Valero Energy Corporation (NYSE:VLO) Q2 2023 Earnings Call Transcript

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Lane Riggs: Yes. This is Lane. So you can really expect us to continue to look to optimize and look at opportunities around our existing assets. We’ve been doing that. Some of them aren’t big or flashy, but in cumulative, they’ll have an effect on our overall performance, and we continue to gate those, just like we always have. And then in the other side of the business, our renewable side. We are looking at the potential to always the gain and develop innovative projects that are sort of in the transportation fuel space that leverage our operations excellence and our project execution capabilities.

Ryan Todd: Okay. Thanks, Lane.

Operator: Thank you. The next question is coming from Joe Laetsch of Morgan Stanley. Please go ahead.

Joe Laetsch: Great. Thanks everybody for taking my questions today. So I want to go back to capture rate here. So, we noticed just on the West Coast Refining margins were really strong during the quarter. Could you just touch on some of the drivers here and how we should think about the setup for the third quarter?

Greg Bram: Yes, this is Greg. So on the West Coast, we had great operations out there. But really, the thing to note there is Benicia has a very, very high gasoline yield in terms of its product mix. So, when gasoline is very strong relative to distillate products out in the West Coast, we see strong capture rates out there driven by Benicia’s yield. That’s the primary factor you saw in the second quarter.

Joe Laetsch: Great. Thanks. That’s helpful. And then just — my second one is just on OpEx and just the drivers of higher OpEx in third quarter versus 2Q. Is that on the gas side? Or how should we think about that?

Lane Riggs: Let me — this is Lane. It’s really driven by slightly higher outlook for natural gas in the third quarter than the second quarter.

Joe Laetsch: Perfect. Thank you.

Operator: Thank you. The next question is coming from Roger Read of Wells Fargo. Please go ahead.

Roger Read: Good morning and congrats to everybody on there for the new roles here. I’d like to hit the diesel question a slightly different way. Last winter, we saw pretty unusually warm weather throughout Northern Hemisphere. So going back, I think you addressed this on the last call, but what do you think the missing demand was last year from a weather standpoint. And so when we think about the upcoming winter and we always just model normal weather. So, what will we potentially be looking at from a demand step up?

Gary Simmons: Roger, we have modeled that, but I don’t have the number in front of me, and I don’t want to give you a bad number, but we can follow up with you with Homer and get you the number we had on heating oil demand.

Roger Read: Okay. That’s helpful. The other is, we have, I think somebody mentioned earlier, seeing diesel move back up over gasoline. Can you give us an idea of how you’ve run in terms of being max diesel or I should say, max distillate or max gasoline as we’ve been coming through this summer?

Greg Bram: Roger, we’ve been mostly in max gasoline mode, but we’ve been watching that movement between those two products. And we’ll make that shift when we start to see that kind of swing cut drive us back the other way. One of the things maybe just to keep in mind is on that swing cut, as you keep that heavier part of the gasoline and the gasoline pool, it pulls in more butane into the blend pool. And when you look at where butane prices are currently that’s really attractive to get as much butane in the blend as you can.

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