Slide 1: Investor Presentation August 2016
Investor Presentation August 2016
Slide 2: HollyFrontier Corporation Disclosure Statement
HollyFrontier Corporation Disclosure Statement 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 Litigation Reform Act of 1995. Forward-looking statements are inherently uncertain an
Slide 3: Our Mission, Our Values
OUR MISSION OUR VALUES OUR MISSION IS to be the premier U.S. petroleum HEALTH & SAFETY refining, pipeline and terminal company as measured WE PUT HEALTH AND SAFETY FIRST. by superior financial performance and sustainable, We conduct our business with primary emphasis on the health and safety of our
Slide 4: Footprint of HollyFrontier and Holly Energy Partners
FOOTPRINT OF HOLLYFRONTIER AND HOLLY ENERGY PARTNERS Collaboration with HEP Pure play inland refining company with 457,000 barrels provides strategic per day of crude capacity growth opportunities in Proximity to North American crude production and attractive niche product markets logistics and mark
Slide 5: HollyFrontier Investment Highlights
HOLLYFRONTIER INVESTMENT HIGHLIGHTS Discounted crude access and high value product market COMPETITIVE ADVANTAGE 100,000 BPD Canadian primarily heavy crude Premium niche product markets versus Gulf Coast ~12,000+ barrels per day of Group 1 Lubricants production SPECIALTY LUBRICANTS $50 to $70 per bar
Slide 6: Proximity to North American Crude Production
PROXIMITY TO NORTH AMERICAN CRUDE PRODUCTION • Refinery location and configuration enables a fleet-wide crude slate discounted to WTI • Highly flexible refining system allows feedstock optionality • Discounted feeds drive higher gross margins / barrel and ultimately, EBITDA • Approximately 100,00 ba
Slide 7: High Value Product Markets
HIGH VALUE PRODUCT MARKETS • Exposure to attractive niche product markets • Higher value product markets drive higher gross margin per barrel & ultimately, EBITDA $25.00 Regional Gasoline Pricing vs Gulf Coast¹ 2012 2013 $20.00 2014 2015 Average $15.00 $/barrel $12.50 $8.48 $10.00 $8.33 $8.42 $5.00
Slide 8: HollyFrontier Business Plan
HOLLYFRONTIER BUSINESS PLAN A fundamentals-focused growth plan that addresses the following opportunities Running our refineries at the 75th percentile in Expected Annual EBITDA¹ ($MM) Operational Availability (2015-2018) Creating sustainable growth in gross margin Refinery Operations $245 and free
Slide 9: HollyFrontier Business Plan: Achievements Realized by Segment
HOLLYFRONTIER BUSINESS PLAN Achievements Realized by Segment Expected Reliability: 97% refinery availability, highest level % of Goal since merger and 40% improvement in lost profit Annual Realized¹ opportunity from 8% to 5% of gross margin EBITDA¹ ($MM) 2015 (2015-2018) Costs: Over $30 MM reduction
Slide 10: Refinery Operations
REFINERY OPERATIONS Annual EBITDA opportunity of $245 MM EBITDA Refinery Reliability $90 MM Cost Reduction $105 MM Turnaround Execution $50 MM IMPROVED RELIABILITY REDUCTION IN IMPROVE AND REDUCTION IN LOST CONTROLLABLE TURNAROUND OPPORTUNITY OPERATING EXPENSES EXECUTION • Achieve first quartile • 1
Slide 11: Optimization
OPTIMIZATION Annual EBITDA opportunity of $90 MM • Little or no capital investment required • Driven by commercial and planning groups recognizing market opportunities Crude Supply • Pipeline reversal between Navajo and Cushing increases optionality • HEP system allows us to preserve quality of Perm
Slide 12: Capital Investments
CAPITAL INVESTMENTS Annual EBITDA opportunity of $365 MM Investing to drive growth and enhance returns EBITDA Large Capital Investments $165 MM LARGE CAPITAL INVESTMENTS Opportunity Capital Program $200 MM Estimated $165 MM in annual EBITDA • El Dorado Naphtha Fractionator: Completed Q4 2015 Planned
Slide 13: Disciplined Approach to Capital Allocation
DISCIPLINED APPROACH TO CAPITAL ALLOCATION SUSTAINING CAPITAL: • Maintenance capex: $100 - $125 million in annual maintenance • Environmental and Sustaining: $100 - $125 million annual spending currently focused on Tier 3 gasoline and MSAT 2 standards • Turnaround spending: $100 - $125 million annua
Slide 14: Capital Structure and Credit Profile
