Oil refiner Valero Energy Corp. (NYSE: VLO) reported first-quarter 2014 earnings before markets opened Tuesday. Diluted earnings per share (EPS) totaled $1.54, compared with EPS a year ago of $1.18. Quarterly revenues totaled $33.66 billion, compared with revenues of $33.47 billion in the first quarter of 2013. The consensus estimates called for EPS of $1.38 on revenues of $32.95 billion.

Operating income in the first quarter rose more than 27% to $1.35 billion. Valero’s oil refining income rose by $67 million, and income from the ethanol segment rose by $229 million.

The company did not offer guidance in its earnings release, but consensus estimates call for second-quarter EPS of $1.91 on revenues of $35.69 billion. For 2014, EPS is forecast at $6.13 on revenues of $123.76 billion.

The company’s CEO, who steps down as CEO on May 1 but will remain as chairman, said:

We’ve had a strong start to the year, and we achieved our best first quarter earnings per share since 2007. We continued to execute on our crude oil supply strategy of growing access to and processing more volumes of cost-advantaged North American crude oil.

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The company acquired a 110 million gallon-capacity ethanol plant in Indiana in March and plans to have that facility back in operation by the end of the year. The huge increase in revenue from ethanol sales was attributed to higher gross margins per gallon due to weather-related disruptions, lower industry ethanol inventories, lower import volumes and lower corn costs compared with the year-ago quarter.

Archer Daniels Midland Co. (NYSE: ADM), which also reported earnings Tuesday morning, said profits from ethanol sales doubled to $154 million.

The higher operating income in refining is down to Valero’s ability to acquire cost-advantaged North American crude oil. The company is permitted to export crude oil from the Gulf Coast to its refinery in Quebec where 45% of all feedstock is North American crude, up from 28% a year ago. By the end of the year, the reversal of Enbridge’s Line 9B pipeline will increase the percentage of North American crude processed at Quebec to 100%.

Shares of Valero traded up 1.8% in Tuesday’s premarket, at $59.00, above the 52-week range of $33.00 to $57.39. The consensus target price for the shares was around $60.20 before this report.

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