Posted on 04/29/2008 7:28:29 AM PDT by thackney
Rising crude prices and weak gas margins are continuing to drag down Valero Energy's earnings from its record highs of a year ago.
For the first quarter of 2008, Valero reported net income of $261 million, or 49 cents per share. That compares to first-quarter 2007 net income of $1.1 billion, or $1.82 per share.
The first quarter 2008 figures include a pre-tax benefit of $101 million, or 12 cents per share, from business interruption insurance recovery related to the fire at the company's McKee refinery in the first quarter of 2007.
Valero officials blame the decline in net income on lower margins for many of the company's products as the cost of crude oil increased more rapidly than the prices of gasoline and other refined products.
The average price of West Texas Intermediate crude oil rose nearly $40 per barrel since last year while the price of conventional gasoline that was produced from that same barrel increased by just $34.
Valero was also impacted by a $180 million jump in refinery operating expenses due to high energy costs and maintenance expenses while throughput volumes decreased by an average of 138,000 barrels per day. But Valero officials remain upbeat regardless.
"Despite a difficult environment for gasoline margins, we reported positive results for the first quarter," says Bill Klesse, Valero's chairman and CEO. "More recently, gasoline margins have shown moderate improvement as inventories have fallen and demand has increased as it normally does this time of year."
Klesse says Valero ended the quarter with a healthy balance sheet, noting that the debt-to-capitalization ratio "stood at a relatively low 22 percent when adjusted for our $1.4 billion cash balance."
Klesse predicts that average throughput rates for its Gulf Coast refineries should increase by 100,000 barrels per day as the company completes repairs at its Port Arthur and Aruba plants.
"The refining business has always been seasonal, volatile, and cyclical," Klesse says. "We will continue working toward excellence in safety, environmental regulatory compliance, and reliability, while also striving to lower expenses and improve our effectiveness.
San Antonio-based Valero (NYSE: VLO) owns and operates 17 refineries throughout the United States, Canada and the Caribbean with a combined throughput capacity of 3.1 million barrels of oil per day. The company also is one of the nation's largest gasoline operations, with 5,800 wholesale and retail outlets under the Valero, Diamond Shamrock, Shamrock, Ultramar and Beacon brands.
We need to support Valero and cutoff Citgo (run by Valenzuela’s communist dictator Chavez!)
Too bad the US doesn’t open up more oil resources for inputs into this US refining company.
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More appropriately, it is TOO BAD the US doesn’t have a comprehensive energy policy and plan that eliminates the issue of radical fuel costs and dependence on foreign oil. Too bad we are not drilling and pumping more, refining more, producing more electric power via nuclear plants — BUT, the so-called “enviromentalist whackos” have enough money to keep politicians at the dollar pig trough, and prevent them from allowing us to have what we need.
So who is running America, anyway? Who said “special interests”?? You win, we lose.
Does this refinery company have its own oil well production or does it have to buy crude?
I believe they are part owners in three offshore platforms but they are primarily a US refining and distribution (retail) company.
2007 Annual Report
http://www.valero.com/NR/rdonlyres/D105445B-CC29-413C-99B5-C768FDF6E151/0/VLOARFINALFORWEB.pdf
See Page 17
If they have to purchase most of their crude, they are in a tough business position. I wouldn’t build a refinery these days unless I had enough crude production already to feed the plant.
Hey, even ExxonMobil purchases more Crude than they produce themselves. With limited access to oil production, primarily controled by Goverment entities around the world, what choices are there?
A different business. Home mortgages. Or, maybe not that. Maybe video games, especially violent crime oriented games like carjacking.
What ever happened to the days of Gulf, Standard, American, Esso, Sinclair, Sun, etc....?
Underway=under water.
I suspect there are hundreds of patents. Effectiveness is not a requirement of getting a patent.
I never believed any of the B.S. of oil companies keeping patents off the market that would greatly improve mpg. Patents would have little meaning to places like Russia or China.
Besides, a 100 mpg car of decent size and performance would guarantee oil's dominance as the fuel of choice for transportation and knock away all attempts at alternative fuels.
I agree with your take on Russia and China.
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