Item 1. FINANCIAL STATEMENTS

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Item 1. FINANCIAL STATEMENTS

VALERO ENERGY CORPORATION

CONSOLIDATED BALANCE SHEETS

(millions of dollars, except par value)


	September 30, 2025		December 31, 2024
	(unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	4,764	$	4,657

Receivables, net	10,333		10,708
Inventories	7,394		7,761
Prepaid expenses and other	1,013		611
Total current assets	23,504		23,737
Property, plant, and equipment, at cost	49,663		52,368
Accumulated depreciation	(21,922)		(23,054)
Property, plant, and equipment, net	27,741		29,314
Deferred charges and other assets, net	7,370		7,092
Total assets	$	58,615	$	60,143
LIABILITIES AND EQUITY
Current liabilities:
Current portion of debt and finance lease obligations	$	894	$	743
Accounts payable	10,694		12,092
Accrued expenses	1,440		1,130
Taxes other than income taxes payable	1,411		1,360
Income taxes payable	290		170
Total current liabilities	14,729		15,495
Debt and finance lease obligations, less current portion	9,687		9,720
Deferred income tax liabilities	5,023		5,267
Other long-term liabilities	2,430		2,140
Commitments and contingencies
Equity:
Valero Energy Corporation stockholders’ equity:
Common stock, $0.01 par value; 1,200,000,000 shares authorized; 673,501,593 and 673,501,593 shares issued	7		7
Additional paid-in capital	6,972		6,939
Treasury stock, at cost; 368,490,214 and 358,637,890 common shares	(29,686)		(28,178)
Retained earnings	47,169		47,016
Accumulated other comprehensive loss	(708)		(1,272)
Total Valero Energy Corporation stockholders’ equity	23,754		24,512
Noncontrolling interests	2,992		3,009
Total equity	26,746		27,521
Total liabilities and equity	$	58,615	$	60,143

See Condensed Notes to Consolidated Financial Statements.

VALERO ENERGY CORPORATION

CONSOLIDATED STATEMENTS OF INCOME

(millions of dollars, except per share amounts)

(unaudited)


	Three Months Ended September 30,				Nine Months Ended September 30,
	2025		2024		2025		2024
Revenues (a)	$	32,168	$	32,876	$	92,315	$	99,125
Cost of sales:
Cost of materials and other	27,958		29,965		81,838		88,590

Operating expenses (excluding depreciation and amortization expense reflected below)	1,614		1,482		4,659		4,317
Depreciation and amortization expense	824		675		2,290		2,042
Total cost of sales	30,396		32,122		88,787		94,949
Asset impairment loss	—		—		1,131		—
Other operating expenses	5		3		13		40
General and administrative expenses (excluding depreciation and amortization expense reflected below)	246		234		727		695
Depreciation and amortization expense	12		10		51		34
Operating income	1,509		507		1,606		3,407
Other income, net	86		123		292		389
Interest and debt expense, net of capitalized interest	(139)		(141)		(417)		(421)
Income before income tax expense	1,456		489		1,481		3,375
Income tax expense	390		96		404		726


Net income	1,066		393		1,077		2,649
Less: Net income (loss) attributable to noncontrolling interests	(29)		29		(137)		160
Net income attributable to Valero Energy Corporation stockholders	$	1,095	$	364	$	1,214	$	2,489








Earnings per common share	$	3.54	$	1.14	$	3.89	$	7.66
Weighted-average common shares outstanding (in millions)	309		318		311		324





Earnings per common share – assuming dilution	$	3.53	$	1.14	$	3.89	$	7.66
Weighted-average common shares outstanding – assuming dilution (in millions)	309		318		312		324
__________________________
Supplemental information:
(a) Includes excise taxes on sales by certain of our foreign operations	$	1,827	$	1,539	$	4,993	$	4,382

See Condensed Notes to Consolidated Financial Statements.

VALERO ENERGY CORPORATION

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(millions of dollars)

(unaudited)


	Three Months Ended September 30,				Nine Months Ended September 30,
	2025		2024		2025		2024
Net income	$	1,066	$	393	$	1,077	$	2,649
Other comprehensive income (loss):
Foreign currency translation adjustment	(157)		326		569		62
Net gain (loss) on pension and other postretirement benefits	(4)		—		1		(11)
Net gain (loss) on cash flow hedges	8		43		8		(49)

Other comprehensive income (loss) before income tax expense (benefit)	(153)		369		578		2
Income tax expense (benefit) related to items of other comprehensive income (loss)	(2)		5		8		(13)
Other comprehensive income (loss)	(151)		364		570		15
Comprehensive income	915		757		1,647		2,664
Less: Comprehensive income (loss) attributable to noncontrolling interests	(25)		51		(131)		135
Comprehensive income attributable to Valero Energy Corporation stockholders	$	940	$	706	$	1,778	$	2,529

See Condensed Notes to Consolidated Financial Statements.

VALERO ENERGY CORPORATION

CONSOLIDATED STATEMENTS OF EQUITY

(millions of dollars, except per share amounts)

(unaudited)


	Valero Energy Corporation Stockholders’ Equity
	Common Stock		Additional Paid-in Capital		Treasury Stock		Retained Earnings		Accumulated Other Comprehensive Loss		Total		Non- controlling Interests		Total Equity
Balance as of June 30, 2025	$	7	$	6,956	$	(28,757)	$	46,425	$	(553)	$	24,078	$	2,869	$	26,947
Net income (loss)	—		—		—		1,095		—		1,095		(29)		1,066
Dividends on common stock ($1.13 per share)	—		—		—		(351)		—		(351)		—		(351)
Stock-based compensation expense	—		18		—		—		—		18		—		18
Transactions in connection with stock-based compensation plans	—		(2)		2		—		—		—		—		—
Purchases of common stock for treasury	—		—		(931)		—		—		(931)		—		(931)
Contributions from noncontrolling interests	—		—		—		—		—		—		148		148


Other comprehensive income (loss)	—		—		—		—		(155)		(155)		4		(151)
Balance as of September 30, 2025	$	7	$	6,972	$	(29,686)	$	47,169	$	(708)	$	23,754	$	2,992	$	26,746

Balance as of June 30, 2024	$	7	$	6,929	$	(27,373)	$	47,052	$	(1,172)	$	25,443	$	2,807	$	28,250
Net income	—		—		—		364		—		364		29		393
Dividends on common stock ($1.07 per share)	—		—		—		(342)		—		(342)		—		(342)
Stock-based compensation expense	—		11		—		—		—		11		—		11

Purchases of common stock for treasury	—		—		(565)		—		—		(565)		—		(565)

Distributions to noncontrolling interests	—		—		—		—		—		—		(111)		(111)

Other comprehensive income	—		—		—		—		342		342		22		364
Balance as of September 30, 2024	$	7	$	6,940	$	(27,938)	$	47,074	$	(830)	$	25,253	$	2,747	$	28,000

See Condensed Notes to Consolidated Financial Statements.

