Valero Energy Corp. has reported $1.944 billion in net income for the second quarter, with $1.3 billion returned to investors.
Earnings after deductions for the refining and petrochemicals company fell from $3.067 billion in the first quarter with sales volumes up but refining margins down, according to a Valero press release.
The Texas state-based company sold at lower prices in the three months ended June as petroleum and natural gas weakened. Last year for the same quarter Valero logged $4.693 billion in net profit as energy prices soared amid a trade disruption in oil and gas that followed Russia’s invasion of Ukraine February 2022.
Sales volumes for renewable diesel rose both by prior-quarter and year-ago comparisons to an average of 4.4 million gallons a day. “The higher sales volumes were due to the impact of additional volumes from the startup of the DGD [Diamond Green Diesel] Port Arthur plant in the fourth quarter of 2022”, Valero said.
Sales volumes also increased for Valero ethanol against the second quarter of 2022 and the first quarter of 2023 to 4.4 million gallons per day.
“Our refineries ran well with throughput capacity utilization at 94 percent and our U.S. wholesale system set a sales record of over 1 million barrels per day in May and June”, chief executive and president Lane Riggs said.
But refining margins, or refinery operating income before expenditure deductions, dropped to $4.22 billion in the April-June period from $5.9 billion in the previous quarter. Reflecting higher petroleum prices Valero’s refining margins totaled $8.089 billion in the second quarter of 2022.
Valero’s cash and cash equivalents stood at $5.075 billion as of the end of June 2023. Its total debt dipped from $9.037 billion in the first quarter to $8.986 billion as of the end of the second quarter with $167 million in current portion excluding variable interest items.
Valero’s dividend per common share was $1.02 for the second quarter, the same for the first quarter but up from $0.98 for the same period 2022. Net earnings per common unit for the second quarter of 2023 stood at $5.4. There were no non-recurring or extraordinary items to account for in net income for the second quarter of 2023 based on Valero’s report.
“Valero continues to target an annual payout ratio between 40 and 50 percent of adjusted net cash provided by operating activities”, it said.
The latest net profit of Valero, listed on the New York Stock Exchange, beat the Zacks Consensus Estimate of $5.08 per share.
Valero owns 15 crude oil refineries in the USA, Canada and the United Kingdom with a combined processing capacity of 3.2 million barrels per day. It has 12 ethanol factories, in the USA Mid-Continent region, with a total capacity of 1.6 billion gallons per day. It also has two renewable diesel plants in the USA Gulf Coast through its joint venture Diamond Green Diesel Holdings LLC with 1.2 billion gallons per year in combined capacity, according to Valero.
Valero is also venturing into sustainable aviation fuel manufacturing. “The Sustainable Aviation Fuel (SAF) project at the DGD Port Arthur plant is expected to be completed in 2025 and is estimated to cost $315 million, with half of that attributable to Valero”, it said in the results announcement.
“The project is expected to give the plant the ability to upgrade approximately 50 percent of its current 470 million gallon annual renewable diesel production capacity to SAF, which is expected to make DGD one of the largest manufacturers of SAF in the world.”
Riggs said, “Our focus on operational excellence, capital discipline and honoring our commitment to shareholder returns has served us well and will continue to anchor our strategy going forward.”
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