Hf Sinclair Corporation · NYSE:DINO
Hf Sinclair — HollyFrontier — Investor Presentation (January 2022)
34 slides from Hf Sinclair's investor presentation, January 2022
Slide 1: HollyFrontier Investor Presentation January 2022
HOLLYFRONTIER INVESTOR PRESENTATION January 2022
Slide 2: Disclosure Statement
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. Words such as “anticipate,” “project,” “expect,” “plan,” “goal,” “forecast,” “st
Slide 3: Executive Summary
Executive Summary Positioned for Value Creation Across all Segments REFINING MIDSTREAM SPECIALTY LUBRICANTS RENEWABLES Inland merchant refiner Operate crude and product Integrated specialty Construction of 9,000 BPD pipelines, loading racks, lubricants producer with Renewable Diesel Unit at
Slide 4: HollyFrontier Asset Footprint
HollyFrontier Asset Footprint Note: Cheyenne Renewable Diesel facility completed Q4 2021. Artesia Renewable Diesel facility expected to be completed in Q2 2022. 4
Slide 5: Proximity to North American Crude Production
Proximity to North American Crude Production Laid in Crude Advantage 2020 Average Crude Slate Beneficiary of inland coastal crude discount across entire refining system 8% 4% 100% of HFC’s purchased crude barrels are “WTI” price based 11% Sweet Refinery location and configuration enables a 48%
Slide 6: High Value Premium Product Markets
High Value Premium Product Markets Product Pricing vs. Gulf Coast Regional Gasoline Pricing vs Gulf Coast1 $/bbl 2015 2016 2017 2018 2019 2020 Average $25 $20 $15 $11.17 $12.72 $11.89 $10 $6.94 $1.57 $1.68 $5 $- Group 3 vs GC Chicago vs GC Denver vs GC Phoenix vs GC Salt Lake vs GC Las Vegas vs GC $
Slide 7: Refining Segment Earnings Power
Refining Segment Earnings Power1 HFC Consolidated 3-2-1 Index Mid-Cycle Refining EBITDA $/Barrel 21.17 21.26 Gulf Coast 3-2-1 Crack $10.00 20.62 $20 Brent/WTI Spread $4.00 19.14 Product Transportation to HFC $4.00 Markets HFC Index $18.00 Capture Rate 70% $15 14.44 Realized Gross Margin Per Barrel $
Slide 8: Puget Sound Refinery Acquisition
Puget Sound Refinery Acquisition Transaction Overview Puget Sound Refinery (Anacortes, WA) Aggregate cash consideration of $627 million1 $350 million cash purchase price plus approximately $277 million of inventory and closing adjustments1 Funded with one year suspension of quarterly dividend
Slide 9: Puget Sound Refinery Acquisition: Assets Acquired
Puget Sound Refinery Acquisition Assets Acquired The Puget Sound Refinery (“PSR”) is a large, complex refinery with Marine Movement catalytic cracking and delayed coking units and a history of strong Free (ANS crude) Cash Flow1 generation Hardisty • ~149 mbpd nameplate capacity2 Trans Mountain Pip
Slide 10: HollyFrontier Renewables
HollyFrontier Renewables Renewables Business Profile Strategic Rationale Expected capacity to produce over 200 million Plan to expand the renewables segment to gallons per year of renewable diesel with become a meaningful part of HollyFrontier’s feedstock flexibility cash flow and diversify from t
Slide 11: HollyFrontier Renewable Diesel
HollyFrontier Renewable Diesel HollyFrontier is expected to produce over 200 million gallons per year of renewable diesel Renewable Diesel Defined Renewable diesel is a cleaner burning fuel with over 50% lower greenhouse (GHG) emissions than conventional diesel Renewable diesel is not biodiesel
Slide 12: Artesia & Cheyenne Renewable Diesel Units
12 Artesia & Cheyenne Renewable Diesel Units Artesia Renewable Diesel Unit Cheyenne Renewable Diesel Unit Expected capacity to produce ~120 million gallons Expected capacity to produce ~90 million gallons per year of renewable diesel per year of renewable diesel HFC to construct greenfield Renewab
