Refining and the Airline October 23, 2012

Contents “Delta 101” Why Trainer and why now? Market reaction

Delta holds a long heritage as the world’s leading airline Delta is the world's largest airline by passenger miles 5th oldest airline founded in 1928 (Delta’s legacy includes the former Northwest, Pan Am, Republic, Western, Northeastern, and Hughes AirWest airlines) Founding member of the SkyTeam Alliance, Joint-Venture partner with AirFrance/KLM and Alitalia and partial owner of AeroMexico and GOL of Brazil Fortune Magazine’s 2011 World’s Most Admired Airline $35 billion in annual revenue 160 million customers annually served through 340 destinations $44 billion in assets More than 700 mainlines aircraft plus 700 regional jets 80,000 employees plus ~100,000 contractors Hubs located in Atlanta, New York’s JFK and LaGuardia, Detroit, Minneapolis, Cincinnati, Memphis, Salt Lake City, Los Angeles, and overseas in Tokyo, Amsterdam, and Paris 2 2

Operational focus is critical to run Delta’s complex business Operations Manufacturing Real Estate 1,400 airplanes moving 500,000 passengers per day Zero fault tolerance environment for equipment (12-sigma equivalence in quality) while still providing >99.8% equipment availability Largest carrier in the world has gone 24 years without a major aviation incident (roughly 40 million flights) Delta TechOps has 10,000 employees rebuilding airplanes and engines Delta performs its own maintenance plus it serves 150 other carriers making it the third largest MRO business in the world 3 million square feet of manufacturing space in Atlanta plus facilities in Minneapolis and Mexico $3 billion in spending on current projects In-house management of major construction projects such as the JFK Terminal 4 complex, LAX and La Guardia expansions >30 million square feet of commercial space is managed by Delta 3 3

Delta developed an internal oil company long before Trainer Fuel value chain for Delta Refining Logistics Terminalling On-site Facilities Fuel Loading Delta has been one of the largest shippers on the Colonial, Plantation, Buckeye, and Teppco pipeline systems moving upwards of 175,000 bpd Delta controls several hundred thousand barrels of storage outside of its airports to facilitate its self-supply function Delta owns, leases, co-owns, and/or oversees 26 on-airport fuel facilities with their associated fuel tanks, filtration equipment, distribution pipelines, hydrants, and fuel carts Several thousand fuel loadings per day – each requiring a specialized technician, a load planner, and 30-90 minutes to execute Point where airlines traditionally have engaged in the value chain If Delta’s fuel function (ex-Trainer) were to be a separate company, it would constitute the following: Approximately 1,100 employees and contractors More than $1bn in fixed assets Roughly $500mn in working capital Annual revenue of $12bn

Delta is the world’s largest private consumer of fuel Would be in the world’s top 50 as a stand-alone country UAL/CO American Airlines Southwest US Air Daily Fuel Consumption (000s bpd of all fuels) Air Tran FEDEX Air & ground BNSF Railroad Other (all consumption) Denmark Portugal

Contents “Delta 101” Why Trainer and why now? Market reaction

Delta’s exposure to fuel price is not a simple crude short… Risk Type Root Causes of volatility Natural Hedge for Delta $/bbl Economic growth combined with higher production costs Supply shocks Price levels can be passed through to customers Delta’s loss Crude oil price risk Brent Economic growth Supply constraints Supply shocks and weather events Some price risk can be passed through All risk borne by Delta Refining Margin Risk Heat Crack Jet Fuel Specific Risk Regional market variations All risk borne by Delta Jet versus Heat

…the jet crack is the fastest growing element of fuel expense… 100% Transport Pipeline & barge $430mn 2.1% Taxes Fuel excise taxes $240mn 3.6% Product Markup Represents the profit margin and marketing spread that a refiner and reseller/trader gain from jet sales, which are typically the most profitable sales at the refinery $2.2bn Jet crack spread tripled since 2009 18.5% Refining Cost Operating cost $590mn 5% Crude Oil Purchase cost of the average source feedstock for jet fuel (all crude contains jet fuel, some contain more than others) $8.5bn 71% Total $12bn 8

…driven by dieselization and slowing demand for gasoline Daily transportation fuel consumption in 000s bpd Diesel & Jet United States European Union China 10,000 8,000 +13% 9,000 7,000 8,000 6,000 +125% 7,000 5,000 6,000 4,000 -21% 5,000 3,000 2000 2005 2010 European fuel switching from gasoline to diesel and voracious BRIC demand for middle distillates are driving the global imbalance between gasoline and diesel Source: BP Statistical Yearbook

Criteria for purchasing a refinery Beliefs about the market The jet-crack will remain high for several years Refinery capacity shut-ins will drive margin volatility and regional shortages Criteria for the refinery Properly sized – large enough to make a material impact on the company’s profitability but not larger than Delta’s consumption Relevant to the company’s demand centers (domestic, USGC or USEC based) Flexible refining kit able to maximize jet production with minimal investment Well-maintained plant that had not suffered from under-investment A B Criteria for the deal Actionable within a year Viable as a stand-alone business Provide a mechanism for non-jet product disposition C D

The Trainer deal 199,000 bpd refinery located in Trainer, Pennsylvania (Philadelphia) Pipeline system and 3 oil terminals included in sale Solomon Complexity Index of 9.6 with a replacement value of $2.7 billion Asset Terms Price of $180 million ex-hydrocarbon inventory (6% of replacement value) $30 million grant from the Commonwealth of Pennsylvania $100 million in turnaround and small capital expense for max-jet mode