VALERO ENERGY CORPORATION

CONSOLIDATED STATEMENTS OF EQUITY (Continued)

(millions of dollars, except per share amounts)

(unaudited)


	Valero Energy Corporation Stockholders’ Equity
	Common Stock		Additional Paid-in Capital		Treasury Stock		Retained Earnings		Accumulated Other Comprehensive Loss		Total		Non- controlling Interests		Total Equity
Balance as of December 31, 2024	$	7	$	6,939	$	(28,178)	$	47,016	$	(1,272)	$	24,512	$	3,009	$	27,521
Net income (loss)	—		—		—		1,214		—		1,214		(137)		1,077
Dividends on common stock ($3.39 per share)	—		—		—		(1,061)		—		(1,061)		—		(1,061)
Stock-based compensation expense	—		68		—		—		—		68		—		68
Transactions in connection with stock-based compensation plans	—		(35)		36		—		—		1		—		1
Purchases of common stock for treasury	—		—		(1,544)		—		—		(1,544)		—		(1,544)
Contributions from noncontrolling interests	—		—		—		—		—		—		245		245
Distributions to noncontrolling interests	—		—		—		—		—		—		(131)		(131)


Other comprehensive income	—		—		—		—		564		564		6		570
Balance as of September 30, 2025	$	7	$	6,972	$	(29,686)	$	47,169	$	(708)	$	23,754	$	2,992	$	26,746

Balance as of December 31, 2023	$	7	$	6,901	$	(25,322)	$	45,630	$	(870)	$	26,346	$	2,178	$	28,524
Net income	—		—		—		2,489		—		2,489		160		2,649
Dividends on common stock ($3.21 per share)	—		—		—		(1,045)		—		(1,045)		—		(1,045)
Stock-based compensation expense	—		63		—		—		—		63		—		63
Transactions in connection with stock-based compensation plans	—		(24)		25		—		—		1		—		1
Purchases of common stock for treasury	—		—		(2,641)		—		—		(2,641)		—		(2,641)
Contributions from noncontrolling interests	—		—		—		—		—		—		90		90
Distributions to noncontrolling interests	—		—		—		—		—		—		(113)		(113)
Conversion of IEnova Revolver debt to equity (see Notes 4 and 6)	—		—		—		—		—		—		457		457

Other comprehensive income (loss)	—		—		—		—		40		40		(25)		15
Balance as of September 30, 2024	$	7	$	6,940	$	(27,938)	$	47,074	$	(830)	$	25,253	$	2,747	$	28,000

See Condensed Notes to Consolidated Financial Statements.

VALERO ENERGY CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

(millions of dollars)

(unaudited)


	Nine Months Ended September 30,
	2025		2024
Cash flows from operating activities:
Net income	$	1,077	$	2,649
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization expense	2,341		2,076


Asset impairment loss	1,131		—

Deferred income tax benefit	(288)		(78)
Changes in current assets and current liabilities	157		795
Changes in deferred charges and credits and other operating activities, net	(649)		171
Net cash provided by operating activities	3,769		5,613
Cash flows from investing activities:
Capital expenditures (excluding variable interest entities (VIEs))	(504)		(399)
Capital expenditures of VIEs:
Diamond Green Diesel Holdings LLC (DGD)	(67)		(198)
Other VIEs	(5)		(7)
Deferred turnaround and catalyst cost expenditures (excluding VIEs)	(808)		(844)
Deferred turnaround and catalyst cost expenditures of DGD	(91)		(62)


Purchases of available-for-sale (AFS) debt securities	(18)		(17)
Proceeds from sales and maturities of AFS debt securities	24		79

Investments in nonconsolidated joint ventures	(1)		—
Other investing activities, net	44		11
Net cash used in investing activities	(1,426)		(1,437)
Cash flows from financing activities:
Proceeds from debt issuance and borrowings (excluding VIEs)	5,599		5,200
Proceeds from debt borrowings of VIEs:
DGD	400		250
Other VIEs	—		23
Repayments of debt and finance lease obligations (excluding VIEs)	(5,566)		(5,521)
Repayments of debt and finance lease obligations of VIEs:
DGD	(320)		(519)
Other VIEs	(27)		(13)

Purchases of common stock for treasury	(1,534)		(2,616)
Payment of excise tax on purchases of common stock for treasury	(28)		—
Common stock dividend payments	(1,061)		(1,045)
Contributions from noncontrolling interests	245		90
Distributions to noncontrolling interests	(131)		(113)
Other financing activities, net	(7)		(1)
Net cash used in financing activities	(2,430)		(4,265)
Effect of foreign exchange rate changes on cash	199		19
Net increase (decrease) in cash, cash equivalents, and restricted cash	112		(70)
Cash, cash equivalents, and restricted cash at beginning of period (a)	4,829		5,424
Cash, cash equivalents, and restricted cash at end of period (a)	$	4,941	$	5,354

(a)Restricted cash is included in prepaid expenses and other in our consolidated balance sheets.

See Condensed Notes to Consolidated Financial Statements.

VALERO ENERGY CORPORATION

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

General

The terms “Valero,” “we,” “our,” and “us,” as used in this report, may refer to Valero Energy Corporation, one or more of its consolidated subsidiaries, or all of them taken as a whole. The term “DGD,” as used in this report, may refer to Diamond Green Diesel Holdings LLC, its wholly owned consolidated subsidiary, or both of them taken as a whole.

These interim unaudited financial statements have been prepared in conformity with United States (U.S.) generally accepted accounting principles (GAAP) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X of the Securities Exchange Act of 1934. Accordingly, they do not include all of the information and notes required by GAAP for complete financial statements. In the opinion of management, these interim unaudited financial statements reflect all adjustments considered necessary for a fair statement of our results for the interim periods presented. All such adjustments are of a normal recurring nature unless otherwise disclosed. Operating results for the interim periods are not necessarily indicative of the results that may be expected for the year ending December 31, 2025. These interim unaudited financial statements should be read in conjunction with our audited financial statements and notes thereto included in our annual report on Form 10-K for the year ended December 31, 2024.

The balance sheet as of December 31, 2024 has been derived from our audited financial statements as of that date. For further information, refer to our audited financial statements and notes thereto included in our annual report on Form 10-K for the year ended December 31, 2024.

Significant Accounting Policies

Use of Estimates

The preparation of financial statements in conformity with GAAP requires us to make estimates and assumptions that affect the amounts reported in these interim unaudited financial statements and accompanying notes. Actual results could differ from those estimates. On an ongoing basis, we review our estimates based on currently available information. Changes in facts and circumstances may result in revised estimates.

Accounting Pronouncements Recently Adopted

ASU 2023-07

In November 2023, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, to improve interim and annual disclosures about a public entity’s reportable segments primarily through enhanced disclosures about significant segment expenses and other segment related items. We adopted this ASU effective January 1, 2024 and it did not affect our financial position or our results of operations, but did result in additional disclosures.

ASU 2023-09

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, to improve annual income tax disclosures by requiring further disaggregation of information in the rate reconciliation and disaggregation of income taxes paid by jurisdiction. This ASU

VALERO ENERGY CORPORATION

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

also includes certain other amendments intended to improve the effectiveness of annual income tax disclosures. We adopted this ASU effective January 1, 2025 on a retrospective basis and it did not affect our financial position or our results of operations, but will result in additional annual disclosures.

Accounting Pronouncement Not Yet Adopted

ASU 2024-03

In November 2024, the FASB issued ASU 2024-03, Income Statement Reporting—Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses, to improve interim and annual disclosures about a public business entity’s expenses by requiring more detailed information in the notes to the financial statements about certain expense categories, including purchases of inventory, employee compensation, depreciation, amortization, and selling expenses. We expect to adopt this ASU effective January 1, 2027 and the adoption will not affect our financial position or our results of operations, but will result in additional disclosures.

