Item 1. FINANCIAL STATEMENTS

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Item 1. FINANCIAL STATEMENTS

VALERO ENERGY CORPORATION

CONSOLIDATED BALANCE SHEETS

(millions of dollars, except par value)


	March 31, 2026		December 31, 2025
	(unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	5,733	$	4,688

Receivables, net	13,410		9,877
Inventories	7,556		7,591
Prepaid expenses and other	1,126		1,054
Total current assets	27,825		23,210
Property, plant, and equipment, at cost	50,012		50,091
Accumulated depreciation	(22,899)		(22,474)
Property, plant, and equipment, net	27,113		27,617
Deferred charges and other assets, net	7,204		7,161
Total assets	$	62,142	$	57,988
LIABILITIES AND EQUITY
Current liabilities:
Current portion of debt and finance lease obligations	$	1,026	$	949
Accounts payable	13,403		10,139
Accrued expenses	1,313		1,403
Taxes other than income taxes payable	1,426		1,550
Income taxes payable	484		68
Total current liabilities	17,652		14,109
Debt and finance lease obligations, less current portion	10,465		9,670
Deferred income tax liabilities	4,725		5,146
Other long-term liabilities	2,366		2,458
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	7,002		6,981
Treasury stock, at cost; 376,566,299 and 374,561,457 common shares	(31,290)		(30,753)
Retained earnings	48,863		47,959
Accumulated other comprehensive loss	(712)		(469)
Total Valero Energy Corporation stockholders’ equity	23,870		23,725
Noncontrolling interests	3,064		2,880
Total equity	26,934		26,605
Total liabilities and equity	$	62,142	$	57,988

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 March 31,
		2026		2025
Revenues (a)		$	32,381	$	30,258
Cost of sales:
Cost of materials and other		26,185		26,048
Taxes other than income taxes		1,721		1,500

Operating expenses (excluding depreciation and amortization expense reflected below)		1,595		1,523
Depreciation and amortization expense		828		680
Total cost of sales		30,329		29,751
Asset impairment loss		—		1,131
Other operating expenses		24		4
General and administrative expenses (excluding depreciation and amortization expense reflected below)		285		261
Depreciation and amortization expense		12		11
Operating income (loss)		1,731		(900)
Other income, net		132		120
Interest and debt expense, net of capitalized interest		(140)		(137)
Income (loss) before income tax expense (benefit)		1,723		(917)
Income tax expense (benefit)		401		(265)


Net income (loss)		1,322		(652)
Less: Net income (loss) attributable to noncontrolling interests		59		(57)
Net income (loss) attributable to Valero Energy Corporation stockholders		$	1,263	$	(595)








Earnings (loss) per common share		$	4.22	$	(1.90)
Weighted-average common shares outstanding (in millions)		298		314





Earnings (loss) per common share – assuming dilution		$	4.22	$	(1.90)
Weighted-average common shares outstanding – assuming dilution (in millions)		298		314
__________________________
Supplemental information:
(a) Includes excise taxes on sales by certain of our foreign operations		$	1,725	$	1,504

See Condensed Notes to Consolidated Financial Statements.

VALERO ENERGY CORPORATION

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(millions of dollars)

(unaudited)


	Three Months Ended March 31,
		2026		2025
Net income (loss)		$	1,322	$	(652)
Other comprehensive income (loss):
Foreign currency translation adjustment		(194)		162
Net gain (loss) on pension and other postretirement benefits		(4)		1
Net gain (loss) on cash flow hedges		(129)		3

Other comprehensive income (loss) before income tax expense (benefit)		(327)		166
Income tax expense (benefit) related to items of other comprehensive income (loss)		(19)		1
Other comprehensive income (loss)		(308)		165
Comprehensive income (loss)		1,014		(487)
Less: Comprehensive loss attributable to noncontrolling interests		(6)		(55)
Comprehensive income (loss) attributable to Valero Energy Corporation stockholders		$	1,020	$	(432)

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 December 31, 2025	$	7	$	6,981	$	(30,753)	$	47,959	$	(469)	$	23,725	$	2,880	$	26,605
Net income	—		—		—		1,263		—		1,263		59		1,322
Dividends on common stock ($1.20 per share)	—		—		—		(359)		—		(359)		—		(359)
Stock-based compensation expense	—		48		—		—		—		48		—		48
Transactions in connection with stock-based compensation plans	—		(27)		27		—		—		—		—		—
Purchases of common stock for treasury	—		—		(564)		—		—		(564)		—		(564)
Contributions from noncontrolling interests	—		—		—		—		—		—		190		190



