QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |
For the transition period from _______________ to _______________ |
(State or other jurisdiction of | (I.R.S. Employer |
incorporation or organization) | Identification No.) |
Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||
☑ | Accelerated filer | ☐ | Non-accelerated filer | ☐ | |||||||||||||
Smaller reporting company | Emerging growth company |
Page | |
June 30, 2020 | December 31, 2019 | ||||||
(unaudited) | |||||||
ASSETS | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | $ | |||||
Receivables, net | |||||||
Inventories | |||||||
Prepaid expenses and other | |||||||
Total current assets | |||||||
Property, plant, and equipment, at cost | |||||||
Accumulated depreciation | ( | ) | ( | ) | |||
Property, plant, and equipment, net | |||||||
Deferred charges and other assets, net | |||||||
Total assets | $ | $ | |||||
LIABILITIES AND EQUITY | |||||||
Current liabilities: | |||||||
Current portion of debt and finance lease obligations | $ | $ | |||||
Accounts payable | |||||||
Accrued expenses | |||||||
Taxes other than income taxes payable | |||||||
Income taxes payable | |||||||
Total current liabilities | |||||||
Debt and finance lease obligations, less current portion | |||||||
Deferred income tax liabilities | |||||||
Other long-term liabilities | |||||||
Commitments and contingencies | |||||||
Equity: | |||||||
Valero Energy Corporation stockholders’ equity: | |||||||
Common stock, $0.01 par value; 1,200,000,000 shares authorized; 673,501,593 and 673,501,593 shares issued | |||||||
Additional paid-in capital | |||||||
Treasury stock, at cost; 265,748,331 and 264,209,742 common shares | ( | ) | ( | ) | |||
Retained earnings | |||||||
Accumulated other comprehensive loss | ( | ) | ( | ) | |||
Total Valero Energy Corporation stockholders’ equity | |||||||
Noncontrolling interests | |||||||
Total equity | |||||||
Total liabilities and equity | $ | $ |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2020 | 2019 | 2020 | 2019 | ||||||||||||
Revenues (a) | $ | $ | $ | $ | |||||||||||
Cost of sales: | |||||||||||||||
Cost of materials and other | |||||||||||||||
Lower of cost or market (LCM) inventory valuation adjustment | ( | ) | |||||||||||||
Operating expenses (excluding depreciation and amortization expense reflected below) | |||||||||||||||
Depreciation and amortization expense | |||||||||||||||
Total cost of sales | |||||||||||||||
Other operating expenses | |||||||||||||||
General and administrative expenses (excluding depreciation and amortization expense reflected below) | |||||||||||||||
Depreciation and amortization expense | |||||||||||||||
Operating income (loss) | ( | ) | |||||||||||||
Other income, net | |||||||||||||||
Interest and debt expense, net of capitalized interest | ( | ) | ( | ) | ( | ) | ( | ) | |||||||
Income (loss) before income tax expense (benefit) | ( | ) | |||||||||||||
Income tax expense (benefit) | ( | ) | |||||||||||||
Net income (loss) | ( | ) | |||||||||||||
Less: Net income attributable to noncontrolling interests | |||||||||||||||
Net income (loss) attributable to Valero Energy Corporation stockholders | $ | $ | $ | ( | ) | $ | |||||||||
Earnings (loss) per common share | $ | $ | $ | ( | ) | $ | |||||||||
Weighted-average common shares outstanding (in millions) | |||||||||||||||
Earnings (loss) per common share – assuming dilution | $ | $ | $ | ( | ) | $ | |||||||||
Weighted-average common shares outstanding – assuming dilution (in millions) | |||||||||||||||
_______________________________________________ | |||||||||||||||
Supplemental information: | |||||||||||||||
(a) Includes excise taxes on sales by certain of our international operations | $ | $ | $ | $ |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2020 | 2019 | 2020 | 2019 | ||||||||||||
Net income (loss) | $ | $ | $ | ( | ) | $ | |||||||||
Other comprehensive income (loss): | |||||||||||||||
Foreign currency translation adjustment | ( | ) | |||||||||||||
Net gain on pension and other postretirement benefits | |||||||||||||||
Net gain (loss) on cash flow hedges | ( | ) | |||||||||||||
Other comprehensive income (loss) before income tax expense (benefit) | ( | ) | |||||||||||||
Income tax expense (benefit) related to items of other comprehensive income (loss) | ( | ) | |||||||||||||
Other comprehensive income (loss) | ( | ) | |||||||||||||
Comprehensive income (loss) | ( | ) | |||||||||||||
Less: Comprehensive income attributable to noncontrolling interests | |||||||||||||||
Comprehensive income (loss) attributable to Valero Energy Corporation stockholders | $ | $ | $ | ( | ) | $ |
Valero Energy Corporation Stockholders’ Equity | |||||||||||||||||||||||||||||||
Common Stock | Additional Paid-in Capital | Treasury Stock | Retained Earnings | Accumulated Other Comprehensive Loss | Total | Non- controlling Interests | Total Equity | ||||||||||||||||||||||||
Balance as of March 31, 2020 | $ | $ | $ | ( | ) | $ | $ | ( | ) | $ | $ | $ | |||||||||||||||||||
Net income | — | — | — | — | |||||||||||||||||||||||||||
Dividends on common stock ($0.98 per share) | — | — | — | ( | ) | — | ( | ) | — | ( | ) | ||||||||||||||||||||
Stock-based compensation expense | — | — | — | — | — | ||||||||||||||||||||||||||
Transactions in connection with stock-based compensation plans | — | ( | ) | — | — | — | |||||||||||||||||||||||||
Distributions to noncontrolling interests | — | — | — | — | — | — | ( | ) | ( | ) | |||||||||||||||||||||
Other comprehensive income (loss) | — | — | — | — | ( | ) | |||||||||||||||||||||||||
Balance as of June 30, 2020 | $ | $ | $ | ( | ) | $ | $ | ( | ) | $ | $ | $ | |||||||||||||||||||
Balance as of March 31, 2019 | $ | $ | $ | ( | ) | $ | $ | ( | ) | $ | $ | $ | |||||||||||||||||||
Net income | — | — | — | — | |||||||||||||||||||||||||||
Dividends on common stock ($0.90 per share) | — | — | — | ( | ) | — | ( | ) | — | ( | ) | ||||||||||||||||||||
Stock-based compensation expense | — | — | — | — | — | ||||||||||||||||||||||||||
Transactions in connection with stock-based compensation plans | — | ( | ) | — | — | ( | ) | — | ( | ) | |||||||||||||||||||||
Open market stock purchases | — | — | ( | ) | — | — | ( | ) | — | ( | ) | ||||||||||||||||||||
Distributions to noncontrolling interests | — | — | — | — | — | — | ( | ) | ( | ) | |||||||||||||||||||||
Other comprehensive income | — | — | — | — | |||||||||||||||||||||||||||
Balance as of June 30, 2019 | $ | $ | $ | ( | ) | $ | $ | ( | ) | $ | $ | $ |
Valero Energy Corporation Stockholders’ Equity | |||||||||||||||||||||||||||||||
Common Stock | Additional Paid-in Capital | Treasury Stock | Retained Earnings | Accumulated Other Comprehensive Loss | Total | Non- controlling Interests | Total Equity | ||||||||||||||||||||||||
Balance as of December 31, 2019 | $ | $ | $ | ( | ) | $ | $ | ( | ) | $ | $ | $ | |||||||||||||||||||
Net income (loss) | — | — | — | ( | ) | — | ( | ) | ( | ) | |||||||||||||||||||||
Dividends on common stock ($1.96 per share) | — | — | — | ( | ) | — | ( | ) | — | ( | ) | ||||||||||||||||||||
Stock-based compensation expense | — | — | — | — | — | ||||||||||||||||||||||||||
Transactions in connection with stock-based compensation plans | — | ( | ) | — | — | ( | ) | — | ( | ) | |||||||||||||||||||||
Open market stock purchases | — | — | ( | ) | — | — | ( | ) | — | ( | ) | ||||||||||||||||||||
Distributions to noncontrolling interests | — | — | — | — | — | — | ( | ) | ( | ) | |||||||||||||||||||||
Other comprehensive income (loss) | — | — | — | — | ( | ) | ( | ) | ( | ) | |||||||||||||||||||||
Balance as of June 30, 2020 | $ | $ | $ | ( | ) | $ | $ | ( | ) | $ | $ | $ | |||||||||||||||||||
Balance as of December 31, 2018 | $ | $ | $ | ( | ) | $ | $ | ( | ) | $ | $ | $ | |||||||||||||||||||
Net income | — | — | — | — | |||||||||||||||||||||||||||
Dividends on common stock ($1.80 per share) | — | — | — | ( | ) | — | ( | ) | — | ( | ) | ||||||||||||||||||||
Stock-based compensation expense | — | — | — | — | — | ||||||||||||||||||||||||||
Transactions in connection with stock-based compensation plans | — | ( | ) | — | — | ( | ) | — | ( | ) | |||||||||||||||||||||
Open market stock purchases | — | — | ( | ) | — | — | ( | ) | — | ( | ) | ||||||||||||||||||||
Acquisition of Valero Energy Partners LP (VLP) publicly held common units | — | ( | ) | — | — | — | ( | ) | ( | ) | ( | ) | |||||||||||||||||||
Distributions to noncontrolling interests | — | — | — | — | — | — | ( | ) | ( | ) | |||||||||||||||||||||
Other | — | ||||||||||||||||||||||||||||||
Other comprehensive income | — | — | — | — | |||||||||||||||||||||||||||
Balance as of June 30, 2019 | $ | $ | $ | ( | ) | $ | $ | ( | ) | $ | $ | $ |
Six Months Ended June 30, | |||||||
2020 | 2019 | ||||||
Cash flows from operating activities: | |||||||
Net income (loss) | $ | ( | ) | $ | |||
Adjustments to reconcile net income (loss) to net cash provided by operating activities: | |||||||
Depreciation and amortization expense | |||||||
LCM inventory valuation adjustment | |||||||
Deferred income tax expense (benefit) | ( | ) | |||||
Changes in current assets and current liabilities | ( | ) | |||||
Changes in deferred charges and credits and other operating activities, net | ( | ) | |||||
Net cash provided by operating activities | |||||||
Cash flows from investing activities: | |||||||
Capital expenditures (excluding variable interest entities (VIEs)) | ( | ) | ( | ) | |||
Capital expenditures of VIEs: | |||||||
Diamond Green Diesel Holdings LLC (DGD) | ( | ) | ( | ) | |||
Other VIEs | ( | ) | ( | ) | |||
Deferred turnaround and catalyst cost expenditures (excluding VIEs) | ( | ) | ( | ) | |||
Deferred turnaround and catalyst cost expenditures of DGD | ( | ) | ( | ) | |||
Investments in unconsolidated joint ventures | ( | ) | ( | ) | |||
Acquisitions of undivided interests | ( | ) | |||||
Other investing activities, net | |||||||
Net cash used in investing activities | ( | ) | ( | ) | |||
Cash flows from financing activities: | |||||||
Proceeds from debt issuances and borrowings (excluding VIEs) | |||||||
Proceeds from borrowings of VIEs | |||||||
Repayments of debt and finance lease obligations (excluding VIEs) | ( | ) | ( | ) | |||
Repayments of debt of VIEs | ( | ) | ( | ) | |||
Purchases of common stock for treasury | ( | ) | ( | ) | |||
Common stock dividends | ( | ) | ( | ) | |||
Acquisition of VLP publicly held common units | ( | ) | |||||
Distributions to noncontrolling interests | ( | ) | ( | ) | |||
Other financing activities, net | ( | ) | ( | ) | |||
Net cash provided by (used in) financing activities | ( | ) | |||||
Effect of foreign exchange rate changes on cash | ( | ) | |||||
Net decrease in cash and cash equivalents | ( | ) | ( | ) | |||
Cash and cash equivalents at beginning of period | |||||||
Cash and cash equivalents at end of period | $ | $ |
1. | BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES |
ASU | Basis of Adoption | ||
2016-13 | Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (including codification improvements in ASUs 2018-19 and 2019-11 and ASU 2020-02— Financial Instruments—Credit Losses (Topic 326): Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin No. 119) | Cumulative effect | |
2018-15 | Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract | Prospectively | |
2019-12 | Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes | Prospectively |
ASU | Basis of Adoption | ||
2020-04 | Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting | Prospectively |
2. | UNCERTAINTIES AND CERTAIN SIGNIFICANT ACCOUNTING ESTIMATES |
3. | MERGER WITH VLP |
4. | INVENTORIES |
June 30, 2020 | December 31, 2019 | ||||||
Refinery feedstocks | $ | $ | |||||
Refined petroleum products and blendstocks | |||||||
Renewable diesel feedstocks and products | |||||||
Ethanol feedstocks and products | |||||||
Materials and supplies | |||||||
Inventories before LCM inventory valuation reserve | |||||||
LCM inventory valuation reserve | ( | ) | |||||
Inventories | $ | $ |
5. | LEASES |
Pipelines, Terminals, and Tanks | Transportation | Feedstock Processing Equipment | Energy and Gases | Real Estate | Other | Total | |||||||||||||||||||||||||
Marine | Rail | ||||||||||||||||||||||||||||||
Three months ended June 30, 2020 | |||||||||||||||||||||||||||||||
Finance lease cost: | |||||||||||||||||||||||||||||||
Amortization of right-of-use (ROU) assets | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||
Interest on lease liabilities | |||||||||||||||||||||||||||||||
Operating lease cost | |||||||||||||||||||||||||||||||
Variable lease cost | |||||||||||||||||||||||||||||||
Short-term lease cost | |||||||||||||||||||||||||||||||
Sublease income | ( | ) | ( | ) | |||||||||||||||||||||||||||
Total lease cost | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||
Three months ended June 30, 2019 | |||||||||||||||||||||||||||||||
Finance lease cost: | |||||||||||||||||||||||||||||||
Amortization of ROU assets | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||
Interest on lease liabilities | |||||||||||||||||||||||||||||||
Operating lease cost | |||||||||||||||||||||||||||||||
Variable lease cost | |||||||||||||||||||||||||||||||
Short-term lease cost | |||||||||||||||||||||||||||||||
Sublease income | ( | ) | ( | ) | ( | ) | |||||||||||||||||||||||||
Total lease cost | $ | $ | $ | $ | $ | $ | $ | $ |
Pipelines, Terminals, and Tanks | Transportation | Feedstock Processing Equipment | Energy and Gases | Real Estate | Other | Total | |||||||||||||||||||||||||
Marine | Rail | ||||||||||||||||||||||||||||||
Six months ended June 30, 2020 | |||||||||||||||||||||||||||||||
Finance lease cost: | |||||||||||||||||||||||||||||||
Amortization of ROU assets | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||
Interest on lease liabilities | |||||||||||||||||||||||||||||||
Operating lease cost | |||||||||||||||||||||||||||||||
Variable lease cost | |||||||||||||||||||||||||||||||
Short-term lease cost | |||||||||||||||||||||||||||||||
Sublease income | ( | ) | ( | ) | |||||||||||||||||||||||||||
Total lease cost | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||
Six months ended June 30, 2019 | |||||||||||||||||||||||||||||||
Finance lease cost: | |||||||||||||||||||||||||||||||
Amortization of ROU assets | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||
Interest on lease liabilities | |||||||||||||||||||||||||||||||
Operating lease cost | |||||||||||||||||||||||||||||||
Variable lease cost | |||||||||||||||||||||||||||||||
Short-term lease cost | |||||||||||||||||||||||||||||||
Sublease income | ( | ) | ( | ) | ( | ) | |||||||||||||||||||||||||
Total lease cost | $ | $ | $ | $ | $ | $ | $ | $ |
June 30, 2020 | December 31, 2019 | ||||||||||||||
Operating Leases | Finance Leases | Operating Leases | Finance Leases | ||||||||||||
Supplemental balance sheet information | |||||||||||||||
ROU assets, net reflected in the following balance sheet line items: | |||||||||||||||
Property, plant, and equipment, net | $ | — | $ | $ | — | $ | |||||||||
Deferred charges and other assets, net | — | — | |||||||||||||
Total ROU assets, net | $ | $ | $ | $ | |||||||||||
Current lease liabilities reflected in the following balance sheet line items: | |||||||||||||||
Current portion of debt and finance lease obligations | $ | — | $ | $ | — | $ | |||||||||
Accrued expenses | — | — | |||||||||||||
Noncurrent lease liabilities reflected in the following balance sheet line items: | |||||||||||||||
Debt and finance lease obligations, less current portion | — | — | |||||||||||||
Other long-term liabilities | — | — | |||||||||||||
Total lease liabilities | $ | $ | $ | $ | |||||||||||
Other supplemental information | |||||||||||||||
Weighted-average remaining lease term | |||||||||||||||
Weighted-average discount rate | % | % | % | % |
June 30, 2020 | December 31, 2019 | ||||||||||||||
Operating Leases | Finance Leases | Operating Leases | Finance Leases | ||||||||||||
2020 (a) | $ | $ | $ | $ | |||||||||||
2021 | |||||||||||||||
2022 | |||||||||||||||
2023 | |||||||||||||||
2024 | |||||||||||||||
Thereafter | |||||||||||||||
Total undiscounted lease payments | |||||||||||||||
Less: Amount associated with discounting | |||||||||||||||
Total lease liabilities | $ | $ | $ | $ |
(a) | The amounts as of June 30, 2020 are for the remaining six months of 2020. |
6. | DEBT |
• | We issued $ |
• | In connection with the completion of the Merger Transaction, Valero Energy Corporation, the parent company, entered into a guarantee agreement to fully and unconditionally guarantee the prompt payment, when due, of the following debt issued by VLP, one of its wholly owned subsidiaries, that was outstanding as of June 30, 2020: |
◦ |
◦ |
June 30, 2020 | ||||||||||||||||||
Facility Amount | Maturity Date | Outstanding Borrowings | Letters of Credit Issued (a) | Availability | ||||||||||||||
Committed facilities: | ||||||||||||||||||
Valero Revolver | $ | March 2024 | $ | $ | $ | |||||||||||||
364-day Revolving Credit Facility | $ | April 2021 | $ | n/a | $ | |||||||||||||
Canadian Revolver | C$ | November 2020 | C$ | C$ | C$ | |||||||||||||
Accounts receivable sales facility (b) | $ | July 2020 | $ | n/a | $ | |||||||||||||
Letter of credit facility | $ | November 2020 | n/a | $ | $ | |||||||||||||
Committed facilities of VIE (c): | ||||||||||||||||||
IEnova Revolver | $ | February 2028 | $ | n/a | $ | |||||||||||||
Uncommitted facilities: | ||||||||||||||||||
Letter of credit facilities | n/a | n/a | n/a | $ | n/a |
(a) | Letters of credit issued as of June 30, 2020 expire at various times in 2020 through 2021. |
(b) | The available borrowing capacity was lower than the facility amount due to a decline in product prices. In July 2020, we extended the maturity date of this facility to July 2021 and decreased the facility amount from $ |
(c) | Creditors of our VIE do not have recourse against us. |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2020 | 2019 | 2020 | 2019 | ||||||||||||
Interest and debt expense | $ | $ | $ | $ | |||||||||||
Less: Capitalized interest | |||||||||||||||
Interest and debt expense, net of capitalized interest | $ | $ | $ | $ |
7. | EQUITY |
Three Months Ended June 30, | |||||||||||||||||||||||||||||||
2020 | 2019 | ||||||||||||||||||||||||||||||
Foreign Currency Translation Adjustment | Defined Benefit Plans Items | Gains (Losses) on Cash Flow Hedges | Total | Foreign Currency Translation Adjustment | Defined Benefit Plans Items | Gains on Cash Flow Hedges | Total | ||||||||||||||||||||||||
Balance as of beginning of period | $ | ( | ) | $ | ( | ) | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | $ | ( | ) | |||||||||||
Other comprehensive income (loss) before reclassifications | ( | ) | ( | ) | |||||||||||||||||||||||||||
Amounts reclassified from accumulated other comprehensive loss | ( | ) | |||||||||||||||||||||||||||||
Other comprehensive income (loss) | ( | ) | ( | ) | |||||||||||||||||||||||||||
Balance as of end of period | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | $ | ( | ) |
Six Months Ended June 30, | |||||||||||||||||||||||||||||||
2020 | 2019 | ||||||||||||||||||||||||||||||
Foreign Currency Translation Adjustment | Defined Benefit Plans Items | Gains (Losses) on Cash Flow Hedges | Total | Foreign Currency Translation Adjustment | Defined Benefit Plans Items | Gains on Cash Flow Hedges | Total | ||||||||||||||||||||||||
Balance as of beginning of period | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | $ | ( | ) | |||||||||
Other comprehensive income (loss) before reclassifications | ( | ) | ( | ) | |||||||||||||||||||||||||||
Amounts reclassified from accumulated other comprehensive loss | ( | ) | |||||||||||||||||||||||||||||
Other comprehensive income (loss) | ( | ) | ( | ) | |||||||||||||||||||||||||||
Balance as of end of period | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | $ | ( | ) |
8. | VARIABLE INTEREST ENTITIES |
• | DGD, a joint venture with a subsidiary of Darling Ingredients Inc., which owns and operates a plant that processes animal fats, used cooking oils, and other vegetable oils into renewable diesel; and |
• | Central Mexico Terminals, which is a collective group of three subsidiaries of Infraestructura Energetica Nova, S.A.B. de C.V. (IEnova), a Mexican company and subsidiary of Sempra Energy, a U.S. public company. We have terminaling agreements with Central Mexico Terminals that represent variable interests. We do not have an ownership interest in Central Mexico Terminals. |
June 30, 2020 | |||||||||||||||
DGD | Central Mexico Terminals | Other | Total | ||||||||||||
Assets | |||||||||||||||
Cash and cash equivalents | $ | $ | $ | $ | |||||||||||
Other current assets | |||||||||||||||
Property, plant, and equipment, net | |||||||||||||||
Liabilities | |||||||||||||||
Current liabilities, including current portion of debt and finance lease obligations | $ | $ | $ | $ | |||||||||||
Debt and finance lease obligations, less current portion |
December 31, 2019 | |||||||||||||||
DGD | Central Mexico Terminals | Other | Total | ||||||||||||
Assets | |||||||||||||||
Cash and cash equivalents | $ | $ | $ | $ | |||||||||||
Other current assets | |||||||||||||||
Property, plant, and equipment, net | |||||||||||||||
Liabilities | |||||||||||||||
Current liabilities, including current portion of debt and finance lease obligations | $ | $ | $ | $ | |||||||||||
Debt and finance lease obligations, less current portion |
9. | EMPLOYEE BENEFIT PLANS |
Pension Plans | Other Postretirement Benefit Plans | ||||||||||||||
2020 | 2019 | 2020 | 2019 | ||||||||||||
Three months ended June 30 | |||||||||||||||
Service cost | $ | $ | $ | $ | |||||||||||
Interest cost | |||||||||||||||
Expected return on plan assets | ( | ) | ( | ) | |||||||||||
Amortization of: | |||||||||||||||
Net actuarial (gain) loss | ( | ) | |||||||||||||
Prior service credit | ( | ) | ( | ) | ( | ) | ( | ) | |||||||
Special charges | |||||||||||||||
Net periodic benefit cost | $ | $ | $ | $ | |||||||||||
Six months ended June 30 | |||||||||||||||
Service cost | $ | $ | $ | $ | |||||||||||
Interest cost | |||||||||||||||
Expected return on plan assets | ( | ) | ( | ) | |||||||||||
Amortization of: | |||||||||||||||
Net actuarial (gain) loss | ( | ) | |||||||||||||
Prior service credit | ( | ) | ( | ) | ( | ) | ( | ) | |||||||
Special charges | |||||||||||||||
Net periodic benefit cost | $ | $ | $ | $ |
10. | INCOME TAXES |
• | Modification of the limitations previously set by the Tax Cuts and Jobs Act of 2017 by providing that tax net operating losses (NOLs) arising in a tax year beginning in 2018, 2019, or 2020 can be carried back five years. This provision allows the taxpayer to recover taxes previously paid at a 35 percent federal income tax rate during tax years prior to 2018. In addition, the CARES Act removed the taxable income limitation to allow a tax NOL to fully offset taxable income for tax years beginning before January 1, 2021. |
• | Increased the deductibility of interest expense from 30 percent to 50 percent of adjusted taxable income for 2019 and 2020. Also, a taxpayer can elect to use its 2019 adjusted taxable income in 2020 to determine the deductible amount of interest expense in that year. |
11. | EARNINGS (LOSS) PER COMMON SHARE |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2020 | 2019 | 2020 | 2019 | ||||||||||||
Earnings (loss) per common share | |||||||||||||||
Net income (loss) attributable to Valero stockholders | $ | $ | $ | ( | ) | $ | |||||||||
Less: Income allocated to participating securities | |||||||||||||||
Net income (loss) available to common stockholders | $ | $ | $ | ( | ) | $ | |||||||||
Weighted-average common shares outstanding | |||||||||||||||
Earnings (loss) per common share | $ | $ | $ | ( | ) | $ | |||||||||
Earnings (loss) per common share – assuming dilution | |||||||||||||||
Net income (loss) attributable to Valero stockholders | $ | $ | $ | ( | ) | $ | |||||||||
Less: Income allocated to participating securities | |||||||||||||||
Net income (loss) available to common stockholders | $ | $ | $ | ( | ) | $ | |||||||||
Weighted-average common shares outstanding | |||||||||||||||
Effect of dilutive securities | |||||||||||||||
Weighted-average common shares outstanding – assuming dilution | |||||||||||||||
Earnings (loss) per common share – assuming dilution | $ | $ | $ | ( | ) | $ |
12. | REVENUES AND SEGMENT INFORMATION |
June 30, 2020 | December 31, 2019 | Decrease | |||||||||
Receivables from contracts with customers, included in receivables, net | $ | $ | $ | ( | ) | ||||||
Contract liabilities, included in accrued expenses | ( | ) |
• | The refining segment includes the operations of our |
• | The renewable diesel segment includes the operations of DGD, our consolidated joint venture as discussed in Note 8. The principal product manufactured by DGD and sold by this segment is renewable diesel. This segment sells some renewable diesel to the refining segment, which is then sold to that segment’s customers. |
• | The ethanol segment includes the operations of our |
Refining | Renewable Diesel | Ethanol | Corporate and Eliminations | Total | |||||||||||||||
Three months ended June 30, 2020 | |||||||||||||||||||
Revenues: | |||||||||||||||||||
Revenues from external customers | $ | $ | $ | $ | $ | ||||||||||||||
Intersegment revenues | ( | ) | — | ||||||||||||||||
Total revenues | ( | ) | |||||||||||||||||
Cost of sales: | |||||||||||||||||||
Cost of materials and other | ( | ) | |||||||||||||||||
LCM inventory valuation adjustment | ( | ) | ( | ) | ( | ) | |||||||||||||
Operating expenses (excluding depreciation and amortization expense reflected below) | |||||||||||||||||||
Depreciation and amortization expense | |||||||||||||||||||
Total cost of sales | ( | ) | |||||||||||||||||
Other operating expenses | |||||||||||||||||||
General and administrative expenses (excluding depreciation and amortization expense reflected below) | |||||||||||||||||||
Depreciation and amortization expense | |||||||||||||||||||
Operating income by segment | $ | $ | $ | $ | ( | ) | $ | ||||||||||||
Three months ended June 30, 2019 | |||||||||||||||||||
Revenues: | |||||||||||||||||||
Revenues from external customers | $ | $ | $ | $ | $ | ||||||||||||||
