Valero sees quarterly loss, shares down

By Anna Driver and Erwin Seba

HOUSTON (Reuters) - Valero Energy Corp (VLO.N), the largest U.S. refiner, said on Tuesday it would post a second- quarter loss due to weak market conditions and indefinitely delay two expansion projects.

The refiner also announced plans to issue 40 million shares to help fund its $2.5 billion capital spending plan in 2009.

The company's shares tumbled 12 percent in post-close trading.

Valero has been on a buying binge. Last month, it announced it planned to buy Dow Chemical Co's (DOW.N) stake in a Dutch refinery for $725 million. Valero also bought several of bankrupt VeraSun's ethanol plans for $477 million.

San Antonio-based Valero expects a second-quarter net loss of about 50 cents per share, far below the average forecast of analysts for a net profit of 69 cents per share, according to Reuters Estimates.

Valero said its results have been hit by extended overhauls at its McKee, Texas, and Delaware City, Delaware, refineries and by weak sour crude oil discounts and lower diesel margins.

Despite the expected loss, Valero said it sees the current environment as a good time to buy assets.

"We are looking at expanding capacity," said spokesman Bill Day. "We continue to position ourselves to be stronger when the economy recovers."