Refiner Marathon Petroleum reported a better-than-expected quarterly profit as low crude costs and strong gasoline demand pushed up margins.
Continue Reading Below
U.S. refiners have been pumping out strong profits as a plunge in crude prices widened crack spreads - the difference between the prices of crude oil and refined products.
Marathon Petroleum, which was spun off from Marathon Oil Corp, said the crack spread increased to $6.65 per barrel in the fourth quarter from $5.43 per barrel a year ago.
The fall in oil prices, however, has resulted in a challenging environment for master limited partnerships (MLP), Chief Executive Gary Heminger said on Wednesday.
Marathon's MLP, which bought natural gas processor MarkWest Energy Partners last year, cut its 2016 distribution growth target to 12-15 percent from 25 percent on Wednesday.
Tax-advantaged MLPs, which hold energy infrastructure assets, have come under pressure in recent months as the oil price slump weighs on cash flows.
Marathon Petroleum earned 79 cents per share, excluding an inventory writedown of $370 million, above analysts' average estimate of 69 cents, according to Thomson Reuters I/B/E/S
Net income attributable to the company slumped 77 percent to $187 million, or 35 cents per share, from a year earlier.
Revenue and other income fell nearly 30 percent to $15.61 billion, missing the average estimate of $16.35 billion.
Up to Tuesday's close of $40.27, Marathon shares had fallen 14.3 percent in the last 12 months.
(Reporting by Amrutha Gayathri and Tanvi Mehta in Bengaluru; Editing by Don Sebastian)