Marathon Petroleum (MPC) reported second-quarter profits that exceeded expectations, driven by increased crude processing volumes and a robust midstream segment, despite facing low refining margins. The company’s shares rose nearly 6% following the announcement.
As of June, Marathon was able to process up to 16% of the total U.S. demand across its 13 plants, even as fuel demand was impacted by reduced manufacturing activity and a rise in renewable fuel supply. U.S. refiners increased their processing capacity to 93.5% in the second quarter, up from 91% a year earlier, according to the U.S. Energy Information Administration.
Marathon’s refining margins dropped to $17.37 per barrel, down from $22.10 per barrel the previous year. However, the company achieved a crude capacity utilization rate of 97%, up from 93% last year, resulting in a throughput of 3.1 million barrels per day (bpd), compared to 2.9 million bpd in the same quarter last year. For the third quarter, Marathon expects a total crude throughput of 2.6 million bpd, or 90% of capacity.
Despite a forecast for lower third-quarter refinery throughput, analysts noted that Marathon’s ability to capture margins and maintain operational performance should continue. CFO John Quaid indicated that lower production in the third quarter is due to decreased demand and scheduled maintenance activities.
Marathon’s core adjusted profit for refining and marketing fell 36.7% year-over-year due to lower market crack spreads, while the midstream segment saw a 5.7% increase in core adjusted profit, benefiting from higher rates and volumes.
The company reported a profit of $4.12 per share for the quarter, significantly above analysts’ estimates of $3.09. Revenue rose to $38.36 billion, surpassing expectations of $35.08 billion. CEO Maryann Mannen dismissed rumors regarding a potential buyout by Finnish refiner Neste Oyj, stating that there are no ongoing discussions.