Intersegment revenues | ( | ) | — | ||||||||||||||||
Total revenues | ( | ) | |||||||||||||||||
Cost of sales: | |||||||||||||||||||
Cost of materials and other | ( | ) | |||||||||||||||||
Operating expenses (excluding depreciation and amortization expense reflected below) | |||||||||||||||||||
Depreciation and amortization expense | |||||||||||||||||||
Total cost of sales | ( | ) | |||||||||||||||||
Other operating expenses | |||||||||||||||||||
General and administrative expenses (excluding depreciation and amortization expense reflected below) | |||||||||||||||||||
Depreciation and amortization expense | |||||||||||||||||||
Operating income by segment | $ | $ | $ | $ | ( | ) | $ |
Refining | Renewable Diesel | Ethanol | Corporate and Eliminations | Total | |||||||||||||||
Six months ended June 30, 2020 | |||||||||||||||||||
Revenues: | |||||||||||||||||||
Revenues from external customers | $ | $ | $ | $ | $ | ||||||||||||||
Intersegment revenues | ( | ) | — | ||||||||||||||||
Total revenues | ( | ) | |||||||||||||||||
Cost of sales: | |||||||||||||||||||
Cost of materials and other | ( | ) | |||||||||||||||||
LCM inventory valuation adjustment | |||||||||||||||||||
Operating expenses (excluding depreciation and amortization expense reflected below) | |||||||||||||||||||
Depreciation and amortization expense | |||||||||||||||||||
Total cost of sales | ( | ) | |||||||||||||||||
Other operating expenses | |||||||||||||||||||
General and administrative expenses (excluding depreciation and amortization expense reflected below) | |||||||||||||||||||
Depreciation and amortization expense | |||||||||||||||||||
Operating income (loss) by segment | $ | ( | ) | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||||
Six months ended June 30, 2019 | |||||||||||||||||||
Revenues: | |||||||||||||||||||
Revenues from external customers | $ | $ | $ | $ | $ | ||||||||||||||
Intersegment revenues | ( | ) | — | ||||||||||||||||
Total revenues | ( | ) | |||||||||||||||||
Cost of sales: | |||||||||||||||||||
Cost of materials and other | ( | ) | |||||||||||||||||
Operating expenses (excluding depreciation and amortization expense reflected below) | |||||||||||||||||||
Depreciation and amortization expense | |||||||||||||||||||
Total cost of sales | ( | ) | |||||||||||||||||
Other operating expenses | |||||||||||||||||||
General and administrative expenses (excluding depreciation and amortization expense reflected below) | |||||||||||||||||||
Depreciation and amortization expense | |||||||||||||||||||
Operating income by segment | $ | $ | $ | $ | ( | ) | $ |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2020 | 2019 | 2020 | 2019 | ||||||||||||
Refining: | |||||||||||||||
Gasolines and blendstocks | $ | $ | $ | $ | |||||||||||
Distillates | |||||||||||||||
Other product revenues | |||||||||||||||
Total refining revenues | |||||||||||||||
Renewable diesel: | |||||||||||||||
Renewable diesel | |||||||||||||||
Ethanol: | |||||||||||||||
Ethanol | |||||||||||||||
Distillers grains | |||||||||||||||
Total ethanol revenues | |||||||||||||||
Corporate – other revenues | |||||||||||||||
Revenues | $ | $ | $ | $ |
June 30, 2020 | December 31, 2019 | ||||||
Refining | $ | $ | |||||
Renewable diesel | |||||||
Ethanol | |||||||
Corporate and eliminations | |||||||
Total assets | $ | $ |
13. | SUPPLEMENTAL CASH FLOW INFORMATION |
Six Months Ended June 30, | |||||||
2020 | 2019 | ||||||
Decrease (increase) in current assets: | |||||||
Receivables, net | $ | $ | ( | ) | |||
Inventories | |||||||
Prepaid expenses and other | ( | ) | |||||
Increase (decrease) in current liabilities: | |||||||
Accounts payable | ( | ) | |||||
Accrued expenses | ( | ) | ( | ) | |||
Taxes other than income taxes payable | ( | ) | ( | ) | |||
Income taxes payable | ( | ) | |||||
Changes in current assets and current liabilities | $ | ( | ) | $ |
• | the decrease in receivables was primarily due to (i) a decrease of $ |
• | the decrease in inventories was due to lower inventory levels combined with a decrease in commodity prices in June 2020 compared to December 2019; |
• | the increase in prepaid expenses and other was primarily related to the recognition of an income tax receivable of approximately $ |
• | the decrease in accounts payable was due to a decrease in commodity prices in June 2020 compared to December 2019 combined with a decrease in crude oil and other feedstock volumes purchased. |
• | the increase in receivables was due to an increase in sales volumes combined with an increase in commodity prices in June 2019 compared to December 2018; |
• | the decrease in inventories was due to lower inventory levels in June 2019 compared to December 2018; |
• | the decrease in prepaid expenses and other was mainly due to a decrease in income taxes receivable resulting from a refund of $ |
• | the increase in accounts payable was due to an increase in commodity prices in June 2019 compared to December 2018 combined with an increase in crude oil and other feedstock volumes purchased and the timing of payments of invoices; and |
• | the decrease in accrued expenses was mainly due to the payment of our annual incentive compensation related to 2018. |
Six Months Ended June 30, | |||||||
2020 | 2019 | ||||||
Interest paid in excess of amount capitalized, including interest on finance leases | $ | $ | |||||
Income taxes paid (refunded), net | ( | ) |
Six Months Ended June 30, | |||||||||||||||
2020 | 2019 | ||||||||||||||
Operating Leases | Finance Leases | Operating Leases | Finance Leases | ||||||||||||
Cash paid for amounts included in the measurement of lease liabilities: | |||||||||||||||
Operating cash flows | $ | $ | $ | $ | |||||||||||
Financing cash flows | — | — | |||||||||||||
Changes in lease balances resulting from new and modified leases (a) |
(a) | Noncash activity for the six months ended June 30, 2020 primarily includes $ |
14. | FAIR VALUE MEASUREMENTS |
June 30, 2020 | |||||||||||||||||||||||||||||||
Total Gross Fair Value | Effect of Counter- party Netting | Effect of Cash Collateral Netting | Net Carrying Value on Balance Sheet | Cash Collateral Paid or Received Not Offset | |||||||||||||||||||||||||||
Fair Value Hierarchy | |||||||||||||||||||||||||||||||
Level 1 | Level 2 | Level 3 | |||||||||||||||||||||||||||||
Assets | |||||||||||||||||||||||||||||||
Commodity derivative contracts | $ | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | $ | |||||||||||||||||||
Physical purchase contracts | n/a | n/a | n/a | ||||||||||||||||||||||||||||
Foreign currency contracts | n/a | n/a | n/a | ||||||||||||||||||||||||||||
Investments of certain benefit plans | n/a | n/a | n/a | ||||||||||||||||||||||||||||
Total | $ | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | ||||||||||||||||||||
Liabilities | |||||||||||||||||||||||||||||||
Commodity derivative contracts | $ | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | $ | ( | ) | |||||||||||||||||
Environmental credit obligations | n/a | n/a | n/a | ||||||||||||||||||||||||||||
Physical purchase contracts | n/a | n/a | n/a | ||||||||||||||||||||||||||||
Foreign currency contracts | n/a | n/a | n/a | ||||||||||||||||||||||||||||
Total | $ | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ |
December 31, 2019 | |||||||||||||||||||||||||||||||
Total Gross Fair Value | Effect of Counter- party Netting | Effect of Cash Collateral Netting | Net Carrying Value on Balance Sheet | Cash Collateral Paid or Received Not Offset | |||||||||||||||||||||||||||
Fair Value Hierarchy | |||||||||||||||||||||||||||||||
Level 1 | Level 2 | Level 3 | |||||||||||||||||||||||||||||
Assets | |||||||||||||||||||||||||||||||
Commodity derivative contracts | $ | $ | $ | $ | $ | ( | ) | $ | $ | $ | |||||||||||||||||||||
Foreign currency contracts | n/a | n/a | n/a | ||||||||||||||||||||||||||||
Investments of certain benefit plans | n/a | n/a | n/a | ||||||||||||||||||||||||||||
Total | $ | $ | $ | $ | $ | ( | ) | $ | $ | ||||||||||||||||||||||
Liabilities | |||||||||||||||||||||||||||||||
Commodity derivative contracts | $ | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | $ | ( | ) | |||||||||||||||||
Environmental credit obligations | n/a | n/a | n/a | ||||||||||||||||||||||||||||
Physical purchase contracts | n/a | n/a | n/a | ||||||||||||||||||||||||||||
Foreign currency contracts | n/a | n/a | n/a | ||||||||||||||||||||||||||||
Total | $ | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ |
• | Commodity derivative contracts consist primarily of exchange-traded futures, which are used to reduce the impact of price volatility on our results of operations and cash flows as discussed in Note 15. These contracts are measured at fair value using a market approach based on quoted prices from the commodity exchange and are categorized in Level 1 of the fair value hierarchy. |
• | Physical purchase contracts represent the fair value of fixed-price corn purchase contracts. The fair values of these purchase contracts are measured using a market approach based on quoted prices from the commodity exchange or an independent pricing service and are categorized in Level 2 of the fair value hierarchy. |
• | Investments of certain benefit plans consist of investment securities held by trusts for the purpose of satisfying a portion of our obligations under certain U.S. nonqualified benefit plans. The plan assets categorized in Level 1 of the fair value hierarchy are measured at fair value using a market approach based on quoted prices from national securities exchanges. The plan assets categorized in Level 3 of the fair value hierarchy represent insurance contracts, the fair value of which is provided by the insurer. |
• | Foreign currency contracts consist of foreign currency exchange and purchase contracts and foreign currency swap agreements related to our international operations to manage our exposure to exchange rate fluctuations on transactions denominated in currencies other than the local (functional) currencies of our operations. These contracts are valued based on quoted foreign currency exchange rates and are categorized in Level 1 of the fair value hierarchy. |
• | Environmental credit obligations represent our liability for the purchase of (i) biofuel credits (primarily Renewable Identification Numbers (RINs) in the U.S.) needed to satisfy our obligation to blend biofuels into the products we produce and (ii) emission credits under the California Global Warming Solutions Act (the California cap-and-trade system, also known as AB 32) and similar programs (collectively, the cap-and-trade systems). To the degree we are unable to blend biofuels (such as ethanol and biodiesel) at percentages required under the biofuel programs, we must purchase biofuel credits to comply with these programs. Under the cap-and-trade systems, we must purchase emission credits to comply with these systems. The liability for environmental credits is based on our deficit for such credits as of the balance sheet date, if any, after considering any credits acquired or under contract, and is equal to the product of the credits deficit and the market price of these credits as of the balance sheet date. The environmental credit obligations are categorized in Level 2 of the fair value hierarchy and are measured at fair value using a market approach based on quoted prices from an independent pricing service. |
June 30, 2020 | December 31, 2019 | ||||||||||||||||
Fair Value Hierarchy | Carrying Amount | Fair Value | Carrying Amount | Fair Value | |||||||||||||
Financial assets | |||||||||||||||||
Cash and cash equivalents | Level 1 | $ | $ | $ | $ | ||||||||||||
Financial liabilities | |||||||||||||||||
Debt (excluding finance leases) | Level 2 |
15. | PRICE RISK MANAGEMENT ACTIVITIES |
• | Cash flow hedges – The objective of our cash flow hedges is to lock in the price of forecasted (i) feedstock, refined petroleum product, or natural gas purchases, or (ii) refined petroleum product or renewable diesel sales at existing market prices that we deem favorable. |
• | Economic hedges – Our objectives for holding economic hedges are to (i) manage price volatility in certain feedstock and refined petroleum product inventories and fixed-price purchase contracts, and (ii) lock in the price of forecasted feedstock, refined petroleum product, or natural gas purchases, or refined petroleum product or renewable diesel sales at existing market prices that we deem favorable. |
Notional Contract Volumes by Year of Maturity | |||||
2020 | 2021 | ||||
Derivatives designated as cash flow hedges | |||||
Renewable diesel: | |||||
Futures – long | |||||
Futures – short | |||||
Derivatives designated as economic hedges | |||||
Crude oil and refined petroleum products: | |||||
Futures – long | |||||
Futures – short | |||||
Corn: | |||||
Futures – long | |||||
Futures – short | |||||
Physical contracts – long |
Balance Sheet Location | June 30, 2020 | December 31, 2019 | |||||||||||||||
Asset Derivatives | Liability Derivatives | Asset Derivatives | Liability Derivatives | ||||||||||||||
Derivatives designated as hedging instruments | |||||||||||||||||
Commodity contracts | Receivables, net | $ | $ | $ | $ | ||||||||||||
Derivatives not designated as hedging instruments | |||||||||||||||||
Commodity contracts | Receivables, net | $ | $ | $ | $ | ||||||||||||
Physical purchase contracts | Inventories | ||||||||||||||||
Foreign currency contracts | Receivables, net | ||||||||||||||||
Foreign currency contracts | Accrued expenses | ||||||||||||||||
Total | $ | $ | $ | $ |
Derivatives in Cash Flow Hedging Relationships | Location of Gain (Loss) Recognized in Income on Derivatives | Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
2020 | 2019 | 2020 | 2019 | |||||||||||||||
Commodity contracts: | ||||||||||||||||||
Gain (loss) recognized in other comprehensive income (loss) on derivatives | $ | ( | ) | $ | $ | $ | ||||||||||||
Gain (loss) reclassified from accumulated other comprehensive income (loss) into income | Revenues | ( | ) | ( | ) |
Derivatives Not Designated as Hedging Instruments | Location of Gain (Loss) Recognized in Income on Derivatives | Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
2020 | 2019 | 2020 | 2019 | |||||||||||||||
Commodity contracts | Revenues | $ | $ | $ | $ | |||||||||||||
Commodity contracts | Cost of materials and other | ( | ) | |||||||||||||||
Commodity contracts | Operating expenses (excluding depreciation and amortization expense) | |||||||||||||||||
Foreign currency contracts | Cost of materials and other | ( | ) | |||||||||||||||
Foreign currency contracts | Other income, net | ( | ) |
• | the effect, impact, potential duration or other implications of the COVID-19 pandemic and global crude oil production levels, and any expectations we may have with respect thereto; |
• | future refining segment margins, including gasoline and distillate margins; |
• | future renewable diesel segment margins; |
• | future ethanol segment margins; |
• | expectations regarding feedstock costs, including crude oil differentials, and operating expenses; |
• | anticipated levels of crude oil and refined petroleum product inventories and storage capacity; |
• | our anticipated level of capital investments, including deferred turnaround and catalyst cost expenditures, capital expenditures for environmental and other purposes, and joint venture investments, and the effect of those capital investments on our results of operations; |
• | anticipated trends in the supply of and demand for crude oil and other feedstocks and refined petroleum products in the regions where we operate, as well as globally; |
• | expectations regarding environmental, tax, and other regulatory initiatives; and |
• | the effect of general economic and other conditions on refining, renewable diesel, and ethanol industry fundamentals. |
• | demand for, and supplies of, refined petroleum products (such as gasoline, diesel, jet fuel, and petrochemicals), renewable diesel, and ethanol; |
• | demand for, and supplies of, crude oil and other feedstocks; |
• | the effects of public health threats, pandemics and epidemics, such as the COVID-19 pandemic, and the adverse impacts thereof on our business, financial condition, results of operations, and liquidity, including, but not limited to, our growth, operating costs, supply chain, labor availability, logistical capabilities, customer demand for our products, and industry demand generally, margins, production and throughput capacity, utilization, inventory value, cash position, taxes, the price of our securities |
• | acts of terrorism aimed at either our facilities or other facilities that could impair our ability to produce or transport refined petroleum products or receive feedstocks; |
• | political and economic conditions in nations that produce crude oil or consume refined petroleum products, renewable diesel, or ethanol; |
• | the ability of the members of the Organization of Petroleum Exporting Countries (OPEC) to agree on and to maintain crude oil price and production controls; |
• | the level of consumer demand, including seasonal fluctuations; |
• | refinery overcapacity or undercapacity; |
• | our ability to successfully integrate any acquired businesses into our operations; |
• | the actions taken by competitors, including both pricing and adjustments to refining capacity in response to market conditions; |
• | the level of competitors’ imports into markets that we supply; |
• | accidents, unscheduled shutdowns, weather events, civil unrest, political events, terrorism, cyberattacks, or other catastrophes or disruptions affecting our operations, refineries, machinery, pipelines, equipment, or information systems, or any of the foregoing of our suppliers or customers; |
• | changes in the cost or availability of transportation or storage capacity for feedstocks and refined petroleum products; |
• | the price, availability, and acceptance of alternative fuels and alternative-fuel vehicles; |
• | the levels of government subsidies for alternative fuels; |
• | the volatility in the market price of biofuel credits (primarily RINs needed to comply with the U.S. federal Renewable Fuel Standard) and GHG emission credits needed to comply with the requirements of various GHG emission programs; |
• | delay of, cancellation of, or failure to implement planned capital projects and realize the various assumptions and benefits projected for such projects or cost overruns in constructing such planned capital projects; |
• | earthquakes, hurricanes, tornadoes, and irregular weather, which can unforeseeably affect the price or availability of natural gas, crude oil, grain and other feedstocks, refined petroleum products, renewable diesel, and ethanol; |
• | rulings, judgments, or settlements in litigation or other legal or regulatory matters, including unexpected environmental remediation costs, in excess of any reserves or insurance coverage; |
• | legislative or regulatory action, including the introduction or enactment of legislation or rulemakings by governmental authorities, including tariffs and tax and environmental regulations, such as those implemented under the California cap-and-trade system and similar programs, and the U.S. Environmental Protection Agency’s regulation of GHGs, which may adversely affect our business or operations; |
• | changes in the credit ratings assigned to our debt securities and trade credit; |
• | changes in currency exchange rates, including the value of the Canadian dollar, the pound sterling, the euro, the Mexican peso, and the Peruvian sol relative to the U.S. dollar; |
• | overall economic conditions, including the stability and liquidity of financial markets; and |
• | other factors generally described in the “Risk Factors” section included in our annual report on Form 10-K for the year ended December 31, 2019 that is incorporated by reference herein, as those factors are amended or supplemented as set forth in the “RISK FACTORS” section included in ITEM 1A, “RISK FACTORS” in this Form 10-Q. |
• | We deferred projects representing approximately $400 million of capital investments that we had expected to make in 2020 related to our refining and ethanol segments. |
• | We deferred income and indirect (e.g., value-added taxes (VAT) and motor fuel taxes) tax payments due in the first six months of 2020 of approximately $440 million. These deferrals have been provided to taxpayers under new legislation, such as the CARES Act in the U.S., and by various taxing authorities under existing legislation. Approximately 40 percent of the deferred payments will be due in the third quarter of 2020, with the remaining amount due in 2021. |
• | We have not purchased any shares of our common stock under our stock purchase program since mid-March 2020, and we will evaluate the timing of repurchases when appropriate. We have no obligation to make purchases under our stock purchase program. |
• | We entered into a 364-day Revolving Credit Facility on April 13, 2020 with an aggregate principal amount of up to $875 million as described in Note 6 of Condensed Notes to Consolidated Financial Statements. As of June 30, 2020 and July 29, 2020, we had no outstanding borrowings under this facility. |
• | We extended the maturity date of our accounts receivable sales facility to July 2021 and decreased the facility amount from $1.3 billion to $1.0 billion as described in Note 6 of Condensed Notes to Consolidated Financial Statements. As of June 30, 2020 and July 29, 2020, we had no outstanding borrowings under this facility, and available borrowing capacity was $666 million as of July 29, 2020. |
(a) | Gasoline prices quoted represent the price of U.S. Gulf Coast conventional blendstock of oxygenate blending gasoline. |
(b) | Diesel prices quoted represent the price of U.S. Gulf Coast ultra-low sulfur diesel. |
(c) | See the components of our liquidity as of June 30, 2020 in the table on page 65 under “LIQUIDITY AND CAPITAL RESOURCES—Overview.” |
• | Refining segment. Refining segment adjusted operating income decreased by $1.4 billion primarily due to decreases in gasoline and distillate margins and lower throughput volumes, partially offset by stronger discounts on crude oils. This is more fully described on pages 49 and 50. |
• | Renewable diesel segment. Renewable diesel segment adjusted operating income decreased by $16 million primarily due to lower renewable diesel prices and higher feedstock costs, partially offset by a favorable impact from commodity derivative instruments associated with our price risk management activities. This is more fully described on page 51. |
• | Ethanol segment. Ethanol segment adjusted operating income decreased by $28 million primarily due to lower ethanol prices and production volumes, partially offset by lower corn prices. This is more fully described on pages 52 and 53. |
• | Refining segment. Refining segment adjusted operating income decreased by $1.6 billion primarily due to decreases in gasoline and distillate margins and lower throughput volumes, partially offset by higher margins on other products. This is more fully described on pages 62 and 63. |
• | Renewable diesel segment. Renewable diesel segment adjusted operating income increased by $61 million primarily due to a favorable impact from commodity derivative instruments associated with our price risk management activities and higher renewable diesel sales volumes, partially offset by lower renewable diesel prices. This is more fully described on pages 63 and 64. |
• | Ethanol segment. Ethanol segment adjusted operating income decreased by $100 million primarily due to lower ethanol prices and production volumes. This is more fully described on pages 64 and 65. |
• | Gasoline, jet fuel, and diesel prices are expected to improve as a result of an expected draw in excess product inventories toward historical levels and a balancing of recovering demand and stabilizing refinery utilization. |
• | Sour crude oil discounts are expected to improve with the anticipated easing of OPEC production cuts. |
• | Renewable diesel prices and resulting product margins are expected to improve due to anticipated higher diesel prices. |
• | Ethanol prices and resulting product margins are expected to improve due to an expected increase in ethanol demand as domestic gasoline consumption improves toward historical levels. |
Three Months Ended June 30, 2020 | |||||||||||||||||||
Refining | Renewable Diesel | Ethanol | Corporate and Eliminations | Total | |||||||||||||||
Revenues: | |||||||||||||||||||
Revenues from external customers | $ | 9,615 | $ | 239 | $ | 543 | $ | — | $ | 10,397 | |||||||||
Intersegment revenues | 2 | 57 | 38 | (97 | ) | — | |||||||||||||
Total revenues | 9,617 | 296 | 581 | (97 | ) | 10,397 | |||||||||||||
Cost of sales: | |||||||||||||||||||
Cost of materials and other (a) | 8,539 | 135 | 501 | (96 | ) | 9,079 | |||||||||||||
LCM inventory valuation adjustment (b) | (2,137 | ) | — | (111 | ) | — | (2,248 | ) | |||||||||||
Operating expenses (excluding depreciation and amortization expense reflected below) | 928 | 20 | 79 | — | 1,027 | ||||||||||||||
Depreciation and amortization expense | 533 | 12 | 21 | — | 566 | ||||||||||||||
Total cost of sales | 7,863 | 167 | 490 | (96 | ) | 8,424 | |||||||||||||
Other operating expenses | 3 | — | — | — | 3 | ||||||||||||||
General and administrative expenses (excluding depreciation and amortization expense reflected below) | — | — | — | 169 | 169 | ||||||||||||||
Depreciation and amortization expense | — | — | — | 12 | 12 | ||||||||||||||
Operating income by segment | $ | 1,751 | $ | 129 | $ | 91 | $ | (182 | ) | 1,789 | |||||||||
Other income, net | 27 | ||||||||||||||||||
Interest and debt expense, net of capitalized interest | (142 | ) | |||||||||||||||||
Income before income tax expense | 1,674 | ||||||||||||||||||
Income tax expense | 339 | ||||||||||||||||||
Net income | 1,335 | ||||||||||||||||||
Less: Net income attributable to noncontrolling interests (a) | 82 | ||||||||||||||||||
Net income attributable to Valero Energy Corporation stockholders | $ | 1,253 |
Three Months Ended June 30, 2019 | |||||||||||||||||||
Refining | Renewable Diesel | Ethanol | Corporate and Eliminations | Total | |||||||||||||||