2. IMPAIRMENT

In recent years, the State of California adopted legislation that has subjected our refining and marketing operations to potential increased operational restrictions and new reporting requirements. The considerable uncertainty and potential adverse effects on our operations and financial performance resulted in the evaluation of strategic alternatives for our operations in California.

In March 2025, we approved a plan with respect to the operations at our Benicia Refinery and currently intend to cease refining operations by the end of April 2026. In addition, we considered strategic alternatives for our remaining operations in California. As a result, we updated our evaluation of potential impairment and concluded that the carrying values of our Benicia and Wilmington refineries were not recoverable as of March 31, 2025. Therefore, we reduced the carrying values of these assets to their estimated fair values of $722 million and $847 million, respectively, and recognized a combined asset impairment loss of $1.1 billion in our Refining segment in March 2025. See Note 12 for disclosure related to the method used to determine the fair values.

Included in the recoverability assessments discussed above was the recognition of expected asset retirement obligations of $337 million, which primarily reflects the fair value of estimated costs for certain legal obligations to decommission the assets based on a range of potential settlement dates as of March 31, 2025.

In connection with our plan to cease refining operations at our Benicia Refinery, we shortened the estimated useful life of the refinery assets, and as a result, will depreciate the revised carrying value of the net property, plant, and equipment and other noncurrent assets to the estimated salvage value of $107 million through April 2026. Accordingly, in the three and nine months ended September 30, 2025, we recorded incremental depreciation of approximately $100 million and $200 million, respectively, in depreciation and amortization expense.

In addition, we implemented a transition plan for the affected employees of the Benicia Refinery, which includes retention incentive payments and separation benefits. During the third quarter of 2025, we recognized a liability of $50 million for these one-time costs, which we expect to distribute to eligible

VALERO ENERGY CORPORATION

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

employees by the end of the second quarter of 2026. These costs are included in operating expenses (excluding depreciation and amortization expense) in the three and nine months ended September 30, 2025 and are attributable to our Refining segment.

We continue to evaluate strategic alternatives for our remaining operations in California.

3. INVENTORIES

Inventories consisted of the following (in millions):


	September 30, 2025		December 31, 2024
Refinery feedstocks	$	1,826	$	2,167
Refined petroleum products and blendstocks	4,035		4,016
Renewable diesel feedstocks and products	840		872
Ethanol feedstocks and products	292		342
Materials and supplies	401		364


Inventories	$	7,394	$	7,761

As of September 30, 2025 and December 31, 2024, the replacement cost (market value) of last-in, first-out (LIFO) inventories exceeded their LIFO carrying amounts by $3.4 billion and $4.0 billion, respectively. Our non-LIFO inventories accounted for $1.2 billion and $1.3 billion of our total inventories as of September 30, 2025 and December 31, 2024, respectively.

4. DEBT

Public Debt

On February 7, 2025, we issued $650 million of 5.150 percent Senior Notes due February 15, 2030. Proceeds from this debt issuance totaled $649 million before deducting the underwriting discount and other debt issuance costs. We used a portion of the net proceeds to repay the $189 million outstanding principal balance of our 3.65 percent Senior Notes that matured on March 15, 2025 and the $251 million outstanding principal balance of our 2.850 percent Senior Notes that matured on April 15, 2025.

In March 2024, we repaid the $167 million outstanding principal balance of our 1.200 percent Senior Notes that matured on March 15, 2024.

VALERO ENERGY CORPORATION

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Credit Facilities

We had outstanding borrowings, letters of credit issued, and availability under our credit facilities as follows (in millions):


				September 30, 2025
	Facility Amount		Maturity Date	Outstanding Borrowings		Letters of Credit Issued (a)		Availability
Committed facilities:
Valero Revolver (b)	$	4,000	November 2027	$	—	$	2	$	3,998
Accounts receivable sales facility	1,300		July 2026	—		n/a		1,300
Committed facilities of VIEs (c):
DGD Revolver (d)	400		June 2026	100		52		248
DGD Loan Agreement (e)	100		June 2026	—		n/a		100
IEnova Revolver (f)	830		February 2028	31		n/a		799
Uncommitted facilities:
Letter of credit facilities	n/a		n/a	n/a		6		n/a
Uncommitted facility of VIE (c):
DGD letter of credit facility	n/a		n/a	n/a		67		n/a

(a)Letters of credit issued as of September 30, 2025 expire at various times in 2025 through 2026.

(b)In October 2025, we extended the maturity date of this facility to October 2030.

(c)Creditors of the VIEs do not have recourse against us.

(d)The variable interest rate on the unsecured revolving credit facility with a syndicate of financial institutions (the DGD Revolver) was 6.073 percent as of September 30, 2025.

(e)The amounts shown for DGD’s unsecured revolving loan agreement with its members (the DGD Loan Agreement) represent the facility amount available from, and borrowings outstanding to, the noncontrolling member as any transactions between DGD and us under this facility are eliminated in consolidation.

(f)Central Mexico Terminals (defined in Note 6) has an unsecured revolving credit facility (the IEnova Revolver) with IEnova (defined in Note 6). The variable interest rate on the IEnova Revolver was 8.141 percent and 8.443 percent as of September 30, 2025 and December 31, 2024, respectively.

VALERO ENERGY CORPORATION

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Borrowings and repayments under our credit facilities were as follows (in millions):


	Nine Months Ended September 30,
	2025		2024
Borrowings:
Accounts receivable sales facility	$	4,950	$	5,200
DGD Revolver	400		150
DGD Loan Agreement	—		100
IEnova Revolver	—		23
Repayments:
Accounts receivable sales facility	(4,950)		(5,200)
DGD Revolver	(300)		(400)
DGD Loan Agreement	—		(100)
IEnova Revolver	(27)		—

Other Disclosures

“Interest and debt expense, net of capitalized interest” was comprised as follows (in millions):


	Three Months Ended September 30,				Nine Months Ended September 30,
	2025		2024		2025		2024
Interest and debt expense	$	144	$	145	$	432	$	438
Less: Capitalized interest	5		4		15		17
Interest and debt expense, net of capitalized interest	$	139	$	141	$	417	$	421

5. EQUITY

Treasury Stock

We purchase shares of our outstanding common stock as authorized by our board of directors (Board), including under share purchase programs (described in the table below) and with respect to our employee stock-based compensation plans. During the three and nine months ended September 30, 2025, we purchased for treasury 5,667,134 shares and 10,309,669 shares, respectively. During the three and nine months ended September 30, 2024, we purchased for treasury 3,798,836 shares and 17,054,864 shares, respectively.