Other comprehensive loss	—		—		—		—		(243)		(243)		(65)		(308)
Balance as of March 31, 2026	$	7	$	7,002	$	(31,290)	$	48,863	$	(712)	$	23,870	$	3,064	$	26,934

Balance as of December 31, 2024	$	7	$	6,939	$	(28,178)	$	47,016	$	(1,272)	$	24,512	$	3,009	$	27,521
Net loss	—		—		—		(595)		—		(595)		(57)		(652)
Dividends on common stock ($1.13 per share)	—		—		—		(356)		—		(356)		—		(356)
Stock-based compensation expense	—		37		—		—		—		37		—		37
Transactions in connection with stock-based compensation plans	—		(32)		33		—		—		1		—		1
Purchases of common stock for treasury	—		—		(272)		—		—		(272)		—		(272)

Distributions to noncontrolling interests	—		—		—		—		—		—		(129)		(129)


Other comprehensive income	—		—		—		—		163		163		2		165
Balance as of March 31, 2025	$	7	$	6,944	$	(28,417)	$	46,065	$	(1,109)	$	23,490	$	2,825	$	26,315

See Condensed Notes to Consolidated Financial Statements.

VALERO ENERGY CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

(millions of dollars)

(unaudited)


	Three Months Ended March 31,
	2026		2025
Cash flows from operating activities:
Net income (loss)	$	1,322	$	(652)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization expense	840		691


Asset impairment loss	—		1,131

Deferred income tax benefit	(397)		(324)
Changes in operating assets and liabilities:
Current assets and current liabilities (see Note 11)	(303)		157
Deferred charges and other assets	(41)		(74)
Long-term liabilities	(82)		3
Other operating activities, net	51		20
Net cash provided by operating activities	1,390		952
Cash flows from investing activities:
Capital expenditures (excluding variable interest entities (VIEs))	(160)		(189)
Capital expenditures of VIEs:
Diamond Green Diesel Holdings LLC (DGD)	(4)		(59)
Other VIEs	(1)		(1)
Deferred turnaround and catalyst cost expenditures (excluding VIEs)	(254)		(374)
Deferred turnaround and catalyst cost expenditures of DGD	(29)		(36)





Investments in nonconsolidated joint ventures	—		(1)
Other investing activities, net	48		25
Net cash used in investing activities	(400)		(635)
Cash flows from financing activities:
Proceeds from debt issuances and borrowings (excluding VIEs)	2,700		2,449

Proceeds from debt borrowings of DGD	350		50

Repayments of debt and finance lease obligations (excluding VIEs)	(1,904)		(2,047)
Repayments of debt and finance lease obligations of VIEs:
DGD	(257)		(57)
Other VIEs	(14)		(12)

Purchases of common stock for treasury	(573)		(274)

Common stock dividend payments	(359)		(356)
Contributions from noncontrolling interests	190		—
Distributions to noncontrolling interests	—		(129)
Other financing activities, net	(9)		(6)
Net cash provided by (used in) financing activities	124		(382)
Effect of foreign exchange rate changes on cash	(67)		43
Net increase (decrease) in cash, cash equivalents, and restricted cash	1,047		(22)
Cash, cash equivalents, and restricted cash at beginning of period (a)	4,865		4,829
Cash, cash equivalents, and restricted cash at end of period (a)	$	5,912	$	4,807

(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 were 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 period presented. All such adjustments are of a normal recurring nature unless otherwise disclosed. Operating results for the interim period are not necessarily indicative of the results that may be expected for the year ending December 31, 2026. 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, 2025.

The balance sheet as of December 31, 2025 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, 2025.

Reclassifications

Certain prior year amounts have been reclassified to conform to the 2026 presentation. The changes were due to the separate presentation of (i) taxes other than income taxes, which were previously included in cost of materials and other in our statements of income and (ii) changes in deferred charges and other assets and changes in long-term liabilities, which were previously included in “changes in deferred charges and credits and other operating activities, net” in our statements of cash flows. In addition, prior year amounts that were presented separately for activities related to investments in available-for-sale (AFS) debt securities have been reclassified to “other investing activities, net” in our statements of cash flows.

