Downstream energy giant Marathon Petroleum Corp. (NYSE: MPC – $63.68) posted fourth quarter adjusted earnings of $2.41 per share, which excludes $1.06 per share of purchase accounting related inventory effects, expenses associated with the Andeavor combination and MPLX debt extinguishing costs, compared with the prior-year period’s $1.03 per share. Analysts were expecting adjusted earnings of $1.96 for the quarter. The beat was roughly split between refining and retail, two areas that benefited from the extreme drop in crude prices in the quarter. The Refining and Marketing segment income of $923 million was driven by high utilization and wide crude differentials. The Midstream segment income of $889 million was supported by volume growth and income from its Retail unit, which includes Speedway gas stations and convenience stores, rose more than four times to $613 million. Revenue for the period was $32.54 billion, up from $21.24 billion in the same quarter last year, but below the Street view of $34.16 billion. Findlay, Ohio-based Marathon also raised its dividend 15% to a quarterly rate of $0.53 per share, yielding 3.2%.
Investors are likely somewhat concerned about the integration process with Andeavor. Yet, in the fourth quarter Marathon realized $160 million in cost synergies related to last year’s acquisition of Andeavor’s refining assets. In all, projections suggest that this issue holds wide capital appreciation potential over the next several years and can be held for recovery in aggressive portfolios.