Ampol continues to benefit from higher petrol prices, with it booking strong margins at its Lytton Refinery in Brisbane for the three months to December 31.
Prices for crude at the refiner in the fourth quarter remained above historical levels averaging $US11.75 per barrel, compared to $US11.24 per barrel in the same period in 2021, and more than double the $US5.13 in 2020.
But the result was down 24 per cent down on the $US15.46 per barrel refiner margin in the third quarter, as Ampol blamed “higher crude premiums and lower product freight versus crude freight spread” for the margin reduction in the fourth quarter.
However, Ampol shares rose 2.2 per cent to $29.32 – their highest level since late October, when it lost 12.6 per cent in a single day after it reported weak jet fuel sales.
RBC Capital Markets analyst Gordon Ramsay said the fourth-quarter result was weaker than expected, with the broker expecting Lytton’s refiner margin to be $US14.50 per barrel and its 2022 margin was $US17.72 versus $US18.70. “We see the main difference as being crude quality premiums and freight differentials, with Ampol purchasing crude two to three months ahead of usage and therefore being exposed to a time lag on pricing differentials,” Mr Ramsay said.
Refinery production during the quarter rose to 1.58 billion litres, increasing from 1.55 billion litres in the September quarter, which included planned maintenance activities.
“We forecast Ampol to continue to realise higher than historical average Lytton refining margins going into 2023, partly offset by freight costs and quality premiums (the extra cost paid for crude and product above posted pricing),” Mr Ramsay said.
Mr Ramsay said proposed EU sanctions on Russian oil imports due to take effect on February 5 would probably provide a “key hinge point with upside risk to global refining margins, particularly diesel”.
Ampol told the market on Wednesday that it expected replacement cost operating profit earnings before interest and taxes to be slightly ahead of its third-quarter result of $272.3m.
“Fuels and Infrastructure (ex-Lytton) achieved a strong level of profitability due primarily to the improved performance from Trading and Shipping compared to the third quarter, while both Convenience Retail and Z Energy continued to perform well,” the company told investors.
Ampol in October reported a $21.3m loss for the three months to September 30 in its fuels and infrastructure business excluding refinery as it blamed a “headwind” in margins on jet fuel sales due to higher freight costs.
Earnings before interest and tax for the first nine months of 2022 were just over $1bn, more than double the same time last year.
Extracted from AFR