The companies on the Global 500 employ 70.2 million people, and their revenue represents more than one-third of the world’s GDP.

Fortune Global 500

With a combined revenue of $21 trillion and $2.1 trillion in profits, the 2026 Fortune 500 is the definitive list of America's largest companies.

Fortune 500

The corporations on our annual list of the world's 500 largest companies combined to generate $41.7 trillion in revenue over the past year.

Almost $20 trillion in revenue—and a record-breaking $1.87 trillion in profits. Introducing the 2025 Fortune 500, the definitive list of the biggest companies in America.

Energy sector dominated this year for the first time since 2008, with 28 companies featured on the list.

100 Fastest-Growing Companies

The corporations on our annual list posted aggregate revenues of $41 trillion for the second year in a row.

Industries included in the sector are mining, oil and gas exploration and services, pipelines, refining, and utilities.

Fortune Sector Leaders: Energy

The Fortune 500, in its 70th year in 2024, ranks the biggest U.S. companies by revenue.

The corporations on our annual list of the world’s largest companies delivered a record $41 trillion in aggregate revenues.

G500-2023-Valero

Petroleum refining company Valero Energy leaped 42 spots in our ranking this year, bringing in $175.7 billion in revenue, a 53% increase over the previous year. 
<ul> 
 	<li>In May 2023, Valero announced that Joseph W. Gorder would retire as chief executive officer effective June 30, staying on as executive chairman. R. Lane Riggs, Valero’s president and chief operating officer, succeded Gorder.</li> 
 	<li>The company’s refining, renewable diesel, and ethanol segments each reported substantial increases in revenue as of the first quarter of 2023 compared to the year-earlier quarter.</li> 
 	<li>Valero’s Port Arthur Coker project, which the company expects will improve its efficiency by converting residual crude oil into useable fuels, was completed in March 2023 and began operations the month after.</li> 
 	<li>In April 2023, Valero agreed to pay a $1.2 million settlement to the U.S. Environmental Protection Agency after its refinery in Benicia, Calif., violated the federal Clean Air Act.</li> 
</ul>

The Fortune 500, in its 69th year in 2023, ranks the biggest U.S. companies by revenue.

F500 2023-Valero Energy

Petroleum refining company Valero Energy leaped 12 spots in our ranking this year, bringing in $171.2 billion in revenue, a 58% increase over the previous year. 
<ul> 
 	<li>In May 2023, Valero announced that Joseph W. Gorder would retire as chief executive officer effective June 30, staying on as executive chairman. R. Lane Riggs, Valero’s president and chief operating officer, will take Gorder’s place as CEO.</li> 
 	<li>The company’s refining, renewable diesel, and ethanol segments each reported substantial increases in revenue as of the first quarter of 2023 compared to the year-earlier quarter.</li> 
 	<li>Valero’s Port Arthur Coker project, which the company expects will improve its efficiency by converting residual crude oil into useable fuels, was completed in March 2023 and began operations the month after.</li> 
 	<li>In April 2023, Valero agreed to pay a $1.2 million settlement to the U.S. Environmental Protection Agency after its refinery in Benicia, Calif., violated the federal Clean Air Act.</li> 
</ul>

Aggregate sales hit $37.8 trillion last year—an increase of 19%, the highest annual growth rate in the list’s history.

This year’s Fortune 500 marks the 68th running of the list.

F500 2022 Valero Energy Corp

Like other oil and gas companies, refining giant Valero Energy enjoyed a snapback in revenue and earnings in 2021 as pandemic lockdowns eased. Valero has launched a number of low-carbon and renewable fuel projects in recent years, and has pledged to reduce emissions from its refining operations 63% from 2020 levels by 2025. The company’s Diamond Alternative Energy has taken some heat from environmentalists, however, for lobbying for renewable fuels over zero-emissions alternatives; Diamond is a plaintiff in a recent federal lawsuit against Environmental Protection Agency regulations designed to encourage the sale of electric vehicles.

Total revenue for the world’s biggest companies fell 4.8% to $31.7 trillion this year—the first decline in half a decade.

