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Upcoming earnings not likely to provide boost for refiners, Barclays says

  • Shares of refiners such as Phillips 66 (PSX), Holly Frontier (HFC), Valero Energy (VLO) and Alon USA Energy (ALJ) have suffered since the U.S. government decided to allow the export of some ultra-light crude oil, and Barclays believes upcoming earnings reports aren't likely to help much.
  • U.S. refiners have fared better than international peers but still have been hit by the narrowing in most of the key North American crude differentials, although refiners exposed to the Cushing-Midland differential are affected less than most, the firm says.
  • As a result, Barclays slashes its current-year earnings forecast for most of the refiners; ALJ's FY 2014 EPS estimate is cut to $0.35 from $1.25 to reflect the company’s lower Q2 throughput guidance at its Big Spring refinery (39M bbl/day vs. 46M bbl/day prior).
  • The firm cuts EPS at HFC to $3.00 from $4.35, PSX to $6.20 from $7.95, and VLO to $6.25 from $8.35; only Tesoro (TSO) emerges unscathed, with its estimate left at $5.00.
Comments (24)
  • MisterJ
    , contributor
    Comments (636) | Send Message
     
    We shall see and I see it different.
    9 Jul, 07:05 PM Reply Like
  • TGP59
    , contributor
    Comments (70) | Send Message
     
    The modification of the export ban has provided an excellent opportunity for Barclays and their industry cronies to release downbeat and negative opinion/guidance directed toward retail investors. I'm sure they will also mention to clients that a 10% market correction is imminently around the corner so now is a great to time to sell. Meanwhile behind the scenes they are buy, buy, buying at great prices. Once the earnings are announced over the next few weeks, if they are inline or better, Barclays will surely re-adjust their PT and forward guidance, just in time to sell all the previously bought cheap shares back to the retail fools who will be told "you can't afford to miss the next move up".
    9 Jul, 07:30 PM Reply Like
  • Brandond
    , contributor
    Comments (354) | Send Message
     
    Spot on. Holding VLO and not paying any attention to Barclays, yet another corrupt organization trying to shake weak long longs. By the way, this would be the same Barclays that, in the past year, has been charged with the Libor Scandal, Gold price fixing and just 2 weeks ago fixing dark pool trading.

     

    VLO is an inexpensive stock in an expensive market so fine holding right here
    10 Jul, 06:05 AM Reply Like
  • Javelina
    , contributor
    Comments (39) | Send Message
     
    I will keep adding to my position. :)
    9 Jul, 07:12 PM Reply Like
  • Ruffdog
    , contributor
    Comments (1386) | Send Message
     
    I do not get it? Isn't making "ultra-light crude oil" out of WTI more production for the refiners?
    9 Jul, 08:35 PM Reply Like
  • Ajayyy
    , contributor
    Comments (315) | Send Message
     
    Someone can correct me on this but I think the issue was that ultra light crude oil doesn't have to be supplied through refiners. There are ways around it that let producers qualify some of the production as ultra light crude while keeping the refiners out of the loop.
    9 Jul, 09:49 PM Reply Like
  • Mike Maher
    , contributor
    Comments (2512) | Send Message
     
    Ajayyy,

     

    VLO doesnt use condensate as a feedstock in its refineries. The company has come out and said that if there is less condensate blended with the heavier oils VLO's refineries are set up to process, that they will be able to run at higher productivity rates.
    10 Jul, 12:41 AM Reply Like
  • mapodga
    , contributor
    Comments (1828) | Send Message
     
    Mike,

     

    You meant probablly this

     

    http://1.usa.gov/1j9r9gE

     

    It is Valero presentation, filled on SEC. Everybody that talking about refinery business should read it. Good overview of all issues that we discussing lately. Included personal note, that won't suffer everything because of export.
    They included also their crack spreads.
    It shows that have better 2Q then first.
    Anyway even with this "lover" E/P at 6.25 on year VLO has at current price P/E under 8.

     

    I wonder if this guys at Barcleys even know to read.

     

    It should be established some investor protection body, that would fight against all this public/media deceiving. As it is It, this propaganda Analyst machine harm market and economy.
    10 Jul, 03:22 AM Reply Like
  • NYCTEXASBANKER
    , contributor
    Comments (2155) | Send Message
     
    mapodga

     

    thanks for the download.
    10 Jul, 03:35 PM Reply Like
  • chammond63
    , contributor
    Comments (68) | Send Message
     
    Looks like Barclays wants to increase their exposure in the refining space
    9 Jul, 08:48 PM Reply Like
  • Hamdy Sadek
    , contributor
    Comments (156) | Send Message
     
    Thank you Barclays for the heads up and your forecast. I am keeping my VLO shares for now and will wait for the next earnings report to see how things will look the rest of this summer.
    9 Jul, 08:54 PM Reply Like
  • Phil McFarren
    , contributor
    Comments (13) | Send Message
     
    Any major adjustment in earnings ignores the facts of the market place. Condensate is of minor benefit to refineries and is limited to the penalty extracted from producers. Additional processing to enable shipping eliminates much of the penalty discount and a more stable pricing paradigm emerges for the first time for condensate. Exporting the condensate will have only very minor impact on the margins of refineries.

