John Locke - Vice President–Investor Relations Joseph W. Gorder - Chairman, President & Chief Executive Officer Gary K. Simmons - Senior Vice President-Supply, International Operations and Systems Optimization Jay D. Browning - Executive Vice President & General Counsel Michael S. Ciskowski - Chief Financial Officer & Executive Vice President R. Lane Riggs - Executive Vice President, Refining Operations & Engineering

Neil Mehta - Goldman Sachs & Co. Evan Calio - Morgan Stanley & Co. LLC Paul Cheng - Barclays Capital, Inc. Phil M. Gresh - JPMorgan Securities LLC Roger D. Read - Wells Fargo Securities LLC Doug Leggate - Bank of America Merrill Lynch Blake Fernandez - Howard Weil Jeffery Alan Dietert - Simmons & Company International Edward George Westlake - Credit Suisse Securities (USA) LLC (Broker) Paul Sankey - Wolfe Research LLC Faisel H. Khan - Citigroup Global Markets, Inc. (Broker) Chi Chow - Tudor, Pickering, Holt & Co. Securities, Inc. Brad Heffern - RBC Capital Markets LLC Spiro M. Dounis - UBS Securities LLC

Welcome to the Valero Energy Corporation Reports 2016 Second Quarter Earnings Results Conference Call. My name is Vanessa, and I'll be your operator for today's call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session. Please note this conference is being recorded. And I will now turn the call over to Mr. John Locke, Vice President of Investor Relations. You may begin. John Locke - Vice President–Investor Relations: Good morning. And welcome to Valero Energy Corporation's second quarter 2016 earnings conference call. With me today are Joe Gorder, our Chairman, President and Chief Executive Officer; Mike Ciskowski, our Executive Vice President and CFO; Lane Riggs, our Executive Vice President of Refining Operations and Engineering; Jay Browning, our Executive Vice President and General Counsel; and several other members of Valero's senior management team. If you've not received the earnings release and would like a copy, you can find one on our website at valero.com. Also attached to the earnings release are tables that provide additional financial information on our business segments. If you have any questions after reviewing these tables, please feel free to contact our investor relations team after the call. I would like to direct your attention now to the forward-looking statement disclaimer contained in the press release. In summary, it says that statements in the press release and on this conference call that state the company's or management's expectations or predictions of the future are forward-looking statements intended to be covered by the safe harbor provisions under the federal securities laws. There're many factors that could cause actual results to differ from our expectations, including those we've described in our filings with the SEC. Now, I'll turn the call over to Joe for a few opening remarks. Joseph W. Gorder…

And thank you. We will now begin the question-and-answer session. And we have our first question from Neil Mehta with Goldman Sachs. Neil Mehta - Goldman Sachs & Co.: Good morning, guys. Congrats on the strong cash flow quarter here. Want to kick it off on the product side. Clearly, product margins are a concern for investors as we think about both the refining stocks and then also as we think about the flat price per crude. So, two questions on that basis. One, Joe, do you think there's just too much refining capacity in the world here? Is there a structural oversupply in capacity? And then, do you expect that we're going to see run cuts this fall here in the U.S. or elsewhere in the world? Joseph W. Gorder - Chairman, President & Chief Executive Officer: Morning, Neil, and thanks for your comments. Why don't I let Gary take a crack at this?

Yeah, Neil. I think despite the fact that we've seen very strong product demand, obviously, the refinery utilization has been such that supply has been able to keep up and even outpace demand. So, ultimately, we're going to need a rebalancing and see lower refinery utilization moving forward. So, I do believe that you'll see some refinery run cuts as we head into the third quarter and fourth quarter. I think that some of what happened this year is that with the steep contango in the market, especially early in the year, some marginal refining capacity that typically you would see cut in the winter had incentive to go ahead and run and produce the summer grade of gasoline. And so, it caused utilization to be very high, especially like in the January, February timeframe. And that's where we built the large overhang of products that we've really had to manage the rest of this year. Neil Mehta - Goldman Sachs & Co.: I appreciate those comments. And then secondly, on RINs here, you maintained the guidance of $750 million to $850 million, but is it fair to say there's some upward bias to the midpoint of the range? Joe, can you just talk about what you ultimately see as the resolution to this RINs issue? I know it's something that you've been talking to the EPA about quite a lot. And then just how you see the RINs issue evolving from here. Joseph W. Gorder - Chairman, President & Chief Executive Officer: Okay, Neil. That's a good question. And I'll speak just briefly about the lawsuit really, and then if we have procedural questions, Jay can help me with that. But our action with the EPA is really focused on dealing with the current structure of the system. The…