Revenues: | |||||||||||||||||||
Revenues from external customers | $ | 27,746 | $ | 222 | $ | 964 | $ | 1 | $ | 28,933 | |||||||||
Intersegment revenues | 8 | 73 | 53 | (134 | ) | — | |||||||||||||
Total revenues | 27,754 | 295 | 1,017 | (133 | ) | 28,933 | |||||||||||||
Cost of sales: | |||||||||||||||||||
Cost of materials and other | 25,172 | 189 | 855 | (133 | ) | 26,083 | |||||||||||||
Operating expenses (excluding depreciation and amortization expense reflected below) | 1,026 | 17 | 132 | — | 1,175 | ||||||||||||||
Depreciation and amortization expense | 518 | 12 | 22 | — | 552 | ||||||||||||||
Total cost of sales | 26,716 | 218 | 1,009 | (133 | ) | 27,810 | |||||||||||||
Other operating expenses | 1 | — | 1 | — | 2 | ||||||||||||||
General and administrative expenses (excluding depreciation and amortization expense reflected below) | — | — | — | 199 | 199 | ||||||||||||||
Depreciation and amortization expense | — | — | — | 14 | 14 | ||||||||||||||
Operating income by segment | $ | 1,037 | $ | 77 | $ | 7 | $ | (213 | ) | 908 | |||||||||
Other income, net (c) | 12 | ||||||||||||||||||
Interest and debt expense, net of capitalized interest | (112 | ) | |||||||||||||||||
Income before income tax expense | 808 | ||||||||||||||||||
Income tax expense | 160 | ||||||||||||||||||
Net income | 648 | ||||||||||||||||||
Less: Net income attributable to noncontrolling interests | 36 | ||||||||||||||||||
Net income attributable to Valero Energy Corporation stockholders | $ | 612 |
Three Months Ended June 30, | |||||||||||
2020 | 2019 | Change | |||||||||
Refining | |||||||||||
Feedstocks (dollars per barrel) | |||||||||||
Brent crude oil | $ | 33.22 | $ | 68.33 | $ | (35.11 | ) | ||||
Brent less West Texas Intermediate (WTI) crude oil | 5.42 | 8.53 | (3.11 | ) | |||||||
Brent less Alaska North Slope (ANS) crude oil | 2.85 | 0.15 | 2.70 | ||||||||
Brent less Louisiana Light Sweet (LLS) crude oil | 2.95 | 1.30 | 1.65 | ||||||||
Brent less Argus Sour Crude Index (ASCI) crude oil | 4.14 | 3.44 | 0.70 | ||||||||
Brent less Maya crude oil | 9.05 | 6.23 | 2.82 | ||||||||
LLS crude oil | 30.27 | 67.03 | (36.76 | ) | |||||||
LLS less ASCI crude oil | 1.19 | 2.14 | (0.95 | ) | |||||||
LLS less Maya crude oil | 6.10 | 4.93 | 1.17 | ||||||||
WTI crude oil | 27.80 | 59.80 | (32.00 | ) | |||||||
Natural gas (dollars per million British Thermal Units (MMBtu)) | 1.65 | 2.46 | (0.81 | ) | |||||||
Product margins (dollars per barrel) | |||||||||||
U.S. Gulf Coast: | |||||||||||
Conventional Blendstock of Oxygenate Blending (CBOB) gasoline less Brent | 0.51 | 6.72 | (6.21 | ) | |||||||
Ultra-low-sulfur (ULS) diesel less Brent | 4.89 | 12.88 | (7.99 | ) | |||||||
Propylene less Brent | (12.71 | ) | (24.70 | ) | 11.99 | ||||||
CBOB gasoline less LLS | 3.46 | 8.02 | (4.56 | ) | |||||||
ULS diesel less LLS | 7.84 | 14.18 | (6.34 | ) | |||||||
Propylene less LLS | (9.76 | ) | (23.40 | ) | 13.64 | ||||||
U.S. Mid-Continent: | |||||||||||
CBOB gasoline less WTI | 6.19 | 18.76 | (12.57 | ) | |||||||
ULS diesel less WTI | 11.38 | 22.51 | (11.13 | ) | |||||||
North Atlantic: | |||||||||||
CBOB gasoline less Brent | 3.03 | 10.11 | (7.08 | ) | |||||||
ULS diesel less Brent | 6.94 | 14.76 | (7.82 | ) | |||||||
U.S. West Coast: | |||||||||||
California Reformulated Gasoline Blendstock of Oxygenate Blending (CARBOB) 87 gasoline less ANS | 9.43 | 23.24 | (13.81 | ) | |||||||
California Air Resources Board (CARB) diesel less ANS | 10.36 | 21.10 | (10.74 | ) | |||||||
CARBOB 87 gasoline less WTI | 12.00 | 31.62 | (19.62 | ) | |||||||
CARB diesel less WTI | 12.93 | 29.48 | (16.55 | ) |
Three Months Ended June 30, | |||||||||||
2020 | 2019 | Change | |||||||||
Renewable diesel | |||||||||||
New York Mercantile Exchange ULS diesel (dollars per gallon) | $ | 0.97 | $ | 1.98 | $ | (1.01 | ) | ||||
Biodiesel RIN (dollars per RIN) | 0.54 | 0.38 | 0.16 | ||||||||
California Low-Carbon Fuel Standard (dollars per metric ton) | 201.01 | 188.77 | 12.24 | ||||||||
Chicago Board of Trade (CBOT) soybean oil (dollars per pound) | 0.27 | 0.28 | (0.01 | ) | |||||||
Ethanol | |||||||||||
CBOT corn (dollars per bushel) | 3.23 | 3.91 | (0.68 | ) | |||||||
New York Harbor ethanol (dollars per gallon) | 1.17 | 1.54 | (0.37 | ) |
Three Months Ended June 30, | |||||||||||
2020 | 2019 | Change | |||||||||
Revenues | $ | 10,397 | $ | 28,933 | $ | (18,536 | ) | ||||
Cost of sales (see note (a) on page 56) | 8,424 | 27,810 | (19,386 | ) | |||||||
LCM inventory valuation adjustment (see note (b) on page 56) | (2,248 | ) | — | (2,248 | ) | ||||||
Operating expenses (excluding depreciation and amortization expense) | 1,027 | 1,175 | (148 | ) | |||||||
General and administrative expenses (excluding depreciation and amortization expense) | 169 | 199 | (30 | ) | |||||||
Operating income | 1,789 | 908 | 881 | ||||||||
Adjusted operating income (loss) (see note (d) on page 57) | (456 | ) | 982 | (1,438 | ) | ||||||
Income tax expense | 339 | 160 | 179 | ||||||||
Net income attributable to noncontrolling interests | 82 | 36 | 46 |
Three Months Ended June 30, | |||||||||||
2020 | 2019 | Change | |||||||||
Operating income | $ | 1,751 | $ | 1,037 | $ | 714 | |||||
Adjusted operating income (loss) (see note (d) on page 58) | (383 | ) | 1,042 | (1,425 | ) | ||||||
Refining margin (see note (d) on page 59) | $ | 1,078 | $ | 2,586 | $ | (1,508 | ) | ||||
Operating expenses (excluding depreciation and amortization expense reflected below) | 928 | 1,026 | (98 | ) | |||||||
Depreciation and amortization expense | 533 | 518 | 15 | ||||||||
Throughput volumes (thousand barrels per day) (see note (e) on page 60) | 2,321 | 2,968 | (647 | ) |
• | Refining segment margin decreased by $1.5 billion in the second quarter of 2020 compared to the second quarter of 2019. |
◦ | A decrease in gasoline margins had an unfavorable impact of approximately $826 million. |
◦ | A decrease in distillate (primarily diesel) margins had an unfavorable impact of approximately $723 million. |
◦ | A decrease in throughput volumes of 647,000 barrels per day had an unfavorable impact of approximately $564 million. As noted in “OVERVIEW AND OUTLOOK—Overview—Business Operations Update” on pages 40 through 42, we reduced the amount of crude oil processed at our refineries and limited the production of gasoline and jet fuel at certain of our refineries late in the first quarter of 2020 and into the beginning of the second quarter of 2020. However, demand for most of our products partially recovered during the latter part of the second quarter of 2020 and, as a result, we have increased the production of most of our products and restarted the gasoline-making units that had been temporarily idled at certain of our refineries. |
◦ | Higher discounts on crude oils had a favorable impact of approximately $435 million. |
◦ | Higher discounts on other feedstocks had a favorable impact of approximately $177 million. |
• | Refining segment operating expenses (excluding depreciation and amortization expense) decreased by $98 million primarily due to lower natural gas and electricity costs of $50 million, lower chemical and catalyst costs of $22 million, and lower maintenance expenses of $17 million. |
• | Refining segment depreciation and amortization expense associated with our cost of sales increased by $15 million primarily due to an increase in depreciation expense associated with capital projects that were completed and finance leases that commenced in the latter half of 2019 and the first half of 2020. |
Three Months Ended June 30, | |||||||||||
2020 | 2019 | Change | |||||||||
Operating income | $ | 129 | $ | 77 | $ | 52 | |||||
Adjusted operating income (see note (d) on page 58) | 129 | 145 | (16 | ) | |||||||
Renewable diesel margin (see note (d) on page 60) | $ | 161 | $ | 174 | $ | (13 | ) | ||||
Operating expenses (excluding depreciation and amortization expense reflected below) | 20 | 17 | 3 | ||||||||
Depreciation and amortization expense | 12 | 12 | — | ||||||||
Sales volumes (thousand gallons per day) (see note (e) on page 60) | 795 | 769 | 26 |
• | Lower renewable diesel prices had an unfavorable impact of approximately $24 million. |
• | An increase in the cost of the feedstocks we process had an unfavorable impact of approximately $14 million. |
• | Price risk management activities had a favorable impact of $20 million. We recognized a hedge gain of $19 million in the second quarter of 2020 compared to a hedge loss of $1 million in the second quarter of 2019. |
Three Months Ended June 30, | |||||||||||
2020 | 2019 | Change | |||||||||
Operating income | $ | 91 | $ | 7 | $ | 84 | |||||
Adjusted operating income (loss) (see note (d) on page 59) | (20 | ) | 8 | (28 | ) | ||||||
Ethanol margin (see note (d) on page 60) | $ | 80 | $ | 162 | $ | (82 | ) | ||||
Operating expenses (excluding depreciation and amortization expense reflected below) | 79 | 132 | (53 | ) | |||||||
Depreciation and amortization expense | 21 | 22 | (1 | ) | |||||||
Production volumes (thousand gallons per day) (see note (e) on page 60) | 2,316 | 4,533 | (2,217 | ) |
• | Ethanol segment margin decreased by $82 million in the second quarter of 2020 compared to the second quarter of 2019. |
◦ | Lower ethanol prices had an unfavorable impact of approximately $98 million. |
◦ | A decrease in production volumes of 2.2 million gallons per day had an unfavorable impact of approximately $80 million. As noted in “OVERVIEW AND OUTLOOK—Overview—Business Operations Update” on pages 40 through 42, as a result of the economic disruption from COVID-19, eight of our ethanol plants were temporarily idled and production was reduced at our remaining six ethanol plants late in the first quarter of 2020 and into the beginning of the second quarter of 2020. However, demand for ethanol began to recover during the latter part of the second quarter of 2020 and, as a result, we have increased production and restarted four of the plants that had been temporarily idled. |
◦ | Lower corn prices had a favorable impact of approximately $87 million. |
• | Ethanol segment operating expenses (excluding depreciation and amortization expense) decreased by $53 million primarily due to lower energy costs of $23 million, lower chemical and catalyst costs of $17 million, and lower maintenance expenses of $8 million. |
Six Months Ended June 30, 2020 | |||||||||||||||||||
Refining | Renewable Diesel | Ethanol | Corporate and Eliminations | Total | |||||||||||||||
Revenues: | |||||||||||||||||||
Revenues from external customers | $ | 30,600 | $ | 545 | $ | 1,354 | $ | — | $ | 32,499 | |||||||||
Intersegment revenues | 4 | 110 | 102 | (216 | ) | — | |||||||||||||
Total revenues | 30,604 | 655 | 1,456 | (216 | ) | 32,499 | |||||||||||||
Cost of sales: | |||||||||||||||||||
Cost of materials and other (a) | 27,666 | 265 | 1,314 | (214 | ) | 29,031 | |||||||||||||
LCM inventory valuation adjustment (b) | 277 | — | 17 | — | 294 | ||||||||||||||
Operating expenses (excluding depreciation and amortization expense reflected below) | 1,923 | 40 | 188 | — | 2,151 | ||||||||||||||
Depreciation and amortization expense | 1,069 | 23 | 43 | — | 1,135 | ||||||||||||||
Total cost of sales | 30,935 | 328 | 1,562 | (214 | ) | 32,611 | |||||||||||||
Other operating expenses | 5 | — | — | — | 5 | ||||||||||||||
General and administrative expenses (excluding depreciation and amortization expense reflected below) | — | — | — | 346 | 346 | ||||||||||||||
Depreciation and amortization expense | — | — | — | 25 | 25 | ||||||||||||||
Operating income (loss) by segment | $ | (336 | ) | $ | 327 | $ | (106 | ) | $ | (373 | ) | (488 | ) | ||||||
Other income, net | 59 | ||||||||||||||||||
Interest and debt expense, net of capitalized interest | (267 | ) | |||||||||||||||||
Loss before income tax benefit | (696 | ) | |||||||||||||||||
Income tax benefit | (277 | ) | |||||||||||||||||
Net loss | (419 | ) | |||||||||||||||||
Less: Net income attributable to noncontrolling interests (a) | 179 | ||||||||||||||||||
Net loss attributable to Valero Energy Corporation stockholders | $ | (598 | ) |
Six Months Ended June 30, 2019 | |||||||||||||||||||
Refining | Renewable Diesel | Ethanol | Corporate and Eliminations | Total | |||||||||||||||
Revenues: | |||||||||||||||||||
Revenues from external customers | $ | 50,964 | $ | 474 | $ | 1,757 | $ | 1 | $ | 53,196 | |||||||||
Intersegment revenues | 10 | 124 | 105 | (239 | ) | — | |||||||||||||
Total revenues | 50,974 | 598 | 1,862 | (238 | ) | 53,196 | |||||||||||||
Cost of sales: | |||||||||||||||||||
Cost of materials and other | 46,337 | 413 | 1,549 | (238 | ) | 48,061 | |||||||||||||
Operating expenses (excluding depreciation and amortization expense reflected below) | 2,097 | 36 | 257 | — | 2,390 | ||||||||||||||
Depreciation and amortization expense | 1,021 | 23 | 45 | — | 1,089 | ||||||||||||||
Total cost of sales | 49,455 | 472 | 1,851 | (238 | ) | 51,540 | |||||||||||||
Other operating expenses | 3 | — | 1 | — | 4 | ||||||||||||||
General and administrative expenses (excluding depreciation and amortization expense reflected below) | — | — | — | 408 | 408 | ||||||||||||||
Depreciation and amortization expense | — | — | — | 28 | 28 | ||||||||||||||
Operating income by segment | $ | 1,516 | $ | 126 | $ | 10 | $ | (436 | ) | 1,216 | |||||||||
Other income, net (c) | 34 | ||||||||||||||||||
Interest and debt expense, net of capitalized interest | (224 | ) | |||||||||||||||||
Income before income tax expense | 1,026 | ||||||||||||||||||
Income tax expense | 211 | ||||||||||||||||||
Net income | 815 | ||||||||||||||||||
Less: Net income attributable to noncontrolling interests | 62 | ||||||||||||||||||
Net income attributable to Valero Energy Corporation stockholders | $ | 753 |
Six Months Ended June 30, | |||||||||||
2020 | 2019 | Change | |||||||||
Refining | |||||||||||
Feedstocks (dollars per barrel) | |||||||||||
Brent crude oil | $ | 42.06 | $ | 66.08 | $ | (24.02 | ) | ||||
Brent less WTI crude oil | 5.17 | 8.73 | (3.56 | ) | |||||||
Brent less ANS crude oil | 1.18 | (0.27 | ) | 1.45 | |||||||
Brent less LLS crude oil | 2.85 | 1.38 | 1.47 | ||||||||
Brent less ASCI crude oil | 4.58 | 3.17 | 1.41 | ||||||||
Brent less Maya crude oil | 9.40 | 5.64 | 3.76 | ||||||||
LLS crude oil | 39.21 | 64.70 | (25.49 | ) | |||||||
LLS less ASCI crude oil | 1.73 | 1.79 | (0.06 | ) | |||||||
LLS less Maya crude oil | 6.55 | 4.26 | 2.29 | ||||||||
WTI crude oil | 36.89 | 57.35 | (20.46 | ) | |||||||
Natural gas (dollars per MMBtu) | 1.74 | 2.66 | (0.92 | ) | |||||||
Product margins (dollars per barrel) | |||||||||||
U.S. Gulf Coast: | |||||||||||
CBOB gasoline less Brent | 1.44 | 3.44 | (2.00 | ) | |||||||
ULS diesel less Brent | 8.08 | 13.94 | (5.86 | ) | |||||||
Propylene less Brent | (16.88 | ) | (22.67 | ) | 5.79 | ||||||
CBOB gasoline less LLS | 4.29 | 4.82 | (0.53 | ) | |||||||
ULS diesel less LLS | 10.93 | 15.32 | (4.39 | ) | |||||||
Propylene less LLS | (14.03 | ) | (21.29 | ) | 7.26 | ||||||
U.S. Mid-Continent: | |||||||||||
CBOB gasoline less WTI | 6.94 | 14.23 | (7.29 | ) | |||||||
ULS diesel less WTI | 14.35 | 23.70 | (9.35 | ) | |||||||
North Atlantic: | |||||||||||
CBOB gasoline less Brent | 3.66 | 5.68 | (2.02 | ) | |||||||
ULS diesel less Brent | 10.62 | 16.10 | (5.48 | ) | |||||||
U.S. West Coast: | |||||||||||
CARBOB 87 gasoline less ANS | 8.63 | 15.49 | (6.86 | ) | |||||||
CARB diesel less ANS | 13.79 | 18.65 | (4.86 | ) | |||||||
CARBOB 87 gasoline less WTI | 12.62 | 24.49 | (11.87 | ) | |||||||
CARB diesel less WTI | 17.78 | 27.65 | (9.87 | ) |
Six Months Ended June 30, | |||||||||||
2020 | 2019 | Change | |||||||||
Renewable diesel | |||||||||||
New York Mercantile Exchange ULS diesel (dollars per gallon) | $ | 1.26 | $ | 1.96 | $ | (0.70 | ) | ||||
Biodiesel RIN (dollars per RIN) | 0.50 | 0.44 | 0.06 | ||||||||
California Low-Carbon Fuel Standard (dollars per metric ton) | 203.52 | 191.49 | 12.03 | ||||||||
CBOT soybean oil (dollars per pound) | 0.29 | 0.29 | — | ||||||||
Ethanol | |||||||||||
CBOT corn (dollars per bushel) | 3.49 | 3.82 | (0.33 | ) | |||||||
NYH ethanol (dollars per gallon) | 1.25 | 1.49 | (0.24 | ) |
(a) | Cost of materials and other for the three and six months ended June 30, 2020 includes a benefit of $76 million and $155 million, respectively, related to the blender’s tax credit attributable to volumes blended during those periods. The legislation authorizing the credit through December 31, 2022 was passed and signed into law in December 2019, and that legislation also applied retroactively to volumes blended during 2019 (2019 blender’s tax credit). The entire 2019 blender’s tax credit was recognized by us in December 2019 because the law was enacted in that month, but the benefit attributable to volumes blended during the three and six months ended June 30, 2019 was $72 million and $149 million, respectively. |
Periods to which Blender’s Tax Credit is Attributable | |||||||||||||||
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2020 | 2019 | 2020 | 2019 | ||||||||||||
Reportable segments to which blender’s tax credit is attributable | |||||||||||||||
Refining | $ | 4 | $ | 4 | $ | 4 | $ | 9 | |||||||
Renewable diesel | 72 | 68 | 151 | 140 | |||||||||||
Total | $ | 76 | $ | 72 | $ | 155 | $ | 149 | |||||||
Interests to which blender’s tax credit is attributable | |||||||||||||||
Valero Energy Corporation stockholders | $ | 40 | $ | 38 | $ | 79 | $ | 79 | |||||||
Noncontrolling interest | 36 | 34 | 76 | 70 | |||||||||||
Total | $ | 76 | $ | 72 | $ | 155 | $ | 149 |
(b) | The market value of our inventories accounted for under the last-in, first-out (LIFO) method fell below their historical cost on an aggregate basis as of March 31, 2020. As a result, we recorded an LCM inventory valuation adjustment of $2.5 billion in March 2020. The market value of our LIFO inventories improved as of June 30, 2020 due to an increase in market prices, which resulted in a reversal of $2.2 billion of the $2.5 billion LCM adjustment |
(c) | “Other income, net” for the three and six months ended June 30, 2019 includes a $22 million charge from the early redemption of $850 million of our 6.125 percent Senior Notes due February 1, 2020. |
(d) | We use certain financial measures (as noted below) that are not defined under U.S. GAAP and are considered to be non-GAAP measures. |
◦ | Adjusted operating income (loss) is defined as total company operating income (loss) adjusted to reflect the 2019 blender’s tax credit in the proper period, and excluding the LCM inventory valuation adjustment and other operating expenses, as reflected in the table below. We believe adjusted operating income (loss) is an important measure of our operating and financial performance because it excludes items that are not indicative of our core operating performance. |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2020 | 2019 | 2020 | 2019 | ||||||||||||
Reconciliation of total company operating income to adjusted operating income (loss) | |||||||||||||||
Total company operating income (loss) | $ | 1,789 | $ | 908 | $ | (488 | ) | $ | 1,216 | ||||||
Adjustments: | |||||||||||||||
2019 blender’s tax credit (see note (a)) | — | 72 | — | 149 | |||||||||||
LCM inventory valuation adjustment (see note (b)) | (2,248 | ) | — | 294 | — | ||||||||||
Other operating expenses | 3 | 2 | 5 | 4 | |||||||||||
Adjusted operating income (loss) | $ | (456 | ) | $ | 982 | $ | (189 | ) | $ | 1,369 |
◦ | Adjusted refining operating income (loss) is defined as refining segment operating income (loss) adjusted to reflect the 2019 blender’s tax credit in the proper period, and excluding the LCM inventory valuation adjustment and other operating expenses, as reflected in the table below. We believe adjusted refining operating income (loss) is an important measure of our refining segment’s operating and financial performance because it excludes items that are not indicative of that segment’s core operating performance. |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2020 | 2019 | 2020 | 2019 | ||||||||||||
Reconciliation of refining operating income (loss) to adjusted refining operating income (loss) | |||||||||||||||
Refining operating income (loss) | $ | 1,751 | $ | 1,037 | $ | (336 | ) | $ | 1,516 | ||||||
Adjustments: | |||||||||||||||
2019 blender’s tax credit (see note (a)) | — | 4 | — | 9 | |||||||||||
LCM inventory valuation adjustment (see note (b)) | (2,137 | ) | — | 277 | — | ||||||||||
Other operating expenses | 3 | 1 | 5 | 3 | |||||||||||
Adjusted refining operating income (loss) | $ | (383 | ) | $ | 1,042 | $ | (54 | ) | $ | 1,528 |
◦ | Adjusted renewable diesel operating income is defined as renewable diesel segment operating income adjusted to reflect the 2019 blender’s tax credit in the proper period, as reflected in the table below. We believe adjusted renewable diesel operating income is an important measure of our renewable diesel segment’s operating and financial performance because it excludes items that are not indicative of that segment’s core operating performance. |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2020 | 2019 | 2020 | 2019 | ||||||||||||
Reconciliation of renewable diesel operating income to adjusted renewable diesel operating income | |||||||||||||||
Renewable diesel operating income | $ | 129 | $ | 77 | $ | 327 | $ | 126 | |||||||
Adjustment: | |||||||||||||||
2019 blender’s tax credit (see note (a)) | — | 68 | — | 140 | |||||||||||
Adjusted renewable diesel operating income | $ | 129 | $ | 145 | $ | 327 | $ | 266 |
◦ | Adjusted ethanol operating income (loss) is defined as ethanol segment operating income (loss) adjusted to exclude the LCM inventory valuation adjustment and other operating expenses, as reflected in the table below.We believe adjusted ethanol operating income (loss) is an important measure of our ethanol segment’s operating and financial performance because it excludes items that are not indicative of that segment’s core operating performance. |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2020 | 2019 | 2020 | 2019 | ||||||||||||
Reconciliation of ethanol operating income (loss) to adjusted ethanol operating income (loss) | |||||||||||||||
Ethanol operating income (loss) | $ | 91 | $ | 7 | $ | (106 | ) | $ | 10 | ||||||
Adjustments: | |||||||||||||||
LCM inventory valuation adjustment (see note (b)) | (111 | ) | — | 17 | — | ||||||||||
Other operating expenses | — | 1 | — | 1 | |||||||||||
Adjusted ethanol operating income (loss) | $ | (20 | ) | $ | 8 | $ | (89 | ) | $ | 11 |
◦ | Refining margin is defined as refining operating income (loss) adjusted to reflect the 2019 blender’s tax credit in the proper period, and excluding the LCM inventory valuation adjustment, operating expenses (excluding depreciation and amortization expense), depreciation and amortization expense, and other operating expenses, as reflected in the table below. We believe refining margin is an important measure of our refining segment’s operating and financial performance as it is the most comparable measure to the industry’s market reference product margins, which are used by industry analysts, investors, and others to evaluate our performance. |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2020 | 2019 | 2020 | 2019 | ||||||||||||
Reconciliation of refining operating income (loss) to refining margin | |||||||||||||||
Refining operating income (loss) | $ | 1,751 | $ | 1,037 | $ | (336 | ) | $ | 1,516 | ||||||
Adjustments: | |||||||||||||||
2019 blender’s tax credit (see note (a)) | — | 4 | — | 9 | |||||||||||
LCM inventory valuation adjustment (see note (b)) | (2,137 | ) | — | 277 | — | ||||||||||
Operating expenses (excluding depreciation and amortization expense) | 928 | 1,026 | 1,923 | 2,097 | |||||||||||
Depreciation and amortization expense | 533 | 518 | 1,069 | 1,021 | |||||||||||
Other operating expenses | 3 | 1 | 5 | 3 | |||||||||||
Refining margin | $ | 1,078 | $ | 2,586 | $ | 2,938 | $ | 4,646 |
◦ | Renewable diesel margin is defined as renewable diesel operating income adjusted to reflect the 2019 blender’s tax credit in the proper period, and excluding operating expenses (excluding depreciation and amortization expense) and depreciation and amortization expense, as reflected in the table below. We believe renewable diesel margin is an important measure of our renewable diesel segment’s operating and financial performance as it is the most comparable measure to the industry’s market reference product margins, which are used by industry analysts, investors, and others to evaluate our performance. |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2020 | 2019 | 2020 | 2019 | ||||||||||||
Reconciliation of renewable diesel operating income to renewable diesel margin | |||||||||||||||
Renewable diesel operating income | $ | 129 | $ | 77 | $ | 327 | $ | 126 | |||||||
Adjustments: | |||||||||||||||
2019 blender’s tax credit (see note (a)) | — | 68 | — | 140 | |||||||||||
Operating expenses (excluding depreciation and amortization expense) | 20 | 17 | 40 | 36 | |||||||||||
Depreciation and amortization expense | 12 | 12 | 23 | 23 | |||||||||||
Renewable diesel margin | $ | 161 | $ | 174 | $ | 390 | $ | 325 |
◦ | Ethanol margin is defined as ethanol operating income (loss) excluding the LCM inventory valuation adjustment, operating expenses (excluding depreciation and amortization expense), depreciation and amortization expense, and other operating expenses, as reflected in the table below. We believe ethanol margin is an important measure of our ethanol segment’s operating and financial performance as it is the most comparable measure to the industry’s market reference product margins, which are used by industry analysts, investors, and others to evaluate our performance. |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2020 | 2019 | 2020 | 2019 | ||||||||||||
Reconciliation of ethanol operating income (loss) to ethanol margin | |||||||||||||||
Ethanol operating income (loss) | $ | 91 | $ | 7 | $ | (106 | ) | $ | 10 | ||||||
Adjustments: | |||||||||||||||
LCM inventory valuation adjustment (see note (b)) | (111 | ) | — | 17 | — | ||||||||||
Operating expenses (excluding depreciation and amortization expense) | 79 | 132 | 188 | 257 | |||||||||||
