Valero Energy (VLO) 8-K Regulation FD Disclosure

Investor Presentation

January 2017

Exhibit 99.01

2

Safe Harbor Statement

Statements

contained

in

this

presentation

that

state

the

company’s

or

management’s

expectations

or

predictions

of

the

future

are

forward–looking

statements

intended

to

be

covered

by

the

safe

harbor

provisions

of

the

Securities

Act

of

1933

and

the

Securities

Exchange

Act

of

1934.

The

words

“believe,”

“expect,”

“should,”

“estimates,”

“intend,”

and

other

similar

expressions

identify

forward–looking

statements.

It

is

important

to

note

that

actual

results

could

differ

materially

from

those

projected

in

such

forward–

looking

statements.

For

more

information

concerning

factors

that

could

cause

actual

results

to

differ

from

those

expressed

or

forecasted,

see

Valero’s

annual

reports

on

Form

10-K

and

quarterly

reports

on

Form

10-Q,

filed

with

the

Securities

and

Exchange

Commission,

and

available

on

Valero’s

website

at

www.valero.com.

3

Who We Are

World’s Largest Independent Refiner

•

15 refineries, 3 million barrels per day (BPD) of high-complexity capacity

Greater than 70% of capacity located in U.S. advantaged Gulf Coast and Mid-Continent

•

Fuels marketed and distributed through bulk and wholesale channels

•

General partner and majority owner of Valero Energy Partners LP

(NYSE: VLP), a fee-based master limited partnership (MLP)

•

Significant inventory of midstream assets within Valero that could be dropped

into VLP

•

Operator and 50% owner of Diamond Green Diesel joint venture

11,000 BPD renewable diesel production capacity

•

Approximately 10,000 employees

One of North America’s

Largest Ethanol

Producers

•

11 plants with 1.4 billion

gallons per year (85,000

BPD) ethanol production

capacity

•

All convert corn into

ethanol and distillers grains

•

Plants were acquired at a

fraction of replacement cost

4

Strong Presence in Advantaged

U.S. Gulf Coast and Mid-Continent

Refineries and ethanol plants

are in advantaged locations

See slide 23 for capacities.

5

Current Macro Environment

Abundant global supply of crude oil

and natural gas

Forecasted world GDP growth

Product shortages in Latin America,

Europe, Africa, and Eastern Canada

Demand response to lower

product prices

SUPPLY

DEMAND

North American logistics build out

added efficiency and removed     

Mid-Continent bottlenecks

2

See slide 20 for notes regarding this slide and slides 28 –

31 for supply and demand details.

Expect ample supply to keep prices low, which should continue driving increased petroleum demand.

1

3

4

5

Maintain manufacturing

excellence and grow

commercial and

operational flexibility

Our Strategy for Value Creation

Operate safely and reliably and

demonstrate environmental

responsibility

Demonstrate disciplined

capital management and

deliver peer leading returns

6

Safety and Reliability

are Imperative for Profitability

See slide 20 for notes regarding this slide.

Mechanical Availability

Personnel Index

Maintenance Index

Non-Energy Cash

Opex

Energy Intensity Index

VLO’s Performance Versus Industry Benchmarks

2008

2010

2012

2014

4

Quartile

1

Quartile

3

Quartile

2

Quartile

nd

st

th

rd

1.60

0.60

Personnel Safety

Employees

Contractors

Industry

0.19

0.08

Tier 1 Process Safety

8

Advantaged Location in U.S. Gulf Coast

1,444

1,084

743

189

0

0

VLO

MPC

PSX

PBF

TSO

HFC

U.S Gulf Coast CDU Capacity

(MBPD)

See slide 20 for notes regarding this slide. Capacities from company 10-K reports as

of December 31, 2015.

Includes 90 MBPD of new capacity from the Houston crude unit, which was

commissioned in June 2016.

Does not include announced WNR acquisition, which is expected to close in 1H17.

Over 55% of our throughput capacity is

located in U.S. Gulf Coast

•

Access to low cost natural gas and abundant North

American and foreign crudes

•

Access to deep pool of skilled labor

•

Pipeline capacity additions have increased crude

optionality and resulted in improved pricing

•

Proximity to growing product export markets in

Mexico and Latin America

•

Competitive refined products supplier to Eastern

Canada and Northwest Europe

•

High weighted average regional Nelson Complexity

Index

•

Flexibility to process wide range of crudes and

feedstocks

(1)

(2)

(1)

(2)

$5.30

$3.60

$4.50

$3

$6

Refining Peers

2016 Refining Cash Operating

Expenses Per Barrel of Throughput

(Excludes Turnaround and D&A)

Peer Range

VLO

Median

High Complexity Refineries

and Lowest Cost Operator

22%

17%

16%

12%

4%

34%

34%

34%

23%

10%

Feedstock Ranges in U.S. Gulf Coast

(2012 –

3Q16)

See slide 20 for notes regarding this slide.  Refining cash operating expenses for nine months ended September 30, 2016. 

