Marathon Petroleum (NYSE:MPC)

sabrient

Refiners have a monopoly on gas production. Due to requlation there is a virtual block to any new refineries or even expansion of existing ones leaving them without competition. Limited production of gasoline keeps prices high and as oil prices come down due to domestic production increases the spread of input costs to output prices increases. These are all money makers and should be added to your porfolio on any dips.

A+

With growing exposure to discounted heavy Canadian crude at the Detroit refinery, increased Gulf Coast leverage via the pending Texas City acquisition, a stable retail business and an outlet for growth via the recent IPO of MPLX LP, I see the MPC story as too good to ignore at current levels and one I believe demands a premium multiple relative to the peer group.

Marathon Petroleum is a new company formed in 2012 as a result of the split of the old Marathon Oil into two companies, Marathon Oil (MRO) of Houston, TX, a exploration and driller entity, and Marathon Petroleum of Findlay, OH, (MPC) which focuses on mid and down stream services. Last month MPC in turn spun off its Master Limited Partnership (MPLX) into yet another entity comprised some pipeline, refinery and barge assets. These will serve as fee based operations to MPC and to third parties. This projected efficiency will unlock additional value as sale of services to third parties develops. MPC retains 70% majority interest in the MLP.

I just listened to the recent Credit Suisse presentation (Feb. 6 2013) by Gary Heminger, CEO. He asserted that although MPC had quite a good year last year and the stock experienced a significant run up, he believes there is more value and growth in store for 2013. MPC acquired (last week) an under performing BP refinery and expects to see increased revenue from bringing that on line. They have completed their Detroit refining facility and the recently purchased Galvenston Bay refinery is ready to go too, bringing their refinery total to six, both in the southwest region and in the Ohio Valley region. Heminger also projects continued share repurchases thru 2013 and a growing dividend.

Heminger mentioned that MPC will be well positioned for the expected Utica Shale drilling, projected to ramp up in mid 2013. MPC has full or part interest in two refineries, barge docks, truck services, and pipeline facilities within easy reach of the drilling in Ohio and cost efficiencies and revenues will benefit from having these facilities close to the wells.

I took out a position in MPC this morning, and I am cautiously optimistic that we will see an increase in the stock price while the US energy sector enjoys its prosperity in the next several years.

STSC Feb 2013

Cherry picked MPC, STX and EPL off of Sabrient's Bakers Dozen list for 2013.

Beating analyst expectations, continuing the buyback will help the short term too. If they are accelerating this - obviously they think the stock is a fair to good price.

Solid growth, low P/E.

Lower oil prices and high demand from travelers this summer should benefit refiners.

I like Marathon's plan to unlock hidden value by conducting a partial IPO of its pipeline assets.

Deej

Well positioned company with new refining assests coming online in late 2012. I don't think the values of this new capacity and ability to process heavy Canadian Oil are priced in. In addition it has been down since a great earnings report.

Marathon has a huge stockpile of cash to cover any short term retraction in margins.
Gas prices will remain high even throughout the usual seasonal adjustment.
Marathon Petroleum is an established business spun off from Marathon Oil to focus on the refinery business, which will always have customers even as oil production may run into various difficulties affecting earnings.
Finally, valuation is very low when compared to other large players in the industry.

12/15

Middle american refinery will cheat those shippers and make a more profitable company.

MPC is likely the best performer in a terrible industry. In the short term, MPC's refineries are well-positioned to take advantage of great crack spreads in the Midwest. Several of MPC's refineries are excellent (and very profitable) operations.

But in the long run, refining is still a terrible industry. I'm holding onto shares of both MRO and MPC for now. I have complete faith in MRO, but I am keeping a closer eye on MPC. Once things start to look sour, I am running for the exit. In the meantime, I'm going to sit back and collect the dividend.

Basically, a solid company offering quality service on a needed commodity.
It'll have it's up's and down's like everything on the market, but it has the legs for a long run.