Thu, Jun. 9, 6:57 PM
- Marathon Petroleum (NYSE:MPC) agrees to spend ~$334M to reduce pollution at refineries in five states and pay a $326K civil penalty, the U.S. Justice Department and Environmental Protection Agency said today.
- The agencies said MPC will spend $319M to install state-of-the-art flare gas recovery systems and $15.5M on projects to reduce air pollution at three facilities.
- MPC says the investments began in late 2013 and effectively will be completed by the end of 2018, and that ~$238M of the projected spending will have occurred by the end of this year.
Thu, May 26, 6:36 PM
- Oil refiners such as Marathon Petroleum (NYSE:MPC), Delek US Holdings (NYSE:DK) and HollyFrontier (NYSE:HFC) are better positioned than the market suggests, Deutsche Bank analysts say.
- The firm thinks current refiner share price levels offer an attractive entry point or to add to positions for longer-term investors, with MPC, DK and HFC screening best with respective 19%, 13% and 8% upside; while from a free cash flow standpoint, only Valero Energy (NYSE:VLO), MPC and HFC find themselves in positive territory, offering respective 6.3%, 5% and 1%.
- For shorter-term investors, the firm sees PBF Energy (NYSE:PBF), HFC and DK with the highest downside risk, while MPC is a relative winner in both cases.
- Contrary to popular belief that higher crude prices are all else being equal a negative for refiners, Deutsche Bank believes a slow grind higher to $60-$65/bbl could be a sweet spot for refiners since the structural advantage of U.S. refiners vs. international refining is more pronounced.
Thu, May 19, 6:48 PM
- Oil refiners are returning to normal after a period of high differentials, and are thus no longer a safe place for investors to wait out the energy downturn, UBS analysts say.
- UBS believe refiners have reached an inflection point where headwinds outnumber tailwinds, likely driving refining margins to more normal levels; the firm expects a rising crude price to eventually compress refining margins that were supported by wide basis differentials that have now narrowed.
- UBS initiates Tesoro (NYSE:TSO) with a Buy rating, as it expects TSO to derive more of its EBITDA from retail and marketing vs. refining by 2018 than comparable peers under coverage.
- However, the firm starts Marathon Petroleum (NYSE:MPC) with a Sell rating; Phillips 66 (NYSE:PSX), Valero Energy (NYSE:VLO) and CVR Refining (NYSE:CVRR) are rated Neutral.
Thu, Apr. 28, 7:17 PM
- Q1 earnings reports illustrate the end of U.S. refiners' years-long boom from cheap and plentiful crude, Reuters reports, as rising oil inventories and weak demand hurt profits and pushed revenues to their lowest in years.
- PBF Energy (NYSE:PBF) and CVR Energy (NYSE:CVI) reported respective quarterly losses of $66.5M and $68M (I, II), while Marathon Petroleum (NYSE:MPC) eked out a $1M profit following earnings of nearly $900M a year ago, and reported their weakest revenue totals in at least four years.
- Refiners "were incentivized to run at higher rates and put more barrels in inventory. That's the overhang we're seeing right now," CVR CEO Jack Lipinski said in today's earnings conference call.
- PBF also coped with downtime at its Delaware plant because of a weather-related power outage in January.
- Phillips 66 (NYSE:PSX) is scheduled to report Q1 results tomorrow, with Valero Energy (NYSE:VLO), Tesoro (NYSE:TSO) and others coming next week.
- Now read The best of the best in the refining industry
Thu, Apr. 28, 3:48 PM
- Marathon Petroleum (MPC -0.6%), which operates the 1.2M bbl/day Louisiana-to-Illinois Capline crude oil pipeline, likely will reverse the pipeline to move heavy Canadian crude south to Louisiana after oil prices recover from the current rout, Marathon Petroleum CEO Gary Heminger says.
- Volumes for the Capline pipeline, the largest in the U.S. and once a major artery to deliver imports and Gulf of Mexico crude to the U.S. midwest, have dropped sharply as U.S. shale output boomed before prices plunged.
- Plains All American Pipeline (PAA -3.9%), the line's majority owner, has said that its 600K bbl/day portion of Capline moved an average of 170K bbl/day last year; MPC and PAA support reversing Capline, but minority owner BP, which relies in part on the line to supply its massive Indiana refinery, has not signed off.
- Heminger says a reversed Capline would need to move a minimum of 500K bbl/day of Canadian heavy crude, but producers struggling with profit losses have cut spending and deferred projects.
