Category Archives: Valero Energy Corporation

Analysis: 2018 was better for Valero than 2017 (if you don’t count Trump’s billion dollar 2017 tax gift)

Repost from Seeking Alpha
[Significant quote: “Valero Energy’s operating income climbed up to $4.7 billion in 2018 from $3.7 billion in 2017. However, due to a $0.9 billion income tax benefit in 2017 versus a $0.9 billion income tax expense in 2018, it appears that the firm’s income generation materially weakened…which isn’t really the case.”  Update: “Valero Keeps Gushing Profits And A 4%+ Dividend Yield.”  For more check out this phone transcript Listening in: Valero on recent earnings, then Q&A with investors.  – R.S.]

Valero Energy Posts A Tremendous 2018

By Callum Turcan, Feb. 3, 2019 8:06 AM ET
Summary

Image result for valeroValero Energy Corporation performed very well in 2018.

Management is committed to rewarding shareholders via buybacks and dividend increases.

Covering the financial and operational performance of Valero Energy’s three main divisions.

Refining giant Valero Energy Corporation (NYSE:VLO) just reported its earnings for the fourth quarter of 2018 that won over some love from Wall Street. Both its earnings and revenue generation beat expectations, which is always a good sign. As of this writing, Valero yields 4.2%, as management boosted the firm’s quarterly payout by 13% in January 2019. This is on top of rewarding investors through $1.7 billion in share buybacks and $1.4 billion in dividend payments last year. Let’s dig in.

Strong refining margins carry the firm higher

Valero Energy’s operating income climbed up to $4.7 billion in 2018 from $3.7 billion in 2017. However, due to a $0.9 billion income tax benefit in 2017 versus a $0.9 billion income tax expense in 2018, it appears that the firm’s income generation materially weakened last year, which isn’t really the case. From 2017 to 2018, Valero Energy’s net income attributable to stockholders fell from $4.1 billion to $3.1 billion. A 4% reduction in its outstanding diluted share count helped offset some of the pain as its EPS dropped from $9.16 to $7.29 on a fully-diluted basis.

When comparing the performance of its refining division on a year-over-year basis, it is clear Valero Energy did quite well in 2018. Its average total throughput volumes for the year climbed by 2% to 2,986,000 bpd, which lifted its product yield by 2% to 3,025,000 bpd.

On top of higher throughput volumes, Valero’s refining margin grew by 10% year-over-year to $10.05 per barrel in 2018. Refining margin means the crack spread Valero received, the difference between its feedstock costs and the price received for its petroleum product production. Strong crack spreads ultimately enabled its refining division’s adjusted operating income per barrel of throughput (the amount of income generated per refined barrel after taking crack spreads and operating expenses into account) to grow by 22% year-over-year to $4.58 per barrel in 2018.

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    Listening in: Valero on recent earnings, then Q&A with investors

    Repost from The Motley Fool
    [Valero’s profits continue at massive levels, although not as high as in 2017 when the Republicans gave corporations unheard-of tax windfalls.  I have  highlighted  the only reference to west coast production.  Of special interest: search this long transcript for the 9 references to “exports” and the 18 references to “rail.”  – R.S.]

    Valero Energy Corp (VLO) Q4 2018 Earnings Conference Call Transcript

    VLO earnings call for the period ending December 28, 2018.
    By Motley Fool Transcribers, Jan 31, 2019 at 4:36PM
    Logo of jester cap with thought bubble.
    IMAGE SOURCE: THE MOTLEY FOOL.

    Valero Energy Corp  (NYSE:VLO)
    Q4 2018 Earnings Conference Call
    Jan. 31, 2019, 10:00 a.m. ET

    Contents:
    Prepared Remarks
    Questions and Answers
    Call Participants
    Prepared Remarks:
    Operator

    Good day, ladies and gentlemen, and welcome to the Valero Energy Corporation’s Fourth Quarter 2018 Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, there will be a question-and-answer session, and instructions will follow at that time. (Operator Instructions) As a reminder, this conference call is being recorded.