Depreciation and amortization expense | 21 | 22 | 43 | 45 | |||||||||||
Other operating expenses | — | 1 | — | 1 | |||||||||||
Ethanol margin | $ | 80 | $ | 162 | $ | 142 | $ | 313 |
(e) | We use throughput volumes, sales volumes, and production volumes for the refining segment, renewable diesel segment, and ethanol segment, respectively, due to their general use by others who operate facilities similar to those included in our segments. |
Six Months Ended June 30, | |||||||||||
2020 | 2019 | Change | |||||||||
Revenues | $ | 32,499 | $ | 53,196 | $ | (20,697 | ) | ||||
Cost of materials and other (see note (a) on page 56) | 29,031 | 48,061 | (19,030 | ) | |||||||
LCM inventory valuation adjustment (see note (b) on page 56) | 294 | — | 294 | ||||||||
Operating expenses (excluding depreciation and amortization expense) | 2,151 | 2,390 | (239 | ) | |||||||
General and administrative expenses (excluding depreciation and amortization expense) | 346 | 408 | (62 | ) | |||||||
Operating income (loss) | (488 | ) | 1,216 | (1,704 | ) | ||||||
Adjusted operating income (loss) (see note (d) on page 57) | (189 | ) | 1,369 | (1,558 | ) | ||||||
Income tax expense (benefit) | (277 | ) | 211 | (488 | ) | ||||||
Net income attributable to noncontrolling interests | 179 | 62 | 117 |
Six Months Ended June 30, | |||||||||||
2020 | 2019 | Change | |||||||||
Operating income (loss) | $ | (336 | ) | $ | 1,516 | $ | (1,852 | ) | |||
Adjusted operating income (loss) (see note (d) on page 58) | (54 | ) | 1,528 | (1,582 | ) | ||||||
Refining margin (see note (d) on page 59) | $ | 2,938 | $ | 4,646 | $ | (1,708 | ) | ||||
Operating expenses (excluding depreciation and amortization expense reflected below) | 1,923 | 2,097 | (174 | ) | |||||||
Depreciation and amortization expense | 1,069 | 1,021 | 48 | ||||||||
Throughput volumes (thousand barrels per day) (see note (e) on page 60) | 2,573 | 2,917 | (344 | ) |
• | Refining segment margin decreased by $1.7 billion in the first six months of 2020 compared to the first six months of 2019. |
◦ | A decrease in distillate (primarily diesel) margins had an unfavorable impact of approximately $930 million. |
◦ | A decrease in gasoline margins had an unfavorable impact of approximately $611 million. |
◦ | A decrease in throughput volumes of 344,000 barrels per day had an unfavorable impact of $550 million. As noted in “OVERVIEW AND OUTLOOK—Overview—Business Operations Update” on pages 40 through 42, we reduced the amount of crude oil processed at our refineries and limited the production of gasoline and jet fuel at certain of our refineries late in the first quarter of 2020 and into the beginning of the second quarter of 2020. However, demand for most of our products partially recovered during the latter part of the second |
◦ | Higher margins on other products had a favorable impact of approximately $464 million. |
• | Refining segment operating expenses (excluding depreciation and amortization expense) decreased by $174 million primarily due to lower natural gas and electricity costs of $114 million, lower chemical and catalyst costs of $38 million, and lower maintenance expenses of $19 million. |
• | Refining segment depreciation and amortization expense associated with our cost of sales increased by $48 million primarily due to an increase in depreciation expense associated with capital projects that were completed and finance leases that commenced in the latter half of 2019 and the first half of 2020. |
Six Months Ended June 30, | |||||||||||
2020 | 2019 | Change | |||||||||
Operating income | $ | 327 | $ | 126 | $ | 201 | |||||
Adjusted operating income (see note (d) on page 58) | 327 | 266 | 61 | ||||||||
Renewable diesel margin (see note (d) on page 60) | $ | 390 | $ | 325 | $ | 65 | |||||
Operating expenses (excluding depreciation and amortization expense reflected below) | 40 | 36 | 4 | ||||||||
Depreciation and amortization expense | 23 | 23 | — | ||||||||
Sales volumes (thousand gallons per day) (see note (e) on page 60) | 831 | 780 | 51 |
• | Price risk management activities had a favorable impact of $72 million. We recognized a hedge gain of $45 million in the first six months of 2020 compared to a hedge loss of $27 million in the first six months of 2019. |
• | An increase in sales volumes of 51,000 gallons per day had a favorable impact of $13 million. |
• | Lower renewable diesel prices had an unfavorable impact of approximately $23 million. |
Six Months Ended June 30, | |||||||||||
2020 | 2019 | Change | |||||||||
Operating income (loss) | $ | (106 | ) | $ | 10 | $ | (116 | ) | |||
Adjusted operating income (loss) (see note (d) on page 59) | (89 | ) | 11 | (100 | ) | ||||||
Ethanol margin (see note (d) on page 60) | $ | 142 | $ | 313 | $ | (171 | ) | ||||
Operating expenses (excluding depreciation and amortization expense reflected below) | 188 | 257 | (69 | ) | |||||||
Depreciation and amortization expense | 43 | 45 | (2 | ) | |||||||
Production volumes (thousand gallons per day) (see note (e) on page 60) | 3,210 | 4,376 | (1,166 | ) |
• | Ethanol segment margin decreased by $171 million in the first six months of 2020 compared to the first six months of 2019. |
◦ | Lower ethanol prices had an unfavorable impact of approximately $141 million. |
◦ | A decrease in production volumes of 1.2 million gallons per day had an unfavorable impact of approximately $53 million. As noted in “OVERVIEW AND OUTLOOK—Overview—Business Operations Update” on pages 40 through 42, as a result of the economic disruption |
• | Ethanol segment operating expenses (excluding depreciation and amortization expense) decreased by $69 million primarily due to lower energy costs of $37 million, lower chemicals and catalyst costs of $16 million, and lower maintenance expenses of $8 million. |
Available borrowing capacity from committed facilities: | ||||
Valero Revolver | $ | 3,967 | ||
364-day Revolving Credit Facility | 875 | |||
Canadian Revolver(a) | 105 | |||
Accounts receivable sales facility | 726 | |||
Letter of credit facility | 50 | |||
Total available borrowing capacity | 5,723 | |||
Cash and cash equivalents(b) | 1,972 | |||
Total liquidity | $ | 7,695 |
(a) | The amount for our Canadian Revolver is shown in U.S. dollars. As set forth in the summary of our credit facilities in Note 6 of Condensed Notes to Consolidated Financial Statements, the availability under our Canadian Revolver as of June 30, 2020 in Canadian dollars was C$143 million. |
(b) | Excludes $347 million of cash and cash equivalents related to our VIEs that is available for use only by our VIEs. |
Six Months Ended June 30, | |||||||
2020 | 2019 | ||||||
Cash flows provided by (used in): | |||||||
Operating activities | $ | 687 | $ | 2,394 | |||
Investing activities | (1,339 | ) | (1,555 | ) | |||
Financing activities: | |||||||
Borrowings | 1,962 | 1,962 | |||||
Other financing activities | (1,527 | ) | (3,787 | ) | |||
Financing activities | 435 | (1,825 | ) | ||||
Effect of foreign exchange rate changes on cash | (47 | ) | 37 | ||||
Net decrease in cash and cash equivalents | $ | (264 | ) | $ | (949 | ) |
(a) | Represents the net cash flow change in “receivables, net” of $4.1 billion (which excludes the impact from the collection of $449 million for a blender’s tax credit receivable) and accounts payable of $5.4 billion during the the six months ended June 30, 2020. |
• | Capital expenditures for purchases of, additions to, and improvements in our property, plant, and equipment, including those made by DGD but excluding other VIEs; |
• | Deferred turnaround and catalyst cost expenditures, including those made by DGD; and |
• | Investments in unconsolidated joint ventures. |
Rating Agency | Rating | |
Moody’s Investors Service | Baa2 (stable outlook) | |
Standard & Poor’s Ratings Services | BBB (stable outlook) | |
Fitch Ratings | BBB (stable outlook) |
ITEM 3. | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK |
• | inventories and firm commitments to purchase inventories generally for amounts by which our current year inventory levels (determined on a LIFO basis) differ from our previous year-end LIFO inventory levels; and |
• | forecasted feedstock and refined petroleum product purchases, refined petroleum product sales, renewable diesel sales, or natural gas purchases to lock in the price of those forecasted transactions at existing market prices that we deem favorable. |
June 30, 2020 | December 31, 2019 | ||||||
Gain (loss) in fair value resulting from: | |||||||
10% increase in underlying commodity prices | $ | 68 | $ | (39 | ) | ||
10% decrease in underlying commodity prices | (68 | ) | 38 |
June 30, 2020 | |||||||||||||||||||||||||||||||
Expected Maturity Dates | |||||||||||||||||||||||||||||||
Remainder of 2020 (a) | 2021 | 2022 | 2023 | 2024 | There- after | Total (b) | Fair Value | ||||||||||||||||||||||||
Fixed rate | $ | — | $ | 11 | $ | — | $ | 850 | $ | — | $ | 9,124 | $ | 9,985 | $ | 11,845 | |||||||||||||||
Average interest rate | — | % | 5.0 | % | — | % | 2.7 | % | — | % | 5.0 | % | 4.8 | % | |||||||||||||||||
Floating rate (c) | $ | 513 | $ | 5 | $ | 5 | $ | 19 | $ | — | $ | — | $ | 542 | $ | 542 | |||||||||||||||
Average interest rate | 5.1 | % | 3.0 | % | 3.0 | % | 3.0 | % | — | % | — | % | 5.0 | % | |||||||||||||||||
December 31, 2019 | |||||||||||||||||||||||||||||||
Expected Maturity Dates | |||||||||||||||||||||||||||||||
2020 (a) | 2021 | 2022 | 2023 | 2024 | There- after | Total (b) | Fair Value | ||||||||||||||||||||||||
Fixed rate | $ | — | $ | 11 | $ | — | $ | — | $ | — | $ | 8,474 | $ | 8,485 | $ | 10,099 | |||||||||||||||
Average interest rate | — | % | 5.0 | % | — | % | — | % | — | % | 5.2 | % | 5.2 | % | |||||||||||||||||
Floating rate (c) | $ | 453 | $ | 6 | $ | 6 | $ | 19 | $ | — | $ | — | $ | 484 | $ | 484 | |||||||||||||||
Average interest rate | 5.0 | % | 4.5 | % | 4.5 | % | 4.5 | % | — | % | — | % | 5.0 | % |
(a) | As of June 30, 2020 and December 31, 2019, our floating rate debt includes $511 million and $348 million, respectively, associated with borrowings under the IEnova Revolver for the construction of terminals in Mexico by Central Mexico Terminals. The IEnova Revolver is only available to the operations of Central Mexico Terminals, and its creditors do not have recourse against us. |
(b) | Excludes unamortized discounts and debt issuance costs. |
(c) | As of June 30, 2020 and December 31, 2019, we had an interest rate swap associated with $31 million and $36 million, respectively, of our floating rate debt resulting in an effective interest rate of 3.85 percent as of each of those reporting dates. The fair value of the swap was immaterial for all periods presented. |
Receive USD/ Pay CAD | Receive USD/ Pay GBP | Receive CAD/ Pay USD | Receive GBP/ Pay USD | ||||||||||||
June 30, 2020 | |||||||||||||||
Contract amount | $ | 174 | $ | 45 | $ | 1,900 | $ | 500 | |||||||
Weighted-average contractual exchange rate | 0.73784 | 1.24368 | 0.72406 | 1.25887 | |||||||||||
Fair value | $ | 1 | $ | — | $ | 27 | $ | (9 | ) | ||||||
December 31, 2019 | |||||||||||||||
Contract amount | $ | 406 | $ | 333 | $ | 2,250 | $ | — | |||||||
Weighted-average contractual exchange rate | 0.75911 | 1.31201 | 0.76217 | — | |||||||||||
Fair value | $ | (6 | ) | $ | (4 | ) | $ | 27 | $ | — |
ITEM 4. | CONTROLS AND PROCEDURES |
(a) | Evaluation of disclosure controls and procedures. |
(b) | Changes in internal control over financial reporting. |
ITEM 1. | LEGAL PROCEEDINGS |
ITEM 1A. | RISK FACTORS |
ITEM 2. | UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS |
(a) | Unregistered Sales of Equity Securities. Not applicable. |
(b) | Use of Proceeds. Not applicable. |
(c) | Issuer Purchases of Equity Securities. The following table discloses purchases of shares of our common stock made by us or on our behalf during the second quarter of 2020. |
Period | Total Number of Shares Purchased | Average Price Paid per Share | Total Number of Shares Not Purchased as Part of Publicly Announced Plans or Programs (a) | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs | Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs (b) | ||||||||||
April 2020 | 170 | $ | 51.11 | 170 | — | $1.4 billion | |||||||||
May 2020 | 1,092 | $ | 63.57 | 1,092 | — | $1.4 billion | |||||||||
June 2020 | 2,574 | $ | 65.04 | 2,574 | — | $1.4 billion | |||||||||
Total | 3,836 | $ | 64.00 | 3,836 | — | $1.4 billion |
(a) | The shares reported in this column represent purchases settled in the second quarter of 2020 relating to (i) our purchases of shares in open-market transactions to meet our obligations under stock-based compensation plans and (ii) our purchases of shares from our employees and non-employee directors in connection with the exercise of stock options, the vesting of restricted stock, and other stock compensation transactions in accordance with the terms of our stock-based compensation plans. |
(b) | On January 23, 2018, we announced that our board of directors authorized our purchase of up to $2.5 billion of our outstanding common stock (2018 Program), with no expiration date. As of June 30, 2020, we had $1.4 billion remaining available for purchase under the 2018 Program. We have not purchased any shares of our common stock under the 2018 Program since mid-March 2020, and we will evaluate the timing of repurchases when appropriate. We have no obligation to make purchases under the 2018 Program. |
ITEM 6. | EXHIBITS |
Exhibit No. | Description | |
***101.INS | Inline XBRL Instance Document–the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document. | |
***101.SCH | Inline XBRL Taxonomy Extension Schema Document. | |
***101.CAL | Inline XBRL Taxonomy Extension Calculation Linkbase Document. | |
***101.DEF | Inline XBRL Taxonomy Extension Definition Linkbase Document. | |
***101.LAB | Inline XBRL Taxonomy Extension Label Linkbase Document. | |
***101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase Document. | |
***104 | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101). |
* | Filed herewith. |
** | Furnished herewith. |
*** | Submitted electronically herewith. |
VALERO ENERGY CORPORATION (Registrant) | |||
By: | /s/ Jason W. Fraser | ||
Jason W. Fraser | |||
Executive Vice President and | |||
Chief Financial Officer | |||
(Duly Authorized Officer and Principal | |||
Financial and Accounting Officer) |
/s/ Joseph W. Gorder | ||
Joseph W. Gorder Chief Executive Officer |
/s/ Jason W. Fraser | ||
Jason W. Fraser Executive Vice President and Chief Financial Officer |
1. | The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
2. | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
/s/ Joseph W. Gorder | |
Joseph W. Gorder | |
Chief Executive Officer | |
July 30, 2020 |
1. | The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
2. | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
/s/ Jason W. Fraser | |
Jason W. Fraser | |
Executive Vice President and Chief Financial Officer | |
July 30, 2020 |
Consolidated Balance Sheets (Parenthetical) - $ / shares |
Jun. 30, 2020 |
Dec. 31, 2019 |
---|---|---|
Valero Energy Corporation stockholders’ equity: | ||
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized | 1,200,000,000 | 1,200,000,000 |
Common stock, shares issued | 673,501,593 | 673,501,593 |
Treasury stock, common shares | 265,748,331 | 264,209,742 |
Consolidated Statements of Comprehensive Income (unaudited) - USD ($) $ in Millions |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2020 |
Jun. 30, 2019 |
Jun. 30, 2020 |
Jun. 30, 2019 |
|
Net income (loss) | $ 1,335 | $ 648 | $ (419) | $ 815 |
Other comprehensive income (loss): | ||||
Foreign currency translation adjustment | 138 | 0 | (469) | 155 |
Net gain on pension and other postretirement benefits | 12 | 2 | 24 | 5 |
Net gain (loss) on cash flow hedges | (25) | 5 | 4 | 5 |
Other comprehensive income (loss) before income tax expense (benefit) | 125 | 7 | (441) | 165 |
Income tax expense (benefit) related to items of other comprehensive income (loss) | (1) | 1 | 5 | 2 |
Other comprehensive income (loss) | 126 | 6 | (446) | 163 |
Comprehensive income (loss) | 1,461 | 654 | (865) | 978 |
Less: Comprehensive income attributable to noncontrolling interests | 70 | 40 | 181 | 68 |
Comprehensive income (loss) attributable to Valero Energy Corporation stockholders | $ 1,391 | $ 614 | $ (1,046) | $ 910 |
Consolidated Statements of Equity (unaudited) - USD ($) $ in Millions |
Total |
Valero Energy Corporation Stockholders' Equity [Member] |
Common Stock [Member] |
Additional Paid-in Capital [Member] |
Treasury Stock [Member] |
Retained Earnings [Member] |
Accumulated Other Comprehensive Loss [Member] |
Non-controlling Interests [Member] |
---|---|---|---|---|---|---|---|---|
Balance as of beginning of period at Dec. 31, 2018 | $ 22,731 | $ 21,667 | $ 7 | $ 7,048 | $ (14,925) | $ 31,044 | $ (1,507) | $ 1,064 |
Increase (Decrease) in Stockholders' Equity Roll Forward | ||||||||
Net income (loss) | 815 | 753 | 753 | 62 | ||||
Dividends on common stock | (751) | (751) | (751) | |||||
Stock-based compensation expense | 21 | 21 | 21 | |||||
Transactions in connection with stock-based compensation plans | (2) | (2) | (3) | 1 | ||||
Open market stock purchases | (246) | (246) | (246) | |||||
Acquisition of Valero Energy Partners LP (VLP) publicly held common units | (950) | (328) | (328) | (622) | ||||
Distributions to noncontrolling interests | (18) | (18) | ||||||
Other | 74 | 74 | 74 | 0 | 0 | 0 | 0 | |
Other comprehensive income (loss) | 163 | 157 | 157 | 6 | ||||
Balance as of end of period at Jun. 30, 2019 | 21,837 | 21,345 | 7 | 6,812 | (15,170) | 31,046 | (1,350) | 492 |
Balance as of beginning of period at Mar. 31, 2019 | 21,779 | 21,309 | 7 | 6,802 | (14,958) | 30,810 | (1,352) | 470 |
Increase (Decrease) in Stockholders' Equity Roll Forward | ||||||||
Net income (loss) | 648 | 612 | 612 | 36 | ||||
Dividends on common stock | (376) | (376) | (376) | |||||
Stock-based compensation expense | 11 | 11 | 11 | |||||
Transactions in connection with stock-based compensation plans | (1) | (1) | (1) | 0 | ||||
Open market stock purchases | (212) | (212) | (212) | |||||
Distributions to noncontrolling interests | (18) | (18) | ||||||
Other comprehensive income (loss) | 6 | 2 | 2 | 4 | ||||
Balance as of end of period at Jun. 30, 2019 | 21,837 | 21,345 | 7 | 6,812 | (15,170) | 31,046 | (1,350) | 492 |
Balance as of beginning of period at Dec. 31, 2019 | 22,536 | 21,803 | 7 | 6,821 | (15,648) | 31,974 | (1,351) | 733 |
Increase (Decrease) in Stockholders' Equity Roll Forward | ||||||||
Net income (loss) | (419) | (598) | (598) | 179 | ||||
Dividends on common stock | (801) | (801) | (801) | |||||
Stock-based compensation expense | 36 | 36 | 36 | |||||
Transactions in connection with stock-based compensation plans | (15) | (15) | (33) | 18 | ||||
Open market stock purchases | (130) | (130) | (130) | |||||
Distributions to noncontrolling interests | (127) | (127) | ||||||
Other comprehensive income (loss) | (446) | (448) | (448) | 2 | ||||
Balance as of end of period at Jun. 30, 2020 | 20,634 | 19,847 | 7 | 6,824 | (15,760) | 30,575 | (1,799) | 787 |
Balance as of beginning of period at Mar. 31, 2020 | 19,685 | 18,842 | 7 | 6,814 | (15,764) | 29,722 | (1,937) | 843 |
Increase (Decrease) in Stockholders' Equity Roll Forward | ||||||||
Net income (loss) | 1,335 | 1,253 | 1,253 | 82 | ||||
Dividends on common stock | (400) | (400) | (400) | |||||
Stock-based compensation expense | 12 | 12 | 12 | |||||
Transactions in connection with stock-based compensation plans | 2 | 2 | (2) | 4 | ||||
Distributions to noncontrolling interests | (126) | (126) | ||||||
Other comprehensive income (loss) | 126 | 138 | 138 | (12) | ||||
Balance as of end of period at Jun. 30, 2020 | $ 20,634 | $ 19,847 | $ 7 | $ 6,824 | $ (15,760) | $ 30,575 | $ (1,799) | $ 787 |
Consolidated Statements of Equity (unaudited) (Parenthetical) - $ / shares |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2020 |
Jun. 30, 2019 |
Jun. 30, 2020 |
Jun. 30, 2019 |
|
Common stock dividends: | ||||
Dividends on common stock (in dollars per share) | $ 0.98 | $ 0.9 | $ 1.96 | $ 1.8 |
Consolidated Statements of Cash Flows (unaudited) - USD ($) $ in Millions |
6 Months Ended | |
---|---|---|
Jun. 30, 2020 |
Jun. 30, 2019 |
|
Cash flows from operating activities: | ||
Net income (loss) | $ (419) | $ 815 |
Adjustments to reconcile net income (loss) to net cash provided by operating activities: | ||
Depreciation and amortization expense | 1,160 | 1,117 |
LCM inventory valuation adjustment | 294 | 0 |
Deferred income tax expense (benefit) | 223 | (12) |
Changes in current assets and current liabilities | (478) | 413 |
Changes in deferred charges and credits and other operating activities, net | (93) | 61 |
Net cash provided by operating activities | 687 | 2,394 |
Cash flows from investing activities: | ||
Investments in unconsolidated joint ventures | (29) | (90) |
Acquisitions of undivided interests | 0 | (29) |
Other investing activities, net | 12 | 9 |
Net cash used in investing activities | (1,339) | (1,555) |
Cash flows from financing activities: | ||
Purchases of common stock for treasury | (147) | (248) |
Common stock dividends | (801) | (751) |
Acquisition of VLP publicly held common units | 0 | (950) |
Distributions to noncontrolling interests | (127) | (18) |
Other financing activities, net | (17) | (25) |
Net cash provided by (used in) financing activities | 435 | (1,825) |
Effect of foreign exchange rate changes on cash | (47) | 37 |
Net decrease in cash and cash equivalents | (264) | (949) |
Cash and cash equivalents at beginning of period | 2,583 | 2,982 |
Cash and cash equivalents at end of period | 2,319 | 2,033 |
Excluding Variable Interest Entities (VIEs) [Member] | ||
Cash flows from investing activities: | ||
Capital expenditures | (555) | (854) |
Deferred turnaround and catalyst cost expenditures | (437) | (470) |
Cash flows from financing activities: | ||
Proceeds from debt issuances and borrowings | 1,799 | 1,892 |
Repayments of debt and finance lease obligations | (432) | (1,792) |
Variable Interest Entities (VIEs) [Member] | ||
Cash flows from financing activities: | ||
Proceeds from debt issuances and borrowings | 163 | 70 |
Repayments of debt and finance lease obligations | (3) | (3) |
Diamond Green Diesel Holdings LLC (DGD) [Member] | ||
Cash flows from investing activities: | ||
Capital expenditures | (177) | (51) |
Deferred turnaround and catalyst cost expenditures | (10) | (1) |
Other VIEs [Member] | ||
Cash flows from investing activities: | ||
Capital expenditures | $ (143) | $ (69) |
Basis of Presentation and Significant Accounting Policies |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2020 | |||||||||||||||||||||||||||||||||||||||||
Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||
BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES | 1. BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation General The terms “Valero,” “we,” “our,” and “us,” as used in this report, may refer to Valero Energy Corporation, one or more of its consolidated subsidiaries, or all of them taken as a whole. These unaudited financial statements have been prepared in accordance with United States (U.S.) generally accepted accounting principles (GAAP) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X of the Securities Exchange Act of 1934. Accordingly, they do not include all of the information and notes required by U.S. GAAP for complete financial statements. In the opinion of management, all adjustments considered necessary for a fair presentation have been included. All such adjustments are of a normal recurring nature unless disclosed otherwise. Operating results for the six months ended June 30, 2020 are not necessarily indicative of the results that may be expected for the year ending December 31, 2020. As discussed in Note 2, the outbreak of COVID-19 and its development into a pandemic in March 2020 resulted in significant economic disruption globally. This disruption became more acute in the latter half of March 2020. While demand and market prices for most of our products increased during the second quarter of 2020 compared to the end of the first quarter of 2020, developments with respect to COVID-19 have been occurring at a rapid pace and the risk remains that circumstances could change. For instance, during the latter part of the second quarter of 2020, governmental authorities in various states across the U.S. began to lift many of the restrictions created by actions taken to slow down the spread of COVID-19. However, many of the states where such restrictions were lifted, and several states where the restrictions have essentially never been lifted (such as California in our U.S. West Coast region), have recently experienced a marked increase in the spread of COVID-19 and many governmental authorities in such areas have responded by reimposing certain restrictions they had previously lifted. Therefore, our operating results for the six months ended June 30, 2020 do not fully reflect the impact this disruption will likely continue to have on us. The balance sheet as of December 31, 2019 has been derived from our audited financial statements as of that date. For further information, refer to our financial statements and notes thereto included in our annual report on Form 10-K for the year ended December 31, 2019. Reclassifications Prior year amounts for capital expenditures, deferred turnaround and catalyst cost expenditures, and repayments of debt and finance lease obligations in the consolidated statements of cash flows have been reclassified to conform to the 2020 presentation to separately present these activities for us and our consolidated VIEs. Significant Accounting Policies Use of Estimates The preparation of financial statements in conformity with U.S. GAAP requires us to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates. On an ongoing basis, we review our estimates based on currently available information. Changes in facts and circumstances may result in revised estimates. Adoption of Accounting Pronouncements We adopted the following Accounting Standards Updates (ASUs) on January 1, 2020. Our adoption of these ASUs did not have a material impact on our financial statements or related disclosures.