And thank you. Our next question comes from Evan Calio with Morgan Stanley. Evan Calio - Morgan Stanley & Co. LLC: Hey. Good morning, guys. Joseph W. Gorder - Chairman, President & Chief Executive Officer: Good morning, Evan. Evan Calio - Morgan Stanley & Co. LLC: Hey, I know you guys raised your dividend early in the first quarter and your indicative yield today is higher than it was in 2008 and 2009. Can you discuss how you stress the dividend when you establish or decide to raise that earlier this year and how you view the sustainability of your yield? Michael S. Ciskowski - Chief Financial Officer & Executive Vice President: Okay, Evan. Our dividend is a commitment to our shareholders and we do consider it non-discretionary. With our cash position and nearly $5 billion of liquidity we have available to us, we're quite comfortable with the sustainability of our current dividend and also the payout target of at least 75% of net income. And in addition, we're not concerned with the funding of our capital program. Joseph W. Gorder - Chairman, President & Chief Executive Officer: And Evan, we did take a good hard look at this. And obviously margins can be volatile, right? That's a understatement for the year. Last year they were strong, this year they're weaker. And so, we ran cases before we presented to the board the dividend increase, which really looked at different margin scenarios. And that's how we got our comfort level with it. I mean, we stressed it pretty hard. And, obviously, in this low-margin environment and with earnings where they are, we're still in a good position on the dividend. So, obviously, we did a thorough job on that. Evan Calio - Morgan Stanley & Co. LLC: Yeah. No, that makes sense. And that should help support in this environment, your stock. Maybe a follow-up on the distribution comment. I mean, you're running above the 75% payout target year-to-date in 2Q. How should we think about that target going forward and does the higher distribution reflect your view on an improving outlook or the cash generating abilities of your assets? Michael S. Ciskowski - Chief Financial Officer & Executive Vice President: Our target is based on net income, but we do understand in this lower earnings environment that we have to consider our cash flow generating capabilities and then also the drops to the VLP. So through June, we have paid out 156% of adjusted net income and that's about 42% of our cash flow. Evan Calio - Morgan Stanley & Co. LLC: Got it. Appreciate it, guys. John Locke - Vice President–Investor Relations: Good. Thanks, Evan.

And thank you. Our next question comes from Paul Cheng with Barclays.

Hey, guys. Good morning. John Locke - Vice President–Investor Relations: Good morning, Paul.

Couple question. Mike, do you have any preliminary 2017, 2018 CapEx that you can share? And if the margins stay close to where we are over the next one or two years, then, how quickly you can adjust those number? Michael S. Ciskowski - Chief Financial Officer & Executive Vice President: Okay, Paul. We haven't disclosed our 2017 capital budget yet. But notionally, we're going to be spending $1.4 billion to $1.6 billion on maintenance capital and roughly $1 billion on growth. Obviously, there's more flexibility in the growth category, but the projects that we're identifying are attractive, and you'd want us to complete these at those rates, at those hurdle rate. So, today we have lots of cash like I just mentioned, and a lot of liquidity and we're quite comfortable in funding our capital expenditures at those levels.

Joe, just curious then, with the refining market, I think, weaker than people expected. When you're looking at the M&A market, have you seen any change in the (20:02) in the last several months? Joseph W. Gorder - Chairman, President & Chief Executive Officer: Paul, I would tell you, I don't think we've seen any major change. I mean, obviously, in a down market if seller doesn't want to sell for what the valuations might be, and a buyer doesn't want to pay for assets based on what we've experienced in the past. And so, it's always a negotiation when you're looking at it. But you raised the question on M&A, and if I could, I just want to stress the fact that M&A is a component of our capital allocation framework, it is not the component of our capital allocation framework. And unfortunately, in our last call, we gave the impression that there was a greater emphasis on M&A than there had been in the past, which we really never intended to do. We've consistently shared that we look at opportunities all the time. So, a transaction like the Parkway Pipeline acquisition wouldn't come as a surprise. But any M&A transactions will need to compete for cash with our growth capital projects and our buybacks. So, just to be clear, there's no greater emphasis on M&A today than there was two years ago. And our commitment to the other components of our capital allocation framework is really unchanged.

