Valero Records Loss Contingency Accrual for Aruba Tax Dispute and Updates Earnings Release Tables

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SAN ANTONIO--(Business Wire)--
Valero Energy Corporation (NYSE: VLO) announced today that, on Nov. 3, an
arbitration panel in the Netherlands handed down an interim decision on certain
issues in dispute between Valero and the Government of Aruba. The panel ruled
favorably on Valero`s existing exemption from income tax liability for refining
operations through 2010. Two other items in the arbitration - the applicable
dividend tax rate and the turnover tax - were not fully resolved in the panel`s
decision and remain subject to further review. Valero continues to believe that
its remaining claims against these taxes have significant merit, and intends to
vigorously pursue these claims through the arbitration proceedings and in
proceedings in Aruba.

Valero had not recognized any expense or liability with respect to these matters
in its consolidated financial statements or in the company`s third quarter
earnings release issued Oct. 27, 2009. Due to the uncertain timing of the
panel`s final ruling, the company has recorded a loss contingency accrual of
approximately $140 million, or $(0.25) per share, in its financial results for
the quarter ended Sept. 30, 2009. The accrual includes all material liabilities
through Sept. 30, 2009 associated with the arbitration.

The company has filed its Form 10-Q for the quarter ended Sept. 30, 2009 and has
reflected these amounts in the company`s financial statements. A more detailed
discussion of these matters is included in Note 14 of the company`s financial
statements on Form 10-Q. The company`s third quarter 2009 earnings release
tables have been updated to reflect this accrual. The updated tables are
attached to this press release.

About Valero:

Valero Energy Corporation is a Fortune 500 company based in San Antonio with
approximately 22,000 employees and 2008 revenues of $119 billion. The company
owns and operates 16 refineries throughout the United States, Canada and the
Caribbean with a combined throughput capacity of approximately three million
barrels per day, making it the largest refiner in North America. Valero is also
a leading ethanol producer with seven ethanol plants in the Midwest with a
combined capacity of 780 million gallons per year, and is one of the nation`s
largest retail operators with approximately 5,800 retail and branded wholesale
outlets in the United States, Canada and the Caribbean under the Valero, Diamond
Shamrock, Shamrock, Ultramar, and Beacon brands.Please visit www.valero.com for
more information.

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

Three Months Ended Nine Months Ended
September 30, September 30,
2009 (1) 2008 (2) 2009 (1) 2008 (2)
STATEMENT OF INCOME DATA:
Operating Revenues (3) $ 19,489 $ 35,960 $ 51,238 $ 100,545

Costs and Expenses:
Cost of Sales 18,104 32,506 46,275 91,848
Operating Expenses 923 1,136 2,778 3,383
Retail Selling Expenses 182 201 522 579
General and Administrative Expenses 167 169 435 421
Depreciation and Amortization Expense 389 370 1,156 1,106
Asset Impairment Loss (4) 417 43 575 43
Gain on Sale of Krotz Springs Refinery (2) - (305 ) - (305 )
Total Costs and Expenses 20,182 34,120 51,741 97,075

Operating Income (Loss) (693 ) 1,840 (503 ) 3,470

Other Income (Expense), Net 9 36 (16 ) 71

Interest and Debt Expense:
Incurred (149 ) (112 ) (386 ) (335 )
Capitalized 19 31 95 74

Income (Loss) Before Income Tax Expense (Benefit) (814 ) 1,795 (810 ) 3,280

Income Tax Expense (Benefit) (185 ) 643 (236 ) 1,133

Net Income (Loss) $ (629 ) $ 1,152 $ (574 ) $ 2,147

Earnings (Loss) per Common Share (5) $ (1.12 ) $ 2.20 $ (1.08 ) $ 4.07

Weighted Average Common Shares
Outstanding (in millions) 561 522 534 526

Earnings (Loss) per Common Share - Assuming Dilution $ (1.12 ) $ 2.18 $ (1.08 ) $ 4.02

Weighted Average Common Shares Outstanding-
Assuming Dilution (in millions) (6) 561 529 534 535

September 30, December 31,
2009 2008
BALANCE SHEET DATA:
Cash and Temporary Cash Investments $ 1,605 $ 940

