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Valero Energy Reports Second Quarter 2011 Results

Stocks in this article: VLO

Klesse concluded, “Valero has an excellent growth story over the next few years, starting with the solid margin outlook. On August 1st, we plan to close on our acquisition of the Pembroke refinery, marketing, and logistics assets in the U.K. and Ireland. Our major growth projects are on-budget and on-schedule for completion in 2012, including the two hydrocrackers and hydrogen plants that are expected to contribute significant earnings and cash flow when in operation. Those projects benefit from high crude oil and low natural gas prices plus growing global demand for diesel and gasoline, and do not depend on wide discounts for WTI-priced crude oil.”

Valero’s senior management will hold a conference call at 11:00 a.m. ET (10 a.m. CT) today to discuss this earnings release and provide an update on company operations. A live broadcast of the conference call will be available on the company’s web site at www.valero.com.

About Valero

Valero Energy Corporation is an international manufacturer and marketer of transportation fuels, other petrochemical products and power. Its assets include 14 petroleum refineries with a combined throughput capacity of approximately 2.6 million barrels per day, 10 ethanol plants with a combined production capacity of 1.1 billion gallons per year, and a 50-megawatt wind farm. Valero is also one of the largest retail operators with approximately 5,800 retail and branded wholesale outlets in the United States, Canada and the Caribbean under the Valero, Diamond Shamrock, Shamrock, Ultramar and Beacon brands. Based in San Antonio, Valero is a Fortune 500 company with approximately 20,000 employees. Please visit www.valero.com for more information.

Safe Harbor Statement

Statements contained in this release that state the Company’s or management’s expectations or predictions of the future are forward-looking statements intended to be covered by the safe harbor provisions of the Securities Act of 1933 and the Securities Exchange Act of 1934. The words “believe,” “expect,” “should,” “estimates,” and other similar expressions identify forward-looking statements. It is important to note that actual results could differ materially from those projected in such forward-looking statements. For more information concerning factors that could cause actual results to differ from those expressed or forecasted, see Valero’s annual reports on Form 10-K and quarterly reports on Form 10-Q, filed with the Securities and Exchange Commission, and available on Valero’s website at www.valero.com.

 
 
VALERO ENERGY CORPORATION AND SUBSIDIARIES
EARNINGS RELEASE
(Millions of Dollars, Except per Share, per Barrel, and per Gallon Amounts)
(Unaudited)
 
    Three Months Ended     Six Months Ended
June 30, June 30,
2011   2010 2011   2010
Statement of Income Data (a) (b) (c) :
Operating revenues (1) $ 31,293   $ 20,561   $ 57,601   $ 39,054  
Costs and expenses:
Cost of sales (d) (e) 28,380 18,227 52,948 35,283
Operating expenses:
Refining 813 693 1,557 1,457
Retail (d) 169 163 331 315
Ethanol 104 91 199 171
General and administrative expenses (f) 151 131 281 228
Depreciation and amortization expense 386 350 751 690
Asset impairment loss   2     2  
Total costs and expenses 30,003   19,657   56,067   38,146  
Operating income (e) 1,290 904 1,534 908
Other income, net 10 1 27 12
Interest and debt expense, net of capitalized interest (107 ) (117 ) (224 ) (244 )
Income from continuing operations before income tax expense 1,193 788 1,337 676
Income tax expense 449   268   489   236  
Income from continuing operations 744 520 848 440
Income (loss) from discontinued operations, net of income taxes (1 ) 63   (7 ) 30  
Net income 743 583 841 470

Less: Net loss attributable to noncontrolling interest (g)

(1 )   (1 )  

Net income attributable to Valero Energy Corporation stockholders

$ 744   $ 583   $ 842   $ 470  

Net income attributable to Valero Energy Corporation stockholders (g):

