Marathon Petroleum Corporation (MPC) has recently released its first quarter results for 2016, showing an earnings report of $1 million throughout their first quarter. Year-over-year, this earnings summary has gone down from $891 million in the first quarter of 2016, which has been attributed to the market environment in addition to the favorable conditions in early 2015. The MPC share dilution is also related to a goodwill impairment by MPLX LP and a lower valuation of inventories due to low cost to market, not due to a decrease in stable revenue.
$244 Million Returned to Shareholders
Despite lower first quarter results, MLP has been able to return $244 million to shareholders and has completed major turnaround activity, which is designed to strongly increase revenue. Earnings throughout Speedway and Midstream segments remained strong, with a total of $334 million in income. This shows that the strategy that is being embarked upon by MPC is working; their revenue streams are growing and stable. Both Speedway and Midstream have shown exceptional performance, both in terms of merchandising and operational value. The actual earnings potential of MPC has not been affected, but instead the value of its inventory and market pressures have impacted its actual earnings reports.
MPC Reduces Capital Expenditures
In addition to building out its earnings, MPC has also been able to significantly reduce its expenditures. The 2016 capital expenditure plan designed by MPC will have reduced its expenses by 30 percent to $3 billion, down from the $4.2 billion of its previous goals. By reducing its expenditures, MPC is able to position itself for extreme growth and revenue as the market rebounds. The goal of the company is to stabilize its revenue streams, reduce its expenses, and prepare for the better market conditions to come. By building its groundwork now, the company will be able to better capitalize on its strengths in the future.
MPLX Encouraged By Gathering and Processing
MPLX LP has reported the processing of record numbers in Marcellus and Utica shales throughout the first quarter, which will undoubtedly bolster the market and improve turnaround for MPC. MPLX processed an average of 4.27 Bcf/d throughout the quarter, which was an 8.9% increase over the prior year. It was additionally able to produce 94,000 b/d of ethane throughout the same time period, which is a staggering 20.5% increase year-over-year. The processing volumes are increasing, which indicates that the market will be quick to rebound. MLP’s new 50-mile Cornerstone Pipeline system is also expected to add to the improvements in revenue, in addition to a variety of other pipeline projects designed to make the transportation of oil and natural gas easier throughout the domestic markets.
Though MPC’s income from operations may have declined from $1,470 million to $75 million year-over-year, much of this was due to a decrease in refining and marketing income and other impairments. The market conditions have adversely affected the income brought in by the company, but the market conditions are only temporary. Turnaround activity is being completed and many revenue centers have been explored for new growth. The natural gas industry continues to grow aggressively, and 2016 is primed for significant development in terms of revenue. At the same time, the natural gas and oil industries must be more cautious than ever about safety, which could cause significant setbacks. Keystone Containment Contractors has operated through 250,000 man hours with 0 incidents. Learn more about the impeccable safety record of Keystone Containment and its safety services today.