VALERO ENERGY CORPORATION

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Our Board authorized us to purchase shares of our outstanding common stock under various programs with no expiration dates as follows (in millions):


Program Name	Authorization Date	Total Cost Authorized		Remaining Available for Purchase as of September 30, 2025
February 2024 Program	February 22, 2024	$	2,500	$	311
September 2024 Program	September 19, 2024	2,500		2,500

Accumulated Other Comprehensive Loss

Changes in accumulated other comprehensive loss by component, net of tax, were as follows (in millions):


	Three Months Ended September 30,
	2025								2024
	Foreign Currency Translation Adjustment		Defined Benefit Plans Items		Gains (Losses) on Cash Flow Hedges		Total		Foreign Currency Translation Adjustment		Defined Benefit Plans Items		Gains (Losses) on Cash Flow Hedges		Total
Balance as of beginning of period	$	(548)	$	1	$	(6)	$	(553)	$	(993)	$	(170)	$	(9)	$	(1,172)
Other comprehensive income (loss) before reclassifications	(155)		—		(6)		(161)		326		—		33		359
Amounts reclassified from accumulated other comprehensive loss	—		(1)		9		8		—		(5)		(16)		(21)
Effect of exchange rates	—		(2)		—		(2)		—		4		—		4
Other comprehensive income (loss)	(155)		(3)		3		(155)		326		(1)		17		342
Balance as of end of period	$	(703)	$	(2)	$	(3)	$	(708)	$	(667)	$	(171)	$	8	$	(830)

VALERO ENERGY CORPORATION

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)


	Nine Months Ended September 30,
	2025								2024
	Foreign Currency Translation Adjustment		Defined Benefit Plans Items		Gains (Losses) on Cash Flow Hedges		Total		Foreign Currency Translation Adjustment		Defined Benefit Plans Items		Gains (Losses) on Cash Flow Hedges		Total
Balance as of beginning of period	$	(1,264)	$	(2)	$	(6)	$	(1,272)	$	(735)	$	(162)	$	27	$	(870)
Other comprehensive income (loss) before reclassifications	561		—		(6)		555		68		—		18		86
Amounts reclassified from accumulated other comprehensive loss	—		(5)		9		4		—		(12)		(37)		(49)
Effect of exchange rates	—		5		—		5		—		3		—		3
Other comprehensive income (loss)	561		—		3		564		68		(9)		(19)		40
Balance as of end of period	$	(703)	$	(2)	$	(3)	$	(708)	$	(667)	$	(171)	$	8	$	(830)

6. VARIABLE INTEREST ENTITIES

Consolidated VIEs

We consolidate a VIE when we have a variable interest in an entity for which we are the primary beneficiary. As of September 30, 2025, the significant consolidated VIEs included:

DGD, a joint venture with a subsidiary of Darling Ingredients Inc. that owns and operates two plants that process waste and renewable feedstocks (predominantly animal fats, used cooking oils, vegetable oils, and inedible distillers corn oils (DCOs)) into renewable diesel, renewable naphtha, and neat sustainable aviation fuel (SAF)1; and
Central Mexico Terminals, a collective group of three subsidiaries of Infraestructura Energetica Nova, S.A.P.I. de C.V. (IEnova), which is a Mexican company and indirect subsidiary of Sempra Energy, a U.S. public company. We have terminaling agreements with Central Mexico Terminals that represent variable interests. We do not have an ownership interest in Central Mexico Terminals.

The assets of the consolidated VIEs can only be used to settle their own obligations and the creditors of the consolidated VIEs have no recourse to our other assets. We generally do not provide financial guarantees to the VIEs. Although we have provided credit facilities to some of the VIEs in support of their construction or acquisition activities and working capital requirements, these transactions are eliminated in consolidation. Our financial position, results of operations, and cash flows are impacted by

___________________________________________________________________

1 DGD produces synthetic paraffinic kerosene (SPK), a renewable blending component, using the Hydrotreated Esters and Fatty Acids (HEFA) process. SPK is also commonly referred to as “neat SAF.” Current aviation regulations allow SPK to be blended up to 50 percent with conventional jet fuel for use in an aircraft. This blend is commonly referred to as “blended SAF” or “SAF.”

VALERO ENERGY CORPORATION

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

the performance of the consolidated VIEs, net of intercompany eliminations, to the extent of our ownership interest in each VIE.

The following table presents summarized balance sheet information for the significant assets and liabilities of the consolidated VIEs, which are included in our balance sheets (in millions):


	DGD		Central Mexico Terminals		Other		Total
September 30, 2025
Assets
Cash and cash equivalents	$	136	$	1	$	32	$	169
Other current assets	1,044		18		38		1,100
Property, plant, and equipment, net	3,690		624		62		4,376
Deferred charges and other assets, net	524		68		12		604
Liabilities
Current liabilities, including current portion of debt and finance lease obligations	$	299	$	49	$	4	$	352
Debt and finance lease obligations, less current portion	622		—		—		622



December 31, 2024
Assets
Cash and cash equivalents	$	353	$	—	$	21	$	374
Other current assets	976		9		42		1,027
Property, plant, and equipment, net	3,806		647		64		4,517
Deferred charges and other assets, net	86		69		11		166
Liabilities
Current liabilities, including current portion of debt and finance lease obligations	$	304	$	75	$	4	$	383
Debt and finance lease obligations, less current portion	642		—		—		642

Nonconsolidated VIEs

We hold variable interests in VIEs that have not been consolidated because we are not considered the primary beneficiary. These nonconsolidated VIEs are not material to our financial position or results of operations and are accounted for as equity investments.

VALERO ENERGY CORPORATION

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

7. EMPLOYEE BENEFIT PLANS

The components of net periodic benefit cost related to our defined benefit plans were as follows (in millions):


	Pension Plans				Other Postretirement Benefit Plans
	2025		2024		2025		2024
Three months ended September 30
Service cost	$	27	$	28	$	—	$	1
Interest cost	34		31		3		3
Expected return on plan assets	(56)		(54)		—		—
Amortization of:
Net actuarial gain	(2)		(1)		(2)		(1)
Prior service cost (credit)	1		(3)		1		—
Settlement loss	3		5		—		—
Net periodic benefit cost	$	7	$	6	$	2	$	3

Nine months ended September 30
Service cost	$	81	$	84	$	2	$	3
Interest cost	102		94		9		9
Expected return on plan assets	(167)		(161)		—		—
Amortization of:
Net actuarial gain	(6)		(4)		(6)		(3)
Prior service cost (credit)	4		(8)		1		—
Settlement loss	6		5		—		—
Net periodic benefit cost	$	20	$	10	$	6	$	9

The components of net periodic benefit cost other than the service cost component (i.e., the non-service cost components) are included in “other income, net.”

VALERO ENERGY CORPORATION

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

8. INCOME TAXES

Income Tax Expense

For the three and nine months ended September 30, 2025, our effective tax rate was higher than the U.S. federal statutory rate due to lower U.S. income before income tax expense primarily resulting from the asset impairment loss associated with our operations in California, as described in Note 2.

There was no significant variation in the customary relationship between income tax expense and income before income tax expense for the three and nine months ended September 30, 2024.

One Big Beautiful Bill Act

On July 4, 2025, legislation commonly known as the One Big Beautiful Bill Act (OBBB) was enacted, which resulted in a broad range of changes to the U.S. Internal Revenue Code of 1986, as amended (the Code). The most significant provisions affecting us include the following:

extension of the clean fuel production credit through December 31, 2029;
requirement that feedstocks for fuel produced after December 31, 2025 must be produced or grown exclusively in the U.S., Mexico, or Canada in order for such fuel to be eligible for the clean fuel production credit;
elimination of the special clean fuel production credit rate for SAF produced after December 31, 2025;
permanent reinstatement of the provision that allows companies to expense 100 percent of the cost of qualified property acquired and placed in service after January 19, 2025; and
modification of several international tax provisions, including those relating to net controlled foreign corporation tested income (formerly global intangible low-taxed income) and foreign-derived deduction eligible income (formerly foreign-derived intangible income) beginning January 1, 2026.

We do not expect that these changes and other provisions of this legislation will have a material effect on our financial position, results of operations, and cash flows in 2025; however, we continue to evaluate the effects of the OBBB on our financial position, results of operations, and cash flows in the future.

