FINDLAY, Ohio -- The second quarter ended June 30 marked Marathon Petroleum Corp.'s one-year anniversary as a standalone public company. And that company remains committed to retail.
During MPC's quarterly conference call, Garry L. Peiffer, executive vice president of corporate planning and investor and government relations fielded a question from an analyst about cashing out the company's retail business.
"We're continuing to look at any way we can to increase value. I think what we've been also fairly consistent in saying, though, is we believe in the integrated approach to the downstream business," he responded. "We happen to be at a point in the business cycle when refining is doing relatively well, that always isn't the case. And we like to have the advantage of having two or three ... businesses, the pipeline transportation, the Speedway and the R&M business to give us a very good complement of cash flows and assets. ... So we're going to look at these things ... though, at the moment, our objective and our goal is still the integrated approach to how we run our business."
MPC executives would not comment on a question regarding any interest in acquiring the Sunoco retail assets from new owner Energy Transfer Partners, which are expected to be put on the market (see Related Content below for previous CSP Daily News coverage).
"We've been pretty consistent in the past with saying that, for us to pursue an acquisition, it would have to be some synergistic effect or leverage which we could have with our existing assets," said Peiffer. "So I think, from our perspective, when we look at any potential opportunity to enhance shareholder value, it's really driven by what we can leverage our existing assets and infrastructure to create more value which then allows us to be able to afford the price needed to pay the type of multiples that are being commanded in the marketplace."
Findlay, Ohio-based MPC reported second-quarter net income of $814 million, or $2.38 per diluted share, compared with net income of $802 million, or $2.24 per diluted share, in second-quarter 2011.
CEO Gary R. Heminger said, "Speedway achieved a 34% increase in segment income over the second quarter of 2011, due primarily to an increase in merchandise and refined product margins."
He also noted that MPC took an important strategic step on July 2 by filing a registration statement in anticipation of a proposed initial public offering of common units of MPLX LP, a master limited partnership. MPLX LP, a wholly owned subsidiary of MPC, was formed as MPC's primary vehicle to own, operate, develop and acquire crude oil pipelines, hydrocarbon-based products pipelines and other midstream assets.
Heminger also provided updates on other recent and ongoing MPC initiatives. "During the second quarter, Speedway completed the acquisition and integration of 87 GasAmerica locations. In mid-July, Speedway completed the acquisition and integration of 10 Road Ranger locations," he said (see Related Content below for previouscoverage).
Refining & Marketing segment income from operations was $1.325 billion in second-quarter 2012, compared with $1.26 billion in second-quarter 2011. The $65 million increase was principally the result of a higher R&M gross margin.
Speedway segment income from operations was $107 million in second-quarter 2012, compared with $80 million in second-quarter 2011. The $27 million increase was primarily the result of higher merchandise, gasoline and distillates gross margins, partially offset by an increase in operating expenses. Speedway gasoline and distillates gross margin per gallon averaged 16.39 cents in second-quarter 2012, compared with 15.02 cents in second-quarter 2011.
Speedway same-store merchandise sales increased 2.2% in second-quarter 2012, compared with a 0.3% increase in second-quarter 2011. Same-store gasoline sales volume increased 2.1% in second-quarter 2012, compared with a decrease of 4.5% in second-quarter 2011.
During the second quarter of 2012, Speedway completed the acquisition and integration of 87 GasAmerica locations throughout Indiana and Ohio. This acquisition supports MPC's strategy to increase Speedway sales volumes and complements the company's existing network of assets.
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MPC is the nation's fifth-largest refiner, with a crude oil capacity of approximately 1.2 million barrels per calendar day in its six-refinery system. Marathon brand gasoline is sold through more than 5,000 independently owned retail outlets across 18 states. In addition, Speedway LLC, an MPC subsidiary, owns and operates the nation's fourth largest convenience store chain, with approximately 1,460 convenience stores in seven states. MPC also owns, leases or has ownership interests in approximately 8,300 miles of pipeline. MPC's fully integrated system provides operational flexibility to move crude oil, feedstocks and petroleum-related products efficiently through the company's distribution network in the Midwest, Southeast and Gulf Coast regions.
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