U.S. refiner Valero Energy Corp on Thursday warned that its first-quarter loss would exceed the previous three months, joining the ranks of energy firms hit hard by the severe winter storm in Texas in February.
The cold wave in U.S. central and southern states has disrupted power and gas supply and knocked refineries, oil production and chemical plants out of commission for several weeks, resulting in companies including Exxon Mobil warning of a profit hit.
Valero said it expects net loss attributable to its stockholders in the range of $1.81 to $2.05 per share for the first quarter, compared with an 88 cents loss in the fourth quarter.
The company estimated the impact of excess electricity and natural gas costs, incurred mainly by its refining and ethanol business segments, to be between $1.14 and $1.18 per share.
U.S. Gulf Coast refining segment’s operating income would be hit by about $480 million due to the additional costs, while the U.S. Mid-Continent region’s income could be impacted by as much as $45 million.
“The higher natgas and electricity costs were definitely above our expectations,” Tudor, Pickering, Holt & Co analyst Matthew Blair said, adding that Valero has elevated Texas exposure as 50% of its refining capacity is in the state.
In comparison, rival Marathon Petroleum Corp has only 25% of its capacity in Texas, while Phillips 66 has just about 16%.
Last week, Exxon Mobil said the cold snap would cut its first-quarter profit by up to $800 million, while Phillips 66 forecast a bigger-than-expected adjusted loss for the quarter, citing impact to its U.S. Gulf Coast petrochemical operations.
Shares of Valero, which is set to report first-quarter results on April 22, were down 2.6% at $72.44 in early trading.
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