VALERO ENERGY CORPORATION

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

9. EARNINGS PER COMMON SHARE

Earnings per common share was computed as follows (dollars and shares in millions, except per share amounts):


	Three Months Ended September 30,				Nine Months Ended September 30,
	2025		2024		2025		2024
Earnings per common share:
Net income attributable to Valero stockholders	$	1,095	$	364	$	1,214	$	2,489
Less: Income allocated to participating securities	3		1		3		7
Net income available to common stockholders	$	1,092	$	363	$	1,211	$	2,482

Weighted-average common shares outstanding	309		318		311		324

Earnings per common share	$	3.54	$	1.14	$	3.89	$	7.66

Earnings per common share – assuming dilution:
Net income attributable to Valero stockholders	$	1,095	$	364	$	1,214	$	2,489
Less: Income allocated to participating securities	3		1		3		7
Net income available to common stockholders	$	1,092	$	363	$	1,211	$	2,482

Weighted-average common shares outstanding	309		318		311		324
Effect of dilutive securities	—		—		1		—
Weighted-average common shares outstanding – assuming dilution	309		318		312		324

Earnings per common share – assuming dilution	$	3.53	$	1.14	$	3.89	$	7.66

Participating securities include restricted stock and performance awards granted under our 2020 Omnibus Stock Incentive Plan. Dilutive securities include participating securities as well as outstanding stock options. For the three and nine months ended September 30, 2025 and 2024, we computed earnings per common share – assuming dilution using the two-class method for all dilutive securities.

VALERO ENERGY CORPORATION

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

10. REVENUES AND SEGMENT INFORMATION

Revenue from Contracts with Customers

Disaggregation of Revenue

Revenue is presented in the table below under “Segment Information” disaggregated by product because this is the level of disaggregation that management has determined to be beneficial to users of our financial statements.

Contract Balances

Contract balances were as follows (in millions):


	September 30, 2025		December 31, 2024
Receivables from contracts with customers, included in receivables, net	$	6,321	$	5,812
Contract liabilities, included in accrued expenses	62		82

Remaining Performance Obligations

We have spot and term contracts with customers, the majority of which are spot contracts with no remaining performance obligations. We do not disclose remaining performance obligations for contracts that have terms of one year or less. The transaction price for our remaining term contracts includes a fixed component and variable consideration (i.e., a commodity price), both of which are allocated entirely to a wholly unsatisfied promise to transfer a distinct good that forms part of a single performance obligation. The fixed component is not material and the variable consideration is highly uncertain. Therefore, as of September 30, 2025, we have not disclosed the aggregate amount of the transaction price allocated to our remaining performance obligations.

Segment Information

We have three reportable segments—Refining, Renewable Diesel, and Ethanol. Each segment is a strategic business unit that offers different products and services by employing unique technologies and marketing strategies and whose operations and operating performance are managed and evaluated separately. Operating performance is measured based on the operating income generated by the segment, which includes revenues and expenses that are directly attributable to the management of the respective segment. Intersegment sales are generally derived from transactions made at prevailing market rates. The following is a description of each segment’s business operations.

The Refining segment includes the operations of our petroleum refineries, the associated activities to market our refined petroleum products, and the logistics assets that support our refining operations. The principal products manufactured by our refineries and sold by this segment include gasolines and blendstocks, distillates, and other products.
The Renewable Diesel segment represents the operations of DGD, a consolidated joint venture as discussed in Note 6, and the associated activities to market low-carbon fuels. The principal products manufactured by DGD and sold by this segment are renewable diesel, renewable naphtha, and neat SAF. This segment sells some renewable diesel and neat SAF to the Refining

VALERO ENERGY CORPORATION

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

segment for blending into petroleum-based diesel and conventional jet fuel, respectively, which is then sold to that segment’s customers as finished product.

The Ethanol segment includes the operations of our ethanol plants and the associated activities to market our ethanol and co-products. The principal products manufactured by our ethanol plants are ethanol and distillers grains. This segment sells some ethanol to the Refining segment for blending into gasoline, which is sold to that segment’s customers as a finished gasoline product.

Operations that are not included in any of the reportable segments are included in the corporate category.

Our chief operating decision maker (CODM) is our Chairman of the Board, Chief Executive Officer and President. Our CODM uses operating income by segment to allocate resources (including employees, property, and financial or capital resources) for each segment primarily during the annual budget process. On a monthly basis, our CODM considers budget-to-actual variances for operating income by segment when evaluating the operating performance of each segment.

VALERO ENERGY CORPORATION

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The following tables reflect information about our operating income (loss), including a reconciliation to our consolidated income before income tax expense and total expenditures for long-lived assets, by reportable segment (in millions):


	Refining		Renewable Diesel		Ethanol		Corporate and Eliminations		Total
Three months ended September 30, 2025
Revenues:
Revenues from external customers	$	30,414	$	719	$	1,035	$	—	$	32,168
Intersegment revenues	1		484		259		(744)		—
Total revenues	30,415		1,203		1,294		(744)		32,168
Cost of sales:
Cost of materials and other (a)	26,684		1,077		942		(745)		27,958

Operating expenses (excluding depreciation and amortization expense reflected below)	1,388		78		148		—		1,614
Depreciation and amortization expense	728		76		21		(1)		824
Total cost of sales	28,800		1,231		1,111		(746)		30,396

Other operating expenses	5		—		—		—		5
General and administrative expenses (excluding depreciation and amortization expense reflected below)	—		—		—		246		246
Depreciation and amortization expense	—		—		—		12		12
Operating income (loss) by segment	$	1,610	$	(28)	$	183	$	(256)	1,509
Other income, net									86
Interest and debt expense, net of capitalized interest									(139)
Income before income tax expense									$	1,456

Total expenditures for long-lived assets (b)	$	324	$	49	$	12	$	24	$	409

See notes on page 23.

VALERO ENERGY CORPORATION

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)


	Refining		Renewable Diesel		Ethanol		Corporate and Eliminations		Total
Three months ended September 30, 2024
Revenues:
Revenues from external customers	$	31,332	$	632	$	912	$	—	$	32,876
Intersegment revenues	3		593		235		(831)		—
Total revenues	31,335		1,225		1,147		(831)		32,876
Cost of sales:
Cost of materials and other (a)	28,922		1,029		842		(828)		29,965

Operating expenses (excluding depreciation and amortization expense reflected below)	1,256		92		133		1		1,482
Depreciation and amortization expense	589		69		19		(2)		675
Total cost of sales	30,767		1,190		994		(829)		32,122

Other operating expenses	3		—		—		—		3
General and administrative expenses (excluding depreciation and amortization expense reflected below)	—		—		—		234		234
Depreciation and amortization expense	—		—		—		10		10
Operating income by segment	$	565	$	35	$	153	$	(246)	507
Other income, net									123
Interest and debt expense, net of capitalized interest									(141)
Income before income tax expense									$	489

Total expenditures for long-lived assets (b)	$	344	$	67	$	9	$	9	$	429

See notes on page 23.

