SECTOR: Energy Sector COMPANY: Western Refining Inc. Sr. Analysts: Jorge Pio Jr. Analysts: Edison Vo, Knut Kirchoff, nicholas Canova, Chris Sondej, Alex Mitrani, Raditya Purwahjo

Investment Recommendation Company Western Refining Inc Recommendation Buy Current Price 17.53 1yr Target Price 26.36 % Upside 50.4% Key investment drivers 1. Rising price of Gas 2. Rising Consumption of Oil 3. Unrest in the Middle East

Industry Snapshot Industry 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

Company Snapshot Key Financials: Revenue $8 Billion P/S .22X TEV TEV/EBITDA 9.7x Market Cap $1.55 Beta .56

Company Snapshot Crude oil is delivered to refineries via pipeline Refine crude Oil Transport Retail/Wholesale Purchase Crude Oil Crude oil is delivered to refineries via pipeline The crude is refined into a combination of Gasoline, Diesel Fuel, and Jet Fuel End product is transported by pipeline and truck Sale of gas at retail and wholesale locations More structured.

MAP Primarily operates in: West Texas New Mexico Arizona Utah Colorado Mid-Atlantic Region Yorktown, Virginia - 70,000 bpd (Temporarily Suspended Sept 2010) Bloomfield, New Mexico - 17,000 bpd (Temporarily suspended Nov 2009) El Paso, Texas - 128,000 bpd Gallup, New Mexico - 31,000 bpd 3/25/2017 © Dyrect Investing, Ltd.

Trends: Crude Oil Unrest in the Middle East has lead to the highest crude oil prices since 2008 and has increased the forecast of future 2011 price per barrel to $105 World Crude oil and liquid fuel consumption grew by an estimated 2.4 million bbl/d. Expected consumption will grow 1.5 million bbl/d in 2011 In 2014 the global oil and gas refining and marketing sector is forecasted to have an 11.4% increase from 2009 (CAGR 2.2%) Data-monitor industry profile Shale deposits and surplus LNG capacity (both liquefaction and re-gasification) provide greater potential for price stability than was the case two years ago Source:EIA.gov 3/25/2017 © Dyrect Investing, Ltd.

Price of WTI Increased production in Canada is creating a downward pressure on the WTI WTI(West Texas Light) Supply buildup at Cushing Canadian production growth to average 170,000 bbl/d

Gasoline price and demand increase EIA estimates a 28% increase in gasoline prices API estimates a 4% demand increase for gasoline

Company Analysis The company has announced a cost reduction effort of $50 million in order to improve margins in anticipation of higher crude oil prices Has expanded its refining capacity through acquisitions of other independent refiners 2007: Giant Inc. doubled their refinery capacity Giant’s New Mexico and Virginia refineries with a $1.5 billion loan.

BU Finance & Investment Club Company Analysis Longhorn pipeline-connects Gulf Coast refineries to the El Paso pipeline, which delivers oil to Phoenix and Albuquerque Increased profit margins in those cities El Paso-Phoenix pipeline expansion Western refinery won exclusive rights to use this 3/25/2017 BU Finance & Investment Club

Valuation Year 2010(e) 2011(e) 2012(e) 2013(e) 2014(e) FCF $(67.50) $121.72 $ 137.72 $ 145.91 $ 135.45 DCF WACC 7.36% Growth Rate 3.00% DCF Value $3,644 B 1yr Price $29.80 Comparables P/S (%w) 30% 1yr Price 22.24 TEV/EBITDA(%w) 25.89 40% Weight 60% Weight 1yr Target Price % Upside 50.4%

Recommendation Rising Gas Prices Rising Consumption of Oil Company Western Refining Inc Recommendation Buy Current Price 17.53 1yr Target Price 26.36 % Upside 50.4% Rising Gas Prices Rising Consumption of Oil Unrest in the Middle East