Valero Energy Corp loses $3.28 billion?

[brandonbull]

Valero's $3.3B loss???

Valero Energy Corp., the largest U.S. oil refiner, reported a fourth-quarter loss of $3.28 billion on impairment of goodwill. Sounds like another one of many scams involving the oil industry. What exactly is an impairment of goodwill?

 

[TechBoyJK]

Originally posted by: brandonbull
Valero's $3.3B loss???

Valero Energy Corp., the largest U.S. oil refiner, reported a fourth-quarter loss of $3.28 billion on impairment of goodwill. Sounds like another one of many scams involving the oil industry. What exactly is an impairment of goodwill?

it means goodwill has been impaired to some extent

 

[CLite]

Originally posted by: brandonbull
Valero's $3.3B loss???

Valero Energy Corp., the largest U.S. oil refiner, reported a fourth-quarter loss of $3.28 billion on impairment of goodwill. Sounds like another one of many scams involving the oil industry. What exactly is an impairment of goodwill?

Valero is a purely downstream oil company. The oil spikes killed the refinery margins which is why it has not done nearly as well as Exxon-Mobile ( which has both upstream (oil extraction) and downstream (refinery) branches).

Or instead of logic we could develop a conspiracy theory about how they are stealing all your money and using it to kill babies.

*edit* I over simplified but there are time-scale charts of North America refinery margins, just google them, the 4th quarter was bad, yes I know the oil spike wasn't in the 4th quarter. *edit*

 

[brandonbull]

Originally posted by: CLite

Originally posted by: brandonbull
Valero's $3.3B loss???

Valero Energy Corp., the largest U.S. oil refiner, reported a fourth-quarter loss of $3.28 billion on impairment of goodwill. Sounds like another one of many scams involving the oil industry. What exactly is an impairment of goodwill?

Valero is a purely downstream oil company. The oil spikes killed the refinery margins which is why it has not done nearly as well as Exxon-Mobile ( which has both upstream (oil extraction) and downstream (refinery) branches).

Or instead of logic we could develop a conspiracy theory about how they are stealing all your money and using it to kill babies.

*edit* I over simplified but there are time-scale charts of North America refinery margins, just google them, the 4th quarter was bad, yes I know the oil spike wasn't in the 4th quarter. *edit*

Or instead of something useful, keep posting nothing informative.

 

[brandonbull]

Originally posted by: TechBoyJK

Originally posted by: brandonbull
Valero's $3.3B loss???

Valero Energy Corp., the largest U.S. oil refiner, reported a fourth-quarter loss of $3.28 billion on impairment of goodwill. Sounds like another one of many scams involving the oil industry. What exactly is an impairment of goodwill?

it means goodwill has been impaired to some extent

Does that mean they tried to be nice and give speculators and OPEC tons of nice gifts and they were refused, thus, needing to write-off said goodwill?

 

[CLite]

Originally posted by: brandonbull

Originally posted by: CLite

Originally posted by: brandonbull
Valero's $3.3B loss???

Valero Energy Corp., the largest U.S. oil refiner, reported a fourth-quarter loss of $3.28 billion on impairment of goodwill. Sounds like another one of many scams involving the oil industry. What exactly is an impairment of goodwill?

Valero is a purely downstream oil company. The oil spikes killed the refinery margins which is why it has not done nearly as well as Exxon-Mobile ( which has both upstream (oil extraction) and downstream (refinery) branches).

Or instead of logic we could develop a conspiracy theory about how they are stealing all your money and using it to kill babies.

*edit* I over simplified but there are time-scale charts of North America refinery margins, just google them, the 4th quarter was bad, yes I know the oil spike wasn't in the 4th quarter. *edit*

Or instead of something useful, keep posting nothing informative.

Nothing informative? I just described why Valero had a net loss in the 4th quarter. Refinery margins (i.e. the difference between oil's price and distillate's prices) were awfull in the 4th quarter. Many days in that quarter they were running at a loss.

Does that mean they tried to be nice and give speculators and OPEC tons of nice gifts and they were refused, thus, needing to write-off said goodwill?