VALERO ENERGY CORPORATION

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)


	Refining		Renewable Diesel		Ethanol		Corporate and Eliminations		Total
Nine months ended September 30, 2025
Revenues:
Revenues from external customers	$	87,495	$	1,777	$	3,043	$	—	$	92,315
Intersegment revenues	5		1,424		681		(2,110)		—
Total revenues	87,500		3,201		3,724		(2,110)		92,315
Cost of sales:
Cost of materials and other (a)	77,995		3,016		2,962		(2,135)		81,838

Operating expenses (excluding depreciation and amortization expense reflected below)	3,986		228		446		(1)		4,659
Depreciation and amortization expense	2,029		205		59		(3)		2,290
Total cost of sales	84,010		3,449		3,467		(2,139)		88,787
Asset impairment loss	1,131		—		—		—		1,131
Other operating expenses	13		—		—		—		13
General and administrative expenses (excluding depreciation and amortization expense reflected below)	—		—		—		727		727
Depreciation and amortization expense	—		—		—		51		51
Operating income (loss) by segment	$	2,346	$	(248)	$	257	$	(749)	1,606
Other income, net									292
Interest and debt expense, net of capitalized interest									(417)
Income before income tax expense									$	1,481

Total expenditures for long-lived assets (b)	$	1,231	$	158	$	30	$	56	$	1,475

See notes on page 23.

VALERO ENERGY CORPORATION

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)


	Refining		Renewable Diesel		Ethanol		Corporate and Eliminations		Total
Nine months ended September 30, 2024
Revenues:
Revenues from external customers	$	94,519	$	1,888	$	2,718	$	—	$	99,125
Intersegment revenues	8		1,932		654		(2,594)		—
Total revenues	94,527		3,820		3,372		(2,594)		99,125
Cost of sales:
Cost of materials and other (a)	85,528		3,025		2,625		(2,588)		88,590

Operating expenses (excluding depreciation and amortization expense reflected below)	3,659		262		395		1		4,317
Depreciation and amortization expense	1,793		196		57		(4)		2,042
Total cost of sales	90,980		3,483		3,077		(2,591)		94,949
Other operating expenses	13		—		27		—		40
General and administrative expenses (excluding depreciation and amortization expense reflected below)	—		—		—		695		695
Depreciation and amortization expense	—		—		—		34		34

Operating income by segment	$	3,534	$	337	$	268	$	(732)	3,407
Other income, net									389
Interest and debt expense, net of capitalized interest									(421)
Income before income tax expense									$	3,375

Total expenditures for long-lived assets (b)	$	1,191	$	260	$	26	$	33	$	1,510

(a)Cost of materials and other for our Renewable Diesel segment is net of the clean fuel production credit on qualifying sales of certain low-carbon transportation fuels of $206 million and $397 million for the three and nine months ended September 30, 2025, respectively, and the blender’s tax credit on qualified fuel mixtures of $313 million and $952 million for the three and nine months ended September 30, 2024, respectively.

(b)Total expenditures for long-lived assets includes amounts related to capital expenditures and deferred turnaround and catalyst costs.

VALERO ENERGY CORPORATION

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The following table provides a disaggregation of revenues from external customers for our principal products by reportable segment (in millions):


	Three Months Ended September 30,				Nine Months Ended September 30,
	2025		2024		2025		2024
Refining:
Gasolines and blendstocks	$	13,287	$	14,361	$	38,382	$	43,004
Distillates	14,582		13,855		40,736		42,286
Other product revenues	2,545		3,116		8,377		9,229
Total Refining revenues	30,414		31,332		87,495		94,519
Renewable Diesel:
Renewable diesel	623		610		1,484		1,829
Renewable naphtha	29		22		114		59
Neat SAF	67		—		179		—
Total Renewable Diesel revenues	719		632		1,777		1,888
Ethanol:
Ethanol	823		685		2,390		1,985
Distillers grains	212		227		653		733
Total Ethanol revenues	1,035		912		3,043		2,718

Revenues	$	32,168	$	32,876	$	92,315	$	99,125

Total assets by reportable segment were as follows (in millions):


	September 30, 2025		December 31, 2024
Refining	$	45,010	$	46,729
Renewable Diesel	5,600		5,680
Ethanol	1,495		1,545
Corporate and eliminations	6,510		6,189
Total assets	$	58,615	$	60,143

As of September 30, 2025 and December 31, 2024, our investments in nonconsolidated joint ventures accounted for under the equity method were $687 million and $695 million, respectively, all of which related to the Refining segment and are reflected in “deferred charges and other assets, net” in our balance sheets.

VALERO ENERGY CORPORATION

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

11. SUPPLEMENTAL CASH FLOW INFORMATION

In order to determine net cash provided by operating activities, net income is adjusted by, among other things, changes in current assets and current liabilities as follows (in millions):


	Nine Months Ended September 30,
	2025		2024
Decrease in current assets:
Receivables, net	$	619	$	1,382
Inventories	529		574
Prepaid expenses and other	51		265
Increase (decrease) in current liabilities:
Accounts payable	(1,438)		(1,081)
Accrued expenses	264		(93)
Taxes other than income taxes payable	13		(114)
Income taxes payable	119		(138)
Changes in current assets and current liabilities	$	157	$	795

Changes in current assets and current liabilities for the nine months ended September 30, 2025 were primarily due to the following:

The decrease in receivables was due to a decrease in refined petroleum product sales volumes in September 2025 compared to December 2024 and the collection of $246 million for a blender’s tax credit receivable, partially offset by an increase in related prices in September 2025 compared to December 2024;
The decrease in inventories was primarily due to lower inventory levels in September 2025 compared to December 2024; and
The decrease in accounts payable was due to a decrease in crude oil and other feedstock prices combined with a decrease in related volumes purchased in September 2025 compared to December 2024.

Changes in current assets and current liabilities for the nine months ended September 30, 2024 were primarily due to the following:

The decrease in receivables was due to a decrease in refined petroleum product sales volumes combined with a decrease in related prices in September 2024 compared to December 2023;
The decrease in inventories was primarily due to lower inventory levels in September 2024 compared to December 2023; and

VALERO ENERGY CORPORATION

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The decrease in accounts payable was due to a decrease in crude oil and other feedstock prices combined with a decrease in related volumes purchased in September 2024 compared to December 2023.

Cash flows related to interest and income taxes were as follows (in millions):


	Nine Months Ended September 30,
	2025		2024
Interest paid in excess of amount capitalized, including interest on finance leases	$	362	$	374
Income taxes paid, net	398		835

Supplemental cash flow information related to our operating and finance leases was as follows (in millions):


	Nine Months Ended September 30,
	2025				2024
	Operating Leases		Finance Leases		Operating Leases		Finance Leases
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows	$	394	$	84	$	392	$	87

Financing cash flows	—		196		—		173
Changes in lease balances resulting from new and modified leases	357		22		346		312

Noncash investing activities for the nine months ended September 30, 2025 included the recognition of expected asset retirement obligations of $337 million, as described in Note 2. There were no other significant noncash investing and financing activities during the nine months ended September 30, 2025, except as noted in the table above.

Noncash financing activities for the nine months ended September 30, 2024 included the conversion by IEnova of $457 million of outstanding borrowings under the IEnova Revolver to additional equity in Central Mexico Terminals. There were no other significant noncash investing and financing activities during the nine months ended September 30, 2024, except as noted in the table above.

VALERO ENERGY CORPORATION

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

12. FAIR VALUE MEASUREMENTS

Recurring Fair Value Measurements

The following tables present information (in millions) about our assets and liabilities recognized at their fair values in our balance sheets categorized according to the fair value hierarchy of the inputs utilized by us to determine the fair values as of September 30, 2025 and December 31, 2024.

We have elected to offset the fair value amounts recognized for multiple similar derivative contracts executed with the same counterparty, including any related cash collateral assets or obligations as shown below; however, fair value amounts by hierarchy level are presented in the following tables on a gross basis. We have no derivative contracts that are subject to master netting arrangements that are reflected gross in our balance sheets.


