Delaware | 1-13175 | 74-1828067 | ||
(State or other jurisdiction of incorporation) | (Commission File Number) | (IRS Employer Identification No.) |
One Valero Way San Antonio, Texas | 78249 | |
(Address of principal executive offices) | (Zip Code) |
o | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) | |
o | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) | |
o | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) | |
o | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
(d) | Exhibits. |
VALERO ENERGY CORPORATION | ||
Date: November 1, 2011 | By: | /s/ Jay D. Browning |
Jay D. Browning | ||
Senior Vice President and Secretary | ||
Three Months Ended | Nine Months Ended | |||||||||||||||
September 30, | September 30, | |||||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||
Statement of Income Data (a) (b): | ||||||||||||||||
Operating revenues (1) | $ | 33,713 | $ | 21,015 | $ | 91,314 | $ | 60,069 | ||||||||
Costs and expenses: | ||||||||||||||||
Cost of sales (c) (d) | 30,033 | 18,915 | 82,981 | 54,198 | ||||||||||||
Operating expenses: | ||||||||||||||||
Refining | 870 | 753 | 2,427 | 2,210 | ||||||||||||
Retail (c) | 177 | 169 | 508 | 484 | ||||||||||||
Ethanol | 103 | 96 | 302 | 267 | ||||||||||||
General and administrative expenses (e) | 161 | 139 | 442 | 367 | ||||||||||||
Depreciation and amortization expense | 390 | 353 | 1,141 | 1,043 | ||||||||||||
Asset impairment loss | — | — | — | 2 | ||||||||||||
Total costs and expenses | 31,734 | 20,425 | 87,801 | 58,571 | ||||||||||||
Operating income (d) | 1,979 | 590 | 3,513 | 1,498 | ||||||||||||
Other income, net | 1 | 17 | 28 | 29 | ||||||||||||
Interest and debt expense, net of capitalized interest | (88 | ) | (119 | ) | (312 | ) | (363 | ) | ||||||||
Income from continuing operations before income tax expense | 1,892 | 488 | 3,229 | 1,164 | ||||||||||||
Income tax expense | 689 | 185 | 1,178 | 421 | ||||||||||||
Income from continuing operations | 1,203 | 303 | 2,051 | 743 | ||||||||||||
Income (loss) from discontinued operations, net of income taxes | — | (11 | ) | (7 | ) | 19 | ||||||||||
Net income | 1,203 | 292 | 2,044 | 762 | ||||||||||||
Less: Net loss attributable to noncontrolling interests (f) | — | — | (1 | ) | — | |||||||||||
Net income attributable to Valero Energy Corporation stockholders | $ | 1,203 | $ | 292 | $ | 2,045 | $ | 762 | ||||||||
Net income attributable to Valero Energy Corporation stockholders (f): | ||||||||||||||||
Continuing operations | $ | 1,203 | $ | 303 | $ | 2,052 | $ | 743 | ||||||||
Discontinued operations | — | (11 | ) | (7 | ) | 19 | ||||||||||
Total | $ | 1,203 | $ | 292 | $ | 2,045 | $ | 762 | ||||||||
Earnings per common share: | ||||||||||||||||
Continuing operations | $ | 2.12 | $ | 0.54 | $ | 3.61 | $ | 1.31 | ||||||||
Discontinued operations | — | (0.02 | ) | (0.01 | ) | 0.03 | ||||||||||
Total | $ | 2.12 | $ | 0.52 | $ | 3.60 | $ | 1.34 | ||||||||
Weighted average common shares outstanding (in millions) | 564 | 564 | 566 | 563 | ||||||||||||
Earnings per common share – assuming dilution: | ||||||||||||||||
Continuing operations | $ | 2.11 | $ | 0.53 | $ | 3.59 | $ | 1.31 | ||||||||
Discontinued operations | — | (0.02 | ) | (0.01 | ) | 0.03 | ||||||||||
Total | $ | 2.11 | $ | 0.51 | $ | 3.58 | $ | 1.34 | ||||||||
Weighted average common shares outstanding – assuming dilution (in millions) | 569 | 568 | 572 | 567 | ||||||||||||
Supplemental information: | ||||||||||||||||
(1) Includes excise taxes on sales by our U.S. retail system | $ | 229 | $ | 234 | $ | 670 | $ | 667 |
Three Months Ended | Nine Months Ended | |||||||||||||||
September 30, | September 30, | |||||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||
Operating income (loss) by business segment: | ||||||||||||||||
