Valero Services Inc : Valero Energy Reports 2012 Fourth Quarter and Annual Results

  Valero Services Inc : Valero Energy Reports 2012 Fourth Quarter and Annual
                                   Results

SAN ANTONIO, January  29, 2013  - Valero Energy  Corporation ("Valero,"  NYSE: 
VLO) today reported  net income  attributable to Valero  stockholders of  $1.0 
billion, or $1.82 per share,  for the fourth quarter  of 2012 compared to  net 
income attributable to Valero stockholders of $45 million, or $0.08 per share,
for the fourth quarter of 2011.  Included in the fourth quarter 2012  results 
was a noncash asset impairment loss of  $37 million after taxes, or $0.06  per 
share.

For the  year ended  December  31, 2012,  net  income attributable  to  Valero 
stockholders was $2.1 billion,  or $3.75 per share.  Included in the  results 
were noncash asset impairment losses of $983 million after taxes, or $1.77 per
share, and severance expense of $41  million after taxes, or $0.07 per  share, 
mainly related to the shutdown and impairment of the Aruba refinery.

Fourth quarter 2012 operating income was  $1.6 billion versus $167 million  of 
operating income in  the fourth quarter  of 2011. The  increase in  operating 
income was primarily due to higher refining throughput margins in each of  the 
company's regions plus  lower refining  operating expenses.  The increase  in 
refining throughput margins was  mainly due to the  increase in discounts  for 
medium sour, heavy sour, and domestic light crude oils. A significant decline
in ethanol margins partially offset the increase in operating income.

Fourth quarter 2012 refining throughput  volume averaged 2.64 million  barrels 
per day, down 73,000 barrels  per day from the  fourth quarter of 2011  mainly 
due to the lack  of throughput volume  at the Aruba  refinery, which was  shut 
down in the first quarter of 2012.

"This was Valero's best fourth-quarter earnings  per share since 2005, and  we 
made important progress on our strategic goals," said Valero Chairman and  CEO 
Bill Klesse. "In  the fourth quarter,  we had  a smooth start-up  of our  new 
hydrocracker at the  Port Arthur refinery,  which was the  largest project  in 
Valero's  history.  We  also  continued  construction  on  our  St.   Charles 
hydrocracker, which is scheduled for start-up  in the second quarter of  2013. 
We believe these projects are perfectly suited for the current environment of
strong distillate margins and inexpensive natural gas."

Klesse continued,  "Also  in the  fourth  quarter  of 2012,  we  replaced  all 
imported light foreign crude oils with cheaper domestic crude oils at our Gulf
Coast and Memphis refineries. Since we expect U.S. and Canadian crude oils to
become increasingly  more  available,  we  are  pursuing  options  to  process 
additional volumes  of these  cost-advantaged crudes  throughout our  refining 
system."

Valero's retail segment reported $95 million of operating income in the fourth
quarter of 2012 versus $83 million  of operating income in the fourth  quarter 
of 2011.  The increase  in operating  income was  mainly due  to higher  fuel 
margins in the U.S.,  which was somewhat  offset by lower  fuel margins and  a 
noncash asset impairment loss of $9  million before taxes in Canada. For  the 
full-year 2012, the retail segment generated $348 million of operating income,
and those results  were second only  to the 2011  record-high results of  $381 
million.

Valero continued to  make progress in  the separation of  its retail  business 
under a new company named CST Brands, Inc. ("CST"). The separation is planned
by way of a pro rata distribution  of 80 percent of the outstanding shares  of 
CST common stock to Valero stockholders. The distribution is expected to take
place in  the second  quarter of  2013, assuming  a favorable  private  letter 
ruling from the Internal  Revenue Service and clearance  of all comments  from 
the Securities and Exchange Commission ("SEC"). When the distribution occurs,
Valero expects to receive approximately $1.1  billion of cash and incur a  tax 
liability of approximately  $300 million,  primarily in  Canada. Valero  also 
expects to liquidate the remaining 20 percent of CST outstanding shares within
18 months of the distribution. Details of the separation and distribution are
provided in  filings with  the SEC  by  CST (formerly  known as  Corner  Store 
Holdings, Inc.).

