OREANDA-NEWS.OREANDA-NEWS. Marathon Petroleum Corporation (NYSE: MPC) today reported 2015 third-quarter earnings of $948 million, or $1.76 per diluted share, compared with $672 million, or $1.18 per diluted share, in the third quarter of 2014. Third-quarter 2015 earnings include a $144 million pre-tax impairment charge, or $0.17 per diluted share, related to the cancellation of the ROUX project.

"Our results in the third quarter were driven by a solid performance across all of our businesses," said Gary R. Heminger, MPC president and chief executive officer. "We were able to capture strong crack spreads in a favorable refining environment and we took advantage of our flexibility to move feedstocks and refined products throughout our system to optimize profitability when regional dislocations occurred." Heminger said lower fuel prices facilitated refined product demand in the third quarter, further contributing to MPC's strong results.

Heminger also highlighted strong performance in the quarter from Speedway, MPC's retail subsidiary. "Speedway benefited from higher light-product margins, and its peer-leading merchandise model drove higher profitability compared to last year," Heminger said. "One year after its acquisition of its East Coast retail assets, Speedway is significantly ahead of schedule in converting the acquired stores, with nearly 1,000 of the 1,245 new locations converted to its brand and operating system. These acquired locations are performing well and to date we have captured more than double the expected synergies of $75 million."

"We continue to implement our strategy of growing the more stable cash-flow segments of our business, and our sponsored master limited partnership MPLX LP continues to be an important part of that strategy," added Heminger. "We look forward to finalizing the combination of MPLX and MarkWest Energy Partners, L.P. later this year."

Announced in mid-July, the combination will create one of the industry's largest master limited partnerships (MLPs). "Through this transaction, we will combine MarkWest's robust organic growth opportunities with MPC's large and growing $1.6 billion inventory of MLP-qualifying earnings before interest, taxes, depreciation and amortization," said Heminger. "This growth will also be supported by MPC's and MPLX's strong financial position, creating a large-cap, diversified MLP with an attractive distribution growth profile over an extended period of time. The strategic combination will drive substantial long-term value for the unitholders of both partnerships and MPC shareholders."

Heminger noted that at the time MPLX announced its combination with MarkWest, the partnership provided distribution growth guidance through 2019. "MPLX remains committed to the growth profile provided in that guidance," Heminger said. "Given the significant change in MLP valuations and the resultant higher yield environment the sector has experienced recently, we now expect dropdown transactions or some form of MPC support as early as 2016."

Consistent with the previous guidance of a 25 percent compound annual distribution growth rate for the combined entity through 2017, Heminger said MPLX expects distribution growth of 25 percent in 2016.

"As we continue to focus on maximizing our shareholders' long-term returns, we have continued our disciplined, balanced approach to investing in the business and returning capital to our investors," said Heminger. He noted that an important element of the company's capital discipline is to monitor market conditions and ensure investments reflect the best long-term, risk-adjusted returns to shareholders. In February, MPC announced it would defer the final investment decision on its proposed ROUX project at its Garyville, La., refinery in order to evaluate the implications of market conditions on the project. "While we still believe the ROUX is an excellent project to enhance MPC's platform, we constantly evaluate market conditions, and at this time we have decided to cancel the project," Heminger said. "We will look to deploy this capital on projects providing superior return prospects." As a result, the company recorded a $144 million impairment charge in the third quarter to write off the costs capitalized to date on the project, including front-end engineering and long lead-time equipment.

Heminger also noted that MPC returned $327 million of capital to shareholders during the quarter. The company purchased $156 million of its shares, and approximately $3 billion remains under its total of $10 billion of share repurchase authorizations. The company also paid dividends of $171 million. MPC declared a $0.32 per share dividend, which was increased 28 percent last quarter, resulting in a 31.5 percent compound annual growth rate since the company became independent in June 2011.

"We continue our efforts to remain a leader in our industry through all cycles by focusing on operational excellence and optimizing our refining system," said Heminger. "We will continue to grow our stable cash flow through our retail and midstream businesses, taking a disciplined approach to capital allocation and delivering significant value to our shareholders through our sponsorship of MPLX."