Continuing operations $ 745 $ 520 $ 849 $ 440
Discontinued operations (1 ) 63   (7 ) 30  
Total $ 744   $ 583   $ 842   $ 470  
Earnings per common share:
Continuing operations $ 1.31 $ 0.92 $ 1.49 $ 0.78
Discontinued operations   0.11   (0.01 ) 0.05  
Total $ 1.31   $ 1.03   $ 1.48   $ 0.83  
Weighted average common shares outstanding (in millions) 567 563 567 563
Earnings per common share – assuming dilution:
Continuing operations $ 1.30 $ 0.92 $ 1.48 $ 0.78
Discontinued operations   0.11   (0.01 ) 0.05  
Total $ 1.30   $ 1.03   $ 1.47   $ 0.83  

Weighted average common shares outstanding – assuming dilution (in millions)

574 567 573 567
Supplemental information:
(1) Includes excise taxes on sales by our U.S. retail system $ 227 $ 225 $ 441 $ 433
 
 
VALERO ENERGY CORPORATION AND SUBSIDIARIES
EARNINGS RELEASE
(Millions of Dollars, Except per Share, per Barrel, and per Gallon Amounts)
(Unaudited)
 
    Three Months Ended     Six Months Ended
June 30, June 30,
2011   2010 2011   2010
Operating income (loss) by business segment:
Refining (e) $ 1,253 $ 904 $ 1,529 $ 889
Retail 135 109 201 180
Ethanol 64 35 108 92
Corporate (162 ) (144 ) (304 ) (253 )
Total $ 1,290   $ 904   $ 1,534   $ 908  

Depreciation and amortization expense by business segment:

Refining $ 339 $ 301 $ 655 $ 595
Retail 27 27 55 53
Ethanol 9 9 18 17
Corporate 11   13   23   25  
Total $ 386   $ 350   $ 751   $ 690  
Operating highlights:
Refining (a) (b) (e):
Throughput margin per barrel $ 11.41 $ 9.57 $ 9.35 $ 7.89
Operating costs per barrel:
Operating expenses 3.86 3.49 3.89 3.91
Depreciation and amortization expense 1.61   1.52   1.64   1.59  
Total operating costs per barrel 5.47   5.01   5.53   5.50  
Operating income per barrel $ 5.94   $ 4.56   $ 3.82   $ 2.39  
Throughput volumes (thousand barrels per day):
Feedstocks:
Heavy sour crude 450 472 412 456
Medium/light sour crude 418 409 395 397
Acidic sweet crude 128 58 100 50
Sweet crude 679 668 672 628
Residuals 293 211 271 174
Other feedstocks 105   116   121   117  
Total feedstocks 2,073 1,934 1,971 1,822
Blendstocks and other 243   246   241   238  
Total throughput volumes 2,316   2,180   2,212   2,060  
Yields (thousand barrels per day):
Gasolines and blendstocks 1,054 1,084 1,005 1,025
Distillates 786 720 741 659
Other products (h) 487   395   476   397  
Total yields 2,327   2,199   2,222   2,081  
 
 
VALERO ENERGY CORPORATION AND SUBSIDIARIES
EARNINGS RELEASE
(Millions of Dollars, Except per Share, per Barrel, and per Gallon Amounts)
(Unaudited)
 