Commenting on the retail  separation, Klesse said,  "We believe the  separated 
retail business will perform well and  unlock value for our shareholders.  In 
addition to  its  large and  geographically  diverse network  of  high-quality 
sites, the retail business has a long history of strong brand recognition  and 
financial  performance,  as  well  as  significant  growth  opportunities   in 
merchandise, food service, and new-build locations."

Valero's ethanol  segment reported  operating  income of  $12 million  in  the 
fourth quarter of 2012 versus $181  million of operating income in the  fourth 
quarter of  2011.  The  decrease  in ethanol  operating  income  was  due  to 
significantly lower gross margins caused by a combination of high corn  prices 
and high  industry  ethanol  inventories attributable  to  lower  ethanol  and 
gasoline demand. Due to poor margins, Valero operated its ethanol capacity at
reduced rates with three plants temporarily idled.

Regarding cash flows in the fourth quarter of 2012, capital spending was  $942 
million, of which $140 million  was for turnaround and catalyst  expenditures. 
Valero paid $97 million in dividends on its common stock and $133 million  to 
purchase the  company's shares.  For  the full-year  2012, Valero  used  $281 
million to purchase 10.6 million shares of the company's stock. Valero  ended 
the fourth quarter with $1.7 billion in cash and temporary cash investments.

For the  full-year  2012, total  capital  spending, including  turnaround  and 
catalyst expenditures,  was  $3.4 billion,  or  $100 million  below  guidance. 
Valero expects  total capital  spending  for 2013  to be  approximately  $2.5 
billion, including approximately $200 million for the retail segment. 

Regarding other uses  of cash  in 2013, Valero  retired $180  million of  6.7% 
senior notes that matured in mid-January and expects to retire $300 million of
maturing notes in the second quarter of 2013.

Klesse concluded,  "Returning cash  to stockholders  remains a  priority.  We 
bought back  shares  in  the fourth  quarter,  and  last week,  our  Board  of 
Directors approved a 14 percent increase in our quarterly dividend to make  it 
20 cents per share. We intend to maintain our investment grade credit rating,
fund selective  growth opportunities,  and  achieve one  of the  highest  cash 
yields among our peers through regular dividends and share repurchases."

Valero's senior management will hold a conference call at 11 a.m. ET (10  a.m. 
CT) today to discuss  this earnings release and  provide an update on  company 
operations. A live broadcast of the conference call will be available on  the 
company's web site at www.valero.com.

About Valero
Valero Energy  Corporation,  through  its subsidiaries,  is  an  international 
manufacturer  and  marketer  of  transportation  fuels,  other   petrochemical 
products and power.  Valero subsidiaries employ  approximately 22,000  people, 
and assets include 16 petroleum refineries with a combined throughput capacity
of approximately 3 million barrels per day, 10 ethanol plants with a  combined 
production capacity of 1.2  billion gallons per year,  and a 50-megawatt  wind 
farm. Approximately  6,800  retail and  branded  wholesale outlets  carry  the 
Valero, Diamond Shamrock, Shamrock and Beacon brands in the United States  and 
the Caribbean;  Ultramar in  Canada;  and Texaco  in  the United  Kingdom  and 
Ireland. Valero is a  Fortune 500 company based  in San Antonio. Please  visit 
www.valero.com for more information.

Safe-Harbor Statement
Statements contained in this release that state the company's or  management's 
expectations or  predictions  of  the future  are  forward-looking  statements 
intended to be covered by the safe harbor provisions of the Securities Act  of 
1933 and the Securities Exchange Act  of 1934. The words "believe,"  "expect," 
"should,"  "estimates,"  "intend,"  and  other  similar  expressions  identify 
forward-looking statements. It is important to note that actual results  could 
differ materially from those projected in such forward-looking statements. For
more information concerning factors that could cause actual results to  differ 
from those expressed or forecasted, see  Valero's annual reports on Form  10-K 
and quarterly reports  on Form 10-Q,  filed with the  Securities and  Exchange 
Commission and on Valero's website at www.valero.com.

