1. 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

2. 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

3. 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

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

5. 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.

6. 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.

7. 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.

8. 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

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

10. 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.

11. 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

12. Valuation Year 2010(e) 2011(e) 2012(e) 2013(e) 2014(e) FCF $(67.50)
$121.72 $ $ $
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%

13. 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