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Valero Energy Corporation VLO

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Valero closed the Benicia refinery in April, a year after writing down $1.13B on it and Wilmington, and then earned $12.62 a share in the following quarter.

Sitting on the balance sheet unrecorded is $7.5B of inventory value, the gap between what the oil in the tanks cost and what it is worth, up from $2.6B in December.

VLO · price with moving averages

Daily · 6MWeekly · 3Y
$85$156$228$299$370 Sep '23Apr '24Nov '24Jun '25Jan '26Aug '26 BID
EMAs82140

Source: market data.

The business

Valero runs crude oil through refineries in the United States, Canada and the United Kingdom and sells the gasoline, diesel and jet fuel wholesale and through branded stations. Two other segments matter more than their size suggests. Diamond Green Diesel, a joint venture with Darling Ingredients, turns used cooking oil and animal fat into renewable diesel and jet fuel. An ethanol business converts corn.

Both of those were losing money eighteen months ago. Both are now materially profitable, and neither is a refining margin story.

Inside the complete Back of Napkin

  1. 01The business
  2. 02The numbers
  3. 03Management
  4. 04How it fails or surprises you
  5. 05The shape of the payoff
  6. 06Closing thoughts
  7. 07Methodology

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