NEW YORK (AP) -- Marathon Petroleum Corp. on Wednesday reported a $75 million loss for the fourth quarter as higher oil prices increased costs at its refineries.
Marathon's shares jumped in premarket trading after it said it may file an initial public offering later this year for a master limited partnership in its midstream pipeline operations. The company also said it will buy back $2 billion of its shares.
Shares rose $3.57, or 9.3 percent, to $41.79 before the opening bell.
Marathon, based in Findlay, Ohio, said its fourth-quarter loss amounted to 21 cents per share for the October-December period. That compares with a profit of $233 million, or 64 cents per share, in the same part of 2010. Revenue rose 11.3 percent to $19.4 billion.
The results missed Wall Street expectations for a loss of 6 cents per share but beat analysts' sales forecasts for $14.2 billion, according to FactSet.
Most U.S. refineries struggled in the final three months of 2011 as the price of their primary feedstock, crude oil, rose. Benchmark crude climbed more than 10 percent in the fourth quarter as global demand reached a record high. Iran's dustup with the West over its nuclear program also raised concerns about oil shipments from the Persian Gulf.
During the spring and summer, refineries could pass on higher costs to consumers as more drivers hit the road for vacations. But a decline in gasoline spending in the fourth quarter pushed retail gasoline prices down 7 percent from the previous quarter.
Marathon Petroleum, which split from Marathon Oil Corp. last year, said its refining and marketing business lost $182 million in the period, compared with earnings of $303 million in the year-ago period. Its Speedway retail stations increased earnings 12.3 percent to $73 million, while the company's pipeline business saw profits fall about 27 percent to $38 million.
Marathon said it is considering an IPO for a master limited partnership for its pipeline and infrastructure operations. This type of partnership is publicly traded and must get most of its cash flow from real estate, natural resources and commodities.
Sam Margolin, an analyst with Global Hunter Securities, said an MLP would benefit Marathon by passing on the tax burden for its pipeline business to investors. Investors, in turn, would be able to buy in to a company with a much more reliable revenue stream. Pipelines generate most of their sales from long-term contracts, while refineries must sell gasoline and other fuels at prices that fluctuate day-to-day.
"Refineries have the most volatile earnings pattern of any asset in the energy industry," Margolin said.
Marathon also said it will spend $2 billion to repurchase shares over the next two years. Repurchases are designed to take shares off of public exchanges, boosting values for the remaining stock.
And the company will pay shareholders a quarterly dividend of 25 cents per share, payable on March 12 to shareholders of record on Feb. 16.
For the full year Marathon Petroleum earned $2.4 billion, or $6.67 per share, up from $623 million, or $1.74 per share, in 2010. Annual revenue rose by 25.8 percent to $78.8 million.
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