10

Distillate

Gasoline

69

118

246

324

164

253

447

541

2011

2012

2013

2014

2015

2016

Current

Capacity

Potential

Future

Capacity

VLO’s U.S. Product Exports

(MBPD)

Gasoline

Diesel

See slide 20 for notes regarding this slide.

(1)

Actual export volumes; 2016 volumes through September 30.

(1)

Our Portfolio Facilitates

Optimization of Product Exports

10

(1)

Capital Allocation

Maintain Strong Balance Sheet

Debt-to-cap ratio based on total debt reduced by $2 billion of cash.

Peer group includes PSX, MPC, TSO, HFC, and PBF.

Payout ratio is the sum of dividends and stock buybacks divided by net income from continuing

operations excluding special items.

Sustaining Capex

•

Approximately $1.5 billion annually

•

Key to safe and reliable operations

Dividend

•

Commitment to shareholders

•

Targeting a dividend payout at the high end

of our peer group

(2)

Growth Capex

•

25% IRR hurdle rate

for refining projects

•

Lower hurdle rate for

steady cash flow

midstream projects

Cash Returns

•

Targeting at least 75% payout ratio 

of adjusted net income for 2017

•

Stock buyback program consists of

ratable and opportunistic purchases

Acquisitions

•

Evaluate versus

alternative uses of

cash

•

Maintain investment grade credit rating

•

Target 20% to 30% debt-to-cap ratio

(1)

1

2

3

11

(1)

(2)

(3)

(3)

12

Demonstrated Discipline in Capital Allocation

Sustaining

$1.5

Sustaining

$1.5

Growth

$1.0

Growth

$0.7

Dividend

$0.8

Dividend

$1.1

Buybacks

$2.8

Buybacks

$1.3

2015

2016E

Capital Allocation

($ billion)

•

Steady investments in maintaining asset base and enhancing margin capability of portfolio.

•

Targeting at least 75% payout ratio of adjusted net income for 2017.

$1.6

Growth

$1.1

2017 Capex Budget

(1)

($ billion)

(1)

Approximately $200 MM growth capex carried forward for Diamond Pipeline

from 2016 to 2017.

Sustaining

(1)

(1)

13

Growth Investments

•

Diamond Pipeline completion expected in 4Q17

•

13 MPBD Houston alkylation unit expected to

startup in 1H19

Incremental octane would relieve tightness created by

Tier 3 gasoline regulations

•

6 MBPD production capacity expansion of

Diamond Green Diesel plant

Project approved in 4Q16; completion expected in

1H18

Renewable diesel margins expected to be supported

by increased usage mandates and carbon pricing

•

Projects under development:

Octane enhancement in U.S. Gulf Coast

Cogeneration in West Coast and North Atlantic

Feedstock and product flexibility in U.S. Gulf Coast

and North Atlantic

Texas City Refinery

14

Delivered Peer Leading Total Stockholder Return

Since December 31, 2014

See slide 20 for notes regarding this slide.  Total stockholder return (TSR) from Dec 31, 2014, through Dec 30, 2016. 

•

Since end of 2014, current leadership team has delivered consistent outperformance.

•

VLO had second highest TSR in peer group for 2016.

VLO

+48%

Peer average

+21%

Peer minimum

-6%

-40%

65%

Peer Range

VLO

Total Stockholder Return

15

•

Grow VLP primarily through drop downs from VLO

•

Target organic growth opportunities and midstream

deals strategic to VLO’s core business or that

provide third party revenue

•

Grow annual distributions at target rates of 25%

through 2017 and at least 20% for 2018

•

Maintain investment grade credit rating

Strategy

See

slides

34

–

38

for

VLP

non-GAAP

disclosures.

*

This

is

the

minimum

quarterly

distribution

(MQD).

The

actual

distribution

was

smaller

as

it

was

prorated

for

the

period

of

December

16

–

31.

As of September 30, 2016.

