Valero is the Best-Performing of S.A.’s Public Firms
Jul. 2–Stocks in general went nowhere during the first six months of 2005, but shares of San Antonio-based Valero Energy Corp. reached the mountaintop.
Valero not only was the best-performing San Antonio public company stock, it is No. 1 in total-return price increase for the broadest index of blue-chip stocks, the Standard & Poor’s 500.
Valero shares rose 74.76 percent, including dividends, during the first half of 2005 thanks to its network of refineries that can produce products from cheaper grades of crude oil.
With gasoline selling at higher prices than ever, the profit margins for Valero’s refineries result in handsome net incomes for the company.
Valero’s rising status among its peers is another factor in the share price increase. Valero’s pending acquisition of refiner Premcor Inc. — an $8 billion deal — would lift Valero’s refining capacity to 3.1 million barrels a day, surpassing the North American operations of Exxon Mobil Corp. and ConocoPhillips Co.
With the acquisition, Valero’s annual revenues would rise to nearly $70 billion, placing Valero at No. 15 on the Fortune 500 list, up from 22nd.
Will Valero someday become San Antonio’s second Dow industrials stock, along with SBC Communications? That doesn’t appear out of the question.
What is more certain is that the Valero name will become more of a household word in the coming year as the company retires the Diamond Shamrock brand it acquired a couple of years ago and puts the Valero name at 1,860 locations where it doesn’t already exist.
More than 1,000 Valero-brand retail-gasoline stations already operate on both coasts, but the company announced Thursday that it will replace the Diamond Shamrock stations in between the coasts with the Valero name.
The marketing side of the company operates 2,900 retail stores.
The day of the announcement, Valero shares rose 19 cents a share to $79.11, even though the Dow industrials index fell 99.51 points.
San Antonio energy stocks in general performed well in the first six months of 2005. Of the top five San Antonio-area public company stocks, the top four are oil and gas companies.
The other three are Pioneer Drilling Co., Tesoro Petroleum Corp. and Abraxas Petroleum Corp.
Stocks nationally sank slightly, with the Dow industrials, S&P 500 and Nasdaq 100 indices all showing small declines during the first 181 days of the year.
That is reflected by the list of 20 San Antonio-area stocks. Nine stocks went up in share prices, and 11 declined.
Among the decliners were two other giant corporations with strong brand names, SBC Communications and Clear Channel Communications.
SBC Communications reported healthy operating profits in April, but net income overall fell from levels a year earlier because of the costs of acquiring AT&T Wireless for its Cingular cell telephone unit owned with BellSouth.
Clear Channel also reported lower net incomes from the previous year this spring from lower radio advertising revenues. The company announced in April that it would split into three new stocks by the end of the year to reflect its varied operations: radio stations, outdoor and large-display advertising and live entertainment.
But the nation’s largest owner of radio stations is still in the acquisition mode. Speculation intensified this week that Clear Channel may be a leading contender to acquire Disney’s radio group, which includes stations in New York, Los Angeles, Chicago, San Francisco, Washington and Dallas.
What will the year-end San Antonio stocks report card look like? It usually looks quite different from the midyear results. If energy prices maintain the trend from the first half of 2005, though, the year-end list might be quite similar.
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