- MPC shares are lower after Q1 earnings fell on weaker refining margins and revenue, as well as writedown at MPC’s MPLX (MPLX -0.4%) pipeline subsidiary.
- Now read Hidden gems that make Marathon Petroleum a buy
Thu, Apr. 28, 7:28 AM
Wed, Apr. 27, 5:30 PM
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Wed, Mar. 23, 12:34 PM
- HollyFrontier (HFC -6.5%) is downgraded to Sell from Neutral with a $34 price target, down from $37, at Goldman Sachs, citing crude spreads, valuation and consensus earnings risk.
- Goldman expects HFC's capital return to decelerate from 2013-15 cumulative levels of $2.7B to 2016-18 levels of $1.8B, well below the $3.9B scenario the company showed at its 2015 analyst day; the firm also cuts its 2016 EPS estimate to $2.44 from $2.64 and below Wall Street consensus of $3.14.
- The firm sees more upside to its Buy-rated names Valero Energy (VLO -0.7%), Marathon Petroleum (MPC -2.3%) and PBF Energy (PBF -3.3%).
Tue, Mar. 15, 7:47 PM
- Valero Energy (NYSE:VLO), PBF Energy (NYSE:PBF) and Delek US Holdings (NYSE:DK) are the three oil refiners with the most upside, Wells Fargo analysts say, liking the setup for the group headed into the important summer gasoline season, particularly Gulf coast refiners with meaningful exposure to light/heavy differentials.
- Among its five total Outperform-rated refiners, Wells finds Alon USA Energy (NYSE:ALJ) and Western Refining (NYSE:WNR) with the least upside potential.
- The firm says Marathon Petroleum (NYSE:MPC) typically would fit well within its outlook but uncertainty around the performance of its MLP and higher diesel yields restrains optimism.
- After spending much of Q1 at record high levels, Wells says U.S. gasoline inventories are now following a typical seasonal pattern of declines; inventories remain elevated in the mid-continent, west coast inventories are near historical averages for this time of year but at risk with the expected restart of the Torrance unit, and Gulf coast gasoline inventories are effectively flat Y/Y, which Wells calls "a positive sign."
Mon, Mar. 14, 7:14 PM
- Marathon Petroleum (NYSE:MPC) agrees to drop down its fee-based inland marine assets to MPLX in exchange for issuing equity to MPC valued at $600M.
- MPLX expects 98% of the equity to be issued in the form of common units and the remainder in general partner units, at ~$26.09/unit.
- MPLX says the inland marine business, which consists of 18 tow boats and 205 barges, accounts for nearly 60% of total volumes MPC ships by inland marine vessels, and will contribute ~$120M in annual EBITDA.
Wed, Mar. 9, 2:58 PM
- Colonial Pipeline’s unwillingness to expand its pipelines that run between Texas and New Jersey is raising the cost of fuel, companies told the FERC at a meeting held to discuss Colonial's proposal to change the rules on its pipeline.
- Colonial’s 5,500-mile pipeline system, an essential energy transportation artery to the U.S. northeast, has been full since 2012, so some longtime shippers do not get as much space to ship fuel as they need.
- Marathon Petroleum (NYSE:MPC) and American Airlines (NASDAQ:AAL) said at the meeting they have to buy fuel on the east coast because they cannot ship enough fuel on the pipeline.
- Gas station operators Sunoco (NYSE:SUN) and Murphy USA (NYSE:MUSA) told the commission they pay other companies for additional pipeline space.
- The pipeline is owned by Koch Industries, South Korea’s National Pension Service, KKR, Royal Dutch Shell (RDS.A, RDS.B) and others.
Thu, Mar. 3, 3:23 PM
- The stocks of most U.S. refiners are trading significantly below their mid-cycle valuations, while the companies likely are heading into another strong U.S. gasoline season, BoA Merrill Lynch analyst Doug Leggate says as he upgrades several stocks in the group.
- Leggate says he continues to view refiners as a volatile sector where momentum follows margin trends, but that the balance of risk has moved in favor of a short-term rebound.
- Marathon Petroleum (MPC +7.4%) is upgraded to Buy from Neutral with a $50 price target, believing the MLP overhang on the shares is overdone and noting that MPC indicated it would do what needs to be done to support MPLX because it is optimistic about the long-term growth opportunities of the business.
- Tesoro (TSO +4%) also is upgraded to Buy from Neutral with a $116 target, anticipating that once winter margin weakness subsides, TSO likely follows summer margin strength higher as the most exposed refiner to seasonal west coast trends.