	September 30, 2025
							Total Gross Fair Value		Effect of Counter- party Netting		Effect of Cash Collateral Netting		Net Carrying Value on Balance Sheet		Cash Collateral Paid or Received Not Offset
	Fair Value Hierarchy
	Level 1		Level 2		Level 3
Assets
Commodity derivative contracts	$	333	$	—	$	—	$	333	$	(328)	$	—	$	5	$	—



Investments of certain benefit plans	90		—		4		94		n/a		n/a		94		n/a
Investments in AFS debt securities	1		26		—		27		n/a		n/a		27		n/a
Foreign currency contracts	4		—		—		4		n/a		n/a		4		n/a
Total	$	428	$	26	$	4	$	458	$	(328)	$	—	$	130

Liabilities
Commodity derivative contracts	$	341	$	—	$	—	$	341	$	(328)	$	(13)	$	—	$	(66)
Physical purchase contracts	—		7		—		7		n/a		n/a		7		n/a
Blending program obligations	—		134		—		134		n/a		n/a		134		n/a



Total	$	341	$	141	$	—	$	482	$	(328)	$	(13)	$	141

VALERO ENERGY CORPORATION

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)


	December 31, 2024
							Total Gross Fair Value		Effect of Counter- party Netting		Effect of Cash Collateral Netting		Net Carrying Value on Balance Sheet		Cash Collateral Paid or Received Not Offset
	Fair Value Hierarchy
	Level 1		Level 2		Level 3
Assets
Commodity derivative contracts	$	402	$	—	$	—	$	402	$	(402)	$	—	$	—	$	—
Physical purchase contracts	—		2		—		2		n/a		n/a		2		n/a
Investments of certain benefit plans	89		—		4		93		n/a		n/a		93		n/a
Investments in AFS debt securities	6		20		—		26		n/a		n/a		26		n/a
Foreign currency contracts	6		—		—		6		n/a		n/a		6		n/a
Total	$	503	$	22	$	4	$	529	$	(402)	$	—	$	127

Liabilities
Commodity derivative contracts	$	448	$	—	$	—	$	448	$	(402)	$	(46)	$	—	$	(71)
Physical purchase contracts	—		3		—		3		n/a		n/a		3		n/a
Blending program obligations	—		13		—		13		n/a		n/a		13		n/a

Total	$	448	$	16	$	—	$	464	$	(402)	$	(46)	$	16

A description of our assets and liabilities recognized at fair value along with the valuation methods and inputs we used to develop their fair value measurements are as follows:

Commodity derivative contracts consist primarily of exchange-traded futures, which are used to reduce the impact of price volatility on our results of operations and cash flows as discussed in Note 13. These contracts are measured at fair value using a market approach based on quoted prices from the commodity exchange and are categorized in Level 1 of the fair value hierarchy.
Physical purchase contracts represent the fair value of fixed-price corn purchase contracts. The fair values of these purchase contracts are measured using a market approach based on quoted prices from the commodity exchange or an independent pricing service and are categorized in Level 2 of the fair value hierarchy.
Blending program obligations represent our liability for the purchase of compliance credits needed to satisfy our blending obligations under various government and regulatory blending programs, such as the U.S. Environmental Protection Agency’s (EPA) Renewable Fuel Standard (RFS), California Low Carbon Fuel Standard (LCFS), Canada Clean Fuel Regulations, U.K. Renewable Transport Fuel Obligation, and similar programs in other jurisdictions in which we operate (collectively, the Renewable and Low-Carbon Fuel Programs). The blending program

VALERO ENERGY CORPORATION

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

obligations are categorized in Level 2 of the fair value hierarchy and are measured at fair value using a market approach based on quoted prices from an independent pricing service.

Investments of certain benefit plans consist of investment securities held by trusts for the purpose of satisfying a portion of our obligations under certain U.S. nonqualified benefit plans. The plan assets categorized in Level 1 of the fair value hierarchy are measured at fair value using a market approach based on quoted prices from national securities exchanges. The plan assets categorized in Level 3 of the fair value hierarchy represent insurance contracts, the fair value of which is provided by the insurer.
Investments in AFS debt securities consist primarily of commercial paper and U.S. government treasury bills and have maturities within one year. The securities categorized in Level 1 are measured at fair value using a market approach based on quoted prices from national securities exchanges and the securities categorized in Level 2 are measured at fair value using a market approach based on quoted prices from independent pricing services. The amortized cost basis of the securities approximates fair value. Realized and unrealized gains and losses were de minimis for the three and nine months ended September 30, 2025 and 2024.
Foreign currency contracts consist of foreign currency exchange and purchase contracts related to our foreign operations to manage our exposure to exchange rate fluctuations on transactions denominated in currencies other than the local (functional) currencies of our operations. These contracts are valued based on quoted foreign currency exchange rates and are categorized in Level 1 of the fair value hierarchy.

Nonrecurring Fair Value Measurements

There were no assets or liabilities that were measured at fair value on a nonrecurring basis as of September 30, 2025 and December 31, 2024.

As discussed in Note 2, we concluded that the carrying values of the Benicia and Wilmington refineries were impaired as of March 31, 2025. The fair values of the refineries were determined using a market approach based on a comparison of recent property sales and other relevant real estate and market data, which we determined reflects the highest and best use of these assets. These fair values involved significant assumptions and actual results could differ from these estimates.

VALERO ENERGY CORPORATION

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The following table presents information (in millions) about our nonfinancial assets measured at fair value on a nonrecurring basis during the nine months ended September 30, 2025.


	March 31, 2025
	Fair Value Measurements Using
	Quoted Prices in Active Markets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Fair Value		Carrying Value as of September 30, 2025 (a)		Loss Recognized (b)
Assets
Long-lived assets of the Benicia Refinery	$	—	$	—	$	722	$	722	$	441	$	901
Long-lived assets of the Wilmington Refinery	—		—		847		847		808		230
Total	$	—	$	—	$	1,569	$	1,569	$	1,249	$	1,131

(a)The carrying values of the Benicia and Wilmington refineries as of September 30, 2025 are lower than the fair values as of March 31, 2025 primarily due to the recognition of depreciation and amortization expense.

(b)The asset impairment loss was recognized in our Refining segment in March 2025.

Financial Instruments

Our financial instruments include cash and cash equivalents, restricted cash, investments in AFS debt securities, receivables, payables, debt obligations, operating and finance lease obligations, commodity derivative contracts, and foreign currency contracts. The estimated fair values of cash and cash equivalents, restricted cash, receivables, payables, and operating and finance lease obligations approximate their carrying amounts; the carrying value and fair value of debt is shown in the table below (in millions).


		September 30, 2025				December 31, 2024
	Fair Value Hierarchy	Carrying Amount		Fair Value		Carrying Amount		Fair Value
Financial liabilities:
Debt (excluding finance lease obligations)	Level 2	$	8,366	$	8,327	$	8,085	$	7,776

Investments in AFS debt securities, commodity derivative contracts, and foreign currency contracts are recognized at their fair values as shown in “Recurring Fair Value Measurements” above.

