Valero Energy Corporation · NYSE:VLO
Valero Energy — Non-Deal Roadshow (June 2007)
21 slides from Valero Energy's roadshow presentation, Jun 25, 2007
Slide 1: European Investor Presentation June 25-28, 2007
European Investor Presentation June 25-28, 2007
Slide 2: Introduction
Greg King President Rich Marcogliese EVP - Refining Operations Mike Ciskowski EVP - Chief Financial Officer Eric Fisher VP - Investor and Corporate Communications Introduction
Slide 3: 2007 Refining Margins Stronger Than Last Year
2007 Refining Margins Stronger Than Last Year 5-Yr Avg 2007 2006 High Low 1/1/2007 5.15 4.69 6.33 7.12 2.87 2/1/2007 4.82 8.7 3.11 8.42 1.98 3/1/2007 8.88 17.21 14.55 14.55 5.64 4/1/2007 11.9 27.8 23.6 23.6 5.77 5/1/2007 10.26 34.77 16.97 16.97 4.1 6/1/2007 9.56 25.18 19.4 19.4 4.09 7/1/2007 10.63 2
Slide 4: Gasoline Fundamentals Bullish Factors Continue
Gasoline Fundamentals Bullish Factors Continue 5-Yr Avg 2007 2006 High Low 1/6/2006 23.78 22.95 22.64 24.78 22.64 1/13/2006 24.29 23.6 23.25 25.17 23.25 1/20/2006 24.53 24.19 23.87 25.52 23.87 1/27/2006 24.87 24.71 24.67 26.36 24.26 2/3/2006 25 25.04 25.14 26.38 23.97 2/10/2006 25.14 24.8 25.22 26.7
Slide 5: Distillate Fundamentals Strong Outlook for Distillate
Distillate Fundamentals Strong Outlook for Distillate 5-Yr Avg 2007 2006 1/6/2006 4.0448 4.201 4.291 1/13/2006 3.92725 4.114 4.162 1/20/2006 3.9222 4.053 4.109 1/27/2006 3.998 4.151 4.146 2/3/2006 4.1893 4.319 4.194 2/10/2006 4.2806 4.502 4.217 2/17/2006 4.3103 4.659 4.244 2/24/2006 4.29455 4.701 4.
Slide 6: Feedstock Differentials Remain Wide
Feedstock Differentials Remain Wide Worldwide crude supply mix expected to be stable going forward Heavy sours hold steady Near-term significant new production is light sweet crude Demand for light sweet crude growing rapidly to meet worldwide clean fuels requirements 2005 2010 Light Sweet 0.34 0.34
Slide 7: Industry Trends Support Strong Margins
Industry Trends Support Strong Margins Industry margins to stay higher for longer Result World oil demand growth continues 2007 estimates 1.6 million barrels per day increase (1.9% growth) Industry refinery expansions and new construction costing much more and taking much longer Since 2004, prices o
Slide 8: Valero's Strategic Focus Has Shifted
Valero's Strategic Focus Has Shifted GOAL - Become a better positioned, better performing, and more valuable company for the long-term Aggressive acquisition strategy was the right call over the past decade Acquisition market has changed Asset values have risen relative to our valuation and replacem
Slide 9: Valero's Key Initiatives
Valero's Key Initiatives Evaluating all capital projects in light of higher costs and changing markets Removing or deferring some strategic projects Focusing on value-added, organic growth projects at flagship and niche refineries Targeting at least $1 billion in annual operating income improvements
Slide 10: Balanced Approach to Investing Cash
Balanced Approach to Investing Cash Capital expenditures - maintaining $3.5 billion budget for 2007 Dividends - increased twice in 2006 and by 50% already in 2007 Goal is to pay dividends in-line with peer group Stock buybacks Board approved additional $4 billion share repurchase authorization - tot
Slide 11: Capital Expenditures Details
Capital Expenditures Details 2006 2007E Regulatory 585 410 Turnarounds 570 425 Sustaining/Other 685 1100 Tier II 990 385 Strategic 920 1180 Strategic Tier II Sustaining/ Other Turnarounds Regulatory $3,750 $3,500 millions Regulatory and Tier II capital spending drops by $780 million from 2006 actual
Slide 12: 2007 Estimated Cash Flow Model
2007 Estimated Cash Flow Model (millions, except per share amounts) (millions, except per share amounts) EPS (First Call mean estimate on June 20, not Valero guidance) Net Income (First Call mean estimate using 570mm shares) Depreciation and Amortization Deferred Taxes and Other Charges Cash Flow fr
Slide 13: Reducing Share Count, Increasing Leverage to Refining Margins
Reducing Share Count, Increasing Leverage to Refining Margins Diluted Shares Outstanding EPS Sensitivity to $1/bbl Change in Throughput Margins EPS Sensitivity to $1/bbl Change in Refining Margins Shares Repurchased 4Q05 654.1 1.14 1.18 7.3 1Q06 644.3 1.08 1.21 10.7 2Q06 635.8 1.16 1.24 9.7 3Q06 627
Slide 14: Valero's Commitment to Safety and the Environment
Valero's Commitment to Safety and the Environment Continued commitment to OSHA's Voluntary Protection Program (VPP) VPP is a recognized OSHA program for excellence in safety Valero has 11 of only 23 VPP Star Sites in the U.S. New Process Safety Management (PSM) initiative underway Created VP positio
Slide 15: Valero's Advantages
Valero's Advantages Aruba Throughput capacities in thousand barrels per day; Excludes 165,000 bpd Lima, OH refinery 17 Refineries Across Four Key Regions High-complexity system and leader in conversion capacity Enables us to convert more low- quality, discounted feedstocks into high-quality products
Slide 16: Operations Improvements
Operations Improvements Energy efficiency 1st quartile performance ^ $360mm operating income improvement Examples: new FCCU power recovery turbines at St. Charles, hydrogen plant at Benicia, and multi-site heater efficiency Mechanical availability (reliability) 1% improvement ^ $240mm operating inco
Slide 17: 2007 Major Strategic Projects
2007 Major Strategic Projects Continuing to invest in meaningful organic growth projects Sour-up and product upgrading opportunities Completed Port Arthur crude expansion, Houston and St. Charles mild hydrocrackers in 2007 Evaluating large hydrocracker and expansion projects at St. Charles and Port
Slide 18: Valero - Best Value in Refining
Valero - Best Value in Refining Compelling fundamentals driving strong industry margins Expect strong margin environment through end of decade Improving returns, growing EPS and cash flow per share through Operating improvements Organic growth projects Stock buybacks Acquisitions that meet our crite
Slide 19: Appendix
Appendix
Slide 20: Map of Valero Refineries
Map of Valero Refineries Valero Marketing Presence Quebec, Canada 215,000 bpd capacity Three Rivers, Texas 100,000 bpd capacity Corpus Christi, Texas 340,000 bpd capacity Wilmington, California 135,000 bpd capacity Benicia, California 170,000 bpd capacity McKee, Texas 170,000 bpd capacity Krotz Spri
Slide 21: Safe Harbor Statement
Safe Harbor Statement Statements contained in this presentation that state the Company's or management's expectations or predictions of the future are forward-looking statements intended to be covered by the safe harbor provisions of the Securities Act of 1933 and the Securities Exchange Act of 1934