Marathon Petroleum Stock after Its 2Q17 Earnings



Marathon Petroleum stock

Marathon Petroleum (MPC) released its results on July 27, 2017. Marathon Petroleum stock opened at $54.3 per share—below the previous day’s close of $55.7. The stock was likely lower due to Marathon Petroleum missing its 2Q17 earnings expectations, as we discussed in Part 1 of the series. The stock saw highs of $56.5 and lows of $53.5 during the day. Eventually, Marathon Petroleum stock closed at $56.2, which was ~0.9% higher than the previous day’s close.

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Marathon Petroleum’s peers HollyFrontier (HFC) and Phillips 66 (PSX) rose 0.9% and 1.0%, respectively, on July 27, 2017. On the same day, crude oil prices rose 0.6%. However, peers Tesoro (TSO) and Delek US Holdings (DK) fell 0.1% and 1.4%, respectively, on the day. On July 27, the SPDR S&P 500 ETF (SPY) fell 0.1%. However, the SPDR Dow Jones Industrial Average ETF (DIA) rose 0.4% on the day.

Marathon Petroleum’s 2Q17 update

In 2Q17, Marathon Petroleum’s capital expenditure and investments stood at $784 million. Of the total capex, $180 million was towards the Refining and Marketing segment, $78 million was towards the Speedway segment, $494 million was towards the Midstream segment, and the rest was towards corporate and others. Segmental assets were reclassified following continual dropdowns to MPLX (MPLX)—Marathon Petroleum’s MLP.

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Marathon Petroleum is in the middle of a strategic overhaul. It dropped down midstream assets worth $2 billion in 1Q17 to MPLX. Marathon Petroleum is preparing for another dropdown in 3Q17. The dropdown will be midstream assets that generate an annual adjusted EBITDA of ~$135 million. The company plans to drop down the assets, representing the remaining $1 billion of annual EBITDA, by 1Q18. Marathon Petroleum also plans to complete the review of Speedway’s tax-free separation by 3Q17.

In its 2Q17 earnings press release, Gary R. Heminger, Marathon Petroleum’s chairman, president, and CEO, said, “Looking forward, we believe the U.S. and global macroeconomic picture remains favorable and we expect good underlying economic growth will continue to support strong demand for our products. With top-tier, strategically located assets with export access, MPC is well-positioned to meet the energy needs of the markets and to continue to drive long-term value for shareholders.”


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