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Highlights:
- Viva Energy shares strong set of numbers as supply and demand gap between refined products widened.
- Viva Energy maintained strong supply through imports and locally refined products.
- Viva Energy shares garnered investor’s attention as oil prices remained volatile.
Shares of liquid fuel supplier, Viva Energy Group Limited (ASX:VEA) gained over 5% on Thursday (12 May) after the company shared updates on its refining and financial performance for the four months ending on 30 April 2022.
During the early morning trade, Viva Energy's share prices gained 5.24% on the ASX. At 10:22 AM AEST, the shares were spotted trading at AU$2.81 apiece. In the last one month, shares of the company rose by 10.2% while on the year-to-date (YTD) basis, this has gained by around 20%.
The shares of Viva Energy have been on investors' radar following the volatility witnessed in the prices of international crude oil on the back of Ukraine-Russia war, which has impacted supply.
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The energy company delivered strong set of numbers, mainly because of geopolitical reasons and a global decrease in refining capacity.
Key financial highlights of four months' performance
In April 2022, the company recorded a Geelong refining margin (GRM) of US$26.4/BBL (barrel), and in March 2022, the GRM was US$11.5/BBL. This can be compared with the US$8.3/BBBL average GRM reported for the entire March quarter.
Viva Energy delivered unaudited EBITDA of around AU$308 million for the four months ended A30 April 2022. This was up by 65% on a prior corresponding period (pcp) basis. Reportedly, the EBITDA was driven by the surge in the refining margins and performance of the retail and commercial marketing segment, the company said.
Why did refining margins of Viva Energy increase?
Image source: © Carrydream | Megapixl.com
In the ASX-announcement, Viva Energy said that it observed a considerable gap between its crude oil cost and refined product price in the international market.
This was due to rising demand for diesel and reduction in global supply of refined products because of the closure of refineries and falling exports from China. The broader impact of sanctions imposed on the purchase of Russian oil also contributed to the jump in Viva Energy's GRM, the company mentioned in the ASX update. The company said this demand and supply gap began in May and has continued till now. Hence, the company's refining margins skyrocketed.
CEO and managing director of Viva energy, Scott Wyatt, commented on the four performances,
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