REFINING THE FUTURE SHIPPER PANEL. DAN GORDON, EVP Delek US

Transcription

1 REFINING THE FUTURE SHIPPER PANEL DAN GORDON, EVP Delek US

2 Safe Harbor Provision 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 rules and regulations of the United States Securities and Exchange Commission. These slides and any accompanying oral and written presentations contain forward-looking statements that are based upon current expectations and involve a number of risks and uncertainties. Statements concerning current estimates, expectations and projections about future results, performance, prospects, opportunities, plans, actions and events and other statements, concerns, or matters that are not historical facts are forward-looking statements, as that term is defined under the federal securities laws. These forward-looking statements include, but are not limited to, statements regarding the post-merger integration and transition plan with Alon USA Energy Inc. ( Alon ), synergies, opportunities, anticipated future performance and financial position, and other factors. Investors are cautioned that the following important factors, among others, may affect these forward-looking statements. These factors include but are not limited to: risks and uncertainties related to the ability to successfully integrate the businesses of Delek US and Alon, risks related to disruption of management time from ongoing business operations due to the integration implementation, the risk that any announcements relating to the integration could have adverse effects on the market price of Delek US' common stock, the risk that the transaction could have an adverse effect on the ability of Delek US and Alon to retain customers and retain and hire key personnel and maintain relationships with their suppliers and customers and on their operating results and businesses generally, the risk that problems may arise in successfully integrating the businesses of the companies, which may result in the combined company not operating as effectively and efficiently as expected, the risk that the combined company may be unable to achieve cost-cutting synergies or it may take longer than expected to achieve those synergies, uncertainty related to timing and amount of future share repurchases and dividend payments, risks and uncertainties with respect to the quantities and costs of crude oil we are able to obtain and the price of the refined petroleum products we ultimately sell; gains and losses from derivative instruments; management's ability to execute its strategy of growth through acquisitions and the transactional risks associated with acquisitions and dispositions; acquired assets may suffer a diminishment in fair value as a result of which we may need to record a write-down or impairment in carrying value of the asset; changes in the scope, costs, and/or timing of capital and maintenance projects; operating hazards inherent in transporting, storing and processing crude oil and intermediate and finished petroleum products; our competitive position and the effects of competition; the projected growth of the industries in which we operate; general economic and business conditions affecting the geographic areas in which we operate; and other risks contained in Delek US and Delek Logistics filings with the United States Securities and Exchange Commission. Forward-looking statements should not be read as a guarantee of future performance or results and will not be accurate indications of the times at, or by which such performance or results will be achieved. Forward-looking information is based on information available at the time and/or management s good faith belief with respect to future events, and is subject to risks and uncertainties that could cause actual performance or results to differ materially from those expressed in the statements. Neither Delek US nor Delek Logistics Partners undertakes any obligation to update or revise any such forward-looking statements. 2 Page 2

3 Summary i. Delek Company Overview ii. US Refining & Demand Outlook iii. US Product Exports iv. Mexico Refined Products Markets v. Mexico Infrastructure & Country Profile vi. Product Transportation Page 3

4 Delek US Holdings, Inc. Company Overview Asphalt Renewables Refining Logistics Retail 14 asphalt terminals located in TN, OK, TX, WA, CA, AZ and NV Largest asphalt supplier in CA and second largest asphalt supplier in TX Approx. 61m gallons Biodiesel: Crossett, AR Cleburne, TX Renewable Diesel/Jet: California 302,000 bpd Capacity El Dorado, AR Tyler, TX Big Spring, TX Krotz Springs, LA Own 81.6% of LP/100% of GP of ALDW, which owns Big Spring 9 terminals Approximately 1,250 miles of pipeline 8.5 million bbls of storage capacity West Texas wholesale Joint venture crude oil pipelines: RIO / Caddo Own 63.5%, incl. 2% GP, of DKL Approximately 300 stores Southwest US locations Largest licensee of 7- Eleven stores in the US Page 4

5 Delek US Holdings, Inc. Company Overview - Exports First Exported Fuel in November of 2016 To Date, we have Successfully Exported: Diesel 87 Gasoline 93 Gasoline Aviation Gasoline Working To Export: Jet Fuel Asphalt Image of our Tyler, TX Transloading Facility Page 5