Refining (d) | $ | 1,947 | $ | 590 | $ | 3,476 | $ | 1,479 | ||||||||
Retail | 97 | 105 | 298 | 285 | ||||||||||||
Ethanol | 107 | 47 | 215 | 139 | ||||||||||||
Corporate | (172 | ) | (152 | ) | (476 | ) | (405 | ) | ||||||||
Total | $ | 1,979 | $ | 590 | $ | 3,513 | $ | 1,498 | ||||||||
Depreciation and amortization expense by business segment: | ||||||||||||||||
Refining | $ | 340 | $ | 303 | $ | 995 | $ | 898 | ||||||||
Retail | 29 | 27 | 84 | 80 | ||||||||||||
Ethanol | 10 | 10 | 28 | 27 | ||||||||||||
Corporate | 11 | 13 | 34 | 38 | ||||||||||||
Total | $ | 390 | $ | 353 | $ | 1,141 | $ | 1,043 | ||||||||
Operating highlights: | ||||||||||||||||
Refining (a) (b) (d): | ||||||||||||||||
Throughput margin per barrel | $ | 13.24 | $ | 8.13 | $ | 10.80 | $ | 7.97 | ||||||||
Operating costs per barrel: | ||||||||||||||||
Operating expenses | 3.65 | 3.71 | 3.80 | 3.84 | ||||||||||||
Depreciation and amortization expense | 1.43 | 1.50 | 1.56 | 1.56 | ||||||||||||
Total operating costs per barrel | 5.08 | 5.21 | 5.36 | 5.40 | ||||||||||||
Operating income per barrel | $ | 8.16 | $ | 2.92 | $ | 5.44 | $ | 2.57 | ||||||||
Throughput volumes (thousand barrels per day): | ||||||||||||||||
Feedstocks: | ||||||||||||||||
Heavy sour crude | 540 | 443 | 455 | 452 | ||||||||||||
Medium/light sour crude | 455 | 402 | 415 | 399 | ||||||||||||
Acidic sweet crude | 150 | 51 | 117 | 51 | ||||||||||||
Sweet crude | 739 | 708 | 695 | 655 | ||||||||||||
Residuals | 310 | 239 | 284 | 195 | ||||||||||||
Other feedstocks | 123 | 113 | 122 | 115 | ||||||||||||
Total feedstocks | 2,317 | 1,956 | 2,088 | 1,867 | ||||||||||||
Blendstocks and other | 275 | 247 | 252 | 241 | ||||||||||||
Total throughput volumes | 2,592 | 2,203 | 2,340 | 2,108 | ||||||||||||
Yields (thousand barrels per day): | ||||||||||||||||
Gasolines and blendstocks | 1,196 | 1,088 | 1,069 | 1,046 | ||||||||||||
Distillates | 894 | 766 | 793 | 695 | ||||||||||||
Other products (g) | 519 | 381 | 491 | 392 | ||||||||||||
Total yields | 2,609 | 2,235 | 2,353 | 2,133 |
Three Months Ended | Nine Months Ended | |||||||||||||||
September 30, | September 30, | |||||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||
Refining operating highlights by region (h): | ||||||||||||||||
Gulf Coast: | ||||||||||||||||
Operating income | $ | 1,167 | $ | 388 | $ | 2,064 | $ | 1,027 | ||||||||
Throughput volumes (thousand barrels per day) | 1,522 | 1,336 | 1,418 | 1,268 | ||||||||||||
Throughput margin per barrel | $ | 13.08 | $ | 8.34 | $ | 10.48 | $ | 8.35 | ||||||||
Operating costs per barrel: | ||||||||||||||||
Operating expenses | 3.31 | 3.65 | 3.62 | 3.78 | ||||||||||||
Depreciation and amortization expense | 1.43 | 1.54 | 1.53 | 1.60 | ||||||||||||
Total operating costs per barrel | 4.74 | 5.19 | 5.15 | 5.38 | ||||||||||||
Operating income per barrel | $ | 8.34 | $ | 3.15 | $ | 5.33 | $ | 2.97 | ||||||||
Mid-Continent: | ||||||||||||||||
Operating income | $ | 586 | $ | 131 | $ | 1,146 | $ | 271 | ||||||||
Throughput volumes (thousand barrels per day) | 400 | 422 | 401 | 392 | ||||||||||||
Throughput margin per barrel | $ | 22.27 | $ | 8.06 | $ | 16.18 | $ | 7.59 | ||||||||
Operating costs per barrel: | ||||||||||||||||
Operating expenses | 4.76 | 3.34 | 4.14 | 3.63 | ||||||||||||
Depreciation and amortization expense | 1.59 | 1.33 | 1.56 | 1.42 | ||||||||||||
Total operating costs per barrel | 6.35 | 4.67 | 5.70 | 5.05 | ||||||||||||
Operating income per barrel | $ | 15.92 | $ | 3.39 | $ | 10.48 | $ | 2.54 | ||||||||
North Atlantic (a): | ||||||||||||||||
Operating income | $ | 65 | $ | 36 | $ | 104 | $ | 81 | ||||||||
Throughput volumes (thousand barrels per day) | 386 | 193 | 268 | 189 | ||||||||||||
Throughput margin per barrel | $ | 5.46 | $ | 6.04 | $ | 5.32 | $ | 6.01 | ||||||||
