Marathon Petroleum Raises Dividend 10% and Approves $5 Billion Buyback

Marathon Petroleum Corp (NYSE:MPC) shares are down in premarket trading on Tuesday, even though the company reported third-quarter adjusted EPS of $26.93, beating the analyst estimate of $24.32, and revenue also topped consensus expectations.

Revenue reached $56.49 billion, above the $46.04 billion analyst estimate. Adjusted EBITDA surged to $11.7 billion from $3.2 billion in the year-ago quarter.

Refining and Marketing Drives Earnings Growth

Refining & Marketing adjusted EBITDA surged to $9.9 billion from $1.8 billion a year earlier, while its margin increased to $45.70 per barrel from $17.60. Results benefited from stronger crack spreads across all regions.

Crude capacity utilization reached 100%, with throughput of 3.2 million barrels per day. Refining costs were nearly unchanged at $5.60 per barrel.

Midstream adjusted EBITDA rose to $1.9 billion from $1.7 billion, driven by higher rates and throughput, equity affiliate income and acquisitions.

Renewable Diesel adjusted EBITDA improved to $254 million from a $56 million loss, supported by stronger margins, higher regulatory credit values and increased throughput.

Shareholder Returns and Capital Allocation

Marathon Petroleum returned $3.3 billion to shareholders in the third quarter and announced a 10% increase in its quarterly dividend.

Its board also approved an additional $5 billion share repurchase authorization, bringing total available buyback capacity to $8.1 billion. The company had $3.1 billion remaining under its existing authorizations before the new approval.

MPLX raised its quarterly distribution by 12.5% for the third consecutive year, bringing expected annual distributions to MPC to $3.1 billion.

As of Sept. 30, MPC held $13.6 billion in cash, cash equivalents and short-term investments, including $1.3 billion at MPLX, with no borrowings under its $5 billion revolving credit facility. The company also redeemed $749 million in senior notes due December 2026.

MPC expects 2026 capital spending of $1.5 billion, excluding MPLX, with 65% allocated to value-enhancing projects and 35% to sustaining operations. High-return investments include projects at its Galveston Bay, Robinson, El Paso and Garyville refineries.

Asset Sale to CVR Energy

Marathon Petroleum and MPLX LP (NYSE:MPLX) agreed to sell their St. Paul Park and Mandan refineries and related midstream assets to CVR Energy Inc. (NYSE:CVI) for $4.2 billion, plus inventory value.

MPLX will receive $750 million for the logistics assets, valued at 9 times forecast 2027 adjusted EBITDA, while MPC will receive $3.45 billion from the refinery sale.

MPC plans to reinvest its proceeds primarily along the Gulf Coast, while MPLX expects to fund growth in the Permian and Marcellus basins.

The refineries have combined capacity of 177,000 barrels per day. Following the sale, MPC will retain approximately 2.8 million barrels per day of refining capacity. The midstream assets include a crude pipeline, storage and three terminals.

The transaction, approved by both companies’ boards, is expected to close by year-end 2026, subject to regulatory clearance.

MPC Stock Price Activity: Marathon Petroleum shares are trading lower by 1.95% at $422.00 during premarket trading on Tuesday, according to Benzinga Pro data.

Photo: Jonathan Weiss via Shutterstock