•

81% increase in quarterly cash distribution over MQD

•

Grew annualized EBITDA attributable to Partnership

by more than 2,500% to $265 million

(1)

•

4.25 million common unit follow-on equity offering

completed in Nov 2015

•

ATM program established in Sep 2016

•

Completed $500 million debt offering in Dec 2016

Accomplishments since IPO

Distribution per LP Unit

Distributable Cash Flow

(millions)

15

(1)

Our Sponsored MLP

Valero Energy Partners LP (NYSE:VLP)

Approximately $1 Billion of Estimated

MLP Eligible EBITDA

(2)

Inventory

Racks, Terminals,

and Storage

(1)

•

Over 70 million

barrels of active

shell capacity for

crude oil and

products

•

139 truck rack

bays

Rail

•

Approximately

5,250 purchased

railcars, expected

to serve long-term

needs of ethanol,

asphalt, aromatics,

and other products

Pipelines

(1)

•

Over 1,200 miles

of active pipelines

•

440-mile Diamond

Pipeline from

Cushing to

Memphis expected

to start up in 4Q17

Marine

•

51 docks

•

Two Panamax

class vessels (joint

venture)

Wholesale Fuels

Marketing

•

Approximately

800 MBPD fuels

distribution volume

16

(1)

Includes assets that have other joint venture or minority interests.

Estimate

as

of

September

30,

2016.

We

are

unable

to

provide

a

reconciliation

of

the

above

forward-looking

estimate

of

non-GAAP

EBITDA

because

certain

information

needed

to

make

a

reasonable

forward-looking

estimate

is

difficult

to

estimate

and

dependent

on

future

events

which

may

be

uncertain

or

outside

of

our

control,

including

with

respect

to

unknown

financing

terms,

acquisition

timing,

unanticipated

acquisition

costs,

negotiation

of

acquisition

terms,

and

other

potential

variables.

Accordingly,

a

reconciliation

is

not

available

without

unreasonable

effort. 

(1)

(2)

Ethanol Business

Operations

•

11 ethanol plants with 1.4 billion gallons annual

production capacity

–

Dry mill production process, where corn is ground into flour

and mixed with water before fermentation

–

Low capital investment with scale, located in corn belt

–

Operational best practices transferred from refining

Outlook

•

Ethanol demand expected to be strong globally

•

Driven by increasing usage mandates, low absolute

finished gasoline prices, increased vehicle miles

traveled, and attractive economics for corn-based

ethanol exports

Ethanol plant in Aurora, South Dakota

17

$5.10

$1.20

$5.10

$3.10

1

5

EBITDA Per Barrel of

Throughput

(Nine-mos ended Sep 30, 2016)

We Believe Valero is an Excellent Investment

Payout

ratio

is

the

sum

of

dividends

and

stock

buybacks

divided

by

net

income

from

continuing

operations

excluding

special

items.

We Believe VLO is Undervalued

•

Disciplined management team

•

Strong financial position

•

Favorable macro environment

•

Proven operations excellence

–

Reliability drives profitability

•

Delivering industry-leading returns

–

Disciplined investing to drive earnings growth

–

Unlocking value through growth in MLP-eligible

assets and dropdowns to VLP

–

Delivered peer leading payout ratio

(1)

and total

stockholder return since December 31, 2014

9%

-3%

9%

6%

-5%

11%

Return on Invested

Capital

(12-mos ended Sep 30, 2016)

3.6

0.6

0.6

1.6

0

4

Net Debt-to-EBITDA

(12-mos ended Sep 30, 2016)

Peer Range

VLO

Median

4.3%

2.5%

3.5%

3.2%

2%

5%

Dividend Yield

(Dec 30, 2016)

18

(1)

Chart

data

sources:

Company

reports

and

Bloomberg

as

of

Dec

30,

2016.

See

slides

20

and

39

–

40

for

notes

and

VLO

non-GAAP

disclosures,

respectively.

19

Appendix Contents

Topic

Pages

Notes

20

Guidance

21

Cumulative Cash Returns

22

Refining Operating Statistics

23 –

24

Natural Gas Cost Sensitivity

25

Crude Oil Transportation

26 –

27

Fundamentals

28 –

31

Valero Energy Partners LP

32 –

33

Non-GAAP Disclosures

34 –

40

Investor Relations Contacts

41

20

Notes

Slide 5

Macro environment themes represent industry consultant views. 

Slide 7

Contractor total recordable incident rate from U.S. Bureau of Labor Statistics.  Tier 1 process safety event defined within API

Recommended Practice 754.  Industry benchmarking and Valero’s performance statistics from Solomon Associates and Valero.