Operating costs per barrel: | ||||||||||||||||
Operating expenses | 2.91 | 2.75 | 2.92 | 2.98 | ||||||||||||
Depreciation and amortization expense | 0.74 | 1.30 | 0.98 | 1.47 | ||||||||||||
Total operating costs per barrel | 3.65 | 4.05 | 3.90 | 4.45 | ||||||||||||
Operating income per barrel | $ | 1.81 | $ | 1.99 | $ | 1.42 | $ | 1.56 | ||||||||
West Coast: | ||||||||||||||||
Operating income | $ | 129 | $ | 35 | $ | 162 | $ | 102 | ||||||||
Throughput volumes (thousand barrels per day) | 284 | 252 | 253 | 259 | ||||||||||||
Throughput margin per barrel | $ | 11.96 | $ | 8.66 | $ | 9.87 | $ | 8.14 | ||||||||
Operating costs per barrel: | ||||||||||||||||
Operating expenses | 4.94 | 5.42 | 5.21 | 5.08 | ||||||||||||
Depreciation and amortization expense | 2.08 | 1.74 | 2.31 | 1.62 | ||||||||||||
Total operating costs per barrel | 7.02 | 7.16 | 7.52 | 6.70 | ||||||||||||
Operating income per barrel | $ | 4.94 | $ | 1.50 | $ | 2.35 | $ | 1.44 | ||||||||
Operating income for regions above | $ | 1,947 | $ | 590 | $ | 3,476 | $ | 1,481 | ||||||||
Asset impairment loss applicable to refining | — | — | — | (2 | ) | |||||||||||
Total refining operating income | $ | 1,947 | $ | 590 | $ | 3,476 | $ | 1,479 |
Three Months Ended | Nine Months Ended | |||||||||||||||
September 30, | September 30, | |||||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||
Average market reference prices and differentials (i): | ||||||||||||||||
Feedstocks (dollars per barrel): | ||||||||||||||||
Louisiana Light Sweet (LLS) crude oil | $ | 112.21 | $ | 78.66 | $ | 111.73 | $ | 79.35 | ||||||||
LLS less West Texas Intermediate (WTI) crude oil | 22.47 | 2.58 | 16.34 | 1.83 | ||||||||||||
LLS less Alaska North Slope (ANS) crude oil | 0.60 | 3.03 | 2.44 | 2.27 | ||||||||||||
LLS less Brent crude oil | (1.43 | ) | 1.73 | (0.82 | ) | 2.14 | ||||||||||
LLS less Mars crude oil | 2.53 | 3.96 | 4.05 | 3.39 | ||||||||||||
LLS less Maya crude oil | 13.48 | 11.04 | 14.58 | 10.88 | ||||||||||||
WTI crude oil | $ | 89.74 | $ | 76.08 | $ | 95.39 | $ | 77.52 | ||||||||
WTI less Mars crude oil | (19.94 | ) | 1.38 | (12.29 | ) | 1.56 | ||||||||||
WTI less Maya crude oil | (8.99 | ) | 8.46 | (1.76 | ) | 9.05 | ||||||||||
Products (dollars per barrel): | ||||||||||||||||
Gulf Coast: | ||||||||||||||||
Conventional 87 gasoline less LLS | $ | 8.20 | $ | 4.35 | $ | 7.43 | $ | 6.26 | ||||||||
Ultra-low-sulfur diesel less LLS | 14.19 | 9.12 | 13.09 | 8.61 | ||||||||||||
Propylene less LLS | 12.46 | 2.61 | 19.33 | 7.80 | ||||||||||||
Conventional 87 gasoline less WTI | 30.67 | 6.93 | 23.77 | 8.09 | ||||||||||||
Ultra-low-sulfur diesel less WTI | 36.66 | 11.70 | 29.43 | 10.44 | ||||||||||||
Propylene less WTI | 34.93 | 5.19 | 35.67 | 9.63 | ||||||||||||
Mid-Continent: | ||||||||||||||||
Conventional 87 gasoline less WTI | $ | 32.11 | $ | 9.20 | $ | 24.79 | $ | 8.77 | ||||||||
Ultra-low-sulfur diesel less WTI | 38.34 | 13.20 | 30.75 | 11.06 | ||||||||||||
North Atlantic: | ||||||||||||||||
Conventional 87 gasoline less Brent | $ | 7.48 | $ | 5.85 | $ | 6.29 | $ | 8.33 | ||||||||
Ultra-low-sulfur diesel less Brent | 14.55 | 12.16 | 14.04 | 12.15 | ||||||||||||
Conventional 87 gasoline less WTI | 31.38 | 6.70 | 23.45 | 8.02 | ||||||||||||
Ultra-low-sulfur diesel less WTI | 38.45 | 13.01 | 31.20 | 11.84 | ||||||||||||
West Coast: | ||||||||||||||||
CARBOB 87 gasoline less ANS | $ | 10.27 | $ | 16.96 | $ | 13.39 | $ | 14.97 | ||||||||
CARB diesel less ANS | 15.77 | 15.10 | 18.56 | 12.95 | ||||||||||||
CARBOB 87 gasoline less WTI | 32.14 | 16.51 | 27.29 | 14.53 | ||||||||||||
CARB diesel less WTI | 37.64 | 14.65 | 32.46 | 12.51 | ||||||||||||
New York Harbor corn crush (dollars per gallon) | $ | 0.36 | $ | 0.43 | $ | 0.17 | $ | 0.41 |
Three Months Ended | Nine Months Ended | |||||||||||||||