Thank you. Joseph W. Gorder - Chairman, President & Chief Executive Officer: You bet.

And thank you. Our next question comes from Philip Gresh from JPMorgan.

Hey, good morning. Joseph W. Gorder - Chairman, President & Chief Executive Officer: Morning.

Just following up on the CapEx side of things. You're tracking well below for the full year. Were you always expecting to be a little bit more back half loaded because of the turnarounds, or would you say maybe there is some degree of conservatism in the capital budget outlook being maintained in the $2.6 billion for the year? John Locke - Vice President–Investor Relations: Well, we are tracking a little bit below the $2.6 billion. I mean, Lane, do you have any idea on the timing of some of these projects? R. Lane Riggs - Executive Vice President, Refining Operations & Engineering: Yeah. What I would say, with what we've disclosed and we have a large turnaround at Port Arthur in the third quarter and fourth quarter, that's obvious. That's a big, big turnaround and that is a known quantity. In terms of our, sort of, ratable spend, I would say we're still holding for this $2.6 billion, but we'll see, because, in terms of capital projects, the ratability is such that November, December it's difficult to spend a lot of money during that time of year. So, and I'll just leave it at that.

Okay. And then, the second question, the return of capital discussion, you mentioned cash available via drops. Some of your peers have been pretty active with capital raises and drops so far this year. Feels like the market is opening up for quality MLPs, maybe with the pull back in oil now maybe a little less, we'll see. But how are you thinking about the back half of the year on this front? John Locke - Vice President–Investor Relations: As far as the drop?

Yeah. In terms of desire to raise capital and do drops. John Locke - Vice President–Investor Relations: Okay. Right now we have no change to the strategy to grow our LP primarily through the dropdown. We do believe a measured pace is prudent, and our guidance is still $500 million to $750 million that we gave in the first quarter call. We will continue to look at third-party logistics still that support Valero's core business. And again, in regard to the capital markets on the equity side, obviously, they've been improving and they have improved throughout the quarter. Debt markets look very good. Joseph W. Gorder - Chairman, President & Chief Executive Officer: So, I guess, we'll continue to keep an eye on it. We're not prepared right now to change what we've shared that we're planning to do. Phil, we're all watching this to see, are we dealing with a new normal or are we dealing with just a spike in the market that was driven by the financial situation we had last year. And so, we'll continue to eyeball it. We've got, again, plenty of assets that we could drop. We got significant EBITDA there. We continue to look for opportunities to grow the LP with potential joint ventures and some smaller acquisitions. But, we're very attentive to it.

Okay. Thanks.

And thank you. Our next question comes from Roger Read with Wells Fargo.

Hey, good morning. Joseph W. Gorder - Chairman, President & Chief Executive Officer: Good morning.

I guess, some of the main topics have been hit. If maybe we could dive just a little bit deeper into the concern about run cuts and then maybe the outlook for turnarounds beyond just Port Arthur for you as we're looking into the fall. Joseph W. Gorder - Chairman, President & Chief Executive Officer: Run cuts. John Locke - Vice President–Investor Relations: Yeah. So, I guess, on run cuts, we continue to have margin to run in our system. We feel good about the fact that we have this natural gas advantage and feedstock cost advantage in the Gulf that puts us in a very good position globally in the refining industry. So, we're not feeling any pressure for run cuts, but I do agree that we're going to need some rebalancing in the market. So, going forward, I think you'll see some run cuts in the third quarter and fourth quarter. I'm not sure where those will occur. Probably Northwest Europe and some of them in the northeastern United States where you're already starting to hear some in the press of run cuts in today's market. I'll let Lane comment on the future turnarounds. R. Lane Riggs - Executive Vice President, Refining Operations & Engineering: Yeah. Roger, we disclosed the Port Arthur turnaround just because it was so material and we wanted to make sure it was out there. It's not a normal way we communicate in terms of providing any additional information on our forward-looking statements with respect to our turnarounds.

