Valero Energy Corp. (VLO) is in the process of restarting units in the Memphis, Tennessee refinery, which abandoned operations earlier this month due to a fire in one of the crude distillation units.
The refinery, with a capacity of 180,000 barrel per day (bpd), will resume with its gasoline producing fluidic catalytic cracker. Initially, the refinery will produce 100,000 bpd from the west crude distillation unit while the refinery’s other distillation unit – east crude – is expected to restart in September.
The delay in commencing operations from the 80,000 bpd east crude unit is due to the ongoing repairs to a heater of the unit that exploded on August 5, igniting a fire. Hence, the refinery will operate at about half its capacity for now. A crude distillation unit will carry out the initial refining, producing most of the feedstock for all other units.
Valero has altered its operating guidance for the third quarter taking the fire into account. It has cut its guidance for throughput at its Mid-Continent U.S. refineries by 50,000 bpd.
Refinery throughput volumes for the Mid-Continent region are now projected in the 370,000 bpd to 380,000 bpd range, down from the original estimate of 420,000 bpd to 430,000 bpd. The company’s Mid-Continent refineries also include plants in Sunray, Texas and Ardmore, Oklahoma.
As a result of the shutdown of the Memphis refinery – that also supplies jet fuel to the Memphis Airport – Valero expects a hike in its third quarter operating expenses by 25 cents to $4.05 per barrel from the original estimate of $3.80 per barrel.
Valero has a Zacks #1 Rank, which translates into a Strong Buy rating for a period of one to three months. We are also maintaining our long-term Outperform recommendation on the stock. Valero competes in the Oil Refining and Marketing industry with companies like Western Refining Inc. (WNR) and Tesoro Corporation (TSO).
TESORO CORP (TSO): Free Stock Analysis Report
VALERO ENERGY (VLO): Free Stock Analysis Report
WESTERN REFING (WNR): Free Stock Analysis Report
Get all Zacks Research Reports and be alerted to fast-breaking buy and sell opportunities every trading day.
Be the first to comment