Valero considers closing Benicia refinery by April 2026

SAN ANTONIO - Valero Energy Corporation (NYSE:VLO), a prominent player in the Oil, Gas & Consumable Fuels industry with a market capitalization of $33.8 billion, has announced that one of its subsidiaries, Valero Refining Company-California, is contemplating the idling, restructuring, or complete shutdown of operations at its Benicia Refinery in California by the end of April 2026. According to InvestingPro analysis, the company currently appears undervalued, suggesting potential opportunities despite operational challenges.

The company is currently assessing strategic alternatives for its remaining California operations. While Valero’s CEO, Lane Riggs, acknowledged the significant impact such a move could have on employees, business partners, and the local community and committed to maintaining communication with all stakeholders during this transition period. The company maintains strong financial fundamentals with a healthy current ratio of 1.53 and operates with a moderate level of debt, as indicated by its debt-to-equity ratio of 0.47.

As part of this strategic review, Valero recorded a combined pre-tax impairment charge of $1.1 billion for the Benicia and Wilmington refineries. This charge, which includes the recognition of expected asset retirement obligations amounting to $337 million as of March 31, 2025, will be treated as a special item and will not be included in the adjusted earnings for the first quarter of 2025. Despite these charges, InvestingPro data shows the company generated substantial levered free cash flow of $5.8 billion in the last twelve months, maintaining its strong dividend yield of 4.2% and a 37-year track record of consecutive dividend payments.

Valero operates across North America and the U.K., with a total of 15 petroleum refineries and a combined throughput capacity of roughly 3.2 million barrels per day. In addition, the company is part of a joint venture that produces low-carbon renewable diesel and sustainable aviation fuel, and it owns 12 ethanol plants in the U.S. with a combined production capacity of about 1.7 billion gallons per year.

The forward-looking statements in the press release reflect Valero’s expectations for its future operations in California, including the anticipated timing and costs associated with the potential closure of the Benicia refinery. However, the company cautions that actual outcomes could materially differ from these projections due to a variety of factors, such as market conditions, legislative changes, and other external influences that could affect Valero’s operations and financial performance.

This news is based on a press release statement from Valero Energy Corporation. For deeper insights into Valero’s financial health, performance metrics, and extensive analysis, investors can access the comprehensive Pro Research Report available on InvestingPro, which covers over 1,400 top US stocks with expert analysis and actionable intelligence.

In other recent news, Valero Energy has been the focus of several analyst updates and market assessments. TD Cowen’s analyst, Jason Gabelman, lowered the company’s price target to $121.00 while maintaining a Buy rating, noting improved refining margins but acknowledging increased maintenance costs. Valero’s refining EBITDA is expected to rise by $60 million quarter-over-quarter, though this marks a 5% decline from the previous quarter. BMO Capital Markets reaffirmed its Outperform rating with a $145.00 price target, highlighting Valero’s strong balance sheet and operational performance despite market volatility.

Mizuho Securities also maintained an Outperform rating with a $158.00 price target, predicting a shortfall in first-quarter earnings due to weaker renewable diesel performance. However, they emphasized Valero’s robust balance sheet and top-tier operations. UBS reiterated a Buy rating with a $160.00 price target, adjusting their first-quarter EPS estimate downward to $0.58, citing challenges in the refining and marketing division. Despite these challenges, UBS analysts are optimistic about Valero’s potential for improved performance in the second quarter of 2025, supported by strategic adjustments and market conditions.

Overall, Valero Energy’s strategic positioning and financial actions reflect a commitment to delivering value amidst dynamic market conditions.

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