(Reuters) - Valero Energy Corp’s (VLO.N) quarterly profit beat analysts’ estimate by a wide margin, as the largest independent U.S. refiner kept a tight leash on costs.
The company’s shares were trading up 1.5 percent in premarket trading at $57 on Tuesday.
Valero said costs and expenses fell 8 percent, or about $2 billion, to $18.75 billion in the third quarter ended Sept. 30.
The cost cuts helped the refiner to offset shrinking margins due to higher gasoline inventories and rising costs of biofuel blending obligations.
Refining throughput margin fell to $9.07 per barrel in the latest quarter, from $14.38 per barrel a year earlier.
U.S. refiners are in the midst of their worst year since the shale boom began in 2011, with high fuel inventories squeezing margins this year.
The company’s biofuel blending costs more than doubled to $198 million.
However, the company backed its full-year cost estimate for blending biofuels at $750 million to $850 million.
Valero’s refineries operated at 95 percent throughput capacity utilization in the third quarter, down from 96 percent in the preceding quarter.
After adjustments, Valero reported earnings of $1.24 per share, while analysts, on average, had expected earnings of 93 cents, according to Thomson Reuters I/B/E/S.
Net income attributable to shareholders fell to $613 million, or $1.33 per share, in the third quarter, from $1.38 billion, or $2.79 per share, a year earlier.
Valero on Tuesday also marginally lowered its 2016 capital expenditure forecast by $200 million, to around $2.4 billion.
The company reported an operating revenue of $19.64 billion.
Reporting by John Benny in Bengaluru; Editing by Sriraj Kalluvila