Okay. Maybe a broader question about turnarounds and experience where we've had these oversupply situations. Is it Valero's experience or would you say it's maybe the industry broadly that when you have a weak margin environment you'll take advantage of opportunities, given that economic costs are much lower of doing a turnaround, or that maybe you don't try to force product through the non-crude unit, if you have a big crude unit turnaround? Just sort of curious of, do you take advantage in a situation where we've come off several years of high margins and a big economic cost to turnaround. Do you see that – is that one of the ways the industry sort of corrects the imbalance here? R. Lane Riggs - Executive Vice President, Refining Operations & Engineering: So, first, I'll comment on Valero. So, we have a strategy of planning our turnarounds a couple of years in advance and executing our turnarounds as they come up. We have a big system, and we feel like we, by virtue of being disciplined in doing that, we don't try to move our turnarounds based on what prompt economics are. Now, (27:07) rest of the industry, there may be some of that. I can't say that there's not. I'm sure that people are looking at whether the refineries are struggling from a maintenance perspective, they may bring the maintenance forward and just fix whatever it is. And if you want to call that a turnaround you might say that. I would say that's essentially about all that there is.

Okay. Thank you.

And thank you. Our next question comes from Doug Leggate with Bank of America.

Thank you. Good morning everybody. Joseph W. Gorder - Chairman, President & Chief Executive Officer: Morning, Doug.

Joe, I guess, my first one might be for Mike. Mike, I just wonder if you could help us understand the strength of the cash flow in the quarter, just as it relates to reported income and DD&A. It looks like there's some other moving parts in there. And my follow-up is on the industry, please. Michael S. Ciskowski - Chief Financial Officer & Executive Vice President: Okay. So, on the cash flow, we had a change in cash of building (28:11) cash for the quarter of $1.1 billion. But of that amount, $1.3 million was due to favorable working capital changes. So, we had an increase in our payables and receivables, and you net those together, it's about $600 million benefit. We had an increase in our taxes payable of roughly $300 million and then we decreased our inventories in the quarter by about $300 million. So that nets to the $1.2 billion of working capital benefit.

Great. That helps me close the gap. Thanks. Joe, my follow-up is on, I guess, it's more of a kind of margin question in terms of the octane premium that hasn't appeared to materialize this summer. You mentioned in your prepared remarks, octane enhancement or projects might be something that Valero continues to look at. Is 2016 just a one-off or do you still think that there is going to be a call for increased alkylate production or whatever it happens to be in the future? And I'll leave it there. Thanks. Joseph W. Gorder - Chairman, President & Chief Executive Officer: Thank you, Doug. Okay. So, Gary or Lane, you guys want to tag team it?

Yeah. I'll start, Doug, and then let Lane talk about the projects a little bit. So, what we've seen in the market is actually the octane premiums on the West Coast in the Mid-Continent in the Group 3 market have been stronger this year than what they were last year. However, in the U.S. Gulf Coast and the New York Harbor we've seen weaker octane premiums. And so, if you kind of try to get your mind around what's going on, I think a lot of that is the fact that where you really can store gasoline is in the U.S. Gulf Coast and the New York Harbor. So, when we had that steep contango earlier in the year, people were storing gasoline, they were largely storing premium grade summer gasoline and high octane blend components. So, in those markets, in the Harbor and the Gulf Coast, as that inventory's come out, it's kind of caused the premiums to be a little weaker this year than what we saw in the past. However, in the Group 3 market, the West Coast market where you don't have a lot of capabilities to store gasoline, the octane values have actually been stronger than what we saw last year. R. Lane Riggs - Executive Vice President, Refining Operations & Engineering: So, Doug, this is Lane. We still have a strategic view that octane has value. And it's really in the context of Tier 3 is going to destroy a lot of octane. And, of course, the autos, on a go-forward basis, are looking at higher compression engines. So, they may, in fact, want higher octane fuel. And the best way to make that, we believe is, it's finding to find a way to get NGL into the transportation fuel and then convert that to octane. So that's why we like our Houston alkylation project. And with that strategic view, we look at other projects to, if it meets our hurdle rates to produce additional octane in our system.

Appreciate the full answer, guys. That's really helpful. Thank you.

And thank you. Our next question comes from Blake Fernandez with Howard Weil.

Hey, guys. Good morning. Joseph W. Gorder - Chairman, President & Chief Executive Officer: Hi.

Question for you. I guess, it's kind of macro and also company specific, but you obviously hit record levels on the export side. At the same time, we're seeing increased gasoline imports into the U.S. And so, I'm just trying to get a sense of exactly what's going on. Is this more of a regional dynamic where Gulf Coast is really sending product to other parts of the world and Europe is basically penetrating the East Coast? Or just basically any color you can give us on that framework.

Yeah, Blake. This is Gary. I think it's exactly what you said. We see, especially on gasoline exports, that we have a competitive advantage going to Mexico and South America. And then largely due to Jones Act shipping, we're not as competitive going to the New York Harbor as maybe Northwest Europe are. So, the natural flow of our barrels is to go south into South America, and there's been an incentive to send barrels from Northwest Europe into the Harbor.

