February 7, 2022 [Reuters] – Marathon Petroleum Corp (MPC.N) on Wednesday authorized a $5 billion share buyback plan, in addition to its existing programs, after strong refining margins drove a stunning fourth-quarter profit and revenue beat, sending its shares up 5%.
The Findlay, Ohio-based company said its refining and marketing margins more than doubled during the quarter amid a rebound in demand after a pandemic-induced slump.
Refining margins will be well positioned for 2022 as light product inventories remain tight, Chief Executive Officer Michael Hennigan said on a call.
Hennigan also expects to see recovery in jet fuel demand this year, even as it is “still roughly 15% below 2019 levels as business travel remains suppressed.”
Marathon said it will spend $1.7 billion in 2022 and use 50% of $1.3 billion of the total investment to complete the conversion of its Martinez refinery into a renewable fuels facility.
Total project cost for Martinez is expected to be $1.2 billion.
The company posted an adjusted net income of $794 million, or $1.30 per share, in the quarter ended Dec. 31, beating expectation of 56 cents per share, according to Refinitiv IBES.
“Stunning refining margin capture drives huge beat,” said an analyst at Tudor, Pickering, Holt & Co.
Revenue of $35.61 billion came way ahead of analysts’ average estimate of $24.33 billion.
Rivals Valero Energy Corp (VLO.N) and Phillips 66 (PSX.N) also powered past Wall Street estimates last week. read more
Marathon’s crude capacity utilization was 94%, resulting in a total throughput of 2.9 million barrels per day (bpd) in the reported quarter, compared with an 82% utilization and total throughput of 2.5 million bpd a year earlier.
For the current quarter, the refiner expects throughput of 2.9 million bpd.
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