Marathon Petroleum beats Q1 profit estimates on elevated fuel demand, tight supplies

By Arunima Kumar

(Reuters) -Top U.S. refiner Marathon Petroleum beat first-quarter profit estimates on Tuesday, as demand for refined products remained at high levels and global fuel supplies tightened due to refinery maintenance activities and disruptions in Russia.

The refiner also announced a $5 billion increase to its share repurchase authorization.

Heavy refinery maintenance work during the quarter and outages at Russian refineries following Ukrainian drone attacks reduced fuel supplies to global markets.

Demand for fuel remained stable. U.S. product supplied, a proxy for demand, averaged at 20.10 million barrels per day (bpd) at the end of March, compared with 19.7 million bpd a year earlier, according to U.S. Energy Information Administration data.

Marathon said it completed $648 million of planned turnaround activity in the reported quarter, the highest level in the company's history.

Turnarounds lowered utilization to 82%, which contributed to refining operating costs per barrel of $6.14 during the first quarter.

Its total throughput was 2.7 million bpd in the January-March quarter, compared with 2.8 million bpd a year earlier. For the second quarter, Marathon expects total refinery throughput of 2.97 million bpd.

Refining and marketing margin fell over 27% to $18.99 per barrel for the first quarter, compared with a year earlier, the biggest U.S. refiner by volume said.

The beat is not big enough to create a "wow" factor, said analysts at Scotiabank.

"Turnaround expense came in higher than guidance suggesting the turnaround did not proceed as smoothly as hoped," Scotiabank added.

Margins and profits of U.S. refiners have normalized after hitting sky-high levels in 2022, when Russia's invasion of Ukraine disrupted crude supplies.

The refiner posted net income of $2.58 per share, for the three months ended March 31, topping average analysts' estimate of $2.42 per share.

It reported a profit of $6.09 per share a year earlier.

(Reporting by Arunima Kumar in Bengaluru; Editing by Krishna Chandra Eluri)