Trainer is able to supply most of Delta’s northeastern fuel demand Trainer jet flows to local market Production and consumption in kbd Upstate NY LGA Buckeye Production Twin Oaks JFK EWR JFK & LGA Harbor Pipeline PHL Other Delta Consump. Trainer PIT Laurel Pipeline Monroe Pipelines Swing & export Waterborne exports

The flexible refining kit at Trainer is capable of full conversion… 2-Stage Hydrocracker – 26,000 bpd Reformer – 60,000 bpd Resid Fluid Catalytic Cracker – 55,000 bpd Hydrotreating Units Distillate VGO HT DHT Kero HT Gasoline NHT Post-Cat NHT

…and a jet-optimized product yield at minimal expense B …and a jet-optimized product yield at minimal expense Refinery Operation from 2007-2011 Monroe Planned Refinery Operation Pricing Middle distillates = 50% of total margin risk 19% Diesel 18% Diesel 14% Jet 32% Jet Gasoline = 44% of total margin risk 52% Gasoline 44% Gasoline Byproduct = 7% of risk 15% Fuel Oil, LPG 7% Fuel Oil, LPG, Other

Trainer would be viable as a stand-alone business C Trainer would be viable as a stand-alone business Trainer performance backcasted with Monroe’s operating plan $ million per quarter $300 million per year in earnings appears, at first glance, to be too high for a $250 million investment, however, the returns are appropriate for a business that if newly built would cost $2.7 billion and consume an additional $500 million in working capital for a pre-tax asset return of 9% Average EBIT = $551 MM/year Average EBIT = $345 MM/year Q1 2006Q1 2006 Q1 2007Q1 2007 Q1 2008Q1 2008 Q1 2009Q1 2009 Q1 2010Q1 2010 Q1 2011Q1 2011

D Exchanges with P66 and BP dispose of all non-jet production while simultaneously fueling Delta’s self-supply network

Delta also carries a significant tax advantage versus other refiners Effective Tax rate 2010 41% 38% Post-tax earnings benefit of $120 million per year versus ExxonMobil’s domestic tax rate at Monroe’s forecast earnings run rate 29% 2% ExxonMobil Valero Frontier Delta

Years Energy Experience Monroe has a seasoned management team Team Member Background / Prior Companies Years Energy Experience Jeff Warmann CEO All aspects of refinery, process and trading operations Murphy Oil, Frontier Refining, Western, Williams 28 Frank Pici CFAO 15 years as public co. CFO in refining, upstream, MLP CVR Energy, Penn Virginia, Mariner Energy, Cabot O&G 30 Coby Stewart VP / Maintenance Lead Construction, maintenance, turnaround experience Frontier Refining, Chicago B&I, Flour Corp. 33 Rodney Smith VP / Controller Senior accounting and financial professional Delek, Western Refining, Holly Corp 20 Brian Carlson Operations Leader Process engineering, economics, technical background Frontier Refining, Citgo Petroleum 11 Rick Chavez Technical Leader Economics & Planning, M&A, project development Stancil, Williams, Lyondell, El Paso, Amerada Hess 27 Pete Pirog VP MIPC Pipeline Pipeline construction, scheduling , storage logistics ConocoPhillips, Buckeye Pipeline 15 Liz Lundmark Environmental Leader Deep environmental compliance & logistic experience Murphy Oil 22 Keenan Kendrick H&S Leader Process Safety Management, Change Management Western Refining, ChevronTexaco Downstream 18

Contents “Delta 101” Why Trainer and why now? Market reaction

Market reaction Refining market “pundits” Equity Analysts Debt Analysts If Delta thinks they will be able to lower fuel volatility, they are sadly mistaken – Phil Flynn Trainer is an innovative approach to the long-term management of the airline's jet fuel costs, notwith-standing the operational risks of running a refinery – Fitch It is worth a shot, the refinery is only about the cost of a single new widebody jet – Ray Neidl It goes beyond Delta’s core competency – Stephen Schork Business Press Other airlines Trainer attracts a lot of haters of Delta’s stock – CNBC Airlines, after all, know a thing or two about managing high risk, logistics intensive, industries – Janet McGurty, Reuters If it works for Delta, it can work for us – and is completely reproducible – Jeff Smisek, CEO of UAL Delta would get into the refinery business only because they are stupid – Ed Hirs, U. of Houston in Forbes It could be brilliant or a disaster, only time will tell – CNN Money

Shocking revelation… this has been done before! 1955: Malcolm McLean creates the Sea-Land shipping company to focus on containerized shipping, the company grows rapidly 1948: Aminoil (American Independent Oil Company) wins a concession to develop oil in Kuwait 1958: Aminoil builds the Mina Abdullah Refinery 1969: RJR purchases Sea-Land Corp. for $530 million 1968: Aminoil expands Mina to 145,000 bpd, yields 50% bunker fuel (company nears bankruptcy) 1970: RJR purchases 100% of Aminoil for $40 million to hedge its Sea-Land’s fuel expense During 14-years of vertical integration both Sea-Land and Aminoil had record years of profitability 1974: Earnings for Sea-Land reach $145 million; Aminoil earns $86 million 1984: RJR spins off Sea-Land (later merged to form CSX) 1984: RJR sells Aminoil to Phillips 66 for $1.7 billion

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