The following ASU was issued on and adopted by us on March 12, 2020. Our adoption of this ASU did not have a material impact on our financial statements or related disclosures.
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Uncertainties and Certain Significant Accounting Estimates |
6 Months Ended |
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Jun. 30, 2020 | |
Unusual or Infrequent Items, or Both [Abstract] | |
UNCERTAINTIES AND CERTAIN SIGNIFICANT ACCOUNTING ESTIMATES (COVID-19) | 2. UNCERTAINTIES AND CERTAIN SIGNIFICANT ACCOUNTING ESTIMATES Overview The outbreak of COVID-19 and its development into a pandemic in March 2020 and certain developments in the global oil markets have impacted and continue to impact our business. We responded, and will strive to continue to respond, to the impact from these matters on our business. We reduced the amount of crude oil processed at most of our refineries in response to the decreased demand for our products, we temporarily idled various gasoline-making units at certain of our refineries to further limit gasoline production, and we took measures to reduce jet fuel production. Eight of our ethanol plants were temporarily idled, and production at our remaining six ethanol plants was reduced earlier this year to address the decreased demand for ethanol. Demand for most of our products partially recovered during the latter part of the second quarter of 2020. As a result, we have increased the production of most of our products and recently restarted the gasoline-making units and four ethanol plants that had been temporarily idled. Many uncertainties remain with respect to COVID-19, including its resulting economic effects, and we are unable to predict the ultimate economic impacts from COVID-19 on our business and how quickly national economies can recover once the pandemic subsides, or whether any recovery will ultimately experience a reversal or other setbacks. However, the adverse impacts of the economic effects from COVID-19 and uncertainty in the global oil markets on our business have been and will likely continue to be significant. We believe we have proactively addressed many of the known impacts of COVID-19 to the extent possible and we will strive to continue to do so, but there can be no assurance that any measures we have taken or may take will be fully effective. As a result, we expect these matters may affect our estimates and assumptions on amounts reported in the financial statements and accompanying notes in the near term. Impairment Analysis of Long-Lived Assets Due to the adverse economic conditions discussed above, we reviewed our significant operating assets for the existence of impairment indicators. As a result of this review, we evaluated six ethanol plants for potential impairment as of June 30, 2020, assuming that we would operate these plants in the future and considering current economic conditions on our future estimated cash flows. Based on our analysis, we determined that the carrying amount of each of these plants was recoverable, as the undiscounted future cash flows from each plant exceeded its respective carrying value. Nonetheless, we will continue to evaluate the economic conditions and their impact on our assumptions. Impairment Analysis of Goodwill We have $260 million of goodwill as of June 30, 2020. All of our goodwill is allocated to one reporting unit, the U.S. Gulf Coast refining region. Our annual test for the impairment of goodwill is performed on October 1 of each year. However, as discussed above, there were adverse changes in the capital and commodity markets that contributed to a significant decline in our common stock price compared to the price as of December 31, 2019 and early March 2020. Despite the decline in our common stock price, we determined our goodwill was not impaired as of June 30, 2020. Nonetheless, we will continue to evaluate the economic conditions and their impact on our assumptions. Inventory Valuation See Note 4 regarding our $294 million LCM inventory valuation reserve and the estimates used to determine the market value of our inventories.
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Merger With VLP |
6 Months Ended |
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Jun. 30, 2020 | |
Business Combinations [Abstract] | |
MERGER WITH VLP | 3. MERGER WITH VLP On January 10, 2019, we completed our acquisition of all of the outstanding publicly held common units of VLP pursuant to a definitive Agreement and Plan of Merger (Merger Agreement, and together with the transactions contemplated thereby, the Merger Transaction) with VLP. Upon completion of the Merger Transaction, each outstanding publicly held common unit was converted into the right to receive $42.25 per common unit in cash without any interest thereon, and all such publicly traded common units were automatically canceled and ceased to exist. Upon completion of the Merger Transaction, we paid aggregate merger consideration of $950 million, which was funded with available cash on hand. Prior to the completion of the Merger Transaction, we consolidated the financial statements of VLP and reflected noncontrolling interests on our balance sheet for the portion of VLP’s partners’ capital held by VLP’s public common unitholders. Upon completion of the Merger Transaction, VLP became our indirect wholly owned subsidiary and, as a result, we no longer reflect noncontrolling interests on our balance sheet with respect to VLP. In addition, we no longer attribute a portion of VLP’s net income to noncontrolling interests. Because we had a controlling financial interest in VLP before the Merger Transaction and retained our controlling financial interest in VLP after the Merger Transaction, the change in our ownership interest in VLP as a result of the merger was accounted for as an equity transaction. Accordingly, we did not recognize a gain or loss on the Merger Transaction.
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Inventories |
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Jun. 30, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Inventory Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
INVENTORIES | 4. INVENTORIES Inventories consisted of the following (in millions):
We compare the market value of inventories to their cost on an aggregate basis, excluding materials and supplies. In determining the market value of our inventories, we assume that feedstocks are converted into refined products, which requires us to make estimates regarding the refined products expected to be produced from those feedstocks and the conversion costs required to convert those feedstocks into refined products. We also estimate the usual and customary transportation costs required to move the inventory from our plants to the appropriate points of sale. We then apply an estimated selling price to our inventories. If the aggregate market value is less than the aggregate cost, we recognize a loss for the difference in our statements of income. To the extent the aggregate market value subsequently increases, we would recognize an increase to the value of our inventories (not to exceed cost) and a gain in our statements of income. The market value of our last-in, first-out (LIFO) inventory fell below our historical LIFO inventory costs as of March 31, 2020, and as a result, we recorded an LCM inventory valuation reserve of $2.5 billion in order to state our inventories at market. As of June 30, 2020, our LCM inventory valuation reserve was $294 million. The change in our LCM inventory valuation reserve resulted in a net benefit of $2.2 billion and a net charge of $294 million to our results of operations during the three and six months ended June 30, 2020, respectively. As of December 31, 2019, the replacement cost (market value) of LIFO inventories exceeded their LIFO carrying amounts by $2.5 billion. Our non-LIFO inventories accounted for $912 million and $1.4 billion of our total inventories as of June 30, 2020 and December 31, 2019, respectively.
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Leases |
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Leases [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
LEASES | 5. LEASES Lease Costs and Other Supplemental Information Our total lease cost comprises costs that are included in our income statement, as well as costs capitalized as part of an item of property, plant, and equipment or inventory. Total lease cost by class of underlying asset was as follows (in millions):
The following table presents additional information related to our operating and finance leases (in millions, except for lease terms and discount rates):
Supplemental cash flow information related to our operating and finance leases is presented in Note 13. Significant Lease Commencement We have a 50 percent membership interest in MVP Terminalling, LLC (MVP), an unconsolidated joint venture formed in September 2017 with a subsidiary of Magellan Midstream Partners LP, to construct, own, and operate the Magellan Valero Pasadena marine terminal (MVP Terminal) located adjacent to the Houston Ship Channel in Pasadena, Texas. Concurrent with the formation of MVP, we entered into a terminaling agreement with MVP to utilize the MVP Terminal upon completion of the initial two phases of construction, which occurred in the first quarter of 2020. During the six months ended June 30, 2020, we recognized a finance lease ROU asset and related liability of approximately $1.4 billion in connection with this agreement. The terminaling agreement has an initial term of 12 years with two five-year automatic renewals, and year-to-year renewals thereafter. Maturity Analysis The remaining minimum lease payments due under our long-term leases were as follows (in millions):
____________________ (a) The amounts as of June 30, 2020 are for the remaining six months of 2020.
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LEASES | 5. LEASES Lease Costs and Other Supplemental Information Our total lease cost comprises costs that are included in our income statement, as well as costs capitalized as part of an item of property, plant, and equipment or inventory. Total lease cost by class of underlying asset was as follows (in millions):
The following table presents additional information related to our operating and finance leases (in millions, except for lease terms and discount rates):
Supplemental cash flow information related to our operating and finance leases is presented in Note 13. Significant Lease Commencement We have a 50 percent membership interest in MVP Terminalling, LLC (MVP), an unconsolidated joint venture formed in September 2017 with a subsidiary of Magellan Midstream Partners LP, to construct, own, and operate the Magellan Valero Pasadena marine terminal (MVP Terminal) located adjacent to the Houston Ship Channel in Pasadena, Texas. Concurrent with the formation of MVP, we entered into a terminaling agreement with MVP to utilize the MVP Terminal upon completion of the initial two phases of construction, which occurred in the first quarter of 2020. During the six months ended June 30, 2020, we recognized a finance lease ROU asset and related liability of approximately $1.4 billion in connection with this agreement. The terminaling agreement has an initial term of 12 years with two five-year automatic renewals, and year-to-year renewals thereafter. Maturity Analysis The remaining minimum lease payments due under our long-term leases were as follows (in millions):
____________________ (a) The amounts as of June 30, 2020 are for the remaining six months of 2020.
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Debt |
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DEBT | 6. DEBT Public Debt During the six months ended June 30, 2020, we issued $850 million of 2.700 percent Senior Notes due April 15, 2023 and $650 million of 2.850 percent Senior Notes due April 15, 2025. Proceeds from these debt issuances totaled $1.499 billion before deducting the underwriting discount and other debt issuance costs. During the six months ended June 30, 2019, the following activity occurred:
Effective March 31, 2020, we early applied the U.S. Securities and Exchange Commission’s (SEC’s) Final Rule Release No. 33-10762, Financial Disclosures About Guarantors and Issuers of Guaranteed Securities and Affiliates Whose Securities Collateralize a Registrant’s Securities. This rule allows us to cease providing the previously required condensed consolidating financial information in our periodic reports while the senior notes issued by VLP noted above are outstanding, as VLP’s reporting obligation was suspended on January 22, 2019 in connection with the completion of the Merger Transaction. Credit Facilities Summary of Credit Facilities We had outstanding borrowings, letters of credit issued, and availability under our credit facilities as follows (amounts in millions and currency in U.S. dollars, except as noted):
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364-day Revolving Credit Facility In April 2020, we entered into an $875 million 364-Day Credit Agreement (the 364-day Revolving Credit Facility) with several lenders. This facility provides for a revolving credit facility in an aggregate principal amount of up to $875 million and matures 364 days from April 13, 2020. Borrowings under this facility bear interest at the base rate or the eurodollar rate (at our election) plus an applicable rate ranging from 0.150 percent to 1.700 percent, based upon the elected interest rate type and our debt ratings from certain rating agencies. The facility requires us to pay a commitment fee accruing on the daily amount of used and unused commitments of the lenders, also based upon our debt ratings mentioned above. The interest and commitment fees under this facility are payable quarterly. The facility also requires us to pay a customary agency fee to the administrative agent. The facility contains various customary covenants and events of default. Accounts Receivable Sales Facility During the six months ended June 30, 2020, we sold $300 million of eligible receivables under our accounts receivable sales facility and repaid $400 million. The weighted-average interest rate on the borrowings outstanding for this facility was 1.5221 percent and 2.5275 percent during the six months ended June 30, 2020 and 2019, respectively. IEnova Revolver During the six months ended June 30, 2020, Central Mexico Terminals (as described in Note 8) amended its combined unsecured revolving credit facility (IEnova Revolver) with IEnova (defined in Note 8) to increase the facility amount from $491 million to $612 million. During the six months ended June 30, 2020 and 2019, Central Mexico Terminals borrowed $163 million and $70 million, respectively, and had no repayments under this revolver. As of June 30, 2020 and December 31, 2019, the variable interest rate was 5.083 percent and 5.749 percent, respectively. The IEnova Revolver is available only to the operations of Central Mexico Terminals, and the creditors of Central Mexico Terminals do not have recourse against us. Other Disclosures “Interest and debt expense, net of capitalized interest” is comprised as follows (in millions):
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Equity |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Equity [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
EQUITY | 7. EQUITY Share Activity There was no significant share activity during the six months ended June 30, 2020 and 2019. Common Stock Dividends On July 16, 2020, our board of directors declared a quarterly cash dividend of $0.98 per common share payable on September 2, 2020 to holders of record at the close of business on August 4, 2020. Accumulated Other Comprehensive Loss Changes in accumulated other comprehensive loss by component, net of tax, were as follows (in millions):
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Variable Interest Entities |
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Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
VARIABLE INTEREST ENTITIES | 8. VARIABLE INTEREST ENTITIES Consolidated VIEs We consolidate a VIE when we have a variable interest in an entity for which we are the primary beneficiary. As of June 30, 2020, our significant consolidated VIEs included:
The VIEs’ assets can only be used to settle their own obligations and the VIEs’ creditors have no recourse to our assets. We do not provide financial guarantees to our VIEs. Although we have provided credit facilities to some of our VIEs in support of their construction or acquisition activities, these transactions are eliminated in consolidation. Our financial position, results of operations, and cash flows are impacted by our consolidated VIEs’ performance, net of intercompany eliminations, to the extent of our ownership interest in each VIE. The following tables present summarized balance sheet information for the significant assets and liabilities of our VIEs, which are included in our balance sheets (in millions):
Non-Consolidated VIEs We hold variable interests in VIEs that have not been consolidated because we are not considered the primary beneficiary. These non-consolidated VIEs are not material to our financial position or results of operations and are accounted for as equity investments.
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Employee Benefit Plans |
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Retirement Benefits [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
EMPLOYEE BENEFIT PLANS | 9. EMPLOYEE BENEFIT PLANS The components of net periodic benefit cost related to our defined benefit plans were as follows (in millions):
The components of net periodic benefit cost other than the service cost component (i.e., the non-service cost components) are included in “other income, net” in the statements of income. During the six months ended June 30, 2020 and 2019, we contributed $19 million and $23 million, respectively, to our pension plans and $7 million and $8 million, respectively, to our other postretirement benefit plans. We previously disclosed in our annual report on Form 10-K for the year ended December 31, 2019 that we planned to contribute approximately $140 million to our pension plans and $21 million to our other postretirement benefit plans during 2020. Due to the current economic environment, we are reconsidering our intent to make a discretionary contribution of $100 million to our qualified U.S. pension plan.
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Income Taxes |
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Jun. 30, 2020 | |||||||||
Income Tax Disclosure [Abstract] | |||||||||
INCOME TAXES | 10. INCOME TAXES On March 27, 2020, the Coronavirus Aid, Relief and Economic Security (CARES) Act was enacted, which resulted in significant changes to the U.S. Internal Revenue Code of 1986, as amended. The most significant changes affecting us were as follows:
Our income tax expense (benefit) for the three and six months ended June 30, 2020 included a tax benefit of $7 million and $117 million, respectively, attributable to the expected tax NOL carryback provided under the CARES Act for expected tax NOLs from our current tax year to our 2015 tax year in which we paid federal income tax at a 35 percent tax rate.
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Earnings (Loss) Per Common Share |
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Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
EARNINGS (LOSS) PER COMMON SHARE | 11. EARNINGS (LOSS) PER COMMON SHARE Earnings (loss) per common share were computed as follows (dollars and shares in millions, except per share amounts):
Participating securities include restricted stock and performance awards granted under our 2020 Omnibus Stock Incentive Plan (2020 OSIP) or our 2011 Omnibus Stock Incentive Plan (2011 OSIP). Dilutive securities include participating securities as well as outstanding stock options granted under our 2020 OSIP or our 2011 OSIP. On April 30, 2020, our stockholders approved the 2020 OSIP.
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Revenues and Segment Information |
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Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
REVENUES AND SEGMENT INFORMATION | 12. REVENUES AND SEGMENT INFORMATION Revenue from Contracts with Customers Disaggregation of Revenue Revenue is presented in the table below under “Segment Information” disaggregated by product because this is the level of disaggregation that management has determined to be beneficial to users of our financial statements. Contract Balances Contract balances were as follows (in millions):
Receivables from contracts with customers is a component of “receivables, net” as presented on the balance sheet. The decrease in “receivables, net” is described in Note 13. For the six months ended June 30, 2020, we recognized as revenue $52 million that was included in contract liabilities as of December 31, 2019. Remaining Performance Obligations We have spot and term contracts with customers, the majority of which are spot contracts with no remaining performance obligations. We do not disclose remaining performance obligations for contracts that have terms of one year or less. The transaction price for our remaining term contracts includes a fixed component and variable consideration (i.e., a commodity price), both of which are allocated entirely to a wholly unsatisfied promise to transfer a distinct good that forms part of a single performance obligation. The fixed component is not material and the variable consideration is highly uncertain. Therefore, as of June 30, 2020, we have not disclosed the aggregate amount of the transaction price allocated to our remaining performance obligations. Segment Information We have three reportable segments — refining, renewable diesel, and ethanol. Each segment is a strategic business unit that offers different products and services by employing unique technologies and marketing strategies and whose operations and operating performance are managed and evaluated separately. Operating performance is measured based on the operating income generated by the segment, which includes revenues and expenses that are directly attributable to the management of the respective segment. Intersegment sales are generally derived from transactions made at prevailing market rates. The following is a description of each segment’s business operations.
manufactured by our refineries and sold by this segment include gasolines and blendstocks, distillates, and other products.
Operations that are not included in any of the reportable segments are included in the corporate category. The following tables reflect information about our operating income (loss) by reportable segment (in millions):
The following table provides a disaggregation of revenues from external customers for our principal products by reportable segment (in millions):
Total assets by reportable segment were as follows (in millions):
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Supplemental Cash Flow Information |
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Supplemental Cash Flow Information [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
SUPPLEMENTAL CASH FLOW INFORMATION | 13. SUPPLEMENTAL CASH FLOW INFORMATION In order to determine net cash provided by operating activities, net income (loss) is adjusted by, among other things, changes in current assets and current liabilities as follows (in millions):
Changes in current assets and current liabilities for the six months ended June 30, 2020 were as follows:
Changes in current assets and current liabilities for the six months ended June 30, 2019 were as follows:
Cash flows related to interest and income taxes were as follows (in millions):
Supplemental cash flow information related to our operating and finance leases was as follows (in millions):
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There were no significant noncash investing and financing activities during the six months ended June 30, 2020, except as noted in the table above. Noncash investing and financing activities during the six months ended June 30, 2019 included the derecognition of the property, plant, and equipment and the related long-term liability associated with a build-to-suit lease arrangement with respect to the MVP Terminal, and the subsequent recognition of our investment in MVP, in addition to the activities noted in the table above.
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Fair Value Measurements |
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
FAIR VALUE MEASUREMENTS | 14. FAIR VALUE MEASUREMENTS Recurring Fair Value Measurements The following tables present information (in millions) about our assets and liabilities recognized at their fair values in our balance sheets categorized according to the fair value hierarchy of the inputs utilized by us to determine the fair values as of June 30, 2020 and December 31, 2019. We have elected to offset the fair value amounts recognized for multiple similar derivative contracts executed with the same counterparty, including any related cash collateral assets or obligations as shown below; however, fair value amounts by hierarchy level are presented in the following tables on a gross basis. We have no derivative contracts that are subject to master netting arrangements that are reflected gross on the balance sheet.
