Investor Presentation

Transcription

1 Investor Presentation May 16, 2013

2 Forward-Looking Statements All statements contained in or made in connection with this presentation that are not statements of historical fact are forward-looking statements intended to be covered by the safe harbor provisions of the Securities Act of 1933 or the Securities Exchange Act of The words believe, intend, plan, expect, should, estimate, anticipate, potential, future, will and similar terms and phrases identify forward-looking statements. Forward-looking statements reflect the current expectations of the management of Alon USA Energy, Inc. ( Alon ) regarding future events, results or outcomes. These expectations may or may not be realized and actual results could differ materially from those projected in forward-looking statements. Alon s businesses and operations involve numerous risks and uncertainties, many of which are beyond our control, which could result in the expectations reflected in forward-looking statements not being realized or which may otherwise affect Alon s financial condition, results of operations and cash flows. These risks and uncertainties include, among other things, changes in price or demand for our products; changes in the availability or cost of crude oil and other feedstocks; changes in market conditions; actions by governments, competitors, suppliers and customers; operating hazards, natural disasters or other disruptions at our or third-party facilities; and the costs and effects of compliance with current and future state and federal regulations. For more information concerning factors that could cause actual results to differ from those expressed in forward-looking statements, see Alon s Form 10-Q for the quarter ended March 31, 2013 which has been filed with the Securities and Exchange Commission and is available on the company s web site at Alon undertakes no obligation to update or publicly release the results of any revisions to any forward-looking statements that may be made to reflect events or circumstances that occur, or that we become aware of, after the date of this presentation or to reflect the occurrence of unanticipated events

3 Table of Contents I. Business Overview II. Financial Summary Appendix: Additional Materials - 3-3

4 I. Business Overview

5 Overview of Alon Energy Alon Energy conducts its operations through five business units: Big Spring Refining & Wholesale Fuels Marketing ( Alon USA Partners, LP ), Krotz Springs Refining ( Krotz Springs ), California Refining ( California ), Asphalt Marketing ( Asphalt ), and Retail. ALJ is the general partner and owns 81.6% of the Alon USA Partners, LP The Company generated $524 million of Adjusted EBITDA for the LTM period ended March 31, 2013 and $157 million of Adjusted EBITDA for 1 st quarter of Alon USA Partners, LP Includes the Big Spring refinery (TX) with a throughput capacity of 70,000 bpd Includes the wholesale fuels marketing business which is integrated through the Big Spring refinery system Markets gasoline and diesel to ~635 sites under the ALON brand, including Alon Brands stores Krotz Springs Includes the Krotz Springs (LA) refinery with a throughput capacity of 74,000 bpd California Includes the Paramount, Long Beach and Bakersfield refineries with a throughput capacity of 70,000 bpd Asphalt Owns and operates 11 asphalt terminals in the western U.S. Operations include: 50% ownership in Paramount Nevada Asphalt Company, and 50% ownership in Wright Asphalt Second largest supplier of asphalt in California Second largest supplier of asphalt in Texas Retail Largest 7-Eleven licensee in the U.S. with 298 retail gasoline / convenience stores in Central and West Texas and New Mexico (~50% fee owned) 1 See page 27 for a reconciliation of Adjusted EBITDA to Net Income under GAAP

6 Business Strategy Refining¹ Asphalt Operational Focus Maintain focus on safety and reliability Run Big Spring at maximum capacity Run Krotz Springs at maximum capacity (using 30,000 bpd of WTI) to leverage recent capital improvements Improve crude flexibility in our CA refineries via the ability to receive advantaged crude by rail Maintain operating expense leadership Optimize asphalt production and 3 rd party purchases Leverage existing distribution network Commercial Focus Optimize crude slate to take advantage of regional pricing dislocations Optimize refined product slate to take advantage of distillate production capacity and strong margin environment Maintain capital discipline and continued investments in high return projects Enhance branded wholesale business Focus in maintaining our market share in premium, specialty asphalts products (Emulsions, Polymer Modified Asphalts ( PMA ) and Ground Tire Rubber ( GTR ) blends) Optimize Zero-Pen shipments to the West Coast Retail Continue improvement of operations through Clean TEAM efforts: remodel interior and exterior retail sites and selectively increase store count Increase fuels sold under ALON brand Increase sales of high margin food products and inventory turns Expand and grow the retail locations in target markets Optimize pricing 1 Refining includes Big Spring and Wholesale Marketing, Krotz Springs and the California complex

