Valero 2003 Annual Report Download - page 6
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And, of course, we continued to invest in both the internal and external
expansionofourreningsystem,whichhasgrownfromasinglerenerywith
170,000barrelsperday(BPD)ofcapacityin1997toa15-renerysystem
withmorethan2.4millionBPDofcapacitytoday.
InTexasCity,wecompletedconstructionofa45,000-BPDdelayedcoker
andourtimingcouldn’thavebeenbetter!Cokermarginshavebeenwellover
$9perbarrelsinceitwentintofullserviceonDecember1.Obviously,with
marginslikethese,weexpectthecokerwillhaveasignicantimpacton2004
earningsaswell.
Intermsofexternalexpansion,IbelievetheSt.CharlesreneryinLouisianamayverywellturnouttobeoneofthe
greatestacquisitionsinValero’shistory.WhenyouconsiderthefactthatwepurchasedtheSt.Charlesreneryfor
$400millionandthefactthatmorethan$2billionhadbeeninvestedintheplantsince1985,wegotthishighly
complexreneryforonly20cents-on-the-dollarofitsreplacementcost.
AspartofValero’slargersystem,theplanthasbenetedfromreducedoverheadcosts,enhancedpurchasingleverage
andsynergieswithValero’sotherGulfCoastfacilities.Theplantalsohasahighlymotivatedworkforceandabright,
energeticleadershipteam.Asaresult,thisplant,whichwepurchasedoutofbankruptcy,generatedapproximately
$40millioninoperatingincomeinthesixmonthsitwaspartofValeroin2003.Wearecurrentlyexpandingthe
plant,includingthecrudeandcokerunits,whichwillincreasetheplant’sthroughputby30,000BPDto245,000
BPD.Weexpectthisrenerywillbeabigcontributortooperatingincomein2004andwillpayforitselfinless
thanthreeyears.
And,whiletheacquisitionofournew315,000-BPDArubareneryactuallytookplaceinMarchof2004,itwasthe
resultofsignicanteffortin2003thatweexpectwillboostourcompany’searningsin2004andbeyond.Itisagreat
acquisitionforValerobecauseweacquiredthereneryforabout15%ofits$2.4billionreplacementcostandwe
immediatelybenetedfrommorethan$640millionwhichhasbeeninvestedinthisreneryoverthelastveyears.
TherenerybenetsfromprocessingMayasourcrudeoilasoneofitsmainfeedstocks,whichiscurrentlyselling
atadiscountofmorethan$9perbarrel.Thereneryisagreattforoursystembecauseitproducesahighyield
ofintermediatefeedstocks,whichcanbeusedtobackoutmorecostlythirdpartypurchasesatourotherreneries.
And,theacquisitionalsoincludedhighlyprotablemarine,bunkeringandmarketingoperations.
Asyoucansee,2003wasarecordyearwithrecordaccomplishments.And,Iamproudtosaythatdespitethe
tremendousworkloadthatcomeswithayearofsomanyaccomplishments,wemaintainedtheuniquecultureof
caringandsharingthatisthecornerstoneofValero’songoingsuccess.
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COMPARISON OF 5-YEAR CUMULATIVE TOTAL RETURN
Valero Energy Corporation Peer Group S&P 500