Debt and Finance Lease Obligations

12 Months Ended

Dec. 31, 2023

Debt and Lease Obligation [Abstract]

DEBT AND FINANCE LEASE OBLIGATIONS

9.    DEBT AND FINANCE LEASE OBLIGATIONS

Debt, at stated values, and finance lease obligations consisted of the following (in millions):

	Final Maturity	December 31,
		2023		2022
Credit facilities:
Valero Revolver	2027	$	—	$	—
Canadian Revolver	2023	n/a		—
Accounts Receivable Sales Facility	2024	—		—
DGD Revolver	2026	250		100
DGD Loan Agreement	2026	—		25
IEnova Revolver	2028	766		717
Public debt:
Valero Senior Notes
1.200%	2024	167		167
2.850%	2025	251		251
3.65%	2025	189		189
3.400%	2026	426		426
2.150%	2027	564		578
4.350%	2028	591		606
4.000%	2029	439		439
8.75%	2030	200		200
2.800%	2031	462		472
7.5%	2032	729		733
6.625%	2037	1,380		1,442
6.75%	2037	24		24
10.500%	2039	113		113
4.90%	2045	621		626
3.650%	2051	829		855
4.000%	2052	508		553
7.45%	2097	70		70
Valero Energy Partners LP (VLP) Senior Notes
4.375%	2026	146		146
4.500%	2028	456		474
Debenture, 7.65%	2026	100		100
Other debt	2024	14		19
Net unamortized debt issuance costs and other		(77)		(84)
Total debt		9,218		9,241
Finance lease obligations (see Note 5)		2,306		2,394
Total debt and finance lease obligations		11,524		11,635
Less: Current portion		1,406		1,109
Debt and finance lease obligations, less current portion		$	10,118	$	10,526

Credit Facilities

Valero Revolver

We have a $4 billion revolving credit facility (the Valero Revolver) that matures in November 2027. We have the option to increase the aggregate commitments under the Valero Revolver to $5.5 billion, subject to certain conditions. The Valero Revolver also provides for the issuance of letters of credit of up to $2.4 billion.

Outstanding borrowings under the Valero Revolver bear interest, at our option, at either (i) the Adjusted Term SOFR, a secured overnight financing rate (SOFR) or (ii) the Alternate Base Rate (each of these rates is defined in the Valero Revolver), plus the applicable margins. The Valero Revolver also requires payments for customary fees, including facility fees, letter of credit participation fees, and administrative agent fees. The interest rate and facility fees under the Valero Revolver are subject to adjustment based upon the credit ratings assigned to our senior unsecured debt.

Canadian Revolver

One of our Canadian subsidiaries had a C$150 million committed revolving credit facility (the Canadian Revolver) with a maturity date of November 2023. The Canadian Revolver provided for the issuance of letters of credit. Prior to November 30, 2023, all letters of credit under this facility were canceled and the facility was terminated.

Accounts Receivable Sales Facility

We have an accounts receivable sales facility with a group of third-party entities and financial institutions to sell up to $1.3 billion of eligible trade receivables on a revolving basis. In July 2023, we extended the maturity date of this facility to July 2024. Under this program, one of our marketing subsidiaries (Valero Marketing) sells eligible receivables, without recourse, to another of our subsidiaries (Valero Capital), whereupon the receivables are no longer owned by Valero Marketing. Valero Capital, in turn, sells an undivided percentage ownership interest in the eligible receivables, without recourse, to the third-party entities and financial institutions. To the extent that Valero Capital retains an ownership interest in the receivables it has purchased from Valero Marketing, such interest is included in our financial statements solely as a result of the consolidation of the financial statements of Valero Capital with those of Valero Energy Corporation; the receivables are not available to satisfy the claims of the creditors of Valero Marketing or Valero Energy Corporation.

As of December 31, 2023 and 2022, $2.6 billion and $3.0 billion, respectively, of our accounts receivable composed the designated pool of accounts receivable included in the program. All amounts outstanding under the accounts receivable sales facility are reflected as debt in our balance sheets and proceeds and repayments are reflected as cash flows from financing activities. Outstanding borrowings under the facility bear interest, at either (i) an adjusted daily simple SOFR or (ii) an alternate base rate as allowed under the terms of this facility, plus applicable margins. The interest rates under the program are subject to adjustment based upon the credit ratings assigned to our senior unsecured debt. The program also requires payments for customary fees, including facility fees.

