Fri, May 29, 11:15 AM
- Ethanol companies rise while refiners are off session highs after the EPA announces its renewables fuels mandate.
- The EPA proposes requiring 15.93B gallons of total renewable fuel in 2014, 16.3B gallons in 2015, and 17.4B gallons in 2016, but the proposal for the total renewable fuel requirement falls short of levels Congress mandated, which were 20.5B gallons in 2015 and 22.5B gallons in 2016.
- Also, the EPA cuts 2016 corn-ethanol quota to 14B gallons; U.S. law required 15B gallons of ethanol for 2016.
- Ethanol exposed companies are mostly higher: ADM +0.7%, GPRE +4.2%, PEIX +4.1%, REX +1%, DAR +2%, CZZ -2.2%.
- Among refiners: HFC +0.3%, TSO +1.3%, VLO +0.8%, WNR +1.9%, PBF -1%.
- Biofuel related stocks: GEVO -8.3%, SZYM -2.7%, CDTI -1%, REGI -0.7%.
Wed, May 27, 10:26 AM
- The five-year outperformance of oil refining stocks will continue, Oppenheimer says as it upgrades HollyFrontier (HFC -0.4%), Marathon Petroleum (MPC +0.2%), Phillips 66 (PSX -0.3%) and Tesoro (TSO -0.4%) to Outperform from Market Perform and reiterates an Outperform rating for Valero (VLO -1%).
- The firm says its bullish outlook is supported by favorable fundamentals, including a wide crude differential, low natural gas prices and growing refined product exports; refining valuations remain attractive even given strong stock performance since 2010, as share buybacks, reduced debt and growing dividends mean valuations could extend further.
- Fadel Gheit and his analyst team forecast a Brent-WTI differential of $4-$8, which they consider a "huge competitive advantage to U.S. refiners with processing flexibility."
- Oppy's respective stock price targets for HFC, MPC, PSX, TSO and VLO are $50, $120, $95, $105 and $70.
Thu, May 14, 2:41 PM
- Citi held its 2015 Global Energy Conference this week, and its analyst team highlighted five Buy-rated stocks it likes in the current environment.
- The analysts indicated that 40% of the industry’s current and future investment plans would be “sub-economic” with Brent oil prices below $75/bbl, thus "self-help needs to be a centrepiece of a new reality... [and the] most aggressive self-help stories" appear to be Total (NYSE:TOT) and ConocoPhillips (NYSE:COP).
- Among U.S. refiners, "the structural advantage driven by shale growth remains an underlying theme," and the companies that appeared most focused on returning capital back to shareholders are Valero Energy (NYSE:VLO), Marathon Petroleum (NYSE:MPC) and Phillips 66 (NYSE:PSX).
- Citi's respective target prices for TOT, COP, VLO, MPC and PSX are $52, $80, $67, $119 and $88.
Thu, Apr. 30, 9:45 AM
Tue, Apr. 28, 8:58 AM
- Valero Energy (NYSE:VLO) +1% premarket after reporting better than expected Q1 earnings and revenues on strength in its refining division, although total revenues fell 37% Y/Y.
- VLO says Q1 throughput volumes in its refining segment averaged 2.7M bbl/day, a 9K-barrel increase from a year ago, and refining operating income rose to $1.6B from $1.3B a year ago, driven by stronger gasoline and secondary product margins relative to Brent crude oil and lower natural gas costs.
- Q1 operating income in the ethanol segment tumbled to $12M from $243M a year ago due to lower gasoline and ethanol prices that more than offset a drop in corn prices; ethanol production volumes averaged 3.8M gal/day, up 22% Y/Y.
- VLO expects 2015 capital spending of $2.65B, as previously guided.
Tue, Apr. 28, 7:35 AM
Fri, Apr. 10, 5:17 PM
- The EPA agrees to issue final biofuel quotas for 2014 and 2015 under the federal Renewable Fuel Standard by Nov. 30 in a tentative settlement of an energy industry lawsuit which had challenged EPA delays in establishing the mandates.
