Marathon Petroleum profits soar, growing on cheap oil

Marathon Petroleum Corporation more than quadrupled its third-quarter earnings as the newly independent refining company capitalized on higher margins offered by sour and heavy crudes, the company announced Tuesday.

The Findlay, Ohio-based company, which recently spun off from the oil and gas drilling arm of Marathon Oil, banked $1.1 billion during the three months that ended Sept. 30, compared to $277 million during the same period in 2010. The company earned $3.16 per diluted share in the third quarter, compared to 77 cents a year earlier.

Total revenue jumped 30 percent to $20.6 billion.

“We purchase crude oils that deliver the highest profitability through price, transportation cost and finished product value,” said C. Michael Palmer, senior vice president of supply distribution and planning.

The gross margin realized by the company’s refining and marketing division grew to $13.18 per barrel from $3.75 in the third quarter of 2010, according to its earnings report. Marathon Petroleum increased its focus on Canadian heavy oil and West Texas Intermediate-based crude, procured at a lower cost than other crude oils, the company said.

Marathon Petroleum’s Speedway subsidiary, which operates a chain of gas stations and convenience stores in the Midwest, produced less favorable third-quarter results. Income from the Speedway division fell 19 percent to $85 million year over year.

Executives attributed the loss largely to the sale of 166 Minnesota convenience stores in December 2010.

The Speedway stores also realized lower gross margins per fuel sales, down 1.16 cents per gallon to 12.57 cents year over year, the company reported. Both gasoline sale volume and store merchandise sales declined 2 percent each in the third quarter.

Marathon Petroleum shares were up 19 cents to $36.09 in late afternoon trading on the New York Stock Exchange.