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Marathon Petroleum Corporation MPC

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Marathon's refining margin went from $17.58 a barrel to $36.33 in twelve months, and diluted earnings per share went from $3.96 to $17.73.

The consensus for next year is $34.25 against $49.48 this year, so the street has already written down most of it. The argument is about how much of the margin is structural.

MPC · price with moving averages

Daily · 6MWeekly · 3Y
$102$172$243$313$384 Sep '23Apr '24Nov '24Jun '25Jan '26Aug '26 BID
EMAs82140

Source: market data.

The business

Marathon Petroleum buys crude oil, runs it through refineries at roughly 2.9 million barrels a day, and sells gasoline, diesel and jet fuel wholesale, through Marathon-branded stations, and for export. Alongside sits MPLX, a majority-owned pipeline and processing business that gathers and moves hydrocarbons for Marathon and for third parties, and which earns about $1.7B of quarterly cash regardless of what refining does.

That second business is the part people undervalue. It is a toll road with a different cycle from the refineries bolted onto it.

Inside the complete Back of Napkin

  1. 01The business
  2. 02The numbers
  3. 03Management
  4. 04How it fails or surprises you
  5. 05The shape of the payoff
  6. 06Closing thoughts
  7. 07Methodology

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