Valero Energy ( VLO) said it expects second-quarter earnings to fall significantly below analysts' consensus estimate. The company cited high natural gas prices and a swift decline in distillate margins.

The company estimates it will earn $1 to $1.10 a share in the quarter. Analysts had been expecting $1.58 a share. The company earned 10 cents a share in last year's second quarter.

"Although the quarter started off very strong, the combined impact of continued high natural gas prices, unplanned outages at a few of our refineries, lower sour crude discounts and the recent rapid decline in distillate margins have lowered our earnings expectation for the second quarter," said Bill Greehey, the CEO.

The San Antonio-based company said it sees refining margins returning to above-average levels in the future because the forward curve for distillate margins is averaging over $5.25 a barrel in New York Harbor for the fourth quarter. Additionally, spot sour crude discounts have widened and the company expects to see strong gasoline and distillate demand and moderating gasoline import levels.