G500-2021-164-VALERO ENERGY

<span data-sheets-value="{&quot;1&quot;:2,&quot;2&quot;:&quot;The U.S. refining sector was battered in 2020 by lockdowns and travel restrictions, pushing the San Antonio–based refiner to a $1.4 billion loss. That compares with 2019’s $2.4 billion profit. One saving grace came from Valero’s renewable fuels business, which capitalized on the push for low-carbon alternatives to fossil fuels. The company now expects to invest half of its growth capital in renewable diesel. As part of its expansion, last year Valero approved a new diesel plant that is expected to begin operations in 2023.&quot;}" data-sheets-userformat="{&quot;2&quot;:12673,&quot;3&quot;:{&quot;1&quot;:0},&quot;10&quot;:2,&quot;11&quot;:4,&quot;15&quot;:&quot;Calibri&quot;,&quot;16&quot;:11}">The U.S. refining sector was battered in 2020 by lockdowns and travel restrictions, pushing the San Antonio–based refiner to a $1.4 billion loss. That compares with 2019’s $2.4 billion profit. One saving grace came from Valero’s renewable fuels business, which capitalized on the push for low-carbon alternatives to fossil fuels. The company now expects to invest half of its growth capital in renewable diesel. As part of its expansion, last year Valero approved a new diesel plant that is expected to begin operations in 2023.

This year’s Fortune 500 marks the 67th running of the list.

F500-2021-53-Valero Energy

This year's Fortune Global 500 generated $33.3 trillion in revenues and $2.1 trillion in profits.

G500-2020-071-Valero-Energy

As CEO Joe Gorder put it when the company released its annual financial report, Valero faced another “challenging environment for the refining business” in 2019. Net income sank 17% year-on-year, to $2.8 billion, even as refinery utilization was at 96% and the company refined record amounts of oil. The business completed a network of central Texas pipelines and terminals, extending the reach of its vast U.S. shale business deeper inland. Its 2020 growth ambitions suffered a blow in late November when its renewable fuels business stumbled: Two ethanol plants were forced to close temporarily, and additional plants went offline in March 2020, as the coronavirus pandemic destroyed demand for any and all types of energy.

This year's Fortune 500 marks the 66th running of the list.

F500-2020-032-Valero-Energy

This year's Fortune Global 500 generated $27.7 trillion in revenues and $1.5 trillion in profits.

This year's Fortune 500 marks the 65th running of the list.

This year's Fortune 500 marks the 64th running of the list.

This year's Fortune 500 marks the 63rd running of the list.

Here are the World's Most Admired Companies for 2016 as ranked in their industries. See who made the list.

World's Most Admired Companies

This year's Fortune Global 500 generated $27.6 trillion in revenues and $1.5 trillion in profits.

This year's Fortune 500 marks the 62nd running of the list.

Business insiders have spoken: Asked which companies they most admire, more than 4,100 executives, directors, and analysts chose these top 50 All-Stars.

The world's 500 largest companies generated $31.2 trillion in revenues and $1.7 trillion in profits in 2014. Together, this year's Fortune Global 500 employ 65 million people worldwide and are represented by 36 countries.

This year's Fortune 500 marks the 61st running of the list. Wal-Mart claims the top spot again. See who made the list.

Global business is back. After limping through a worldwide financial crisis and economic slowdown, the 500 largest companies ranked by revenues shattered all sorts of performance records in 2013: They racked up combined revenues of $31.1 trillion, up 2.5% from 2012, and profits soared 27% to nearly $2 trillion. China’s 95 companies (up from 89 last year) posted $5.8 trillion in revenues. The U.S. has four fewer companies on the list than last year but remains (for now) the country leader, with 128 corporations on the list—including No. 1 Wal-Mart Stores—reporting $8.6 trillion in revenues. 

Wal-Mart stayed on top as its sales crept closer to half-a-trillion dollars. Apple moved into the top five. And UnitedHealth Group continued its steady climb. 

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Valero Energy is an oil refiner with operations in the U.S., Canada, Latin America, and Europe. Founded in 1980, the company sells gasoline, diesel, and ethanol through outlets under the Valero, Beacon, Diamond Shamrock, Shamrock, Texaco, and Ultramar brands.