Significant Accounting Policy

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.

VALERO ENERGY CORPORATION

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

2. IMPAIRMENT AND OTHER MATTERS

In March 2025, we approved a plan to idle the processing units and cease refining operations at our Benicia Refinery by the end of April 2026. In addition, we considered strategic alternatives for our remaining operations in California. As a result of these actions, the following impacts were recorded in our Refining segment:

During the first quarter of 2025, we evaluated the Benicia and Wilmington refineries for potential impairment and concluded that their carrying values were not recoverable as of March 31, 2025. Therefore, we recognized a combined asset impairment loss of $1.1 billion.
Included in the recoverability assessments discussed above was the recognition of expected asset retirement obligations of $337 million. During the three months ended March 31, 2026, we settled approximately $100 million of the asset retirement obligation related to our Benicia Refinery.
We shortened the estimated useful life of the Benicia Refinery, and as a result, have been depreciating the revised carrying value of the net property, plant, and equipment and other noncurrent assets since April 2025 to the estimated salvage value. Accordingly, we recorded incremental depreciation of approximately $100 million in depreciation and amortization expense in the three months ended March 31, 2026.
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 was included in operating expenses (excluding depreciation and amortization expense). A portion of this amount was paid to eligible employees during the first quarter of 2026 and we expect to distribute the remaining balance by the end of the second quarter of 2026.
During the fourth quarter of 2025, we reduced certain inventory levels related to our California operations that resulted in the liquidation of last-in, first-out (LIFO) inventory layers with historical costs higher than current costs. As a result, cost of materials and other increased by $37 million.

During the first quarter of 2026, we began idling the processing units through a phased approach and ceased operation of the fuel production units at our Benicia Refinery. In accordance with our plan, full idling of all processing units was completed in April 2026. While we evaluate potential redevelopment options for the future use of the refinery property, we plan to maintain all required operating permits and keep the facilities in a safe, clean, and idled condition. In addition, we expect to continue to fulfill our contractual obligations to customers in the Northern California market through imports or other alternative supply arrangements. Beginning in the second quarter of 2026, activities associated with the decommissioning and redevelopment of our Benicia Refinery will be reported within other corporate expenses in our segment information, as disclosed in Note 10.

VALERO ENERGY CORPORATION

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

3. INVENTORIES

Inventories consisted of the following (in millions):


	March 31, 2026		December 31, 2025
Refinery feedstocks	$	1,629	$	1,880
Refined petroleum products and blendstocks	4,317		4,182
Renewable diesel feedstocks and products	867		809
Ethanol feedstocks and products	335		314
Materials and supplies	408		406


Inventories	$	7,556	$	7,591

As of March 31, 2026 and December 31, 2025, the replacement cost (market value) of LIFO inventories exceeded their LIFO carrying amounts by $11.2 billion and $2.6 billion, respectively. Our non-LIFO inventories accounted for $1.3 billion and $1.2 billion of our total inventories as of March 31, 2026 and December 31, 2025, respectively.

4. DEBT

Public Debt

On March 10, 2026, we issued $850 million of 5.150 percent Senior Notes due March 10, 2036. Proceeds from this debt issuance totaled $850 million before deducting the underwriting discount and other debt issuance costs.

In February 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.

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):


				March 31, 2026
	Facility Amount		Maturity Date	Outstanding Borrowings		Letters of Credit Issued (a)		Availability
Committed facilities:
Valero Revolver	$	4,000	October 2030	$	—	$	2	$	3,998
Accounts receivable sales facility	1,300		July 2026	—		n/a		1,300
Committed facilities of VIEs (b):
DGD Revolver (c)	400		February 2029	100		39		261
DGD Loan Agreement (d)	100		June 2029	—		n/a		100
IEnova Revolver (e)	1,000		February 2028	10		n/a		990
Uncommitted facilities:
Letter of credit facilities	n/a		n/a	n/a		6		n/a
Uncommitted facility of VIE (b):
DGD letter of credit facility	n/a		n/a	n/a		68		n/a

(a)Letters of credit issued as of March 31, 2026 expire at various times in 2026 through 2027.

