[ad_1]
Marathon Petroleum, the largest US oil refinery. In the US, it posted a first-quarter loss of $ 9.2 billion after taking an impairment charge of $ 12.4 billion, as fuel demand began to drop during coronavirus blockages.
The company said it would cut $ 1.4 billion, or 30 percent, from capital spending this year and cut spending by $ 950 million in response to the “Covid-19” conditions. About half of those spending cuts would be in the company’s intermediate business, including the subsidiary MPLX.
The company also sharply lowered its prospects for refining performance in the second quarter, which it expects to reach 2.1 million barrels per day, or 30% less than 3 million barrels per day in the first quarter, according to expectations. lower fuel needs.
“These are unprecedented times, leading us to make prudent tactical changes by 2020,” said Chief Executive Michael Hennigan.
In addition to the reductions in capital spending, Marathon suspended the share buyback and said it would temporarily suspend some facilities. Analysts said this would imply reducing execution rates at refineries.
In April, the company issued $ 2.5 billion of senior notes and secured an additional $ 1 billion revolving line of credit. Total lending capacity, excluding MPLX, amounts to $ 7.5 billion and borrowing capacity of $ 6.7 billion. The company said it “would evaluate other actions to improve liquidity.”
Recommended
Marathon shares rose approximately 5 percent at the opening of trading in New York after the results exceeded analyst expectations.
The adjusted quarterly revenue loss of $ 106 million was well below the expected loss of $ 203 million. The adjusted loss per share of 16 cents was approximately half of the expected loss. However, total revenue in the first quarter fell from $ 28.6 billion a year earlier to $ 24.1 billion, below expectations.
Retail earnings before revenue, taxes, depreciation and amortization increased to $ 644 million compared to $ 296 million the previous year, also beating forecasts: “the star of the show,” said analysts at Tudor, Pickering, Holt and Company, an investment bank. But they also noted that “debt metrics worsened considerably” due to the $ 12 billion impairment charge.
Hennigan took the helm at Marathon in March after activist investors, including hedge fund Elliott Management, lobbied for changes in the company’s leadership and strategy.
Investors have also urged the company to spin off its Speedway retail arm. Part of Marathon’s $ 12.4 billion impairment charge included $ 35 million of costs “incurred in connection with the separation of Speedway” and a review of the company’s pipeline business.