Slide 8

Crude distillation capacities from company 10-K filings and reports by geographic location. 

Slide 9

Valero’s U.S. Gulf Coast feedstock ranges are based upon quarterly processing rates between 2012 and 3Q16.

Refining

cash

operating

expenses

per

barrel

of

throughput,

excluding

D&A,

from

company

reports.

Peer

group

includes

PSX,

MPC,

TSO,

HFC, and PBF. 

Slide 10

Valero’s

potential

future

gasoline

and

distillate

export

capacities

are

based

upon

expansion

opportunities

identified

at

the

St.

Charles

(gasoline and distillate), Port Arthur (gasoline and distillate), and Texas City (distillate) refineries. 

Slide 12

Peer group includes PSX, MPC, TSO, HFC, and PBF. TSR for time period includes stock price appreciation and dividends paid. 

Slide 18

Peer groups for return on invested capital, EBITDA per barrel of throughput, net debt-to-EBITDA, and dividend yield consist of PSX, MPC,

TSO, HFC, and PBF.  Net debt-to-EBITDA chart excludes HFC due to TTM net loss after tax.

Guidance

4Q16 (anticipated)

•

Throughput (MBPD)

–

Gulf Coast

1,580 to 1,630

–

Mid-Continent

420 to 440

–

North Atlantic

450 to 470

–

West Coast

270 to 290

•

Refining operating expenses per barrel throughput

$3.75

•

Ethanol

–

Production (millions of gallons per day)

3.95

–

Operating expenses per gallon of production

$0.38

•

Cash opex

$0.33

•

Non-cash opex

$0.05

–

General and administrative expenses

$200 MM

–

Net interest expense

$150 MM

–

Depreciation and amortization expense

$465 MM

–

Effective tax rate

31%

2016 (anticipated)

–

RINs expense ($MM)

$750 to $850

–

Capital expenditures ($MM)

$2,400

•

Sustaining

$1,500

•

Growth

$900

Port Arthur Refinery

Delivering Cash Returns to

Stockholders is One of Our Priorities

2016 dividends and buybacks through December 30. 

(1)

Nine months ended Sep 30, 2016.  WASO from company 10-K and 10-Q filings.

(2)

WASO for MPC adjusted for stock split which occurred in 2013.  Share count as of 12 months ended Dec 31, 2011, and nine months ended Sep 30, 2016.

$10.5 billion

Reduced share count by 103 million shares, or 18%, and increased quarterly dividend by 300% since 2011.

111%

74%

82%

90%

70%

105%

WASO

(2)

at 9/30/2016 Relative to 12/31/2011

467

million

shares

22

Cumulative Capital Returned and Weighted Average

Shares Outstanding as Percentage Relative to 2011

570 million

shares

98%

96%

93%

88%

[VALUE]

(1)

Dividends

Buybacks

WASO

2011

2012

2013

2014

2015

2016

Peer Range

VLO

Average

23

Our Refining Capacity and Nelson Complexity

Refinery

Capacities (MBPD)

(1)

Nelson Complexity

Index

Throughput

Crude

Corpus Christi

(2)

370

275

15.1

Houston

175

90

15.4

Meraux

135

125

9.7

Port Arthur

375

335

12.7

St. Charles

305

215

16.1

Texas City

260

225

11.1

Three

Rivers

100

89

13.2

U.S. Gulf Coast

1,720

1,354

13.4

(3)

Ardmore

90

86

12.1

McKee

200

195

8.3

Memphis

195

180

7.9

U.S. Mid-Continent

485

461

8.9

(3)

Pembroke

270

210

10.1

Quebec

City

235

230

7.7

North

Atlantic

505

440

8.8

(3)

Benicia

170

145

16.1

Wilmington

135

85

15.8

U.S. West Coast

305

230

16.0

Total

3,015

2,485

12.0

(3)

Capacities and Nelson complexity indices as of January 1, 2016.

Represents the combined capacities of two refineries—Corpus Christi East and Corpus Christi West.  45 MBPD increase in throughput compared to 2014

is related to the 70 MBPD crude unit commissioned in December 2015, net of 25 MBPD of displaced FCC feedstock purchases.

Weighted average.

(3)

(1)

(2)

(3)

Reliability Initiatives Have Improved Refinery

Availability and Enabled Higher Utilization

86%

82%

88%

87%

92%

95%

96%

95%

96%

94%

95%

Solomon

availability

Valero Refinery Availability and Utilization Rates

24

25

$2.55/mmBtu

U.S.