Okay. And just to clarify, is Houston – the startup of Houston, is that contributing to those exports or is that not really that material in the quarter?

No, it really didn't have any material impact at all in the quarter.

Okay. And if you don't mind, just a final point of clarity. I know you said on the economic run cuts, you're not necessarily providing, I guess, an outlook on exactly where it would occur, but if I heard the guidance correctly on Mid-Con, it looks like a pretty decent rollover quarter-to-quarter. Would that guidance contemplate any economic run cuts that you're planning to do inland? R. Lane Riggs - Executive Vice President, Refining Operations & Engineering: Blake, this is Lane. And the way I'll answer that is, today we have positive economics in the Mid-Con. Obviously, the region is landlocked. So, we get into seasonal product containments potentially in sort of the fourth quarter and first quarter if that happens about every year.

Okay. Fair enough. Thank you.

And thank you. Our next question comes from Jeff Dietert with Simmons & Company. Jeffery Alan Dietert - Simmons & Company International: Good morning. Joseph W. Gorder - Chairman, President & Chief Executive Officer: Good morning, Jeff. Jeffery Alan Dietert - Simmons & Company International: My question is on summer grade gasoline. With the gasoline inventory overhang that we've got, are you worried about moving your summer grade gasoline at a premium? Are you concerned that that might compress as we get closer to the end of the summer driving season? We've heard some discussion about already shifting to winter grade gasoline production. Does that make any sense?

Yeah, Jeff. This is Gary. I don't think there's really a concern on being able to clear out the overhang of the summer grade spec gasoline and moving it out to the market. And, I guess, to your second comment, yes, we are hearing that there are people starting to put some winter grade gasoline into some of the markets, especially into the Harbor. Jeffery Alan Dietert - Simmons & Company International: And secondly, you reported, I think, record light product yield gasoline yield. We saw 49.3%, up 1.3% year-on-year. Industry to DOE stats show it up maybe slightly more than that. What would you attribute the increase in gasoline yield to in the second quarter? What were the primary factors? R. Lane Riggs - Executive Vice President, Refining Operations & Engineering: Hey. So, Jeff, this is Lane. I would say, we've been in a strong maximum gasoline signal for the most part, up until about a month ago. And so, our assets, we just had them pointed to try to make as much gasoline as possible. When you compare it year-over-year, there were times last year we maybe didn't have a strong signal to maximize our reformers as much as we have this year and it's really the naphtha discount. But I would just say that's sort of the year-over-year difference. Jeffery Alan Dietert - Simmons & Company International: Great. Thanks for your comments. Joseph W. Gorder - Chairman, President & Chief Executive Officer: You bet.

And thank you. Our next question comes from Ed Westlake with Credit Suisse. Edward George Westlake - Credit Suisse Securities (USA) LLC (Broker): Yeah. Good morning. You shouted out on the front page ample supplies of medium and heavy sour crude, obviously which your system can process better than others. Is that a comment about the sort of OPEC barrels? Or are you seeing things like in Venezuela, I mean as they run out of power, are they having to puke out some sort of real heavy rubbish at cheap discounts that you can run and others can't? John Locke - Vice President–Investor Relations: I think we see good supplies in the Middle East, South America and Canada, as well. I don't know that we've seen a lot in terms of change in behavior from Venezuela. We continue to see good supply and will from Venezuela. The grades are a little bit different, so we see a lot more what we call diluted crude oil, or DCO, and less of some of the synthetic barrels (36:01) that type of thing. That's the only change that we've seen. Edward George Westlake - Credit Suisse Securities (USA) LLC (Broker): Right. But presumably those DCOs, you can run through your system at a better economics than the synthetic barrels? John Locke - Vice President–Investor Relations: Yes, typically. They have more difficulty placing the DCO than they would a synthetic barrel. Edward George Westlake - Credit Suisse Securities (USA) LLC (Broker): That makes sense. Okay, and then a separate question. With the cash pile plus organic free cash flow, we'll obviously see how refining works out in the second half. And your inventory in VLP, a question about sort of how you plan to kind of grow the EBITDA inventory that you could then…

And thank you. Our next question is from Paul Sankey with Wolfe Research.

Hi, good morning, everyone. Joseph W. Gorder - Chairman, President & Chief Executive Officer: Hey, Paul.