CAPITAL STRUCTURE AND CREDIT PROFILE¹ Investment Grade Rating • Moody’s Baa3 Total Debt to Capital2 • S&P BBB- WNR Strong liquidity PBF • $528MM cash balance • $595MM outstanding debt DK o $350MM term loan closed 4/28/16 o $250MM 5.875% senior notes due 2026 MPC • No borrowings and $3.3MM of L/Cs on
Slide 15: Strong Track Record of Cash Returns
STRONG TRACK RECORD OF CASH RETURNS Since the July 2011 merger HFC has returned approximately $4 billion, or approximately $22.50 per share to shareholders • Industry leader in returning excess cash to shareholders • Committed to maintaining competitive cash yield versus peers • Share repurchase pro
Slide 16: 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 (2011 – 2015) 12.00 10.00 6.43 5.98 8.00 5.26 5.12 6.00 3.23 3.18 2.96 4.00 0.97 2.00 0.56 0.00 HFC* WNR* PSX* MPC* VLO* DK* TSO* PBF* ALJ 2011 2012 2013 2014 2015 *2014 & 2015 net
Slide 17: Among Best in Class Returns on Capital Employed
AMONG BEST IN CLASS RETURNS ON CAPITAL EMPLOYED Pro Forma HollyFrontier Returns on Invested Capital (Average 2011-2015) 19% 20% 17% 17% 16% 18% 16% 14% 13% 14% 11% 12% 10% 8% 6% 6% 4% 4% 2% 0% WNR* HFC* MPC* PSX* TSO* DK* VLO* PBF* ALJ *2014 & 2015 net income excludes lower of cost or market impacts
Slide 18: Holly Energy Partners
HOLLY ENERGY PARTNERS¹ 1) Data as of 6/30/16 IDR: incentive distribution rights. 18
Slide 19: Holly Energy Partners: Distribution
HOLLY ENERGY PARTNERS Consistent Distribution Growth Despite Operate a system of petroleum product Crude Price Volatility and crude pipelines, storage tanks, $0.60 $160 DPU* distribution terminals and loading rack facilities located near HFC’s refining WTI $140 assets in high growth markets $0.50 $1
Slide 20: Holly Energy Partners Growth Drivers
HOLLY ENERGY PARTNERS GROWTH DRIVERS Organic Dropdown Context • Southeastern New Mexico Gathering • HEP generally has right of first refusal on all logistics assets HFC builds or • UNEV acquires • Internal Initiatives • As HFC grows, HEP is positioned to • Contractual PPI/FERC Increases benefit by p
Slide 21: Holly Energy Partners: Target 8% Annual Distribution Growth Rate
HOLLY ENERGY PARTNERS TARGET 8% ANNUAL DISTRIBUTION GROWTH RATE Estimated EBITDA Contribution vs 2014 ($mm) 2016E 2017E4 UNEV Growth1 4 15 Internal Initiatives2 7 14 WX Expansion Assets2 8 30 Cheyenne Pipeline Interest1 3 5 Tulsa Crude Tanks1 4 6 El Dorado Naphtha Dropdown1 7 7 Frontier Pipeline Int
Slide 22: HEP Growth: Cash Distribution Since Inception
HEP GROWTH: CASH DISTRIBUTION SINCE INCEPTION Total HEP Distributions (GP and LP) Total GP Distribution $200 $50.0 HFC received approximately $173 $44.0 $175 $90mm in cash distributions for FY2015² $158 $40.0 $150 $144 $36.5 $126 $125 $29.4 $30.0 $99 $100 $23.6 $86 $20.0 $17.5 $75 $68 $54 $49 $12.9
Slide 23: Value of HFC's LP & GP Interests in HEP
VALUE OF HFC’S LP & GP INTERESTS IN HEP Methodology: • GP values are equal to LP INTEREST¹: quarterly GP cash flow on an annualized basis minus the HEP Unit Price $32.00 $34.00 $36.00 $5m GP giveback (as part of the HEP UNEV purchase HFC owns 22.4mm common units ($mm): $717 $762 $806 transaction) ti
Slide 24: HollyFrontier Corporation
HollyFrontier Corporation (NYSE: HFC) 2828 N. Harwood, Suite 1300 Dallas, Texas 75201 (214) 954-6510 www.hollyfrontier.com Julia Heidenreich, VP, Investor Relations Craig Biery, Manager, Investor Relations investors@hollyfrontier.com 214-954-6510 24
Slide 25: Appendix
APPENDIX 25
Slide 26: HollyFrontier Index
HOLLYFRONTIER INDEX Please see p. 29 for disclaimer and www.HollyFrontier.com/investor-relations for most current version. 26
Slide 27: Financial Metrics
FINANCIAL METRICS¹ Net Income/BBL Current July29, 2016 crude capacity 2011 2012 2013 2014 2015 5 yr ave Cash Yield dividend NYSE Close HFC* 8.23 10.68 4.55 3.25 5.44 6.43 ALJ 8.5% $0.60 $7.07 WNR* 2.41 7.24 4.94 8.65 6.64 5.98 WNR 7.3% $1.52 $20.85 PSX* 5.53 5.05 4.55 5.99 5.20 5.26 PBF 5.4% $1.20 $
Slide 28: Definitions
DEFINITIONS Non GAAP 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 29: HFC Index Disclosure
HFC INDEX DISCLOSURE The data on p. 30 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 fro
Slide 30: HollyFrontier.
ae HOLLYFRONTIER.