You are clueless, high oil prices due to speculators hurts Valero. They are consumers of oil not producers.

You clearly have nothing informative to add as per your post.

 

[heyheybooboo]

IIRC Valero has undertaken significant expansion in the last 5 years acquiring multiple 'sour' crude refineries, pipelines, distribution companies and service stations.

From the article:

Valero said today it is shutting down its massive Texas City refinery instead of running portions of it during regular maintenance as was planned. At its Corpus Christi East plant, Valero shut down the unit primarily used to make gasoline.

I only point this out because the Aruba refinery which I assume processes only Chavez Oil seems to be doing well while I assume the 550 employees at Texas City will for the most part lose their jobs.

 

[CLite]

Originally posted by: heyheybooboo
IIRC Valero has undertaken significant expansion in the last 5 years acquiring multiple 'sour' crude refineries, pipelines, distribution companies and service stations.

From the article:

Valero said today it is shutting down its massive Texas City refinery instead of running portions of it during regular maintenance as was planned. At its Corpus Christi East plant, Valero shut down the unit primarily used to make gasoline.

I only point this out because the Aruba refinery which I assume processes only Chavez Oil seems to be doing well while I assume the 550 employees at Texas City will for the most part lose their jobs.

I've done work at the Aruba refinery, it takes a lot of mexican crude, which is really dirty shit with a lot of sulfur, that's the refinery's specialty.

Anyways, no one is lossing their job at Texas City, if you read it closely you will see they are only shutting it down during the turn around. In fact turn arounds typically employ more people than regular operation so more than likely there will be a creation of jobs.

 

[ElFenix]

'goodwill' is the difference between the net value of the company's assets and liabilities, and what the market believes the company is worth, iirc.

 

[brandonbull]

Originally posted by: ElFenix
'goodwill' is the difference between the net value of the company's assets and liabilities, and what the market believes the company is worth, iirc.

So they get a nice tax write-off because the Market said it should be worth more than it really is?

 

[CLite]

Originally posted by: brandonbull

Originally posted by: ElFenix
'goodwill' is the difference between the net value of the company's assets and liabilities, and what the market believes the company is worth, iirc.

So they get a nice tax write-off because the Market said it should be worth more than it really is?

No.

They valued their assests at the 'goodwill' value + X. X is the price of stock times the number of stocks there are. The stockholders are drastically undervalueing the company so the company is forced to take off value from the assests they hold. I really don't think there are any tax implications.

I.E. Valero thinks they have $100 billion in assests. However their "stock" value is only $96 billion. The government forces Valero to take $4 billion off their books.

However, I really like how throughout this whole thread you've added nothing of substance and are on a witch hunt, keep the informative posts flowing in.

 

[brandonbull]

Originally posted by: CLite

Originally posted by: brandonbull

Originally posted by: ElFenix
'goodwill' is the difference between the net value of the company's assets and liabilities, and what the market believes the company is worth, iirc.

So they get a nice tax write-off because the Market said it should be worth more than it really is?

No.

They valued their assests at the 'goodwill' value + X. X is the price of stock times the number of stocks there are. The stockholders are drastically undervalueing the company so the company is forced to take off value from the assests they hold. I really don't think there are any tax implications.

I.E. Valero thinks they have $100 billion in assests. However their "stock" value is only $96 billion. The government forces Valero to take $4 billion off their books.

However, I really like how throughout this whole thread you've added nothing of substance and are on a witch hunt, keep the informative posts flowing in.

Maybe that's why the OP was in the form of a question. Questions usually are a means of obtaining answers and not providing them.

So I'm on a witchhunt now? What happened to the billions it made from refining oil the past few years and it's involvment in oil transportation with Wall street?

 

[sactoking]

Originally posted by: CLite
No.

They valued their assests at the 'goodwill' value + X. X is the price of stock times the number of stocks there are. The stockholders are drastically undervalueing the company so the company is forced to take off value from the assests they hold. I really don't think there are any tax implications.

I.E. Valero thinks they have $100 billion in assests. However their "stock" value is only $96 billion. The government forces Valero to take $4 billion off their books.

However, I really like how throughout this whole thread you've added nothing of substance and are on a witch hunt, keep the informative posts flowing in.

