Alon USA Energy — Merger or Acquisition (June 2017)
29 slides from Alon USA Energy's merger presentation, Jun 6, 2017
Slide 1: Delek US Holdings Inc. Investor Presentation
June 2017 Delek US Holdings Inc. Investor Presentation
Slide 2: Disclaimers
Disclaimers 2 Delek US Holdings, Inc. (“Delek US”) and Delek Logistics Partners, LP (“Delek Logistics”; collectively with Delek US, defined as “we”, “our”) are traded on the New York Stock Exchange in the United States under the symbols “DK” and ”DKL” respectively, and, as such, are governed by the
Slide 3: Strategic Combination with Financial Flexibility to Support Growth and Unlock Value
Strategic Combination with Financial Flexibility to Support Growth and Unlock Value 3 • Grown through opportunistic acquisitions across multiple market cycles • Expertise to invest in/improve operations • Strong balance sheet • Low cost reliable operator • Retail expertise/largest 7-Eleven licensee
Slide 4: Consideration / Valuation
Consideration/ Valuation • All stock transaction for remaining 53% equity ownership • Each Alon USA Energy, Inc. (“Alon”) shareholder will receive 0.5040 shares of Delek US Holdings, Inc. (“Delek”) common stock, resulting in pro forma ownership of approximately 76% to Delek shareholders and approxim
Slide 5: Increased Scale and Asset Diversity
Increased Scale and Asset Diversity Complementary Businesses with Strategically Located Assets; Increased Permian Basin Exposure 5 Alon USA Asset Overview(1) Refining • 147,000 bpd in total • Big Spring • 73,000 bpd • 10.5 complexity • Krotz Springs • 74,000 bpd • 8.4 complexity Retail • Approximate
Slide 6: Permian Basin Crude Oil Production and Breakeven Prices
1) Deutsche Bank Research, Permian Basin: “You are still the one” 11/28/16, breakeven based on flat natural gas of $3.00/MMbtu; NGLs priced 35% of WTI; regional commodity differential and 25% royalty. 2) EIA production data through May 15, 2017, Drilling Productivity Report; Baker Hughes rig count a
Slide 7: Permian Basin Activity Improving
Permian Basin Activity Improving As production increases should widen the differential between Midland and Cushing 7 1) Source: Baker Hughes Drilling Rig report through June 2, 2017; EIA Drilling Productivity Report May 15, 2017. 2) Differential includes contango of $0.40/bbl (2012); contango of $0.
Slide 8: Permian Basin Estimated Takeaway/Production Balance
Permian Basin Estimated Takeaway/Production Balance Current pipeline takeaway capacity adequate, but production growth may tighten balance 8Chart Source: Simmons & Company research, May 2017. Provided for illustrative purposes to show potential balance. Based on exit rate Permian production. Actual
Slide 9: Combined System with Over 300,000 bpd of Crude Throughput Capacity
Combined System with Over 300,000 bpd of Crude Throughput Capacity (~69% Permian Basin Based) Refining System with Permian Based Crude Slate 9 Increased Scale and Position Increased refining capacity from 155,000 bpd to a 302,000 bpd four refinery system: Tyler (DK) – light crude refinery with a
Slide 10: Strong Platform for Logistics Growth Created by Combination
Strong Platform for Logistics Growth Created by Combination Growing Logistics Assets Support Crude Sourcing and Product Marketing 10 Key Value Drivers • Delek Logistics Partners provides platform to unlock logistics value • Increased access to Permian and Delaware basin through presence of Big Sprin
Slide 11: Delek US GP and IDR Ownership in DKL
11 Delek US GP and IDR Ownership is in DKL in the high splits Future Potential Dropdowns to DKL Benefit Delek US Cash Flow Supports Long Term Distribution Growth at Delek Logistics Total Quarterly Distribution Per Unit Target Amount Unitholders General Partner Minimum Quarterly Distribution below $0
Slide 12: DKL: Increased Distribution with Conservative Coverage and Leverage
DKL: Increased Distribution with Conservative Coverage and Leverage 12 Distribution per unit has been increased seventeen consecutive times since the IPO $0.375 $0.385 $0.395 $0.405 $0.415 $0.425 $0.475 $0.490 $0.510 $0.530 $0.550 $0.570 $0.590 $0.610 $0.630 $0.655 $0.680 $0.690 MQD (1) 1Q 13 2Q 13
Slide 13: Alon Transaction Expands Retail/Wholesale System in Southwest
Alon Transaction Expands Retail/ Wholesale System in Southwest Integrated wholesale marketing and retail network at Big Spring; complementary to DKL west Texas 13 Alon Refinery Legend: Big Spring Krotz Springs Branded license agreement and payment card location Branded company-operated and distribut
Slide 14: Robust Synergy Opportunity from DK/ALJ Combination
Robust Synergy Opportunity from DK/ALJ Combination 14 Expect to achieve run-rate synergies of approximately $85 - $105 million in 2018 Commercial • Logistics, purchase and trading benefits from a larger platform • $20-$35 m Operational • Sharing of resources across the platform; improved insurance a
