(Bloomberg) -- Marathon Petroleum Corp. said refining margins more than doubled from a year ago, while revenue exceeded estimates, sending shares to the highest level since 2018.
The largest U.S. independent refiner by market value posted on Wednesday fourth-quarter profit that was more than double the average of analyst estimates, while revenue was 27% higher than forecast. Refining margins surged to $15.88 per oil barrel, also beating estimates. Marathon signaled it may return more capital to shareholders than previously planned.
The profit beat underscores the recovery of one of the hardest-hit industries during the coronavirus pandemic, when stay-at-home orders sent demand for fuels plummeting. Major rivals Phillips 66 and Valero Energy Corp. have also reported quarterly results that exceeded expectations.
“Based on the trends over the last few months, we've become less concerned about the pace of recovery in transportation fuels demand,” Chief Executive Officer Michael J. Hennigan said in a conference call with analysts. “Product inventories remain tight and U.S. demand continues to recover.”
The revival in driving across the U.S. has helped refining companies return to overall profitability and slash the debt glut built during the crisis even as jet fuel demand remains curbed by international travel restrictions. Meanwhile, tight supplies have driven gasoline prices to the highest since 2014, fueling inflation concerns.
Marathon has completed about 55% of a $10 billion share-buyback program and was authorized to repurchase an additional $5 billion in stock, the company said.
READ MORE: Marathon Petroleum Goes All-In on Buybacks: Earnings Outlook
Shares of the Findlay, Ohio-based company gained 6.1% to $78.50, the highest closing price since October 2018.
Marathon also said it plans to spend $1.7 billion in capital this year. About half of the planned investment is for the conversion of its Martinez refinery into a renewable fuel plant.
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