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Strategies & Market Trends : Value Investing

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To: Spekulatius who wrote (25659)	1/30/2007 10:02:46 AM
From: Spekulatius	Read Replies (1) of 78666

VLO valuation TSO purchase price for Shells' LA refinery: 1.63B$ for 100,000B/Day translates into 16,000$/barrel. Also TSO pays for the inventory separately. VLO has an EV value of 36B$ and owns 3.3 million B/Day refining capacity. I subtract 4B$ in inventory (as this is accounted separately in most refinery purchases). So VLO I calculate VLO $/barrel capacity at: (36B$-4B$)/3,3M=9700$/barrel. CA refineries mostly have above average profitability so I assume they trade at a premium. On the other hand 100,000B/Day is a small refinery in a business where big is better. I have not seen a recent refinery transaction in NA below 13,000$/barrel capacity. Based on these back of the envelope calculations VLO is trading at least 30% below private market value.

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