Hf Sinclair Corporation · NYSE:DINO
Hf Sinclair — HollyFrontier — Barclays Energy-Power Conference 2014
40 slides from Hf Sinclair's conference presentation, Sep 2, 2014
Slide 1: Barclays Energy-Power Conference September 2014
Barclays Energy-Power Conference September 2014
Slide 2: Forward-looking statements
ae HOLLYFRONTIER i Seniesa a _ pies Corpo! Statements made during the course of this presentation that are not historical facts are “forward looking statements” within the meaning of the U.S. Private Securities Leases Reform Act of 1995. Forward-looking statements are inherently uncertain and necess
Slide 3: Our Mission and Values
OUR MISSION OUR VALUES OUR MISSION |S tobe the premier Us. petroleum refining, HEALTH & SAFETY WE PUT ETY FIRST sustainable, profitable growth. WE SEEK TO ACCOMPLISH THIS BY: [i uA SS ENVIRONMENTAL STEWARDSHIP, WE CARE ABOUT THE ENVIRONMENT. Ga uaer ger WE OBEY THELY HONESTY & RESPECT WE TELL THE TR
Slide 4: HollyFrontier Investment Highlights
HollyFrontier Investment Highlights 4 Pure play competitive refinery 5 refineries with 443,000 barrels per day refining capacity Attractive niche product markets with advantaged crude supply Rocky Mountains, Southwest and Mid-Continent Strong investment track record with future growth focu
Slide 5: Footprint of HollyFrontier and Holly Energy Partners
Footprint of HollyFrontier and Holly Energy Partners Collaboration with HEP provides strategic growth opportunities in logistics and marketing operations 5
Slide 6: Proximity to Growing North American Crude Production
Proximity to Growing North American Crude Production Refineries are well-positioned for exposure to the growing supply of lower cost domestic and Canadian crude oil 6 Sources: Citi, Deutsche Bank, Goldman Sachs, Macquarie, Simmons & Co, Canadian Association of Petroleum Producers, Turner, Mason & Co
Slide 7: Advantaged Crude Slate
Sensitivity determined from WTI, WTS, and WCS crude inputs multiplied by annualized crude capacity for HFC and adjusted for approximate tax expenses. The full year $/share impact is determined based on 12/31/13 shares outstanding. Based on assumption that Brent based crude sets product prices. *Data
Slide 8: Expanding Reach in Growing Markets
Expanding Reach in Growing Markets 8 Sources: Company research and the EIA.
Slide 9: Focus on Safe and Reliable Operations
Focus on Safe and Reliable Operations 9 Personal Safety Refinery Reliability Equivalent Distillation Capacity Process Availability *Data from 2H2011 following the Holly and Frontier merger Source: HFC Analysis Key Initiatives Occupational and Process Safety Management Teams Risk-based Inspection
Slide 10: Investment & Acquisition Strategy
10 Investment & Acquisition Strategy • Strong track record of buying the right assets at the right time • Woods Cross, El Dorado, and Tulsa refineries all purchased at industry lows on a per barrel basis • High hurdle rate on investments and acquisitions • Target AT LEAST 2x our Cost of Capital • Fo
Slide 11: Strategic Investment & Acquisition: Woods Cross Expansion Phase 1
11 Strategic Investment & Acquisition Woods Cross Expansion Phase 1 Expand crude capacity from 31,000 to 45,000 barrels per day Includes relocation/revamp of FCC and polymerization units from Bloomfield, NM refinery Crude slate to include 25,000 BPD local Uinta Basin Black Wax Crude. 20,000 BP
Slide 12: Strategic Investment & Acquisition: Woods Cross Expansion Phase 2
Expand crude capacity from 45,000 to 60,000 barrels per day Includes increased crude and vacuum capacity, the installation of a Hydro Isom Unit, Hydrogen Plant and Distillate Hydrotreater Up to 50,000 BPD of local Uinta Basin Black Wax Crude capacity. Pursuing further crude supply agreements t
Slide 13: Capital Expenditure Overview
Capital Expenditure Overview *We expect 2014 capital expenditures to total approximately $400 million, and expect to spend approximately $111 on turnarounds and tank maintenance. Legacy HOC & FTO capital expenditures combined for periods prior to the 2011 merger. 2011 capital expenditure calculated
Slide 14: Strong Balance Sheet & Cash Returns