$0.82/bbl

$4.73/mmBtu

Europe

$1.53/bbl

Natural Gas Cost Sensitivity for Valero’s Refineries

U.S. Natural Gas Provides Opex and

Feedstock Cost Advantages

Natural gas prices year for 2016 through December 30 for U.S. and Europe. Estimated per barrel cost of 904,000 mmBtu/day of natural gas consumption at 93%

refinery throughput capacity utilization, or 2.8 MMBPD.

$719 MM

pre-tax

annual cost

advantage

•

Our refining operations consume approximately 904,000 mmBtu/day of natural gas, of which

57% is operating expense and balance is cost of goods sold

•

Significant annual pre-tax cost savings compared to refiners in Europe

•

Prices expected to remain low and disconnected from global oil and gas markets

Pipeline Takeaway Capacity Additions Have

Increased Crude Competition in the U.S. Gulf Coast

Niobrara

KEY

Completed

2017 or Later Startup

Capacities in MBPD. Pipeline completion and startup dates are

subject to change. Bayou Bridge Phase 1 operational with Phase

2 completion expected in 2017.

Cushing

Alberta

Permian

•

Pipeline capacity additions

increased market liquidity and

crude competition in U.S. Gulf

Coast

•

Discounts for inland crudes

versus WTI and Brent have

narrowed with falling production

and excess logistics capacity

•

Spot space on some pipelines

are trading inside of published

tariffs

Eagle

Ford

Bakken

26

Investing to Improve Access to North American Crude

Diamond Pipeline

•

440 miles of 20-inch pipe (200 MBPD capacity) connecting Memphis to Cushing

•

Received permits required to begin construction; project is on track for completion in 4Q17

•

Provides supply flexibility and ability to improve crude blend quality

•

Approximately $925 MM total project cost

Exercised option in Dec 2015 to acquire 50% interest; over $200 MM spent through Sep 30, 2016

Expect to receive cash proceeds if 50% interest is dropped to VLP and 12% pre-tax IRR for VLP

27

Ample Supply Provides Resource Advantage

to North American Refiners

58.4

72.9

U.S. Natural Gas Production

(Bcf/day)

Source:

DOE, 2016 data through September.

9,213

7,889

5,476

8,897

U.S. Crude Oil Production and

Imports

(MBPD)

28

Imports

Production

-0.8

-0.4

0.0

0.4

0.8

1.2

1.6

2.0

2013

2014

2015

2016E-2020E Avg

MMBPD

Source:

Consultant

and

Valero

estimates.

Net

Global

Refinery

CDU

Additions

=

New

Capacity

+

Restarts

–

Announced

Closures.

(Does

not

include

Condensate

Splitters.)

Global Petroleum Demand Growth Expected

to Outpace Refinery Capacity Expansion

29

Europe

China

Middle East

Other

Net CDU Capacity Additions

World Petroleum Demand Growth

30

0

100

200

300

400

500

600

700

800

900

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

Other

Europe

Other Latin America

Mexico

Canada

12 Month Moving Average

(MBPD)

Gasoline represents all finished gasoline plus all blendstocks (including ethanol, MTBE, and other oxygenates)

Source:

DOE Petroleum Supply Monthly data through September 2016.

U.S. Gasoline Exports

31

Source:

DOE Petroleum Supply Monthly data through September 2016.

U.S. Diesel Exports

0

200

400

600

800

1000

1200

1400

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

Other

Europe

Other Latin America

Mexico

Canada

12 Month Moving Average

(MBPD)

Diversified VLP Portfolio

(2)

Integrated

with VLO’s Refining Assets

Texas Crude Systems

McKee,

Three Rivers, Wynnewood

July

1,

2014

-

$154

mm

(1)

Houston and St. Charles Terminals

March

1,

2015

-

$671

mm

(1)

Corpus Christi Terminals

October

1,

2015

-

$465

mm

(1)

IPO assets

Drop

downs

McKee Terminal

April

1,

2016

-

$240

mm

(1)

1

2

3

4

Meraux

and

Three

Rivers

Terminals

September

1,

2016

-

$325

mm

(1)

5

Total

consideration

value.

Portfolio

assets

as

of

Jan

1,

2017.

