VLO: Valero Energy Corp. Message Board

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Gold/Mining/Energy : VLO: Valero Energy Corp.

VLO 175.61

-0.2%

Nov 7 9:30 AM EST

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From: Dennis Roth	12/12/2007 8:52:25 AM
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Valero Energy Corp. (VLO): No change to Buy rating following management change - Goldman Sachs - 12/11/07 News Valero Energy announced that its president, Greg King, has decided to resign from the company effective December 31, 2007. The short press release indicates the decision was “unexpected” but that the company wished him well and thanked him for his 14 years of service. Analysis Mr. King has had a successful career at Valero and it does not come as a surprise to us that at this stage of his career as well as Valero’s corporate evolution that he has decided to leave the company. Implications Mr. King’s resignation does not impact our view of Valero’s shares and we reiterate our Buy rating and $85, 12-month target price (based on asset value, P/E and cash flow valuation analyses; key risk is sustained lower refining margins). There is no change to our EPS estimates for 2007-2012. The key driver of Valero’s shares remains the outlook for refining margins. We continue to expect a strong rebound in refining margins over the course of 2008 relative to current seasonally weak levels. In our view, $80-$90/bbl WTI oil prices are more consistent with $14+/bbl Gulf Coast 3:2:1 refining margins on average over a 12-month period, which is the key driver of our bullish view of Valero shares and our well above-consensus EPS estimates for 2008 and 2009.

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