I had a couple of questions which actually were the first questions asked about half-an-hour ago. So, I appreciate the details. I was going to ask about RINs. I just wanted – as a follow-up, is there an alternate strategy if the lawsuit fails? I mean, what really is the next recourse after that? Joseph W. Gorder - Chairman, President & Chief Executive Officer: Well, you know, Paul, the obvious operating strategy is to try to go ahead and continue to find ways to blend more, right? So, expansion of our wholesale marketing business is something that we've got a key eye on. Obviously acquiring terminaling assets would provide that opportunity. And then continuing to try to build the export markets to try to alleviate some of the burden of the RIN. Those are all things that we look at regularly and really ongoing. Other than that, you just continue to bang away on the rock and you try to get people to recognize the fact that the system that we have today is broken, that it is creating windfalls for some and it's creating disadvantages for others, and the playing field isn't level. And I can tell you that based on the conversations that we have, there's an understanding of this issue and there's an understanding that the RFS isn't intending what it was intended to do, which was increase the amount of biofuels blended. And we believe that that's caused by the structural problem that we've talked about earlier. So we're not going to give up the fight. We'll continue to push it, both from a regulatory and a legislative perspective, and then from an operating perspective.

Yep, understood. Good luck with that. And then the other one was again pretty much the first question you answered, which is regarding the market environment. If the demand is higher this year than last year in the U.S., is it a function of extra refineries being added, do you think, globally new capacity? Or is it more that the competitive advantage of the Atlantic Basin non-U.S. refiners has improved and therefore they're running stronger, or I would imagine it's a combination of both, but any sort of market commentary you have on that would be great? Thanks. John Locke - Vice President–Investor Relations: Yeah, I would say a lot of it is really more a result of utilization, especially utilization in periods where typically we see refineries cut. So as I talked about, typically you get refineries cutting in the fourth quarter and the first quarter, and this year we saw refineries running very high utilization rates. And a lot of that was just due to the steep contango that was in the market.

Yeah, understood. And then finally from me, the demand side, it seems to be sort of being revised lower in the U.S. Is that a concern for you guys? Do you think that the demand is being overstated or do you really think that this is a supply problem? Thank you. Joseph W. Gorder - Chairman, President & Chief Executive Officer: I can just comment on what we're seeing through our wholesale demand domestically, and we're seeing good demand through that wholesale channel. So, year-over-year, our gasoline volumes through wholesale are up 3%, and even on the distillate side, we're moving about 1% more through the wholesale channel of diesel than what we did last year.

Great. That's helpful. Thank you.

And thank you. Our next question is from Faisel Khan with Citigroup.

Thanks, good morning. Joseph W. Gorder - Chairman, President & Chief Executive Officer: Hi, Faisel.

Hi, Joe. Just going back to the question that Jeff Dietert asked on the sort of switching from summer grade to winter grade and people already putting gasoline in inventory for the winter. Do you think that's a risk or do you think this is a one-off that hopefully we don't carry this excess inventory from the summer into the winter? Joseph W. Gorder - Chairman, President & Chief Executive Officer: It certainly is a risk. It's always a risk that's out there and will depend on what the market structure is, but I think after we've gone through this period where the market's been weaker this year, I don't think it's as great a risk as what we saw in the winter where people were storing the summer grade.

Okay. Got you. And then, just with the outages in Canada that we saw over the summer, early in the summer. Have you seen those volumes completely recover and how are you dealing with that disruption, and how is that evolving as production ramps back up for you guys? John Locke - Vice President–Investor Relations: Yeah, so I think for us, on the Canadian heavy side, we pretty much are seeing all the volume back available to us. And the Canadian heavy barrels are being priced very competitively versus either another heavy sour alternative or medium sour alternative. So I would say that we've fully recovered from those fires so far.

Okay, great. Thanks for the time, guys.

