Presentation on theme: "SECTOR: Energy Sector COMPANY: Western Refining Inc."— Presentation transcript:
1 SECTOR: Energy Sector COMPANY: Western Refining Inc. Sr. Analysts: Jorge PioJr. Analysts: Edison Vo, Knut Kirchoff, nicholas Canova, Chris Sondej, Alex Mitrani, Raditya Purwahjo
2 Investment Recommendation CompanyWestern Refining IncRecommendationBuyCurrent Price17.531yr Target Price26.36% Upside50.4%Key investment drivers1. Rising price of Gas2. Rising Consumption of Oil3. Unrest in the Middle East
3 Industry SnapshotIndustry Definition: The oil refining industry consists of companies that specialize in the refining of crude oil into gasoline, diesel Fuel and other oil products. The refining industry also includes the sale refined products at wholesale and retail locations.Industry Size: $437 Billion
4 Company Snapshot Key Financials: Revenue $8 Billion P/S .22X TEV TEV/EBITDA9.7xMarket Cap$1.55Beta.56
5 Company Snapshot Crude oil is delivered to refineries via pipeline Refine crude OilTransportRetail/WholesalePurchase Crude OilCrude oil is delivered to refineries via pipelineThe crude is refined into a combination of Gasoline, Diesel Fuel, and Jet FuelEnd product is transported by pipeline and truckSale of gas at retail and wholesale locationsMore structured.
8 Price of WTIIncreased production in Canada is creating a downward pressure on the WTIWTI(West Texas Light)Supply buildup at CushingCanadian production growth to average 170,000 bbl/d
9 Gasoline price and demand increase EIA estimates a 28% increase in gasoline pricesAPI estimates a 4% demand increase for gasoline
10 Company AnalysisThe company has announced a cost reduction effort of $50 million in order to improve margins in anticipation of higher crude oil pricesHas expanded its refining capacity through acquisitions of other independent refiners2007: Giant Inc. doubled their refinery capacityGiant’s New Mexico and Virginia refineries with a $1.5 billion loan.
11 BU Finance & Investment Club Company AnalysisLonghorn pipeline-connects Gulf Coast refineries to the El Paso pipeline, which delivers oil to Phoenix and AlbuquerqueIncreased profit margins in those citiesEl Paso-Phoenix pipeline expansionWestern refinery won exclusive rights to use this3/25/2017BU Finance & Investment Club
13 Recommendation Rising Gas Prices Rising Consumption of Oil CompanyWestern Refining IncRecommendationBuyCurrent Price17.531yr Target Price26.36% Upside50.4%Rising Gas PricesRising Consumption of OilUnrest in the Middle East