Unconventional hydrocarbons Boost Profit for Refining Companies: Marathon Oil Corporation (MRO), Valero Energy Corporation (VLO), Murphy Oil Corporation (MUR)

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The U.S. is witnessing an oil revolution of sorts, thanks to the booming production of unconventional hydrocarbon. While producers are obvious gainers, another group benefiting immensely are refining companies. U.S. refiners benefit from North American crude, heavily boosting refining margins.

This gains being made in this industry was obvious after Valero Energy Corporation (NYSE:VLO)’s latest quarterly results when the company reported a profit of $1 billion, up from $45 million in 2011 fourth quarter profit.

Valero Energy Corporation (NYSE:VLO)Valero Energy Corporation (NYSE:VLO) said that the encouraging results were mainly due to a much-improved feedstock supply picture in the U.S.; the tight oil boom has unlocked increasing volumes of economically priced domestic crude.

The company also reported a strong top line which included revenues of $34.70 billion, just a slight gain from previous gross earnings of $34.67 billion.  The company’s numbers were well ahead of analysts’ expectations of $31.01 billion. This top line may seem stagnant to some, but cheaper domestic crude means that the company is processing more quantity now than ever.

In fact, the company said it will continue to reduce its reliance on foreign crude at its North American refineries and is expanding its capacity for West Canada heavy crude.

Higher refining output does not appear to be an issue yet as U.S. refiners have been able to export surging volumes of oil products abroad. Their competitiveness has been rising thanks to the domestic oil boom.

Although integrated oil companies stand to gain the most from the new boom – as they are the ones with access to both cheap hydrocarbon supplies and the capacity to turn them into high value petroleum products that can be shipped abroad -  refiners are making distinct niche for themselves as well.

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