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Valero Energy Corporation (NYSE: VLO) today reported income from continuing operations of $104 million, or $0.18 per share, for the first quarter of 2011, compared to a loss from continuing operations of $80 million, or $0.14 per share, for the first quarter of 2010. Included in the first quarter 2011 results was an after-tax loss of $352 million, or $0.61 per share, on derivative contracts related to the forward sales of refined products. These derivatives contracts were closed and realized in the first quarter of 2011.
First quarter 2011 operating income was $244 million versus first quarter 2010 operating income of $4 million. Excluding the pre-tax loss of $542 million on the forward sales of refined products, first quarter 2011 operating income was $786 million and refining throughput margin was $9.91 per barrel. The $782 million improvement in operating income versus first quarter 2010 was mainly due to a $3.93-per-barrel increase in refining throughput margins. The increase in throughput margins was primarily due to higher margins for diesel and jet fuel plus wider discounts for heavy-sour feedstocks on the Gulf Coast and light-sweet crude oils in the Mid-Continent.
In addition, the company estimates its March 2011 results were impacted by $116 million of lost income after taxes, or $0.20 per share, mainly due to turnaround-maintenance delays at the refineries. The impact from these issues was not captured in the earnings guidance issued by the company on March 2.
“Clearly, the first quarter was a much better start to the year than last year,” said Valero Chairman and CEO Bill Klesse. “Our refining system experienced strong margins and turned in solid results despite a heavy maintenance schedule and associated restart delays. We also announced the acquisition of Chevron’s Pembroke refinery, marketing, and logistics assets in the United Kingdom and Ireland. These attractively priced assets will improve the competitiveness of our asset portfolio and should be immediately accretive to earnings upon closing in the third quarter.”