(Reuters) - Refining company Valero Energy Corp (VLO.N) on Tuesday reported a 44 percent drop in second-quarter profit as higher prices for some of the crude oil it processes hurt margins.
U.S. refiners are fast losing the cost advantage they have enjoyed for nearly three years as U.S. benchmark oil prices steadily gain.
Refining throughput margins fell in the second quarter due to higher prices for crude and natural gas and rising costs of ethanol credits mandated by the U.S. government, the San Antonio company said.
Valero warned on July 11 that its second-quarter profit would be lower than a year earlier and forecast its per-share profit at 80 cents to 90 cents.
Net income attributable to stockholders fell to $466 million, or 85 cents per share, in the second quarter, from $831 million, or $1.50 per share, a year earlier.
Because the profit came in as expected, analysts at Wells Fargo characterized the earnings report as mostly “neutral,” but noted the company’s Gulf Coast refining margins came in below expectations.
Shares of Valero fell less than 1 percent, or 18 cents, to $35.09 in early New York Stock Exchange trading.
The company earmarked a capital budget of $2.5 billion to $3.0 billion for 2014, compared with the $2.85 billion it expects to spend in 2013.
Reporting by Swetha Gopinath in Bangalore and Anna Driver in Houston; Editing by Saumyadeb Chakrabarty and Nick Zieminski