6 Delek US Holdings, Inc. Company Overview - Exports Currently Operate 3 Export Facilities: Cullendale, Arkansas (On Short-Line, UP & BN Connected, 20 car per day capacity) Tyler, Texas (On UP, 12 car per day capacity) Lake Charles, Louisiana (On UP, 8 car per day capacity) Page 6

7 Volume (kilo-bbls per day) U.S. Refining & Demand Outlook Refining Capacity 20,000 18,000 16,000 14,000 12,000 10,000 8,000 6,000 4,000 2,000 0 Refined Products - bbls per day U.S. Refining Capacity Source: Argus, 2018, US Products Demand Page 7

8 U.S. Refining & Demand Outlook Demand Outlook Source: Argus, 2018, Global Product Market Connectivity Page 8

9 U.S. Refining & Demand Outlook Demand Outlook Source: Argus, 2018, Global Product Market Connectivity Page 9

10 U.S. Product Exports Market Trends US Refined Product Export Trends Source: Argus, 2018, Global Product Market Connectivity Page 10

11 U.S. Product Exports Destinations Source: Argus, 2018, Global Product Market Connectivity Page 11

12 Mexico Refined Products Market Gasoline Production & Consumption Page 12

13 Mexico Refined Products Market Imports on the Rise Mexican refineries lack the capacity and complexity to compete with the existing U.S. Gulf Coast refining complex so near to the Mexican market and necessary upgrades require immense amounts of capital investment. Page 13

14 Mexico Refined Products Market Imports on the Rise Page 14

15 Mexico Infrastructure & Country Profile Refining & Logistics Infrastructure Pemex Infrastructure Refineries 6 Storage Terminals (TAR) Maritime Terminals Oil Pipelines Product Pipelines Retail Stations (Pemex franchises) ,213 km 8,958 km 11, Pemex, US EIA, US Census Bureau Page 15

16 Mexico Infrastructure & Country Profile Production Trends - Pemex, US EIA, Argus Media Group Page 16

17 Mexico Infrastructure & Country Profile Demand Outlook Mexico is the twelfth-largest oil consumer in the world and secondlargest in Latin America after Brazil. Gasoline accounts for almost half of the country s oil consumption and strong growth in gasoline consumption has led the resumption in demand growth. - Wilson Center, 2018 Gasoline sales averaged more than 800,000 bpd during the first quarter, an increase of 35,000 bpd or 4.6 percent compared with the same period in Mexico s refineries are unable to meet all the domestic demand for gasoline or diesel and the country is a major importer of motor fuels, especially gasoline. Page 17

18 Mexico Infrastructure & Country Profile Country Profile Services 63% Agriculture 4% Industrial 33% Mexico s size, natural resources, and low-cost skilled labor force has created a GDP of $2.3 trillion on a purchasing power parity (PPP) basis Mexico s GDP ranks 11th in the world on a PPP basis between France and Italy and 15th on a nominal basis between Spain and Indonesia GDP has grown at 2% since 2013 Key industries: petroleum, chemicals and plastics, motor vehicles, and food and beverage On a PPP basis, GDP per capita in 2015 and 2016: 2015 Mexico $16,667 United States $52, Mexico $16,831 United States $53,272 Page 18

19 Mexico Infrastructure & Country Profile Country Profile Land Area Mexico PEMEX Pipelines 761,600 mi 2 6,214 mi 1,972,550 km 2 10,000 km Population MM Land Area Texas Texas Liquid Pipelines 268,597 mi 2 59,912 mi 695,662 km 2 96,419 km Population MM Page 19

20 Mexico Infrastructure & Country Profile Country Profile The Sierra Madre Occidental (Western) runs 932 miles with a 150 mile width and peak elevation of 10,863 feet. The Sierra Madre Oriental (Eastern) runs 620 miles with a peak elevation of 12,100 feet. Page 20

21 Mexico Infrastructure & Country Profile Country Profile Age Demographics in Mexico Population Density of Mexico Mexico is the tenth largest country in the world by population. Median age in Mexico is 27.8 years, significantly lower than the median age of over 37 years in the United States. Mexico s population is 131 million, 78.5% of which is urban. Population density in Mexico is 174 people per square mile. Page 21

22 Mexico Infrastructure & Country Profile Pipeline Tapping Page 22

23 Mexico Infrastructure & Country Profile Mexico Railroad Infrastructure The Mexican railroads are structured on a North South orientation. There is very little ability to go from east to west. This favors Delek s facilities when going Central and West versus Houston. - ScienceDirect, 2018, Privatization; Railroad; Mexico Page 23