Contacts
Investors: Ashley Smith, Vice President - Investor Relations, 210-345-2744
Media: Bill Day, Executive Director - Corporate Communications, 210-345-2928

                  VALERO ENERGY CORPORATION AND SUBSIDIARIES
                               EARNINGS RELEASE
 (Millions of Dollars, Except per Share, per Barrel, and per Gallon Amounts)
                                 (Unaudited)

                                   Three Months Ended    Twelve Months Ended
                                      December 31,           December 31,
                                    2012       2011        2012        2011
Statement of Income Data (a)
(b):
Operating revenues (1)            $ 34,695   $ 34,673   $ 139,250   $ 125,987
Costs and expenses:
Cost of sales (c)                   31,300     32,738     127,268     115,719
Operating expenses:
Refining (d)                           906        979       3,668       3,406
Retail                                 172        170         686         678
Ethanol                                 84         97         332         399
General and administrative
expenses                               189        129         698         571
Depreciation and amortization
expense                                402        393       1,574       1,534
Asset impairment losses (e)             58          -       1,014           -
Total costs and expenses            33,111     34,506     135,240     122,307
Operating income                     1,584        167       4,010       3,680
Other income, net                       10         15           9          43
Interest and debt expense, net
of capitalized interest               (70)       (89)       (313)       (401)
Income from continuing
operations before income tax
expense                              1,524         93       3,706       3,322
Income tax expense                     515         48       1,626       1,226
Income from continuing
operations                           1,009         45       2,080       2,096
Loss from discontinued
operations, net of income taxes          -          -           -         (7)
Net income                           1,009         45       2,080       2,089
Less: Net loss attributable to
noncontrolling interest (f)            (1)          -         (3)         (1)
Net income attributable to
Valero Energy Corporation
stockholders                      $  1,010   $     45   $   2,083   $   2,090
Net income attributable to
Valero Energy Corporation
stockholders (f):
Continuing operations             $  1,010   $     45   $   2,083   $   2,097
Discontinued operations                  -          -           -         (7)
Total                             $  1,010   $     45   $   2,083   $   2,090
Earnings per common share:
Continuing operations             $   1.83   $   0.08   $    3.77   $    3.70
Discontinued operations                  -          -           -      (0.01)
Total                             $   1.83   $   0.08   $    3.77   $    3.69
Weighted average common shares
outstanding (in millions)              551        555         550         563
Earnings per common share -
assuming dilution:
Continuing operations             $   1.82   $   0.08   $    3.75   $    3.69
Discontinued operations                  -          -           -      (0.01)
Total                             $   1.82   $   0.08   $    3.75   $    3.68
Weighted average common shares
outstanding - assuming dilution
(in millions)                          556        560         556         569
Dividends per common share        $  0.175   $  0.150   $   0.650   $   0.300
Supplemental information:
(1) Includes excise taxes on
sales by our U.S. retail system   $    241   $    222   $     964   $     892

                  VALERO ENERGY CORPORATION AND SUBSIDIARIES
                               EARNINGS RELEASE
 (Millions of Dollars, Except per Share, per Barrel, and per Gallon Amounts)
                                 (Unaudited)

