Valero stock performance
Valero Energy (VLO) announced its results on February 1, 2018, before the market opened. Valero stock opened at $96.42 per share, above its previous day’s close of $95.97. This rise was likely because VLO’s 4Q17 earnings surpassed analysts’ estimate, as we discussed in part one of the series. The stock saw highs of $96.87 and lows of $92.69 during the day. Eventually, Valero stock closed at $94.69, around 1.3% lower than the previous day’s close. This performance was in line with peers and the broader market.
VLO’s peers HollyFrontier (HFC) and Phillips 66 (PSX) fell by 0.7% and 1.5%, respectively, on February 1, 2018. Also, Andeavor (ANDV) and Delek US Holdings (DK) fell 1.2% and 1.1%, respectively, on the day. The SPDR S&P 500 ETF (SPY) fell 0.1%. However, crude oil prices rose 1.7% on the day.
VLO’s 4Q17 update
VLO’s capex for the fourth quarter stood at $641 million. In 2017, Valero’s capex stood at around $2.4 billion. $1.1 billion of this was for growth projects and the rest was for sustenance projects.
VLO’s Wilmington cogeneration project and Diamond Pipeline projects started in November 2017. The Diamond Pipeline project involved the construction of 440 miles of pipeline to transport crude oil from Cushing to Memphis. The pipeline capacity is expected to be 200 thousand barrels per day. The Diamond pipeline could improve Valero’s supply flexibility and also its crude blend quality. The Wilmington cogeneration plant is expected to reduce energy costs and provide a steady supply of power and steam to the company.
On the startup of the Diamond pipeline, Valero’s chair, president, and CEO, Joe Gorder, stated, “We were excited to receive our first barrels of crude oil off the Diamond Pipeline. With current price differentials between WTI and LLS crude oil, our Memphis refinery is enjoying a significant cost advantage versus crude delivered on Capline.”
In 4Q17, Valero also returned $727 million to shareholders in the form of dividends (around $306 million) and share repurchases (around $421 million).