VLO
#Hello, <UNK>.
Yes, <UNK>, this is <UNK>.
We can't talk about forward turnarounds, but we take a view of turnaround activity and then also markets to plan our throughputs.
Well, okay.
I don't know that I've assessed it the way you're asking.
We understand that they had a partnership that they wanted to both exit and they decided to do that.
I think Saudi's pleased with the assets that they got in the deal and Shell's pleased with the assets that they have in the deal.
And that's really all we know about that one, to be quite honest.
I do not view this transaction, though, as a precursor to a whole series of other major similar type of transactions in the US, <UNK>.
I just don't ---+ we're not hearing it and we're not seeing it.
Well, I can't ---+ I'd only be speculating.
And I really don't have an opinion on it.
Again, I think they'd have to find something that was for sale if they wanted to engage.
And I just don't know if there's a significant portfolio of assets out there that they could get into.
You bet.
Sorry, <UNK>.
Good morning.
Yes, this is <UNK> again.
I don't think we've really seen any significant impact of the exports on any of our operations.
<UNK>, this is <UNK>.
So I'll answer it.
We started up in December.
Our funding investment decision was for about $150 million of EBITDA.
If you use 2015 pricing, it made about $200 million.
And if you look at the last quarter, we're estimating it contributed about $35 million.
So it's in line with our funding decision.
And then <UNK> spoke to the market on it.
So that's where the project sits.
You have commodity risks all over the place.
I think when we analyze the project, the one that we always stare at the most is naptha.
The Gulf is long naptha, its crude unit backed out resid purchases.
And so we always have a keen eye on the placement of the naptha that's created due to both of these projects, both the Corpus Christi and the crude unit.
That's where I would say the greatest commodity risk is.
<UNK>, I never really heard anybody use generous and FTC in the same context.
But what I would describe them as a very reasonable group, quite honestly.
And we've had a lot of dealings with them over the years, as we've done acquisitions.
I believe what they would look at, not only for Valero, but for anybody, is your ability to restrict trade in a particular market.
And because the Gulf Coast is so long and so over supplied and the barrels tend to move throughout the US and abroad, you're not going to run into a situation whereby having a more significant concentration in the Gulf Coast, you could run into a situation where you could manipulate markets.
It just wouldn't be possible.
So anyway, I really don't think they'd have a problem with additional Gulf Coast exposure for Valero.
No, I think, we have seen a strategic shift that the Saudis have made an effort to regain the market share they lost to a lot of the domestic crude producers.
And they're exporting a lot more barrels to the US Gulf coast.
And we certainly saw that in the first quarter and we expect it will continue.
Throughput guidance, yes.
So <UNK>, I'll take a stab at this.
<UNK> alluded to it.
Both of the crude units are running in the ---+ the Corpus Christi crude unit is running in the second quarter and the Houston crude unit starts up in the second quarter.
All the rest of the volume guidance is related to other activities and then with our market outlook and the capacity that we plan to run with.
Yes, this is <UNK> <UNK>.
I think a lot of it, there's quite a bit of stock to pull down on the RINs.
So we'll see.
We still don't have clear sight to what's going to be called for in 2017.
So I think right now, it's a little early to say.
It's been remarkably stable for the last few months, RIN prices.
Yes, so we had heard the same thing, that there was a lot of cargoes, especially parked off New York harbor.
Our understanding is a lot of that has actually come in over the last couple of weeks.
And as I mentioned, we're actually seeing the premium regrade start to widen, which kind of contradicts this idea that there's all this octane laying around.
Thanks, <UNK>.
Hello, <UNK>.
<UNK>, this is <UNK>.
So in the first quarter, we did 249,000 barrels a day of diesel.
If you include jet and kerosene with that, we were up to 295,000 barrels a day.
That was split with about 80% going to Latin America, 20% to Europe.
During the first quarter, the arb to Europe was closed most of the first half of the first quarter.
It opened back up and has remained open.
So I think you'll see a little more volume go into Europe.
But we're still seeing very good Latin American demand for diesel, as well, moving forward.
Right now, the $2.6 billion is what we have in our forecast.
On an annualized basis, obviously, we're way short of that, but we're okay on the forecast.
<UNK>, this is <UNK>.
I'll give a little color on that.
The first quarter is always a little bit of a challenge.
You're coming out of the holidays and you have weather to contend with.
The first quarter for us, at least seasonally, is always light with respect to our CapEx.
We'll spend more than the run rate, then that rate second and third quarter, and then it slows down again in the fourth quarter.
So that's where I would say the seasonality in the CapEx spend for our Company.
Good, <UNK>.
You.
Yes.
So we've seen the arb to export diesel to Europe open since midway through the first quarter.
It remains open today.
And we're seeing good demand for European quality distillate in our system.
Yes.
So I think what you're ---+ at least my view of where they are in northwest Europe, the refineries that are cutting are primarily refineries that are producing fuel oil, because fuel oil is so discounted today.
Pembroke is a pretty high conversion refinery.
So we're seeing (inaudible) remain very high at Pembroke.
Yes, it's more of a passing comment.
I would say very limited, but I don't want to tell you we would never look at a UK refinery and then we show up at some point in time and do it and you remind me of it.
But <UNK>, you know those markets.
Frankly, we've said this for years, and we got a gem in Pembroke.
And back to your first question, all the diesel that's produced at Pembroke moves inland, most of the gasoline.
And so we've got a fairly unique footprint there, in that we're able to supply the domestic markets in Ireland in a very efficient way.
So we really like that.
If we could find a similar type of asset in a market that was similar, okay, and when I say that I'm really thinking primarily of the UK, but I think we'd consider it.
Now are we having active conversations on anything like that.
No.
But would we want to move into France, Spain, Italy or the Med.
The answer would be no.
So it's more of a passing comment.
But we tell you guys, we're looking at everything that's out there and we do that, because we're always looking for opportunities to continue to grow the EPS.
But again, we're very pleased with the portfolio that we have and we can create significant income with it.
So we don't feel desperate to do anything in that M&A market.
Certainly, again, it's in competition for all the other good uses of cash that we have.
I would think ---+ I mean, we're going to continue to look at each of the drops as we come up on them, as far as how we want the financing to be to mitigate the taxes.
I think it would probably be on this next drop, similar cash tax, after-tax cash has ---+
But <UNK>, looking longer term, and this is just the reality of it, a lot of the logistics assets that would be dropped, they've got zero tax basis.
And so I think for a long time, when everybody was looking at 10-time multiples, 11-time multiples on these drop transactions, with all that cash flowing back in, we were really overstating the actual cash that would be coming back into the sponsor.
And so the reality of it is, we're not changing the portfolio of assets that we have to drop.
We're really looking at the drop structure and doing it as efficiently as we can.
Again, <UNK> mentioned earlier that we think the capital markets are certainly there, but it's a little bit expensive to go to the public markets today.
We don't have a gun to our head to do something, because we've got the distribution covered for two years with the cash flow stream that we have today, and all the things that he mentioned earlier.
I think we're in a very, very strong position here.
And we can take our time and time the market and be patient in doing this.
And whether we do $500 million or $750 million now and then we'll start talking about next year, what we're going to do, we're going to continue to grow the LP.
We're going to continue to drop.
I think we're just waiting to see if things don't improve a bit.
And certainly, higher crude prices should take some of this pressure off, if we see the crude markets move up, and we should be in a good place going forward.
No problem.
Okay.
Thank you, Bianca.
We appreciate you all for joining us today.
Please contact me or Karen Ngo if you have additional questions after the call.
Thank you.