    I would now like to turn the conference over to Homer Bhullar, Vice President of Investor Relations. Sir, you may begin.

    Homer Bhullar — Vice President, Investor Relations

    Good morning, and welcome to Valero Energy Corporation’s fourth quarter 2018 earnings conference call. With me today are Joe Gorder, our Chairman, President and Chief Executive Officer; Donna Titzman, our Executive Vice President and CFO; Lane Riggs, our Executive Vice President and COO; Jason Fraser, our Executive Vice President and General Counsel and several other members of Valero Senior Management team.

    If you have not received the earnings release and would like a copy, you can find one on our website at valero.com. Also attached to the earnings release are tables that provide additional financial information on our business segments. If you have any questions after reviewing these tables, please feel free to contact our Investor Relations team after the call.

    I would like to direct your attention to the forward-looking statement disclaimer contained in the press release. In summary, it says that statements in the press release and on this conference call 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 under federal securities laws. There are many factors that could cause actual results to differ from our expectations, including those we’ve described in our filings with the SEC.

    Now I’ll turn the call over to Joe for opening remarks.

    Joseph W. Gorder — Chairman, President and Chief Executive Officer

    Thanks, Homer, and good morning, everyone. We are pleased to report that we completed another good quarter where we ran our business well and delivered solid financial results. Throughout the quarter, we maintained our unrelenting focus on operations excellence, which enabled us to operate safely and reliably in an environmentally responsible manner.

    We also delivered on our commitment to invest in growth projects and acquisitions that increase Valero’s earnings capability, while maintaining solid returns to our stockholders. In 2018, we matched our 2017 record for process safety performance, and we continued to outperform the industry on our personnel injury rates.

    For logistics investments we made over the last several years are contributing significantly to earnings. Our investments in Line 9B, the Diamond Pipeline and the Sunrise Pipeline expansion increased our systems flexibility, allowing us to take advantage of the opportunities available in the fourth quarter of 2018. In fact, we set a record for total light crude runs at 1.5 million barrels per day and a record for North American light crudes process at over 1.3 million barrels per day.

    We also continued to maximize product exports into higher netback markets in Latin America. Turning to capital allocation, we continued to execute according to our disciplined framework. Our projects in execution remain on track. Construction is scheduled to finish on the Houston alkylation unit in the second quarter and the Central Texas pipelines and terminals are expected to be completed in mid 2019. Continue reading Listening in: Valero on recent earnings, then Q&A with investors

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      Valero increased Canadian tar sands oil trains to and from Gulf Coast in 2018

      Repost from S&P Global Platts
      [Editor: You can be sure that if Benicia hadn’t succeeded in stopping Valero Crude By Rail in 2016, we would be seeing these monstrous oil trains every day now.  Many thanks to all who contributed to our David & Goliath effort!  NOTE: “USGC” in this story refers to the US Gulf Coast.  – R.S.]

      Valero looks north to replace Venezuelan heavy crude

      By Janet McGurty and Keiron Greenhalgh, 31 Jan 2019, 22:04 UTC

      New York — Valero Energy increased the volume of heavy Canadian crude processed in its refining system in the fourth quarter of 2018, including crude arriving by rail, a trend that is likely to continue as recent sanctions cut into shipments from Venezuela.

      Valero CEO Joe Gorder said the company needs to replace Venezuelan crude at two of its US Gulf Coast refineries – the 215,000 b/d St. Charles facility in eastern Louisiana and the 335,000 b/d Port Arthur, Texas, complex.

      Valero’s systemwide heavy crude throughput was 445,000 b/d in Q4 out of 3.0 million b/d overall. About 20% of that was from Venezuela, Gorder said on the Q4 results call.

      Valero imported about 50,000 b/d of heavy Canadian crude in October for its USGC system, compared with 126,000 b/d of Venezuelan crude, US Energy Information Administration data showed.