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

(c)In February 2026, DGD amended this unsecured revolving credit facility with a syndicate of financial institutions (the DGD Revolver) to (i) extend the maturity date to February 2029 and (ii) modify the reference interest rates from an adjusted term SOFR, a secured overnight financing rate (SOFR), to the term SOFR, and from an adjusted daily simple SOFR to the daily simple SOFR. The variable interest rate on the DGD Revolver was 6.169 percent as of March 31, 2026.

(d)In February 2026, DGD amended its unsecured revolving loan agreement with its members (the DGD Loan Agreement) to extend the maturity date to June 2029. The amounts shown for 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.

(e)Central Mexico Terminals (defined in Note 7) has an unsecured revolving credit facility (the IEnova Revolver) with IEnova (defined in Note 7). The variable interest rate on the IEnova Revolver was 7.511 percent and 7.835 percent as of March 31, 2026 and December 31, 2025, respectively.

VALERO ENERGY CORPORATION

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Activity under our credit facilities was as follows (in millions):


	Three Months Ended March 31,
	2026		2025
Borrowings:
Accounts receivable sales facility	$	1,850	$	1,800
DGD Revolver	300		50
DGD Loan Agreement	50		—
IEnova Revolver	—		—
Repayments:
Accounts receivable sales facility	(1,850)		(1,800)
DGD Revolver	(200)		(50)
DGD Loan Agreement	(50)		—
IEnova Revolver	(14)		(12)

Other Disclosures

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


	Three Months Ended March 31,
		2026		2025
Interest and debt expense		$	146	$	142
Less: Capitalized interest		6		5
Interest and debt expense, net of capitalized interest		$	140	$	137

VALERO ENERGY CORPORATION

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

5. COMMITMENTS AND CONTINGENCIES

Port Arthur Refinery Fire

On March 23, 2026, our Port Arthur Refinery experienced a fire in one of the refinery’s distillate hydrotreater units that prompted a full shut-down of the refinery. As of the date of this quarterly report on Form 10-Q, the Port Arthur Refinery has resumed operations at reduced capacity and efforts remain ongoing to determine the ultimate cause of the incident, assess the full extent of the damages, and implement a plan for making any repairs or replacements. We currently expect that the incident will result in additional capital expenditures in 2026, which should be covered by insurance, subject to our self-insured retention. However, the ultimate timing and amount of any such capital expenditures and insurance proceeds are currently uncertain and are not reasonably estimable at this time. Such capital expenditures may also occur in a different period than when any insurance proceeds may be received. Uncertainties remain with respect to the ultimate outcomes from this incident and the resulting impact on our financial position, results of operations, and cash flows.

We have received a number of lawsuits, including a proposed class action lawsuit, alleging personal injury, property damage, and nuisance in the adjacent community. Several of these actions seek unspecified damages in excess of $1 million. While we intend to vigorously defend against such pending actions, the ultimate outcomes and impacts thereof are currently uncertain and any potential losses or damages cannot be reasonably estimated at this time. We continue to work cooperatively with various regulatory authorities reviewing the incident and discussions are ongoing. As of the date of this quarterly report on Form 10-Q, no formal regulatory actions or proceedings have been commenced. Regulatory actions or proceedings, if any, that may arise in the future, are currently uncertain and we are unable to make any reasonable estimates with respect thereto at this time.

Trade and Other Policy Matters

The U.S. federal government under the current administration implemented new or revised tariffs that negatively impacted our business, particularly our Renewable Diesel segment, during 2025 and into 2026, including those implemented pursuant to the International Emergency Economic Powers Act (IEEPA). On February 20, 2026, the U.S. Supreme Court ruled that tariffs imposed under IEEPA were invalid. On April 20, 2026, the U.S. Customs and Border Protection (CBP) launched a system that was developed to process IEEPA tariff refund claims. Based on the eligibility parameters established by the CBP for the initial phase of the refund process, DGD prepared and filed a refund claim in the amount of $51 million, which has been accepted by the CBP. In accordance with the accounting for gain contingencies, we recorded a receivable for this amount in April 2026. We will continue to monitor developments related to trade and tariff-related matters and evaluate their potential effects on our business, financial position, results of operations, and cash flows.

VALERO ENERGY CORPORATION

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

6. 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 months ended March 31, 2026 and 2025, we purchased for treasury 2,327,023 shares and 2,074,605 shares, respectively.