7 Alon USA Strategic Advantages Strategically Located Refineries with Advantageous Sources of Crude Supply Significant Exposure to High Margin Distillates Physically Integrated Retail and Wholesale Network Diversified Operations Provide Stability High Quality Assets with Low Operating Costs Leading Blended and Modified Asphalt Producer Strong Liquidity Position and Flexibility provided by Supply & Off-take Agreements at each refinery Experienced Management Team - 7-7

8 Strategically Located Assets Refinery Exchange Terminal Alon USA Terminal Third-Party Terminal Asphalt Terminal Portland Richmond Beach Washington Willbridge Oregon Refinery Capacity (bpd) Nelson Complexity Big Spring 70, Krotz Springs 74, California 70,000 TBD Wright JV Asphalt Terminal Alon Pipelines Third Party Pipelines Nevada Key Retail Cities Fernley Elk Grove California Mojave Paramount/ Long Beach Bakersfield Arizona Bloomfield New Mexico Oklahoma Tulsa Phoenix Tucson Flagstaff Albuquerque El Paso Moriarty Lubbock Wichita Falls Abilene Big Spring Orla Midland / Odessa Duncan DFW Houston Arkansas Louisiana Krotz Springs Empire Texas Corpus Christi Nederland South Marsh Island Loop - 8-8

9 Diversified Operations Provide Stability Three separate refinery complexes provide asset and geographic diversification Five business units (Big Spring and wholesale fuels marketing, Krotz Springs refining, California refining, asphalt marketing and retail) provide business diversification Regional differences in Alon s refining base (Louisiana, Texas and California) provide diversification during price dislocations Asphalt business is typically counter-cyclical to refining environment Retail business provides steady and predictable cash flows LTM March 31, 2013 Gross Margin by Business Unit Total Gross margin: $1,089 million Retail, 13.4% LTM March 31, 2013 Production by Refinery Total Production: 152Mbpd California, 12.1% Asphalt, 3.7% California, 1.3% $1,089 million 152Mbpd Big Spring, 43.7% Krotz Springs, 22.1% Big Spring, 59.6% Krotz Springs, 44.2% - 9-9

10 Flexible Refineries with Low Operating Expenses LTM March 31, 2013 Refinery Operating Expenses ($/bbl) Mid-Continental and Gulf Coast Groups Mid-Continent Peer Group Gulf Coast Peer Group $10.00 $3.57 $4.41 $4.46 $4.80 $5.07 $5.34 $6.34 $6.35 $3.57 $3.94 $4.23 VLO Mid- Continent (1) CVI Coffeyville, KS ALJ Big Spring, WNR El Paso, TX TX HFC Mid- Continent (2) DK Tyler, TX HFC Navajo, NM CVI Wynnewood, OK WNR Four Corners, NM VLO Gulf Coast (3) ALJ Krotz Springs, LA DK El Dorado, AR Source: Derived from public company filings with SEC. Note: Refinery direct expense is a per barrel measurement calculated by dividing direct operating expenses by total throughput volume. (1) VLO Mid-Continent region includes the McKee, Ardmore, and Memphis Refineries. (2) HFC Mid-Continent region includes the El Dorado and Tulsa Refineries. (3) VLO Gulf Coast region includes the Corpus Christi, Port Arthur, St. Charles, Texas City, Aruba, Houston, Three Rivers and Meraux Refineries

11 Crude Differentials Beginning in 2011, WTI related crudes have shown a substantial divergence from historical trends and differentials for LLS and Buena Vista crudes are significantly greater than any time in past 5 years 5 Year Average¹ --$86.00 YTD 2013² ---$94.27 West Texas Sour ("WTS") West Texas Intermediate ("WTI") Buena Vista ("BV") Louisiana Light Sweet ("LLS") WTI - WTS 5 Year Average --$2.99 YTD $11.41 WTI - BV 5 Year Average --$(3.47) YTD $(15.76) LLS - WTI 5 Year Average --$7.25 YTD $20.22 GC321 5 Year Average --$15.35 YTD $28.40 WC3111 (BV) 5 Year Average --$10.56 YTD $11.06 GC 211 (HSD/LLS) 5 Year Average --$8.08 YTD $8.20 ¹ 5 Year Average of 2008 to 2012 ² YTD as of Mar