A description of our assets and liabilities recognized at fair value along with the valuation methods and inputs we used to develop their fair value measurements are as follows:
There were no transfers into or out of Level 3 for assets and liabilities held as of June 30, 2020 and December 31, 2019 that were measured at fair value on a recurring basis. There was no significant activity during the six months ended June 30, 2020 and 2019 related to the fair value amounts categorized in Level 3 as of June 30, 2020 and December 31, 2019. Nonrecurring Fair Value Measurements There were no assets or liabilities that were measured at fair value on a nonrecurring basis as of June 30, 2020 and December 31, 2019. Other Financial Instruments Financial instruments that we recognize in our balance sheets at their carrying amounts are shown in the following table along with their associated fair values (in millions):
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Price Risk Management Activities |
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Derivative Instruments and Hedging Activities Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
PRICE RISK MANAGEMENT ACTIVITIES | 15. PRICE RISK MANAGEMENT ACTIVITIES General We are exposed to market risks primarily related to the volatility in the price of commodities, foreign currency exchange rates, and the price of credits needed to comply with various government and regulatory programs. We enter into derivative instruments to manage some of these risks, including derivative instruments related to the various commodities we purchase or produce, and foreign currency exchange and purchase contracts, as described below under “Risk Management Activities by Type of Risk.” These derivative instruments are recorded as either assets or liabilities measured at their fair values (see Note 14), as summarized below under “Fair Values of Derivative Instruments.” The effect of these derivative instruments on our income and other comprehensive income (loss) is summarized below under “Effect of Derivative Instruments on Income and Other Comprehensive Income (Loss).” Risk Management Activities by Type of Risk Commodity Price Risk We are exposed to market risks related to the volatility in the price of crude oil, refined petroleum products (primarily gasoline and distillate), renewable diesel, grain (primarily corn), renewable diesel feedstocks, and natural gas used in our operations. To reduce the impact of price volatility on our results of operations and cash flows, we use commodity derivative instruments, such as futures and options. Our positions in commodity derivative instruments are monitored and managed on a daily basis by our risk control group to ensure compliance with our stated risk management policy that has been approved by our board of directors. We primarily use commodity derivative instruments as cash flow hedges and economic hedges. Our objectives for entering into each type of hedge is described below.
As of June 30, 2020, we had the following outstanding commodity derivative instruments that were used as cash flow hedges and economic hedges, as well as commodity derivative instruments related to the physical purchase of corn at a fixed price. The information presents the notional volume of outstanding contracts by type of instrument and year of maturity (volumes in thousands of barrels, except corn contracts that are presented in thousands of bushels).
Foreign Currency Risk We are exposed to exchange rate fluctuations on transactions related to our international operations that are denominated in currencies other than the local (functional) currencies of our operations. To manage our exposure to these exchange rate fluctuations, we use foreign currency contracts. These contracts are not designated as hedging instruments for accounting purposes and therefore are classified as economic hedges. As of June 30, 2020, we had foreign currency contracts to purchase $219 million of U.S. dollars, $1.9 billion of U.S. dollar equivalent Canadian dollars, and $500 million of U.S. dollar equivalent pounds sterling. Of these commitments, $919 million matured on or before July 24, 2020 and the remaining $1.7 billion will mature by October 15, 2020. Environmental Compliance Program Price Risk We are exposed to market risk related to the volatility in the price of credits needed to comply with various governmental and regulatory environmental compliance programs. To manage this risk, we enter into contracts to purchase these credits when prices are deemed favorable. Some of these contracts are derivative instruments; however, we elect the normal purchase exception and do not record these contracts at their fair values. Certain of these programs require us to blend biofuels into the products we produce, and we are subject to such programs in most of the countries in which we operate. These countries set annual quotas for the percentage of biofuels that must be blended into the motor fuels consumed in these countries. As a producer of motor fuels from petroleum, we are obligated to blend biofuels into the products we produce at a rate that is at least equal to the applicable quota. To the degree we are unable to blend at the applicable rate, we must purchase biofuel credits (primarily RINs in the U.S.). We are exposed to the volatility in the market price of these credits, and we manage that risk by purchasing biofuel credits when prices are deemed favorable. The cost of meeting our obligations under these compliance programs was $136 million and $67 million for the three months ended June 30, 2020 and 2019, respectively, and $248 million and $158 million for the six months ended June 30, 2020 and 2019, respectively. These amounts are reflected in cost of materials and other. We are subject to additional requirements under greenhouse gas (GHG) emission programs, including the cap-and-trade systems, as discussed in Note 14. Under these cap-and-trade systems, we purchase various GHG emission credits available on the open market. Therefore, we are exposed to the volatility in the market price of these credits. The cost to implement certain provisions of the cap-and-trade systems are significant; however, we recovered the majority of these costs from our customers for the three and six months ended June 30, 2020 and 2019 and expect to continue to recover the majority of these costs in the future. For the three and six months ended June 30, 2020 and 2019, the net cost of meeting our obligations under these compliance programs was immaterial. Fair Values of Derivative Instruments The following tables provide information about the fair values of our derivative instruments as of June 30, 2020 and December 31, 2019 (in millions) and the line items in the balance sheets in which the fair values are reflected. See Note 14 for additional information related to the fair values of our derivative instruments. As indicated in Note 14, we net fair value amounts recognized for multiple similar derivative contracts executed with the same counterparty under master netting arrangements, including cash collateral assets and obligations. The following table, however, is presented on a gross asset and gross liability basis, which results in the reflection of certain assets in liability accounts and certain liabilities in asset accounts:
Market Risk Our price risk management activities involve the receipt or payment of fixed price commitments into the future. These transactions give rise to market risk, which is the risk that future changes in market conditions may make an instrument less valuable. We closely monitor and manage our exposure to market risk on a daily basis in accordance with policies approved by our board of directors. Market risks are monitored by our risk control group to ensure compliance with our stated risk management policy. We do not require any collateral or other security to support derivative instruments into which we enter. We also do not have any derivative instruments that require us to maintain a minimum investment-grade credit rating. Effect of Derivative Instruments on Income and Other Comprehensive Income (Loss) The following table provides information about the gain or loss recognized in income and other comprehensive income (loss) due to fair value adjustments of our cash flow hedges (in millions):
For cash flow hedges, no component of the derivative instruments’ gains or losses was excluded from the assessment of hedge effectiveness for the three and six months ended June 30, 2020 and 2019. For the three and six months ended June 30, 2020, cash flow hedges primarily related to forward sales of renewable diesel and we estimate that the deferred after-tax loss of $3 million as of June 30, 2020 will be reclassified into revenues over the next 12 months as a result of hedged transactions that are forecasted to occur. For the three and six months ended June 30, 2020 and 2019, there were no amounts reclassified from accumulated other comprehensive income (loss) into income as a result of the discontinuance of cash flow hedge accounting. The changes in accumulated other comprehensive loss by component, net of tax, for the three and six months ended June 30, 2020 and 2019 are described in Note 7. The following table provides information about the gain (loss) recognized in income on our derivative instruments of our economic hedges and our foreign currency hedges and the line items in the statements of income in which such gains (losses) are reflected (in millions):
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Basis of Presentation and Significant Accounting Policies (Policies) |
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Jun. 30, 2020 | |||||||||||||||||||||||||||||||||||||||||
Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||
Basis of Presentation | Basis of Presentation General The terms “Valero,” “we,” “our,” and “us,” as used in this report, may refer to Valero Energy Corporation, one or more of its consolidated subsidiaries, or all of them taken as a whole. These unaudited financial statements have been prepared in accordance with United States (U.S.) generally accepted accounting principles (GAAP) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X of the Securities Exchange Act of 1934. Accordingly, they do not include all of the information and notes required by U.S. GAAP for complete financial statements. In the opinion of management, all adjustments considered necessary for a fair presentation have been included. All such adjustments are of a normal recurring nature unless disclosed otherwise. Operating results for the six months ended June 30, 2020 are not necessarily indicative of the results that may be expected for the year ending December 31, 2020. As discussed in Note 2, the outbreak of COVID-19 and its development into a pandemic in March 2020 resulted in significant economic disruption globally. This disruption became more acute in the latter half of March 2020. While demand and market prices for most of our products increased during the second quarter of 2020 compared to the end of the first quarter of 2020, developments with respect to COVID-19 have been occurring at a rapid pace and the risk remains that circumstances could change. For instance, during the latter part of the second quarter of 2020, governmental authorities in various states across the U.S. began to lift many of the restrictions created by actions taken to slow down the spread of COVID-19. However, many of the states where such restrictions were lifted, and several states where the restrictions have essentially never been lifted (such as California in our U.S. West Coast region), have recently experienced a marked increase in the spread of COVID-19 and many governmental authorities in such areas have responded by reimposing certain restrictions they had previously lifted. Therefore, our operating results for the six months ended June 30, 2020 do not fully reflect the impact this disruption will likely continue to have on us. The balance sheet as of December 31, 2019 has been derived from our audited financial statements as of that date. For further information, refer to our financial statements and notes thereto included in our annual report on Form 10-K for the year ended December 31, 2019. |
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Reclassifications | Reclassifications Prior year amounts for capital expenditures, deferred turnaround and catalyst cost expenditures, and repayments of debt and finance lease obligations in the consolidated statements of cash flows have been reclassified to conform to the 2020 presentation to separately present these activities for us and our consolidated VIEs. |
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Use of Estimates | Use of Estimates The preparation of financial statements in conformity with U.S. GAAP requires us to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates. On an ongoing basis, we review our estimates based on currently available information. Changes in facts and circumstances may result in revised estimates. |
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Adoption of Accounting Pronouncements | Adoption of Accounting Pronouncements We adopted the following Accounting Standards Updates (ASUs) on January 1, 2020. Our adoption of these ASUs did not have a material impact on our financial statements or related disclosures.
The following ASU was issued on and adopted by us on March 12, 2020. Our adoption of this ASU did not have a material impact on our financial statements or related disclosures.
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Variable interest entities | We hold variable interests in VIEs that have not been consolidated because we are not considered the primary beneficiary. These non-consolidated VIEs are not material to our financial position or results of operations and are accounted for as equity investments. We consolidate a VIE when we have a variable interest in an entity for which we are the primary beneficiary.
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Offsetting fair value amounts of commodity derivative contracts | We have elected to offset the fair value amounts recognized for multiple similar derivative contracts executed with the same counterparty, including any related cash collateral assets or obligations as shown below; however, fair value amounts by hierarchy level are presented in the following tables on a gross basis. We have no derivative contracts that are subject to master netting arrangements that are reflected gross on the balance sheet.
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Derivatives | We are exposed to market risks primarily related to the volatility in the price of commodities, foreign currency exchange rates, and the price of credits needed to comply with various government and regulatory programs. We enter into derivative instruments to manage some of these risks, including derivative instruments related to the various commodities we purchase or produce, and foreign currency exchange and purchase contracts, as described below under “Risk Management Activities by Type of Risk.” These derivative instruments are recorded as either assets or liabilities measured at their fair values (see Note 14), as summarized below under “Fair Values of Derivative Instruments.” The effect of these derivative instruments on our income and other comprehensive income (loss) is summarized below under “Effect of Derivative Instruments on Income and Other Comprehensive Income (Loss).”
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Derivative instruments collateral requirements | We do not require any collateral or other security to support derivative instruments into which we enter. |
Basis of Presentation and Significant Accounting Policies (Tables) |
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Jun. 30, 2020 | |||||||||||||||||||||||||||||||||||||||||
Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||
Schedule of adopted accounting pronouncements | We adopted the following Accounting Standards Updates (ASUs) on January 1, 2020. Our adoption of these ASUs did not have a material impact on our financial statements or related disclosures.
The following ASU was issued on and adopted by us on March 12, 2020. Our adoption of this ASU did not have a material impact on our financial statements or related disclosures.
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Inventories (Tables) |
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Jun. 30, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Inventory Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of inventories | Inventories consisted of the following (in millions):
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Leases (Tables) |
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Leases [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total lease cost by class of underlying asset | Total lease cost by class of underlying asset was as follows (in millions):
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Additional information related to operating and finance leases | The following table presents additional information related to our operating and finance leases (in millions, except for lease terms and discount rates):
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Remaining minimum lease payments due under long-term operating leases | The remaining minimum lease payments due under our long-term leases were as follows (in millions):
____________________ (a) The amounts as of June 30, 2020 are for the remaining six months of 2020.
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Remaining minimum lease payments due under long-term finance leases | The remaining minimum lease payments due under our long-term leases were as follows (in millions):
____________________ (a) The amounts as of June 30, 2020 are for the remaining six months of 2020.
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Debt (Tables) |
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Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of credit facilities | We had outstanding borrowings, letters of credit issued, and availability under our credit facilities as follows (amounts in millions and currency in U.S. dollars, except as noted):
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(c) Creditors of our VIE do not have recourse against us.
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||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Interest and debt expense, net of capitalized interest | “Interest and debt expense, net of capitalized interest” is comprised as follows (in millions):
|
Equity (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Equity [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of changes in accumulated other comprehensive loss | Changes in accumulated other comprehensive loss by component, net of tax, were as follows (in millions):
|
Variable Interest Entities (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summarized balance sheet information of VIEs | The following tables present summarized balance sheet information for the significant assets and liabilities of our VIEs, which are included in our balance sheets (in millions):
|
Employee Benefit Plans (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Retirement Benefits [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Periodic benefit cost related to our defined benefit plans, net | The components of net periodic benefit cost related to our defined benefit plans were as follows (in millions):
|
Earnings (Loss) Per Common Share (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of earnings (loss) per common share, basic and diluted | Earnings (loss) per common share were computed as follows (dollars and shares in millions, except per share amounts):
|
Revenues and Segment Information (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of contract balances | Contract balances were as follows (in millions):
|
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Segment information for our reportable segments | The following tables reflect information about our operating income (loss) by reportable segment (in millions):
The following table provides a disaggregation of revenues from external customers for our principal products by reportable segment (in millions):
Total assets by reportable segment were as follows (in millions):
|
Supplemental Cash Flow Information (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Supplemental Cash Flow Information [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of cash flows, supplemental disclosures | Cash flows related to interest and income taxes were as follows (in millions):
Supplemental cash flow information related to our operating and finance leases was as follows (in millions):
___________________ (a) Noncash activity for the six months ended June 30, 2020 primarily includes $1.4 billion for a finance lease ROU asset and related liability recognized in connection with the terminaling agreement with MVP described in Note 5. Noncash activity for the six months ended June 30, 2019 included $1.3 billion for operating lease ROU assets and related liabilities recorded on January 1, 2019 upon adoption of Financial Accounting Standards Board Accounting Standards Codification Topic 842, “Leases.” In order to determine net cash provided by operating activities, net income (loss) is adjusted by, among other things, changes in current assets and current liabilities as follows (in millions):
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Fair Value Measurements (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair value of assets and liabilities measured on recurring basis | The following tables present information (in millions) about our assets and liabilities recognized at their fair values in our balance sheets categorized according to the fair value hierarchy of the inputs utilized by us to determine the fair values as of June 30, 2020 and December 31, 2019. We have elected to offset the fair value amounts recognized for multiple similar derivative contracts executed with the same counterparty, including any related cash collateral assets or obligations as shown below; however, fair value amounts by hierarchy level are presented in the following tables on a gross basis. We have no derivative contracts that are subject to master netting arrangements that are reflected gross on the balance sheet.
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Carrying amount and estimated fair value of financial instruments | Financial instruments that we recognize in our balance sheets at their carrying amounts are shown in the following table along with their associated fair values (in millions):
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Price Risk Management Activities (Tables) |
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Derivative Instruments and Hedging Activities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Risk management activities by type of risk | As of June 30, 2020, we had the following outstanding commodity derivative instruments that were used as cash flow hedges and economic hedges, as well as commodity derivative instruments related to the physical purchase of corn at a fixed price. The information presents the notional volume of outstanding contracts by type of instrument and year of maturity (volumes in thousands of barrels, except corn contracts that are presented in thousands of bushels).
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Fair values of derivative instruments | The following tables provide information about the fair values of our derivative instruments as of June 30, 2020 and December 31, 2019 (in millions) and the line items in the balance sheets in which the fair values are reflected. See Note 14 for additional information related to the fair values of our derivative instruments. As indicated in Note 14, we net fair value amounts recognized for multiple similar derivative contracts executed with the same counterparty under master netting arrangements, including cash collateral assets and obligations. The following table, however, is presented on a gross asset and gross liability basis, which results in the reflection of certain assets in liability accounts and certain liabilities in asset accounts:
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Effect of derivative instruments on income and other comprehensive income (loss) | The following table provides information about the gain (loss) recognized in income on our derivative instruments of our economic hedges and our foreign currency hedges and the line items in the statements of income in which such gains (losses) are reflected (in millions):
The following table provides information about the gain or loss recognized in income and other comprehensive income (loss) due to fair value adjustments of our cash flow hedges (in millions):
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Uncertainties and Certain Significant Accounting Estimates (Details) |
1 Months Ended | 3 Months Ended | 4 Months Ended | |
---|---|---|---|---|
Mar. 31, 2020
USD ($)
plant
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Jun. 30, 2020
USD ($)
plant
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Jun. 30, 2020
USD ($)
plant
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Dec. 31, 2019