    Three Months Ended     Six Months Ended
June 30, June 30,
2011   2010 2011   2010
Refining operating highlights by region (i):
Gulf Coast:
Operating income $ 786 $ 650 $ 897 $ 639
Throughput volumes (thousand barrels per day) 1,432 1,329 1,366 1,234
Throughput margin per barrel $ 11.30 $ 10.28 $ 9.01 $ 8.35
Operating costs per barrel:
Operating expenses 3.74 3.34 3.80 3.85
Depreciation and amortization expense 1.54   1.57   1.58   1.64  
Total operating costs per barrel 5.28   4.91   5.38   5.49  
Operating income per barrel $ 6.02   $ 5.37   $ 3.63   $ 2.86  
Mid-Continent:
Operating income $ 393 $ 151 $ 560 $ 140
Throughput volumes (thousand barrels per day) 398 390 401 377
Throughput margin per barrel $ 16.50 $ 9.13 $ 13.09 $ 7.32
Operating costs per barrel:
Operating expenses 4.01 3.54 3.83 3.79
Depreciation and amortization expense 1.65   1.36   1.54   1.48  
Total operating costs per barrel 5.66   4.90   5.37   5.27  
Operating income per barrel $ 10.84   $ 4.23   $ 7.72   $ 2.05  
Northeast:
Operating income (loss) $ (17 ) $ 7 $ 39 $ 45
Throughput volumes (thousand barrels per day) 207 199 208 187
Throughput margin per barrel $ 3.36 $ 4.40 $ 5.19 $ 5.99
Operating costs per barrel:
Operating expenses 3.04 2.55 2.93 3.10
Depreciation and amortization expense 1.22   1.47   1.20   1.56  
Total operating costs per barrel 4.26   4.02   4.13   4.66  
Operating income (loss) per barrel $ (0.90 ) $ 0.38   $ 1.06   $ 1.33  
West Coast:
Operating income $ 91 $ 98 $ 33 $ 67
Throughput volumes (thousand barrels per day) 279 262 237 262
Throughput margin per barrel $ 10.65 $ 10.55 $ 8.60 $ 7.89
Operating costs per barrel:
Operating expenses 4.84 4.87 5.37 4.92
Depreciation and amortization expense 2.21   1.57   2.46   1.55  
Total operating costs per barrel 7.05   6.44   7.83   6.47  
Operating income per barrel $ 3.60   $ 4.11   $ 0.77   $ 1.42  
Operating income for regions above $ 1,253 $ 906 $ 1,529 $ 891
Asset impairment loss applicable to refining   (2 )   (2 )
Total refining operating income $ 1,253   $ 904   $ 1,529   $ 889  
 
 
VALERO ENERGY CORPORATION AND SUBSIDIARIES
EARNINGS RELEASE
(Millions of Dollars, Except per Share, per Barrel, and per Gallon Amounts)
(Unaudited)
 
    Three Months Ended     Six Months Ended
June 30, June 30,
2011   2010 2011   2010
Average market reference prices and differentials (j):
Feedstocks (dollars per barrel):
Louisiana Light Sweet (LLS) crude oil $ 117.96 $ 80.06 $ 111.49 $ 79.70
LLS less West Texas Intermediate (WTI) crude oil 15.47 2.26 13.27 1.46
LLS less Alaska North Slope (ANS) crude oil 2.94 3.00 3.36 1.90
LLS less Brent crude oil (0.64 ) 1.61 (0.52 ) 2.34
LLS less Mars crude oil 6.04 2.62 4.81 3.12
LLS less Maya crude oil 14.58 12.01 15.13 10.79
WTI crude oil $ 102.49 $ 77.80 $ 98.22 $ 78.24
WTI less Mars crude oil (9.43 ) 0.36 (8.46 ) 1.66
WTI less Maya crude oil (0.89 ) 9.75 1.86 9.33
Products (dollars per barrel):
U.S. Gulf Coast:
Conventional 87 gasoline less LLS $ 10.26 $ 7.97 $ 7.04 $ 7.22
Ultra-low-sulfur diesel less LLS 11.49 9.88 12.54 8.36
Propylene less LLS 26.03 3.85 22.76 10.40
Conventional 87 gasoline less WTI 25.73 10.23 20.31 8.68
Ultra-low-sulfur diesel less WTI 26.96 12.14 25.81 9.82
Propylene less WTI 41.50 6.11 36.03 11.86
U.S. Mid-Continent:
Conventional 87 gasoline less WTI $ 26.38 $ 10.39 $ 21.14 $ 8.55
Ultra-low-sulfur diesel less WTI 28.83 13.29 26.97 10.00
U.S. Northeast:
Conventional 87 gasoline less Brent $ 7.44 $ 8.85 $ 5.69 $ 9.57
Ultra-low-sulfur diesel less Brent 12.53 12.93 13.78 12.14
Conventional 87 gasoline less WTI 23.55 9.50 19.48 8.69
Ultra-low-sulfur diesel less WTI 28.64 13.58 27.57 11.26
U.S. West Coast:
CARBOB 87 gasoline less ANS $ 14.54 $ 17.24 $ 14.95 $ 13.97
CARB diesel less ANS 19.21 15.19 19.96 11.87
CARBOB 87 gasoline less WTI 27.07 16.50 24.86 13.53
CARB diesel less WTI 31.74 14.45 29.87 11.43
New York Harbor corn crush (dollars per gallon) $ 0.07 $ 0.36 $ 0.07 $ 0.41
 
