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 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

    3 Resilient Oil Stocks for a Down Market

    Stuck on oil? Take a look at these six stocks—three that present risk vs. three that offer some resiliency.
  2. Economics

    Keep an Eye on These Emerging Economies

    Emerging markets have been hammered lately, but these three countries (and their large and young populations) are worth monitoring.
  3. Stock Analysis

    Is Pepsi (PEP) Still a Safe Bet?

    PepsiCo has long been known as one of the most resilient stocks throughout the broader market. Is this still the case today?
  4. Investing Basics

    Learn How To Trade Gold In 4 Steps

    Trading spot gold or gold futures, equities and options isn’t hard to learn, but the activity requires skill sets unique to these markets.
  5. Economics

    The Effect of Fed Fund Rate Hikes on Gold

    Explore the historical relationship between interest rate increases and the price of gold, and consider what effect a fed funds rate hike might have on gold.
  6. Investing

    The ABCs of Bond ETF Distributions

    How do bond exchange traded fund (ETF) distributions work? It’s a question I get a lot. First, let’s explain what we mean by distributions.
  7. Savings

    Easy Ways to Go Green and Stay Budget Friendly

    Social entrepreneurs recruit "skeptics" to team green, by providing economically efficient products and services that minimize consumers' carbon footprint.
  8. Investing

    Top Investment Banks In The Energy Industry

    Many global Investment banks are highly involved in the energy industry, but there are also some smaller banks and boutiques that are strong players.
  9. Stock Analysis

    3 Stocks that Are Top Bets for Retirement

    These three stocks are resilient, fundamentally sound and also pay generous dividends.
  10. Investing News

    Are Stocks Cheap Now? Nope. And Here's Why

    Are stocks cheap right now? Be wary of those who are telling you what you want to hear. Here's why.
  1. Does working capital measure liquidity?

    Working capital is a commonly used metric, not only for a company’s liquidity but also for its operational efficiency and ... Read Full Answer >>
  2. How do I read and analyze an income statement?

    The income statement, also known as the profit and loss (P&L) statement, is the financial statement that depicts the ... Read Full Answer >>
  3. Can working capital be too high?

    A company's working capital ratio can be too high in the sense that an excessively high ratio is generally considered an ... Read Full Answer >>
  4. How do I use discounted cash flow (DCF) to value stock?

    Discounted cash flow (DCF) analysis can be a very helpful tool for analysts and investors in equity valuation. It provides ... Read Full Answer >>
  5. How do dividends affect retained earnings?

    When a company issues a cash dividend to its shareholders, the retained earnings listed on the balance sheet are reduced ... Read Full Answer >>
  6. What is the formula for calculating compound annual growth rate (CAGR) in Excel?

    The compound annual growth rate, or CAGR for short, measures the return on an investment over a certain period of time. Below ... Read Full Answer >>

You May Also Like

Trading Center
You are using adblocking software

Want access to all of Investopedia? Add us to your “whitelist”
so you'll never miss a feature!