paramount petroleum corporation and edgington...
Post on 16-Jun-2018
225 Views
Preview:
TRANSCRIPT
CONFIDENTIAL
0
Paramount Petroleum CorporationParamount Petroleum Corporationand Edgington Oil Companyand Edgington Oil Company
Announcement of AcquisitionsAnnouncement of Acquisitions
May 1, 2006May 1, 2006
1
Forward-Looking Statements
Any statements contained in or made in this presentation that are not statements of historical fact are forward-looking statements. Forward-looking statements reflect 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. Some of these expectations may be based upon assumptions or judgments that prove to be incorrect. In addition, Alon’s business and operations involve numerous risks and uncertainties, many of which are beyond its control, which could result in these expectations not being realized or otherwise materially affect Alon’s financial condition, results of operation and cash flows. Additional information regarding these and other risks is contained in Alon’s filings with the Securities and Exchange Commission.
2
Transaction Summary
Alon has executed purchase agreements to acquire the Paramount Petroleum Corporation and the Edgington Oil Company in two separate transactions for a combined amount of approximately $459 million plus inventories in EdgingtonParamount Petroleum Corporation
$307 million for all equity interests in CompanyAssuming approximately $100 million of debt, net of cashIncluding estimated $105 million of working capital (1) at closing
Paramount’s primary assets are a hydroskimming oil refinery in California; a topping refinery in Oregon; and an asphalt marketing business in the western United States
54,000 bpd refinery in Paramount, CA– 6.4 complexity12,000 bpd refinery and terminal in Willbridge, OR7 additional asphalt terminals located in California, Arizona, Nevada and Washington50% interest in Wright Asphalt - A proprietary ground tire rubber asphalt business
Edgington Oil Company$52 million for all assets of the company plus the negotiated value of all ending inventoriesEdgington’s primary asset is a heavy crude topping refinery located in California
24,000 bpd capacity
(1) Working capital obligations defined as (adjusted accounts receivable + inventory + prepaid expenses and others) less (trade payables + current accrued liabilities)
3
Transaction SummaryAcquisition will be financed with a combination of cash on hand and proceeds from a new credit facility
Paramount
Forfeiture of $10 million for qualified termination prior to June 30th
Increased to $25 million if termination date is automatically extended to August 31, 2006, to obtain regulatory approval
No Material Adverse Effect (subject to purchase price adjustment for an MAE less than $40 million)Edgington
Forfeiture of $5 million for qualified termination prior to June 1st (or July 1, 2006 if regulatory approval not yet obtained)
The following provisions relate to both transactions:
Limited conditions to closingHSR clearanceNo financing out
Targeted closing in late May 2006
Immediately accretive to earnings and cash flow
4
Strategic RationaleParamount and Edgington assets are a great fit with Alon
Enhanced geographic diversity adds exposure to PADD V refining marginsIncrease Alon’s asphalt integrationSignificantly increase retail asphalt opportunities
The assets provide profit improvement opportunitiesAlon has proven track record of increasing refining reliability, capacity and yields– Reformer and Bensat units installed in 2005 at the Paramount refineryOptimize and save on asphalt blendstock purchases and transportation costsExpense and overhead savings– Reduction of refinery operating expenses (i.e., Big Spring)– Elimination of duplicative corporate functionsBest practices transfer between companiesPotential to add additional units in future to expand fuels production
Geographic proximity allows both refineries to be operated as oneThe two refineries are approximately 2 miles apart and will be operated with one LP model utilizing the existing owned pipeline and right of wayUnlocks the operating efficiencies in purchasing, supply chain, operations and back office
5
A Great Fit With Alon
Alon Product TerminalRefinery
Third-Party PipelinesKey Retail Cities
Third-Party TerminalExchange Terminal
Alon PipelinesAlon Pipelines (unfinished)HEP Pipelines
Asphalt Terminal
California
Arizona
Texas
Oklahoma
Arkansas
Louisiana
Bakersfield
Phoenix
Tucson
El Paso
