August 07, 2024 [Reuters]- Marathon Petroleum beat second-quarter profit estimates, as higher volume of crude processing and a strong midstream segment helped offset low refining margins, sending the shares of the top U.S. refiner up nearly 6%.
It was able to process up to 16% of the country’s total demand at its 13 U.S. plants as of June even as fuel demand took a hit from lower manufacturing activity and higher renewable fuel supply.
In anticipation of higher demand, U.S. refiners had ramped up processing capacity to 93.5% in the second quarter, compared with 91% a year ago, according to the U.S. Energy Information Administration.
Weak demand hit Marathon’s refining margins that came in at $17.37 per barrel, compared with $22.10 per barrel a year ago
It, however, saw a quarterly crude capacity utilization of 97%, up from 93% last year. This led to a total throughput of 3.1 million barrels per day (bpd) compared with 2.9 million bpd a year ago.
Marathon expects total crude throughput of 2.6 million bpd, or 90% of capacity in the third quarter.
“(Third quarter) refinery throughput looks to be lower than street forecasts. However, Marathon’s ability to capture margin and maintain sound operating performance looks to continue,” said Peter McNally, global head of analysts at Third Bridge.
Marathon Chief Financial Officer John Quaid said third quarter production was lower because of lower demand.
“We’ve got (turnaround) activities, as I mentioned, in the Mid-Continent and the Gulf Coast that are going to affect what we’re going to be able to run,” Quaid said. “But really we’re going to continue to run our assets optimally to meet the demand in the market. Yes, but we will run economically.”
Refiners routinely perform maintenance in the first and third quarters of the year.
It joins rivals Phillips 66, Valero, and HF Sinclair in posting lower quarterly profits, but exceeding profit estimates on higher amount of crude processed.
Marathon’s refining and marketing core adjusted profit was 36.7% lower from a year ago on lower market crack spreads.
But its core adjusted profit for midstream segment jumped 5.7%, on higher rates, volumes and fuel moved through pipelines.
The company posted a profit of $4.12 per share for the three months ended June 30, higher than analysts’ estimates of $3.09, according to LSEG data.
Revenue from its operations jumped to $38.36 billion, higher than expectations of $35.08 billion.
Marathon CEO Maryann Mannen said there was no truth to rumors the company was in talks about a buyout with Finnish refiner Neste Oyj
“I heard you mention that. That rumor is not factual and we are not having any conversations about a buyout with Neste,” Mannen said.
