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Marathon Petroleum Quarterly Profit Rises on Gasoline Margin

May 1 (Bloomberg) -- Marathon Petroleum Corp., the oil refiner that’s weighing a public offering of part of its pipeline division, said first-quarter profit increased 13 percent as the margin for refining fuel widened.

Net income rose to $596 million, or $1.70 a share, from $529 million, or $1.48, a year earlier, the Findlay, Ohio-based company said in a statement today. Per-share profit was 45 cents more than the average of 2 analysts’ estimates compiled by Bloomberg. Sales rose 13 percent to $20.3 billion.

Marathon’s refining margin rose 24 percent from a year earlier to $8.36 a barrel and profit from its Speedway stations rose 51 percent to $50 million as it sold more fuel. Pipeline profit fell 17 percent as volume fell. The company said today it’s exploring forming a master-limited partnership and selling shares in the pipeline division.

“Things are looking better,” Fadel Gheit, a New York-based analyst Oppenheimer & Co. said today in an interview. He rates the shares outperform, recommending investors buy them, and owns none. “Crude margins were better for them.”

The difference between the cost of crude and the price of fuel increased 32 percent from a year earlier to $26.94 a barrel, according to data compiled by Bloomberg.

“Our operational flexibility and efficiency, coupled with the location of our processing capacity, allowed us to take advantage of changing crude differentials,” Chief Executive Officer Gary Heminger said in today’s statement.

Pipeline IPO

The company, which was spun off from Marathon Oil Corp. last year, is weighing an initial public offering for some of its 9,600 miles (15,400 kilometers) of pipelines that run from the Gulf Coast to the Midwest.

Heminger announced plans to study the option Feb. 1, less than two weeks after hedge fund Jana Partners LLC bought a 5.5 percent stake and began talks with the company.

Marathon’s six refineries can process 1.19 million barrels a day of crude, according to its website.

Marathon Petroleum fell 1 percent to $41.21 at the close in New York. The shares have 13 buy and five hold ratings from analysts.

To contact the reporter on this story: Bradley Olson in Houston at bradleyolson@bloomberg.net

To contact the editor responsible for this story: Susan Warren at susanwarren@bloomberg.net

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