Klesse Goes to Head of Class

Valero's Greehey limits role, promises fourth-quarter results

SAN ANTONIO -- As he prepares to take on a larger role at Valero Energy Corp., Bill Klesse is optimistic that North America's largest refiner can continue the growth that has taken it from a one-refinery also-ran to industry leader. I am confident that we'll continue to grow and achieve tremendous success, while preserving Valero's special corporate culture, which always puts employees first, he said.

Klesse, the current executive vice president and COO of the San Antonio-based company, will assume the CEO position in January. Klesse takes over the role [image-nocss] from Bill Greehey, who announced plans yesterday to resign from the position at the end of the year but continue as chairman of the board and chairman of Valero LP, as reported in a CSP Daily News Flash.

The timing couldn't be better, Greehey said during the company's third-quarter conference call Monday morning. At no point over the past 25 years has Valero achieved greater success than it has this year. And the outlook for the future is just as bright.

Greehey explained his resignation as a desire to spend more time with his family and devote more time to philanthropic activity. He is credited by many for guiding Valero from a one-refinery company 15 years ago to the largest refiner in North America with its September acquisition of Premcor Inc.

Klesse, who also has been elected to the board as vice chairman, joined Valero from Ultramar Diamond Shamrock (UDS), where he served as executive vice president of the company's refining operations. After UDS was acquired by Valero in 2001, he served as executive vice president of refining and commercial operations, and assumed his current position in 2002.

At no time has Valero achieved greater success than this year, Greehey said during the conference call, noting a reported net income of $2.7 billion for the nine months ending Sept. 30, 2005, compared to $1.3 billion for the nine months ending Sept. 30, 2004. Greehey also warned analysts, Your fourth-quarter estimates are significantly too low, pointing to the fact that Valero had already attained 60% of its earnings estimates for the year in October alone.

Next year is shaping up to be another great year for Valero as supply continues to be a challenge in 2006, said Greehey, who also pointed to issues such as the phase out of methyl tertiary butyl ether (MTBE) as creating a favorable earnings environment for the refiner.

Greehey said it is Valero's strong management team that makes leaving the CEO position an option at this time. I have never felt more confident in Valero's leadership team, said Greehey. I have worked closely with Bill Klesse for a number of years, and I am confident in his business judgment and leadership skills.

He added that company president Greg King has also done a great job in his current role overseeing the finance, administrative and legal divisions. And, of course, his strengths and areas of expertise are very complementary to Bill's so I feel like they will make a great team.

San Antonio-based Valero Energy owns and operates 18 refineries throughout the United States, Canada and the Caribbean with a combined throughput capacity of approximately 3.3 million barrels per day, making it the largest refiner in North America. It is also one of the nation's largest retail operators with more than 4,700 retail and branded wholesale outlets in the United States, Canada and the Caribbean under brand names including Valero, Diamond Shamrock, Shamrock, Ultramar, and Beacon.