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Valero Energy Corp. Reports Operating Results (10-Q)

November 06, 2012 | About:
10qk

10qk

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Valero Energy Corp. (VLO) filed Quarterly Report for the period ended 2012-09-30.

Valero Energy Corporation has a market cap of $16.02 billion; its shares were traded at around $29.82 with a P/E ratio of 7.8 and P/S ratio of 0.1. The dividend yield of Valero Energy Corporation stocks is 2.4%. Valero Energy Corporation had an annual average earning growth of 6.5% over the past 10 years.

Highlight of Business Operations:

The results for the first nine months of 2012 were significantly impacted by an asset impairment loss of $956 million, of which $928 million related to our Aruba Refinery, and severance expense of $41 million, which was also related to our Aruba Refinery. In addition, the results of the first nine months of 2011 were significantly impacted by a $542 million loss on commodity derivative contracts related to forward sales of refined product, which were closed and realized in the first quarter of 2011. Excluding these significant items, total operating income for the first nine months of 2012 and the first nine months of 2011 would have

Operating revenues increased 3 percent (or $1.0 billion) for the third quarter of 2012 compared to the third quarter of 2011 primarily as a result of higher refined product prices between the two periods related to our refining segment operations. Throughput volumes were essentially unchanged between the two quarters because the incremental throughputs of 55,000 barrels per day and 52,000 barrels per day from the Meraux and Pembroke Refineries, which were acquired on October 1, 2011 and August 1, 2011, respectively, were offset by a 180,000 barrel per day decline in throughput volumes at the Aruba Refinery due to the suspension of its operations in March 2012. Operating income decreased $670 million and income from continuing operations before income tax expense decreased $655 million for the third quarter of 2012 compared to amounts reported for the third quarter of 2011 due to a $419 million decrease in refining segment operating income, a $56 million decrease in retail segment operating income, and a $180 million decrease in ethanol segment operating income, which are discussed below.

Cost of sales for the nine months ended September 30, 2011 includes a loss of $542 million ($352 million after taxes) on commodity derivative contracts related to the forward sales of refined product. These contracts were closed and realized during the first quarter of 2011. The loss is reflected in refining segment operating income for the nine months ended September 30, 2011, but throughput margin per barrel for the refining segment has been restated from the amount previously presented to exclude this $542 million loss ($0.85 per barrel). In addition, operating income and throughput margin per barrel for the U.S. Gulf Coast, U.S. Mid-Continent, and U.S. West Coast regions for the nine months ended September 30, 2011 have been restated from the amounts previously presented to exclude the portion of this loss that had been allocated to them of $372 million ($0.96 per barrel); $122 million ($1.11 per barrel), and $48 million ($0.69 per barrel), respectively.

The net cash provided by operating activities during the first nine months of 2012 combined with $300 million of proceeds from the remarketing of the 4.0% Gulf Opportunity Zone Revenue Bonds Series 2010 (GO Zone Bonds), $1.1 billion in borrowings under our revolving credit facility, and $1.5 billion of proceeds from the sale of receivables under our accounts receivable sales facility were used mainly to:

We have an accounts receivable sales facility with a group of third-party entities and financial institutions to sell eligible trade receivables on a revolving basis. In July 2012, we amended our agreement to increase the facility from $1.0 billion to $1.5 billion and extended the maturity date to July 2013. During the nine months ended September 30, 2012, we sold $1.5 billion of interests in eligible receivables to the third-party entities and financial institutions under this facility, and we repaid $1.7 billion under this facility. As of September 30, 2012, the amount of interests in eligible receivables sold was $100 million.

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