And thank you. Our next question comes from Chi Chow with Tudor, Pickering, Holt. Chi Chow - Tudor, Pickering, Holt & Co. Securities, Inc.: Hey, thanks. Good morning. Joseph W. Gorder - Chairman, President & Chief Executive Officer: Hi, Chi. Chi Chow - Tudor, Pickering, Holt & Co. Securities, Inc.: Hi, Joe. This question may be the same as Paul's, couple questions ago. But just this RIN issue is kind of cropping back up this year. Do you think there's any vulnerability to the merchant refining model that you have longer term, given the RIN issue or anything else that may be out there? Joseph W. Gorder - Chairman, President & Chief Executive Officer: Well, it would probably be hard to say that the RIN was helpful to the merchant refining model. Okay? Obviously, it's not. But then you get into what are the options for dealing with it, and I think I mentioned those earlier, Chi. Specifically from Valero's perspective, the retail marketing business isn't something that's currently on our radar screen. We believe there's better ways to deal with the issue. And so I really don't have anything to add to that, but I think certainly it's an issue that we're working very hard to deal with because it does. It puts an expense on the merchant refiner that he shouldn't be bearing today. And so that creates a real problem. It creates an unlevel playing field in the marketplace, and that's never good. So, anyway, we'll continue to address it the way we are. Chi Chow - Tudor, Pickering, Holt & Co. Securities, Inc.: Yeah. Thanks, Joe, for those thoughts. Maybe a question on Aruba. There's been a lot of industry chatter about Venezuela's interest in Aruba lately. But you've written the whole asset off at this point. So are you suggesting that there's no option going forward to sell or transfer the plant to another operator? Joseph W. Gorder - Chairman, President & Chief Executive Officer: I'm looking at Jay to see what we say about this. Jay D. Browning - Executive Vice President & General Counsel: The option to transfer, it's still there. I mean, it's just a function of the financial requirements we've chosen to write off. Chi Chow - Tudor, Pickering, Holt & Co. Securities, Inc.: Okay. So you can still transfer, but for free basically, is that kind of what you're signaling? Joseph W. Gorder - Chairman, President & Chief Executive Officer: Yeah, I guess so. Chi Chow - Tudor, Pickering, Holt & Co. Securities, Inc.: Okay. Great. Thanks for that. Joseph W. Gorder - Chairman, President & Chief Executive Officer: Okay, Chi.

And thank you. Our next question comes from Brad Heffern with RBC Capital Markets.

Good morning, everyone. Joseph W. Gorder - Chairman, President & Chief Executive Officer: Morning, Brad.

Just a follow-up to Jeff's question a little while ago on yield. Lane, you mentioned the system's been running at maximum gasoline yield for quite a while now, and I think there was maybe an implication which you said that you're not running quite at maximum gasoline anymore. I'm curious just how you're thinking about your yield decisions these days. I would assume that given the incentives in the market at the moment, you're probably running a little more distillate, with more of a distillate focus than you had been, but how are you thinking about making catalyst decisions and so on that affect the next 18 months, 24 months? R. Lane Riggs - Executive Vice President, Refining Operations & Engineering: So, we are currently in, I would say, max-jet mode, so the decision you make there is between our cut point between jet and naphtha. And naphtha shows up in our sort of our overall results as a gasoline although it's not really. We export it. For maximizing jet – we're still actually maximizing gasoline is the next step, and it's largely due to butane blending economics. And it has to do with what we would call the swing cut (46:29) between the heavy part of cat gasoline and LTO and there's drilling (46:34) economics as well, to bring butane into the pull, so that's how we're postured today. But we're very close on all these things just because of where the relative cracks are. In terms of catalyst choices, FCCs, we can change relatively quickly. I would say, if we want – most of the time there we make a decision on whether we want to try to fill our alkylation capacity catalytically with like VSM5 (46:58) and not run as much rate. And that's normally what we do in the winter, and we're certainly looking at that, and I would be surprised if we didn't end up there. And on hydrocrackers, every three years we make that decision and that really is a choice between – it's not really gasoline and diesel in our hydrocrackers, it's really naphtha and diesel. And so we're still biased on the side of making distillate out of our big hydrocrackers.

Okay, got it. Thanks for that color. And then I was curious if you could talk a little bit about the results in the North Atlantic this quarter. The indicator was up $3 sequentially, but the margin was down. What were the contributing factors to the performance?

Yeah, Brad, this is Gary. I would tell you that the big factor that we saw there, if you're looking year-over-year, was our feedstock costs. So as you're aware, last year we had a pretty good incentive to move U.S. Gulf Coast barrels to Quebec, and we had a very good feedstock advantage doing that, but with the Brent TIR coming in, we lost a lot of that advantage, and it's impacted our North Atlantic Basin results.