Total Debt $ 7,375 $ 6,576

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

Three Months Ended Nine Months Ended
September 30, September 30,
2009 2008 (2) 2009 2008 (2)
Operating Income (Loss) by Business Segment:
Refining $ (674 ) $ 1,913 $ (335 ) $ 3,716
Retail:
U.S. 79 81 140 120
Canada 32 26 92 86
Total Retail 111 107 232 206
Ethanol (1) 49 - 71 -
Total Before Corporate (514 ) 2,020 (32 ) 3,922
Corporate (179 ) (180 ) (471 ) (452 )
Total $ (693 ) $ 1,840 $ (503 ) $ 3,470

Depreciation and Amortization by Business Segment:
Refining $ 345 $ 331 $ 1,035 $ 998
Retail:
U.S. 17 18 52 51
Canada 8 10 22 26
Total Retail 25 28 74 77
Ethanol (1) 7 - 12 -
Total Before Corporate 377 359 1,121 1,075
Corporate 12 11 35 31
Total $ 389 $ 370 $ 1,156 $ 1,106

Operating Highlights:
Refining:
Throughput Margin per Barrel $ 4.86 $ 13.11 $ 6.09 $ 10.80

Operating Costs per Barrel (4):
Refining Operating Expenses $ 3.94 $ 4.78 $ 4.01 $ 4.66
Depreciation and Amortization 1.58 1.39 1.55 1.38
Total Operating Costs per Barrel $ 5.52 $ 6.17 $ 5.56 $ 6.04

Throughput Volumes (Mbbls per Day):
Feedstocks:
Heavy Sour Crude 443 565 489 580
Medium/Light Sour Crude 544 670 582 680
Acidic Sweet Crude 24 75 80 76
Sweet Crude 676 578 619 622
Residuals 211 282 193 242
Other Feedstocks 179 136 177 141
Total Feedstocks 2,077 2,306 2,140 2,341
Blendstocks and Other 302 281 305 306
Total Throughput Volumes 2,379 2,587 2,445 2,647

Yields (Mbbls per Day):
Gasolines and Blendstocks 1,207 1,136 1,176 1,197
Distillates 744 906 789 920
Petrochemicals 72 66 67 74
Other Products (7) 360 464 409 449
Total Yields 2,383 2,572 2,441 2,640

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

Three Months Ended Nine Months Ended
September 30, September 30,
2009 2008 2009 2008
Refining Operating Highlights by Region (8):
Gulf Coast (2):
Operating Income (Loss) $ (81 ) $ 1,159 $ 28 $ 2,639

Throughput Volumes (Mbbls per Day) 1,238 1,324 1,316 1,399

Throughput Margin per Barrel $ 4.66 $ 13.21 $ 5.22 $ 12.01

Operating Costs per Barrel (4):
Refining Operating Expenses $ 3.81 $ 4.83 $ 3.65 $ 4.62
Depreciation and Amortization 1.57 1.37 1.49 1.30
Total Operating Costs per Barrel $ 5.38 $ 6.20 $ 5.14 $ 5.92

Mid-Continent:
Operating Income $ 5 $ 296 $ 197 $ 514

Throughput Volumes (Mbbls per Day) 374 426 381 426

Throughput Margin per Barrel $ 5.38 $ 13.23 $ 7.18 $ 9.94

Operating Costs per Barrel (4):
Refining Operating Expenses $ 3.69 $ 4.41 $ 3.72 $ 4.25
Depreciation and Amortization 1.53 1.28 1.57 1.29
Total Operating Costs per Barrel $ 5.22 $ 5.69 $ 5.29 $ 5.54

Northeast:
Operating Income (Loss) $ (134 ) $ 387 $ (203 ) $ 357

Throughput Volumes (Mbbls per Day) 485 552 467 545

Throughput Margin per Barrel $ 2.86 $ 13.53 $ 4.94 $ 8.50

Operating Costs per Barrel (4):
Refining Operating Expenses $ 4.26 $ 4.54 $ 4.90 $ 4.69
Depreciation and Amortization 1.59 1.36 1.62 1.42
Total Operating Costs per Barrel $ 5.85 $ 5.90 $ 6.52 $ 6.11

West Coast:
Operating Income $ 67 $ 114 $ 331 $ 249

Throughput Volumes (Mbbls per Day) 282 285 281 277

Throughput Margin per Barrel $ 8.51 $ 11.60 $ 10.59 $ 10.55

Operating Costs per Barrel (4):
Refining Operating Expenses $ 4.35 $ 5.53 $ 4.60 $ 5.50
Depreciation and Amortization 1.58 1.70 1.67 1.76
Total Operating Costs per Barrel $ 5.93 $ 7.23 $ 6.27 $ 7.26

