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Valero Energy (NYSE: VLO) beat analyst expectations as it reported on Thursday that first-quarter earnings more than tripled from a year ago as refining margins remained strong and the cost of crude dropped.
Valero on Thursday reported an adjusted net income of $3.1 billion, or $8.27 per share, for the first quarter of 2023, compared to $944 million, or $2.31 per share, for the first quarter of 2022.
The EPS for the first quarter beat the analyst consensus estimate of $7.23 per-share profit compiled by The Wall Street Journal.
Valero was the first U.S. refiner to report earnings for the first quarter, and it looks like it has been another good quarter for refiners with demand recovering, margins staying strong, and the cost of crude for processing much lower than in the first quarter of 2022. Valero’s average cost of Brent crude oil for refining was $82.20 per barrel for Q1 2023, compared to $97.34 a barrel for Q1 in 2022.
Valero’s refining division reported operating income of $4.1 billion for the first quarter of 2023, sharply higher compared to $1.5 billion for the first quarter of 2022. The refining margin per barrel of throughput averaged $22.37 for the first quarter this year, nearly double the $12.74 per-barrel margin for Q1 2022.
“Our refineries operated at a 93 percent capacity utilization rate in the first quarter, despite planned maintenance at several of our facilities, illustrating the benefits from our long-standing commitment to operational excellence,” Valero’s chairman and chief executive officer Joe Gorder said.
At the end of last year, Valero’s refineries were operating at 97% capacity utilization in a favorable refining margin environment, Gorder said in January on the earnings call for the Q4 results. The Q4 utilization was the highest refinery utilization for the company’s refining system since 2018.
Refiners in the U.S. started booking bumper profits last year amid high refining margins and reduced operational capacity in America, more than recovering the hefty losses from 2020, when the pandemic hit fuel demand.
By Michael Kern for Oilprice.com
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Michael Kern is a newswriter and editor at Safehaven.com and Oilprice.com,