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 March 31, 2026
September 2024 Program	September 19, 2024	$	2,500	$	1,206
February 2026 Program	February 25, 2026	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 March 31,
	2026								2025
	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	$	(602)	$	130	$	3	$	(469)	$	(1,264)	$	(2)	$	(6)	$	(1,272)
Other comprehensive income (loss) before reclassifications	(190)		—		(74)		(264)		162		—		(1)		161
Amounts reclassified from accumulated other comprehensive loss	—		(1)		24		23		—		(2)		2		—
Effect of exchange rates	—		(2)		—		(2)		—		2		—		2
Other comprehensive income (loss)	(190)		(3)		(50)		(243)		162		—		1		163
Balance as of end of period	$	(792)	$	127	$	(47)	$	(712)	$	(1,102)	$	(2)	$	(5)	$	(1,109)

VALERO ENERGY CORPORATION

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

7. 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 March 31, 2026, 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 Energética 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 the performance of the consolidated VIEs, net of intercompany eliminations, to the extent of our ownership interest in each VIE.

The following tables present 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
March 31, 2026
Assets
Cash and cash equivalents	$	162	$	2	$	31	$	195
Other current assets	1,496		20		86		1,602
Property, plant, and equipment, net	3,593		614		61		4,268

Liabilities
Current liabilities, including current portion of debt and finance lease obligations	$	341	$	36	$	2	$	379
Debt and finance lease obligations, less current portion	609		—		—		609

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)


	DGD		Central Mexico Terminals		Other		Total
December 31, 2025
Assets
Cash and cash equivalents	$	196	$	2	$	30	$	228
Other current assets	1,106		18		49		1,173
Property, plant, and equipment, net	3,643		619		61		4,323

Liabilities
Current liabilities, including current portion of debt and finance lease obligations	$	297	$	43	$	4	$	344
Debt and finance lease obligations, less current portion	616		—		—		616

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.

8. 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
	2026		2025		2026		2025










Three months ended March 31
Service cost	$	27	$	27	$	1	$	1
Interest cost	32		34		3		3
Expected return on plan assets	(58)		(55)		—		—
Amortization of:
Net actuarial gain	(2)		(2)		(2)		(2)
Prior service cost	2		2		—		—
Settlement loss	1		1		—		—
Net periodic benefit cost	$	2	$	7	$	2	$	2

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.”

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CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

9. EARNINGS (LOSS) PER COMMON SHARE

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


	Three Months Ended March 31,
		2026		2025
Earnings (loss) per common share:
Net income (loss) attributable to Valero stockholders		$	1,263	$	(595)
Less: Income allocated to participating securities		4		1
Net income (loss) available to common stockholders		$	1,259	$	(596)

Weighted-average common shares outstanding		298		314

Earnings (loss) per common share		$	4.22	$	(1.90)

Earnings (loss) per common share – assuming dilution:
Net income (loss) attributable to Valero stockholders		$	1,263	$	(595)
Less: Income allocated to participating securities		4		1
Net income (loss) available to common stockholders		$	1,259	$	(596)

Weighted-average common shares outstanding		298		314
Effect of dilutive securities		—		—
Weighted-average common shares outstanding – assuming dilution		298		314

Earnings (loss) per common share – assuming dilution		$	4.22	$	(1.90)

Participating securities include restricted stock and performance awards granted under our 2020 Omnibus Stock Incentive Plan. Dilutive securities include participating securities. For the three months ended March 31, 2026 and 2025, we computed earnings (loss) per common share – assuming dilution using the two-class method and included dilutive securities as appropriate.

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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):


	March 31, 2026		December 31, 2025
Receivables from contracts with customers, included in receivables, net	$	8,610	$	6,233
Contract liabilities, included in accrued expenses	61		60

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 March 31, 2026, we have not disclosed the aggregate amount of the transaction price allocated to our remaining performance obligations. See Note 2 for additional information regarding contractual obligations related to our Benicia Refinery.

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 (loss) 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 includes the operations of DGD, a consolidated joint venture as discussed in Note 7, 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

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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 and other category. As discussed in Note 2, beginning in the second quarter of 2026, activities associated with the decommissioning and redevelopment of our Benicia Refinery will be reported within other corporate expenses.

Our chief operating decision maker (CODM) is our Chairman of the Board, Chief Executive Officer and President. Our CODM uses operating income (loss) 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 (loss) by segment when evaluating the operating performance of each segment.

