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Jan 31 (Reuters) – Marathon Petroleum Corp (MPC.N) on Tuesday beat Wall Avenue expectations for quarterly revenue as its margins soared amid tight provides and excessive demand for refined merchandise.
The highest U.S. refiner additionally permitted a further $5 billion in inventory repurchases, whereas rival Phillips 66 (PSX.N) returned $1.2 billion to shareholders by dividends and share buybacks through the reported quarter.
Shares of Phillips 66 fell 5.4% after it missed analysts’ estimates for quarterly revenue, whereas Marathon rose 1%.
U.S. President Joe Biden’s administration has criticized oil companies for pouring money into shareholder payouts somewhat than considerably investing in additional refining capability regardless of brief provide.
Marathon’s crude capability utilization was about 94% within the fourth quarter, leading to whole throughput of two.9 million barrels per day (bpd), which was roughly flat year-over-year.
It expects decrease first quarter crude throughput volumes of roughly 2.5 million barrels per day, representing 88% utilization, as a result of larger turnaround exercise within the first half of 2023.
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The corporate’s refining and advertising margins surged 81.5% to $28.82 per barrel in contrast with final yr.
Marathon had a 109% margin seize charge – the speed of realized margins somewhat than benchmark margins – this quarter, and expects to maneuver in direction of a median of 100% in coming quarters, partially by optimizing gas manufacturing throughout upkeep durations.
“We’ve meaningfully modified the best way we go to market from a industrial perspective all through our complete firm,” stated Rick Hessling, Marathon’s senior vp of world feedstocks, on Tuesday’s first quarter earnings name.
Realized refining margins for Phillips 66 jumped 65% to $19.73 per barrel.
“Refining margins (for Phillips) had been weaker than forecast within the Atlantic Basin and West Coast, driving the earnings miss,” stated Jason Gabelman, analyst, Cowen and Co.
Earnings final yr from turning oil into gasoline, diesel and jet gas hit multi-decade highs as refineries ran at full throttle to fulfill rising demand amid a provide squeeze following Russia’s invasion of Ukraine and plant closings.
The scarcity of diesel inventories and the EU ban ought to proceed to assist refining margins, based on Marathon’s Hessling.
Findlay, Ohio-based Marathon posted fourth-quarter adjusted internet earnings of $6.65 per share in contrast with analysts’ common estimate of $5.67 per share, based on Refinitiv information.
Phillips 66 reported an adjusted earnings of $4 per share, in contrast with analysts’ expectations of $4.35 per share.
“Whereas (Phillips 66’s) whole money return for the quarter was above our estimate, it nonetheless falls wanting the corporate’s objective of returning 40% of working money circulation,” stated Faisal Hersi, analyst at Edward Jones.
Reporting by Arunima Kumar in Bengaluru
Enhancing by Vinay Dwivedi, Shinjini Ganguli and Deepa Babington
Our Requirements: The Thomson Reuters Trust Principles.
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