Caltex expects to lift its full year profit by about 40 per cent thanks to higher fuel sales in the face of falling oil prices.
Investors cheered the news on Thursday, sending the company's shares higher amid weakness in the energy sector.
Caltex expects to make an underlying operating profit of between $450 and $470 million for 2014, up from $332 million last year.
The oil refiner attributed the stronger profit - which it reports on a replacement cost basis to exclude the effects of oil price movements - to stronger earnings from its marketing division, which includes the company's service stations.
Higher sales of premium petrol and diesel had offset lower demand for unleaded petrol overall, it said.
Caltex also expects its refining business to bounce back into the black with earnings of between $10 million and $30 million, compared with a $171 million loss last year.
Refiner margins had improved in recent weeks, as petrol prices had not fallen as quickly as oil prices, though Caltex said that would change in the near future.
CMC chief market analyst Michael McCarthy said a less competitive landscape was easing pressure on Caltex's margins.
"That's translating to a much better operating environment for them and hence the good lift," he said.
"However, while that is pleasing from a business point of view, the hit that they'll take from their oil inventories means that the market is unlikely to get too enthusiastic about this."
Mr McCarthy said being in the refining business meant Caltex always carried inventory and recent falls in oil prices would not help.
Oil prices hit fresh five-year lows overnight after OPEC slashed estimates of how much oil the cartel will need to produce in 2015 amid weak demand.
Caltex expects the recent falls will eat into the profit it reports on a historic cost basis, which takes into account the effect of oil price movements on its inventories.
It has forecast that profit result to drop to between $90 million and $110 million, from $530 million last year.
Hefty costs from its recent efficiency review are also expected to affect the result.
The company, which is half-owned by US oil giant Chevron, makes the bulk of its earnings as a fuel supplier and operator of petrol stations.
Caltex shares were 89 cents, or 2.9 per cent, higher at $31.30 at 1340 AEDT after earlier rising as high as $31.43.
Share
