Refiners including Phillips 66 and Marathon Petroleum Corp. reached record highs as they beat earnings estimates and promised to turn an abundance of cheap U.S. oil into a boon for shareholders.
Phillips 66, the largest U.S. independent refiner by revenue, rose 1.5 percent to $60.76 at the close in New York. Marathon Petroleum gained 1.3 percent to $72.89, the highest since June 2011.
Phillips 66 plans to expand a share buyback program by $1 billion and boost its annual dividend, it said in a statement today. Marathon will expand its buyback program by $2 billion, according to a statement today.
“They’re taking advantage of the God-given gift of very wide crude discounts and cheap natural gas,” Fadel Gheit, a New York-based analyst with Oppenheimer & Co., said in a telephone interview today. “They are putting the money to good use and it’s reflected in the stock price.”
U.S. refiners in some regions paid an average of $17.48 less for every barrel they processed compared to the global benchmark oil price. The difference between the cost of crude and the price at which refiners sell fuel on the U.S. Gulf Coast averaged $5.11 a barrel in the fourth quarter, the most since 2005 and more than double the average during the same time last year, according to data compiled by Bloomberg.
Excluding a refinery writedown, per-share profit at Phillips 66 was $2.06 a share, 37 cents more than the $1.69 average of 16 analysts’ estimates compiled by Bloomberg. Marathon Petroleum, which was spun off from Marathon Oil Corp. last year, said fourth-quarter profit was $755 million, or $2.24 a share, 16 cents more than the $2.08 average of four analysts’ estimates.
Marathon rose 89 percent last year and had a total return of 94 percent, the highest of any energy company on the Standard & Poor’s 500 Index. Phillips 66 has risen 85 percent since it was spun off of ConocoPhillips in May. Independent refiners do not explore for or produce crude.