Slide 13: Pre-Treatment Unit
Pre-Treatment Unit Feedstock Flexibility Pre-treatment capacity allows our renewable diesel plants to process a variety of feedstock Project Details HFC to construct pre-treatment unit to provide flexibility and upgrade of feedstock Designed to treat degummed “unrefined” soybean oil, bleachable
Slide 14: Holly Energy Partners Business Profile
Holly Energy Partners Business Profile Operate a system of petroleum product and crude pipelines, storage tanks, distribution terminals and loading rack facilities located near HFC’s refining assets in high growth markets Revenues are nearly 100% fee-based with de minimis commodity risk Customer
Slide 15: Ownership Structure
Ownership Structure Eliminated IDRs in 2017 to Simplify Structure HOLLYFRONTIER CORPORATION (HFC) 100% Interest GENERAL PARTNER (GP) HOLLY LOGISTIC SERVICES, L.L.C. PUBLIC Non-economic GP Interest 59.6mm HEP units1 57% LP Interest $983M Value2 45.8mm HEP units1 43% LP Interest $755M Value2 HOLLY ENE
Slide 16: HEP Historical Growth
HEP Historical Growth Holly Tulsa 50% JV with Acquired Holly Corporation dropdown of Crude gathering Plains for remaining and Frontier Oil Holly intermediate loading rack system Frontier interests in SLC / Corporation feedstock pipeline (Tulsa West) expansion pipeline Frontier pipelines complete mer
Slide 17: HEP Avenues for Growth
HEP Avenues for Growth ORGANIC EXTERNAL TRANSACTIONS DROPDOWNS FROM HFC Leverage HEP’s existing Pursue logistics assets in HEP’s Partnering with HFC to build footprint to capitalize on current geographic region and/or acquire new assets / commercial opportunities businesses Replace incumbent
Slide 18: Cushing Connect Joint Venture
Cushing Connect Joint Venture Asset Description Strategic Rationale HEP formed a 50/50 JV with Plains All American Pipeline, L.P. (PAA) Generates HEP growth while providing long term control of a consisting of: strategic asset • New build, 50-mile, 160 KBPD common carrier crude pipeline Insources HF
Slide 19: HF Lubricants & Specialty Products: Integrated Model
HF Lubricants & Specialty Products Integrated Model from Crude to Finished Products • Rack Back captures the value between feedstock cost and base oil market prices (elastic index pricing) • Rack Forward captures the value between base oil market prices and product sales revenues from customers (ine
Slide 20: HF Lubricants & Specialty Products: Global End Markets
HF Lubricants & Specialty Products Our Product Portfolio Serves a Variety of Global End Markets Adhesives Agriculture Construction Automotive Packaging Food & Beverage Forestry & Saw Mill Energy Manufacturing Health & Beauty Heavy Duty Mining Transportation Pharmaceutical Plastic Processors Railroad
Slide 21: Diverse Suite of Products Supplied to Major Brands
HF Lubricants & Specialty Products Diverse Suite of Products Supplied to Major Industrial and Consumer Brands Brands • Finished Lubricants & • Finished Lubricants & • Finished Products & • Specialty Products Greases Greases Greases • Waxes Product • Specialty Products • Waxes • Base Oils Type • Waxe
Slide 22: Opportunity Across the Value Chain
Opportunity Across the Value Chain Upgrade Existing Base Oils into Finished Products Converting one barrel of Base Oil sales into Finished Product sales results in an average margin uplift of ~$50/bbl Margin Value $/bbl 2020 Product Slate by Volume Finished Lubricants & Greases Coproducts Base Oils
Slide 23: Rack Forward Multiple Up-Lift