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CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The following tables reflect information about our reportable segments and include the reconciliation to our consolidated income (loss) before income tax expense (benefit) (in millions):


	Refining		Renewable Diesel		Ethanol		Total
Three months ended March 31, 2026
Revenues:
Revenues from external customers	$	30,805	$	711	$	865	$	32,381
Intersegment revenues	2		703		302		1,007
	30,807		1,414		1,167		33,388

Reconciliation of revenues by segment to consolidated revenues
Elimination of intersegment revenues							(1,007)
Total consolidated revenues							$	32,381
Less:
Cost of sales:
Cost of materials and other (a)	25,178		1,112		894

Taxes other than income taxes	1,721		—		—
Operating expenses (excluding depreciation and amortization expense reflected below)	1,346		85		164
Depreciation and amortization expense	732		78		19
Total cost of sales	28,977		1,275		1,077

Other operating expenses	24		—		—
Operating income by segment	$	1,806	$	139	$	90	$	2,035

Reconciliation of operating income by segment to income before income tax expense
Elimination of intersegment profits							(7)
Unallocated amounts:
Other corporate expenses (b)							(297)
Other income, net							132
Interest and debt expense, net of capitalized interest							(140)
Income before income tax expense							$	1,723

Other segment disclosures
Segment assets	$	47,506	$	5,634	$	1,569	$	54,709
Expenditures for long-lived assets (c)	402		33		7		442

See notes on page 19.

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CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)


	Refining		Renewable Diesel		Ethanol		Total
Three months ended March 31, 2025
Revenues:
Revenues from external customers	$	28,757	$	493	$	1,008	$	30,258
Intersegment revenues	2		407		217		626
	28,759		900		1,225		30,884

Reconciliation of revenues by segment to consolidated revenues
Elimination of intersegment revenues							(626)
Total consolidated revenues							$	30,258
Less:
Cost of sales:
Cost of materials and other (a)	24,769		895		1,032

Taxes other than income taxes	1,500		—		—
Operating expenses (excluding depreciation and amortization expense reflected below)	1,291		78		154
Depreciation and amortization expense	594		68		19
Total cost of sales	28,154		1,041		1,205
Asset impairment loss	1,131		—		—
Other operating expenses	4		—		—
Operating income (loss) by segment	$	(530)	$	(141)	$	20	$	(651)

Reconciliation of operating income (loss) by segment to loss before income tax benefit
Elimination of intersegment losses							23
Unallocated amounts:
Other corporate expenses (b)							(272)
Other income, net							120
Interest and debt expense, net of capitalized interest							(137)
Loss before income tax benefit							$	(917)

Other segment disclosures
Segment assets	$	45,755	$	5,283	$	1,621	$	52,659
Expenditures for long-lived assets (c)	533		95		8		636

(a)Cost of materials and other is net of the clean fuel production credit on qualifying sales of certain low-carbon transportation fuels of $178 million and $20 million for our Renewable Diesel and Ethanol segments, respectively, in the three months ended March 31, 2026 and $51 million for our Renewable Diesel segment in the three months ended March 31, 2025.

(b)Other corporate expenses include general and administrative expenses and depreciation and amortization expense, as reflected in our consolidated statements of income on page 2.

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

VALERO ENERGY CORPORATION

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Total assets for reportable segments reconciled to our consolidated assets were as follows (in millions):


	March 31, 2026		December 31, 2025
Total assets for reportable segments	$	54,709	$	51,316
Corporate assets	7,807		6,938
Elimination of intercompany receivables and other assets	(374)		(266)
Total consolidated assets	$	62,142	$	57,988

Expenditures for long-lived assets for reportable segments reconciled to our consolidated expenditures for long-lived assets were as follows (in millions):


	Three Months Ended March 31,
		2026		2025
Expenditures for long-lived assets for reportable segments		$	442	$	636
Corporate expenditures for long-lived assets		6		23
Total consolidated expenditures for long-lived assets		$	448	$	659

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


	Three Months Ended March 31,
		2026		2025
Refining:
Gasolines and blendstocks		$	12,431	$	12,374
Distillates		15,461		13,376
Other product revenues		2,913		3,007
Total Refining revenues		30,805		28,757
Renewable Diesel:
Renewable diesel		566		391
Renewable naphtha		37		39
Neat SAF		108		63
Total Renewable Diesel revenues		711		493
Ethanol:
Ethanol		676		787
Distillers grains		189		221
Total Ethanol revenues		865		1,008

Revenues		$	32,381	$	30,258

As of March 31, 2026 and December 31, 2025, our investments in nonconsolidated joint ventures accounted for under the equity method were $680 million and $684 million, respectively, all of which

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CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

related to the Refining segment and are reflected in “deferred charges and other assets, net” in our balance sheets.