Strong Balance Sheet & Cash Returns 14 $1.8 billion cash on balance as of 6/30/14 $190 million outstanding debt excludes non-recourse HEP debt Total debt to capital ratio 3% as of 6/30/14* As of 6/30/14, approximately $312 million remaining in share repurchase authorization Continued com
Slide 15: Dividend Returns to Shareholders
Dividend Returns to Shareholders *Dividends are split adjusted reflecting HFC’s two-for-one stock split announced August 3, 2011. **Data from public filings and press releases. As of 8/22/2014 NYSE closing prices. See page 38 for calculations. 15 Increased regular dividend 6 times since the merger,
Slide 16: Best In Class Returns on Capital Employed
Best In Class Returns on Capital Employed Pro Forma HollyFrontier Returns on Invested Capital (Average 2009-2013) 5-year average ROCE calculated by taking the average of ROCE’s for the years 2009-2013. ROCE calculated as net income divided by the sum of total debt (excluding MLP debt) and total equi
Slide 17: EV/EBITDA vs Returns on Capital Employed
EV/EBITDA vs Returns on Capital Employed 5-year average ROCE calculated by taking the average of ROCE's for the years 2009-2013. ROCE calculated as net income divided by the sum of total debt and total equity. For HFC, legacy HOC/FTO earnings, debt & equity were combined for 5-year calculations. See
Slide 18: Strong Financial Metrics vs Peers
Strong Financial Metrics vs Peers Net Income per Barrel of Crude Capacity HFC earnings per bbl strongest in peer sector (2009 – 2013) HFC earnings calculated by adding legacy HOC plus FTO earnings for periods prior to the merger. See page 38 for calculations. 18 4.76 3.66 2.92 2.00 1.42 1.18 1.11 0.
Slide 19: Business not Built on WTI/Brent Spread
Business not Built on WTI/Brent Spread Between 2001-2010, WTI traded on average at a $1.00 PREMIUM to Brent Between 2001-2010: Average ROCE 22% Average NI/BBL $2.69 -10.0% 0.0% 10.0% 20.0% 30.0% 40.0% 50.0% 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 ROCE Source: Bloomberg HFC financials c
Slide 20: Holly Energy Partners Investment Highlights
Holly Energy Partners Investment Highlights 20 Well positioned assets that serve high growth markets Leverage to Permian growth through Southeastern New Mexico Gathering system expansion Successful execution of growth plan has resulted in consistent distribution increases Increased distribut
Slide 21: Holly Energy Partners Partnership Growth
Holly Energy Partners Partnership Growth 21 Organic Growth Increase cash flow via logical additions to existing assets, volume growth and annual contractual PPI-related revenue growth HFC Growth Partner with HollyFrontier to grow current asset base with projects and joint acquisitions Thir
Slide 22: Holly Energy Partners Expected Visible Growth
22 Holly Energy Partners Expected Visible Growth Expected Annual Incremental Revenue Expected Timing SE NM Crude Gathering $10 mm 2H 2014 UNEV Volume Increase via SLC Refinery Expansions $15 mm 2015 - 2016 Contractual Tariff Increases $3 - $9 mm Annually > $30 million With minimal incremental increa
Slide 23: HEP Southeastern New Mexico Crude Gathering Expansion
23 Holly Energy Partners Southeastern New Mexico Crude Gathering Expansion Permian Production projected to grow from 1.5 million BPD to over 2 million BPD by 2018 Long term, bull case scenario calls for Permian Production to reach over 3 million BPD by 2025 HFC’s Navajo refinery runs 80-100% P
Slide 24: HEP Southeastern New Mexico Crude Gathering Expansion
24 Expansion of Southeast New Mexico crude gathering system to 100,000 BPD Provides shippers additional capacity to Navajo Refinery Connections to major clearing points via Centurion to Cushing and Midland/Crane via Bisti 800 miles of pipelines in the Bone Spring and the Delaware Basin areas
Slide 25: Permian Demand and Takeaway
Permian Demand and Takeaway 25
Slide 26: HEP Growth: Cash Distribution Since Inception
HEP Growth: Cash Distribution Since Inception 26 $0.0 $5.0 $10.0 $15.0 $20.0 $25.0 $30.0 2005 2006 2007 2008 2009 2010 2011 2012 2013 $0.9 $2.0 $3.1 $4.1 $8.1 $12.9 $17.5 $23.6 $29.4 $ m ill io n s Total GP Distribution $0 $20 $40 $60 $80 $100 $120 $140 $160 2005 2006 2007 2008 2009 2010 2011 2012 2
Slide 27: Value of HFC's LP & GP Interests in HEP