 
VALERO ENERGY CORPORATION AND SUBSIDIARIES
EARNINGS RELEASE
(Millions of Dollars, Except per Share, per Barrel, and per Gallon Amounts)
(Unaudited)
 
    Three Months Ended     Six Months Ended
June 30, June 30,
2011   2010 2011   2010
Retail - U.S. (d):
Operating income $ 87 $ 76 $ 106 $ 109
Company-operated fuel sites (average) 995 990 994 989
Fuel volumes (gallons per day per site) 5,094 5,196 4,995 5,070
Fuel margin per gallon $ 0.204 $ 0.186 $ 0.142 $ 0.148
Merchandise sales $ 323 $ 316 $ 606 $ 588
Merchandise margin (percentage of sales) 28.4 % 28.1 % 28.3 % 28.1 %
Margin on miscellaneous sales $ 22 $ 22 $ 44 $ 44
Operating expenses $ 103 $ 104 $ 201 $ 198
Depreciation and amortization expense $ 18 $ 18 $ 37 $ 36
Retail - Canada (d):
Operating income $ 48 $ 33 $ 95 $ 71
Fuel volumes (thousand gallons per day) 3,182 3,098 3,208 3,088
Fuel margin per gallon $ 0.319 $ 0.260 $ 0.318 $ 0.272
Merchandise sales $ 68 $ 61 $ 125 $ 113
Merchandise margin (percentage of sales) 29.8 % 29.9 % 29.8 % 30.3 %
Margin on miscellaneous sales $ 11 $ 9 $ 22 $ 19
Operating expenses $ 66 $ 59 $ 130 $ 117
Depreciation and amortization expense $ 9 $ 9 $ 18 $ 17
Ethanol (c):
Operating income $ 64 $ 35 $ 108 $ 92
Production (thousand gallons per day) 3,397 3,190 3,340 2,864
Gross margin per gallon of production $ 0.57 $ 0.47 $ 0.54 $ 0.54
Operating costs per gallon of production:
Operating expenses 0.33 0.31 0.33 0.33
Depreciation and amortization expense 0.03   0.03   0.03   0.03  
Total operating costs per gallon of production 0.36   0.34   0.36   0.36  
Operating income per gallon of production $ 0.21   $ 0.13   $ 0.18   $ 0.18  
 
June 30, December 31,
2011 2010
Balance Sheet Data:
Cash and temporary cash investments $ 4,107 $ 3,334

Total debt

7,623 8,337
 
 

VALERO ENERGY CORPORATION AND SUBSIDIARIES NOTES TO EARNINGS RELEASE

(a) On December 17, 2010, Valero sold its refinery in Paulsboro, New Jersey, and associated inventory to PBF Holding Company LLC for $707 million. The results of operations of the refinery for the three and six months ended June 30, 2010 are reflected in discontinued operations. In addition, the refining segment and Northeast region operating highlights for the three and six months ended June 30, 2010 exclude the Paulsboro Refinery.

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