Q2 2026

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Q4 2024

Valero Energy (VLO): Company Profile, Stock Price, News, Rankings

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Valero Energy

valero energy

Greetings and welcome to Valero Energy Corp. Fourth Quarter twenty twenty four Earnings Conference Call. At this time, all participants are on a listen only mode. A question and answer session will follow the formal presentation. As a reminder, this conference is being recorded.

It is now my pleasure to introduce your host, Homer Bollard, Vice President of Investor Relations and Finance. Thank you. You may begin.

Good morning, everyone, and welcome to Valera Energy Corporation's fourth quarter twenty twenty four earnings conference call. With me today are Lane Riggs, our Chairman, CEO and President Jason Frasier, our Executive Vice President and CFO Gary Simmons, our Executive Vice President and COO and several other members of Valero's senior management team. If you have not received our earnings release and would like a copy, you can find 1 on our website at investorvalero.com. Also attached to the earnings release are tables that provide additional financial information on our business segments and reconciliations and disclosures for adjusted financial metrics mentioned on this call. If you have any questions after reviewing these tables, please feel free to contact our Investor Relations team after the call.

I would now 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 earnings release and filings with the SEC. Now, I'll turn the call over to Lane for opening remarks.

Thank you, Homer, and good morning, everyone. I would like to start by highlighting some of our team's accomplishments last year. 2024 was our best year for personnel and process safety and 1 of our best years for environmental performance. Safe and reliable operations drive overall performance and disciplined operations. In refining, we processed a record volume of heavy sour crude in the This demonstrates our refining systems flexibility and highlights the capability of our commercial and operations teams to be able to secure and process the most economic crude oils.

Finally, we set a record for ethanol production with the expansion of the Charles City plant and process optimization at other sites. Our team's relentless focus on operational excellence and low cost operations enabled us to deliver positive results in the in an otherwise weak margin environment. On the strategic front, we continue to deliver on our commitment to grow Valero's earnings capacity through organic investments. The DGD sustainable aviation fuel project was successfully started up in the and is now fully operational. Looking ahead, we are progressing with an SEC unit optimization project at St.

Charles that will enable the refinery to increase the yield of high value products, including high octane alkylate. The project is estimated to cost $2.30,000,000 dollars and is expected to start up in 2026. And we continue to pursue other short cycle high return optimization projects around our existing refining assets. On the financial side, we continue to honor our commitment to shareholder returns with a strong payout ratio of 78% for the year. And earlier this month, our board approved a 6% increase in the quarterly cash dividend further demonstrating our strong financial position.

Looking ahead, refining margins should be supported by low light product inventories ahead of the driving season. And longer term, we still expect product demand to exceed supply with the announced refinery shutdowns this year and the limited capacity additions beyond 2025, supporting long term refining fundamentals. So with that, Homer, I'll hand it back to you.

Thanks, Lane. For the net income attributable to Valero stockholders was $2.81,000,000 dollars or $0,.88 per share compared to $120,000,000,0.0 or $3,.55 per share for the Excluding the adjustments in the earnings release tables, adjusted net income attributable to Valero stockholders was $2.00 $7,000,000 or $0,.64 per share for the compared to $120,000,000,0.0 or $3,.57 per share for the For 2024, net income attributable to Valero stockholders was $280,000,000,0.0 or $8,.58 per share compared to $880,000,000,0.0 or $24,.92 per share in 2023. '20 '20 04/00 adjusted net income attributable to Valero stockholders was $270,000,000,0.0 or $8,.48 per share compared to $890,000,000,0.0 or $24,.96 per share in 2023. The Refining segment reported $4.37,000,000 dollars of operating income for the compared to $160,000,000,0.0 for the Refining throughput volumes in the averaged 3000000 barrels per day or 94% throughput capacity utilization. Refining cash operating expenses were $4,.67 per barrel in the operating income was $170,000,000 for the compared to $84,000,000 for the sales volumes averaged 3400000.0 gallons per day in the The ethanol segment reported $20,000,000 of operating income for the compared to $190,000,000 for the Ethanol production volumes averaged 4600000.0 gallons per day in the G and A expenses were $2.66,000,000 dollars for the and $9.61,000,000 dollars for the full year.

