Valero Energy Corporation · NYSE:VLO
Valero Energy — Investor Presentation (June 2016)
34 slides from Valero Energy's investor presentation, Jun 15, 2016
Slide 1: Investor Presentation June 2016
Exhibit 99.01 Investor Presentation June 2016
Slide 2: Safe Harbor Statement
2 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 19
Slide 3: Who We Are
3 Who We Are World’s Largest Independent Refiner Operator of Liquids-Focused Logistics Assets One of North America’s Largest Renewable Fuels Producers • 15 refineries, 3 million barrels per day (BPD) of high-complexity throughput capacity • Greater than 70% of refining capacity located in U.S. Gulf
Slide 4: Strong U.S. Gulf Coast and Mid-Continent Presence
4 Strong U.S. Gulf Coast and Mid-Continent Presence Refineries and ethanol plants are in advantaged locations See slide 19 for capacities
Slide 5: Current Macro Environment
5 Current Macro Environment Abundant global supply of crude oil and natural gas Forecasted world GDP growth Product shortages in Latin America, Europe, Africa and Eastern Canada Demand response to lower product prices North American logistics build out added efficiency and removed mid-continent bott
Slide 6: Operate Safely and Reliably
6 Operate Safely and Reliably Safety and Reliability are Imperative for Profitability 0.19 0.08 Disciplined Capital Mgmt to Unlock Value Commercial and Operational Flexibility 1.60 0.70 Personnel Safety Employees Contractors Industry Mechanical Availability Personnel Index Maintenance Index Non-Ener
Slide 7: Commercial and Operational Flexibility: Advantaged Location in U.S. Gulf Coast
7 Commercial and Operational Flexibility Advantaged Location in U.S. Gulf Coast Disciplined Capital Mgmt to Unlock Value Operate Safely and Reliably 1,354 1,084 VLO MPC PSX PBF TSO HFC U.S Gulf Coast CDU Capacity (MBPD) See slide 18 in Appendix for notes regarding this slide. Capacities as of Januar
Slide 8: High Complexity Refineries and Lowest Cost Operator
8 Commercial and Operational Flexibility $4.55 High Complexity Refineries and Lowest Cost Operator Disciplined Capital Mgmt to Unlock Value Operate Safely and Reliably $5.60 $3.60 $3 $6 Refining Peers 1Q16 Refining Cash Operating Expenses Per Barrel of Throughput (Excludes Turnaround and D&A) 24% 17
Slide 9: Portfolio Facilitates Optimization of Product Exports
9 Commercial and Operational Flexibility Our Portfolio Facilitates Optimization of Product Exports 164 249 472 492 Disciplined Capital Mgmt to Unlock Value Operate Safely and Reliably Distillate Gasoline 2011 2012 2013 2014 2015 2016* Current Capacity Potential Future Capacity VLO’s U.S. Product Exp
Slide 10: Disciplined Capital Management to Unlock Value: Capital Allocation
10 Disciplined Capital Mgmt to Unlock Value Capital Allocation Maintain Strong Balance Sheet Sustaining Capex Dividend Growth Capex Cash Returns Acquisitions 1 2 3 Commercial and Operational Flexibility Operate Safely and Reliably (1) Debt-to-cap ratio based on total debt reduced by $2 billion of ca
Slide 11: 2016 Capital Budget
11 Disciplined Capital Mgmt to Unlock Value Logistics $460 Capital Investments Focused on Maintaining Asset Base, Enhancing Margins, and Growing Logistics Commercial and Operational Flexibility Operate Safely and Reliably Sustaining $1,640 Asset Optimization $480 2016 Capital Budget ($MM) • Budgeted
Slide 12: Investing in Asset Optimization
12 Disciplined Capital Mgmt to Unlock Value Investing in Asset Optimization Products & Other Commercial and Operational Flexibility Operate Safely and Reliably See slide 30 in Appendix for non-GAAP disclosures. • New CDU capacity at Corpus Christi (Dec 2015) and Houston (Jun 2016) to process up to 5
Slide 13: Our Sponsored MLP Valero Energy Partners LP
13 Disciplined Capital Mgmt to Unlock Value Our Sponsored MLP Valero Energy Partners LP (NYSE:VLP) Summary * This is the minimum quarterly distribution (MQD). The actual distribution was smaller as it was prorated for the period of December 16 – 31. Accomplishments since IPO Commercial and Operation
Slide 14: Approximately $1 Billion of Estimated MLP Eligible EBITDA
14 Disciplined Capital Mgmt to Unlock Value Approximately $1 Billion of Estimated MLP Eligible EBITDA Inventory Racks, Terminals, and Storage (1) Pipelines (1) Marine (1) Wholesale Fuels Marketing Commercial and Operational Flexibility Operate Safely and Reliably • Over 75 million barrels of active
Slide 15: Renewables Business
15 Disciplined Capital Mgmt to Unlock Value Renewables Business Renewables Operations Renewables Outlook Ethanol plant in Linden, Indiana Commercial and Operational Flexibility Operate Safely and Reliably • 11 ethanol plants with 1.4 billion gallons annual production capacity – Low capital investmen
Slide 16: We Believe Valero is an Excellent Investment
16 We Believe Valero is an Excellent Investment We Believe VLO is Undervalued 30% 4.1% Chart data sources: Company reports and Bloomberg as of June 13, 2016. See slide 18 in Appendix for notes. • Disciplined management team • Strong financial position • Favorable macro environment • Proven operation
Slide 17: Appendix Contents
17 Appendix Contents Notes 18 Refining Operating Statistics 19 – 20 Natural Gas Cost Sensitivity 21 Crude Oil Transportation 22 – 23 Fundamentals 24 – 27 Valero Energy Partners LP 28 – 29 Non-GAAP Disclosures 30 Investor Relations Contacts 31 Topic Pages
Slide 18: Notes
18 Notes Slide 5 Macro environment themes represent industry consultant views. Slide 6 Contractor total recordable incident rate from U.S. Bureau of Labor Statistics. Tier 1 process safety event defined within API Recommended Practice 754. Industry benchmarking and VLO performance statistics from So
Slide 19: Our Refining Capacity and Nelson Complexity
19 Our Refining Capacity and Nelson Complexity Refinery Capacities (MBPD) (1) Nelson Complexity Index Throughput Crude Corpus Christi (2) 15.1 Houston 15.4 Meraux 9.7 Port Arthur 12.7 St. Charles 16.1 Texas City 11.1 Three Rivers 13.2 U.S. Gulf Coast 1,720 1,354 13.4 Ardmore 12.1 McKee 8.3 Memphis 7
Slide 20: Reliability Initiatives Improved Refinery Availability and Utilization
20 Reliability Initiatives Have Improved Refinery Availability and Enabled Higher Utilization 86% 82% 88% 87% 92% 95% 96% 95% 96% Solomon availability Valero Refinery Availability and Utilization Rates * 2016 through March 31.
