Marathon (MPC) Acquires a 49.9% Share in LF Bioenergy
Marathon Petroleum Corporation (MPC), a refining major, recently announced that it has paid $50 million to Cresta Fund Management in order to acquire a 49.9% stake in LF Bioenergy — an emerging American producer of renewable natural gas (RNG). Based on the attainment of estimated earn-out targets, the deal has the potential of providing up to an additional $50 million.
LF Bioenergy has been working toward building and expanding a range of dairy farm-based, low carbon intensity RNG projects. While the first facility is approaching completion and is anticipated to go into service in the first half of 2023, current projects are still under different phases of development.
The company’s management and origination teams are working to boost the portfolio with added sanctioned projects, while upholding MPC’s current pipeline of opportunities for final investment decisions. MPC is anticipated to fund its share of capital expenditure with project milestone achievements, thereby expanding its portfolio and producing more than 6,500 MMBtu per day by the end of 2026.
According to Dave Heppner, MPC's senior vice president of Strategy and Business Development, the RNG transaction represents the company’s commitment toward lower carbon investments. He added that this platform will provide opportunities for further integration and support MPC's goal of minimizing the carbon intensity of its products and operations.
Zacks Rank & Key Picks
MPC currently carries a Zack Rank #3 (Hold).
You can see the complete list of today’s Zacks #1Rank (Strong Buy) stocks here.
Some better-ranked stocks for investors interested in the energy space include CVR Energy CVI and Valero Energy Corporation VLO both sporting a Zacks Rank #1 and Murphy USA Inc. MUSA carrying a Zacks Rank #2 (Buy).
CVR Energy, a diversified holding company with its main office in Sugar Land, TX, is an independent refiner and marketer of high value transportation fuels. Over the past seven days, CVI has seen an upward revision in earnings estimates for 2023 and 2024.
Valero Energy, a TX-based company, is one of the largest independent refiners and marketers of petroleum products in the US. With 15 refineries spread across Canada, the United States and the United Kingdom, it has a daily refining capacity of 3.1 million barrels. Over the past 30 days, VLO has seen an upward revision in earnings estimates for 2023 and 2024.
Murphy USA operates stations close to Walmart supercenters and sells low-cost, high-volume fuel. This helps the company to get a lot more business than its competitors. Another significant competitive advantage for the firm is its access to product distribution centers and pipelines, which helps control costs in the intensely competitive retail sector. Over the past 30 days, MUSA has witnessed upward earnings estimate revisions for 2024.
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