Operating Income (Loss) for Regions Above $ (143 ) $ 1,956 $ 353 $ 3,759
Asset Impairment Loss Applicable to Refining (417 ) (43 ) (574 ) (43 )
Loss Contingency Accrual Related to Aruban
Tax Matter (9) (114 ) - (114 ) -
Total Refining Operating Income (Loss) $ (674 ) $ 1,913 $ (335 ) $ 3,716

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

Three Months Ended Nine Months Ended
September 30, September 30,
2009 2008 2009 2008
Retail - U.S.:
Company-Operated Fuel Sites (Average) 998 984 1,001 961
Fuel Volumes (Gallons per Day per Site) 4,963 4,946 5,022 4,997
Fuel Margin per Gallon $ 0.231 $ 0.273 $ 0.157 $ 0.173
Merchandise Sales $ 315 $ 292 $ 888 $ 819
Merchandise Margin (Percentage of Sales) 28.7 % 29.8 % 29.2 % 30.0 %
Margin on Miscellaneous Sales $ 22 $ 24 $ 66 $ 74
Selling Expenses $ 120 $ 134 $ 349 $ 375

Retail - Canada:
Fuel Volumes (Thousand Gallons per Day) 3,115 3,126 3,155 3,169
Fuel Margin per Gallon $ 0.263 $ 0.261 $ 0.255 $ 0.278
Merchandise Sales $ 58 $ 56 $ 146 $ 156
Merchandise Margin (Percentage of Sales) 28.6 % 28.6 % 29.1 % 28.5 %
Margin on Miscellaneous Sales $ 10 $ 10 $ 25 $ 29
Selling Expenses $ 62 $ 67 $ 173 $ 204

Ethanol (1):
Ethanol Production (Thousand Gallons per Day) 2,116 N/A 1,229 N/A
Gross Margin per Gallon of Ethanol Production $ 0.59 N/A $ 0.55 N/A
Operating Costs per Gallon of Ethanol Production:
Ethanol Operating Expenses $ 0.31 N/A $ 0.31 N/A
Depreciation and Amortization 0.03 N/A 0.03 N/A
Total Operating Costs per Gallon of Ethanol Production $ 0.34 N/A $ 0.34 N/A

Average Market Reference Prices and Differentials
(Dollars per Barrel):
Feedstocks (at U.S. Gulf Coast):
West Texas Intermediate (WTI) Crude Oil $ 68.18 $ 117.83 $ 56.90 $ 113.25
WTI Less Sour Crude Oil (10) $ 1.72 $ 4.05 $ 1.25 $ 5.20
WTI Less Mars Crude Oil $ 1.78 $ 5.26 $ 1.06 $ 6.40
WTI Less Maya Crude Oil $ 5.01 $ 11.36 $ 4.68 $ 16.39

Products:
U.S. Gulf Coast:
Conventional 87 Gasoline Less WTI $ 7.85 $ 12.13 $ 8.85 $ 7.66
No. 2 Fuel Oil Less WTI $ 4.53 $ 19.27 $ 6.40 $ 19.17
Ultra-Low-Sulfur Diesel Less WTI $ 6.99 $ 23.91 $ 8.59 $ 24.38
Propylene Less WTI $ 8.22 $ 7.21 $ (3.05 ) $ (0.11 )
U.S. Mid-Continent:
Conventional 87 Gasoline Less WTI $ 8.11 $ 8.62 $ 9.09 $ 6.49
Low-Sulfur Diesel Less WTI $ 8.01 $ 25.55 $ 8.63 $ 25.10
U.S. Northeast:
Conventional 87 Gasoline Less WTI $ 8.34 $ 5.80 $ 8.78 $ 4.62
No. 2 Fuel Oil Less WTI $ 4.95 $ 19.86 $ 7.68 $ 20.85
Lube Oils Less WTI $ 28.89 $ 89.33 $ 40.54 $ 51.75
U.S. West Coast:
CARBOB 87 Gasoline Less WTI $ 18.00 $ 11.28 $ 18.40 $ 12.13
CARB Diesel Less WTI $ 9.29 $ 22.94 $ 10.30 $ 24.57

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

(1) The information presented for the three and nine months ended September 30, 2009 includes the operations related to the acquisition of certain ethanol plants from VeraSun
Energy Corporation. Ethanol plants located in Charles City, Fort Dodge and Hartley, Iowa; Aurora, South Dakota; and Welcome, Minnesota were purchased on April 1, 2009,
and ethanol plants in Albert City, Iowa and Albion, Nebraska were purchased on April 9, 2009 and May 8, 2009, respectively. The ethanol production volumes reflected in
this earnings release for the nine months ended September 30, 2009 are based on 273 calendar days rather than the actual daily production, which varied by facility.

