Marathon Petroleum Beats Profit Estimates on High Demand, Tight Supplies

Marathon Petroleum Beats Profit Estimates on High Demand, Tight Supplies
Cargo shipping containers, surrounded by storage tanks for refined petroleum products, are seen at Marathon Petroleum's Los Angeles Refinery, in Carson, Calif., on March 11, 2022. (Bing Guan/Reuters)

Marathon Petroleum Corp. on Tuesday beat Wall Street expectations for quarterly profit as refining margins soared amid tight supplies and higher demand for its products.

The top U.S. refiner also approved an additional $5 billion share repurchase plan, joining rival Phillips 66 in increasing shareholder returns. Phillips 66 raised its quarterly dividend on Tuesday by 5 percent to 97 cents per share.

U.S. President Joe Biden’s administration has criticized oil firms for pouring cash into shareholder payouts rather than expanding capacity despite short supply.

Marathon’s crude capacity utilization was about 94 percent for the fourth quarter, resulting in total throughput of 2.9 million barrels per day (bpd), which was roughly flat year-over-year.

Refining and marketing margins for the company surged 81.5 percent to $28.82 per barrel compared with last year.

Meanwhile, rival Phillips 66’s realized refining margins jumped 65 percent in the October–December quarter to $19.73 per barrel.

Profits last year from turning oil into gasoline, diesel, and jet fuel hit multi-decade highs as refineries ran at full throttle to meet rising demand amid a supply squeeze following Russia’s invasion of Ukraine and plant closings.

Findlay, Ohio-based Marathon posted an adjusted net income of $6.65 per share, for the three months ended Dec. 31, compared with analysts’ average estimate of $5.67 per share, according to Refinitiv data.

While Phillips 66 posted an adjusted income of $4 per share, missing analysts’ average estimate of $4.35 per share, as results were impacted by costs related to Hurricane Ian.