USD ($)
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Uncertainties and Certain Significant Accounting Estimates (Textual) | ||||
Number of ethanol plants temporarily idled | 8 | |||
Number of ethanol plants with temporarily reduced production | 6 | |||
Number of idled ethanol plants restarted due to partial recovery in demand | 4 | |||
Number of ethanol plants evaluated for potential impairment | 6 | |||
Goodwill | $ | $ 260,000,000 | $ 260,000,000 | ||
Impairment of goodwill | $ | 0 | |||
LCM inventory valuation reserve | $ | $ 2,500,000,000 | $ 294,000,000 | $ 294,000,000 | $ 0 |
Merger With VLP (Details) - USD ($) $ / shares in Units, $ in Millions |
6 Months Ended | ||
---|---|---|---|
Jan. 10, 2019 |
Jun. 30, 2020 |
Jun. 30, 2019 |
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Merger (Textual) | |||
Merger transaction, aggregate merger consideration funded with available cash on hand | $ 0 | $ 950 | |
VLP [Member] | |||
Merger (Textual) | |||
Merger transaction, price per common unit (in usd per unit) | $ 42.25 | ||
Merger transaction, aggregate merger consideration funded with available cash on hand | $ 950 |
Inventories (Details) - USD ($) $ in Millions |
3 Months Ended | 6 Months Ended | ||||
---|---|---|---|---|---|---|
Jun. 30, 2020 |
Jun. 30, 2019 |
Jun. 30, 2020 |
Jun. 30, 2019 |
Mar. 31, 2020 |
Dec. 31, 2019 |
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Schedule of Inventories | ||||||
Refinery feedstocks | $ 2,000 | $ 2,000 | $ 2,399 | |||
Refined petroleum products and blendstocks | 3,161 | 3,161 | 4,034 | |||
Renewable diesel feedstocks and products | 53 | 53 | 46 | |||
Ethanol feedstocks and products | 224 | 224 | 260 | |||
Materials and supplies | 276 | 276 | 274 | |||
Inventories before LCM inventory valuation reserve | 5,714 | 5,714 | 7,013 | |||
LCM inventory valuation reserve | (294) | (294) | $ (2,500) | 0 | ||
Inventories | 5,420 | 5,420 | 7,013 | |||
Inventories (Textual) | ||||||
Lower of cost or market (LCM) inventory valuation adjustment | (2,248) | $ 0 | 294 | $ 0 | ||
Excess of market value over carrying amount of LIFO inventories | 2,500 | |||||
Amount of non-LIFO inventory | $ 912 | $ 912 | $ 1,400 |
Leases, Total Lease Cost by Class of Underlying Asset (Details) - USD ($) $ in Millions |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2020 |
Jun. 30, 2019 |
Jun. 30, 2020 |
Jun. 30, 2019 |
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Finance lease cost: | ||||
Amortization of right-of-use (ROU) assets | $ 32 | $ 14 | $ 58 | $ 24 |
Interest on lease liabilities | 26 | 14 | 48 | 25 |
Lease cost: | ||||
Operating lease cost | 107 | 113 | 216 | 218 |
Variable lease cost | 33 | 22 | 69 | 50 |
Short-term lease cost | 23 | 24 | 63 | 47 |
Sublease income | (2) | (16) | (8) | (18) |
Total lease cost | 219 | 171 | 446 | 346 |
Pipelines, Terminals, and Tanks [Member] | ||||
Finance lease cost: | ||||
Amortization of right-of-use (ROU) assets | 28 | 12 | 50 | 20 |
Interest on lease liabilities | 25 | 12 | 46 | 22 |
Lease cost: | ||||
Operating lease cost | 42 | 47 | 84 | 94 |
Variable lease cost | 17 | 15 | 33 | 33 |
Short-term lease cost | 2 | 4 | 6 | 7 |
Sublease income | 0 | 0 | 0 | 0 |
Total lease cost | 114 | 90 | 219 | 176 |
Transportation, Marine [Member] | ||||
Finance lease cost: | ||||
Amortization of right-of-use (ROU) assets | 0 | 0 | 0 | 0 |
Interest on lease liabilities | 0 | 0 | 0 | 0 |
Lease cost: | ||||
Operating lease cost | 37 | 34 | 76 | 68 |
Variable lease cost | 15 | 7 | 33 | 17 |
Short-term lease cost | 14 | 12 | 36 | 26 |
Sublease income | (2) | (15) | (8) | (16) |
Total lease cost | 64 | 38 | 137 | 95 |
Transportation, Rail [Member] | ||||
Finance lease cost: | ||||
Amortization of right-of-use (ROU) assets | 0 | 0 | 0 | 0 |
Interest on lease liabilities | 0 | 0 | 0 | 0 |
Lease cost: | ||||
Operating lease cost | 15 | 13 | 30 | 24 |
Variable lease cost | 0 | 0 | 1 | 0 |
Short-term lease cost | 0 | 0 | 0 | 0 |
Sublease income | 0 | 0 | 0 | 0 |
Total lease cost | 15 | 13 | 31 | 24 |
Feedstock Processing Equipment [Member] | ||||
Finance lease cost: | ||||
Amortization of right-of-use (ROU) assets | 3 | 1 | 6 | 2 |
Interest on lease liabilities | 1 | 1 | 1 | 1 |
Lease cost: | ||||
Operating lease cost | 4 | 5 | 8 | 12 |
Variable lease cost | 0 | 0 | 1 | 0 |
Short-term lease cost | 7 | 8 | 21 | 14 |
Sublease income | 0 | 0 | 0 | 0 |
Total lease cost | 15 | 15 | 37 | 29 |
Energy and Gases [Member] | ||||
Finance lease cost: | ||||
Amortization of right-of-use (ROU) assets | 1 | 1 | 2 | 2 |
Interest on lease liabilities | 0 | 1 | 1 | 2 |
Lease cost: | ||||
Operating lease cost | 2 | 2 | 4 | 4 |
Variable lease cost | 0 | 0 | 0 | 0 |
Short-term lease cost | 0 | 0 | 0 | 0 |
Sublease income | 0 | 0 | 0 | 0 |
Total lease cost | 3 | 4 | 7 | 8 |
Real Estate [Member] | ||||
Finance lease cost: | ||||
Amortization of right-of-use (ROU) assets | 0 | 0 | 0 | 0 |
Interest on lease liabilities | 0 | 0 | 0 | 0 |
Lease cost: | ||||
Operating lease cost | 6 | 10 | 12 | 14 |
Variable lease cost | 1 | 0 | 1 | 0 |
Short-term lease cost | 0 | 0 | 0 | 0 |
Sublease income | 0 | (1) | 0 | (2) |
Total lease cost | 7 | 9 | 13 | 12 |
Other [Member] | ||||
Finance lease cost: | ||||
Amortization of right-of-use (ROU) assets | 0 | 0 | 0 | 0 |
Interest on lease liabilities | 0 | 0 | 0 | 0 |
Lease cost: | ||||
Operating lease cost | 1 | 2 | 2 | 2 |
Variable lease cost | 0 | 0 | 0 | 0 |
Short-term lease cost | 0 | 0 | 0 | 0 |
Sublease income | 0 | 0 | 0 | 0 |
Total lease cost | $ 1 | $ 2 | $ 2 | $ 2 |
Leases, Additional Information (Details) - USD ($) $ in Millions |
Jun. 30, 2020 |
Dec. 31, 2019 |
---|---|---|
ROU assets, net reflected in the following balance sheet line items: | ||
Operating lease ROU assets, net, balance sheet line item | us-gaap:OtherAssetsNoncurrent | us-gaap:OtherAssetsNoncurrent |
Operating leases - deferred charges and other assets, net | $ 1,273 | $ 1,329 |
Current lease liabilities reflected in the following balance sheet line items: | ||
Current operating lease liabilities, balance sheet line item | us-gaap:AccruedLiabilitiesCurrent | us-gaap:AccruedLiabilitiesCurrent |
Operating leases - accrued expenses | $ 325 | $ 331 |
Noncurrent lease liabilities reflected in the following balance sheet line items: | ||
Noncurrent operating lease liabilities, balance sheet line item | us-gaap:OtherLiabilitiesNoncurrent | us-gaap:OtherLiabilitiesNoncurrent |
Operating leases - other long-term liabilities | $ 920 | $ 959 |
Operating leases - total lease liabilities | $ 1,245 | $ 1,290 |
ROU assets, net reflected in the following balance sheet line items: | ||
Finance lease ROU assets, net, balance sheet line item | us-gaap:PropertyPlantAndEquipmentNet | us-gaap:PropertyPlantAndEquipmentNet |
Finance leases - property, plant, and equipment, net | $ 2,225 | $ 790 |
Current lease liabilities reflected in the following balance sheet line items: | ||
Current finance lease liabilities, balance sheet line item | us-gaap:DebtCurrent | us-gaap:DebtCurrent |
Finance leases - current portion of debt and finance lease obligations | $ 71 | $ 41 |
Noncurrent lease liabilities reflected in the following balance sheet line items: | ||
Noncurrent finance lease liabilities, balance sheet line item | us-gaap:LongTermDebtAndCapitalLeaseObligations | us-gaap:LongTermDebtAndCapitalLeaseObligations |
Finance leases - debt and finance lease obligations, less current portion | $ 2,177 | $ 750 |
Finance leases - total lease liabilities | $ 2,248 | $ 791 |
Operating Leases | ||
Weighted-average remaining lease term | 7 years 6 months | 7 years 8 months 12 days |
Weighted-average discount rate | 4.70% | 4.90% |
Finance Leases | ||
Weighted-average remaining lease term | 22 years 4 months 24 days | 19 years 8 months 12 days |
Weighted-average discount rate | 4.30% | 5.20% |
Leases, Significant Lease Commencement (Details) $ in Millions |
6 Months Ended | |
---|---|---|
Jun. 30, 2020
USD ($)
renewal
|
Dec. 31, 2019
USD ($)
|
|
Significant Lease Commencement (Textual) | ||
Finance lease ROU asset | $ 2,225 | $ 790 |
Finance lease liability | $ 2,248 | $ 791 |
MVP Terminalling, LLC (MVP) [Member] | ||
Significant Lease Commencement (Textual) | ||
Initial term of terminal agreement | 12 years | |
Number of available automatic renewals | renewal | 2 | |
Automatic renewal term of terminalling agreement | 5 years | |
MVP Terminal [Member] | ||
Significant Lease Commencement (Textual) | ||
Finance lease ROU asset | $ 1,400 | |
Finance lease liability | $ 1,400 | |
MVP Terminalling, LLC (MVP) [Member] | ||
Significant Lease Commencement (Textual) | ||
Membership percentage in VIE (percent) | 50.00% |
Leases, Remaining Minimum Lease Payments (Details) - USD ($) $ in Millions |
Jun. 30, 2020 |
Dec. 31, 2019 |
||
---|---|---|---|---|
Operating Leases | ||||
Remainder of current year | [1] | $ 207 | ||
Year one | 287 | $ 376 | ||
Year two | 214 | 250 | ||
Year three | 179 | 194 | ||
Year four | 142 | 160 | ||
Year five | 125 | |||
Thereafter | 510 | |||
Thereafter | 498 | |||
Total undiscounted lease payments | 1,539 | 1,603 | ||
Less: Amount associated with discounting | 294 | 313 | ||
Total lease liabilities | 1,245 | 1,290 | ||
Finance Leases | ||||
Remainder of current year | [1] | 85 | ||
Year one | 171 | 88 | ||
Year two | 173 | 86 | ||
Year three | 178 | 87 | ||
Year four | 170 | 91 | ||
Year five | 82 | |||
Thereafter | 2,922 | |||
Thereafter | 1,011 | |||
Total undiscounted lease payments | 3,699 | 1,445 | ||
Less: Amount associated with discounting | 1,451 | 654 | ||
Total lease liabilities | $ 2,248 | $ 791 | ||
|
Debt, Narrative (Details) - USD ($) |
6 Months Ended | ||||||
---|---|---|---|---|---|---|---|
Apr. 13, 2020 |
Jun. 30, 2020 |
Jun. 30, 2019 |
Jul. 30, 2020 |
Dec. 31, 2019 |
|||
364-Day Revolving Credit Facility [Member] | Credit Facilities [Member] | |||||||
Debt Instrument [Line Items] | |||||||
Line of credit facility, maximum borrowing capacity | $ 875,000,000 | $ 875,000,000 | |||||
Line of credit facility, term | 364 days | ||||||
364-Day Revolving Credit Facility [Member] | Credit Facilities [Member] | Minimum [Member] | Base Rate [Member] | |||||||
Debt Instrument [Line Items] | |||||||
Basis spread on variable rate | 0.15% | ||||||
364-Day Revolving Credit Facility [Member] | Credit Facilities [Member] | Minimum [Member] | Eurodollar Rate [Member] | |||||||
Debt Instrument [Line Items] | |||||||
Basis spread on variable rate | 0.15% | ||||||
364-Day Revolving Credit Facility [Member] | Credit Facilities [Member] | Maximum [Member] | Base Rate [Member] | |||||||
Debt Instrument [Line Items] | |||||||
Basis spread on variable rate | 1.70% | ||||||
364-Day Revolving Credit Facility [Member] | Credit Facilities [Member] | Maximum [Member] | Eurodollar Rate [Member] | |||||||
Debt Instrument [Line Items] | |||||||
Basis spread on variable rate | 1.70% | ||||||
Accounts Receivable Sales Facility [Member] | Credit Facilities [Member] | |||||||
Debt Instrument [Line Items] | |||||||
Line of credit facility, maximum borrowing capacity | [1] | 1,300,000,000 | |||||
Amount of eligible receivables sold under accounts receivable sales facility | 300,000,000 | ||||||
Repayments on lines of credit | $ 400,000,000 | ||||||
Weighted-average interest rate on borrowings outstanding (percent) | 1.5221% | 2.5275% | |||||
Accounts Receivable Sales Facility [Member] | Credit Facilities [Member] | Subsequent Event [Member] | |||||||
Debt Instrument [Line Items] | |||||||
Line of credit facility, maximum borrowing capacity | [1] | $ 1,000,000,000.0 | |||||
Central Mexico Terminals [Member] | IEnova Revolver [Member] | Credit Facilities [Member] | |||||||
Debt Instrument [Line Items] | |||||||
Line of credit facility, maximum borrowing capacity | $ 612,000,000 | $ 491,000,000 | |||||
Repayments on lines of credit | 0 | $ 0 | |||||
Amount borrowed | $ 163,000,000 | 70,000,000 | |||||
Variable interest rate (percent) | 5.083% | 5.749% | |||||
Senior Notes [Member] | |||||||
Debt Instrument [Line Items] | |||||||
Proceeds from issuance of senior long-term debt | $ 1,499,000,000 | ||||||
Senior Notes [Member] | Senior Notes Due April 15, 2023 [Member] | |||||||
Debt Instrument [Line Items] | |||||||
Face amount of long-term debt issuance | $ 850,000,000 | ||||||
Stated rate on debt instrument (percent) | 2.70% | ||||||
Senior Notes [Member] | Senior Notes Due April 15, 2025 [Member] | |||||||
Debt Instrument [Line Items] | |||||||
Face amount of long-term debt issuance | $ 650,000,000 | ||||||
Stated rate on debt instrument (percent) | 2.85% | ||||||
Senior Notes [Member] | Senior Notes Due April 1, 2029 [Member] | |||||||
Debt Instrument [Line Items] | |||||||
Face amount of long-term debt issuance | $ 1,000,000,000.0 | ||||||
Stated rate on debt instrument (percent) | 4.00% | ||||||
Proceeds from issuance of senior long-term debt | $ 992,000,000 | ||||||
Senior Notes [Member] | Senior Notes Due February 1, 2020 [Member] | |||||||
Debt Instrument [Line Items] | |||||||
Stated rate on debt instrument (percent) | 6.125% | ||||||
Early repayment of senior debt | $ 871,000,000 | ||||||
Debt instrument, redemption price, percentage of principal amount redeemed (percent) | 102.48% | ||||||
Early redemption fee | $ 21,000,000 | ||||||
Senior Notes [Member] | VLP Senior Notes Due December 15, 2026 [Member] | Valero Energy Partners LP [Member] | |||||||
Debt Instrument [Line Items] | |||||||
Stated rate on debt instrument (percent) | 4.375% | ||||||
Senior Notes [Member] | VLP Senior Notes Due March 15, 2028 [Member] | Valero Energy Partners LP [Member] | |||||||
Debt Instrument [Line Items] | |||||||
Stated rate on debt instrument (percent) | 4.50% | ||||||
|
Debt, Credit Facilities (Details) |
Jul. 30, 2020
USD ($)
|
Jun. 30, 2020
USD ($)
|
Jun. 30, 2020
CAD ($)
|
Apr. 13, 2020
USD ($)
|
Dec. 31, 2019
USD ($)
|
||||||
---|---|---|---|---|---|---|---|---|---|---|---|
Valero Revolver [Member] | Credit Facilities [Member] | |||||||||||
Line of Credit Facility | |||||||||||
Facility amount | $ 4,000,000,000 | ||||||||||
Outstanding borrowings or letters of credit issued | 0 | ||||||||||
Availability | 3,967,000,000 | ||||||||||
Valero Revolver Letter of Credit [Member] | Credit Facilities [Member] | |||||||||||
Line of Credit Facility | |||||||||||
Outstanding borrowings or letters of credit issued | [1] | 33,000,000 | |||||||||
364-Day Revolving Credit Facility [Member] | Credit Facilities [Member] | |||||||||||
Line of Credit Facility | |||||||||||
Facility amount | 875,000,000 | $ 875,000,000 | |||||||||
Outstanding borrowings or letters of credit issued, short-term | 0 | ||||||||||
Availability | 875,000,000 | ||||||||||
Canadian Revolver [Member] | Credit Facilities [Member] | |||||||||||
Line of Credit Facility | |||||||||||
Facility amount | $ 150,000,000 | ||||||||||
Outstanding borrowings or letters of credit issued, short-term | 0 | ||||||||||
Availability | 143,000,000 | ||||||||||
Canadian Revolver Letter of Credit [Member] | Credit Facilities [Member] | |||||||||||
Line of Credit Facility | |||||||||||
Outstanding borrowings or letters of credit issued, short-term | [1] | $ 7,000,000 | |||||||||
Accounts Receivable Sales Facility [Member] | Credit Facilities [Member] | |||||||||||
Line of Credit Facility | |||||||||||
Facility amount | [2] | 1,300,000,000 | |||||||||
Outstanding borrowings or letters of credit issued, short-term | [2] | 0 | |||||||||
Availability | [2] | 726,000,000 | |||||||||
Accounts Receivable Sales Facility [Member] | Credit Facilities [Member] | Subsequent Event [Member] | |||||||||||
Line of Credit Facility | |||||||||||
Facility amount | [2] | $ 1,000,000,000.0 | |||||||||
Committed Letter of Credit Facility Expires November 2020 [Member] | Credit Facilities [Member] | |||||||||||
Line of Credit Facility | |||||||||||
Facility amount | 50,000,000 | ||||||||||
Outstanding borrowings or letters of credit issued, short-term | [1] | 0 | |||||||||
Availability | 50,000,000 | ||||||||||
IEnova Revolver [Member] | Central Mexico Terminals [Member] | Credit Facilities [Member] | |||||||||||
Line of Credit Facility | |||||||||||
Facility amount | 612,000,000 | $ 491,000,000 | |||||||||
IEnova Revolver [Member] | Central Mexico Terminals [Member] | Credit Facilities [Member] | Variable Interest Entities (VIEs) [Member] | |||||||||||
Line of Credit Facility | |||||||||||
Facility amount | [3] | 612,000,000 | |||||||||
Outstanding borrowings or letters of credit issued, short-term | [3] | 511,000,000 | |||||||||
Availability | [3] | 101,000,000 | |||||||||
Uncommitted Letter of Credit Facility [Member] | Credit Facilities [Member] | |||||||||||
Line of Credit Facility | |||||||||||
Outstanding borrowings or letters of credit issued, short-term | [1] | $ 92,000,000 | |||||||||
|
Debt, Interest Incurred (Details) - USD ($) $ in Millions |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2020 |
Jun. 30, 2019 |
Jun. 30, 2020 |
Jun. 30, 2019 |
|
Interest and Debt Expense, Net of Capitalized Interest | ||||
Interest and debt expense | $ 161 | $ 136 | $ 306 | $ 272 |
Less: Capitalized interest | 19 | 24 | 39 | 48 |
Interest and debt expense, net of capitalized interest | $ 142 | $ 112 | $ 267 | $ 224 |
Equity, Narrative (Details) |
Jul. 16, 2020
$ / shares
|
---|---|
Dividend Declared [Member] | Subsequent Event [Member] | |
Equity (Textual) | |
Dividends payable, amount per share (in dollars per share) | $ 0.98 |
Equity, Changes in Accumulated Other Comprehensive Loss (Details) - USD ($) $ in Millions |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2020 |
Jun. 30, 2019 |
Jun. 30, 2020 |
Jun. 30, 2019 |
|
Changes in Accumulated Other Comprehensive Loss, By Component, Net of Tax | ||||
Beginning balance, accumulated other comprehensive loss, net of tax | $ 21,803 | |||
Other comprehensive income (loss) before reclassifications | $ 136 | $ 0 | (449) | $ 153 |
Amounts reclassified from accumulated other comprehensive loss | 2 | 2 | 1 | 4 |
Other comprehensive income (loss) | 138 | 2 | (448) | 157 |
Ending balance, accumulated other comprehensive loss, net of tax | 19,847 | 19,847 | ||
Accumulated Other Comprehensive Loss [Member] | ||||
Changes in Accumulated Other Comprehensive Loss, By Component, Net of Tax | ||||
Beginning balance, accumulated other comprehensive loss, net of tax | (1,937) | (1,352) | (1,351) | (1,507) |
Ending balance, accumulated other comprehensive loss, net of tax | (1,799) | (1,350) | (1,799) | (1,350) |
Foreign Currency Translation Adjustment [Member] | ||||
Changes in Accumulated Other Comprehensive Loss, By Component, Net of Tax | ||||
Beginning balance, accumulated other comprehensive loss, net of tax | (1,282) | (869) | (676) | (1,022) |
Other comprehensive income (loss) before reclassifications | 138 | (1) | (468) | 152 |
Amounts reclassified from accumulated other comprehensive loss | 0 | 0 | 0 | 0 |
Other comprehensive income (loss) | 138 | (1) | (468) | 152 |
Ending balance, accumulated other comprehensive loss, net of tax | (1,144) | (870) | (1,144) | (870) |
Defined Benefit Plans Items [Member] | ||||
Changes in Accumulated Other Comprehensive Loss, By Component, Net of Tax | ||||
Beginning balance, accumulated other comprehensive loss, net of tax | (663) | (483) | (672) | (485) |
Other comprehensive income (loss) before reclassifications | 0 | 0 | 0 | 0 |
Amounts reclassified from accumulated other comprehensive loss | 10 | 2 | 19 | 4 |
Other comprehensive income (loss) | 10 | 2 | 19 | 4 |
Ending balance, accumulated other comprehensive loss, net of tax | (653) | (481) | (653) | (481) |
Gains (Losses) on Cash Flow Hedges [Member] | ||||
Changes in Accumulated Other Comprehensive Loss, By Component, Net of Tax | ||||
Beginning balance, accumulated other comprehensive loss, net of tax | 8 | 0 | (3) | 0 |
Other comprehensive income (loss) before reclassifications | (2) | 1 | 19 | 1 |
Amounts reclassified from accumulated other comprehensive loss | (8) | 0 | (18) | 0 |
Other comprehensive income (loss) | (10) | 1 | 1 | 1 |
Ending balance, accumulated other comprehensive loss, net of tax | $ (2) | $ 1 | $ (2) | $ 1 |
Variable Interest Entities (Details) - USD ($) $ in Millions |
Jun. 30, 2020 |
Dec. 31, 2019 |
---|---|---|
Assets | ||
Cash and cash equivalents | $ 2,319 | $ 2,583 |
Property, plant, and equipment, net | 30,653 | 29,264 |
Liabilities | ||
Current liabilities, including current portion of debt and finance lease obligations | 7,300 | 13,160 |
Debt and finance lease obligations, less current portion | 12,090 | 9,178 |
Variable Interest Entity, Primary Beneficiary [Member] | ||
Assets | ||
Cash and cash equivalents | 347 | 110 |
Other current assets | 305 | 689 |
Property, plant, and equipment, net | 1,492 | 1,192 |
Liabilities | ||
Current liabilities, including current portion of debt and finance lease obligations | 643 | 483 |
Debt and finance lease obligations, less current portion | 27 | 31 |
Diamond Green Diesel Holdings LLC (DGD) [Member] | ||
Assets | ||
Cash and cash equivalents | 331 | 85 |
Other current assets | 234 | 567 |
Property, plant, and equipment, net | 887 | 706 |
Liabilities | ||
Current liabilities, including current portion of debt and finance lease obligations | 80 | 66 |
Debt and finance lease obligations, less current portion | 0 | 0 |
Central Mexico Terminals [Member] | ||
Assets | ||
Cash and cash equivalents | 0 | 0 |
Other current assets | 44 | 33 |
Property, plant, and equipment, net | 506 | 381 |
Liabilities | ||
Current liabilities, including current portion of debt and finance lease obligations | 556 | 409 |
Debt and finance lease obligations, less current portion | 0 | 0 |
Other VIEs [Member] | ||
Assets | ||
Cash and cash equivalents | 16 | 25 |
Other current assets | 27 | 89 |
Property, plant, and equipment, net | 99 | 105 |
Liabilities | ||
Current liabilities, including current portion of debt and finance lease obligations | 7 | 8 |
Debt and finance lease obligations, less current portion | $ 27 | $ 31 |
Employee Benefit Plans (Details) - USD ($) $ in Millions |
3 Months Ended | 6 Months Ended | |||
---|---|---|---|---|---|
Jun. 30, 2020 |
Jun. 30, 2019 |
Jun. 30, 2020 |
Jun. 30, 2019 |
Dec. 31, 2019 |
|
Pension Plans [Member] | |||||
Components of net periodic benefit cost: | |||||
Service cost | $ 35 | $ 30 | $ 70 | $ 60 | |
Interest cost | 22 | 25 | 43 | 49 | |
Expected return on plan assets | (46) | (41) | (90) | (83) | |
Amortization of: | |||||
Net actuarial (gain) loss | 19 | 10 | 37 | 20 | |
Prior service credit | (5) | (5) | (10) | (9) | |
Special charges | 1 | 2 | 1 | 2 | |
Net periodic benefit cost | 26 | 21 | 51 | 39 | |
Employee Benefit Plans (Textual) | |||||
Contributions to benefit plans | 19 | 23 | |||
Future employer contributions to pension and other postretirement plans, as disclosed in annual report on Form 10-K | $ 140 | ||||
Previously planned discretionary contributions subject to reconsideration | 100 | 100 | |||
Other Postretirement Benefit Plans [Member] | |||||
Components of net periodic benefit cost: | |||||
Service cost | 2 | 1 | 3 | 2 | |
Interest cost | 2 | 3 | 4 | 6 | |
Expected return on plan assets | 0 | 0 | 0 | 0 | |
Amortization of: | |||||
Net actuarial (gain) loss | 0 | (1) | 0 | (2) | |
Prior service credit | (2) | (2) | (3) | (4) | |
Special charges | 0 | 0 | 0 | 1 | |
Net periodic benefit cost | $ 2 | $ 1 | 4 | 3 | |
Employee Benefit Plans (Textual) | |||||
Contributions to benefit plans | $ 7 | $ 8 | |||
Future employer contributions to pension and other postretirement plans, as disclosed in annual report on Form 10-K | $ 21 |
Income Taxes (Details) - USD ($) $ in Millions |
3 Months Ended | 6 Months Ended |
---|---|---|
Jun. 30, 2020 |
Jun. 30, 2020 |
|
Income Taxes (Textual) | ||
Income tax benefit, expected tax NOL carryback provided for under CARES Act | $ 7 | $ 117 |
Earnings (Loss) Per Common Share (Details) - USD ($) $ / shares in Units, shares in Millions, $ in Millions |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2020 |
Jun. 30, 2019 |
Jun. 30, 2020 |
Jun. 30, 2019 |
|
Earnings (loss) per common share | ||||
Net income (loss) attributable to Valero stockholders | $ 1,253 | $ 612 | $ (598) | $ 753 |
Less: Income allocated to participating securities | 4 | 2 | 3 | 2 |
Net income (loss) available to common stockholders | $ 1,249 | $ 610 | $ (601) | $ 751 |
Weighted-average common shares outstanding (in shares) | 406 | 415 | 407 | 416 |
Earnings (loss) per common share (in dollars per share) | $ 3.07 | $ 1.47 | $ (1.48) | $ 1.80 |
Earnings (loss) per common share – assuming dilution | ||||
Net income (loss) attributable to Valero stockholders | $ 1,253 | $ 612 | $ (598) | $ 753 |
Less: Income allocated to participating securities | 4 | 2 | 3 | 2 |
Net income (loss) available to common stockholders | $ 1,249 | $ 610 | $ (601) | $ 751 |
Weighted-average common shares outstanding (in shares) | 406 | 415 | 407 | 416 |
Effect of dilutive securities (in shares) | 1 | 2 | 0 | 1 |
Weighted-average common shares outstanding – assuming dilution (in shares) | 407 | 417 | 407 | 417 |
Earnings (loss) per common share – assuming dilution (in dollars per share) | $ 3.07 | $ 1.47 | $ (1.48) | $ 1.80 |
Revenues and Segment Information, Contract Balances (Details) $ in Millions |
6 Months Ended |
---|---|
Jun. 30, 2020
USD ($)
| |
Receivables from contracts with customers, included in receivables, net | |
Decrease | $ (4,100) |
Contract liabilities, included in accrued expenses | |
Beginning balance | 55 |
Decrease | (21) |