      “We did 43,000 b/d of heavy Canadian by rail in Port Arthur [in Q4] and those were very discounted barrels,” said Gorder. Continue reading Valero increased Canadian tar sands oil trains to and from Gulf Coast in 2018

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        Benicia isn’t the only one – big oil money inserts itself in Petaluma & Santa Rosa races

        Repost from the Santa Rosa Press Democrat
        [Editor: note some of the same unfriendly giants as in Benicia: Valero Energy of course, and the law firm Nielsen Merksamer (“Bay Area-based law and lobbying firm that specializes in political and public-sector cases”).  – R.S.]

        Oil and real estate interests pour money into Petaluma and Santa Rosa races

        By Will Schmitt & Hannah Beausang, November 2, 2018, 8:57PM
        Candidates for Petaluma Mayor include, from left, Mike Harris, Teresa Barrett, and Brian Powell.

        More than $100,000 from oil and real estate interests has been funneled into city council races in Sonoma County’s two largest cities, highlighting how outside groups have ponied up to influence voters in the Nov. 6 election.

        Of the pair of independent expenditure campaigns, the most visible has been in Petaluma, where a committee backed by several large oil companies has poured more than $78,000 into the race for mayor, according to campaign finance records.

        The second spending effort is by a national real estate group that has spent more than $31,000 in favor of several city council candidates in Petaluma and Santa Rosa.

        In Petaluma especially, the rush of outside spending has caused a stir. The two campaigns there have separately generated mailers supporting two mayoral candidates — Mike Harris and Brian Powell — and online ads and mailers supporting Harris and two others running for council seats, incumbent Dave King and candidate Michael Regan.

        Brian Sobel, a Petaluma- based political analyst and former city councilman, called the level of outside spending in the city election unprecedented.

        “It’s not been in Petaluma’s tradition or history to have independent expenditures committees singling out individual candidates and supporting them,” Sobel said.

        Campaign finance rules limit individual donations directly to candidate campaigns to $200 in Petaluma and $500 in Santa Rosa per donor per election cycle. But there is no cap on how much money individuals or organizations can dole out through independent expenditure committees. The committees must report their spending to election authorities and are barred from coordinating with candidates.

        Independent expenditures to sway elections are not new, though their prevalence and power has increased since the 2010 Citizens United case before the U.S. Supreme Court. It did away with independent political spending limits for corporations, labor groups and other entities on free-speech grounds.

        The group responsible for the largest amount of spending in Petaluma this year goes by the name Coalition to Restore California’s Middle Class, Including Energy Companies who Produce Gas, Oil, Jobs and Pay Taxes. The committee has received millions of dollars from oil giants Chevron, Valero Energy and Phillips 66, according to campaign finance documents filed with the California Secretary of State.

        The committee reported spending about $62,300 as of Friday to support Harris, a former councilman who is making his second bid for the mayor’s post. The oil-backed group also reported spending $15,800 in favor of Powell, a political newcomer and environmentalist who has embraced a strong anti-growth platform for the city.

        Powell, Harris and Councilwoman Teresa Barrett are vying to replace Mayor David Glass, who is retiring.

        The oil-backed coalition’s motives were not immediately obvious.

        The phone number listed on the filings is associated with the San Rafael office of Nielsen Merksamer, a Bay Area-based law and lobbying firm that specializes in political and public-sector cases. Chevron Corp., Valero Energy and Philips 66 are listed as clients on the firm’s website.

        Steven Lucas, the coalition’s registered agent, did not respond to requests for comment.

        Barrett said she believed the outside spending was an attempt to bolster the chances of her rivals for the mayor’s post and deny her a public platform. Barrett is a strong pro-environment voice who serves on the Bay Area Air Quality Management District, which regulates regional refineries. The district’s leadership comprises local elected officials, and Barrett would have to step down if she came up short in the mayor’s race, she noted.

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