12 bpd $ / bbl Big Spring Refinery Overview On November 20, 2012 Alon USA Partners, LP ( ALDW ) completed an initial public offering as a variable rate MLP Issued 11.5 million of common units raising $184 million (The public owns an 18.4% limited partner interest in Alon Partners) The Big Spring refinery located in Big Spring, Texas $35.00 $30.00 $25.00 $20.00 $15.00 $10.00 $5.00 Refinery Operating Margin $ ,000 bpd (~26 million bbl/year) sour crude cracking refinery 10.8 Nelson Complexity Captive wholesale fuels marketing business supplies substantially all of Alon Retail segments Closest refinery to robust West Texas crude oil production (Permian Basin), which provides a significant crude cost advantage Additional benefit from running ~76% West Texas Sour ( WTS ), which traded at an average discount to West Texas Intermediate ( WTI ) of $11.41/bbl for the three months ended March 31, 2013 Product price advantage based on favorable location Gulf Coast refiners pay ~$2.50/bbl to ship light products to our region Majority of the units have been rebuilt at Big Spring refinery post February 2008 fire Since 2008, the Company invested ~$500 million to rebuild equipment and make other refinery improvements Entered into a Supply and Off-take Agreement with J. Aron in March 2011 $ ,000 70,000 60,000 50,000 40,000 30,000 20,000 10, % 80% 60% 40% 20% 0% Q ,028 5% 15% 80% Refinery Throughput 63,614 80% 76% % 16% 68,946 3% 21% 59,476 5% 19% 76% Q 2013 WTS crude WTI crude Blendstocks Refinery Product Yield 99.1% 99.8% 99.8% 99.4% 11% 12% 11% 11% 6% 7% 6% 6% 32% 32% 32% 32% 50% 49% 50% 50% Q 2013 Gasoline Diesel/jet Asphalt Other * Lower throughput is due to reformer regeneration and maintenance work *

13 Big Spring is in the Heart of the Permian Basin Big Spring sources substantially all of its crude oil locally from the Permian Basin Permian Basin Activity Overview 1 The Permian Basin is experiencing a drilling and production renaissance, with 482 active drilling rigs Crude Oil Production 2 Year Oil Produced (million bbl.) Lack of logistics infrastructure limits crude oil transport to the Gulf Coast, creating attractive opportunities for Big Spring to purchase at a significant discount Active Drilling Rigs Existing pipelines Proposed/under construction ¹ Baker Hughes, RigData, U.S. Energy Information Administration. Rig data as of November 2, ² Production Data obtained from RRC Production Data Query on March 27,

14 bpd $ / bbl Krotz Springs Refinery Overview 74,000 bpd sweet crude residual cracking refinery 8.3 Nelson Complexity Historically processed a mix LLS and HLS type crudes. Access to 30,000 bpd of WTI Midland priced crude through the AMDEL pipeline and using our existing railcars to ship and additional 6,000 bpd of WTI Midland priced crude oil to a railcar unloading terminal facility at Krotz Springs High liquid recovery of over 101% One of the newest refineries in the U.S. (1980)¹ with industry low operating costs Access to domestic and foreign crude markets through the Louisiana Offshore Oil Port ( LOOP ) High distillate yield capability of ~40% $14.00 $12.00 $10.00 $8.00 $6.00 $4.00 $2.00 $ ,000 55,000 35,000 15,000-5, % 80% 60% Refinery Operating Margin $13.14 $8.30 $3.05 $ Q 2013 Refinery Throughput 59,720 67,877 1% 58,439 1% 3% 39,244 2% 69% 54% 99% 98% 30% 43% Q 2013 WTI crude Gulf Coast sweet crude Blendstocks Refinery Product Yield 100.4% 100.6% 101.2% 102.3% 12% 13% 16% 18% 48% 46% 42% 38% * 40% 20% 40% 42% 43% 46% ¹ Source: US Energy Information Administration. 0% Q 2013 Gasoline Diesel/Jet Other * Lower throughput is due to reformer regeneration and maintenance work

15 California Refineries Overview Integrated complex consisting of the Paramount, Long Beach and Bakersfield refineries with a throughput capacity of 70,000 bpd Operates in one of the largest distillate markets in the U.S Since 2011 heavy West Coast crude pricing increased relative to mid-continent based crudes. This has primarily been driven by the rapid increase in production of U.S. domestic crudes in the mid-continent region, for which logistics are not readily available to transport to major refining regions on the U.S. Gulf Coast The California complex used heavy crude to produce approximately 30% asphalt whose demand is at cyclical lows. Asphalt demand is expected to rise with the passing of the new federal highway spending bill, and revival of the housing market which is at its strongest since 2006 Operated at low throughput rates in due to high crude pricing and weak asphalt demand In the 4 th quarter of 2012, ceased operations for interim period while reconfiguring crude mix from heavy to light crudes which will allow the system to utilize its high distillate production capability (~44%) and reduce lower value heavy product (primarily asphalt) yields In the interim period, significantly reduced operating expenses in the California system Submitted permit applications to allow shipment via rail of light mid-continent crudes such as Bakken, WTI to replace heavy West Coast crudes (expect to receive permits and complete infrastructure build out during the 4 th quarter of 2013) In the longer term, the California system is expected to benefit from a significant increase in light sweet Monterey shale oil production (the EIA estimates the Monterey shale has 20 billion barrels of recoverable resources representing 64% of the total recoverable shale oil in the lower 48 states)

