The Gist: (1) Refining delivered the highest return on capital among the oil & & gas subsectors at 17.2% for the year. (2) Refining cash flow per throughput put in another early cycle peak in 2022 but there is no capex cycle on the horizon so the long-term viability of returns looks fine. (3) A historical recap of how refining evolved to the cash flow powerhouse it is today and some thoughts on the future.
All the major refiners have reported and the sector bested all the energy subsectors (OFS, Integrated, Canadians, Drillers, etc) with a 17.2% return on capital when one adjusts for impairments well above the 10% long-term average.
Breaking them out separately, PBF led the way with the big three of VLO, MPC, and PSX in the middle of the pack while Delek took up the rear.
Nonetheless, despite being down from 2022, it was a good year for the processors of our beloved commodity.
Shifting gears a bit, a unique chart that I like to track is this next one which shows profit per barrel of throughput to get a sense of how profitable the industry is getting.
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