Valero Energy Corp. released its third-quarter financial results on October 26, 2023, highlighting robust earnings and production volumes in its ethanol and renewable diesel segments. The company reported notable growth in renewable diesel sales volumes and reiterated the progress of its sustainable aviation fuel (SAF) project.
Valero's renewable diesel segment, primarily driven by its Diamond Green Diesel joint venture with Darling Ingredients, posted an operating income of $123 million for the third quarter. This figure marked a decrease from the $212 million reported during the same period in 2022. Valero attributed the decline in operating income to lower renewable diesel margins.
Renewable diesel sales volumes displayed an upward trajectory, averaging 3 million gallons per day throughout the third quarter. This figure represents an increase of 761,000 gallons per day compared to the same period the previous year. The growth in sales volumes was attributed to the contributions of the DGG Port Arthur plant, which commenced operations in the fourth quarter of the prior year. Valero's outlook for the full year anticipates renewable diesel sales volumes to reach around 1.2 billion gallons.
Valero's ethanol segment reported $197 million in operating income for the third quarter, a significant upturn from the $1 million reported during the corresponding period in the previous year. Ethanol production volumes averaged 4.3 million gallons per day, reflecting an increase of 831,000 gallons per day compared to the third quarter of 2022. The boost in operating income was attributed to elevated production volumes and reduced corn prices. The ethanol segment is projected to produce 4.4 million gallons per day in the fourth quarter.
Valero's President and CEO, Lane Riggs, provided insights into the company's sustainable aviation fuel (SAF) project. The SAF project at the DGD's Port Arthur facility in Texas is slated to allow the facility to upgrade 50 percent of its current 470 million-gallon-per-year production capacity to SAF. The project remains on track and is expected to be finalized in 2025.
In addition, Homer Bhullar, Vice President of Investor Relations at Valero, addressed Navigator CO2 Venture LLC's recent announcement on the cancellation of its proposed Heartland Greenway CO2 pipeline project. Valero was expected to be a key CO2 shipper on this pipeline. Bhullar emphasized Valero's continued commitment to carbon capture and storage (CCS) as a strategic opportunity to reduce the carbon intensity of conventional ethanol. He noted that CCS is essential to providing ethanol with a pathway to SAF under current policies and stated that the company is actively evaluating alternative projects for CO2 sequestration.
Overall, Valero reported net income attributable to Valero stockholders of $2.6 billion, equivalent to $7.29 per share, for the third quarter. This compares to $2.8 billion, or $7.19 per share, for the same period in the prior year.