Marathon Petroleum Corporation (NYSE:MPC) is the newest energy company available to investors, as Marathon Oil (NYSE:MRO) has completed the spin off announced earlier in 2011. The new company represents a pure play on the downstream part of the energy complex.

TUTORIAL: 20 Investments To Know

Details of Spin off
In January 2011, Marathon Oil announced that the company would separate into two entities through a spin off of the company's downstream operations. These operations included pipelines, refiners, storage and marketing businesses.

Management cited various benefits of the separation, including a singular focus when allocating capital and resources, more transparency for the investment community and a lower cost of equity. Marathon Oil shareholders received one share of Marathon Petroleum Corporation for every two shares of Marathon Oil.

Marathon Petroleum Corporation
Marathon Petroleum Corporation is organized into three business segments - Refining & Marketing, Speedway and Pipeline Transportation. In 2010, the Refining & Marketing comprised 63% of the company's operating income, while Speedway and Pipeline Transportation provided 23% and 14% of operating income, respectively.

Refining and Marketing
Marathon Petroleum Corporation owns and operates six refineries located in the Midwest and Gulf Coast regions in the United States. The refineries have the capacity to refine 1.142 million barrels per day of crude oil.

One refinery that is undergoing an extensive upgrade by the company is the Detroit facility, which has current capacity of 106,000 barrels per day. Marathon Petroleum Corporation is spending $2.2 billion to enable the refinery to handle a higher volume of heavy crude oil that is expected to come in from Canada. The total capacity at Detroit will increase to 120,000 barrels per day and the project is scheduled to be completed by the second half of 2012.

Other refiners in the United States include Valero (NYSE:VLO), which owns 14 refiners with capacity of 2.6 million barrels per day. Holly Frontier Corporation (NYSE:FTO) owns five refineries with capacity of 443,000 barrels per day.

Marathon Petroleum Corporation also has an extensive network of 5,100 Marathon-branded retail outlets located in 18 states. The Refining & Marketing segment earned $800 million in operating income in 2010, up from $452 million in 2009.

Speedway
Speedway is a retail marketing operation selling gasoline and convenience store items with approximately 1,350 locations in seven states in the Midwestern region. Speedway earned $293 million in operating income in 2010, up from $212 million in 2009.

Pipeline Transportation
Marathon Petroleum Corporation has an ownership interest in approximately 9,600 miles of pipelines used to transport crude oil and refined products. The company also has an interest in other non-operated pipelines in the United States.

The company's other assets in this segment include light product and asphalt terminals as well as railcars, barges, towboats and trucks. The Pipeline Transportation segment earned $183 million in operating income in 2010, up from $172 million in 2009.

The Bottom Line
Marathon Petroleum Corporation is now an independent company after Marathon Oil completed the reorganization announced in January 2011. Investors now have another way to play the downstream business in the energy sector. (For more, see, Cashing In On Corporate Restructuring.)

Use the Investopedia Stock Simulator to trade the stocks mentioned in this stock analysis, risk free!

Related Articles
  1. Stock Analysis

    Analyzing Altria's Return on Equity (ROE) (MO)

    Learn about Altria Group's return on equity (ROE) and analyze net profit margin, asset turnover and financial leverage to determine what is causing its high ROE.
  2. Fundamental Analysis

    Performance Review: Commodities in 2015

    Learn how commodities took a big hit in 2015 with a huge variance in performances. Discover how the major commodities performed over the year.
  3. Investing News

    Icahn's Bet on Cheniere Energy: Should You Follow?

    Investing legend Carl Icahn continues to lose money on Cheniere Energy, but he's increasing his stake. Should you follow his lead?
  4. Stock Analysis

    Analyzing Google's Return on Equity (ROE) (GOOGL)

    Learn about Alphabet's return on equity. How has its ROE changed over time, how does it compare to its peers and what factors are driving ROE for the company?
  5. Investing News

    Is Buffett's Bet on Oil Right for You? (XOM, PSX)

    Oil stocks are getting trounced, but Warren Buffett still likes one of them. Should you follow the leader?
  6. Stock Analysis

    The Biggest Risks of Investing in SandRidge Stock

    Learn about the significant risks of investing in SandRidge. Read how the company may not be able to service its substantial debt load.
  7. Stock Analysis

    The Top 5 Micro Cap Alternative Energy Stocks for 2016 (AMSC, SLTD)

    Follow a cautious approach when purchasing micro-cap stocks in the alternative energy sector. Learn about five alternative energy micro-caps worth considering.
  8. Stock Analysis

    Analyzing Porter's Five Forces on Under Armour (UA)

    Learn about Under Armour and how it differentiates itself in the competitive athletic apparel industry in light of the Porter's Five Forces Model.
  9. Stock Analysis

    The Biggest Risks of Investing in Qualcomm Stock (QCOM, BRCM)

    Understand the long-term fundamental risks related to investing in Qualcomm stock, and how financial ratios also play into the investment consideration.
  10. Stock Analysis

    The Biggest Risks of Investing in Johnson & Johnson Stock (JNJ)

    Learn the largest risks to investing in Johnson & Johnson through fundamental analysis and other potential risks. Also discover how JNJ compares to its peers.
RELATED FAQS
  1. What is the formula for calculating EBITDA?

    When analyzing financial fitness, corporate accountants and investors alike closely examine a company's financial statements ... Read Full Answer >>
  2. How do I calculate the P/E ratio of a company?

    The price-earnings ratio (P/E ratio) is a valuation measure that compares the level of stock prices to the level of corporate ... Read Full Answer >>
  3. How do you calculate return on equity (ROE)?

    Return on equity (ROE) is a ratio that provides investors insight into how efficiently a company (or more specifically, its ... Read Full Answer >>
  4. How do you calculate working capital?

    Working capital represents the difference between a firm’s current assets and current liabilities. The challenge can be determining ... Read Full Answer >>
  5. What is the formula for calculating the current ratio?

    The current ratio is a financial ratio that investors and analysts use to examine the liquidity of a company and its ability ... Read Full Answer >>
  6. What is the formula for calculating earnings per share (EPS)?

    Earnings per share (EPS) is the portion of a company’s profit that is allocated to each outstanding share of common stock, ... Read Full Answer >>
COMPANIES IN THIS ARTICLE
Trading Center