Independent oil refiner and marketer,
Marathon Petroleum Corp.
) has decided to become the primary shipper of
) Sandpiper pipeline project. The pipeline will transport crude
oil from the Bakken field of North Dakota to the refiners of U.S.
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Moreover, Marathon Petroleum has agreed to finance roughly 37.5%
of the $2.6 billion Sandpiper project for 27.0% ownership in the
North Dakota pipeline System of
Enbridge Energy Partners LP
). Marathon Petroleum also has the option to hike its ownership
to 30.0% with further investments in the future.
Sandpiper pipeline will integrate with the North Dakota pipeline,
increasing the Bakken crude oil transporting capacity of the
latter by 225,000 barrels per day (bpd). The Sandpiper pipeline
is expected to start operating by 2016.
Marathon Petroleum revealed that it will be able to transport
more crude oil from the Bakken play at a competitive cost, upon
completion of the Sandpiper pipeline project.
Findlay, Ohio-based Marathon Petroleum is a leading independent
refiner, transporter and marketer of petroleum products. 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 and
publicly traded entity. Marathon Petroleum operates through three
segments: Refining and Marketing, Speedway (Retail), and Pipeline
Being a buyer of oil, we believe that Marathon Petroleum's
profits improved on a sharp decline in oil price recently.
However, the requirement of conforming to regulations to
reformulate fuel and lower emission from refinery operations make
the industry a highly regulated one. As a result, Marathon
Petroleum is often compelled to divert cash flows to ensure
regulatory compliance, which can adversely impact profitability.
Marathon Petroleum currently holds a Zacks Rank #3 (Hold),
implying that it is expected to perform in line with the broader
U.S. equity market over the next one to three months.