Depreciation and amortization expense was $6.98,000,000 dollars net interest expense was $135,000,000 and income tax benefit was $34,000,000 for the The effective tax rate was 19% for 2024. Net cash provided by operating activities was $110,000,000,0.0 in the Included in this amount was $119,000,000 of adjusted net cash provided by operating activities associated with the other joint venture member share of DGD. Excluding this item, adjusted net cash provided by operating activities was $9.51,000,000 dollars in the Net cash provided by operating activities in 2024 was $670,000,000,0.0 Included in this amount was a $7.95,000,000 dollars favorable change in working capital and $3.71,000,000 dollars of adjusted net cash provided by operating activities associated with the other joint venture member share of DGD. Excluding these items, adjusted net cash provided by operating activities was $550,000,000,0.0 in 2024. Regarding investing activities, we made $5.47,000,000 dollars of capital investments in the of which $4.52,000,000 dollars was for sustaining the business, including costs for turnarounds, catalysts and regulatory compliance and the balance was for growing the business.

Excluding capital investments attributable to the other joint venture member share of DGD and other variable interest entities, capital investments attributable to Valero were $5.15,000,000 dollars in the and $190,000,000,0.0 for the year. Moving to financing activities, we returned $6.00 $1,000,000 to our stockholders in the of which $3.39,000,000 dollars was paid as dividends and $2.62,000,000 dollars was for the purchase of approximately 2,000,000 shares of common stock resulting in a payout ratio of 63% for the quarter. In 2024, we returned 4300000000.0 to stockholders consisting of $290,000,000,0.0 in stock stock buybacks and $140,000,000,0.0 in dividends, resulting in a payout ratio of 78% for the year. In fact, since the start of 2021, our total cash flow from operations have exceeded our total uses of cash over this period, including capital investments. During this time, we delivered over $4,000,000,000 of debt reduction and returned approximately $1,870,000,000,0.0 to stockholders through dividends and share buybacks.

Through share repurchases, we reduced our share count by approximately 6% in 2024 and by 23% since year end 2021. With respect to our balance sheet, we ended the quarter with $810,000,000,0.0 of total debt, $240,000,000,0.0 of finance lease obligations and $470,000,000,0.0 of cash and cash equivalents. Debt to capitalization ratio net of cash and cash equivalents was 17% as of Dec. 31, 2024. And we ended the quarter well capitalized with $530,000,000,0.0 of available liquidity excluding cash.

Turning to guidance, we expect capital investments attributable to Valero for 2025 to be approximately $2,000,000,000 which includes expenditures for turnarounds, catalysts, regulatory compliance and joint venture investments. About $160,000,000,0.0 of that is allocated to sustaining the business and the balance to growth. For modeling our operations, we expect refining throughput volumes to fall within the following ranges: Gulf Coast at 1720000.00 to 1770000.00 barrels per day Mid Continent at 415000 to 435000 barrels per day, West Coast at 190000 to 210000 barrels per day and North Atlantic at 455000 to 475000 barrels per day. We expect refining cash operating expenses in the to be approximately $4,.95 per barrel. With respect to the Renewable Diesel segment, we expect sales volumes to be approximately 1200000000.0 gallons in 2025.

Operating expenses in 2025 should be $0,.51 per gallon, which includes $0,.22 per gallon for non cash costs such as depreciation and amortization. Our ethanol segment is expected to produce 4600000.0 gallons per day in the Operating expenses should average $0,.41 per gallon, which includes $0,.05 per gallon for non cash costs such as depreciation and amortization. For the net interest expense should be about $130,000,000 and total depreciation and amortization expense should be approximately $7.10,000,000 dollars For 2025, we expect G and A expenses to be approximately $9.85,000,000 dollars That concludes our opening remarks. Before we open the call to questions, please limit each turn in the Q and A to 2 questions. If you have more than 2 questions, please rejoin the queue as time permits to ensure other callers have time to ask their questions.

Thank you. The floor is now open for questions. Today's first question is coming from John Royal of JPMorgan. Please go ahead.

Hi, good morning. Thanks for taking my question. So my first question is maybe to Gary, just broadly on market color. You've always given us a good view of the fundamental picture in the sector. How do you view the supply demand balances today for products and the outlook for cracks for this year?