- Leggate also raises Valero Energy (VLO +2.6%) and PBF Energy (PBF +6.4%) to Neutral from Underperform with respective price targets of $78 and $34.
Thu, Mar. 3, 12:23 PM
- There are better ways to play the ongoing oil apocalypse other than Exxon Mobil (XOM -1.2%), Deutsche Bank analyst Ryan Todd, pointing to a slow recovery in free cash flow, limited relative leverage to a recovery at this point in the cycle, and trading at a 60% premium to peers.
- One of the questions facing XOM remains the sustainability and attractiveness of its business model in a low-to-moderate crude price environment - i.e., can the combination of cost reductions and capital reallocation support sustainable reserve replacement, dividend/free cash flow growth and improving returns: "If the budget outlook is any indication, we're not there yet," Todd says.
- The analyst prefers Pioneer Natural Resources (PXD -1.4%), Valero Energy (VLO +2.3%), Marathon Petroleum (MPC +5.2%) and HollyFrontier (HFC +4.5%); he rates XOM as a Hold with an $85 price target.
- Earlier: Exxon Mobil plans 25% capex cut to $23B (Mar. 2)
Thu, Feb. 25, 8:58 AM
- Marathon Petroleum (NYSE:MPC) says CEO and President Gary Heminger also will become Chairman, replacing Thomas Usher, who plans to retire following the company's April 27 shareholders meeting.
- Heminger, who joined Marathon Oil in 1975 and became CEO of MPC in 2011, will keep his current titles.
- MPC considers Usher the architect of the separation of Marathon Oil and U. S. Steel in 2001, and coordinated MPC's spinoff from Marathon Oil in 2011.
Tue, Feb. 9, 7:39 PM
- Chesapeake Energy’s (NYSE:CHK) problems illustrate the potential for a domino effect in U.S. pipeline companies, and threatens to shatter the assumption of many investors that the companies are insulated from plunging energy prices.
- CHK has commitments to pay ~$2B/year for space on pipelines run by MLPs; Williams Cos. (WMB, WPZ) has the most exposure to CHK after buying the company's logistics assets for $6B in 2014
- CHK's distress threatens the $33B Williams-Energy Transfer (ETE, ETP) tie-up announced last September, and has been a drag on WMB's credit rating, which could cause headaches for ETE if the merger goes through.
- WMB likely will be forced to accept a 50% price cut in its contract price with CHK, either through the courts or mutual renegotiation - which would equal a drop of $300M in annual cash flow - says InfraCap portfolio manager Jay Hatfield.
- Williams and Energy Transfer "would be way better off if they did not merge,” Hatfield says. “I can’t believe that both stocks wouldn’t rocket if the deal was called off.”
- Other companies with CHK contracts include Spectra Energy Partners (NYSE:SEP), Columbia Pipeline Partners (NYSE:CPPL) and Marathon Petroleum's (NYSE:MPC) MPLX unit; a SEP spokesperson tells Reuters that its CHK contract to supply gas out of the Marcellus Shale accounted for less than 3% of its 2015 revenues.
- Kinder Morgan (NYSE:KMI) has not disclosed its exposure to CHK.
Fri, Feb. 5, 2:19 PM
- Marathon Petroleum (MPC -6.7%) plunges to another 52-week low, capping an 18% drubbing in the three days since releasing disappointing Q4 results and guidance for slower distribution growth at MPLX (MPLX -10.3%), the MLP formed by MPC to invest in pipelines.
- MPC is downgraded to Neutral from Overweight with a $44 price target, cut from $62, at J.P. Morgan, which says it did not anticipate that management would halve its 2016 growth outlook and defer all 2017 commitments; making matters worse, MPC may now be on the hook to provide even more support to MPLX - up to $500M in 2016 beyond the marine dropdown - just to keep MPLX at ~4x leverage.
- Cowen’s Sam Margolin says MPLX’s capital requirements to achieve growth targets have created "functional commodity leverage" for MPC, something that would not be the case if MPC were simply a refiner.
Marathon Petroleum Corp. is an independent petroleum product refiners, marketers and transporters in the United States. The company operates through three segments: Refining & Marketing, Speedway and Pipeline Transportation. The Refining & Marketing segment refines crude oil and other feedstocks... More
Sector: Basic Materials
Industry: Oil & Gas Refining & Marketing
Country: United States
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