Refiner Citgo Petroleum posts record $1.28 billion profit

Published 08/11/2022, 06:47 PM
Updated 08/11/2022, 07:57 PM
© Reuters. FILE PHOTO: The Citgo Petroleum Corporation headquarters are pictured in Houston, Texas, U.S., February 19, 2019. REUTERS/Loren Elliott
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HOUSTON (Reuters) -U.S. oil refiner Citgo Petroleum on Thursday reported second quarter earnings that surged to $1.28 billion, the highest quarterly profit in its history, on higher crude processing volumes and stronger margins.

The results reflect a sharp turnaround after back-to-back annual losses in 2020 and 2021. Demand and prices for gasoline, diesel and jet fuel have soared this year on the U.S. recovery and global shortages caused by Russia's invasion of Ukraine.

The eighth largest U.S. refiner's three plants processed 776,000 barrels of oil per day (bpd), up from 732,000 bpd a year earlier, it said. It sold a record 130,000 barrels per day of unbranded gasoline to retailers, the company's parent posted on Twitter (NYSE:TWTR).

Refinery utilization rates, a key measure of efficiency, rose to 101% from 95% in the first quarter this year, it said. The utilization rates topped those of rivals, some of whom also posted record earnings in the June quarter.

A spokesperson was not immediately available to comment on the tweets.

A subsidiary of Venezuelan state-run oil firm PDVSA, Citgo is run by boards appointed by Juan Guaido, who Washington recognizes as Venezuela's legitimate leader.

The company last year returned to profitability after deep losses during the coronavirus pandemic. Its first quarter $245 million profit was more than 10 times the year-ago level on higher processing volumes, higher exports and stronger margins.

On Thursday, Citgo said it was offering to buy $286 million in notes due in 2024 https://www.citgo.com/newsroom/press-releases/2022/citgo-holding-inc-announces-offer-to-purchase-up-to-286-231-million-in-aggregate-principal-amount and repay nearly $483 million of a term loan facility. Its net debt to capitalization ratio fell to 28% from 47%, its parent said.

The debt reductions signaled that Citgo could soon resume paying dividends to its parent, a practice that was stopped after its 2019 split from state-run PDVSA and the naming of ad hoc boards that oversee Venezuela's foreign assets.

In a tweet, the ad hoc parent said the company's debt agreements required it to pay down debt "before being able to send dividends."

© Reuters. FILE PHOTO: The Citgo Petroleum Corporation headquarters are pictured in Houston, Texas, U.S., February 19, 2019. REUTERS/Loren Elliott

Citgo ended the period with $2.2 billion in cash and proceeds from an accounts receivable securitization, according to the PDVSA ad hoc Twitter posts.

Citgo is protected by U.S. executive orders from creditors trying to seize Venezuela's foreign assets. It would be willing to resume Venezuelan heavy crude imports if the U.S. government authorizes the flow, Citgo's CEO said in July. The crude imports are key to feeding its refineries' deep conversion units.

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