Ending balance | 34 |
Contract Balances (Textual) | |
Revenue recognized that was included in contract liabilities as of prior year end | 52 |
Receivables from Contracts with Customers [Member] | |
Receivables from contracts with customers, included in receivables, net | |
Beginning balance | 5,610 |
Decrease | (3,007) |
Ending balance | $ 2,603 |
Revenues and Segment Information, Components of Operating Income (Loss) (Details) $ in Millions |
3 Months Ended | 6 Months Ended | ||||
---|---|---|---|---|---|---|
Jun. 30, 2020
USD ($)
ethanol_plant
refinery
|
Jun. 30, 2019
USD ($)
|
Jun. 30, 2020
USD ($)
ethanol_plant
refinery
segment
|
Jun. 30, 2019
USD ($)
|
|||
Segment Information for our Reportable Segments | ||||||
Revenues | [1] | $ 10,397 | $ 28,933 | $ 32,499 | $ 53,196 | |
Cost of materials and other | 9,079 | 26,083 | 29,031 | 48,061 | ||
LCM inventory valuation adjustment | (2,248) | 0 | 294 | 0 | ||
Operating expenses (excluding depreciation and amortization expense reflected below) | 1,027 | 1,175 | 2,151 | 2,390 | ||
Depreciation and amortization expense | 566 | 552 | 1,135 | 1,089 | ||
Total cost of sales | 8,424 | 27,810 | 32,611 | 51,540 | ||
Other operating expenses | 3 | 2 | 5 | 4 | ||
General and administrative expenses (excluding depreciation and amortization expense reflected below) | 169 | 199 | 346 | 408 | ||
Depreciation and amortization expense | 12 | 14 | 25 | 28 | ||
Operating income (loss) | $ 1,789 | 908 | $ (488) | 1,216 | ||
Disclosure of Entity's Reportable Segments (Textual) | ||||||
Number of reportable segments | segment | 3 | |||||
Number of petroleum refineries | refinery | 15 | 15 | ||||
Number of ethanol plants | ethanol_plant | 14 | 14 | ||||
Corporate, Reconciling Items And Eliminations [Member] | ||||||
Segment Information for our Reportable Segments | ||||||
Revenues | $ (97) | (133) | $ (216) | (238) | ||
Operating income (loss) | (182) | (213) | (373) | (436) | ||
Corporate [Member] | ||||||
Segment Information for our Reportable Segments | ||||||
Revenues | 0 | 1 | 0 | 1 | ||
General and administrative expenses (excluding depreciation and amortization expense reflected below) | 169 | 199 | 346 | 408 | ||
Depreciation and amortization expense | 12 | 14 | 25 | 28 | ||
Intersegment Eliminations [Member] | ||||||
Segment Information for our Reportable Segments | ||||||
Revenues | (97) | (134) | (216) | (239) | ||
Cost of materials and other | (96) | (133) | (214) | (238) | ||
LCM inventory valuation adjustment | 0 | 0 | ||||
Operating expenses (excluding depreciation and amortization expense reflected below) | 0 | 0 | 0 | 0 | ||
Depreciation and amortization expense | 0 | 0 | 0 | 0 | ||
Total cost of sales | (96) | (133) | (214) | (238) | ||
Other operating expenses | 0 | 0 | 0 | 0 | ||
Refining [Member] | ||||||
Segment Information for our Reportable Segments | ||||||
Revenues | 9,615 | 27,746 | 30,600 | 50,964 | ||
Refining [Member] | Operating Segments [Member] | ||||||
Segment Information for our Reportable Segments | ||||||
Revenues | 9,617 | 27,754 | 30,604 | 50,974 | ||
Cost of materials and other | 8,539 | 25,172 | 27,666 | 46,337 | ||
LCM inventory valuation adjustment | (2,137) | 277 | ||||
Operating expenses (excluding depreciation and amortization expense reflected below) | 928 | 1,026 | 1,923 | 2,097 | ||
Depreciation and amortization expense | 533 | 518 | 1,069 | 1,021 | ||
Total cost of sales | 7,863 | 26,716 | 30,935 | 49,455 | ||
Other operating expenses | 3 | 1 | 5 | 3 | ||
General and administrative expenses (excluding depreciation and amortization expense reflected below) | 0 | 0 | 0 | 0 | ||
Depreciation and amortization expense | 0 | 0 | 0 | 0 | ||
Operating income (loss) | 1,751 | 1,037 | (336) | 1,516 | ||
Refining [Member] | Intersegment Eliminations [Member] | ||||||
Segment Information for our Reportable Segments | ||||||
Revenues | 2 | 8 | 4 | 10 | ||
Renewable Diesel [Member] | ||||||
Segment Information for our Reportable Segments | ||||||
Revenues | 239 | 222 | 545 | 474 | ||
Renewable Diesel [Member] | Operating Segments [Member] | ||||||
Segment Information for our Reportable Segments | ||||||
Revenues | 296 | 295 | 655 | 598 | ||
Cost of materials and other | 135 | 189 | 265 | 413 | ||
LCM inventory valuation adjustment | 0 | 0 | ||||
Operating expenses (excluding depreciation and amortization expense reflected below) | 20 | 17 | 40 | 36 | ||
Depreciation and amortization expense | 12 | 12 | 23 | 23 | ||
Total cost of sales | 167 | 218 | 328 | 472 | ||
Other operating expenses | 0 | 0 | 0 | 0 | ||
General and administrative expenses (excluding depreciation and amortization expense reflected below) | 0 | 0 | 0 | 0 | ||
Depreciation and amortization expense | 0 | 0 | 0 | 0 | ||
Operating income (loss) | 129 | 77 | 327 | 126 | ||
Renewable Diesel [Member] | Intersegment Eliminations [Member] | ||||||
Segment Information for our Reportable Segments | ||||||
Revenues | 57 | 73 | 110 | 124 | ||
Ethanol [Member] | ||||||
Segment Information for our Reportable Segments | ||||||
Revenues | 543 | 964 | 1,354 | 1,757 | ||
Ethanol [Member] | Operating Segments [Member] | ||||||
Segment Information for our Reportable Segments | ||||||
Revenues | 581 | 1,017 | 1,456 | 1,862 | ||
Cost of materials and other | 501 | 855 | 1,314 | 1,549 | ||
LCM inventory valuation adjustment | (111) | 17 | ||||
Operating expenses (excluding depreciation and amortization expense reflected below) | 79 | 132 | 188 | 257 | ||
Depreciation and amortization expense | 21 | 22 | 43 | 45 | ||
Total cost of sales | 490 | 1,009 | 1,562 | 1,851 | ||
Other operating expenses | 0 | 1 | 0 | 1 | ||
General and administrative expenses (excluding depreciation and amortization expense reflected below) | 0 | 0 | 0 | 0 | ||
Depreciation and amortization expense | 0 | 0 | 0 | 0 | ||
Operating income (loss) | 91 | 7 | (106) | 10 | ||
Ethanol [Member] | Intersegment Eliminations [Member] | ||||||
Segment Information for our Reportable Segments | ||||||
Revenues | $ 38 | $ 53 | $ 102 | $ 105 | ||
|
Revenues and Segment Information, Disaggregation of Revenue by Product (Details) - USD ($) $ in Millions |
3 Months Ended | 6 Months Ended | ||||
---|---|---|---|---|---|---|
Jun. 30, 2020 |
Jun. 30, 2019 |
Jun. 30, 2020 |
Jun. 30, 2019 |
|||
Revenue by Segment | ||||||
Revenues | [1] | $ 10,397 | $ 28,933 | $ 32,499 | $ 53,196 | |
Corporate [Member] | ||||||
Revenue by Segment | ||||||
Revenues | 0 | 1 | 0 | 1 | ||
Other Revenues [Member] | Corporate [Member] | ||||||
Revenue by Segment | ||||||
Revenues | 0 | 1 | 0 | 1 | ||
Refining [Member] | ||||||
Revenue by Segment | ||||||
Revenues | 9,615 | 27,746 | 30,600 | 50,964 | ||
Refining [Member] | Gasoline and Blendstocks [Member] | ||||||
Revenue by Segment | ||||||
Revenues | 3,993 | 11,530 | 12,237 | 20,904 | ||
Refining [Member] | Distillates [Member] | ||||||
Revenue by Segment | ||||||
Revenues | 4,379 | 13,476 | 15,042 | 25,393 | ||
Refining [Member] | Other Product Revenues [Member] | ||||||
Revenue by Segment | ||||||
Revenues | 1,243 | 2,740 | 3,321 | 4,667 | ||
Renewable Diesel [Member] | ||||||
Revenue by Segment | ||||||
Revenues | 239 | 222 | 545 | 474 | ||
Renewable Diesel [Member] | Renewable Diesel [Member] | ||||||
Revenue by Segment | ||||||
Revenues | 239 | 222 | 545 | 474 | ||
Ethanol [Member] | ||||||
Revenue by Segment | ||||||
Revenues | 543 | 964 | 1,354 | 1,757 | ||
Ethanol [Member] | Ethanol [Member] | ||||||
Revenue by Segment | ||||||
Revenues | 432 | 774 | 1,061 | 1,394 | ||
Ethanol [Member] | Distillers Grains [Member] | ||||||
Revenue by Segment | ||||||
Revenues | $ 111 | $ 190 | $ 293 | $ 363 | ||
|
Revenues and Segment Information, Assets (Details) - USD ($) $ in Millions |
Jun. 30, 2020 |
Dec. 31, 2019 |
---|---|---|
Total Assets by Reportable Segment | ||
Reportable segment assets | $ 49,099 | $ 53,864 |
Corporate and Eliminations [Member] | ||
Total Assets by Reportable Segment | ||
Reportable segment assets | 3,683 | 3,770 |
Refining [Member] | Operating Segments [Member] | ||
Total Assets by Reportable Segment | ||
Reportable segment assets | 42,225 | 47,067 |
Renewable Diesel [Member] | Operating Segments [Member] | ||
Total Assets by Reportable Segment | ||
Reportable segment assets | 1,504 | 1,412 |
Ethanol [Member] | Operating Segments [Member] | ||
Total Assets by Reportable Segment | ||
Reportable segment assets | $ 1,687 | $ 1,615 |
Supplemental Cash Flow Information (Details) - USD ($) $ in Millions |
6 Months Ended | ||||
---|---|---|---|---|---|
Jan. 01, 2019 |
Jun. 30, 2020 |
Jun. 30, 2019 |
|||
Decrease (increase) in current assets: | |||||
Receivables, net | $ 4,616 | $ (1,664) | |||
Inventories | 1,136 | 278 | |||
Prepaid expenses and other | (383) | 406 | |||
Increase (decrease) in current liabilities: | |||||
Accounts payable | (5,446) | 1,555 | |||
Accrued expenses | (73) | (195) | |||
Taxes other than income taxes payable | (180) | (75) | |||
Income taxes payable | (148) | 108 | |||
Changes in current assets and current liabilities | (478) | 413 | |||
Cash Flows Related to Interest and Income Taxes | |||||
Interest paid in excess of amount capitalized, including interest on finance leases | 250 | 227 | |||
Income taxes paid (refunded), net | 76 | (331) | |||
Operating cash flows | |||||
Operating Leases | 216 | 216 | |||
Finance Leases | 48 | 25 | |||
Financing cash flows | |||||
Finance Leases | 32 | 21 | |||
Changes in lease balances resulting from new and modified leases, Operating Leases | [1] | 163 | 1,592 | ||
Changes in lease balances resulting from new and modified leases, Finance Leases | [1] | 1,495 | 192 | ||
Supplemental Cash Flow Information (Textual) | |||||
Decrease in receivables as a result of decreases in commodity prices and sales volumes | 4,100 | ||||
Recognition of income tax receivable | 440 | ||||
Topic 842 [Member] | |||||
Financing cash flows | |||||
Changes in lease balances resulting from new and modified leases, Operating Leases | $ 1,300 | ||||
MVP Terminal [Member] | |||||
Financing cash flows | |||||
Changes in lease balances resulting from new and modified leases, Finance Leases | [1] | 1,400 | |||
Internal Revenue Service (IRS) [Member] | Domestic Tax Authority [Member] | |||||
Supplemental Cash Flow Information (Textual) | |||||
Refund received, including interest, associated with income tax settlement | $ 348 | ||||
Blender's Tax Credit Receivable [Member] | |||||
Supplemental Cash Flow Information (Textual) | |||||
Collection of blender's tax credit receivable | $ 449 | ||||
|
Fair Value Measurements, Recurring (Details) - Fair Value, Recurring [Member] - USD ($) $ in Millions |
Jun. 30, 2020 |
Dec. 31, 2019 |
---|---|---|
Assets | ||
Total gross fair value, assets | $ 758 | $ 718 |
Effect of counterparty netting | (506) | (612) |
Effect of cash collateral netting | (38) | 0 |
Net carrying value on Balance Sheet, assets | 214 | 106 |
Liabilities | ||
Environmental credit obligations | 38 | 2 |
Total gross fair value, liabilities | 568 | 683 |
Effect of counterparty netting | (506) | (612) |
Effect of cash collateral netting | (13) | (56) |
Net carrying value on Balance Sheet, liabilities | 49 | 15 |
Assets Held in Trust [Member] | ||
Assets | ||
Investments of certain benefit plans | 73 | 74 |
Commodity Contracts [Member] | ||
Assets | ||
Derivative contracts | 656 | 617 |
Effect of counterparty netting | (506) | (612) |
Effect of cash collateral netting | (38) | 0 |
Derivative contracts, net assets | 112 | 5 |
Cash collateral received not offset | 0 | 0 |
Liabilities | ||
Derivative contracts | 519 | 668 |
Effect of counterparty netting | (506) | (612) |
Effect of cash collateral netting | (13) | (56) |
Derivative contracts, net liabilities | 0 | 0 |
Cash collateral paid not offset | (38) | (84) |
Physical Purchase Contracts [Member] | ||
Assets | ||
Derivative contracts | 1 | |
Derivative contracts, net assets | 1 | |
Liabilities | ||
Derivative contracts | 2 | 3 |
Derivative contracts, net liabilities | 2 | 3 |
Foreign Currency Contracts [Member] | ||
Assets | ||
Derivative contracts | 28 | 27 |
Derivative contracts, net assets | 28 | 27 |
Liabilities | ||
Derivative contracts | 9 | 10 |
Derivative contracts, net liabilities | 9 | 10 |
Fair Value, Inputs, Level 1 [Member] | ||
Assets | ||
Total gross fair value, assets | 749 | 709 |
Liabilities | ||
Environmental credit obligations | 0 | 0 |
Total gross fair value, liabilities | 528 | 678 |
Fair Value, Inputs, Level 1 [Member] | Assets Held in Trust [Member] | ||
Assets | ||
Investments of certain benefit plans | 65 | 65 |
Fair Value, Inputs, Level 1 [Member] | Commodity Contracts [Member] | ||
Assets | ||
Derivative contracts | 656 | 617 |
Liabilities | ||
Derivative contracts | 519 | 668 |
Fair Value, Inputs, Level 1 [Member] | Physical Purchase Contracts [Member] | ||
Assets | ||
Derivative contracts | 0 | |
Liabilities | ||
Derivative contracts | 0 | 0 |
Fair Value, Inputs, Level 1 [Member] | Foreign Currency Contracts [Member] | ||
Assets | ||
Derivative contracts | 28 | 27 |
Liabilities | ||
Derivative contracts | 9 | 10 |
Fair Value, Inputs, Level 2 [Member] | ||
Assets | ||
Total gross fair value, assets | 1 | 0 |
Liabilities | ||
Environmental credit obligations | 38 | 2 |
Total gross fair value, liabilities | 40 | 5 |
Fair Value, Inputs, Level 2 [Member] | Assets Held in Trust [Member] | ||
Assets | ||
Investments of certain benefit plans | 0 | 0 |
Fair Value, Inputs, Level 2 [Member] | Commodity Contracts [Member] | ||
Assets | ||
Derivative contracts | 0 | 0 |
Liabilities | ||
Derivative contracts | 0 | 0 |
Fair Value, Inputs, Level 2 [Member] | Physical Purchase Contracts [Member] | ||
Assets | ||
Derivative contracts | 1 | |
Liabilities | ||
Derivative contracts | 2 | 3 |
Fair Value, Inputs, Level 2 [Member] | Foreign Currency Contracts [Member] | ||
Assets | ||
Derivative contracts | 0 | 0 |
Liabilities | ||
Derivative contracts | 0 | 0 |
Fair Value, Inputs, Level 3 [Member] | ||
Assets | ||
Total gross fair value, assets | 8 | 9 |
Liabilities | ||
Environmental credit obligations | 0 | 0 |
Total gross fair value, liabilities | 0 | 0 |
Fair Value, Inputs, Level 3 [Member] | Assets Held in Trust [Member] | ||
Assets | ||
Investments of certain benefit plans | 8 | 9 |
Fair Value, Inputs, Level 3 [Member] | Commodity Contracts [Member] | ||
Assets | ||
Derivative contracts | 0 | 0 |
Liabilities | ||
Derivative contracts | 0 | 0 |
Fair Value, Inputs, Level 3 [Member] | Physical Purchase Contracts [Member] | ||
Assets | ||
Derivative contracts | 0 | |
Liabilities | ||
Derivative contracts | 0 | 0 |
Fair Value, Inputs, Level 3 [Member] | Foreign Currency Contracts [Member] | ||
Assets | ||
Derivative contracts | 0 | 0 |
Liabilities | ||
Derivative contracts | $ 0 | $ 0 |
Fair Value Measurements, Nonrecurring (Details) - Fair Value, Nonrecurring [Member] - USD ($) |
Jun. 30, 2020 |
Dec. 31, 2019 |
---|---|---|
Fair Value Measurements (Textual) | ||
Assets measured at fair value, nonrecurring | $ 0 | $ 0 |
Liabilities measured at fair value, nonrecurring | $ 0 | $ 0 |
Fair Value Measurements, Other Financial Instruments (Details) - USD ($) $ in Millions |
Jun. 30, 2020 |
Dec. 31, 2019 |
---|---|---|
Financial assets | ||
Cash and cash equivalents, at carrying amount | $ 2,319 | $ 2,583 |
Financial liabilities | ||
Debt (excluding finance leases), at carrying amount | 10,429 | 8,881 |
Fair Value, Inputs, Level 1 [Member] | ||
Financial assets | ||
Cash and cash equivalents, at fair value | 2,319 | 2,583 |
Fair Value, Inputs, Level 2 [Member] | ||
Financial liabilities | ||
Debt (excluding finance leases), at fair value | $ 12,387 | $ 10,583 |
Price Risk Management Activities (Details) bu in Thousands, $ in Millions |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2020
USD ($)
|
Jun. 30, 2019
USD ($)
|
Jun. 30, 2020
USD ($)
MBbls
bu
|
Jun. 30, 2019
USD ($)
|
|
Price Risk Management Activities (Textual) | ||||
Compliance program costs | $ | $ 9,079 | $ 26,083 | $ 29,031 | $ 48,061 |
Environmental Compliance Program Price Risk [Member] | ||||
Price Risk Management Activities (Textual) | ||||
Compliance program costs | $ | 136 | $ 67 | $ 248 | $ 158 |
Derivatives Designated as Hedges [Member] | Cash Flow Hedges [Member] | Future, 2020 Maturity [Member] | Long (Purchases) [Member] | Renewable Diesel (in thousands of barrels) [Member] | ||||
Volume of Outstanding Contracts | ||||
Nonmonetary notional amount of price risk derivatives, volume | 394 | |||
Derivatives Designated as Hedges [Member] | Cash Flow Hedges [Member] | Future, 2020 Maturity [Member] | Short (Sales) [Member] | Renewable Diesel (in thousands of barrels) [Member] | ||||
Volume of Outstanding Contracts | ||||
Nonmonetary notional amount of price risk derivatives, volume | 1,414 | |||
Derivatives Designated as Hedges [Member] | Cash Flow Hedges [Member] | Future, 2021 Maturity [Member] | Long (Purchases) [Member] | Renewable Diesel (in thousands of barrels) [Member] | ||||
Volume of Outstanding Contracts | ||||
Nonmonetary notional amount of price risk derivatives, volume | 0 | |||
Derivatives Designated as Hedges [Member] | Cash Flow Hedges [Member] | Future, 2021 Maturity [Member] | Short (Sales) [Member] | Renewable Diesel (in thousands of barrels) [Member] | ||||
Volume of Outstanding Contracts | ||||
Nonmonetary notional amount of price risk derivatives, volume | 0 | |||
Derivatives Designated as Economic Hedges [Member] | Future, 2020 Maturity [Member] | Long (Purchases) [Member] | Crude Oil and Refined Petroleum Products (in thousands of barrels) [Member] | ||||
Volume of Outstanding Contracts | ||||
Nonmonetary notional amount of price risk derivatives, volume | 75,877 | |||
Derivatives Designated as Economic Hedges [Member] | Future, 2020 Maturity [Member] | Long (Purchases) [Member] | Corn (in thousands of bushels) [Member] | ||||
Volume of Outstanding Contracts | ||||
Nonmonetary notional amount of price risk derivatives, volume | bu | 63,030 | |||
Derivatives Designated as Economic Hedges [Member] | Future, 2020 Maturity [Member] | Short (Sales) [Member] | Crude Oil and Refined Petroleum Products (in thousands of barrels) [Member] | ||||
Volume of Outstanding Contracts | ||||
Nonmonetary notional amount of price risk derivatives, volume | 58,694 | |||
Derivatives Designated as Economic Hedges [Member] | Future, 2020 Maturity [Member] | Short (Sales) [Member] | Corn (in thousands of bushels) [Member] | ||||
Volume of Outstanding Contracts | ||||
Nonmonetary notional amount of price risk derivatives, volume | bu | 76,110 | |||
Derivatives Designated as Economic Hedges [Member] | Future, 2021 Maturity [Member] | Long (Purchases) [Member] | Crude Oil and Refined Petroleum Products (in thousands of barrels) [Member] | ||||
Volume of Outstanding Contracts | ||||
Nonmonetary notional amount of price risk derivatives, volume | 56 | |||
Derivatives Designated as Economic Hedges [Member] | Future, 2021 Maturity [Member] | Long (Purchases) [Member] | Corn (in thousands of bushels) [Member] | ||||
Volume of Outstanding Contracts | ||||
Nonmonetary notional amount of price risk derivatives, volume | bu | 130 | |||
Derivatives Designated as Economic Hedges [Member] | Future, 2021 Maturity [Member] | Short (Sales) [Member] | Crude Oil and Refined Petroleum Products (in thousands of barrels) [Member] | ||||
Volume of Outstanding Contracts | ||||
Nonmonetary notional amount of price risk derivatives, volume | 56 | |||
Derivatives Designated as Economic Hedges [Member] | Future, 2021 Maturity [Member] | Short (Sales) [Member] | Corn (in thousands of bushels) [Member] | ||||
Volume of Outstanding Contracts | ||||
Nonmonetary notional amount of price risk derivatives, volume | bu | 1,255 | |||
Derivatives Designated as Economic Hedges [Member] | Physical Contracts, 2020 Maturity [Member] | Long (Purchases) [Member] | Corn (in thousands of bushels) [Member] | ||||
Volume of Outstanding Contracts | ||||
Nonmonetary notional amount of price risk derivatives, volume | bu | 11,751 | |||
Derivatives Designated as Economic Hedges [Member] | Physical Contracts, 2021 Maturity [Member] | Long (Purchases) [Member] | Corn (in thousands of bushels) [Member] | ||||
Volume of Outstanding Contracts | ||||
Nonmonetary notional amount of price risk derivatives, volume | bu | 1,214 | |||
Derivatives Designated as Economic Hedges [Member] | Foreign Exchange Contract, US Dollars [Member] | ||||
Price Risk Management Activities (Textual) | ||||
Monetary notional amount of derivative liabilities | $ | 219 | $ 219 | ||
Derivatives Designated as Economic Hedges [Member] | Foreign Exchange Contract, US Dollar Equivalent Canadian Dollars [Member] | ||||
Price Risk Management Activities (Textual) | ||||
Monetary notional amount of derivative liabilities | $ | 1,900 | 1,900 | ||
Derivatives Designated as Economic Hedges [Member] | Foreign Exchange Contract, US Dollar Equivalent Pounds Sterling [Member] | ||||
Price Risk Management Activities (Textual) | ||||
Monetary notional amount of derivative liabilities | $ | 500 | 500 | ||
Derivatives Designated as Economic Hedges [Member] | Foreign Exchange Contract, Maturity on or Before July 24, 2020 [Member] | ||||
Price Risk Management Activities (Textual) | ||||
Monetary notional amount of derivative liabilities | $ | 919 | 919 | ||
Derivatives Designated as Economic Hedges [Member] | Foreign Exchange Contract, Maturity by October 15, 2020 [Member] | ||||
Price Risk Management Activities (Textual) | ||||
Monetary notional amount of derivative liabilities | $ | $ 1,700 | $ 1,700 |
Price Risk Management Activities, Hedging Instruments by Consolidated Balance Sheet Location (Details) - USD ($) $ in Millions |
Jun. 30, 2020 |
Dec. 31, 2019 |
---|---|---|
Derivatives Designated as Hedging Instruments [Member] | Commodity Contracts [Member] | Receivable, Net [Member] | ||
Fair Values of Derivative Instruments | ||
Derivative asset, fair value, gross asset | $ 5 | $ 9 |
Derivative asset, fair value, gross liability | 14 | 20 |
Derivatives Not Designated as Hedging Instruments [Member] | ||
Fair Values of Derivative Instruments | ||
Derivative asset, fair value, gross asset | 680 | 635 |
Derivative liability, fair value, gross liability | 516 | 661 |
Derivatives Not Designated as Hedging Instruments [Member] | Commodity Contracts [Member] | Receivable, Net [Member] | ||
Fair Values of Derivative Instruments | ||
Derivative asset, fair value, gross asset | 651 | 608 |
Derivative asset, fair value, gross liability | 505 | 648 |
Derivatives Not Designated as Hedging Instruments [Member] | Physical Purchase Contracts [Member] | Inventories [Member] | ||
Fair Values of Derivative Instruments | ||
Derivative asset, fair value, gross asset | 1 | 0 |
Derivative asset, fair value, gross liability | 2 | 3 |
Derivatives Not Designated as Hedging Instruments [Member] | Foreign Currency Contracts [Member] | Receivable, Net [Member] | ||
Fair Values of Derivative Instruments | ||
Derivative asset, fair value, gross asset | 28 | 27 |
Derivative asset, fair value, gross liability | 0 | 0 |
Derivatives Not Designated as Hedging Instruments [Member] | Foreign Currency Contracts [Member] | Accrued Expenses [Member] | ||
Fair Values of Derivative Instruments | ||
Derivative liability, fair value, gross asset | 0 | 0 |
Derivative liability, fair value, gross liability | $ 9 | $ 10 |
Price Risk Management Activities, Effect of Derivative Instruments on Income and Other Comprehensive Income (Loss) (Details) - USD ($) $ in Millions |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2020 |
Jun. 30, 2019 |
Jun. 30, 2020 |
Jun. 30, 2019 |
|
Effect of Derivative Instruments on Income (Textual) | ||||
Estimated deferred after-tax loss expected to be reclassified into income over next 12 months | $ 3 | |||
Commodity Contracts [Member] | ||||
Effect of Derivative Instruments on Income | ||||
Gain (loss) recognized in other comprehensive income (loss) on derivatives | $ (5) | $ 4 | 50 | $ 4 |
Commodity Contracts [Member] | Revenues [Member] | ||||
Effect of Derivative Instruments on Income | ||||
Gain (loss) reclassified from accumulated other comprehensive income (loss) into income | 19 | (2) | 45 | (2) |
Commodity Contracts [Member] | Revenues [Member] | Derivatives Not Designated as Hedging Instruments [Member] | ||||
Effect of Derivative Instruments on Income | ||||
Gain (loss) recognized in income on derivatives | 9 | 5 | 1 | 5 |
Commodity Contracts [Member] | Cost of Materials and Other [Member] | Derivatives Not Designated as Hedging Instruments [Member] | ||||
Effect of Derivative Instruments on Income | ||||
Gain (loss) recognized in income on derivatives | 140 | 72 | (12) | 1 |
Commodity Contracts [Member] | Operating Expenses (Excluding Depreciation and Amortization Expense) [Member] | Derivatives Not Designated as Hedging Instruments [Member] | ||||
Effect of Derivative Instruments on Income | ||||
Gain (loss) recognized in income on derivatives | 4 | 0 | 2 | 0 |
Foreign Currency Contracts [Member] | Cost of Materials and Other [Member] | Derivatives Not Designated as Hedging Instruments [Member] | ||||
Effect of Derivative Instruments on Income | ||||
Gain (loss) recognized in income on derivatives | 0 | 2 | 49 | (7) |
Foreign Currency Contracts [Member] | Other Income, Net [Member] | Derivatives Not Designated as Hedging Instruments [Member] | ||||
Effect of Derivative Instruments on Income | ||||
Gain (loss) recognized in income on derivatives | $ 60 | $ 48 | $ (105) | $ 55 |
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