                                       Three Months Ended  Twelve Months Ended
                                          December 31,        December 31,
                                         2012      2011      2012       2011
Operating income by business segment:
Refining (c) (e)                       $  1,677   $   40   $  4,450   $ 3,516
Retail                                       95       83        348       381
Ethanol                                      12      181       (47)       396
Corporate                                 (200)    (137)      (741)     (613)
Total                                  $  1,584   $  167   $  4,010   $ 3,680
Depreciation and amortization expense
by business segment:
Refining                               $    350   $  343   $  1,370   $ 1,338
Retail                                       31       31        119       115
Ethanol                                      10       11         42        39
Corporate                                    11        8         43        42
Total                                  $    402   $  393   $  1,574   $ 1,534
Operating highlights:
Refining (a) (b):
Throughput margin per barrel (c)       $  12.27   $ 5.46   $  10.96   $  9.91
Operating costs per barrel:
Operating expenses (d)                     3.73     3.92       3.79      3.83
Depreciation and amortization expense      1.44     1.37       1.44      1.51
Total operating costs per barrel (e)       5.17     5.29       5.23      5.34
Operating income per barrel            $   7.10   $ 0.17   $   5.73   $  4.57
Throughput volumes (thousand barrels
per day):
Feedstocks:
Heavy sour crude                            505      454        453       454
Medium/light sour crude                     544      522        547       442
Acidic sweet crude                           46      112         81       116
Sweet crude                                 902      894        910       745
Residuals                                   212      274        200       282
Other feedstocks                             86      123        120       122
Total feedstocks                          2,295    2,379      2,311     2,161
Blendstocks and other                       345      334        302       273
Total throughput volumes                  2,640    2,713      2,613     2,434
Yields (thousand barrels per day):
Gasolines and blendstocks                 1,255    1,270      1,251     1,120
Distillates                                 941      957        918       834
Other products (g)                          473      505        467       494
Total yields                              2,669    2,732      2,636     2,448

                  VALERO ENERGY CORPORATION AND SUBSIDIARIES
                               EARNINGS RELEASE
 (Millions of Dollars, Except per Share, per Barrel, and per Gallon Amounts)
                                 (Unaudited)

                                      Three Months Ended   Twelve Months Ended
                                         December 31,         December 31,
                                        2012      2011       2012       2011
Refining operating highlights by
region (e) (h):
U.S. Gulf Coast (a):
Operating income (loss) (c)           $   914   $  (231)   $  2,541   $ 2,205
Throughput volumes (thousand barrels
per day)                                1,570      1,546      1,488     1,450
Throughput margin per barrel (c)      $ 11.08   $   3.57   $   9.65   $  9.33
Operating costs per barrel:
Operating expenses (d)                   3.40       3.77       3.55      3.66
Depreciation and amortization
expense                                  1.36       1.42       1.44      1.50
Total operating costs per barrel         4.76       5.19       4.99      5.16
Operating income (loss) per barrel    $  6.32   $ (1.62)   $   4.66   $  4.17
U.S. Mid-Continent:
Operating income (c)                  $   638   $    267   $  2,044   $ 1,535
Throughput volumes (thousand barrels
per day)                                  465        439        430       411
Throughput margin per barrel (c)      $ 19.75   $  12.17   $  18.49   $ 15.91
Operating costs per barrel:
Operating expenses                       3.43       4.16       4.02      4.15
Depreciation and amortization
expense                                  1.42       1.42       1.48      1.52
Total operating costs per barrel         4.85       5.58       5.50      5.67
Operating income per barrel           $ 14.90   $   6.59   $  12.99   $ 10.24
North Atlantic (b):
Operating income                      $   135   $     67   $    752   $   171
Throughput volumes (thousand barrels
per day)                                  327        463        428       317
Throughput margin per barrel          $ 10.48   $   5.63   $   9.24   $  5.43
Operating costs per barrel:
Operating expenses                       4.75       3.36       3.59      3.08
Depreciation and amortization
expense                                  1.23       0.68       0.85      0.87
Total operating costs per barrel         5.98       4.04       4.44      3.95
Operating income per barrel           $  4.50   $   1.59   $   4.80   $  1.48
U.S. West Coast:
Operating income (loss) (c)           $    39   $   (63)   $    147   $   147
Throughput volumes (thousand barrels
per day)                                  278        265        267       256
Throughput margin per barrel (c)      $  8.58   $   5.01   $   8.84   $  9.11
Operating costs per barrel:
Operating expenses                       4.90       5.37       5.09      5.25
Depreciation and amortization
expense                                  2.16       2.21       2.25      2.29
Total operating costs per barrel         7.06       7.58       7.34      7.54
Operating income (loss) per barrel    $  1.52   $ (2.57)   $   1.50   $  1.57
Operating income for regions above    $ 1,726   $     40   $  5,484   $ 4,058
Loss on derivative contracts related
to the forward sales of refined
product (c)                                 -          -          -     (542)
Severance expense (d)                       -          -       (41)         -
Asset impairment losses (e)              (49)          -      (993)         -
Total refining operating income       $ 1,677   $     40   $  4,450   $ 3,516