And what do you think are the key things we should look out for in terms of just any early indicators of when this market might turn back up?

Yes, John. It's always difficult to get much of a read on the market this early. I'll tell you that we typically see our sales through our wholesale channel dip fairly significantly through the holiday season, kind of goes through the first couple of weeks of the year then starts to recover. We saw that same dynamic this year. Sales kind of dipped to about 85% of average.

The last couple of weeks, we've seen a nice recovery back to kind of a 1000000 barrels a day level that we typically see. I think yesterday, we did 1040000 barrels a day. Gasoline sales in our system year to date are slightly down year over year. I think when you look at the concentration of our marketing, this makes sense. The snow in the South and Southeast kept people off the road.

And then the Colonial Pipeline outage limited our volumes we had available to sell in some markets. For that window, the pipeline was down. Our current seven day average data shows gasoline sales up 2% year over year. Overall, what we can see is gasoline demand looks good and we expect gasoline demand in The United States to be fairly flat to last year. Diesel sales year to date in our system are also off a few percent.

This was a little more surprising to me mainly because of the cold weather that we've seen. But I think if you look into the data a little bit more, it makes sense. We had about 10000 barrels a day of renewable diesel from Port Arthur that was going to our wholesale channel that we were selling. That material is now going to produce sustainable aviation fuel. So that's a chunk in the year over year decline in diesel sales.

In addition to that, we saw the same dynamic on diesel with some of the snow impacting on road diesel demand. And then I think if you look at Valero, we don't have a big marketing presence in the markets where you see high heating oil demand. So we don't really see that big uplift from the cold weather that you may see. We definitely get that on the bulk side, but not through wholesale. Seven day average shows diesel sales are up about 1% and that's kind of what we expect for the year about a 1% increase in diesel demand in The United States.

Most consultants I've read are showing about a 250000 barrel a day increase in diesel demand just due to cold weather in the North Atlantic Basin. Not only do we expect diesel demand to be better, but we expect a greater percentage of that to be supplied by refinery derived diesel. Last year, we had the big wave of bio and renewable diesel projects hitting the market. We don't see that same dynamic this year. So I think overall, things are shaping up pretty nicely.

We're at total life product inventory 9000000, 10 million barrels below where we were last year at this time. So inventory is in good place. I think at the beginning of the year, the supplydemand balances look similar to last year, but as you progress through the year, you'll see gradual tightening of supply demand balances.

Great. It's very helpful. Thank you, Gary. And then my second question is on capital allocation. You finished the year with another quarter well above your 40% to 50% floor and high 70s for the full year.

But assuming we don't have a significant recovery in cracks from here, how should we think about that payout ratio in a lower crack environment in 'twenty five? Should we expect you to move closer to that 40% to 50% floor?

Good morning, John. This is Jason. I'm going to ask Homer to give you a little more detail on that.

Sure. Yes, John, I mean, you're right. We had a 78% payout for the year, but that was partly funded by our excess cash balance going into the year. But if you want to put this into context with some numbers, if we had held our shareholder payout ratio at 50% for the year, we would have built almost $170,000,000,0.0 of cash for the year. Even if you excluded the $7.95,000,000 dollars of positive impact for working capital for the year and include the $167,000,000 debt repayment we did in the we would have still built over $700,000,000 of cash.

Now taking that a bit further, even if you look at the low margin environment in the we still would have been able to honor our minimum payout commitment of 40% to 50% without leaning into the balance sheet or drawing down cash. So hopefully this gives you some context of the earnings capacity of the portfolio even in a low margin environment and our ability to invest capital, obviously honor our shareholder commitment and flexibility with debt and our balance sheet.

Thank you. The next question is coming from Doug Leggate of Wolfe Research. Please go ahead.

Thank you. Thanks guys. I think Gary might be the most popular man in the call today, Lane. I apologize, but there's obviously a lot going on.

So, I got to try just a couple someone's got to do it. I'm going to try a couple of high level ones, if I may. The headlines I saw just a couple of hours ago was that Trump is still going to go ahead with tariffs on Canada. And we I seem to recall that the last time there were problems with heavy oil supply at Canada, a there was a second order effect that everyone seems to have forgotten about. And I wanted to run this past you and just get your perspective on it.

