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(Reuters) -Marathon Petroleum Corp on Tuesday beat Wall Street expectations for quarterly profit as its margins soared amid tight supplies and high demand for refined products.
The top U.S. refiner also approved an additional $5 billion in stock repurchase, while rival Phillips 66 (NYSE:PSX) returned $1.2 billion to shareholders through dividends and share buybacks during the reported quarter.
“While (Phillips 66’s) total cash return for the quarter was above our estimate, it still falls short of the company’s goal of returning 40% of operating cash flow,” said Faisal Hersi analyst at Edward Jones.
Shares of Phillips 66 fell 5.4% after it missed analysts’ estimates for quarterly profit, while Marathon rose 1%.
U.S. President Joe Biden’s administration has criticized oil firms for pouring cash into shareholder payouts rather than expanding capacity despite short supply.
Marathon’s crude capacity utilization was about 94% in the fourth quarter, resulting in total throughput of 2.9 million barrels per day (bpd), which was roughly flat year-over-year.
It expects current-quarter throughput to be 2.8 million bpd and forecast full-year spending of $1.3 billion.
The company’s refining and marketing margins surged 81.5% to $28.82 per barrel compared with last year.
Realized refining margins for Phillips 66 jumped 65% to $19.73 per barrel.
“Refining margins (for Phillips) were weaker than forecast in the Atlantic Basin and West Coast, driving the earnings miss,” said Jason Gabelman, analyst, Cowen and Co.
Profits last year from turning oil into gasoline, diesel and jet fuel hit multi-decade highs as refineries ran at full throttle to meet rising demand amid a supply squeeze following Russia’s invasion of Ukraine and plant closings.
Findlay, Ohio-based Marathon posted fourth-quarter adjusted net income of $6.65 per share compared with analysts’ average estimate of $5.67 per share, according to Refinitiv data.
Phillips 66 reported an adjusted income of $4 per share, compared with analysts’ expectations of $4.35 per share.