Slide 15: Cash, Debt and Capital Allocation at March 31, 2017
At March 31, 2017 Cash of $591.4 million; Debt of $824.9 million Includes $392.0 million of debt at Delek Logistics (DKL) Excluding DKL, Delek US’ net cash position was approximately $158.5 million Closed sale of retail related assets for $535.0 million on Nov. 14, 2016 Plus $17.9 millio
Slide 16: Financial Strength and Flexibility for the Combined Company
Financial Strength and Flexibility for the Combined Company Benefits from Delek’s financial position 16 Key Value Drivers • Combined balance sheet should have financial flexibility • Opportunity for cost of capital benefits from combination estimated to be approximately $20 million • Financial posit
Slide 17: Questions and Answers
17 Complementary Logistics Systems Significant Organic Growth / Margin Improvement Opportunities Focus on Shareholder Returns Strong Balance Sheet Strategically Positioned Refining Platform Questions and Answers
Slide 18: Additional Information
18 Additional Information No Offer or Solicitation This communication relates to a proposed business combination between Delek US and Alon. This announcement is for informational purposes only and is neither an offer to purchase, nor a solicitation of an offer to sell, any securities or the solicita
Slide 19: Appendix
Appendix
Slide 20: Non GAAP Reconciliations of Potential Dropdown EBITDA
Non GAAP Reconciliations of Potential Dropdown EBITDA (1) 20 (1) Based on projected range of potential future logistics assets that could be dropped to Delek Logistics from Delek US in the future. Amounts of EBITDA, net income and timing will vary, which will affect the potential future EBITDA and a
Slide 21: Delek US Focused on Growth through Acquisitions
Delek US Focused on Growth through Acquisitions (1) Includes logistic assets in purchase price. Purchase price includes working capital for refineries. (2) Mt. Pleasant includes $1.1 million of inventory. 2006 Abilene & San Angelo terminals $55.1 mm 2012 Nettleton Pipeline $12.3 mm 2011 Paline Pipel
Slide 22: Summary Organization Structure
22 Summary Organization Structure (1) As of December 31, 2016, a 5.1% interest in the Delek US ownership interest in the general partner is held by three members of senior management of Delek US. The remaining ownership interest is indirectly held by Delek. Market cap based on share prices on June 2
Slide 23: Tyler Refinery Overview
54% 55% 54% 55% 54% 55% 39% 39% 40% 40% 41% 40% 7% 6% 6% 5% 5% 5% 0% 20% 40% 60% 80% 100% 120% 2013 2014 2015 2016 1Q16 1Q17 Gasoline Diesel Petro/Other 62,304 65,523 60,704 70,773 Tyler Refinery Overview 23 Overview Niche market generally priced above Gulf Coast; supported by Delek Logistics' t
Slide 24: El Dorado Refinery Overview
80,000 bpd refinery with crude slate flexibility to process light and medium gravity crudes El Dorado Refinery Overview 241) COPEC is a wholly owned subsidiary of Compania de Petroleos de Chile COPEC S.A, which owns and operates convenience stores in Chile, Columbia, Panama, Ecuador, Peru and Mexico
Slide 25: -$30 -$20 -$10 $0 $10 $20 $30 $40 $50 J a n -1 Fe
-$30 -$20 -$10 $0 $10 $20 $30 $40 $50 J a n -1 0 Fe b -1 0 Ma r- 1 0 A p r- 1 0 Ma y -1 0 J u n -1 0 J u l- 1 0 A u g -1 0 S e p -1 0 O c t- 1 0 N o v -1 0 D e c -1 0 J a n -1 1 Fe b -1 1 Ma r- 1 1 A p r- 1 1 Ma y -1 1 J u n -1 1 J u l- 1 1 A u g -1 1 S e p -1 1 O c t- 1 1 N o v -1 1 D e c -1 1 J a
Slide 26: WTI Midland vs. WTI Cushing Crude Pricing
($14.00) ($12.00) ($10.00) ($8.00) ($6.00) ($4.00) ($2.00) $0.00 $2.00 Ja n -1 1 Fe b -1 1 M ar -1 1 A p r- 11 M ay -1 1 Ju n -1 1 Ju l-1 1 A u g- 1 1 Se p -1 1 O ct-1 1 N o v- 1 1 De c- 1 1 Ja n -1 2 Fe b -1 2 M ar -1 2 A p r- 12 M ay -1 2 Ju n -1 2 Ju l-1 2 A u g- 1 2 Se p -1 2 O ct-1 2 N o v- 1 2
Slide 27: DKL: Reconciliation of Cash Available for Distribution
DKL: Reconciliation of Cash Available for Distribution 27 (1) Distribution for forecast period based on $1.50 per unit; Distribution for year ended December 31, 2013, 2014, 2015 and 2016 based on actual amounts distributed during the periods; does not include a LTIP accrual. Coverage is defined as c
Slide 28: DKL: Income Statement and Non-GAAP EBITDA Reconciliation
DKL: Income Statement and Non-GAAP EBITDA Reconciliation 28 (1) Includes approximately $2.0 million of estimated annual incremental general and administrative expenses expected to incur as a result of being a separate publicly traded partnership. (2) Interest expense and cash interest both include c
Slide 29: Investor Relations Contact
Investor Relations Contact: Kevin Kremke Keith Johnson Executive Vice President, CFO Vice President of Investor Relations 615-224-1323 615-435-1366