                  VALERO ENERGY CORPORATION AND SUBSIDIARIES
                               EARNINGS RELEASE
 (Millions of Dollars, Except per Share, per Barrel, and per Gallon Amounts)
                                 (Unaudited)

                                     Three Months Ended   Twelve Months Ended
                                        December 31,          December 31,
                                      2012       2011       2012       2011
Average market reference prices
and differentials:
Feedstocks (dollars per barrel):
Brent crude oil                     $ 110.03   $ 109.11   $ 111.70   $ 110.93
Brent less West Texas Intermediate
(WTI) crude oil                        21.93      15.08      17.55      15.88
Brent less Alaska North Slope
(ANS) crude oil                         3.65     (1.17)       1.08       1.39
Brent less Louisiana Light Sweet
(LLS) crude oil                       (0.77)     (1.62)     (0.91)     (0.54)
Brent less Mars crude oil               5.12       2.21       3.97       3.46
Brent less Maya crude oil              17.15       5.57      12.06      12.18
LLS crude oil                         110.80     110.73     112.61     111.47
LLS less Mars crude oil                 5.89       3.83       4.88       4.00
LLS less Maya crude oil                17.92       7.19      12.97      12.72
WTI crude oil                          88.10      94.03      94.15      95.05
Natural gas (dollars per million
British Thermal Units)                  3.34       3.27       2.71       3.96
Products (dollars per barrel,
unless otherwise noted):
U.S. Gulf Coast:
Conventional 87 gasoline less
Brent                                 (1.27)     (0.44)       6.49       5.58
Ultra-low-sulfur diesel less Brent     17.42      15.32      16.48      13.78
Propylene less Brent                 (24.82)    (25.78)    (22.38)       8.23
Conventional 87 gasoline less LLS     (2.04)     (2.06)       5.58       5.04
Ultra-low-sulfur diesel less LLS       16.65      13.70      15.57      13.24
Propylene less LLS                   (25.59)    (27.40)    (23.29)       7.69
U.S. Mid-Continent:
Conventional 87 gasoline less WTI      21.65      15.16      25.40      22.37
Ultra-low-sulfur diesel less WTI       42.31      32.02      34.96      31.06
North Atlantic:
Conventional 87 gasoline less
Brent                                   9.24       3.12      11.46       6.24
Ultra-low-sulfur diesel less Brent     23.13      17.42      19.06      15.64
U.S. West Coast:
CARBOB 87 gasoline less ANS             9.48       5.84      15.39      11.48
CARB diesel less ANS                   23.46      18.20      19.93      18.47
CARBOB 87 gasoline less WTI            27.76      22.09      31.86      25.97
CARB diesel less WTI                   41.74      34.45      36.40      32.96
New York Harbor corn crush
(dollars per gallon)                  (0.23)       0.50     (0.15)       0.25

                  VALERO ENERGY CORPORATION AND SUBSIDIARIES
                               EARNINGS RELEASE
 (Millions of Dollars, Except per Share, per Barrel, and per Gallon Amounts)
                                 (Unaudited)