- Refiners and biofuel producers have complained that the EPA's repeated delays in setting renewable fuel use requirements have led to uncertainty and volatility in biofuel markets.
- Refiners are required under the RFS to blend a certain amount of biofuels into gasoline and diesel based on the targets established by the EPA; potentially relevant tickers include VLO, TSO, PBF, PSX, ALJ, MPC, WNR, HFC, CVI.
- Biofuels producers also crave the certainty and market demand guaranteed by the annual targets, but they believe the EPA should not back down from setting aggressive renewable fuel quotas; potentially relevant tickers include REGI, FF, AMRS, GEVO, CDTI, SZYM, OTCPK:KIORQ.
Thu, Mar. 26, 10:59 AM
- Cowen analysts see plenty of room to go in gains for the refinery sector, and moves up Q1 earnings estimates for across the firm's coverage universe.
- Cowen acknowledges that while crack spreads should start moving back to normal levels as industry maintenance winds down after April, margins are still strong, and many expect one of the largest-ever travel seasons this summer.
- The six stocks rated Outperform at Cowen are Delek (NYSE:DK) with a $43 stock price target, Marathon Petroleum (NYSE:MPC) with a $120 target, PBF Energy (NYSE:PBF) at $35, Tesoro (NYSE:TSO) at $90, Valero (NYSE:VLO) at $70 and Western Refining (NYSE:WNR) with a $60 price target.
Wed, Mar. 25, 5:45 PM
- The difference between the price of oil and the gasoline made from it would be bad news for U.S. refiners if the spread shrinks, but Cowen analyst Sam Margolin and Jason Gabelman offer three reasons why they’re not worried.
- With valuations remaining attractive, the analysts see three themes emerging to carry continued outperformance in refineries: positive consumer fuel demand response to lower prices, sustained crude oversupply into the fall turnaround period, and midstream consolidation and growth as a shareholder-friendly use of cash.
- The analysts have Outperform ratings on VLO, TSO, MPC, WNR, PBF and DK; only WNR failed to finish with a solid gain in today's trade.
Wed, Mar. 18, 3:24 PM
- Crude oil prices, in the doldrums yet again after U.S. inventories hit record highs for a 10th week and supplies at the futures' Cushing delivery hub hit a peak, turned around to finish higher following the Fed policy statement.
- Nymex crude rose 2.5% to settle at $44.66/bbl, pushing off earlier lows of $42.25 and the lowest intraday level since March 2009; Brent is up 4.5% at nearly $56.
- The gain could prove only a momentary recovery, however, as "speculation is going to grow about operational capacity being hit in Cushing and what that portends for prices,” according to Again Capital John Kilduff, adding that he sees U.S.crude testing $40 soon.
- U.S. refiners are enjoying big gains as the Brent/WTI spread surpasses $11: TSO +5.1%, CLMT +4.7%, CVI +4.8%, HFC +4.6%, MUR +4.5%, WNR +4.4%, VLO +3.9%, RDS.A +3.9%, CVRR +3.7%, MPC +3.3%, PSX +3.2%, ALJ +3.2%.
- ETFs: USO, OIL, UCO, SCO, BNO, DTO, DBO, UWTI, USL, DWTI, DNO, SZO, OLO, TWTI, OLEM
Tue, Mar. 17, 2:58 PM
- Oil refinery stocks are not as expensive as they look, Deutsche Bank analyst Todd Ryan writes, as he recommends buying Valero Energy (NYSE:VLO), Marathon Petroleum (NYSE:MPC), Tesoro (NYSE:TSO) and Phillips 66 (NYSE:PSX).
- After stripping out implied MLP-related valuations, Ryan finds "reasonable" stock price multiples at ~5.0x, in line with average levels seen in late 2013 and early 2014; more importantly, revisions are likely to remain a steady tailwind, with nearly 10% upside to 2015 EBITDA estimates using fairly conservative assumptions of $5/bbl Brent-WTI for 2015.
- With an overall healthy refining backdrop, a healthy Q1 EPS setup as estimates look low, and higher investor appreciation for the retail business with comps trading at ~1.5x turns above the five-year average, Ryan sees further upside for the group over the near term.
