Valero Energy Q4 profit beats estimates; shares surge
U.S. refiner Valero Energy kicked off the earnings season for U.S. refiners with strong fourth-quarter profits, on the back of a rebound in margins and higher throughput volume.
Top fuelmakers have reaped unexpected profits during the quarter as product margins, driven largely by ongoing Russia-Ukraine war, rebounded from the multi-year lows seen in 2024 when earnings eased from post-pandemic highs.
The San Antonio, Texas-based company said refining margin surged over 61% from a year ago to $13.61 per barrel during the quarter, while its average throughput volume rose to 3.1 million barrels per day, compared with 2.9 million bpd a year earlier.
Shares of Valero were up over 3% shortly after the conference call on Thursday.
The adjusted net income for the quarter was $3.82 per share, compared with analysts' expectations of $3.27 per share according to data compiled by LSEG.
The company returned $1.4 billion to its shareholders in the fourth quarter.
Venezuela deals, Benicia refinery closure. Investors sought more details about Venezuela during Thursday's call as the U.S. energy sector prepares to boost output in the Latin American country after the Trump administration outlined a long-term plan urging companies to spend $100 billion to revive the country's oil industry.
"Obviously, having the Venezuela supply back in the fold for our system is great news," vice president of crude and feedstocks supply and trading Randy Hawkins said, adding that the crude is expected to make up a large part of Valero's heavy crude diet as early as February.
Valero is the best positioned company among refiners to benefit from more Venezuelan barrels coming into the U.S., UBS analyst Manav Gupta said.
A regime change in Venezuela could result in wider crude differentials. "A $3 per barrel wider heavy-light spread would result in at least $600 million increase in earnings upside for Valero," Gupta added.
The refiner also provided updates on its refinery in Benicia, California, which is on track to cease operation by the end of April.
The refinery will begin idling its process units in February, executive vice president Rich Walsh said during the call.
"We will continue to supply the California market out of Wilmington," he added.
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