                               Three Months Ended      Twelve Months Ended
                                  December 31,             December 31,
                                 2012       2011        2012          2011
Retail - U.S.:
Operating income              $      78   $    48   $      240    $      213
Company-operated fuel
sites (average)                   1,029       995        1,013           994
Fuel volumes (gallons per
day per site)                     4,994     5,077        5,083         5,060
Fuel margin per gallon        $   0.208   $ 0.139   $    0.162    $    0.144
Merchandise sales             $     303   $   293   $    1,239    $    1,223
Merchandise margin
(percentage of sales)             29.0%     29.0%        29.7%         28.7%
Margin on miscellaneous
sales                         $      22   $    22   $       89    $       88
Operating expenses            $     109   $   104   $      434    $      416
Depreciation and
amortization expense          $      20   $    21   $       77    $       77
Asset impairment losses
(e)                           $       -   $     -   $       12    $        -
Retail - Canada:
Operating income              $      17   $    35   $      108    $      168
Fuel volumes (thousand
gallons per day)                  3,053     3,152        3,096         3,195
Fuel margin per gallon        $   0.256   $ 0.287   $    0.258    $    0.299
Merchandise sales             $      63   $    64   $      257    $      261
Merchandise margin
(percentage of sales)             27.9%     28.6%        29.0%         29.4%
Margin on miscellaneous
sales                         $      11   $    10   $       44    $       43
Operating expenses            $      63   $    66   $      252    $      262
Depreciation and
amortization expense          $      11   $    10   $       42    $       38
Asset impairment losses
(e)                           $       9   $     -   $        9    $        -
Ethanol:
Operating income (loss)       $      12   $   181   $     (47)    $      396
Production (thousand
gallons per day)                  2,664     3,455        2,967         3,352
Gross margin per gallon of
production                    $    0.44   $  0.91   $     0.30    $     0.68
Operating costs per gallon
of production:
Operating expenses                 0.34      0.31         0.30          0.33
Depreciation and
amortization expense               0.05      0.03         0.04          0.03
Total operating costs per
gallon of production               0.39      0.34         0.34          0.36
Operating income (loss)
per gallon of production      $    0.05   $  0.57   $   (0.04)    $     0.32
                                                    December 31,  December 31,
                                                        2012          2011
Balance Sheet Data:
Current assets                                      $   16,460    $   15,972
Cash and temporary cash investments included in
current assets                                           1,723         1,024
Inventories included in
current assets                                           5,973         5,623
Replacement cost (market value) of inventories in
excess of LIFO carrying amounts                          6,717         6,767
Current liabilities                                     11,929        12,708
Current portion of debt and capital lease
obligations included in current liabilities                586         1,009
Debt and capital lease
obligations, less current
portion                                                  6,463         6,732
Total debt                                               7,049         7,741
Valero Energy Corporation
stockholders' equity                                    18,032        16,423

                  VALERO ENERGY CORPORATION AND SUBSIDIARIES
                          NOTES TO EARNINGS RELEASE

(a) The statement of  income data  and operating highlights  for the  refining 
    segment and U.S. Gulf  Coast region reflect the  results of operations  of 
    our refinery  in Meraux,  Louisiana (Meraux  Refinery), including  related 
    logistics assets, from the date of its acquisition on October 1, 2011.  We 
    acquired this  refinery, inventories,  and offsite  logistics assets  from 
    Murphy Oil Corporation for $547 million.
(b) The statement of  income data  and operating highlights  for the  refining 
    segment and North Atlantic region reflect the results of operations of our
    refinery in  Wales,  United  Kingdom (Pembroke  Refinery),  including  the 
    related marketing and logistics business, from the date of its acquisition
    on August 1, 2011. We acquired this business from a subsidiary of  Chevron 
    Corporation for $1.7billion, net of cash acquired.
(c) Cost of sales  for the twelve  months ended December  31, 2011 includes  a 
    loss of $542 million  ($352 million after  taxes) on commodity  derivative 
    contracts related to the forward sales of refined product. These contracts
    were closed and realized  during the first quarter  of 2011. This loss  is 
    reflected in refining segment operating income for the twelve months ended
    December 31,  2011, but  throughput  margin per  barrel for  the  refining 
    segment has been restated from the amount previously presented to  exclude 
    this $542 million loss ($0.61  per barrel). In addition, operating  income 
    and throughput  margin  per barrel  for  the  U.S. Gulf  Coast,  the  U.S. 
    Mid-Continent, and the U.S. West Coast regions for the twelve months ended
    December 31, 2011 have been restated from the amounts previously presented
    to exclude the portion  of this loss  that had been  allocated to them  of 
    $372million ($0.70 per barrel), $122 million ($0.81 per barrel), and  $48 
    million ($0.51 per barrel), respectively.
(d) In September 2012, we decided to  reorganize our refinery in Aruba  (Aruba 
    Refinery) into a crude oil  and refined products terminal. These  terminal 
    operations  require  a  considerably  smaller  workforce;  therefore,  the 
    reorganization  resulted  in  the  termination  of  the  majority  of  our 
    employees in  Aruba. We  recognized severance  expense of  $41 million  in 
    September 2012. This  expense is reflected  in refining segment  operating 
    income for the twelve months ended  December 31, 2012, but it is  excluded 
    from operating costs per barrel for the refining segment and the U.S. Gulf
    Coast region.  No income  tax  benefits were  recognized related  to  this 
    severance expense. 
(e) During the three and twelve months ended December 31, 2012, we  recognized 
    the following asset impairment losses (in millions):

