Valero profits double to $1 billion

San Antonio-based Valero Energy Corp. on Tuesday logged its highest fourth-quarter earnings per share since 2005, as profit more than doubled because of higher margins in all areas where the company does business.

Valero’s fourth-quarter profit jumped to $1 billion, or $1.82 a share, compared with profit of $45 million, or 8 cents a share, for the year-earlier period.

The results exceeded analysts’ estimates, as polled by Bloomberg News, that Valero would earn $1.20 a share in the quarter.

“This was Valero’s best fourth-quarter earnings per share since 2005, and we made important progress on our strategic goals,” Valero CEO Bill Klesse said in a statement.

Valero’s stock rose to $42.06 a share on the news, up $3.25 a share, or more than 8 percent, in midday trading on the New York Stock Exchange.

Read more: Carbon capture project at Valero refinery launches

Independent refiner Valero attributed higher margins in the quarter to more significant discounts for various types of crude oils it processes to make refined fuels.

Klesse noted that in the fourth quarter, the company ceased importing light foreign crude oil, replacing it with cheaper domestic crude at its refineries on the Gulf Coast and in Memphis.

“Since we expect U.S. and Canadian crude oils to become increasingly more available, we are pursuing options to process additional volumes of these cost-advantaged crudes throughout our refining system,” Klesse said.

In a note to clients, Roger Read, senior analyst at Wells Fargo Securities LLC, said Valero’s plans to move more Canadian and inland crudes through its refining system “should have a favorable effect” on the company’s margins and costs.

For the year ending Dec. 31, Valero’s profit fell slightly to $2.08 billion, or $3.75 a share, compared with profit of $2.09 billion, or $3.68 a share. Included in the full-year results were noncash asset impairment losses of $983 million after taxes, or $1.77 a share, and severance expense of $41 million after taxes, or 7 cents a share, mainly related to the shutdown of the company’s Aruba refinery.