DGD Revolver

In March 2021, DGD, as described in Note 12, entered into a $400 million unsecured revolving credit facility (the DGD Revolver) with a syndicate of financial institutions. In June 2023, DGD amended this

facility to (i) extend the maturity date from March 2024 to June 2026 and (ii) transition the benchmark reference interest rate previously based on the London Interbank Offered Rate (LIBOR) to a SOFR. DGD has the option to increase the aggregate commitments under the DGD Revolver to $550 million, subject to certain restrictions. The DGD Revolver also provides for the issuance of letters of credit of up to $150 million. The DGD Revolver is only available to fund the operations of DGD, and the creditors of DGD do not have recourse against us. As of December 31, 2023, all outstanding borrowings under this facility are reflected in current portion of debt as payment is expected to occur in 2024.

Effective June 2023, outstanding borrowings under the DGD Revolver generally bear interest, at DGD’s option, at (i) an alternate base rate, (ii) an adjusted term SOFR, or (iii) an adjusted daily simple SOFR as allowed under the terms of the agreement for the applicable interest period in effect from time to time, plus the applicable margins. As of December 31, 2023 and 2022, the variable interest rate on the DGD Revolver was 7.201 percent and 5.880 percent, respectively. The DGD Revolver also requires payments for customary fees, including unused commitment fees, letter of credit fees, and administrative agent fees.

DGD Loan Agreement

DGD had an unsecured revolving loan agreement with its members (Darling Ingredients Inc. (Darling) and us) with a maturity date of April 2022. Under this agreement, each member had committed $25 million, resulting in aggregate commitments of $50 million. In March 2022, the maturity date of this facility was extended to April 2023, and then further extended to June 2023. In June 2023, DGD entered into a new unsecured revolving loan agreement (the DGD Loan Agreement) with its members that replaced and superseded the previous agreement. The new agreement includes the following modifications from the previous agreement: (i) extends the maturity date from June 2023 to June 2026, (ii) increases each member’s commitment from $25 million to $100 million, resulting in an increase in aggregate commitments from $50 million to $200 million, and (iii) transitions the benchmark reference interest rate previously based on the LIBOR to a SOFR. The DGD Loan Agreement is only available to fund the operations of DGD. Any outstanding borrowings under this agreement represent loans made by the noncontrolling member as any transactions between DGD and us under this agreement are eliminated in consolidation.

Effective June 2023, outstanding borrowings under the DGD Loan Agreement bear interest at a term SOFR for the applicable interest period in effect from time to time plus the applicable margin. There were no outstanding borrowings under the DGD Loan Agreement as of December 31, 2023. As of December 31, 2022, the variable interest rate was 6.672 percent.

IEnova Revolver

Central Mexico Terminals, as described in Note 12, has a combined $830 million unsecured revolving credit facility (IEnova Revolver) with IEnova (defined in Note 12), that matures in February 2028. IEnova may terminate this revolver at any time and demand repayment of all outstanding amounts; therefore, all outstanding borrowings are reflected in current portion of debt. The IEnova Revolver is only available to fund the operations of Central Mexico Terminals, and the creditors of Central Mexico Terminals do not have recourse against us.

Outstanding borrowings under the IEnova Revolver bear interest at a SOFR for the applicable interest period in effect from time to time plus the applicable margin. The interest rate under this revolver is

subject to adjustment, with agreement by both parties, based upon changes in market conditions. As of December 31, 2023 and 2022, the variable interest rate was 9.245 percent and 7.393 percent, respectively.

Summary of Credit Facilities

We had outstanding borrowings, letters of credit issued, and availability under our credit facilities as follows (in millions):

				December 31, 2023
	Facility Amount		Maturity Date	Outstanding Borrowings		Letters of Credit Issued (a)		Availability
Committed facilities:
Valero Revolver	$	4,000	November 2027	$	—	$	4	$	3,996
Accounts receivable sales facility	1,300		July 2024	—		n/a		1,300
Committed facilities of VIEs (b):
DGD Revolver	400		June 2026	250		54		96
DGD Loan Agreement (c)	100		June 2026	—		n/a		100
IEnova Revolver	830		February 2028	766		n/a		64
Uncommitted facilities:
Letter of credit facilities	n/a		n/a	n/a		—		n/a

________________________

(a)Letters of credit issued as of December 31, 2023 expire at various times in 2024 through 2026.

(b)Creditors of the VIEs do not have recourse against us.

(c)The amounts shown for this facility represent the facility amount available from, and borrowings outstanding to, the noncontrolling member as any transactions between DGD and us under this facility are eliminated in consolidation.

We are charged letter of credit issuance fees under our various uncommitted short-term bank credit facilities. These uncommitted credit facilities have no commitment fees or compensating balance requirements.

