Independent oil refiner and marketer, Marathon Petroleum Corp. (MPC) said it plans to invest roughly $4.0 billion during the 2014–2016 timeframe. The amount will be allocated to three business units - Refining and Marketing, Pipeline Transportation, and Speedway (Retail).
This planned investment reflects a $2.4 billion hike from what Marathon Petroleum had invested during the previous three years for the segments.
Out of $4.0 billion, the company is expecting to spend around $640.0 million for midstream properties during 2014 to 2016. The midstream operation is part of Marathon Petroleum’s Refining and Marketing business, which include seven refineries having a combined crude processing capacity of 1.7 million barrels per day, concentrated primarily in the Midwest, Gulf Coast and Southeast regions of the country. Marathon Petroleum earns majority of its profit from this business unit.
Marathon Petroleum will invest another $2.4 billion of the total planned investment for Pipeline Transportation, which also includes subsidiary MPLX LP (MPLX). The company’s ‘Pipeline Transportation’ segment – which oversees one of the biggest petroleum pipeline networks in the U.S. based on total volume delivered – owns, operates, leases or has an ownership interest in about 8,300 miles of pipeline.
The remaining $925.0 million will be allocated for expanding the company’s Speedway retail segment. Marathon Petroleum possesses a profitable retail footprint headquartered in Enon, Ohio. Known as Speedway LLC, it is the fourth biggest chain of company-owned and -operated gasoline and convenience stations in the U.S.
Marathon Petroleum also said that it will likely provide their shareholders with 100% of the through-cycle free cash flow in the near future. The cash flows will be distributed among the shareholders through dividends and share repurchases.
Findlay, Ohio-based Marathon Petroleum holds a Zacks Rank #3 (Hold), implying that it is expected to perform in line with the broader U.S. equity market over the next one to three months.
Meanwhile one can look at better-ranked stocks in the energy sector like Harvest Natural Resources Inc. (HNR) and SM Energy Company (SM). Both these stocks sport a Zacks Rank #1 (Strong Buy).
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