Slide 21: Natural Gas Cost Sensitivity for Valero's Refineries
21 $2.00/mmBtu U.S. $0.65/bbl U.S. Natural Gas Provides Opex and Feedstock Cost Advantages • Our refining operations consume approximately 898,000 mmBtu/day of natural gas, of which 56% is operating expense and balance is cost of goods sold • Significant annual pre-tax cost savings compared to refin
Slide 22: Slide 22
Slide 23: Slide 23
Slide 24: Slide 24
Slide 25: Pipeline Takeaway Capacity Additions Increased Crude Competition in U.S. Gulf Coast
22 KEY Pipeline Takeaway Capacity Additions Have Increased Crude Competition in the U.S. Gulf Coast Niobrara Completed Cushing Alberta Permian Eagle Ford Bakken 2016 or Later Startup Capacities in MBPD. Pipeline completion and startup dates are subject to change. Bayou Bridge Phase 1 operational wit
Slide 26: Diamond Pipeline
23 Investing to Improve Access to North American Crude Diamond Pipeline • 440 miles of 20-inch pipe (200 MBPD capacity) connecting Memphis to Cushing • Received permits required to begin construction; project is on track for completion in 4Q17 • Provides supply flexibility and ability to improve cru
Slide 27: Production Growth Provides Resource Advantage to North American Refiners
24 Production Growth Provides Resource Advantage to North American Refiners 5,476 U.S. Natural Gas Production (Bcf/day) Source: DOE, 2016 data through March 9,213 7,872 9,145 U.S. Crude Oil Production and Imports (MBPD) 74.6 58.4
Slide 28: Global Petroleum Demand Growth Expected to Outpace Refinery Capacity Expansion
25 Global Petroleum Demand Growth Expected to Outpace Refinery Capacity Expansion -0.8 -0.4 0.0 0.4 0.8 1.2 1.6 2.0 2013 2014 2015 2016E-2020E Avg MMBPD Europe China Middle East Other Net CDU Capacity Additions World Petroleum Demand Growth Source: Consultant and Valero estimates. Net Global Refiner
Slide 29: U.S. Gasoline Exports
26 U.S. Gasoline Exports 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Other Europe Other Latin America Mexico Canada Latest 4 Wk avg estimate (Finished only) 12 Month Moving Average (MBPD) Gasoline represents all finished gasoline plus all blendstocks (including ethanol, MTBE, and oth
Slide 30: U.S. Diesel Exports
27 U.S. Diesel Exports Source: DOE Petroleum Supply Monthly data through March 2016. 4 Week Average estimate from Weekly Petroleum Statistics Report. 1000 1200 1400 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Other Europe Other Latin America Mexico Canada Latest 4 Wk avg estimate 12
Slide 31: VLP's Competitive Strengths
28 VLP’s Competitive Strengths Strong Sponsor Quality Assets Stable and Predictable Revenues Strong Balance Sheet Long Runway for Growth Top Tier Distribution Growth • Strategic relationship with investment grade sponsor VLO • High quality, well maintained assets integrated with VLO’s refineries and
Slide 32: Diversified VLP Portfolio Integrated With VLO's Refining Assets
29 Diversified VLP Portfolio Integrated With VLO’s Refining Assets 4 1 2 3 Texas Crude Systems McKee, Three Rivers, Wynnewood July 1, 2014 - $154 mm (1) Houston and St. Charles Terminals March 1, 2015 - $671 mm (1) Corpus Christi Terminal October 1, 2015 - $465 mm (1) McKee Terminal April 1, 2016 -
Slide 33: Non-GAAP Disclosures
30 Non-GAAP Disclosures We define EBITDA as net income before income tax expense, interest expense, and depreciation expense. We define distributable cash flow as EBITDA less cash payments during the period for interest, income taxes, and maintenance capital expenditures, plus adjustments related to
Slide 34: Investor Relations Contacts
31 Investor Relations Contacts John Locke Karen Ngo For more information, please contact: Vice President, Investor Relations 210.345.3077 john.locke@valero.com Manager, Investor Relations 210.345.4574 karen.ngo@valero.com