Marathon Petroleum Corp. (MPC) has reported fourth-quarter adjusted earnings per share of $3.98, exceeding the Zacks Consensus Estimate of $2.36. The company’s stronger-than-expected performance in its Refining & Marketing segment contributed significantly to this outperformance. The segment’s operating income of $1.2 billion surpassed the consensus mark of $812 million.
Despite this positive news, the company’s bottom line declined from the year-ago adjusted profit of $6.65 due to a higher unit operating cost and a drop in refining margin. Although Marathon Petroleum reported revenues of $36.8 billion, beating the Zacks Consensus Estimate, they declined 8.2% year over year.
Performance of MPC’s Segments
Refining & Marketing: The operating income in this segment fell 68.2% from the year-ago profit, primarily due to lower margins and a decrease in capacity utilization. The refining margin declined from $28.82 to $17.79 per barrel year-over-year, and capacity utilization reduced from 94% to 91%. Despite this, total refined product sales volumes and throughput increased, outperforming estimates.
The operating costs per barrel also saw an increase from $5.62 to $5.67 year-over-year.
Midstream: The segment reflected positive results as the profitability increased by 18.1% from the fourth quarter of the previous year.
Financial Analysis
Marathon Petroleum reported lower expenses in the fourth quarter of 2023 compared to the year-ago quarter. The company spent $780 million on capital programs in the reported quarter, and it guided that its standalone capital expenditure (excluding MPLX) will come in at $1.25 billion for 2024. As of December 31, it had cash and cash equivalents of $5.4 billion and total debt, including that of MPLX, of $27.3 billion, with a debt-to-capitalization of 47.2%.
In the fourth quarter, MPC repurchased $2.5 billion of shares and a further $900 million worth of shares in January, with a remaining authorization of $5.9 billion.
Energy Industry Earnings Analysis
In the energy industry, SLB and Kinder Morgan have also reported their fourth-quarter earnings. While SLB’s earnings beat the Zacks Consensus Estimate, Kinder Morgan’s earnings were slightly below expectations.
As of December 31, 2023, SLB reported approximately $4 billion in cash and short-term investments, with long-term debt amounting to $10.8 billion. On the other hand, Kinder Morgan reported $83 million in cash and cash equivalents, with long-term debt reaching $27.9 billion at quarter-end.
