Sector: Energy | Focus: Oil & Gas Refining & Marketing
HQ: San Antonio, Texas
Financial Risks
Valero faces significant market risk from commodity price volatility (crude oil, refined products, renewable fuels), foreign exchange rate fluctuations, and compliance credit prices (RINs). Uncertainty surrounding California's SBx 1-2 legislation, including potential penalties and inventory requirements, poses a substantial operational and financial risk. Potential impairment losses on California assets are a concern, as are similar legislative uncertainties in other jurisdictions. Credit risk from customer concentration is also mentioned.
Financial Upside
Strong worldwide demand for petroleum-based transportation fuels, combined with constrained supply, supports Valero's results. The company's operations generated substantial cash flow in the first nine months of 2024, enabling capital investments and shareholder returns. Continued improvement in jet fuel demand and relatively stable crude oil differentials offer potential upside. Increased sales volumes in some segments (renewable diesel, ethanol) also present a positive outlook.
