Valero Energy Corporation

What they do

Valero operates refineries, renewable diesel plants (through the DGD joint venture), and ethanol plants. Its Refining segment produces transportation fuels and other petroleum products, while the Renewable Diesel and Ethanol segments produce low-carbon fuels. The company also has a corporate segment that includes general and administrative expenses.

Revenue drivers

• Refining — The largest segment, reporting Q2 2026 operating income of $4.5 billion, with throughput volumes averaging 3.0 million barrels per day.
• Renewable Diesel (DGD) — The DGD joint venture reported Q2 2026 operating income of $717 million, with sales volumes averaging 3.8 million gallons per day.
• Ethanol — The Ethanol segment reported Q2 2026 operating income of $318 million, with production volumes averaging 4.7 million gallons per day.

Recent performance

In Q2 2026, Valero reported net income attributable to stockholders of $3.7 billion, or $12.62 per share, compared to $714 million, or $2.28 per share, in Q2 2025. Reported revenue for the quarter was $44.48 billion. Adjusted net income was $3.7 billion, or $12.54 per share. Operating cash flow was $5.6 billion, with capital investments of $350 million.

Strategy

Management emphasizes operational excellence and commercial execution across all segments. The company is investing in growth projects, including a $230 million FCC Unit optimization project at the St. Charles Refinery expected to begin operations in Q3 2026. Valero is returning cash to stockholders through dividends and share repurchases, with a new $5.0 billion repurchase authorization approved in July 2026. The company also focuses on maintaining a strong balance sheet with a debt to capitalization ratio of 11% as of June 30, 2026.

Risks

• Volatile margins — Financial results depend on the volatile difference between product prices and feedstock costs (crude oil, corn, etc.), which are affected by global supply, demand, OPEC+ decisions, and trade policies.
• Operational incidents — The March 2026 Port Arthur Refinery incident resulted in estimated capital investments of $250 million in 2026, with a substantial portion expected to be covered by insurance but subject to self-insured retention.
• Joint venture dependency — Valero consolidates DGD, but only owns 50%, so operating cash flows are partially attributable to the other member, and DGD's capital investments are not fully under Valero's control.
• Regulatory and market risks — Changes in environmental regulations, tariffs, sanctions, or other trade restrictions could affect feedstock costs and product prices, as well as the competitiveness of renewable fuels.

Outlook

Management expects 2026 capital investments (attributable to Valero) to be approximately $2.0 billion, including about $250 million for the Port Arthur incident and $1.7 billion for sustaining the business. The St. Charles FCC Unit project is expected to be completed and begin operations in Q3 2026. The company plans to contribute about $70 million to pension plans and $20 million to other postretirement benefit plans during 2026.