Valero, Shell and BP Report First Quarter Earnings

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Valero, Shell and BP Report First Quarter Earnings

SAN ANTONIO -- Three leading oil companies released their first quarter reports, which underscored continued growth despite respective operational issues and industry concerns.

Valero Energy Corp. first quarter 2008 income was $261 million, which includes a pre-tax benefit of $101 million of business interruption insurance recovery related to a fire at its McKee refinery in the first quarter of 2007. In comparison, the company's income in the first quarter of 2007 was $1.1 billion.

The company's first quarter operating income was $472 million, or $371 million without the previously mentioned insurance recovery, versus $1.7 billion reported in the first quarter of 2007, according to the company report. The decline in operating income was attributable, in part, to lower margins for many of the company's products in the first quarter of 2008 compared to the same quarter last year.

"Despite a difficult environment for gasoline margins, we reported positive results for the first quarter," Valero chairman of the board and CEO, Bill Klesse, said in a released statement. "More recently, gasoline margins have shown moderate improvement as inventories have fallen and demand has increased as it normally does this time of year. We continue to benefit from a very solid on-road diesel market, with margins over $25 per barrel across our system."

Royal Dutch Shell Plc profits continued to rise as record crude and natural gas prices were realized. Bloomberg News reported that Europe's biggest oil company realized a 25 percent increase in earnings for the first quarter.

The company's net income advanced to $9.08 billion, from $7.28 billion a year earlier, The Hague-based company said today in a statement. Excluding inventory changes and one-time items, earnings beat analysts' estimates.

From a stock perspective, the future looks bright. "It's remarkable, almost everything is better than expected," Herman Bots, an Amsterdam-based analyst at Theodoor Gilissen Bankiers NV, told Bloomberg News. Bots has a "buy" rating on the stock. Twenty-three analysts also recommend buying Shell, reported Bloomberg News, while 12 advise holding the shares and four suggest selling the stock.

Reuters reported that BP Plc will realize a 48 percent spike in first-quarter profits to $6.6 billion, a figure buoyed by record oil prices and strong profits from energy markets.

Chief Executive Tony Hayward said these latest figures will raise investors' hopes for the world's third-largest non-government-controlled oil company. At press time, Reuters reported that BP's shares up were up by four percent.

The main driver of BP's earnings was its core oil and gas production unit, which benefited from oil prices which broke the $100 per barrel barrier in the quarter, according to the report. The company's refining and marketing division turned in an unexpected $1.2 billion profit, despite lower crude processing margins and lower throughputs at its refineries.

A BP spokesman told Reuters that while company realized a strong first-quarter earnings, it did not mean the company's operations were maximized, adding the results were flattered by a number of unusual items including BP's oil and gas traders having a "lucky quarter."