Okay. Is that an yard (48:11) that you're still taking advantage of in the first quarter? I'm just thinking about it on a sequential basis versus the first quarter and the margin was down as well. Joseph W. Gorder - Chairman, President & Chief Executive Officer: Yeah, so – yeah, so we move an occasional cargo to Quebec. But even when we're moving it, it's not near the margin that we saw last year when the yard (48:32) was much wider.

Okay, I'll leave it at that. Thanks.

And thank you. Our next question comes from Spiro Dounis with UBS.

Hey, good morning, gentlemen. Thanks for taking the question. Just two quick ones, hopefully. First, just on the OpEx. Figures are pretty strong this quarter, despite I guess slightly lower utilization. I guess just wondering how repeatable that is. I know next quarter it sounds like going to tick up a bit just given the turnarounds. But beyond that, just wondering if there is sort of belt-tightening going on and how much more we could see of that? R. Lane Riggs - Executive Vice President, Refining Operations & Engineering: So, this is Lane. We're always belt-tightening. I mean, we run our business very disciplined, we're always very attentive to all of our costs, and that's just the way we run our business. I would say our throughput is largely drive the – when you sort of compare quarter-to-quarter, year over year, it has to do with what our relative throughputs were through that timeframe that affects things, and obviously natural gas has a big hand in this. But those are really the two. When you start really looking at our – at least our cash operating expenses, it's really the energy and it has to do with our throughput.

Got it. That makes sense. And then just second one, seems like West Coast was a bit of a bright spot over the last quarter both on margins and cost. And I guess just focusing on margins, I guess how sustainable is that? I guess, over the last few weeks, they've come in a bit, but I know driving in the West Coast has been pretty strong and seems like demand there is pretty strong. And on top of that, I think some of the stockpile levels are a bit better than the rest of the U.S. I'm just wondering how you're viewing that market. John Locke - Vice President–Investor Relations: Yeah, I think we feel pretty good about the West Coast. It's a unique grade of gasoline in that market, so it limits some of the stockpiling of barrels, and certainly with the increased demand, the production – the supply/demand balance is much tighter than it used to be.

Got it. Appreciate the color. Thanks, guys.

And thank you. We have a follow-up question from Paul Cheng with Barclays.

Hey. This is for Gary and Lane. When you decide whether you want to stretch the yield between distillate and gasoline, do you looking at the spot economic or that you also take into consideration of the future curve? Joseph W. Gorder - Chairman, President & Chief Executive Officer: Do you want to take that one? John Locke - Vice President–Investor Relations: I would say we do a combination of both, Paul. As you look, we certainly – we're making cut-points decision, it's more done on a spot economic basis. But when you talk about catalyst changes, then we're looking more – using the forward curve for those type of decisions.

Okay. So, just for the cut of the temperature and that would be just on the spot. You won't be looking at, say, the next two months or three months what is the futures curve may suggest? John Locke - Vice President–Investor Relations: It comes into play, but for the most part, we're looking at spot economics on making cut point changes because we can do that day to day in our refining system.

And a final one, if I may. Maybe this is either for Lane and Gary also. If I'm looking at – if the third quarter market conditions would be extended the same as the second quarter, given your expectation of your runs, should we assume that your margin capture rate versus your Valero index would be roughly about the same or that is something that we should be consider? R. Lane Riggs - Executive Vice President, Refining Operations & Engineering: Paul, this is Lane. I would say it's going to be roughly the same with the exception of where feedstocks are. I mean, that's really the only real major variable in terms of our capture rates. We'll start into butane blending at the end of the third quarter. That will affect it a little bit, as well.

But that it won't start until September, right? The butane blending. The butane blending won't start until September, I presume? R. Lane Riggs - Executive Vice President, Refining Operations & Engineering: Right. And then – but it'll – so there'll be a little bit of that impact. And the other one is, we do – as we've said earlier, we've disclosed that we have a big turnaround at the Gulf (52:44) in our Port Arthur refinery starting in the third quarter.

Is that a full planned turnaround? R. Lane Riggs - Executive Vice President, Refining Operations & Engineering: Over the course of the timeframe, most of the refineries, with the exception of – of our conversion units, will all be down. But it's really the crude and coking complex that will be coming down.

Okay, thank you.

And thank you. We have no further questions at this time. I will now turn the call back over to John Locke for closing remarks. John Locke - Vice President–Investor Relations: Thank you, Vanessa. We appreciate everyone joining us today. Please contact Karen Ngo or me if you have any additional questions. Thank you.

And thank you, ladies and gentlemen. This concludes today's conference. We thank you for participating and you may now disconnect.