Marathon Petroleum beats Q4 profit estimates as midstream strength offsets refining weakness

Top U.S. refiner Marathon Petroleum on Tuesday posted a 74% drop in fourth-quarter earnings but beat Wall Street estimates, as strength in its midstream segment helped offset a steep decline in refining margins.

Shares were up 4% at $152.88.

U.S. refiner profits have been under pressure since late 2023 due to new refining capacity coming online and margins returning to normal levels, following two years of high profits driven by supply shortages from Russia's invasion of Ukraine and post-pandemic recovery.

The Findlay, Ohio-based company's refining and marketing margin was at $12.93 per barrel in the quarter, down 27.4% from a year earlier, but beat expectations of several brokerages.

Marathon's refining segment's quarterly core profit slumped to $559 million, compared with $2.25 billion a year earlier.

However, the company's midstream segment reported an adjusted core profit of $1.71 billion in the quarter, up 8.7% from a year earlier, benefiting from higher rates and higher volumes of liquids transported through its system.

The segment was also helped by contributions from Utica shale assets, which were acquired by MPLX from pipeline operator Summit Midstream Partners for $625 million last year.

MPLX is a limited partnership formed by Marathon Petroleum to focus on midstream and logistic infrastructure in key U.S. natgas basins.

Marathon Petroleum now expects to spend about $1.25 billion, beating brokerage TD Cowen's $900 million estimate.

MPLX anticipates spending around $2 billion in 2025 to enhance its pipeline and processing capabilities.

The refiner also expects higher crude capacity utilization in the current quarter at 85%, compared with 82% from a year earlier, with refinery turnaround expenses expected to be about 30% lower at $450 million from a year ago.

On an adjusted basis, the company reported a profit of 77 cents per share in the quarter, compared with the analysts' average estimate of 2 cents per share, according to data compiled by LSEG.