11. SUPPLEMENTAL CASH FLOW INFORMATION

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


	Three Months Ended March 31,
	2026		2025
Decrease (increase) in current assets:
Receivables, net	$	(3,707)	$	(457)
Inventories	(16)		693
Prepaid expenses and other	(71)		63
Increase (decrease) in current liabilities:
Accounts payable	3,310		(42)
Accrued expenses	(102)		(13)
Taxes other than income taxes payable	(139)		(84)
Income taxes payable	422		(3)
Changes in current assets and current liabilities	$	(303)	$	157

Changes in current assets and current liabilities for the three months ended March 31, 2026 were primarily due to the following:

The increase in receivables was due to an increase in refined petroleum product prices combined with an increase in related sales volumes in March 2026 compared to December 2025; and
The increase in accounts payable was due to an increase in crude oil and other feedstock prices combined with an increase in related volumes purchased in March 2026 compared to December 2025.

Changes in current assets and current liabilities for the three months ended March 31, 2025 were primarily due to the following:

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

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CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

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


	Three Months Ended March 31,
	2026		2025
Interest paid in excess of amount capitalized, including interest on finance leases	$	96	$	84
Income taxes paid, net	63		35

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


	Three Months Ended March 31,
	2026				2025
	Operating Leases		Finance Leases		Operating Leases		Finance Leases
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows	$	138	$	29	$	127	$	29

Financing cash flows	—		61		—		65
Changes in lease balances resulting from new and modified leases	118		—		100		10

There were no significant noncash investing and financing activities during the three months ended March 31, 2026 or 2025, 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 March 31, 2026 and December 31, 2025.

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.


	March 31, 2026
							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	$	5,199	$	—	$	—	$	5,199	$	(5,100)	$	—	$	99	$	—
Physical purchase contracts	—		2		—		2		n/a		n/a		2		n/a

Clean fuel production credits	—		—		140		140		n/a		n/a		140		n/a
Investments of certain benefit plans	90		—		4		94		n/a		n/a		94		n/a
Investments in AFS debt securities	—		28		—		28		n/a		n/a		28		n/a
Foreign currency contracts	10		—		—		10		n/a		n/a		10		n/a
Total	$	5,299	$	30	$	144	$	5,473	$	(5,100)	$	—	$	373

Liabilities
Commodity derivative contracts	$	5,444	$	—	$	—	$	5,444	$	(5,100)	$	(344)	$	—	$	(166)
Physical purchase contracts	—		7		—		7		n/a		n/a		7		n/a
Blending program obligations	—		149		—		149		n/a		n/a		149		n/a



Total	$	5,444	$	156	$	—	$	5,600	$	(5,100)	$	(344)	$	156

VALERO ENERGY CORPORATION

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)


	December 31, 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	$	490	$	—	$	—	$	490	$	(448)	$	(7)	$	35	$	—
Physical purchase contracts	—		1		—		1		n/a		n/a		1		n/a
Clean fuel production credits	—		—		55		55		n/a		n/a		55		n/a
Investments of certain benefit plans	92		—		4		96		n/a		n/a		96		n/a
Investments in AFS debt securities	1		26		—		27		n/a		n/a		27		n/a

Total	$	583	$	27	$	59	$	669	$	(448)	$	(7)	$	214

Liabilities
Commodity derivative contracts	$	453	$	—	$	—	$	453	$	(448)	$	(5)	$	—	$	(39)
Physical purchase contracts	—		4		—		4		n/a		n/a		4		n/a
Blending program obligations	—		85		—		85		n/a		n/a		85		n/a
Foreign currency contracts	2		—		—		2		n/a		n/a		2		n/a
Total	$	455	$	89	$	—	$	544	$	(448)	$	(5)	$	91

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.
Clean fuel production credits represent the fair value of the tax credits that DGD intends to sell on behalf of the other joint venture member. These tax credits are categorized in Level 3 of the fair value hierarchy and are measured at fair value using a market approach based on historical sales prices and third-party consultant estimates. Significant unobservable inputs used in the valuation include the expected market discount per $1.00 of credit value.

