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Marathon Petroleum working through 'a couple' of asset divestiture deals

Marathon Petroleum Corp. executives said Aug. 1 that asset divestitures are in the works as part of a long-term portfolio optimization.

"This has been part of our strategy even before we closed the transaction with Andeavor, to be able to look at assets that may be … nonstrategic," Marathon Petroleum Chairman and CEO Gary Heminger said during the company's second-quarter earnings call. "We're looking across the entire portfolio. It's not just one segment versus the other … and this isn't just a one-year or a short-term thing that we're going to do."

Heminger said the company has "already proceeded with a couple of packages on some assets. It's private at this time. … We are an asset-rich company. We look at some assets that probably have more value in somebody else's portfolio than ours and proceed accordingly."

Executives did not provide details on the scope of the divestiture program.

In an Aug. 1 second-quarter earnings release, the company said it would use any divestiture proceeds for "general purposes," such as investing in high-return projects or paying down debt.

CFO Donald Templin said the company is comfortable with a four-times debt-to-EBITDA ratio for its master limited partnership subsidiary MPLX LP. Factoring distributions from MPLX that flow to Marathon Petroleum, Templin said, "It's sort of a 1.1-times leverage metric. We feel very comfortable with that, especially given the strong performance at Speedway."

Marathon Petroleum's retail segment grew second-quarter EBITDA to $623 million from $296 million in the first quarter.

"Both on the MLP side and at the corporate level, we're going to defend our investment-grade credit profile," Templin said. "What we really look at is the risk around the cash flows, the volatility of those cash flows and the consistency that you have. … The risk that we think is attendant to that part of the business is what's really going to influence where our leverage goes and how we manage it."