Valero Boasts Solid Ethanol Results in 2013, Expects $3 Billion in Capital Expenditures in 2014

---

Researched by Industrial Info Resources (Sugar Land, Texas)--Valero Energy Corporation (NYSE:VLO) (San Antonio, Texas), a leading global manufacturer and marketer of transportation fuels and other petrochemical products, benefited from record results in its Ethanol segment in fourth-quarter and full-year 2013, as strong Ethanol margins mostly offset lower throughput in the Refining segment. Net income was reported to be $1.29 billion for the quarter, a 27.52% increase from fourth-quarter 2012, and $2.72 billion for the year, a 30.58% increase from 2012.

Total operating revenues stood at $34.43 billion for the quarter and $138.07 billion for the year, both decreases of less than 1% from the same periods in 2012. The Ethanol segment benefited from lower corn prices and lower industrial ethanol inventories, which significantly strengthened gross margins per gallon. Production volumes averaged 3.6 million gallons per day, a quarterly record. The Refining segment suffered steeper energy costs, which increased operating expenses; higher depreciation and amortization expenses; and weaker throughput margins, which were attributed to lower gasoline and diesel margins. However, the company still benefited from favorable crude oil discounts.

Valero also saw a $325 million nontaxable gain from the spinoff of gas-station retailer CST Brands Incorporated (NYSE:CST) (San Antonio, Texas) in May. During the fourth quarter, the company completed the initial public offering for Valero Energy Partners LP (NYSE:VLP) (San Antonio), which was formed by Valero "to own, operate, develop and acquire crude oil and refined petroleum products pipelines, terminals and other transportation and logistics assets," according to the company.

Capital expenditures totaled $538 million for the quarter, compared with $942 million reported in the same period last year, and $2.76 billion for the year, compared with $3.4 billion in 2012.

Industrial Info is tracking more than $3.2 billion in projects involving Valero, including a $220 million addition to a 95,000-barrel-per-day (BBL/d) crude oil refinery in Houston, Texas. The new, 90,000-BBL/d crude unit will process additional West Texas Intermediate, Eagle Ford and Bakken crude. Burns & McDonnell Incorporated (Kansas City, Missouri) is serving as the engineering contractor for the project, which is expected to kick off in the second quarter of this year.

"The Refining segment throughput margin in the fourth quarter of 2013 was $11.20 per barrel, which was down approximately $1 per barrel versus the fourth quarter of 2012," said Ashley Smith, the vice president of Investor Relations for Valero, in a conference call. "A decrease in gasoline and distillate margins on our regions was mostly offset by an increase in medium and sour heavy crude discounts."

Valero executives expect 2014 capital expenditures to total about $3 billion, including turnaround-related costs. Bill Klesse, the chairman and chief executive officer of Valero, said in a press release that the company is focusing on increasing its light crude oil-processing capacity and distillates yield, as well as increasing its conversions of natural gas into liquids. Executive also were optimistic about the export market.

"In the quarter, we did 133,000 BBL/d of gasoline exports," said Joe Gorder, the president and chief operating officer of Valero, in the conference call. "December was particularly strong, but it was pretty consistent throughout the entire quarter. If you look forward to the first quarter, I would tell you that we're seeing volumes at similar levels. And it all has to do with the fact that we've had some low prices, and that the Latin American countries continue to be short, so we have the opportunity to move the barrels there."

For more information, visit Industrial Info's North American Petroleum Refining Database.

View Plant Profile - 1014506
View Project Report - 300099291

Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, three offices in North America and nine international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle™, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities.