Marathon Petroleum Corp. reports Q1 financial results including acquisitions and leadership in energy efficiency.
Marathon Petroleum Corp. has reported 2018 Q1 financial results including earnings of $37 million, or $0.08 per diluted share. This compares with $30 million, or $0.06 per diluted share, in the first quarter of 2017.
“So far in 2018, we have accomplished many significant milestones,” said Gary Heminger, chairman and CEO. “We successfully completed a major turnaround at our Galveston Bay refinery, organically grew our midstream footprint in the Northeast and Permian, announced a definitive agreement to acquire store locations that will expand Speedway into key growth markets, and returned over $1.5 billion of capital to our shareholders.
“As we continue to focus on operational excellence and maximizing our shareholders’ long-term returns, we also are pleased to announce that the U.S. Environmental Protection Agency has named MPC a 2018 Energy Star Partner of the Year for Energy Management, recognizing our leadership in energy efficiency. We are proud to manufacture, transport and market cost-efficient energy that makes millions of people’s lives better every day, never losing sight of our responsibility to operate safely and efficiently.”
MPC’s first-quarter 2018 income from operations was $440 million, an increase of $149 million over the first quarter of 2017. The year-over-year increase in first-quarter income from operations was partially offset by higher net interest and other financial costs, as well as the increased amount of net income allocated to noncontrolling interests in MPLX LP resulting from the Feb. 1 dropdown and general partner/IDR exchange transactions. In addition, the effective tax rate for the quarter reflects deferred tax benefits of approximately $20 million, primarily resulting from effects of these strategic transactions.
The Refining and Marketing (R&M) segment reported a loss from operations of $133 million, compared with a loss from operations of $70 million in the first quarter of 2017, largely as a result of the February dropdown. This quarter, activities associated with these businesses reduced R&M segment income from operations by approximately $181 million and increased Midstream segment income from operations by a like amount. Excluding these effects, R&M results improved, driven by higher throughputs and lower direct operating costs from decreased turnaround activity, partially offset by lower product-price realizations.
MPC remains focused on realizing the substantial advantages of its flexible and integrated refining system and enhancing margins through further investments and process improvements. During the quarter, the Garyville refinery completed the final phase of its diesel maximization project. This investment further enhances MPC’s ability to benefit from the adoption of the International Maritime Organization’s (IMO) low-sulfur-fuels requirements, scheduled to take effect in 2020, by increasing ultra-low-sulfur-distillate production by 5,000 barrels per day.
The Midstream segment, which largely reflects MPLX, reported record income from operations of $567 million, up from $309 million in the first quarter last year, driven by a strong underlying base business and the February dropdown. The partnership continues to execute on its significant organic growth plan, commissioning three new processing plants during the quarter, further expanding the partnership’s earnings base.
Speedway contributed $95 million in segment income from operations, compared with $135 million in the same quarter last year. Results were affected by increased operating expenses, accelerated depreciation arising from technology investments, and adverse weather. In April, consistent with its growth strategy, Speedway announced its agreement to purchase 78 store locations in Syracuse, Rochester and Buffalo, New York. These stores will enhance the existing network and expand Speedway’s brand presence in key growth markets.
During the quarter, MPC returned $1.55 billion to MPC shareholders, including $1.33 billion in share repurchases funded primarily by after-tax cash proceeds from the February dropdown.
“Looking forward, we are very optimistic about the opportunities for our business,” Heminger said. “The solid demand backdrop, favorable crude differentials, and changing dynamics of the low-sulfur-fuel market all set the stage to create meaningful benefits across MPC’s integrated and diversified business model.
“Additionally, this morning we were excited to announce that MPC entered into a definitive merger agreement to acquire Andeavor. This transaction combines two strong, complementary companies to create a leading U.S. refining, marketing, and midstream company, building a platform that is well-positioned for long-term growth and shareholder value creation.”
Income from operations was $440 million in the first quarter of 2018, compared with $291 million in the first quarter of 2017.