Alon USA Energy — Merger or Acquisition (March 2017)
33 slides from Alon USA Energy's merger presentation, Mar 27, 2017
Slide 1: March 2017 Delek US Holdings Inc. Investor Presentation
March 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 Attractive Drilling Economics Support Growth
Permian Basin Attractive Drilling Economics Support Growth Production continued to grow through the downturn in crude oil prices; Improved Efficiencies 6 Crude Oil Production Grew Despite Rig Decline (2) 1) Deutsche Bank Research, Permian Basin: “You are still the one” 11/28/17, breakeven based on f
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 March 17, 2017. 2) Differential includes contango of $0.40/bbl (2012); contango of $0.07/bbl (2013); backwardation of $0.77/bbl (20
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 8 Chart Source: Simmons & Company research, March 2017. Provided for illustrative purposes to show potential balance. Based on exit rate Permian production. Actu
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: Delek US Refinery System has Benefited from Active Management
Reduced capital expenditure needs following investment cycle; Focus on reliability and cost Delek US Refinery System has Benefited from Active Management 10 Capital Spending Management Refineries improved through large capital investment cycle Expanded capacity and improved flexibility in the sy
Slide 11: $- $2 $4 $6 $8 $10 $12 V L O /N o rth A
$- $2 $4 $6 $8 $10 $12 V L O /N o rth A tl a n tic (Q u e b e c, U K ) V L O /M id -C o n tin e n t (O K , T N, T X ) P A R R /H a wai i V L O /G u lf C o a s t (L A , T X ) P S X /G u lf C o a s t D e lek /T yl e r, T X D e lek /E l D o ra d o , A R A lo n /B ig S p rin g , T X W N R /E l P a s o ,
Slide 12: 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 12 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 13: Future Potential Dropdowns to DKL Benefit Delek US
13 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 14: DKL Joint Venture Pipeline Projects
DKL Joint Venture Pipeline Projects 14 Caddo Pipeline ■ DKL (50%)/Plains (50%) ■ Est. Cost: $123 million (1) ■ Capacity: 80,000 bpd ■ Length: 80 miles ■ Completed: Jan. 2017 ■ Provides additional logistics support to El Dorado refinery with third crude supply source Rio Pipeline (Delaware Basin) ■ R
Slide 15: DKL Increased Distribution with Conservative Coverage and Leverage
1.39x 1.32x 1.35x 1.30x 1.61x 2.02x 1.42x 1.67x 1.23x 1.47x 1.50x 1.17x 1.19x 1.31x 0.99x 0.90x 1Q 13 2Q 13 3Q 13 4Q 13 1Q 14 2Q 14 3Q 14 4Q 14 1Q 15 2Q 15 3Q 15 4Q15 1Q16 2Q16 3Q16 4Q16 DKL Increased Distribution with Conservative Coverage and Leverage 15 Distributable Cash Flow Coverage Ratio (2)(
Slide 16: 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 16 Alon Refinery Legend: Big Spring Krotz Springs Branded license agreement and payment card location Branded company-operated and distribut
Slide 17: Robust Synergy Opportunity from DK/ALJ Combination
Robust Synergy Opportunity from DK/ALJ Combination 17 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 18: Financial Highlights
At December 31, 2016 Cash of $689.2 million; Debt of $832.9 million Includes $392.6 million of debt at Delek Logistics (DKL) Excluding DKL, Delek US’ net cash position was approximately $248.8 million Closed sale of retail related assets for $535.0 million on Nov. 14, 2016 Plus $17.9 mil
Slide 19: Financial Strength and Flexibility for the Combined Company
Financial Strength and Flexibility for the Combined Company Benefits from Delek’s financial position 19 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 20: Government Policy Update
Initiatives from new administration may benefit refining industry Government Policy Update 20 Ethanol RINs Prices (1) 1) Ethanol RINs prices from OPIS, March 23, 2017 $0.00 $0.20 $0.40 $0.60 $0.80 $1.00 4Q 1 2 1Q 1 3 2Q 1 3 3Q 1 3 4Q 1 3 1Q 1 4 2Q 1 4 3Q 1 4 4Q 1 4 1Q 1 5 2Q 1 5 3Q 1 5 4Q 1 5 1Q 1 6
Slide 21: Questions and Answers
21 Complementary Logistics Systems Significant Organic Growth / Margin Improvement Opportunities Focus on Shareholder Returns Strong Balance Sheet Strategically Positioned Refining Platform Questions and Answers
Slide 22: Additional Information
22 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 23: Appendix
Appendix
Slide 24: Non GAAP Reconciliations of Potential Dropdown EBITDA
Non GAAP Reconciliations of Potential Dropdown EBITDA (1) 24 (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 25: 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 26: Summary Organization Structure
26 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 March
Slide 27: Tyler Refinery Overview
54% 55% 54% 55% 39% 39% 40% 40% 7% 6% 6% 5% 0% 20% 40% 60% 80% 100% 120% 2013 2014 2015 2016 Gasoline Diesel Petro/Other 62,304 65,523 60,704 70,773 Tyler Refinery Overview 27 Overview Niche market generally priced above Gulf Coast; supported by Delek Logistics' terminals Crude slate consists
Slide 28: El Dorado Refinery Overview
80,000 bpd refinery with crude slate flexibility to process light and medium gravity crudes El Dorado Refinery Overview 28 1) 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 Mexic
Slide 29: -$30 -$20 -$10 $0 $10 $20 $30 $40 $50 J a n -1 F
-$30 -$20 -$10 $0 $10 $20 $30 $40 $50 J a n -1 0 F e b -1 0 M a r- 1 0 A pr -1 0 M a 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 No v -1 0 De c -1 0 J a n -1 1 F e b -1 1 M a r- 1 1 A pr -1 1 M a 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 No v -1 1 De c -1 1 J a
Slide 30: 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 31: DKL: Reconciliation of Cash Available for Distribution
31 DKL: Reconciliation of Cash Available for Distribution (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 32: DKL: Income Statement and Non-GAAP EBITDA Reconciliation
DKL: Income Statement and Non-GAAP EBITDA Reconciliation 32 (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 33: Investor Relations Contact
Investor Relations Contact: Assi Ginzburg Keith Johnson Chief Financial Officer Vice President of Investor Relations 615-435-1452 615-435-1366