Value of HFC’s LP & GP Interests in HEP 27 *Based on a range of recent HEP unit prices on the NYSE for valuation purposes. NYSE closing price on 8/22/14 was $35.44. Methodology: • GP values are equal to quarterly GP cash flow (for 2Q 2014) on an annualized basis minus the $5m GP giveback for the a p
Slide 28: HollyFrontier Corporation contact details
HollyFrontier Corporation (NYSE: HFC) 2828 N. Harwood, Suite 1300 Dallas, Texas 75201 (214) 954-6510 www.hollyfrontier.com Julia Heidenreich, VP, Investor Relations Blake Barfield, Investor Relations investors@hollyfrontier.com 214-954-6510 28
Slide 29: Appendix
Appendix 29
Slide 30: HollyFrontier Index
30 HollyFrontier Index Please see p. 40 for disclaimer and www.HollyFrontier.com/investor-relations for most current version. 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14* 433,370 407,900 380,620 381,460 416,910 370,890 416,210 438,960 405,000 *Anticipated crude charge based on guidance given on 8/6
Slide 31: HollyFrontier Enterprise Value
HollyFrontier Enterprise Value 31 *As of 2Q14 publicly available financial statements. NYSE closing price on 8/22/14 was $51.26. HFC does not have preferred shares outstanding. **Holly Energy Partners debt is non-recourse to HollyFrontier **See p. 27 for additional details on GP and LP valuation ran
Slide 32: Logistics Matter
Logistics Matter Proximity to Crude Oil Pricing Hubs and Takeaway Infrastructure 32 Prices reflect estimated transportation cost per barrel via pipeline, rail and marine Sources: Barclays, Credit Suisse, Deutsche Bank, Macquarie, and Tudor Pickering Holt
Slide 33: Feedstock Flexibility
Feedstock Flexibility* • High WTI/WTS ($3 or higher) • Low WTI/WCS ($8 or less) • WTI/Brent Range ($10 to $20) • Low WTI/WTS ($2 or less) • High WTI/WCS ($20 or higher) • WTI/Brent Range ($10 to $20) • Low WTI/WTS ($2 or less) • Low WTI/WCS ($8 or less) • WTI/Brent Range ($20 or higher) *Please note
Slide 34: Mid-Continent: El Dorado & Tulsa Refineries
Mid-Continent: El Dorado & Tulsa Refineries The Mid-Continent Region comprises our Tulsa and El Dorado Refineries and has a combined crude oil processing capacity of 260,000 BPSD. Mid-Continent Sales of Refinery Produced Products 247,030 BPD • Located in El Dorado, Kansas • 135,000 BPSD capacity and
Slide 35: Southwest: Navajo Refinery
Southwest: Navajo Refinery The Southwest Region consists of our Navajo Refinery and has a crude oil processing capacity of 100,000 BPSD. In addition, we manufacture and market commodity and modified asphalt products through the Southwest Region. Southwest Sales of Refinery Produced Products 94,830 B
Slide 36: Rocky Mountain: Woods Cross and Cheyenne Refineries
Rocky Mountain: Woods Cross and Cheyenne Refineries The Rocky Mountain Region comprises of our Cheyenne and Woods Cross Refineries and has a combined crude oil processing capacity of 83,000 BPSD. Rocky Mountain Sales of Refinery Produced Products 68,870 BPD • Located in Cheyenne, Wyoming • 52,000 BP
Slide 37: Holly Energy Partners
Holly Energy Partners Holly Energy Partners owns and operates substantially all of the refined product pipeline and terminaling assets that support our refining and marketing operations in the Mid- Continent, Southwest and Rocky Mountain regions of the United States. • Approximately 3,000 miles of c
Slide 38: Financial Metrics
Financial Metrics* 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 Average WTI/Brent (SNAPWTIB) $ 1.11 $ 1.04 $ 2.40 $ 3.35 $ 1.57 $ 0.33 $ (0.28) $ 1.34 $ (0.47) $ (0.57) $ 1.00 ROCE 29.1% 5.2% 7.9% 20.8% 44.0% 45.0% 45.3% 21.8% -2.3% 4.8% 22% NI/BBL $ 2.23 $ 0.41 $ 0.57 $ 1.59 $ 4.45 $ 6.28 $ 7.
Slide 39: Definitions
Definitions Non GAPP measurements: We report certain financial measures that are not prescribed or authorized by U. S. generally accepted accounting principles ("GAAP"). We discuss management's reasons for reporting these non-GAAP measures below. Although management evaluates and presents these non-
Slide 40: HFC Index Disclosure
HFC Index Disclosure 40 The data on p. 25 is for informational purposes only and is not reflective or intended to be an indicator of HollyFrontier's past or future financial results. This data is general industry information and does not reflect prices paid or received by HFC. The data was compiled
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