16 Leading Asphalt Supplier Operates 11 asphalt terminals in the western U.S. Operations include: 50% ownership in Paramount Nevada Asphalt Company the largest GTR/PMA plant in Nevada, and 50% ownership in Wright Asphalt Products Company which brings exclusive rights to Neste s GTR technology Second largest supplier of asphalt in California and Texas Supplies advanced asphalt products such as rubberized asphalt, PMA and GTR Increasingly specified by government agencies for use in highway projects in Texas Strategic access to the California asphalt market California and Texas are the largest asphalt consuming states in the U.S. California highway budget for asphalt is larger than in previous years Paramount / Long Beach Legend Willbridge (Portland) Elk Grove (Sacramento) Refineries Richmond Beach (Seattle) Fernley (Reno) Bakersfield Mojave Asphalt terminals Flagstaff Phoenix Wright asphalt 3 rd party throughput Among U.S. Refiners: #7 asphalt supplier in U.S. #2 asphalt supplier West of Mississippi #1 asphalt supplier in PADD V states #1 Ground Tire Rubber asphalt marketer in U.S. #1 purchaser of polymers for paving asphalt products Tulsa Big Spring Houston Corpus Christi Krotz Springs ¹ Source: Internal Alon Asphalt marketing analysis and market studies

17 Summary Financial Performance - Asphalt Q 2013 WTI $/bbl. $79.41 $95.07 $94.14 $ Blended Asphalt Sales (000 s tons) Non-Blended Asphalt Sales (000 s tons) Total Asphalt Sales (000 s tons) 863 1, Sales Price/ton (blended) $ 477 $ 541 $ 590 $ 540 Sales Price/ton (non blended) $ 326 $ 327 $ 372 $ 392 Asphalt Margin/ton $ 51 $ 27 $ 43 $ 62 Polymer Modified Asphlat (000 s tons) Ground Tire Rubber Asphalt (000 s tons) Emulsions (000 s tons) Total Speciality Asphalt (000 s tons) Speciality Asphalt % of total sales volumes 25% 17% 26% 11% Speciality Asphalt Sales price $/ton $ 569 $ 569 $ 611 $ 483 Speciality Asphalt Realizations % of WTI 128% 107% 116% 92% Paving Grade Asphalt Realizations % of WTI 99% 93% 101% 95%

18 Physically Integrated Retail Network Retail Asset Overview Alon Energy s retail business unit is the largest 7-Eleven licensee in the U.S. with 298 stores (~50% fee owned) in Central and West Texas and New Mexico The retail business unit has nearly doubled its store count since 2006 Recently completed re-branding effort from FINA branded gasoline stations to ALON brand Location Total Big Spring, Texas 8 Wichita Falls, Texas 11 Waco, Texas 11 Midland, Texas 17 Lubbock, Texas 21 Albuquerque, New Mexico 23 Odessa, Texas 35 Abilene, Texas 41 El Paso, Texas 83 Other locations in Central and West Texas 48 Total Stores

19 Attractive Retail Store Economics Retail Fuel Sold Merchandise Sales $0.25 $0.20 $320 $310 $ % 33.0% 32.0% 31.0% LTM 1Q 2013 Gallons Sold (in millions) Fuel Margin ($ per gallon) $0.15 $0.10 $0.05 $0.00 $290 $280 $270 $ % 29.0% % 27.0% 26.0% 25.0% LTM 1Q 2013 Merch Sales (in $ millions) Merch Gross Profit % of Revenue

