Marathon Petroleum Surges Past Q4 Profit Expectations Despite Tough Margin Conditions

Marathon Petroleum, a major U.S. refiner, reported a drop in earnings for the fourth quarter, but still surpassed Wall Street predictions. This was largely thanks to its midstream operations, which performed well despite challenges in refining margins.

The refining sector in the U.S. has been facing pressure since late 2023. Increased refining capacity and a return to normal margins have affected profits. Previously, high profits were fueled by supply shortages following Russia’s invasion of Ukraine and the recovery from the pandemic.

For the latest quarter, Marathon’s adjusted profit was 77 cents per share. Analysts had expected just 2 cents per share, according to data from LSEG. However, the company’s refining profit plummeted to $559 million, a significant drop from $2.25 billion a year earlier.

Marathon’s refining margin was $12.93 per barrel, down more than 27% from last year but still beating the projections of several brokerage firms. Executives noted that lower crack spreads, especially in the Midwest, were a primary reason for the decline in refining margins.

On a positive note, Marathon’s midstream segment saw adjusted earnings of $1.71 billion, an 8.7% increase from the previous year. This growth is attributed to higher rates and increased volumes of liquids transported in its system.

In terms of shareholder returns, Marathon disbursed around $1.6 billion, meeting analyst expectations. As of year-end, the company had $7.8 billion remaining for share repurchases.

Following the earnings report, Marathon’s shares climbed by 6.8% in midday trading.

Looking ahead, Marathon plans to invest approximately $1.25 billion in its refineries in Los Angeles, Galveston Bay, and Robinson in 2025, exceeding TD Cowen’s estimate of $900 million. Additionally, its midstream business anticipates spending about $2 billion on growth projects.

Executives also expressed optimism, expecting margins to improve in the latter half of the year as refinery closures counterbalance recent capacity increases. The company aims for crude capacity utilization of 85% this quarter, up from 82% a year earlier.

Check out this related article: Renowned Climate Scientist Declares the 2°C Climate Change Target ‘Dead’: What It Means for Our Planet