Despite declining refining margins, Marathon Petroleum Corp. (NYSE: MPC) on Tuesday reported higher-than-expected earnings for the fourth quarter of 2024, driven by stronger performance in the midstream and renewable diesel divisions.

Marathon Petroleum booked an adjusted net income of $249 million, or $0.77 per diluted share, for the fourth quarter of 2024. This is significantly lower compared to the adjusted net income of $1.5 billion, or $3.98 per share, for the fourth quarter of 2023.

However, the Q4 2024 earnings of $0.77 per share beat by a mile the analyst consensus estimate of EPS of just $0.02.

Marathon Petroleum, and all other U.S. refiners, continued to lose profitability due to declining refining margins.

But growth from equity affiliates and contributions from recently acquired midstream assets in the Utica and Permian basins helped Marathon Petroleum’s adjusted core earnings in the midstream division rise to $1.7 billion in the fourth quarter of 2024, from $1.6 billion a year earlier.

In addition, Marathon Petroleum’s renewable diesel division turned a $28 million profit for the fourth quarter of 2024, compared to a loss of $47 million for the fourth quarter of 2023. The increase was primarily due to increased utilization, particularly at the Martinez Renewable Fuels joint venture.

Midstream and renewable diesel helped the refiner beat Q4 earnings estimates, but couldn’t stop the massive decline in profits compared to the previous two years, when refining margins were soaring.

In the fourth quarter of 2024, the refining and marketing margin at Marathon Petroleum fell to $12.93 per barrel of net refinery throughput, from $17.81 per barrel for the fourth quarter of 2023.

Full-year earnings per share more than halved in 2024 from a year earlier, highlighting the decline in refining margins over the past year.

The other major U.S. refiners also reported falling margins and profits, but still higher than analysts had expected. Phillips 66 reported a loss for the fourth quarter, but this loss was smaller than analysts had forecast as the refiner’s renewable fuels division booked a profit in the last quarter of 2024.

Valero Energy reported higher-than-expected earnings for the fourth quarter amid a widely anticipated slump in profits.

By Charles Kennedy for Oilprice.com

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