Paramount Petroleum Corporation and Edgington...

CONFIDENTIAL

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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)


Mojave

Paramount

Phoenix

Flagstaff

Fredonia


PPC Terminals

Refineries


Distribution

+ Wright Asphalt

+

Big Spring+

+

HoustonBig Spring

Tulsa

Corpus Christi

+

+

+

+

17

Elk Grove Terminal300,000 barrels asphalt storage


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)


Mojave

Paramount

Phoenix

Flagstaff

Fredonia


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


10 fee acres

27 car rail capacity


Plants:Emulsions and CutbacksPMA ProductsTire Rubber Modified Asphalt Products

ASHTO certified / SHRP laboratory


Portland

Fernley(Reno)


Mojave

Paramount

Phoenix

Flagstaff

Fredonia


PPC Terminals

Refineries


Distribution

+ Wright Asphalt

+

Big Spring+

+

HoustonBig Spring

Tulsa

Corpus Christi

+

+

+

+

19

Flagstaff Terminal

27,000 barrels asphalt storage


Leased facility

12 car rail capacity


Plants: Emulsions and CutbacksPMA Products


Portland

Fernley(Reno)


Mojave

Paramount

Phoenix

Flagstaff

Fredonia


PPC Terminals

Refineries


Distribution

+ Wright Asphalt

+

Big Spring+

+

HoustonBig Spring

Tulsa

Corpus Christi

+

+

+

+

20

Fredonia Terminal60,000 barrels asphalt storage


Leased facility


Plants:

Emulsions and Cutbacks Portland

Fernley(Reno)


Mojave

Paramount

Phoenix

Flagstaff

Fredonia


PPC Terminals

Refineries


Distribution

+ Wright Asphalt

+

Big Spring+

+

HoustonBig Spring

Tulsa

Corpus Christi

+

+

+

+

21

Mojave Terminal*

240,000 barrels asphalt storage with hot oil heating


65 fee acres

2.3 miles of rail spur on site

20 heated rail unloading spots

Product blending in tanks


80 foot truck scale

* Photo predates asphalt retrofit at terminal.

Portland

Fernley(Reno)


Mojave

Paramount

Phoenix

Flagstaff

Fredonia


PPC Terminals

Refineries


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


Plants:

PMA products

Portland

Fernley(Reno)


Mojave

Paramount

Phoenix

Flagstaff

Fredonia


PPC Terminals

Refineries


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)


Mojave

Paramount

Phoenix

Flagstaff

Fredonia


PPC Terminals

Refineries


Distribution

+ Wright Asphalt

+

Big Spring+

+

HoustonBig Spring

Tulsa

Corpus Christi

+

+

+

+

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