Valero to Convert Diamond Shamrock Network to Valero Brand

SAN ANTONIO, Texas -- Valero Energy Corp. is retiring the approximately 30-year-old Diamond Shamrock brand and converting its 2,900 U.S. retail (company-operated) and branded wholesale sites to the Valero brand image.

Putting Valero signs up at its stations stretching from South Dakota to South Texas and from Arizona to Arkansas will give the company a national brand presence for the first time.

"We are very excited about having the Valero name on our retail and wholesale sites across the country," said Bill Greehey, Valero's chairman and chief executive officer. "With Valero's growth in recent years, we've become one of the nation's leading refiners and one of the top 25 companies among the Fortune 500, so it was a logical next step to roll out the Valero brand nationwide. And, the timing couldn't be better since we're planning to acquire Premcor Inc. later this year, making Valero the largest refiner in North America.

"There's a significant value to having our name in front of customers, potential investors, community leaders, business partners and media on a daily basis. We also believe that we'll capture synergies from supporting a single premier brand and realize greater benefits from our national advertising and sponsorships, like the Valero Texas Open.

"What's more, we're confident that the Valero brand will be as popular with our customers in the Mid-Continent as it has been on the West and East Coasts," said Greehey, explaining that the company already has Valero stations on both coasts but none in the Mid-Continent where the Diamond Shamrock brand currently exists. "We had a great response when we introduced the Valero brand in California in 2000 and again when we began branding wholesale locations throughout the East Coast a couple of years later."

Valero will spend an incremental $70 million over the next two years to re-image its 1,030 retail locations and the 830 branded wholesale sites in the Mid-Continent area. The vast majority of the stores will be re-imaged by the fourth quarter of 2006.

Additionally, Valero is in the process of completing construction on the first few new-to-industry, company-owned stores in Texas, which sport the new Valero Corner Store image. The company just opened the first new store in Corpus Christi, Texas and just in time for the Fourth of July weekend, the store is rolling back fuel prices by 25 cents between 11 a.m. and 1 p.m. in honor of Valero's 25th anniversary.

The Valero brand image features the company's teal-and-yellow color scheme and retail logo, which is a giant "V" with a line, resembling a winding road, running through it. The company will continue to use the Corner Store brand name for its company-operated convenience stores but the image has been updated to match the Valero design.

The company will use the Valero brand at all of its premier branded wholesale sites, which meet certain image and volume requirements, and will continue to use its popular value brands -- Shamrock and Beacon -- for smaller sites that don't meet the premier brand standards. Its 1,000 Canadian stores will continue to use the Ultramar brand name, which is recognized as a leader in the Eastern Ontario, Quebec and Atlantic provinces.

History of Valero's Retail Network
Valero made its retail debut in June 2000 when the company acquired Exxon Mobil Corporation's Benicia, Calif., refinery. Included in the sale were 80 retail sites in the San Francisco Bay Area and 270 branded wholesale locations throughout California.

At the time, the company did not have a retail brand image so it conducted extensive research to develop the new Valero brand. Based on those results, the company chose the teal-and-yellow color scheme because it distinguished the stations from competitors and maintained consistency with Valero's corporate brand image. The "V" insignia was adopted because it reinforced the Valero name and gave the brand a bold, unique and memorable icon.

"Our philosophy from day one was to look like a major brand, but price like an independent," said Greehey. "Customers clearly responded to our clean and colorful image, as well as our marketing and pricing strategy because our volumes immediately increased. It was and still is the right strategy."

Valero's acquisition of Ultramar Diamond Shamrock Corp. (UDS) in December 2001 expanded its retail and branded wholesale network significantly, as did the company's wholesale expansion on the East Coast, bringing the total number of sites to approximately 4,700.

"Our teal-and-yellow Valero signs have gone up at wholesale stations stretching from Bangor, Maine, to Miami, Florida," said Greehey. "The Valero brand has gotten a great reception everywhere we've introduced it because we have a strong image and quality offering."
Conversion of Proprietary Credit Card
Starting this summer, a dual-branded Diamond Shamrock/Valero credit card will be issued to all new cardholders in areas where the conversion is taking place. After a one-year transition period, a Valero-branded credit card will be sent to all cardholders in the markets being converted to Valero.

Customers interested in applying for the credit card can do so online by going to http://www.valero.com/Retail+Marketing/CreditCards/. Those who sign up between now and Sept. 30, 2005 will save $.05 per gallon for three months when using their new credit card for fuel purchases.
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