VALERO ENERGY CORPORATION

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

13. PRICE RISK MANAGEMENT ACTIVITIES

General

We are exposed to market risks primarily related to the volatility in the price of commodities, foreign currency exchange rates, and the price of credits needed to comply with the Renewable and Low-Carbon Fuel Programs. We enter into derivative instruments to manage some of these risks, including derivative instruments related to the various commodities we purchase or produce, and foreign currency exchange and purchase contracts, as described below under “Risk Management Activities by Type of Risk.” These derivative instruments are recorded as either assets or liabilities measured at their fair values (see Note 12), as summarized below under “Fair Values of Derivative Instruments.” The effect of these derivative instruments on our income and other comprehensive income (loss) is summarized below under “Effect of Derivative Instruments on Income and Other Comprehensive Income (Loss).”

Risk Management Activities by Type of Risk

Commodity Price Risk

We are exposed to market risks related to the volatility in the price of feedstocks (primarily crude oil, waste and renewable feedstocks, and corn); the products we produce; and natural gas and electricity used in our operations. To reduce the impact of price volatility on our results of operations and cash flows, we use commodity derivative instruments, such as futures and options. Our positions in commodity derivative instruments are monitored and managed on a daily basis by our risk control group to ensure compliance with our stated risk management policy that is periodically reviewed with our Board and/or relevant Board committee.

We primarily use commodity derivative instruments as cash flow hedges and economic hedges. Our objectives for entering into each type of hedge is described below.

*•*Cash flow hedges – The objective of our cash flow hedges is to lock in the price of forecasted purchases and/or product sales at existing market prices that we deem favorable.

*•*Economic hedges – Our objectives for holding economic hedges are to (i) manage price volatility in certain feedstock and product inventories and (ii) lock in the price of forecasted purchases and/or product sales at existing market prices that we deem favorable.

VALERO ENERGY CORPORATION

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

As of September 30, 2025, we had the following outstanding commodity derivative instruments that were used as cash flow hedges and economic hedges, as well as commodity derivative instruments related to the physical purchase of corn at a fixed price. The information presents the notional volume of outstanding contracts by type of instrument and year of maturity (volumes in thousands of barrels, except corn contracts that are presented in thousands of bushels).


	Notional Contract Volumes by Year of Maturity
	2025	2026
Derivatives designated as cash flow hedges:
Refined petroleum products:

Futures – short	3,600	419



Derivatives designated as economic hedges:
Crude oil and refined petroleum products:


Futures – long	94,944	12,098
Futures – short	89,860	13,420







Corn:
Futures – long	60,540	660
Futures – short	89,210	10,420
Physical contracts – long	21,550	9,750

Renewable and Low-Carbon Fuel Programs Price Risk

We are exposed to market risk related to the volatility in the price of credits needed to comply with the Renewable and Low-Carbon Fuel Programs. To manage this risk, we enter into contracts to purchase these credits. Some of these contracts are derivative instruments; however, we elect the normal purchase exception and do not record these contracts at their fair values. The Renewable and Low-Carbon Fuel Programs require us to blend a certain volume of renewable and low-carbon fuels into the petroleum-based transportation fuels we produce in, or import into, the respective jurisdiction to be consumed therein based on annual quotas. To the degree we are unable to blend at the required quotas, we must purchase compliance credits (primarily Renewable Identification Numbers (RINs)). The cost of meeting our credit obligations under the Renewable and Low-Carbon Fuel Programs was $431 million and $156 million for the three months ended September 30, 2025 and 2024, respectively, and $1.2 billion and $535 million for the nine months ended September 30, 2025 and 2024, respectively. These amounts are reflected in cost of materials and other.

Foreign Currency Risk

We are exposed to exchange rate fluctuations on transactions related to our foreign operations that are denominated in currencies other than the local (functional) currencies of our operations. To manage our exposure to these exchange rate fluctuations, we often use foreign currency contracts. These contracts are not designated as hedging instruments for accounting purposes and therefore are classified as economic hedges. As of September 30, 2025, we had foreign currency contracts to purchase $537 million of U.S. dollars. Of these commitments, $467 million matured on or before October 20, 2025 and the remaining $70 million will mature by October 24, 2025.

VALERO ENERGY CORPORATION

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Fair Values of Derivative Instruments

The following table provides information about the fair values of our derivative instruments as of September 30, 2025 and December 31, 2024 (in millions) and the line items in our balance sheets in which the fair values are reflected. See Note 12 for additional information related to the fair values of our derivative instruments.

As indicated in Note 12, we net fair value amounts recognized for multiple similar derivative contracts executed with the same counterparty under master netting arrangements, including cash collateral assets and obligations. The following table, however, is presented on a gross asset and gross liability basis, which results in the reflection of certain assets in liability accounts and certain liabilities in asset accounts:


	Balance Sheet Location		September 30, 2025						December 31, 2024
		Asset Derivatives			Liability Derivatives			Asset Derivatives			Liability Derivatives
Derivatives designated as hedging instruments:
Commodity contracts	Receivables, net		$	8		$	8		$	12		$	13

Derivatives not designated as hedging instruments:
Commodity contracts	Receivables, net		$	325		$	333		$	390		$	435
Physical purchase contracts	Inventories		—			7			2			3
Foreign currency contracts	Receivables, net		4			—			6			—

Total			$	329		$	340		$	398		$	438

Market Risk

Our price risk management activities involve the receipt or payment of fixed price commitments into the future. These transactions give rise to market risk, which is the risk that future changes in market conditions may make an instrument less valuable. We closely monitor and manage our exposure to market risk on a daily basis in accordance with policies that are periodically reviewed with our Board and/or relevant Board committee. Market risks are monitored by our risk control group to ensure compliance with our stated risk management policy. We do not require any collateral or other security to support derivative instruments into which we enter. We also do not have any derivative instruments that require us to maintain a minimum investment-grade credit rating.

VALERO ENERGY CORPORATION

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Effect of Derivative Instruments on Income and Other Comprehensive Income (Loss)

The following table provides information about the gain (loss) recognized in income and other comprehensive income (loss) due to fair value adjustments of our cash flow hedges (in millions):


Derivatives in Cash Flow Hedging Relationships	Location of Gain (Loss) Recognized in Income on Derivatives		Three Months Ended September 30,					Nine Months Ended September 30,
2025	2024	2025			2024
Commodity contracts:
Gain (loss) recognized in other comprehensive income (loss)	n/a		$	(15)		$	83	$	(15)	$	45
Gain (loss) reclassified from accumulated other comprehensive loss into income	Revenues		(23)			40		(23)		94

For cash flow hedges, no component of any derivative instrument’s gain or loss was excluded from the assessment of hedge effectiveness for the three and nine months ended September 30, 2025 and 2024. For the three and nine months ended September 30, 2025 and 2024, cash flow hedges primarily related to forecasted sales of renewable diesel. As of September 30, 2025, the estimated deferred after-tax gain that is expected to be reclassified into revenues within the next 12 months was not material. The changes in accumulated other comprehensive loss by component, net of tax, for the three and nine months ended September 30, 2025 and 2024 are described in Note 5.

The following table provides information about the gain (loss) recognized in income on our derivative instruments with respect to our economic hedges and our foreign currency hedges and the line items in our statements of income in which such gains (losses) are reflected (in millions):


Derivatives Not Designated as Hedging Instruments	Location of Gain (Loss) Recognized in Income on Derivatives		Three Months Ended September 30,					Nine Months Ended September 30,
2025	2024	2025			2024
Commodity contracts	Revenues		$	(3)		$	(16)	$	(7)	$	(23)
Commodity contracts	Cost of materials and other		—			(9)		(50)		(66)

Foreign currency contracts	Cost of materials and other		13			(17)		(7)		2

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