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Valero Energy Partners LP Announces Acquisition of Certain Valero Terminaling Businesses for $671 Million

VLO | February 27, 2015

SAN ANTONIO, Feb. 27, 2015 /PRNewswire/ -- Valero Energy Partners LP (NYSE: VLP, the Partnership) today announced that the board of directors of its general partner has approved the Partnership's acquisition of certain businesses from subsidiaries of Valero Energy Corporation (NYSE: VLO, Valero). In the transaction, the Partnership will receive the outstanding membership interests in Valero Partners Houston, LLC and Valero Partners Louisiana, LLC for total consideration of about $671 million. The transaction is expected to be immediately accretive to the Partnership and its unitholders and is expected to close effective March 1, 2015.

"This acquisition is our largest yet and is consistent with our previously communicated accelerated growth strategy," said Joe Gorder, Chairman, President, and Chief Executive Officer.

The businesses to be acquired include the following assets and operations:

Valero Partners Houston, LLC operates a crude oil, intermediates, and refined petroleum products terminal located on the Houston ship channel that supports Valero's Houston refinery. The assets consist of storage tanks with 3.6 million barrels of storage capacity.
Valero Partners Louisiana, LLC operates a crude oil, intermediates, and refined petroleum products terminal located on the Mississippi River in Norco, Louisiana, that supports Valero's St. Charles refinery. The assets consist of storage tanks with 10 million barrels of storage capacity.

The Partnership expects to finance the acquisition with $211 million of cash, $200 million of borrowings under its revolving credit facility, $160 million in borrowings under a five-year subordinated loan agreement with Valero, and the issuance of 1,908,100 common units, representing limited partner interests, and 38,941 general partner units to a subsidiary of Valero valued, collectively, at $100 million. The newly issued VLP units will be allocated between common units and general partner units in a proportion allowing the general partner to maintain its 2 percent general partner interest.

Upon closing, the Partnership plans to enter into 10-year terminaling agreements with subsidiaries of Valero. The businesses to be acquired are expected to contribute approximately $75 million of EBITDA in their first full year of operation.

The terms of the transaction were approved, subject to the execution of definitive documentation, by the board of directors of the general partner, following the approval and recommendation of the board's conflicts committee. The conflicts committee is composed of independent directors and was advised by Evercore Group L.L.C., its financial advisor, and Akin Gump Straus Hauer & Feld LLP, its legal counsel.

About Valero Energy Partners LP

Valero Energy Partners LP is a fee-based, growth-oriented, traditional master limited partnership formed by Valero Energy Corporation to own, operate, develop, and acquire crude oil and refined petroleum products pipelines, terminals, and other transportation and logistics assets. With headquarters in San Antonio, the Partnership's assets include crude oil and refined petroleum products pipeline and terminal systems in the Gulf Coast and Mid-Continent regions of the United States that are integral to the operations of several of Valero's refineries.

Contacts
Investors:
John Locke, Executive Director – Investor Relations, 210-345-3077
Karen Ngo, Manager – Investor Relations, 210-345-4574
Media:
Bill Day, Vice President – Communications, 210-345-2928

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Safe-Harbor Statement

This release contains forward-looking statements within the meaning of federal securities laws. These statements discuss future expectations, contain projections of results of operations or of financial condition or state other forward-looking information. You can identify forward-looking statements by words such as "anticipate," "believe," "estimate," "expect," "forecast," "project," "could," "may," "should," "would," "will" or other similar expressions that convey the uncertainty of future events or outcomes. These forward-looking statements are not guarantees of future performance and are subject to risks, uncertainties and other factors, some of which are beyond the Partnership's control and are difficult to predict. These statements are often based upon various assumptions, many of which are based, in turn, upon further assumptions, including examination of historical operating trends made by the management of the Partnership. Although the Partnership believes that these assumptions were reasonable when made, because assumptions are inherently subject to significant uncertainties and contingencies, which are difficult or impossible to predict and are beyond its control, the Partnership cannot give assurance that it will achieve or accomplish these expectations, beliefs or intentions. When considering these forward-looking statements, you should keep in mind the risk factors and other cautionary statements contained in the Partnership's filings with the Securities and Exchange Commission, including the Form S-1 and prospectus relating to the initial public offering of the Partnership's common units, and the Partnership's annual reports on Form 10-K and quarterly reports on Form 10-Q, available on the Partnership's website at www.valeroenergypartners.com. These risks could cause the Partnership's actual results to differ materially from those contained in any forward-looking statement.

Use of Non-GAAP Financial Information

We define EBITDA as net income before income tax expense, interest expense, and depreciation expense. EBITDA is a supplemental financial measure that is not defined under United States generally accepted accounting principles (GAAP). We believe that the presentation of EBITDA provides useful information to investors in assessing our financial condition and results of operations. The GAAP measure most directly comparable to EBITDA is net income. EBITDA should not be considered an alternative to net income in accordance with GAAP. EBITDA has important limitations as an analytical tool because it excludes some, but not all, items that affect net income. EBITDA should not be considered in isolation or as a substitute for analysis of our results as reported under GAAP. Additionally, because EBITDA may be defined differently by other companies in our industry, our definition of EBITDA may not be comparable to similarly titled measures of other companies, thereby diminishing its utility.

VALERO ENERGY PARTNERS LP RECONCILIATION OF FORECASTED NET INCOME UNDER GAAP TO EBITDA (Unaudited, in Thousands)

	Full Year Beginning March 1, 2015 Valero Partners Houston and Louisiana
Forecasted net income	$ 37,300
Add: Forecasted depreciation expense	20,000
Add: Forecasted interest expense	18,100
Add: Forecasted income tax expense	400
Forecasted EBITDA	$ 75,800