``1999 Was Our Best Year Yet'' Says Ultramar Diamond Shamrock CEO At Annual Shareholder Meeting.

Business Editors and Energy Writers

SAN ANTONIO--(BUSINESS WIRE)--May 2, 2000

"The strength of Ultramar Diamond Shamrock and our ability to create shareholder value were made even more clear in 1999 -- our best year yet," said Jean Gaulin, Ultramar Diamond Shamrock's (NYSE:UDS) chairman, chief executive officer and president at the company's Annual Shareholders Meeting today.

"In 1999, we reported both record earnings and record cash flows, repaid more than $600 million of long-term debt and paid $95.3 million in dividends, while industry margins dropped 12% from 1998," said Gaulin.

Gaulin said that the strength in earnings, despite weak industry conditions, came from increased refining, retail fuel and retail merchandising volumes and lower operating and administrative expenses. He attributed the improvements to the efforts of the organization in delivering promised self-help. "I'm proud of our organization and the people whose work made it all possible," Gaulin said.

Gaulin noted that the company's strong showing during 1999 positioned the company as a leader among its peers in delivering earnings, returns and cash flows. That leadership, he said, was reflected in the performance of the company's stock during 1999 which, including dividends, returned 10% more than the average return of the peer group of companies.

Believing that earnings and return will ultimately lead to share price growth, Gaulin promised to further position the company to be the leader among its peers in delivering both. To do that, the company has targeted $200 MM of pre-tax earnings growth over the next three years. That should grow return on capital employed to 12%, at low margins, by the end of 2002. "From that will come the solid cash flows necessary to create value through acquisitions, continued de-leveraging and the repurchasing of shares," Gaulin said.

To realize this goal, UDS has set as its strategy the development of high return and environmentally sound businesses in selected markets through integrated operations. This includes the acquisition and development of high-return retail and logistics operations around its flagship refineries in Quebec, Texas and California. The company will also seek alliances with various commercial partners to reduce costs and improve earnings. In addition, the company will continue to look for new sources of self-help and aggressively pursue an e-commerce strategy that takes advantage of its controlled, integrated operations and 3.5 million retail customer contacts per day.

"1999 was our best year yet, but I believe 2000 is shaping-up to be even better," said Gaulin.

In fact, UDS announced yesterday their first quarter 2000 net income of $69.1 million or 80 cents per basic share. For the same period last year the company reported net income of $16.0 million or 18 cents per basic share. These are the strongest first quarter results Ultramar Diamond Shamrock has posted since the merger of Ultramar and Diamond Shamrock in 1996.

Ultramar Diamond Shamrock Corp. (NYSE:UDS), with about $14.0 billion in annual revenues and more than 21,000 employees, is one of the largest independent refining and marketing companies in North America. The company operates six refineries in the United States and Canada with a total throughput capacity of 649,000 barrels per day and has over 5,000 branded retail gasoline/convenience merchandise stores, the majority of which are branded Diamond Shamrock, Ultramar, Beacon or Total. The corporation also has growing petrochemicals and home heating oil businesses. Please visit our Web site at http://www.udscorp.com for more information including annual reports, press releases, SEC forms 10-K and 10-Q, and audio archives of recent conference calls.