VALERO ENERGY CORPORATION

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

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 months ended March 31, 2026 and 2025.
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 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.
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 measured at fair value using a market approach 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 March 31, 2026 and December 31, 2025.

VALERO ENERGY CORPORATION

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Financial Instruments

Our financial instruments include cash and cash equivalents, restricted cash, receivables, investments of certain benefit plans, investments in AFS debt securities, 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 are shown in the table below (in millions).


		March 31, 2026				December 31, 2025
	Fair Value Hierarchy	Carrying Amount		Fair Value		Carrying Amount		Fair Value
Financial liabilities:
Debt (excluding finance lease obligations)	Level 2	$	9,191	$	9,051	$	8,261	$	8,190

Investments of certain benefit plans, 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.

13. PRICE RISK MANAGEMENT ACTIVITIES

General

We are exposed to market risks primarily related to the volatility in the price of commodities, the price of credits needed to comply with the Renewable and Low-Carbon Fuel Programs, and foreign currency exchange rates. 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.

VALERO ENERGY CORPORATION

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

We primarily use commodity derivative instruments that are either designated as cash flow hedges or entered into for economic hedging purposes. While both types of derivatives are used to manage exposure to commodity price risk, they differ in their risk management focus and accounting treatment, as described below.

*•*Cash flow hedges – Cash flow hedges are derivative instruments that are formally designated and qualify for hedge accounting. The objective of these hedges is to reduce variability in cash flows by locking in the price of forecasted purchases and/or product sales at market prices.

*•*Economic hedges – Economic hedges are derivative instruments that are not designated as hedging instruments for accounting purposes. These derivatives are primarily used to manage exposure to commodity price volatility associated with certain feedstock and product inventories and, in some cases, forecasted purchases and/or product sales. Although economic hedges may achieve similar economic risk management objectives as cash flow hedges, changes in their fair value are recognized currently in our statements of income.

As of March 31, 2026, 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
						2026
Derivatives designated as cash flow hedges:
Refined petroleum products:

Futures – short						2,071



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


Futures – long						180,088
Futures – short						186,476
Options – long						100






Corn:
Futures – long						55,960
Futures – short						112,600
Physical contracts – long						55,130

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

VALERO ENERGY CORPORATION

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

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 $653 million and $332 million for the three months ended March 31, 2026 and 2025, 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 March 31, 2026, we had foreign currency contracts to purchase $530 million of U.S. dollars. These commitments matured on or before April 24, 2026.

Fair Values of Derivative Instruments

The following table provides information about the fair values of our derivative instruments as of March 31, 2026 and December 31, 2025 (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		March 31, 2026						December 31, 2025
		Asset Derivatives			Liability Derivatives			Asset Derivatives			Liability Derivatives
Derivatives designated as hedging instruments:
Commodity contracts	Receivables, net		$	193		$	363		$	31		$	7

Derivatives not designated as hedging instruments:
Commodity contracts	Receivables, net		$	5,006		$	5,081		$	459		$	446
Physical purchase contracts	Inventories		2			7			1			4
Foreign currency contracts	Receivables, net		10			—			—			—
Foreign currency contracts	Accrued expenses		—			—			—			2
Total			$	5,018		$	5,088		$	460		$	452

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CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

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.

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

The following table provides information about the 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 Loss Recognized in Income on Derivatives			Three Months Ended March 31,
		2026	2025
Commodity contracts:
Loss recognized in other comprehensive income (loss)	n/a				$	(190)	$	(4)
Loss reclassified from accumulated other comprehensive loss into income	Revenues				(61)		(7)

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 months ended March 31, 2026 and 2025. For the three months ended March 31, 2026 and 2025, cash flow hedges primarily related to forecasted sales of renewable diesel. As of March 31, 2026, the estimated deferred after-tax loss 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 months ended March 31, 2026 and 2025 are described in Note 6.

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 March 31,
		2026	2025
Commodity contracts	Revenues				$	(168)	$	—
Commodity contracts	Cost of materials and other				174		(18)

Foreign currency contracts	Cost of materials and other				17		(4)

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