Marathon Petroleum Corp on Wednesday authorized a $5 billion share buyback plan, in addition to its existing programs, after strong refining margins drove a stunning fourth-quarter profit and revenue beat, sending its shares up 5%.
The Findlay, Ohio-based company said its refining and marketing margins more than doubled during the quarter amid a rebound in demand after a pandemic-induced slump.
Refining margins will be well positioned for 2022 as light product inventories remain tight, Chief Executive Officer Michael Hennigan said on a call.
Hennigan also expects to see recovery in jet fuel demand this year, even as it is "still roughly 15% below 2019 levels as business travel remains suppressed."
Marathon said it will spend $1.7 billion in 2022 and use 50% of $1.3 billion of the total investment to complete the conversion of its Martinez refinery into a renewable fuels facility.
Total project cost for Martinez is expected to be $1.2 billion.
The company posted an adjusted net income of $794 million, or $1.30 per share, in the quarter ended Dec. 31, beating expectation of 56 cents per share, according to Refinitiv IBES.
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"Stunning refining margin capture drives huge beat," said an analyst at Tudor, Pickering, Holt & Co.
Revenue of $35.61 billion came way ahead of analysts' average estimate of $24.33 billion.
Rivals Valero Energy Corp and Phillips 66 also powered past Wall Street estimates last week.
Marathon's crude capacity utilization was 94%, resulting in a total throughput of 2.9 million barrels per day (bpd) in the reported quarter, compared with an 82% utilization and total throughput of 2.5 million bpd a year earlier.
For the current quarter, the refiner expects throughput of 2.9 million bpd.
(Reporting by Arunima Kumar; Editing by Shounak Dasgupta and Shinjini Ganguli)
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