Gas Driving Strong Quarter
High profit margins are seen fuelling stronger-than-expected second quarter earnings for U.S. refiners.
A tightness in gasoline refining capacity in tandem with low inventories and high crude prices has pushed pump prices to record highs, and increased refiners' second-quarter profits accordingly, Reuters reported.
Valero Energy Corp. yesterday said it expects to earn over $4 per share in the second quarter, up from the $3.25 to $3.75 per share it had initially forecast. For the year, Valero said expects to earn a whopping $10 per share. "Refined product margins and discounts for our key sour crude feedstocks have improved to record levels during the second quarter," said Bill Greehey, Valero?s chairman and CEO.
The San Antonio-based refiner, which announced a $6-billion acquisition agreement with Ultramar Diamond Shamrock Corp. in May, earned $2.13 per share in the first quarter.
Valero also continued its expansion plans. The refiner signed a lease with purchase option with El Paso Corp. for its 115,000 barrel per day refinery with significant upgrade potential. The refinery is located in Corpus Christi, one mile from Valero's own plant along the Texas Gulf Coast.
Under the terms of the deal, Valero will pay $18.5 million in annual lease payments for the first two years as well as $105 million for inventories and working capital. At the end of the second year, Valero will have the option to buy the refinery for $294 million.
Philadelphia-based Sunoco Inc., a major player in the northeastern gasoline refining market, said yesterday its second-quarter earnings would range from $1.75 to $2.25 per share, up from the $1.63 forecast by analysts.
"The combination of excellent operations and strong margins so far this quarter should enable us to achieve record results this quarter," said Sunoco CEO and Chairman John Drosdick. "As we complete the first half of 2001, we expect to be well ahead of last year's record earnings pace and on track to generate in excess of $400 million of free cash flow in 2001."
Sunoco expects to pump more than $400 million in cash flow for the year, Drosdick said.
A tightness in gasoline refining capacity in tandem with low inventories and high crude prices has pushed pump prices to record highs, and increased refiners' second-quarter profits accordingly, Reuters reported.
Valero Energy Corp. yesterday said it expects to earn over $4 per share in the second quarter, up from the $3.25 to $3.75 per share it had initially forecast. For the year, Valero said expects to earn a whopping $10 per share. "Refined product margins and discounts for our key sour crude feedstocks have improved to record levels during the second quarter," said Bill Greehey, Valero?s chairman and CEO.
The San Antonio-based refiner, which announced a $6-billion acquisition agreement with Ultramar Diamond Shamrock Corp. in May, earned $2.13 per share in the first quarter.
Valero also continued its expansion plans. The refiner signed a lease with purchase option with El Paso Corp. for its 115,000 barrel per day refinery with significant upgrade potential. The refinery is located in Corpus Christi, one mile from Valero's own plant along the Texas Gulf Coast.
Under the terms of the deal, Valero will pay $18.5 million in annual lease payments for the first two years as well as $105 million for inventories and working capital. At the end of the second year, Valero will have the option to buy the refinery for $294 million.
Philadelphia-based Sunoco Inc., a major player in the northeastern gasoline refining market, said yesterday its second-quarter earnings would range from $1.75 to $2.25 per share, up from the $1.63 forecast by analysts.
"The combination of excellent operations and strong margins so far this quarter should enable us to achieve record results this quarter," said Sunoco CEO and Chairman John Drosdick. "As we complete the first half of 2001, we expect to be well ahead of last year's record earnings pace and on track to generate in excess of $400 million of free cash flow in 2001."
Sunoco expects to pump more than $400 million in cash flow for the year, Drosdick said.