Valero Energy Corporation
) posted adjusted first quarter 2014 income of $1.54 per share,
beating the Zacks Consensus Estimate of $1.36 by 13.2%.
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The quarterly earnings compare favorably with the year-ago
adjusted earnings of $1.18 per share. This growth was bolstered
by higher refining throughput margins in each of the company's
regions, except the U.S. Mid-Continent.
Total revenue in the quarter increased 0.6% year over year to
$33,663.0 million from $33,474.0 million but missed the Zacks
Consensus Estimate of $35,293 million.
During the quarter, refining throughput volumes were
approximately 2.7 million barrels per day, up from the
year-earlier level of 2.57 million barrels a day. This was
primarily backed by major turnaround, maintenance and repair
activity at refineries in Valero's U.S. Gulf Coast region,
including the Texas City, Corpus Christi and Port Arthur
refineries; and at its Benicia and Wilmington refineries in the
U.S. West Coast region.
By feedstock composition, sweet crude, medium/light sour crude
and heavy sour crude accounted for 39%, 19% and 18%,
respectively. The remaining volumes came from residuals, other
feedstock as well as blendstocks and others.
The Gulf Coast accounted for approximately 59% of the total
volume. The Mid-Continent, North Atlantic and West Coast regions
accounted for 15%, 17% and 9%, respectively.
Company-wide throughput margins increased to $10.90 per barrel
from the year-ago level of $10.59 per barrel. The increase was
buoyed by higher discounts for light sweet and sour crude oil.
Average throughput margin realized was $11.47 per barrel in the
U.S. Gulf Coast (up from $10.00 per barrel in the year-earlier
period), $12.60 per barrel in the U.S. Mid-Continent (down from
$17.41), $9.47 per barrel in the North Atlantic (up from $8.45)
and $7.24 per barrel in the U.S. West Coast (up from $6.26).
Total operating cost per barrel was $5.64 during the quarter, up
5.6% from the year-earlier figure of $5.34. Refining operating
expenses per barrel were $4.00 versus $3.79 in the year-ago
quarter. However, unit depreciation and amortization expenses
increased 5.8% year over year to $1.64 per barrel.
Capital Expenditure & Balance Sheet
First quarter capital expenditure totaled $517.0 million,
including $129 million for turnarounds and catalyst expenditures.
At the end of the quarter, the company had cash and temporary
cash investments of $3.6 billion. Valero also rewarded
shareholders $133 million through dividends.
Valero maintained its total capital spending projection for 2014
at around $3 billion, including spending for turnarounds,
catalyst expenditures as well as the retail segment. Majority of
the capital is to be allocated to design logistics aimed at
enhancing access to cost-advantaged crudes and increasing crude
The stock retains a Zacks Rank #3 (Hold). However, there are
certain Zacks Ranked #1 (Strong Buy) stocks -
Helmerich & Payne, Inc.
Boardwalk Pipeline Partners, LP
) - that appear more rewarding in the short term.