     

    pdm
    9 Jul, 11:46 PM Reply Like
  • mapodga
    , contributor
    Comments (1828) | Send Message
     
    Actually none.

     

    Since US rafineries don't use it for their production. They earning money on it fir processing and it will earn it in same way further - like fixed fee.
    10 Jul, 03:24 AM Reply Like
  • Ruffdog
    , contributor
    Comments (1386) | Send Message
     
    So if a refinery processes it so it can be exported,
    that reduces the amount of their output that goes for domestic production? Therefore, more profit for refiners.
    10 Jul, 07:59 AM Reply Like
  • mapodga
    , contributor
    Comments (1828) | Send Message
     
    Refineries need for their production crude oil (alll kind of it) not destilat. Thry use destilat only for help that heavy crude oils goes better through pipelines

     

    Producers of destilat has problems that they couldn't sell all of their stock because in last years their priduction grow very much, so export will help them to get rid if all this market surplus. Good for them, but not connected to refineries. Actually only in this part that some refineries will help to prepare condensat for export.

     

    If you will observe a little this Valero,presentation that I posted here, they explained also this.
    10 Jul, 06:15 PM Reply Like
  • Tahoe_JC1
    , contributor
    Comments (17) | Send Message
     
    Overall agree with the comments above. The government has recently reported that it does not intend, nor has any immediate plan, to export additional ultra-light crude oil. Additionally, we are headed into a "lame duck" season, which would traditionally assume that no major changes in policy will occur. I will continue to hold my shares of VLO as I will assume the Company does not foresee any issues in the near future. It will be an interesting earnings release and am confident it will mitigate any lingering fears.
    9 Jul, 11:47 PM Reply Like
  • QTL25
    , contributor
    Comment (1) | Send Message
     
    Marathon Petroleum (MPC) and Valero (VLO) are among the 102 companies of S & P 500 will have their upcoming earnings increase by more than 30 % as estimated by the analysts in this capsule of Bloomberg TV today :

     

    http://bloom.bg/1lVGFrk

     

    I will think twice when I read any other guidance from Barclays the next time !!
    9 Jul, 11:51 PM Reply Like
  • Hamdy Sadek
    , contributor
    Comments (156) | Send Message
     
    That was uplifting. Thanks for sharing the video.
    10 Jul, 01:50 AM Reply Like
  • arthur_bishop1972
    , contributor
    Comments (2231) | Send Message
     
    Actually, you would be better off just ignoring what Barclays says. They're not interested in helping retail investors.
    10 Jul, 01:59 AM Reply Like
  • raykrv6a
    , contributor
    Comments (2613) | Send Message
     
    That's the crap that is wrong with the system. VLO came out with a presentation that condensate export isn't a factor to them. There is no change in the export of crude.

     

    http://bit.ly/1ragtOX

     

    I'm sitting in 10% cash. I'll be happy to add to my VLO if the price gets kicked down some more. REview the VLO presentation I linked to above which was publshed 7/7 and consider do you really want to believe Barclays.
    10 Jul, 02:33 AM Reply Like
  • mapodga
    , contributor
    Comments (1828) | Send Message
     
    This was really done to mislead people.

     

    For example $VLO have already consensus for Y14 6.2$. So after they cut their own overwhelming estimation they are still above consensus and still at the level of profit which rate is among top 10% (at P/E 8).

     

    But nobody can understand this from their text.

     

    This is really ugly game around refiner.
    10 Jul, 04:12 AM Reply Like
  • Ajayyy
    , contributor
    Comments (315) | Send Message
     
    All this extreme bullishness on refiners in all the comments gives me pause. It's never a good sign.
    10 Jul, 08:30 AM Reply Like
  • raykrv6a
    , contributor
    Comments (2613) | Send Message
     
    Buy quality at a good price and eventually you will do well. COP raised it's dividend today. Glad to see that. VLO stated they are committed to returning value to the shareholder. Hoping for another nice dividend increase in 6 months.

     

    I was a buyer of UAL in 38.50 - 39.00 range recently when the big guys pushed the price down. Sold some this morning at 42.83 and wrote calls on some of the rest.

     

    Remember all the FREE advice to invest globally this year? Yeah right, not for me.
    10 Jul, 09:55 AM Reply Like
  • makingithappen
    , contributor
    Comments (2) | Send Message
     
    Bloomberg's ,Hunting for earnings season suprises. by Adam Johnson july 10,2014 . Earnings growth of at least 30% ,TSO, VLO ,M, RR, and more.
    10 Jul, 09:57 PM Reply Like
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