Valero (VLO) quadrupled its third-quarter net income and beat Wall Street’s expectations on Tuesday as the energy company benefited from higher profit margins and output.

The San Antonio-based company said it earned $1.2 billion, or $2.11 a share, last quarter, compared with a profit of $303 million, or 53 cents a share, a year earlier. Analysts had been calling for EPS of just $1.94.

Revenue soared 60% to $33.7 billion, surpassing the Street’s forecast of $31.77 billion.

Valero’s results were boosted by higher refining margins. The company reported throughput margins rose to $5.11 a barrel and volumes climbed to 389,000 barrels per day.

However, Valero warned refining margins have declined this quarter compared with the previous quarters.

"Our focus on improving operations and the competitiveness  of our portfolio has produced solid financial results,” CEO Bill Klesse said in a statement. “We were able to capitalize on favorable refining margins and attain our highest refinery utilization since the third quarter of 2007.”

Shares of Valero slid 2.48% to $23.99 Tuesday morning, eating into the stock’s 2011 gain of about 6%.

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