Activity under our credit facilities was as follows (in millions):

	Year Ended December 31,
	2023		2022		2021
Borrowings:
Accounts receivable sales facility	$	1,750	$	1,600	$	—
DGD Revolver	550		759		276
DGD Loan Agreement	—		50		25
IEnova Revolver	120		105		81
Repayments:
Accounts receivable sales facility	(1,750)		(1,600)		—
DGD Revolver	(400)		(759)		(176)
DGD Loan Agreement	(25)		(50)		—
IEnova Revolver	(71)		(67)		—

Public Debt

In February 2023, we used cash on hand to purchase and retire a portion of the following notes (in millions):

Debt Purchased and Retired	Principal Amount
6.625% Senior Notes due 2037	$	62
3.650% Senior Notes due 2051	26
4.000% Senior Notes due 2052	45
Various other Valero and VLP Senior Notes	66
Total	$	199

During the year ended December 31, 2022, the following activity occurred:

•In November and December 2022, we used cash on hand to purchase and retire a portion of the following notes (in millions):

Debt Purchased and Retired	Principal Amount
2.150% Senior Notes due 2027	$	22
4.500% VLP Senior Notes due 2028	26
2.800% Senior Notes due 2031	28
6.625% Senior Notes due 2037	58
4.90% Senior Notes due 2045	24
3.650% Senior Notes due 2051	95
4.000% Senior Notes due 2052	97
7.45% Senior Notes due 2097	30
Various other Valero Senior Notes	62
Total	$	442

•In September 2022, we used cash on hand to purchase and retire a portion of the following notes in connection with cash tender offers that we publicly announced in August 2022 and completed in September 2022 (in millions):

Debt Purchased and Retired	Principal Amount
3.65% Senior Notes due 2025	$	48
2.850% Senior Notes due 2025	291
4.375% VLP Senior Notes due 2026	62
3.400% Senior Notes due 2026	166
4.350% Senior Notes due 2028	131
4.000% Senior Notes due 2029	552
Total	$	1,250

•In June 2022, we reduced our debt through the acquisition of the $300 million of 4.00 percent Gulf Opportunity Zone Revenue Bonds Series 2010 that are due December 1, 2040, but were subject to mandatory tender on June 1, 2022. We have the option to effectuate a remarketing of these bonds.

•In February 2022, we issued $650 million of 4.000 percent Senior Notes due June 1, 2052. Proceeds from this debt issuance totaled $639 million before deducting the underwriting discount and other debt issuance costs. The proceeds and cash on hand were used to purchase and retire a

portion of the following notes in connection with cash tender offers that we publicly announced and completed in February 2022 (in millions):

Debt Purchased and Retired	Principal Amount
3.65% Senior Notes due 2025	$	72
2.850% Senior Notes due 2025	507
4.375% VLP Senior Notes due 2026	168
3.400% Senior Notes due 2026	653
Total	$	1,400

During the year ended December 31, 2021, the following activity occurred:

•In November 2021, we issued $500 million of 2.800 percent Senior Notes due December 1, 2031 and $950 million of 3.650 percent Senior Notes due December 1, 2051. Proceeds from these debt issuances totaled $1.446 billion before deducting the underwriting discounts and other debt issuance costs. These proceeds and cash on hand were used to redeem or purchase and retire a portion of the following notes in connection with cash tender offers that we publicly announced in November 2021 and completed in December 2021 (in millions):

Debt Redeemed or Purchased and Retired	Principal Amount
2.700% Senior Notes due 2023	$	850
1.200% Senior Notes due 2024	756
3.65% Senior Notes due 2025	276
4.375% VLP Senior Notes due 2026	124
10.500% Senior Notes due 2039	137
Total	$	2,143

In connection with the early debt redemption and retirement activity described above, we recognized a charge of $193 million in “other income, net” comprised of $179 million of premiums paid, $10 million of unamortized debt discounts and deferred debt costs, and $4 million of bank fees.

•In September 2021, we redeemed our Floating Rate Senior Notes due September 15, 2023 for $575 million.

Other Disclosures

“Interest and debt expense, net of capitalized interest” is comprised as follows (in millions):

	Year Ended December 31,
	2023		2022		2021
Interest and debt expense	$	611	$	619	$	651
Less: Capitalized interest	19		57		48
Interest and debt expense, net of capitalized interest	$	592	$	562	$	603

Our credit facilities and other debt arrangements contain various customary restrictive covenants, including cross-default and cross-acceleration clauses.

Principal maturities for our debt obligations as of December 31, 2023 were as follows (in millions):

2024 (a)	$	1,197
2025	441
2026	672
2027	564
2028	1,047
Thereafter	5,374
Net unamortized debt issuance costs and other	(77)
Total debt	$	9,218

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(a)Maturities for 2024 include the DGD Revolver and the IEnova Revolver.