September 30, | September 30, | |||||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||
Retail - U.S. (c): | ||||||||||||||||
Operating income | $ | 59 | $ | 72 | $ | 165 | $ | 181 | ||||||||
Company-operated fuel sites (average) | 994 | 990 | 994 | 990 | ||||||||||||
Fuel volumes (gallons per day per site) | 5,168 | 5,204 | 5,053 | 5,115 | ||||||||||||
Fuel margin per gallon | $ | 0.155 | $ | 0.176 | $ | 0.146 | $ | 0.158 | ||||||||
Merchandise sales | $ | 324 | $ | 322 | $ | 930 | $ | 910 | ||||||||
Merchandise margin (percentage of sales) | 29.2 | % | 28.8 | % | 28.6 | % | 28.4 | % | ||||||||
Margin on miscellaneous sales | $ | 22 | $ | 21 | $ | 66 | $ | 65 | ||||||||
Operating expenses | $ | 111 | $ | 108 | $ | 312 | $ | 306 | ||||||||
Depreciation and amortization expense | $ | 19 | $ | 18 | $ | 56 | $ | 54 | ||||||||
Retail - Canada (c): | ||||||||||||||||
Operating income | $ | 38 | $ | 33 | $ | 133 | $ | 104 | ||||||||
Fuel volumes (thousand gallons per day) | 3,214 | 3,214 | 3,210 | 3,131 | ||||||||||||
Fuel margin per gallon | $ | 0.273 | $ | 0.247 | $ | 0.303 | $ | 0.263 | ||||||||
Merchandise sales | $ | 72 | $ | 66 | $ | 197 | $ | 179 | ||||||||
Merchandise margin (percentage of sales) | 29.4 | % | 30.4 | % | 29.6 | % | 30.3 | % | ||||||||
Margin on miscellaneous sales | $ | 11 | $ | 10 | $ | 33 | $ | 29 | ||||||||
Operating expenses | $ | 66 | $ | 61 | $ | 196 | $ | 178 | ||||||||
Depreciation and amortization expense | $ | 10 | $ | 9 | $ | 28 | $ | 26 | ||||||||
Ethanol: | ||||||||||||||||
Operating income | $ | 107 | $ | 47 | $ | 215 | $ | 139 | ||||||||
Production (thousand gallons per day) | 3,272 | 3,100 | 3,317 | 2,943 | ||||||||||||
Gross margin per gallon of production | $ | 0.73 | $ | 0.54 | $ | 0.60 | $ | 0.54 | ||||||||
Operating costs per gallon of production: | ||||||||||||||||
Operating expenses | 0.34 | 0.34 | 0.33 | 0.33 | ||||||||||||
Depreciation and amortization expense | 0.04 | 0.03 | 0.03 | 0.04 | ||||||||||||
Total operating costs per gallon of production | 0.38 | 0.37 | 0.36 | 0.37 | ||||||||||||
Operating income per gallon of production | $ | 0.35 | $ | 0.17 | $ | 0.24 | $ | 0.17 | ||||||||
September 30, | December 31, | |||||||||||||||
2011 | 2010 | |||||||||||||||
Balance Sheet Data: | ||||||||||||||||
Cash and temporary cash investments | $ | 2,829 | $ | 3,334 | ||||||||||||
Total debt | 7,648 | 8,337 |
(a) | The statement of income data for the three and nine months ended September 30, 2011 includes the results of operations of our refinery in Wales, United Kingdom (Pembroke Refinery), including the related marketing and logistics business, from the date of its acquisition, August 1, 2011, through September 30, 2011. In addition, the refining segment and North Atlantic region operating highlights for the three and nine months ended September 30, 2011 include the Pembroke Refinery. We acquired this business from a subsidiary of Chevron Corporation for approximately $1.7 billion, net of cash acquired. |
(b) | On December 17, 2010, we sold our refinery in Paulsboro, New Jersey, and associated inventory to PBF Holding Company LLC for $707 million, and on June 1, 2010, we sold the assets of our shutdown refinery in Delaware City, Delaware, and associated terminal and pipeline assets to PBF Energy Partners LP for $220 million. The results of operations of these refineries are reflected in discontinued operations, and the refining segment and North Atlantic region operating highlights exclude these refineries. |
(c) | Credit card transaction processing fees incurred by our Retail business segment of $23 million and $68 million for the three and nine months ended September 30, 2010, respectively, were reclassified from Retail operating expenses to cost of sales to conform to the current period presentation. In addition, the Retail-U.S. and Retail-Canada operating highlights for the three and nine months ended September 30, 2010 have been restated to reflect this reclassification. |
