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    Valero Energy Corp. Expects Q2 Net Loss

    Results negatively affected by refinery downtime.

    SAN ANTONIO -- Valero Energy Corp. expects to report a net loss of approximately 50 cents per share for the second quarter of 2009.

    Valero's second quarter 2009 results were adversely affected by extended downtime at its Delaware City and McKee refineries and by the continuation of weak sour crude oil discounts and lower diesel margins, the company said in a statement.

    In the last three months, Valero acquired seven ethanol plants and a site currently under development from VeraSun Energy Corp. for $477 million, excluding working capital, and announced a pending acquisition of The Dow Chemical Co.'s 45-percent interest in Total Raffinaderij Nederland N.V., which owns a crude oil refinery, for $600 million, excluding working capital. The company expects its total capital expenditures in 2009 to be approximately $2.5 billion, of which approximately $1 billion is for strategic projects.

    "Including the two acquisitions and our strategic capital projects, we expect to invest roughly $2 billion in growth investments this year," said Bill Klesse, Valero’s chairman and CEO.

    Combining the $1 billion debt issuance in March with the 40 million common share offering it announced Tuesday, the company said it is able to continue to make strategic investments while maintaining a strong balance sheet.

    "Our newly acquired ethanol plants are performing well and meeting our expectations," Klesse said. "In addition, the pending acquisition of Dow’s interest in TRN is an extension of our favorable long-term outlook for distillates, and we believe the purchase price is less than 50 percent of replacement cost for this world-class distillate hydrocracking facility."

    The oil refiner is indefinitely postponing its new hydrocracker projects at St. Charles and Port Arthur. "In the current environment, it makes more sense to acquire existing capacity at a substantial discount to new construction costs, as we have done with TRN and the ethanol plants," Klesse said.

    Valero is a Fortune 500 with approximately 22,000 employees and 2008 revenues of $119 billion. The company is one of the nation’s largest retail operators with approximately 5,800 retail and branded wholesale outlets in the United States, Canada and the Caribbean under the Valero, Diamond Shamrock, Shamrock, Ultramar and Beacon brands.

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