“Also in the second quarter, we progressed on key investments to enhance our long-term profitability. We completed the cat-cracker revamp at our St. Charles Refinery and are already seeing yield improvements. At our Memphis Refinery, a third-party oxygen line was completed. As oxygen volumes increase in August, we expect additional improvements to be realized from the Memphis cat-cracker revamp completed last year. We expect both of these projects will significantly improve our reliability performance.”
Commenting on the industry outlook, Klesse said, “With crude oil prices holding in a range and global economic growth continuing, refined product demand will grow. Benchmark margins in the third quarter have increased from second-quarter levels, and the forward curve shows margins are strong into 2012. We continue to see attractive opportunities to export products from our Gulf Coast refineries.”
Valero’s retail segment continued its record-setting performance with $135 million in operating income, which was the best second quarter in Valero’s history. The increase in operating income was mainly due to higher retail fuel margins plus the Canadian retail division achieved its highest quarterly operating income on record with $48 million.
Valero’s ethanol segment operating income was $64 million in the second quarter of 2011 versus $35 million in the second quarter of 2010. The increase in operating income was mainly due to an increase in production volumes to 3.4 million gallons per day, the highest quarterly production volume in company history, combined with higher gross margins.Regarding cash flows in the second quarter of 2011, capital spending was $664 million, of which $133 million was for turnaround and catalyst expenditures. Valero paid $29 million in dividends on its common stock and paid $208 million to redeem long-term debt. Valero also spent $37 million to acquire a terminal and pipelines in eastern Kentucky, which will enable the company to expand its wholesale fuels business. Valero ended the second quarter with $4.1 billion in cash and temporary cash investments as well as $7.6 billion of total debt. For the six months ended June 30, 2011, Valero has reduced debt by approximately $700 million.