Valero stock performance
Valero Energy (VLO) announced its results on July 27, 2017, before the market opened. The stock opened at $68.0 per share, which was higher than the previous day’s close of $67.9.
Valero (VLO) saw highs of $68.8 and lows of $66.1 on July 27. Eventually, VLO closed at $67.6—0.6% lower than its previous day’s close.
The drop in Valero’s stock price despite surpassing its estimates was apparently due to its renewable fuel blending obligation. VLO saw a rise in its RIN (renewable identification number) costs in 2Q17 over 2Q16.
In the 2Q17 earnings transcript, Jason Fraser, VLO’s European vice president stated: “We also still have this broken structure with a disconnect between the point of obligation and the point of compliance.”
Fraser added: “There are still very long parties and very short parties, and we think this is contributing to the high RIN prices, which are costing consumers billions of dollars a year.”
Crude and the broader market
On July 27, 2017, crude oil prices rose 0.6%. VLO’s peers Tesoro (TSO) and Delek US Holdings (DK) fell 0.1%, and 1.4%, respectively, but Marathon Petroleum (MPC) and Phillips 66 (PSX) rose 0.9% and 1.0%, respectively, that day.
On July 27, the SPDR S&P 500 ETF (SPY) fell 0.1%, but the SPDR Dow Jones Industrial Average ETF (DIA) rose 0.4%.
VLO’s 2Q17 update
Valero’s capital expenditure or capex for 2Q17 stood at $461 million. Valero expects its 2017 capex to be around $2.7 billion, of which $1.1 billion will be for growth projects, and the rest would be for sustenance projects.
Joe Gorder, VLO’s CEO (chief executive officer), stated: “We’re pleased with the progress we’ve made on our growth investments this year. Before year-end, we expect to see the Wilmington cogeneration plant running and to have oil flowing through the Diamond Pipeline.”
In 2Q17, Valero returned $658 million to shareholders in the form of dividends ($312 million) and share repurchases ($346 million).