Typing this list helps me remind myself why I should own Valero:
1)$140,000,000,000.00 in sales company ($140 Billion in sales)
2)Cheap US Crude oil input costs (US shale oil is game changer)
3)Low natural gas prices (US shale natural gas in game changer)
4)Almost all of Valero's refineries on the water enabling them to export refined products to anywhere in the world
5)Retail spin-off coming to shareholders
6)2% dividend yield and more coming
7)Valero has the hardware to process heavy sour discounted crude
8)Valero's $3.1 Billion 2 hydrocracker projects almost complete creating an additional $1 per share in earnings (one operating and one to start up by end of quarter).
9)Closure of significant Altantic Basin refineries has occured
10)Valero concentrates on the more profitable distillates where it intends to get to 50% of production
11)Valero's reliablity of its refineries are on the increase
12)Managable debt level and paying off debt
13)Ended 2012 with $1.7 Billion in cash
14)Ethanol margins starting to increase
15)Central and South American countries continue to have troubles running refineries creating an export market for Valero
16)US Economy improving and distillate demand is up from a year ago
17)Valero finally getting in the train business of getting discounted crude
18)Capital spending this year should drop by $500 million from last year
19)Valero's refineries are run by hardworking US workers (except one in Canada and England)
20) Valero has closed or sold under performing refineries
21)Distillate inventories at very low levels
Those are the positives. What are the headwinds. Three words: government, government, government.
Government headwinds: RIN's, EPA's new low sulfur gasoline proposal, Keystone XL north not approved, California AB 32 carbon rules, and future US carbon Tax rules. The Obama administration wants to make gasoline so expensive so that alternate "green" energy can compete like electric, etc.
Other headwinds: see separate post.
I am out and will stay out until the crack spread starts getting better. This is always a bad quarter due to the summer blend conversion. I bought some PSX on wed and sold it after the opening yesterday and i probably should of bought some VLO And WNR for the same reason GL2ALL Mike
Fan - What do you think of the retail approval and 1st quater earnings. Granted, VLO beaten down, if oil slips to 90 by end of April how would you think that would impact VLO's chances of popping to 48ish again? Would the combination of a good 1st quaters and this sale do the trick?
The retail spin-off is a good thing. It is not a sale but a spin-off to shareholders. You will get one share in the new company for each share you own of Valero. It unlocks about $2 Billion of share holder valure or about $4/share.
First quarter earnings should be good but not blow out. Lower oil prices are not a problem for Valero. Lower oil prices equals lower refined products which equals more demand and more profit for Valero.
Other headwinds: lower crack spreads recently, lower WTI-Brent discount but this should transfer to the Gulf Coast, lower heavy sour crude discounts, more efficient vehicles, and conversion of trucks, buses, etc. to natural gas use.