32

(1)

(2)

33

VLP’s Competitive Strengths

Strong Sponsor

•

Strategic relationship with

investment grade sponsor

VLO

Quality Assets

•

High quality, well

maintained assets

integrated with VLO’s

refineries and located in

advantaged regions

Stable and Predictable

Revenues

•

Fee-based agreements with

no direct exposure to

commodity price risks

•

Contracts with 10 year

initial terms and five year

renewal terms

•

About 85% of revenues

supported by minimum

volume commitments

Strong Balance Sheet

•

Financial flexibility to fund

growth in distribution and

distributable cash flow with

2.0x coverage and 3.1x

debt/EBITDA ratio

(1)

•

Maintain investment grade

credit rating

Long Runway

for Growth

•

Drop downs from sponsor

•

Organic growth and

midstream deals that

support VLO’s core

business or that provide

third party revenue

Top Tier Distribution

Growth

•

Annual distribution growth

targets of 25% through

2017 and at least 20% for

2018

Coverage

and

debt/EBITDA

ratios

as

of

nine

months

ended

September

30,

2016.

Debt/EBITDA

ratio

calculated

in

accordance

with

debt

covenants.

See

slides

34

–

38

for

VLP

non-GAAP

disclosures.

(1)

34

VLP Non-GAAP Disclosures:  EBITDA, Distributable Cash

Flow, Distribution Coverage, and Debt-to-EBITDA

VLP defines EBITDA as net income before income tax expense, interest expense, and depreciation expense. VLP defines

distributable cash flow as EBITDA less (i) EBITDA attributable to its Predecessor and cash payments during the period for

interest, income taxes, and maintenance capital expenditures; plus (ii) adjustments related to minimum throughput

commitments, capital projects prefunded by Valero, and certain other items. VLP defines coverage ratio as the ratio of

distributable cash flow to the total distribution declared.

EBITDA, distributable cash flow, and coverage ratio are supplemental financial measures that are not defined under GAAP.

They may be used by management and external users of our financial statements, such as industry analysts, investors, lenders,

and rating agencies, to:

•

describe VLP’s expectation of forecasted earnings;

•

assess VLP’s operating performance as compared to other publicly traded limited partnerships in the transportation and

logistics industry, without regard to historical cost basis or, in the case of EBITDA, financing methods;

•

assess the ability of VLP’s business to generate sufficient cash to support its decision to make distributions to its unitholders;

•

assess VLP’s ability to incur and service debt and fund capital expenditures; and

•

assess the viability of acquisitions and other capital expenditure projects and the returns on investment of various investment

opportunities.

VLP believes that the presentation of EBITDA provides useful information to investors in assessing its financial condition and

results of operations. The GAAP measures most directly comparable to EBITDA are net income and net cash provided by

operating activities. EBITDA should not be considered an alternative to net income or net cash provided by operating activities

presented in accordance with GAAP. EBITDA has important limitations as an analytical tool because it excludes some, but not

all, items that affect net income or net cash provided by operating activities. EBITDA should not be considered in isolation or as

a substitute for analysis of our results as reported under GAAP. Additionally, because EBITDA may be defined differently by

other companies in our industry, VLP’s definition of EBITDA may not be comparable to similarly titled measures of other

companies, thereby diminishing its utility.

35

VLP Non-GAAP Disclosures:  EBITDA, Distributable Cash

Flow, Distribution Coverage, and Debt-to-EBITDA

VLP uses distributable cash flow to measure whether it has generated from its operations, or “earned,” an amount of

cash sufficient to support the payment of the minimum quarterly distributions. VLP’s partnership agreement contains the

concept of “operating surplus” to determine whether VLP’s operations are generating sufficient cash to support the

distributions that it is paying, as opposed to returning capital to VLP’s partners. Because operating surplus is a

cumulative concept (measured from VLP’s IPO date and compared to cumulative distributions from the IPO date), VLP

uses the term distributable cash flow to approximate operating surplus on a quarterly or annual, rather than a

cumulative, basis. As a result, distributable cash flow is not necessarily indicative of the actual cash VLP has on hand to

distribute or that it is required to distribute.

VLP uses the distribution coverage ratio to reflect the relationship between its distributable cash flow and the total

distribution declared.

The debt-to-EBITDA ratio as defined in accordance with VLP’s debt covenants is the total debt and capital lease

obligations divided by adjusted pro forma EBITDA for the trailing 12 month period. VLP believes that the presentation of

net debt-to-EBITDA provides useful information to investors to assess its ability to incur and service debt.