I don't think this is 100% accurate. What you're talking about is book value vs. market value. That's not quite the same as goodwill. Goodwill is the amount you pay for something above book value, but it is not measured on a share-by-share basis. It is only measured on a company acquisition basis.

In this case, Valero likely bought another company. The company Valero bought had a book value of $X ($A in assets, $L in liabilities, and $E in equity). The $A, $L, and $E are added to Valero's books after the acquisition. In exchange, Valero loses $Y (the cost paid for the acquisition). Now, if $X (the value of the acquisition) = $Y (the price paid), the transaction is pretty easy. If $Y > $X (the sum is worth more than the parts), then $Y - $X is carried as 'goodwill'. Thus, goodwill is the amount paid above market value for the acquisition of an entire company, not just a share.

Here, regulators determined that the goodwill Valero was carrying as a result of some acquisitions was not worth what they thought it was and made them write it down. That write down, which is recorded as an expense, contributed to the $3.28 billion loss.

What you're thinking of CLite would be considered 'Treasury Stock', but only insofar as Valero has repurchased the stock on the open market. If the stock is still trading stock, the market value of the stock is irrelevant (for the most part) to Valero's balance sheet.

 

[CLite]

Originally posted by: sactoking

Originally posted by: CLite
No.

They valued their assests at the 'goodwill' value + X. X is the price of stock times the number of stocks there are. The stockholders are drastically undervalueing the company so the company is forced to take off value from the assests they hold. I really don't think there are any tax implications.

I.E. Valero thinks they have $100 billion in assests. However their "stock" value is only $96 billion. The government forces Valero to take $4 billion off their books.

However, I really like how throughout this whole thread you've added nothing of substance and are on a witch hunt, keep the informative posts flowing in.

I don't think this is 100% accurate. What you're talking about is book value vs. market value. That's not quite the same as goodwill. Goodwill is the amount you pay for something above book value, but it is not measured on a share-by-share basis. It is only measured on a company acquisition basis.

In this case, Valero likely bought another company. The company Valero bought had a book value of $X ($A in assets, $L in liabilities, and $E in equity). The $A, $L, and $E are added to Valero's books after the acquisition. In exchange, Valero loses $Y (the cost paid for the acquisition). Now, if $X (the value of the acquisition) = $Y (the price paid), the transaction is pretty easy. If $Y > $X (the sum is worth more than the parts), then $Y - $X is carried as 'goodwill'. Thus, goodwill is the amount paid above market value for the acquisition of an entire company, not just a share.

Here, regulators determined that the goodwill Valero was carrying as a result of some acquisitions was not worth what they thought it was and made them write it down. That write down, which is recorded as an expense, contributed to the $3.28 billion loss.

What you're thinking of CLite would be considered 'Treasury Stock', but only insofar as Valero has repurchased the stock on the open market. If the stock is still trading stock, the market value of the stock is irrelevant (for the most part) to Valero's balance sheet.

I apologize for my poorly worded and incorrect explanation. However your point about the goodwill is incorrect. Infact what happened is that whatever Valero bought lost value so Valero was forced to write down that goodwill.

The wording of your explanation implies Valero was undervalueing what they bought, when infact they overvalued it, and they were forced to write down a $4.1 billion dollar goodwill to cover the amount they had overvalued it.

 

[sactoking]

Originally posted by: CLite
I apologize for my poorly worded and incorrect explanation. However your point about the goodwill is incorrect. Infact what happened is that whatever Valero bought lost value so Valero was forced to write down that goodwill.

The wording of your explanation implies Valero was undervalueing what they bought, when infact they overvalued it, and they were forced to write down a $4.1 billion dollar goodwill to cover the amount they had overvalued it.

When I read what I wrote, I read it as 'overvalued and had to be written down'. But I guess if I didn't read it that way I wouldn't have written it, so........

Yeah, it's really no big deal. I wasn't sure if you were thinking of treasury stock or not but it's certainly not worth getting into a pissing match over!

Edited because I couldn't form a complete sentence.

 

[CLite]

Cleary a duel to the death is in order.