OREANDA-NEWS. Valero Energy Corporation (NYSE: VLO, "Valero") today reported net income attributable to Valero stockholders of USD 1.1 billion, or USD 2.00 per share, for the third quarter of 2014 compared to USD 312 million, or USD 0.57 per share, for the third quarter of 2013.

Operating income in the third quarter of 2014 was approximately USD 1.7 billion versUSD 532 million in the third quarter of 2013. The USD 1.1 billion increase in operating income resulted mainly from wider discounts for sweet and sour crude oils relative to Brent crude oil, stronger gasoline margins in most regions, and higher refining throughput volumes. These positive drivers were partially offset by weaker distillate margins relative to Brent crude oil in most regions and higher natural gas costs in the third quarter of 2014 versus the third quarter of 2013.

Third quarter 2014 refining throughput volumes averaged 2.8 million barrels per day, an increase of 42,000 barrels per day from the third quarter of 2013. The increase in volumes was due primarily to less turnaround activity and higher throughput capacity utilization, which was supported by strong product exports and increased availability of North American light crude oil on the U.S. Gulf Coast. Valero's refineries operated at 98 percent throughput capacity utilization in the third quarter of 2014.

"Our strong performance during the quarter reflects the capabilities of our team and our assets to capitalize on market opportunities," said Valero CEO and President Joe Gorder. "Our ability to do so has been enhanced by the capital invested in our refineries and logistics systems. In addition to solid operations, we increased our dividend for the second time in 2014, and so far this year, we have returned more cash via stock buybacks than we did in all of 2013.

"We continued to advance our refining and logistics capital investments, which enable us to process more North American crude oil. We completed a 70,000 barrels-per-day rail unloading facility at our Port Arthur refinery, and we received additional rail cars. We secured the option to purchase a 50 percent interest in the announced Diamond Pipeline, which when completed, will connect our Memphis refinery to the crude oil hub at Cushing, Oklahoma. We also completed our first drop-down sale to Valero Energy Partners LP in the third quarter of 2014."

"As we enter the fourth quarter, our business continues to perform well and our growth investments are progressing," Gorder said. "We have completed investments and are ready to receive advantaged crude at our Quebec refinery when the Enbridge Line 9B pipeline reversal starts up. Later this quarter, we expect to complete the hydrocracker revamp at our Meraux refinery, which will increase the refinery's yield of ultra low sulfur diesel and jet fuel. The two crude topping units at our Corpus Christi and Houston refineries are progressing as planned, and we expect these units will significantly reduce feedstock costs for both of these refineries when complete in 2016."

The ethanol segment reported record third quarter operating income of USD 198 million versUSD 113 million in the third quarter of 2013. The USD 85 million increase in operating income was mainly due to higher gross margin per gallon driven by lower corn costs and increased volumes with the start-up of Valero's eleventh ethanol plant in Mount Vernon, Indiana in August 2014.

"Our ethanol business continues to generate impressive returns for Valero, delivering a record USD 628 million in operating income in the first three quarters of 2014," Gorder said. "We are also pleased with our Mount Vernon ethanol plant's safe and timely start-up."

Regarding cash flows in the third quarter of 2014, capital expenditures were USD 622 million, of which USD 123 million was for turnarounds and catalyst. Valero increased its quarterly common stock dividend 10 percent to USD 0.275 per share, paid USD 145 million in dividends, and purchased 7 million shares of its common stock for USD 344 million. Subsequent to the third quarter of 2014, Valero bought 3 million shares of its common stock for USD 138 million and announced a common stock dividend of USD 0.275 per share for the fourth quarter of 2014. Valero has purchased 18.4 million shares for USD 937 million in 2014.

Valero ended the third quarter of 2014 with USD 6.4 billion in total debt and USD 4.2 billion of cash and temporary cash investments, of which USD 231 million was held by Valero Energy Partners LP.

Valero expects 2014 capital expenditures, including turnarounds and catalyst, to be approximately USD 2.9 billion, including USD 1.4 billion for stay-in-business capital and USD 1.5 billion for growth investments. More than 50 percent of the planned growth investments will be used to strengthen and expand the company's logistics system.

Valero expects 2015 capital expenditures, including turnarounds and catalyst, to be approximately USD 2.8 billion, including USD 1.5 billion for stay-in-business capital and USD 1.3 billion for growth investments. Consistent with its strategy, Valero expects over 35 percent of its 2015 growth investments will be for light crude oil processing and more than 30 percent will be for logistics. The company believes that most of the logistics investments will be eligible for future sales to Valero Energy Partners LP.