Marathon Petroleum Profit Rises 41%

By Tess Stynes 

Marathon Petroleum Corp. said its third-quarter earnings rose 41% on stronger refining margins and growth in its retail and pipeline businesses.

The Findlay, Ohio, company owns refineries in Texas, Louisiana, and throughout the Midwest. It launched MPLX LP in 2012 to own and operate pipelines and other fuel-transportation assets.

MPLX, which is controlled by Marathon Petroleum, in July reached a $15.8 billion deal for MarkWest Energy Partners LP that will combine Marathon's oil- pipeline network with MarkWest's business separating natural gas into fuels such as propane and ethane.

While plunging oil and natural-gas prices haven't hit pipeline operators as hard as other energy companies, analysts say the part of the industry that builds and operates pipelines, natural-gas processing facilities and storage terminals is facing pressure to merge. During September, Energy Transfer Equity LP agreed to acquire Williams Cos. in a $32.6 billion deal that will create a massive U.S. network of natural-gas pipelines.

Chief Executive Gary R. Heminger said in prepared remarks Thursday that in the latest quarter Marathon was able to capture strong crack spreads--the difference between wholesale gasoline prices and crude--while lower fuel prices helped boost demand for its refined products.

In Marathon Petroleum's refining and marketing segment, operating earnings soared 50% to $1.46 billion, mostly on higher refining margins.

Marathon's Speedway retail business reported its operating profit more than doubled to $243 million, with a boost from the acquisition of Hess Corp.'s retail operations last year.

The pipeline segment, which includes Marathon's interest in MPLX, recorded operating earnings of $72 million, an increase of 4.3%.

Overall, Marathon Petroleum reported a profit of $948 million, or $1.76 a share, up from $672 million, or $1.18 a share, a year earlier. The latest period included a $144 million write-down related to the cancellation of a project at its Garyville, La., refinery. Revenue slumped 26% to $18.76 billion.

Analysts polled by Thomson Reuters expected a per-share profit of $1.82 and revenue of $20.12 billion.

Valero Energy Corp. on Wednesday reported that its third-quarter earnings rose 30% as the refiner's margins for gasoline and other products benefited from low prices for crude. Phillips 66 is set to report its third-quarter results Friday.

Write to Tess Stynes at [e-mail]

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October 29, 2015 08:30 ET (12:30 GMT)

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