Nederland
Duncan
AbileneDallas / Fort Worth
(Southlake)
LubbockWichita Falls
Big Spring
Albuquerque
Bloomfield
Orla
Moriarty
Midland / Odessa
Kinder-Morgan
3rd Party PL
Trust
Magellan
Carswell
River
Holly
New Mexico
Nevada
Oregon
Washington
Paramount/Long Beach
Portland
Willbridge
Richmond Beach
Elk Grove
Flagstaff
FredoniaMojave
Fernley
Wright JV Asphalt Terminal
Tulsa
Corpus Christi
Houston
Kinder-Morgan
6
Paramount Refinery Overview
54,000 bpd refinery
6.4 complexity
60 fee acres
1,800,000 barrels total storage
105 miles owned and leased crude and product pipelines
Major products:
16% CARBOB Gasoline
16% CARB / Ultra Low Sulfur Diesel
10% Jet Fuel
30% Asphalt
25% Vacuum Gas Oil
7
Paramount Refinery – Major Process UnitsUnit Capacity (bpd)
Two crude / vacuum trains 54,000
Reformer 12,000
Hydrotreaters 32,000
Bensat / Isomerization 4,000
Jet Treater 8,000
LSR Merox Treater 4,000
Sulfur Recovery Unit – 40 tons/day
7.5 megawatt gas-fired cogeneration plant
8
Edgington Long Beach Refinery
24,000 bpd refinery
2.8 complexity
18 fee acres
Major products:
10% Naptha
14% Untreated Diesel
12% Jet Fuel
42% Asphalt
22% Vacuum Gas Oil
Unit Capacity (bpd)
Two crude trains 24,000
Two vacuum towers 12,000
Jet treater 2,500
9
Willbridge Topping Refinery and Terminal in Portland Oregon
12,000 bpd heavy oil refinery1.3 complexity1,032,000 barrels total storageSales: 250,000 tons per year42 acres14 rail unloading spots (spring 2006)Emulsion manufacturing plantRoofing air blowing plantWater access
Major products %Paving asphalt 50Roofing asphalt 15Vacuum gas oil 30 Naphtha 5
10
Paramount Asphalt Marketing Business
Over 2 million tons of asphalt sales per year
Asphalt Terminals:
Emulsions /Cutbacks
Paramount Terminal 1,800 √ √ √
Mojave240
√ √Elk Grove 300 √ √ √Phoenix 160 √ √ √Flagstaff 27 √ √Fredonia 60 √ √
Fernley*250
√ √Willbridge 1,032 √ √ √Richmond Beach 1,060 √ √TOTAL 3,129
PRODUCTS
TerminalStorage Mbbls(1)
Conventional Paving
Modified Paving
(1) Storage figures for Willbridge and Richmond Beach include crude oil, fuel oil, and other products.•50% owned by Paramount.
Wright Asphalt: 50% PPC ownership, market through facilities in Houston, CorpusChristi, Big Spring, Phoenix, Tulsa and Portland owned by others.
11
Estimated Financial ContributionKey assumptions
Annual throughput of 48,000 bpd in Paramount refinery
Annual throughput of 10,000 bpd in Long Beach (Edgington)
Realized gross margin based on 2003-2005 pricing environment
Terminals EBITDA of $28 mm
Estimated synergies of $10 - $15 mm per year (longer term opportunities for more)
– Only $5 million currently reflected in estimated financial contribution
($ in millions)Est. Contribution
Paramount Refinery EBITDA $57.0Willbridge Refinery EBITDA $1.0Long Beach (Edgington) EBITDA $14.0Asphalt Marketing $28.0
EBITDA $100.0
Depreciation ($18.0)Net Interest Expense ($35.0)Tax Expense 40% ($19.0)
Net Income to Common $28.0
Add back Depreciation $18.0Deferred Tax Expense ($2.0)
Cash Flow $44.0Fully Diluted Shares 46.8
Incremental Earnings Per Share $0.60Incremental Cash Flow Per Share $0.94
12
Capital Spending Requirements
Ongoing capital need of approximately $10 mm per year
Other key opportunities to be considered:
Hydrocracker
Modified asphalt plant expansion
Rack equipment / activities for finished fuels
LPG processing
13
Summary
Logical acquisitions
Strategic
Synergistic
Accretive
Attractive prices
Doubles existing refining base (70,000 bpd to 160,000 bpd)
Access to West Coast refining margins
Complements Alon’s existing asphalt business
Significant opportunities for future growth and profit improvement
CONFIDENTIAL
14
Appendix
Asphalt Terminals and Wright Asphalt Overview
15
Paramount Asphalt Terminal600,000 barrels asphalt storageSales: 1,000,000 tons per yearAsphalt Oxidation plant – 6,000 bpdEmulsions Plant – 2,300 bpd / Polymer Modified Asphalt Plant – 2,000 bpd14 car rail capacity / 15 truck loading racksProducts:
Roofing Flux, Coatings and SealantsEmulsions and CutbacksPolymer Modified PMA ProductsGround Tire Modified TRMAC patented rubberized asphalt products
ASHTO certified/SHRP laboratory265 car rail fleetEnvironmental arrangements with previous owners
Portland
Fernley(Reno)
Elk Grove(Sacramento)
Mojave
Paramount
Phoenix
Flagstaff
Fredonia
Richmond Beach (Seattle)
PPC Terminals
Refineries
Paramount Petroleum Corporation Asphalt Manufacturing, Marketing and
Distribution
+ Wright Asphalt
+
Big Spring+
+
HoustonBig Spring
