Vertex (VTNR) Expects Reduced Throughput Volumes in Q4 2023
Vertex Energy VTNR announced operational and financial outlook for the fourth quarter of 2023. The expected throughput volumes at the company’s Mobile, AL, refinery is 67,000 barrels per day, lower than the company’s previous guidance of 68,000-71,000. The slight reduction from the forecasted range is due to the effect of the strategic lowering of throughput volumes owing to deteriorating market conditions. The decline also stemmed from the previously disclosed downtime for replacing an electric transformer.
VTNR is set to release fourth-quarter results sometime in late February. The bottom-line estimate for the to-be-reported quarter is pegged at a loss of 6 cents per share on revenues of $816.7 million.
Fourth-Quarter Update
The company expects renewable diesel production of 3,900 barrels per day, just below the previously projected range of 4,000-6,000. Yield on renewable throughput volumes is now estimated at 96%, also below the previously predicted band of 97-98%.
Vertex also expects yield of finished conventional fuel products (gasoline, diesel and jet fuel etc.) to be in the range of 65-67% compared with the previously forecasted band of 64-68%. This demonstrates the benefit of yield optimization effects that were introduced in the second quarter of 2023.
The operating expenses are expected to be in the $3.75-$3.95 per barrel range. This shows a 5.5% improvement from the prior guidance at the midpoint. Capital expenditures for the fourth quarter are expected to be in the range of $8-$10 million. The projected range is 48.6% below the prior guidance.
Outlook for 2024
According to Vertex, since the beginning of the first quarter of 2024, it has been witnessing an improvement in crack rates and increased marginal efficiency. The company aims to use the positive market conditions to ramp up production for both conventional fuels as well as renewable diesel. The increased production capacity utilization is in line with evolving market conditions.
Recent Energy Earnings
While it's early in the earnings season, there have been a few key energy releases so far. Let’s take a look at some of them.
SLBSLB, the largest oilfield contractor, announced fourth-quarter 2023 earnings of 86 cents per share (excluding charges and credits), which beat the Zacks Consensus Estimate of 84 cents. SLB’s bottom line also increased from the year-ago quarter’s level of 71 cents.
SLB’s strong quarterly earnings resulted from higher evaluation and stimulation activity in the international market. As of Dec 31, 2023, the company had approximately $4 billion in cash and short-term investments. It had a long-term debt of $10.8 billion at the end of 2023.
Smaller rival Halliburton HAL reported fourth-quarter 2023 adjusted net income per share of 86 cents, which surpassed the Zacks Consensus Estimate of 80 cents. The figure was also well above the year-ago quarter’s level of 72 cents (adjusted). The outperformance reflects strength in the international markets, partly offset by weak performance in the North American region.
In good news for investors, Halliburton raised its quarterly dividend by 6.3% to 17 cents per share (or 68 cents per share annualized). It reported fourth-quarter capital expenditure of $399 million. As of Dec 31, 2023, the company had approximately $2.3 billion in cash/cash equivalents and $7.6 billion in long-term debt, representing a debt-to-capitalization ratio of 44.7.
Meanwhile, energy infrastructure provider Kinder Morgan KMI reported fourth-quarter adjusted earnings per share of 28 cents, slightly below the Zacks Consensus Estimate of 31 cents. The bottom line was adversely affected by a decline in realized weighted natural gas liquid price and milder winter conditions observed in 2023. However, KMI’s fourth-quarter DCF was $1.2 billion, down $46 million from the year-ago quarter’s level.
As of Dec 31, 2023, Kinder Morgan reported $83 million in cash and cash equivalents. Its long-term debt amounted to $27.9 billion. In its initial budget for 2024, KMI set its adjusted EBITDA guidance of $8.2 billion. It also declared a dividend of $1.15 per share, indicating an increase from the prior-year figure of $1.13.
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