And that is that if you need to find a substitute for that much heavy oil, you're going to have run cuts. You're going to have utilization yield issues, funding your system and so on. And I wanted to see if you guys thought there was any sense to that in the context of actually became a thing as it relates to the substitution of lighter crudes on the heavy rigs. What would you guys do?

Yes. So Doug, this is Gary. And I can tell you, we've been aware of this for a couple of months. And so our commercial teams and optimization teams have been working hard to develop every possible scenario we can think of and how we would respond to that. Of course, it's why we like our position on The U.

S. Gulf Coast because you can source feedstocks from anywhere around the world and where we also like our feedstock flexibility. But yes, there is a point where if heavy feedstocks become limited, it affects rate and production of clean products certainly from our assets and we'd expect industry wide.

So assuming this is transitory, it's not a big deal, but if it did drag on for an extended period of time, particularly as we switch into summer grade, I mean, could it be meaningful or is that a rounding error?

Hey, Doug, this is Greg. Yes, when we think about it and look at some of those different scenarios, you might see a 10% change in throughput. A lot depends on how far it goes and how deep you have to back off on some of those heavy barrels. But it wouldn't be driving things to a much greater degree than that, I don't think.

Okay. I'm also meaningfully enough when you were talking about the situation you are right now. So we're searching for green shoots guys. That's what we've got to tell what these questions are about. So I apologize, I'm going to try another high level 1 and it really relates to your throughput guidance.

So obviously, everyone is focused on whether it's DAS BOCUS or Lyondell closing or Grangemouth or whatever it happens to be. But it seems to me that coming out of COVID, utilization rates, the concentration or the absence of goods maintenance got solved and the concentration of great maintenance meant everybody ran well. And it seems to us with no storms and all the things you run through, Gary, there's probably about 3% or 4% of utilization that was kind of a best in class world for The U. S. Last year, which is basically 4 refineries, if you think about it.

And so when I look at your guidance for the quarter, you obviously don't give forward cadence for commercial reasons through the rest of the year. But at a high level, how do you see the likelihood that the industry, The U. S. Industry specifically can continue to run at those kind of levels, given the backdrop we've had and the fact that we're down 10% in the last three weeks in utilization?

Yes. So I think certainly what you've seen utilization in the last few weeks is somewhat weather related along with the maintenance activity. I think given the advantages that U. S. Refiners enjoy on feedstock cost and energy cost, you should expect to see that U.

S. Refinery continue refining continues to run at higher utilization rates. And when you have run cuts, they occur elsewhere in the world where they don't have the natural resources advantages that we have.

I think I was thinking more about the reliability aspect as opposed to the cost advantage aspect.

Yes. And I'm sure we've certainly seen an improvement in our system on mechanical availability, and I suspect our peers have as well and it's something we always strive to get better and better at.

Great stuff. All right guys, sorry for the high level questions, but I've had my 2, so I'll leave it there. Thanks so much.

Thank you. The next question is coming from Neil Mehta of Goldman Sachs. Please go ahead.

Yes. Good morning team. Just a couple of questions on the quarter itself. Renewable diesel performance came in I think better than what most market participants were expecting and better than implied by the indicators. So just curious on any thoughts there and the outlook for that business as we work our way through 2025?

Yes, this is Eric. I think a lot there was a 1 time benefit with some inventory optimization at the end of the year that was the bulk of that higher than expected performance. There is a little bit of SAF in that, but I would make it clear that that was mostly some inventory optimization we did at the end of the year. In terms of forward looking in renewable diesel and SAB for us, we're all kind of waiting to see how this market is going to develop and how the policy is going to develop. But overall, things are very much staying in line with kind of what we thought was going to happen.

The 45Z has now replaced the blenders tax credit. We can see that that's now going to limit product imports into The U. S. It is going to make it a carbon intensity scale rather than a flat dollar to every renewable product. All of that is advantageous to Diamond Green Diesel and our platform because like the refining platform, our feedstock flexibility, our ability to export to any of the other markets.

