Note: Following on from last week’s Inside Investor report with Dan Dicker where he mentioned CVR Refining (up over 10% since last Friday.) We decided to spend some time looking into the refining sector for additional investment opportunities.
If 2012 was a great year for refiners and anyone who invested in them, 2013 is shaping up to be more profitable than even the most astute analysts predicted. In September 2012, combined crude oil and condensate production in the Eagle Ford play topped 700,000 barrels per day; by 2016 we could be looking at as much as 1.6 million barrels per day. All this crude has to go somewhere.
But let’s not bury the lead. Follow this trail … Valero Energy Corp (NYSE:VLO) sends crude oil extracted in the Eagle Ford Texas shale play to its refineries in Quebec City.
This is very significant on two levels. It means that:
• production is growing to the point that it is starting to replace refiners’ more expensive overseas imports
• if Valero is refining Eagle Ford crude in Quebec City, this means it got special approval from the US federal government to EXPORT US crude
The Year of the Refiner
What is happening, in effect, is that the shale boom is ramping up production to the extent that refiners are drowning in supplies of light sweet crude to the point that they no longer have to import as much from West Africa, Mexico and Venezuela, for…