20 Initial Public Offering - Alon USA Partners, LP (NYSE: ALDW) Completed initial public offering of Big Spring and Wholesale Marketing via a Master Limited Partnership structure under the ticker ALDW on the NYSE on November 20, Initial issue of 18.4% of common units to public at offer price of $16.0/unit raising $184 million of gross proceeds - Market value of equity at IPO - $1.0 billion - Net debt at IPO: $305 million - Enterprise value at IPO: $1.3 billion ALJ & ALDW Stock Price (as of May 7, 2013) $35 $30 $25 $20 $15 $10 $5 Jan-12 Feb-12 Mar-12 Apr-12 May-12 Jun-12 Jul-12 Aug-12 Sep-12 Oct-12 Nov-12 Dec-12 Jan-13 Feb-13 Mar-13 Apr-13 May-13 ALJ Closing Price ALDW Closing Price

21 $ millions Debt Reduction 1, Net Debt 1Q-12 2Q-12 3Q-12 4Q-12 1Q-13 In the 4 th quarter of 2012 we reduced net debt by $282 million of which: $171 million from the proceeds of IPO of ALDW, and Additional reduction in debt with cash flows from operations In the 1 st quarter of 2013 we further reduced by net debt by $137 million Total net debt reduction over 12 months period ending March 31, 2013 was $530 million (in $ millions) 1Q-12 2Q-12 3Q-12 4Q-12 1Q-13 Total Debt Net Debt

22 II. Financial Summary

23 Summary Financial Performance - Refining Q 2013 Pricing Statistics: GC $8.22 $23.37 $27.43 $ GC (HSD/LLS) $5.26 $7.00 $11.29 $ 8.20 WC (Buena Vista)* $8.34 $9.20 $13.08 $ Operating Statistics: Big Spring Refinery: Throughput (bpd) 49,028 63,614 68,946 59,476 Operating margin/bbl. $7.64 $20.89 $23.50 $ Operating expense/bbl. $5.05 $4.23 $4.00 $ 5.68 California Refinery: Throughput (bpd) 17,596 22,815 17,877 N/A Operating margin/bbl. $1.08 ($1.31) $2.36 N/A Operating expense/bbl. $7.73 $7.32 $12.59 N/A Krotz Springs Refinery: Throughput (bpd) 39,244 59,720 67,877 58,439 Operating margin/bbl. $2.24 $3.05 $8.30 $13.14 Operating expense/bbl. $4.36 $3.67 $3.85 $4.42 *Note: In Q the WC (Buena Vista) benchmark was changed to WC (Buena Vista)

24 ($ / bbl.) Historical Crack Spreads $35.00 $30.00 $28.76 $27.43 $28.40 $25.00 $20.89 $23.37 $23.50 $20.00 $15.00 $10.00 $5.00 $0.00 ($5.00) $7.64 $13.08 $13.14 $9.20 $11.29 $11.06 $8.34 $8.22 $8.30 $8.20 $5.26 $7.00 $2.24 $3.05 $1.08 $2.36 ($1.31) Q 2013 Big Spring Operating Margin Krotz Springs Operating Margin California Operating Margin Historical Gulf Coast 321 Crack Spread Historical Gulf Coast 211 Crack Spread (LLS) Historical West Coast 3111 Crack Spread (BV)

25 Historical Capex Capital and Turnaround Expenditures by Asset ($millions) $140 $120 $100 $80 $60 $40 $20 $0 $122 $3 $17 $2 $9 $14 $56 $60 $2 $30 $2 $5 $16 $18 $10 $21 $2 $105 $25 $32 $23 $2 $4 $1 $1 $ Q 2013 Big Spring Krotz Springs California Retail Asphalt Other $14 Capital and Turnaround Expenditures by Type ($millions) $140 $120 $100 $80 $60 $40 $20 $0 $60 $122 $82 $21 $53 $26 $31 $13 $10 $ Q 2013 Chemcat & Turnaround Regulatory & Sustaining Growth 25 $105 $15 $14 $2 $6 $5

26 Appendix

27 Adjusted EBITDA Reconciliation (in $ 000's) Q 2013 Net Income (122,932) 42,507 79,134 54,184 Non-controlling interest in income (loss) of subsidiaries (9,641) 1,241 11,463 19,467 Income tax expense (benefit) (90,512) 18,918 49,884 30,590 Interest expense 94,939 88, ,572 21,292 Depreciation and Amortization 102, , ,929 31,163 Gain on bargain purchase (17,480) (Gain) loss on disposition of assets (945) (729) 2,309 (18) Unrealized (gains) losses on commodity swaps - (31,936) 31,936 - (Gain) loss on heating oil call option crack spread contracts - 36,280 7,297 - Adjusted EBITDA (44,475) 268, , ,678 Note: Adjusted EBITDA per press release