And I think consistent with our outlook from last year, the most attractive markets are going to be in Europe and Canada compared to U. S. And California. So, overall, we're waiting to see how RINs are going to respond, how LCFS is going to respond. And I think you will see those changes emerging in the market in the next couple of months as some of those production and credit reports emerge on how the year ended.

Gary already mentioned that we don't see any increase in renewable production this year. It's still long compared to say D3 RIN credit bank or D4 RIN credit banks and LCFS credit banks. But we do also expect you're going to see some correction in production that will eventually start to pull those credit banks down throughout the year.

That's helpful. And then independent of tariffs, it was notable the amount of heavy that you were able to run through the system. And I think there were some concerns about coking economics in in the quarter given how tight fuel oil was, but clearly you were able to optimize the system to run over 600000 barrels a day of heavy sour oil. So can you just talk about how you were able to do that and the commercial approach to maximizing heavy in a time when fuel oil is pretty tight?

Hey, Neil, this is Greg. I'll start and Gary can talk some more about the market. But you hit on I think the key factor, which is as the fuel oil prices, those differentials narrowed that with fuel oil typically being a feedstock in our Gulf Coast system, we pivoted away from that towards the heavy crudes as an alternative, which continued to show some good value. So that's why you see that shift towards more heavy sour crude. You also notice a reduction on the heavy resid feedstocks that we've processed as well.

And that's kind of how we got to the high level of heavy crude processing. Also keep in mind, we've got the Port Arthur Coker online. That shifts us to a bit of a heavier feed slate as well. So that's part of what you see in that number as well.

Would you like to move on to the next question?

Thank you. The next question is coming from Theresa Chen of Barclays. Please go ahead.

Good morning. Thank you for taking my questions. On the tariff topic specifically, understanding that you're not captive to any specific source of crude based on your footprint and the optionality you have on the Gulf Coast. But as we think about the tariffs on Canada, Mexico incremental sanctions potentially on Venezuela, how are you thinking about life heavy differentials as we move through the year?

Yes, Theresa, this is Gary. I think I'll start with kind of fundamentals, but then cut to really what's driving the market. And certainly on the fundamentals side, typically this time of year, you see less buying of medium and heavy sours just due to turnaround activity. In addition to that, Lyondell coming down puts another 200000 barrels a day heavy on the market. Calls for OPEC crude 01/00 '80 barrels a day of medium sour crude.

So all those things would be supportive of water quality differentials. But in reality, the discussions on sanctions and tariffs are really what's driving the market. And until we see some resolution to that, I don't expect any meaningful moves in the quality differentials.

Understood. And related to the St. Charles FCC project, would you be able to provide a little bit more color on this, what the optimization means in terms of the incremental improvement in the yield of high value products?

Sure, Theresa. It's Greg. Lane mentioned it costs about $2.30,000,000 dollars It definitely meets our investment hurdle at mid cycle pricing. And 1 of the key outcomes for the project is increasing the production of light olefin product out of the FCC. And what that really means is that's additional feedstock we can use to fill the alkylation capacity we have downstream of the FCC there.

And you might remember, we started up a C5 alkylation unit at St. Charles back in And with some tweaks and optimizations we've done to that unit since, we've got some spare capacity in the Alky. And with this project, you will increase high octane outlet production by something on the order of 6000 to 7000 barrels today. That's 1 of the key outcomes and things that drive the value. It's really a good example of identifying some key equipment constraints within the operation that when we modify those constraints of that equipment, it allows us to take full advantage of the capability, not only of the SEC unit in this case, but other equipment and other units in the refinery and again in this case the Alky.

And that's how we generate a good return from the project.

Thank you. The next question is coming from Manav Gupta of UBS. Please go ahead.

Good morning. I wanted some additional color on the North Atlantic capture. Looks like it jumped from 102% last quarter to about 118%. And similarly, the Gulf Coast capture jumped from about 76% to 86%. So Gary, if you could help us out a little, what were some of the factors helping you drive that kind of capture improvement?

Hey, Manav. A couple of things I'd point out on the North Atlantic. It really is a bit of a system question. So it's North Atlantic and Gulf Coast as well. But we go into the wintertime, we start blending more butane into the higher RVP gasoline.