36

VLP Non-GAAP Disclosures:  EBITDA, Distributable

Cash Flow, and Distribution Coverage

VALERO ENERGY PARTNERS

LP

RECONCILIATION OF NON-GAAP MEASURES TO MOST COMPARABLE AMOUNTS REPORTED UNDER U.S. GAAP

(Unaudited, in

Thousands, Except Ratio Amount)

Reconciliation of net income to EBITDA and distributable cash flow: 

Nine Months Ended

September 30, 2016

Net income

$

129,032

Plus:  Depreciation

expense

34,652

Plus:

Interest and debt expense, net of capitalized interest

9,582

Plus:  Income tax expense

780

EBITDA

174,046

Less:  EBITDA attributable to Predecessor

(11,492)

EBITDA attributable to Partnership

185,538

Plus:  Adjustments

related to minimum throughput commitments

1,100

Less:  Cash interest paid

8,688

Less:  Income taxes paid

496

Less:

Maintenance capital expenditures

5,759

Distributable

cash flow

$

171,695

Total distribution declared 

$

86,695

Distribution coverage ratio:

Distributable cash flow divided by total distribution declared

2.0x

37

VLP Non-GAAP Disclosures:  Debt-to-EBITDA

VALERO ENERGY PARTNERS LP

RECONCILIATION OF NON-GAAP MEASURES TO MOST COMPARABLE AMOUNTS REPORTED UNDER U.S. GAAP

(Unaudited, in

Thousands, Except Ratio Amount)

September 30, 2016

Numerator: 

Total debt and capital lease obligations

$

894,057

Nine Months

Ended

September 30, 2015

Year Ended

December 31, 2015

Nine Months Ended

September 30, 2016

Denominator: 

Net income

$

34,517

$

71,312

$

129,032

Plus:  Depreciation expense

34,702

45,678

34,652

Plus:

Interest and debt expense, net of capitalized interest

3,365

6,113

9,582

Plus:  Income tax expense (benefit)

(62)

251

780

EBITDA

72,522

123,354

174,046

Less:  EBITDA attributable to Predecessor

(41,605)

(47,652)

(11,492)

EBITDA attributable to Partnership

$

114,127

$

171,006

$

185,538

12 Months Ended

September 30, 2016

EBITDA

attributable

to

Partnership

for

12

months

ended

Sep

30,

2016:

Sum

of

EBITDA

for

nine

months

ended

Sep

30,

2016

and

year

ended

December

31,

2015

less

EBITDA

for

nine

months

ended

Sep

30,

2015

$

242,417

Pro forma EBITDA adjustments:

Plus:  Apr 1, 2015

–

McKee Terminal Services ($28,300 x 6/12 months)

14,150

Plus:  Sep

1, 2015

–

Meraux and Three Rivers Terminal Services

($38,600 x 11/12 months)

35,383

Adjusted

pro forma EBITDA

$

291,950

Debt-to-EBITDA ratio

($894,057/ $291,950):

3.1

38

1Q2014

2Q2014

3Q2014

4Q2014

1Q2015

2Q2015

3Q2015

4Q2015

1Q2016

2Q2016

3Q2016

Net income

$4,520

$6,157

$5,658

($2,907)

$6,936

$23,504

$15,625

$44,667

$43,298

$49,447

$48,707

Plus:  Depreciation expense

5,916

6,132

7,178

8,583

8,310

9,904

13,760

9,151

9,388

10,622

11,319

Plus:  Interest and debt expense, net of

capitalized interest

228

221

214

209

601

1,411

1,353

2,748

2,659

3,251

3,672

Plus:  Income tax expense

157

150

129

112

(126)

(51)

115

313

242

303

235

EBITDA

10,821

12,660

13,179

5,997

15,721

34,768

30,853

56,879

55,587

63,623

63,933

Less:  EBITDA attributable to Predecessor

(3,037)

(2,905)

(9,025)

(17,744)

(12,089)

(7,969)

(12,727)

—

—

—

(2,395)

EBITDA attributable to Partnership

13,858

15,565

22,204

23,741

27,810

42,737

43,580

56,879

55,587

63,623

66,328

Plus:  Adjustments related to minimum

throughput commitments

32

475

(235)

(164)

(20)

24

—

18

14

221

865

Plus:  Projects prefunded by Valero

775

853

418

865

589

—

—

—

—

—

—

Plus:  Other

—

—

—

—

384

—

—

—

—

—

—

Less:  Cash interest paid

236

229

221

213

172

1,406

1,374

2,415

2,502

2,982

3,204

Less:  Income taxes paid

—

9

—

—

—

441

—

—

—

496

—

Less:  Maintenance capital expenditures

864

1,005

1,035

1,623

1,139

863

326

1,621

2,002

1,518

2,239

Distributable cash flow

$13,565

$15,650

$21,131

$22,606

$27,452

$40,051

$41,880

$52,861

$51,097

$58,848

$61,750

VLP Non-GAAP Disclosures:  Quarterly EBITDA

and Distributable Cash Flow

VALERO ENERGY PARTNERS LP

RECONCILIATION OF NON-GAAP MEASURES TO MOST COMPARABLE AMOUNTS REPORTED UNDER U.S. GAAP

(Unaudited, in Thousands)