                                            Three Months       Twelve Months
                                                Ended              Ended
                                          December 31, 2012  December 31, 2012
Refining segment:
Aruba Refinery                            $           -      $          928
Cancelled capital projects                           49                  65
Asset impairment losses - refining
segment                                              49                 993
Retail segment:
U.S. stores                                           -                  12
Canada stores                                         9                   9
Asset impairment losses - retail segment              9                  21
Total asset impairment losses             $          58      $        1,014

    The asset impairment loss related to the Aruba Refinery resulted from  our 
    decision in March 2012 to suspend refining operations at the refinery  and 
    our subsequent decision in September 2012 to reorganize the refinery  into 
    a crude oil and  refined products terminal, as  discussed in note (d).  We 
    recognized an asset impairment loss of  $595 million in March 2012 and  an 
    additional asset  impairment  loss  of $308  million  in  September  2012, 
    resulting in no remaining book value being associated with the  refinery's 
    idled processing units  and related infrastructure  (refining assets).  In 
    addition,  we  recorded  a  loss  of  $25  million  related  to   supplies 
    inventories  that  supported   the  refining   operations.  The   refining 
    operations will  remain suspended  indefinitely; however,  we continue  to 
    maintain the refining  assets to  allow them to  be restarted  and do  not 
    consider them  to  be abandoned.  No  income tax  benefits  were  recorded 
    related to this asset impairment loss.

    We  also  recognized  asset  impairment  losses  related  to   permanently 
    cancelled capital projects at certain of our refineries and related to our
    determination that the  net book values  of certain of  our retail  stores 
    were not recoverable through the future operation and disposition of those
    stores. The after-tax amounts  of these asset  impairment losses were  $37 
    million and $55million for the three and twelve months ended December 31,
    2012, respectively.

    The asset impairment losses reflected in  the table above are included  in 
    the operating income of  the respective segment for  the three and  twelve 
    months ended  December  31, 2012.  However,  the asset  impairment  losses 
    related to the refining segment are excluded from the segment's  operating 
    costs per barrel  and from the  operating income and  operating costs  per 
    barrel by region.
(f) We own a 50  percent interest in Diamond  Green Diesel Holdings LLC  (DGD) 
    and have agreed to lend  DGD up to $221 million  to finance 60 percent  of 
    the construction costs of the  plant, as described below. We  consolidate 
    the financial statements of DGD due to our controlling financial  interest 
    in this entity. The losses incurred  by DGD that are attributable to  the 
    owner of the remaining interest are added back to net income to arrive  at 
    net income attributable to Valero.DGD is currently building a plant  that 
    will process animal fats, used cooking oils, and other vegetable oils into
    renewable green  diesel. The  plant is  located next  to our  refinery  in 
    Norco, Louisiana (St. Charles Refinery).
(g) Primarily includes petrochemicals,  gas oils,  No. 6  fuel oil,  petroleum 
    coke, and asphalt. 
(h) The regions reflected herein contain  the following refineries: U.S.  Gulf 
    Coast- Corpus  Christi East,  Corpus Christi  West, Texas  City,  Houston, 
    Three Rivers, St. Charles, Aruba, Port Arthur, and Meraux Refineries; U.S.
    Mid-Continent- McKee,  Ardmore, and  Memphis Refineries;  North  Atlantic- 
    Pembroke and  Quebec City  Refineries; and  U.S.West Coast-  Benicia  and 
    Wilmington Refineries.

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Source: Valero Services Inc via Thomson Reuters ONE
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