That gives us a bit of a bump in capture as that adds value into the gasoline pool. In both those regions as well, you had good contributions from the wholesale side of the business, the commercial parts. So we saw some benefit from that. On the Gulf Coast, the other notable item would really be if you look at Maya

relative to the Canadian grades that we use for the benchmark. Maya was

a bit more discounted. Crude costs that we saw for the heavy crudes into the Gulf Coast.

Quick follow-up here is, we are seeing a very strong diesel margin and slightly weaker gasoline and I know Valero can move the yield around a lot. So are you already operating in max diesel mode Or how much more can you swing the yield more towards diesel? Or do you think this is very temporary, like once you come Feb. 0 and March 0, the gasoline demand will improve and the cracks will start to balance out each other?

No, Manav, this is Greg. Yes, we are definitely in max diesel mode. As you mentioned, the cracks would drive us in that direction. And we'll see as we get into gasoline season whether the gas crack shifts enough to push us the other way.

Thank you. The next question is coming from Paul Sankey of Sankey Research. Please go ahead.

Hi, everyone. Just continuing on the themes the themes that we've had this morning. Can you talk a bit about the Atlantic Basin and all the trade arbitrages? I think it's obviously tough to make a firm's outlook here with all that's moving around. But I wondered, what have you been seeing, let's say, over the past two to six months in terms of the major Nigerian refinery?

There's been a lot of action in the dollar versus the euro. There's obviously been all the cold weather effects. So I just wondered if you could describe a little bit what we've been seeing in the market in the Atlantic Basin and what your outlook is for the coming year? Thanks a lot. Tough question.

Yes. So I'll start with the Dangote Refinery. I think from what we can see and what we read, they do have their resid up and running. We see that commercially. They're not offering out the fuel oil or the Resid that we were buying from them.

We also see less imports of gasoline into West Africa, which is all consistent with Dangote continuing to ramp up. With that though, however, what we've seen is that generally tends to impact Europe more than it does The U. S. Gasoline that was going to West Africa gets backed into Europe. We haven't really seen much of an impact from that.

Our gasoline exports primarily go to Latin America. You can see in the we are 98000 barrels a day of gasoline exports into that market, which is consistent of where we've been. I can tell you in the that's we're right about that same level again. Diesel has been somewhat interesting. The cold weather in The U.

S. Kind of has The U. S. Market strong. So you actually see a few cargos from Europe actually booked in the New York Harbor, which is an abnormal trade flow.

We do see that correcting when you get to the February,. We're already seeing an open arb to export back from The U. S. To Europe. So nothing too abnormal on trade flows.

I think by and large what you've seen is that the Dangote startup in the North Atlantic Basin has been largely offset with Lyondell coming down and Grangemouth coming down. And they're kind of counterbalancing each other and keeping trade flows about what we've seen historically.

That's brilliant. Thanks very much. And just if I could follow-up, thinking about the reality of tariffs, could you describe maybe a situation of how they would work? I mean, what happens? Do you just suddenly have to start paying it overnight?

Or how does it work? If you've got any ideas, I'd be grateful. Thanks.

Without having really any clarity on what's going to happen, there's no reason for us. There is no way we can really speculate on how we deal with it. We're just going to have to deal with it when it

the market, right? If you're a captive market, they're going to it'll somehow get shared between the refinery and the say the Canadian crude producer because there's some captive markets in the Mid Continent. In the Gulf Coast, somehow that will all ultimately get sort of priced in depending on what how the refiner is configured and what their alternatives are. And then we'll just have to see how long it lasts.

Got it. Have there been examples of it happening in the past that you can think of where you suddenly have to pay 25% more for a given crew?

The next question is coming from Roger Read of Wells Fargo.

Lane, I'm still chuckling from you've been around a long time answer there. Maybe coming back a little bit on the whole changing in capacity. So obviously, you mentioned the shutdown of Grange Smith. We had the shutdown here locally of Lyondell and we have some more stuff likely coming in Europe beyond what's been announced. I'm just curious how you all are seeing some of those dynamics play out in terms of just crude availability, let's leave the tariff thing aside and maybe how that's playing out along The Gulf Coast?

Valero Energy (VLO) Q4 2024 Earnings Call Transcript

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