39

VLO Non-GAAP Disclosures: 

Return on Invested Capital

VALERO ENERGY CORPORATION

RECONCILIATION OF NON-GAAP MEASURES TO MOST COMPARABLE AMOUNTS REPORTED UNDER U.S. GAAP

(Unaudited, in

Millions, Except Percentage and Ratio Amounts)

Nine Months

Ended

September 30, 2015

Year Ended

December 31, 2015

Nine Months Ended

September 30, 2016

Numerator: 

Operating income

$

5,712

$

6,358

$

2,952

Effective

tax rate

31.6%

31.3%

24.6%

Operating income after tax

$

3,905

$

4,367

$

2,227

TTM operating income after tax $2,689 = $2,227 + $4,367 –

$3,905

Nine Months

Ended

September 30, 2015

Nine Months Ended

September 30, 2016

Denominator: 

Current portion of debt and capital lease obligations

$

129

$

1,064

Debt and capital lease obligations, less current portion

7,252

7,888

Total equity

21,868

21,130

Total invested capital

$

29,249

$

30,082

TTM total invested capital $29,666 =

($29,249 + $30,082) / 2

TTM return on invested capital 9.1% = $2,689 / $29,666

VLO

defines

return

on

invested

capital

(ROIC)

as

operating

income

after

tax

divided

by

the

total

invested

capital.

VLO

defines

total

invested

capital

as

the

sum

of

total

debt

and

total

equity.

VLO

defines

operating

income

after

tax

for

the

trailing

12

month

(TTM)

period

as

the

sum

of

operating

income

after

tax

for

2015

and

the

nine

months

ended

Sep

30,

2016,

less

that

for

the

nine

months

ended

Sep

30,

2015.

VLO

defines

TTM

total

invested

capital

as

the

average

of

the

total

invested

capital

for

the

current

nine

month

period

ended

Sep

30,

2016,

and

the

same

period

one

year

ago

(2015).

VLO

believes

that

the

presentation

of

ROIC

provides

useful

information

to

investors

for

assessing

how

efficiently

it

uses

its

capital

and

its

ability

to

generate

returns

from

invested

capital.

40

VLO Non-GAAP Disclosures: 

EBITDA and Net Debt-to-EBITDA

VALERO ENERGY CORPORATION

RECONCILIATION OF NET INCOME TO EBITDA

(Unaudited, in

Millions, Except Ratio Amount)

Nine Months

Ended

September 30, 2015

Year Ended

December 31, 2015

Nine Months Ended

September 30, 2016

Net income

$

3,706

$

4,101

$

2,001

Less:

Deferred turnaround and catalyst costs

509

673

474

Plus:  Depreciation and amortization expense

1,348

1,842

1,426

Plus:  Interest and debt expense, net of capitalized interest

326

433

334

Plus:

Income tax expense

1,715

1,870

652

EBITDA

$

6,586

$

7,573

$

3,939

TTM EBITDA $4,926 = $3,939 + $7,573

–

$6,586

Nine Months Ended

September 30, 2016

Debt and capital lease obligations, less current portion

$

7,888

Current portion of debt and capital lease obligations

1,064

Cash and temporary cash investments

(5,949)

Total debt net of cash

$

3,003

TTM net debt-to-EBITDA 0.61 = $3,003 / $4,926

VLO defines net debt-to-EBITDA ratio as total debt net of cash divided by EBITDA adjusted for turnaround and catalyst costs.  VLO

defines EBITDA for the trailing 12 month period (TTM) as the sum of EBITDA  for 2015 and the nine months ended Sep 30, 2016,

less that for the nine months ended Sep 30, 2015.

VLO believes that the presentation of net debt-to-EBITDA provides useful

information to investors to assess its ability to incur and service debt. 

41

Investor Relations Contacts

For more information, please contact:

John Locke

Vice President, Investor Relations

210.345.3077

john.locke@valero.com

Karen Ngo

Sr. Manager, Investor Relations

210.345.4574

karen.ngo@valero.com