Rack Forward Multiple Up-Lift Segment(s) Multiple Margin Profile Peer Group Integrateds: BP, CVX, RDS, XOM Refining & 5-7x Variable Rack Back Refiners: CLMT, CVI, DK, MPC, PBF, PSX, VLO MLP 6-9x Stable DKL, MPLX, PBFX, PSXP Rack Forward 10-13x Stable FPE GY, IOSP, KWR, NEU, VVV Note: Multiple repres
Slide 24: Mid-Cycle Rack Forward EBITDA
HF Lubricants & Specialty Products Mid-Cycle Rack Forward EBITDA Mid-Cycle Rack Forward Adjusted EBITDA ($ in millions) $265 RF EBITDA Margin 11-16% Annual SG&A $190 - $200MM Target Multiple 11x Annual DD&A $80 - $90MM Upside with Organic Growth and M&A Enterprise Value ($ in millions) $2,91
Slide 25: Environmental, Social, and Governance (ESG)
Environmental, Social, and Governance (ESG) Environmental Social Governance Reduction in GHG emissions Annual Sustainability Report highlighting Board leadership provides significant ESG efforts1 industry expertise, alongside diverse • Significant investment in 2 Renewable business, financial and EH
Slide 26: Appendix
APPENDIX
Slide 27: 2022 Capex Guidance
2022 Capex Guidance Refining 2022 Expected - $250 – $270 million Capex Allocation Lubricants & Specialties - $45– $60 million HEP 9% Renewables Turnarounds & Refining 36% - $225 – $300 million Catalysts 12% Turnarounds & Catalysts - $70 – $100 million HEP Renewables Lubricants & - $55 – $8
Slide 28: Strong Historical Track Record of Cash Returns
Strong Historical Track Record of Cash Returns • Strong historical track record in returning excess cash to shareholders Regular quarterly dividend of $0.35 per common share suspended for one year effective with the dividend to be declared in Q2 2021 to help fund Puget Sound Refinery acquisition1
Slide 29: HollyFrontier Capital Structure
HollyFrontier Capital Structure HFC Consolidated Capital Structure HFC Standalone Capital Structure As of September 30, 2021 (US$ millions) As of September 30, 2021 (US$ millions) Cash and cash equivalents $1,482 Cash and Short Term Marketable Securities $1,469 HOLLYFRONTIER CORPORATION HFC LONG TER
Slide 30: HollyFrontier Credit Profile
HollyFrontier Credit Profile HFC Standalone Debt Profile Investment Grade Rating 30% - S&P BBB- 25% - Moody’s Baa3 20% 15% - Fitch BBB- 10% $1.5 billion cash as of 9/30/21 5% 0% $1.75 billion outstanding debt -5% as of 9/30/21 2016 2017 2018 2019 2020 - excludes non-recourse HEP debt Standalon
Slide 31: Definitions
Definitions BPD: the number of barrels per calendar day of crude oil or petroleum products. Free Cash Flow: Calculated by taking operating cash flow and subtracting capital expenditures. Blenders Tax Credit (BTC): Federal tax credit where qualified biodiesel blenders are eligible for an income tax c
Slide 32: HollyFrontier Index
HollyFrontier Index Note: Q4 2021 Crude Charge Guidance includes expected volumes from the Puget Sound Refinery in November and December. 32 Please see p. 33 for disclaimer and www.HollyFrontier.com/investor-relations for32 most current version.
Slide 33: HFC Index Disclosure
HFC Index Disclosure HFC's actual pricing and margins may differ from benchmark indicators due to many factors. For example: • Crude Slate differences – HFC runs a wide variety of crude oils across its refining system and crude slate may vary quarter to quarter. • Product Yield differences – HFC’s p
Slide 34: HollyFrontier Corporation
HollyFrontier Corporation (NYSE: HFC) 2828 N. Harwood, Suite 1300 Dallas, Texas 75201 (214) 954-6510 www.hollyfrontier.com Craig Biery | Vice President, Investor Relations [email protected] 214-954-6510 Trey Schonter | Investor Relations [email protected] 214-954-6510