Vertex Energy Provides Operational Update For Fourth Quarter 2023, Expected renewable production yield at approximately 96% vs. prior forecasted range of 97%-98%.
Vertex Energy, Inc. (NASDAQ: VTNR) (“Vertex” or the “Company”), a leading specialty refiner and marketer of high-quality refined products, provided an update to its financial and operational outlook for the fourth quarter of 2023, and announced the timing of its Fourth Quarter and Full-Year 2023 Earnings Release and Conference Call.
Fourth Quarter Conventional Throughput Volumes Slightly Below Prior Forecasts
Reported throughput volumes at the Company’s Mobile, Alabama Refinery (the “Mobile Refinery”) for the fourth quarter of 2023 are expected to be approximately 67,000 barrels per day (bpd), just below management’s previous guidance.
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The slight reduction reflects a combined impact of a strategic curtailment in throughput in light of deteriorating market conditions during the quarter as well as the previously disclosed downtime to proactively replace an electrical transformer.
The expected yield of finished conventional fuel products such as gasoline, diesel, and jet fuel is expected to be between 65% and 67%, in line with the previously forecasted range of 64% to 68%. This reflects the ongoing benefit of the yield optimization efforts introduced in the second quarter of 2023.
Operating expenses per barrel for the fourth quarter of 2023 are expected to total between $3.75 to $3.95 per barrel, a 5.5% improvement vs. prior expectations at the mid-point. Capex is expected to be $8 – $10 million, 48.6% below expectations at the midpoint.
Key commodity price averages in local markets served by Vertex for the fourth quarter of 2023 include CBOB gasoline at $85.28 per barrel, ultra-low sulfur diesel at $112.38 per barrel, jet fuel at $111.18 per barrel, and Louisiana Light, Sweet Crude oil at $81.17 per barrel.
Renewable Diesel Volume Expected to be Below Prior Outlook
Vertex’s reported renewable diesel production for the fourth quarter 2023 is expected to be 3,900 barrels per day (bpd), just under the forecasted range of 4,000 to 6,000 bpd. The yield on renewable throughput volumes is expected to be approximately 96%, slightly below the previously anticipated range of 97% to 98%.
Renewable Diesel Feedstock Supply Strategy Update
Vertex is pleased to report that the Company’s feedstock optimization strategy is progressing as expected. As previously communicated, the Company expected to receive LCFS credits in the fourth quarter of 2023 for its renewable diesel production volumes produced in the third and fourth quarters of 2023.
The initial LCFS credits reflect a temporary carbon intensity (“CI”) score and amounted to $9.5 million in the period. Upon receiving its provisional CI score, expected sometime in the first or second quarter of 2024, Vertex anticipates the per-barrel LCFS credits to improve materially over temporary CI values.
Management Commentary
Benjamin P. Cowart, President and CEO of Vertex, stated:
The fourth quarter of 2023 presented us with deteriorating crack spreads, leading us to adjust our throughput rates in line with our economic-driven operational strategy.
Mr. Cowart continued, “Simultaneously, we opted to improve our liquidity position by further leveraging cash invested in hard assets for the Renewable Diesel project through our existing term loan partner, achieving approximately $80 million in liquidity as of December 31st, 2023.”
“As we step into the first quarter of 2024, we’re observing an improvement in crack spreads, combined with increased margin efficiency, which has led us to opportunistically ramp our production rates for conventional fuels and renewable diesel, proactively aligning increased capacity utilization with evolving market conditions.”
ABOUT VERTEX ENERGY
Vertex Energy is a leading energy transition company that specializes in producing both renewable and conventional fuels. The Company’s innovative solutions are designed to enhance the performance of its customers and partners while also prioritizing sustainability, safety, and operational excellence. With a commitment to providing superior products and services, Vertex Energy is dedicated to shaping the future of the energy industry.
Hiaghlights:
- Conventional throughput volumes anticipated at approximately 67,000 bpd, vs. previously forecasted 68,000-71,000 bpd
- Expected fourth quarter finished product yield of 65%-67%, in line with previously forecasted range of 64%-68%
- Renewable throughput volumes anticipated at approximately 3,900 bpd, at the low end of previously forecasted 4,000-6,000 bpd
- Expected renewable production yield at approximately 96% vs. prior forecasted range of 97%-98%
- Average fourth quarter crack spreads on finished refined products declined 40% vs. third quarter average levels.
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VERTEX ENERGY PROVIDES OPERATIONAL UPDATE FOR FOURTH QUARTER 2023, Houston, January 23, 2024