Tulsa
Corpus Christi
+
+
+
+
16
Richmond Beach Terminal1,064,000 barrels total storage
AsphaltFuel Oil
Sales: 100,000 tons per year
65 acres, located on Puget sound
Water Access:1,000 foot marine dock, 36 foot draft
9 rail unloading spots w/ steam, 10 spots w/o steam
Roofing air blowing plant
Asphalt emulsion plant
Environmental arrangements with previous owners
Portland
Fernley(Reno)
Elk Grove(Sacramento)
Mojave
Paramount
Phoenix
Flagstaff
Fredonia
Richmond Beach (Seattle)
PPC Terminals
Refineries
Paramount Petroleum Corporation Asphalt Manufacturing, Marketing and
Distribution
+ Wright Asphalt
+
Big Spring+
+
HoustonBig Spring
Tulsa
Corpus Christi
+
+
+
+
17
Elk Grove Terminal300,000 barrels asphalt storage
Sales: 300,000 tons per year
17 fee acres
21 car rail capacity with additional 12 leased
7 truck loading racks
Plants:Emulsions and CutbacksPMA Products
SHRP laboratory
Portland
Fernley(Reno)
Elk Grove(Sacramento)
Mojave
Paramount
Phoenix
Flagstaff
Fredonia
Richmond Beach (Seattle)
PPC Terminals
Refineries
Paramount Petroleum CorporationAsphalt Manufacturing, Marketing and
Distribution
+ Wright Asphalt
+
Big Spring+
+
HoustonBig Spring
Tulsa
Corpus Christi
+
+
+
+
18
Phoenix Terminal159,000 barrels asphalt storage
Sales: 175,000 tons per year
10 fee acres
27 car rail capacity
7 truck loading racks
Plants:Emulsions and CutbacksPMA ProductsTire Rubber Modified Asphalt Products
ASHTO certified / SHRP laboratory
Environmental arrangements with previous owners
Portland
Fernley(Reno)
Elk Grove(Sacramento)
Mojave
Paramount
Phoenix
Flagstaff
Fredonia
Richmond Beach (Seattle)
PPC Terminals
Refineries
Paramount Petroleum CorporationAsphalt Manufacturing, Marketing and
Distribution
+ Wright Asphalt
+
Big Spring+
+
HoustonBig Spring
Tulsa
Corpus Christi
+
+
+
+
19
Flagstaff Terminal
27,000 barrels asphalt storage
Sales: 40,000 tons per year
Leased facility
12 car rail capacity
4 truck loading racks
Plants: Emulsions and CutbacksPMA Products
Environmental arrangements with previous owners
Portland
Fernley(Reno)
Elk Grove(Sacramento)
Mojave
Paramount
Phoenix
Flagstaff
Fredonia
Richmond Beach (Seattle)
PPC Terminals
Refineries
Paramount Petroleum Corporation Asphalt Manufacturing, Marketing and
Distribution
+ Wright Asphalt
+
Big Spring+
+
HoustonBig Spring
Tulsa
Corpus Christi
+
+
+
+
20
Fredonia Terminal60,000 barrels asphalt storage
Sales: 20,000 tons per year
Leased facility
2 truck loading racks
Plants:
Emulsions and Cutbacks Portland
Fernley(Reno)
Elk Grove(Sacramento)
Mojave
Paramount
Phoenix
Flagstaff
Fredonia
Richmond Beach (Seattle)
PPC Terminals
Refineries
Paramount Petroleum Corporation Asphalt Manufacturing, Marketing and
Distribution
+ Wright Asphalt
+
Big Spring+
+
HoustonBig Spring
Tulsa
Corpus Christi
+
+
+
+
21
Mojave Terminal*
240,000 barrels asphalt storage with hot oil heating
Sales: 100,000 tons per year
65 fee acres
2.3 miles of rail spur on site
20 heated rail unloading spots
Product blending in tanks
4 truck loading racks
80 foot truck scale
* Photo predates asphalt retrofit at terminal.
Portland
Fernley(Reno)
Elk Grove(Sacramento)
Mojave
Paramount
Phoenix
Flagstaff
Fredonia
Richmond Beach (Seattle)
PPC Terminals
Refineries
Paramount Petroleum CorporationAsphalt Manufacturing, Marketing and
Distribution
+ Wright Asphalt
+
Big Spring+
+
HoustonBig Spring
Tulsa
Corpus Christi
+
+
+
+
22
Fernley Terminal
250,000 barrels asphalt storage
Sales: over 100,000 tons per year
50% venture with partner; PPC operated and managed
42 fee acres
Car rail unloading
6 truck loading racks
Plants:
PMA products
Portland
Fernley(Reno)
Elk Grove(Sacramento)
Mojave
Paramount
Phoenix
Flagstaff
Fredonia
Richmond Beach (Seattle)
PPC Terminals
Refineries
Paramount Petroleum Corporation Asphalt Manufacturing, Marketing and
Distribution
+ Wright Asphalt
+
Big Spring+
+
HoustonBig Spring
Tulsa
Corpus Christi
+
+
+
+
23
Wright Asphalt Company
50% venture with partner
Specializing in patented Tire Rubber Modified Asphalt products
Over 300,000 tons of sales per year
6 marketing locations:Houston, TXCorpus Christi, TXBig Spring, TXTulsa, OK Phoenix, AZPortland, OR
SHRP laboratory
Portland
Fernley(Reno)
Elk Grove(Sacramento)
Mojave
Paramount
Phoenix
Flagstaff
Fredonia
Richmond Beach (Seattle)
PPC Terminals
Refineries
Paramount Petroleum Corporation Asphalt Manufacturing, Marketing and
Distribution
+ Wright Asphalt
+
Big Spring+
+
HoustonBig Spring
Tulsa
Corpus Christi
+
+
+
+
24
top related