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Marathon (MPC) to Test Shipper Interest on Reversed Capline

Zacks Equity Research
Updated
Crown Castle (CCI) reported earnings 30 days ago. What's next for the stock? We take a look at earnings estimates for some clues.

Leading independent refiner Marathon Petroleum Corporation MPC announced the commencement of the non-binding open season for the Capline Pipeline.

It is to be noted that Marathon Pipe Line LLC is the operator of the pipeline, having capacity to carry crude at a rate of 1.2 million barrel a day. Notably, Marathon Pipe Line LLC is an affiliate of MPLX LP MPLX – a master limited partnership.

The open season will gauge the interest of shippers in the reversal of the pipeline. Presently, the Capline Pipeline carries oil to Patoka, IL, from St. James, LA.

Recently, oil transportation through the pipeline has reduced considerably as shippers are shifting to other leading U.S. pipelines. It is to be noted that a few years back, Capline was the largest pipeline in the United Sates.

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In the Capline Pipeline, Marathon Petroleum has 33% stake. Plains All American Pipeline PAA and BP Plc BP have 54% and 13% interest, respectively.

Findlay, OH-based Marathon Petroleum is a leading independent refiner, transporter and marketer of petroleum products.

Investors should know that Marathon Petroleum is the third largest domestic refiner with a combined crude oil processing capacity of approximately 1.8 million barrels per day through a portfolio of seven refineries. A major advantage for the company is its proprietary access to pipelines, which inhibits lower-cost competitors from supplying to its key markets.

However, we are concerned about the company’s rising long-term debt since 2017. Also, Marathon Petroleum’s debt-to-capitalization ratio of 39.2% is significantly higher than 28.5% of the industry.

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Plains All American Pipeline, L.P. (PAA) : Free Stock Analysis Report
 
Marathon Petroleum Corporation (MPC) : Free Stock Analysis Report
 
BP p.l.c. (BP) : Free Stock Analysis Report
 
MPLX LP (MPLX) : Free Stock Analysis Report
 
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