(2) Effective July 1, 2008, Valero sold its Krotz Springs Refinery to Alon Refining Krotz Springs, Inc. (Alon), a subsidiary of Alon USA Energy, Inc. The nature and
significance of Valero's post-closing participation in an offtake agreement with Alon represents a continuation of activities with the Krotz Springs Refinery for
accounting purposes, and as such the results of operations related to the Krotz Springs Refinery have not been presented as discontinued operations in the Statement of
Income Data for the three and nine months ended September 30, 2008. The refining operating highlights, both consolidated and for the Gulf Coast region, presented in this
earnings release include the Krotz Springs Refinery for the nine months ended September 30, 2008. The pre-tax gain of $305 million on the sale of the Krotz Springs
Refinery is included in the Gulf Coast operating income for the three and nine months ended September 30, 2008.

(3) Includes excise taxes on sales by Valero's U.S. retail system of $226 million and $207 million for the three months ended September 30, 2009 and 2008, respectively, and
$659 million and $605 million for the nine months ended September 30, 2009 and 2008, respectively.

(4) The asset impairment loss for the three months ended September 30, 2009 relates primarily to charges of approximately $340 million resulting from the permanent shutdown
of the gasification unit at Valero's Delaware City Refinery. The remaining loss for the three months ended September 30, 2009 relates to the permanent cancellation of
certain capital projects classified as "construction in progress" as a result of the unfavorable impact of the continuing economic slowdown on refining industry
fundamentals. Losses resulting from the permanent cancellation of certain capital projects classified as "construction in progress" in prior periods have been
reclassified from Operating Expenses and presented separately for comparability with the third quarter 2009 presentation. The asset impairment loss amounts for all
periods have been excluded from operating costs in determining operating costs per barrel, resulting in an adjustment to the operating costs per barrel previously
reported in 2008.

(5) Effective January 1, 2009, Valero adopted certain new accounting rules that require restricted stock granted under Valero's stock-based compensation plans to be treated
as participating securities under the two-class method of determining basic earnings per common share. Basic earnings per common share for prior periods are to be
adjusted to conform to these new rules. The adoption of the new rules did not have any effect on the calculation of basic earnings per common share for the three and nine
months ended September 30, 2009, but did reduce the $2.21 and $4.08 basic earnings per common share amounts originally reported for the three and nine months ended
September 30, 2008, respectively.

(6) Common equivalent shares have been excluded from the computation of diluted earnings (loss) per common share for the three and nine months ended September 30, 2009 as the
effect of including such shares would be antidilutive.

(7) Primarily includes gas oils, No. 6 fuel oil, petroleum coke, and asphalt.

(8) The regions reflected herein contain the following refineries: Gulf Coast- Corpus Christi East, Corpus Christi West, Texas City, Houston, Three Rivers, Krotz Springs
(prior to its sale effective July 1, 2008), St. Charles, Aruba, and Port Arthur Refineries; Mid-Continent- McKee, Ardmore, and Memphis Refineries; Northeast- Quebec City,
Paulsboro, and Delaware City Refineries; and West Coast- Benicia and Wilmington Refineries.

(9) A loss contingency accrual of $140 million ($.25 per share) was recorded in the third quarter of 2009 related to Valero's dispute with the Government of Aruba regarding a
turnover tax on export sales as well as other tax matters. The portion of the loss contingency accrual that relates to the turnover tax was recorded in cost of sales for
the three and nine months ended September 30, 2009, and therefore is included in refining operating income (loss) but has been excluded in determining throughput margin
per barrel.

(10) The market reference differential for sour crude oil is based on 50% Arab Medium and 50% Arab Light posted prices.

Valero Energy Corporation, San Antonio
Investors, Ashley Smith, Vice President,
Investor Relations: 210-345-2744
or
Media, Bill Day, Executive Director, Corporate Communications:
210-345-2928
Website: http://www.valero.com/

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