Valero Energy Corp. earned $1.1 billion in the last 3 months of 2021, when revenues more than doubled and refining margin nearly tripled to $3.0 billion.
Refining throughput volumes during the period ended Dec. 31 were a little more than 3 million b/d versus nearly 2.6 million in late 2020 and margin per bbl clocked in at $10.73 versus $4.64. The ethanol and renewable diesel segments of San Antonio-based Valero’s business also posted increases–to $648 million and $223 million, respectively–in the fourth quarter.
Looking ahead to 2022, the Valero team is upbeat about numbers as the global economy continues to recover from the effects of the COVID-19 pandemic. Demand continues to recover and Valero’s 7-day average of late is just 3% below early-2019 levels.
“We remain optimistic on refining margins, with low global light product inventories, strong product demand, global supply tightness due to significant refining capacity rationalization and wider sour crude oil differentials,” Chairman and Chief Executive Officer Joe Gorder told analysts and investors on a conference call Jan. 27. “We also remain optimistic on our low-carbon businesses, which we continue to expand with the growing global demand for lower-carbon intensity products. We've been leaders in the growth of these businesses and maintain a competitive advantage.”
Valero is forecasting refining throughput to be down about 10% year over year due to maintenance work and some seasonal factors. For the full year, the company plans to spend about $2 billion on capital projects (versus $1.8 billion in 2021), of which about 40% will be allocated to growth projects. Half of that 40% will focus on the company’s low-carbon businesses.
On the heels of the earnings report, analyst Phil Gresh at JPMorgan raised his target price for Valero shares to $95 from $88. At Raymond James, Justin Jenkins tweaked his target to $104 from $103. Valero’s stock (Ticker: VLO) was changing hands around $81.50 on the afternoon of Jan. 28 and is up about 20% over the past 6 months.