Tue, Mar. 10, 2:58 PM
- The two oil trains that derailed and burst into flames in recent weeks in northern Ontario were both carrying synthetic crude from Alberta to Valero Energy's (VLO -1.9%) refinery near Quebec City, the company says.
- "Despite the number of rail incidents recently, it is very rare for cargo not to be delivered to its destination safely," a VLO spokesperson says.
- Separately, Canadian National Railway (NYSE:CNI) says the train that derailed in February had been carrying petroleum distillates in addition to synthetic crude.
Tue, Mar. 10, 11:37 AM
- U.S. coastal refiners "could be a shore thing" for investors, Credit Suisse says, noting that the group can buy domestic crude when it is too cheap or profit from discounted waterborne barrels.
- Tesoro (NYSE:TSO) is "leading the charge," the firm says; with more than 350K bbl/day of crude capacity offline in a finely balanced market with growing vehicle miles traveled, west coast margins have spiked and could remain elevated for some time.
- PBF Energy (NYSE:PBF) is upgraded to Outperform from Neutral, as it is a key beneficiary of low crude prices, an oversupplied crude market for mediums and heavies, plus leverage to WTI domestic pricing.
- Phillips 66's (NYSE:PSX) target price is raised to $100 from $85, as Credit Suisse believes the longer-term upside looks strong and intact.
- Among others in the group, the firm says Marathon Petroleum’s (NYSE:MPC) self-help is underestimated, and Valero’s (NYSE:VLO) rising cash returns to shareholders and Delek’s (NYSE:DK) rising free cash flow should drive a re-rating of their equity.
Fri, Feb. 27, 12:30 PM
- Valero Energy Partners (NYSE:VLP) agrees to acquire two terminal businesses from Valero Energy (NYSE:VLO) for ~$671M in cash and stock; VLP shares are halted.
- The assets, located at the Houston Ship Channel and on the Mississippi River in Louisiana, consist of storage tanks with a combined 13.6M barrels of storage capacity.
- Upon closing, VLP will enter into 10-year terminaling agreements with the VLO subsidiaries.
- VP expects the acquired businesses to contribute ~$75M of EBITDA in their first full year of operation.
Thu, Feb. 19, 11:31 AM
- Valero Energy (VLO +1.5%) is upgraded to Buy from Hold with a $70 price target, raised from $60, at Deutsche Bank, driven by stronger than expected U.S. product demand, inventory-driven WTI differentials, and a Gulf coast that is "awash in crude optionality."
- The firm expects H1 2015 to be “much stronger” for the entire refining industry than in its 2015 outlook, specifically pointing to VLO's Gulf coast operations as a strong point for the company based on widened crude differentials.
- Although a rising tide is lifting all boats, Deutsche Bank sees the greatest benefit accruing to those with meaningful Gulf coast flexibility, including Marathon Petroleum (MPC +0.3%) as well as VLO, and leverage to widening Brent-WTI differentials, such as HollyFrontier (HFC -3.3%).
- At the same time, DB downgrades Delek US Holdings (DK -3%) to Hold from Buy.
Fri, Feb. 13, 11:18 AM
- All oil refiners are not the same, Goldman Sachs suggests as it upgrades Valero Energy (VLO +4%) to Buy from Neutral and adds it to the firm's Conviction Buy List while downgrading Tesoro (TSO -0.4%) to Neutral from Buy and removing it from the conviction list.
- Goldman thinks VLO offers investors a compelling turnaround story - similar to TSO in 2014 - with a clear, new strategy to reduce growth capex and return capital to shareholders; VLO also has not been impacted by USW strikes, unlike TSO.
- The firm also expect VLO to be as aggressive as any refiner in dropping down assets to its underlying Valero Energy Partners (NYSE:VLP) MLP, and feels the market generally has underappreciated this potential upside.
VLO vs. ETF Alternatives
Valero Energy Corp is a refining and marketing company. The Company produces conventional gasolines, distillates, jet fuel, asphalt, petrochemicals, lubricants, and other refined products as well as a slate of premium products.
Other News & PR