Ohio-based independent oil refiner and marketer
Marathon Petroleum Corp.
) reported weak third quarter earnings, pulled down by lower
margins on the back of spiraling costs.
MARATHON PETROL (MPC): Free Stock Analysis
MARATHON OIL CP (MRO): Free Stock Analysis
MATADOR RESOURC (MTDR): Free Stock Analysis
NORTHRN OIL&GAS (NOG): Free Stock Analysis
To read this article on Zacks.com click here.
The company, in its current form, came into existence following
the 2011 spin-off of Houston, Texas-based
Marathon Oil Corp
) refining/sales business into a separate, independent, publicly
Marathon Petroleum reported earnings per share - adjusted for
special items - of 59 cents, underperforming the Zacks Consensus
Estimate of 65 cents and way below the year-ago period adjusted
profit of $3.31.
However, revenues - at $26,274.0 million - were up 23.6% year
over year and also surpassed the Zacks Consensus Estimate of
$23,293.0 million, backed by higher fuel sales volumes and
Refining & Marketing:
Margins in the refining business decreased significantly from the
year-earlier levels. The situation was further compounded by
narrower sweet/sour differentials.
Marathon Petroleum's refining and marketing unit earned $227.0
million during the quarter, compared to profits of $1,691.0
million last year - reflecting lower margins and crack spreads.
The company's realized gross refining and marketing margin of
$2.55 per barrel was down markedly from last year period's margin
of $13.12 per barrel.
However, Marathon Petroleum's total refined product sales volumes
improved 33.8% from the year-earlier level to 2,148 thousand
barrels per day, while throughput was up 39.6% to 1,877 thousand
barrels per day.
Income from the Speedway retail stations totaled $102.0 million
during the quarter, up from $76.0 million in the year-ago period.
The positive comparison was driven by improved gasoline and
distillate gross margin, together with higher merchandise gross
margin. This was partially offset by higher operating expenses.
Marathon Petroleum's same-store fuel sales were up by 1.0% year
Segment profitability for the most recent quarter was $54.0
million, up marginally from the $52.0 million achieved during the
third quarter of 2012. Earnings were propped up by higher
transportation revenue, somewhat negated by a rise in operating
and depreciation expenses.
Capital Expenditure, Balance Sheet & Share
During the quarter, Marathon Petroleum spent $411.0 million on
capital programs (59% on Refining & Marketing). As of Sep 30,
2013, the company had cash and cash equivalents of $2,018.0
million and total debt of $3,403.0 million, with a
debt-to-capitalization ratio of 23%.
Moreover, for the reported quarter, Marathon Petroleum returned
about $1,200.0 million to shareholders through dividends and
Marathon Petroleum currently carries a Zacks Rank #5 (Strong
Sell), implying that it is expected to significantly underperform
with the broader U.S. equity market over the next 1 to 3 months.
Meanwhile, one can look at
Matador Resources Co.
Northern Oil & Gas Inc.
) as good buying opportunities. These domestic upstream energy
operators - sporting a Zacks Rank #1 (Strong Buy) - have solid
secular growth stories with potential to rise significantly from