(d) | Cost of sales for the nine months ended September 30, 2011 includes a loss of $542 million ($352 million after taxes) on derivative contracts related to forward sales of refined products. These contracts were closed and realized during the first quarter of 2011. The $542 million loss is reflected in refining segment operating income, resulting in a $0.85 reduction in refining throughput margin per barrel for the nine months ended September 30, 2011, and is allocated to refining operating income by region, excluding North Atlantic, based on relative throughput volumes for each region as follows: Gulf Coast- $372 million, or $0.96 per barrel; Mid-Continent- $122 million, or $1.11 per barrel; and West Coast- $48 million, or $0.69 per barrel. |
(e) | General and administrative expenses for the nine months ended September 30, 2010 includes the recognition of a favorable settlement with one of our third-party insurers for $40 million. The settlement relates to our claim of insurance coverage in connection with losses incurred in prior periods. |
(f) | As a result of the Pembroke Refinery acquisition, we own an 85 percent interest in Mainline Pipelines Limited (MLP). In addition, we own a 50 percent interest in Diamond Green Diesel Holdings LLC (DGD). Valero consolidates the financial statements of MLP and DGD due to our controlling financial interests in these entities. The losses incurred by MLP and DGD that are attributable to the owners of the remaining interests have been added back to net income to arrive at net income attributable to Valero. MLP owns a pipeline that distributes gasoline and distillates products from the Pembroke Refinery to terminals in the United Kingdom. DGD is currently building a plant that will process animal fats, used cooking oils, and other vegetable oils into renewable green diesel. The plant will be located next to our St. Charles Refinery in Norco, Louisiana. |
(g) | Primarily includes petrochemicals, gas oils, No. 6 fuel oil, petroleum coke, and asphalt. |
(h) | The regions reflected herein contain the following refineries: Gulf Coast- Corpus Christi East, Corpus Christi West, Texas City, Houston, Three Rivers, St. Charles, Aruba, and Port Arthur Refineries; Mid-Continent- McKee, Ardmore, and Memphis Refineries; North Atlantic (formerly known as Northeast)- Pembroke and Quebec City Refineries; and West Coast- Benicia and Wilmington Refineries. |
(i) | Average market reference prices for Louisiana Light Sweet (LLS) crude oil, along with price differentials between the price of LLS crude oil and other types of crude oil, have been included in the table of Average Market Reference Prices and Differentials. The table also includes price differentials by region between the prices of certain products and the benchmark crude oil that provides the best indicator of product margins for each region. We previously provided feedstock and product differentials based on the price of West Texas Intermediate (WTI) crude oil. However, the price of WTI crude oil no longer provides a reasonable benchmark price of crude oil for all regions. Beginning in late 2010, WTI light-sweet crude oil began to price at a discount to waterborne light-sweet crude oils, such as LLS and Brent, because of increased WTI supplies resulting from greater domestic production and increased deliveries of crude oil from Canada into the Mid-Continent region. Therefore, the use of the price of WTI crude oil as a benchmark price for regions that do not process WTI crude oil is no longer reasonable. |