San Antonio-based oil refiner Valero Energy (VLO - Get Report)  posted adjusted earnings of $1.07 per share on $19.6 billion of operating revenues, beating consensus estimates of $1.02 in earnings per share on $16.8 billion in revenues.

With the report, shares of Valero were trading up more than 3% around midday, while shares of peers Phillips 66 (PSX - Get Report) , Marathon Petroleum (MPC - Get Report) , Tesoro (TSO) , and PBF Energy (PBF - Get Report) also saw healthy boosts as expected. 

Although Valero's quarter compares poorly to the $1.4 billion in net income, or $2.66 EPS, the refiner recorded in the same period a year ago, industry followers weren't anticipating much in the way of impressive numbers for the second frame as margins have been stunted by an oversupply of petroleum products. 

Analysts were, however, looking for better visibility into the international demand for petroleum products on Valero's conference call Tuesday, and some questioned whether or the deal environment has shown improvement with boosted commodity prices. 

The refiner said demand both domestically and abroad remains strong, pointing to a 3% year-over-year uptick in domestic gasoline sales and 1% increase in diesel sales. 

Valero also emphasized that the company continues to look at deal opportunities all the time, but cautioned it is not the main component of its capital allocation framework, meaning there is no greater emphasis on M&A today at the refiner than in years past. 

The company noted, however, that not much has changed in the spread between buyer's bids and seller's asking prices, implying the gap remains wide and negotiations continue to be difficult. 

As far as the numbers go, Valero suffered lower refining results in the Gulf Coast and North Atlantic regions in the second quarter and places special emphasis on the high costs it realized from Renewable Identification Numbers, or RINs, which effectively represent the amount of biofuel that has been blended into fossil fuels by refiners. 

Management said the $173 million it spent on RINs was an issue in the quarter and expects no relief for the remainder of the year with an estimated full-year obligation of $750 to $850 million.

But on the bright side, its cash operating costs were "exceptionally low" at $3.51 per barrel, according to Tudor, Pickering, Holt analysts.

"The company continues to do well on controllable aspects of the business," TPH said Tuesday morning.

The firm further said share buybacks were stronger than expected in the quarter at $403 million and noted the balance sheet remains strong with consolidated net debt to capitalization at 11.2% and cash balance of $4.9 billion at the end of the quarter.

Analysts opined on the call that the strong buybacks and the additional $282 million in dividends Valero paid to shareholders in the second quarter should help support its stock. 

Valero noted that it has complete confidence in the ability to maintain its dividend moving forward after paying stockholders 60 cents per share for the second consecutive quarter.