Based out of San Antonio, Valero Energy (VLO) is the largest independent petroleum refiner in the U.S. with throughput capacity of 2.8 million barrels per day. With a footprint in all major regions in the U.S., the company offers the most diversified refining base out of all other independent refiners. The company is also positioning itself to run more light sweet crude from U.S. shale plays through its system as more of it becomes available at the U.S. Gulf Coast. VLO’s refining system is about flexibility and this flexibility allows the company to run an extremely competitive refining system. The growing midstream backlog also provides the company with diversification. In the wake of recent oil price weakness, U.S. independent refiners have been quite resilient with only a modest decline during this tumultuous time. This partly reflects the sectors already depressed valuation as well as surprisingly strong global refined product market in the third quarter. I believe in a weak price environment the U.S. refiners, including VLO; will continue to enjoy a strong relative performance within the energy complex. Finally, Republicans’ win in the mid-term polls has also increased the probability of Keystone approval, which will be a longer-term positive for VLO. Solid Operational Results Valero reported solid 3Q14 results, which should have a positive …show more content…
This is a first visible sign from the management that the ever rising capex era may finally be over. 2015 capex guidance is a clear message of increase capital discipline and I expect this trend to continue. The refining related growth capex is up $260 million Y/Y and logistics related capex is down $360 million Y/Y. Lower spending on rail cars is the main reason for drop in logistics spending in 2015. On the other hand, spending on refining capex is up Y/Y due to spending on existing/announced