UPDATE 2-Valero warns of bigger first-quarter loss on costs from Texas deep freeze

(Adds details on outlook, shares, background)

April 8 (Reuters) - U.S. refiner Valero Energy Corp on Thursday warned of a bigger first-quarter loss compared to the previous three months due to higher costs related to the severe winter weather in Texas in February.

Freezing weather in U.S. central and southern states in mid-February had led to power outages and gas-supply disruptions that knocked oil refineries and chemical plants out of commission for up to two weeks.

Valero expects net loss attributable to its stockholders in the range of $2.05 to $1.81 per share for the first quarter, compared with an 88 cents per share loss in the fourth quarter.

The estimated preliminary impact of excess energy costs to loss is $1.18 to $1.14 per share, Valero said, adding that the electricity and natural gas costs were incurred mainly by its refining and ethanol business segments.

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.

Shares of the company, which is set to report results on April 22, fell as much as 1% in premarket trading, while oil prices remained broadly flat.

Valero, like other refiners, had pinned its hopes on widespread COVID-19 vaccinations to ease travel curbs and improve fuel demand after last year saw one of the industry's worst downturns ever.

However, the unexpectedly severe winter is set to hurt profit for producers and refiners that had to shut some operations.

Rival Phillip 66 forecast a bigger-than-expected adjusted loss for the first quarter, citing the severe winter that battered its U.S. Gulf Coast petrochemical operations.

Last week, Exxon Mobil said the winter weather would cut its first-quarter profit by up to $800 million. (Reporting by Arathy S Nair in Bengaluru; Editing by Devika Syamnath and Arun Koyyur)

04/08/2021 12:49

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