Analyst Note| Allen Good, CFA |
Marathon Petroleum showed further improvement in the third quarter with adjusted earnings of $464 million compared with a loss of $649 million last year thanks to improved refining segment earnings. At the same time, Marathon made additional progress on returning Speedway proceeds to investors, repurchasing $1.5 billion in shares during the quarter. It plans to repurchase the remining $7.5 billion of its plan by year-end 2022, which equates to 17% of the current market cap. It also plans to reduce structural debt by an additional $2.1 billion. Management also announced it was seeking strategic alternatives for the Kenai, Alaska, refinery, which could include a sale. Kenai is another refinery acquired through Andeavor that has higher costs and a poor strategic position--as such, divestment makes sense and should leave the core portfolio stronger.