* Valero, Marathon Petroleum beat street
* Valero sees Q4 margins slipping
* Export demand still good -Valero
* Valero, Marathon eyeing plants for sale
* Marathon Oil sees no quick return to Libya
By Anna Driver
Nov 1 U.S. refining companies Valero Energy
Corp and Marathon Petroleum Corp reported
sharply higher quarterly profits that topped Wall Street
estimates as margins were lifted by the ability to process
cheaper grades of crude oil and improved fuel demand.
A supply glut at the Cushing, Oklahoma, delivery point has
weighed on prices for West Texas Intermediate crude, providing
an advantage to companies with plants that can process the
cheaper oil into fuel.
"It looks like the worst of it is over as far as the
recession downturn," said Brian Youngberg, an analyst at Edward
Jones in St. Louis. "Things have definitely picked up in the
Marathon Petroleum and Valero both have plants that can
process less-expensive "heavy and sour" oil.
The better-than-expected results come at a time of flux in
the industry. Marathon Petroleum was spun off from Marathon Oil
Corp as a separate company in June, and Valero has been
a buyer of assets and the subject of recent takeover
Other companies such as ConocoPhillips and Sunoco have plants for sale as they scale back exposure to
Both Valero and Marathon Petroleum told investors on
conference calls that they were looking at some of the plants
up for sale.
"While fourth-quarter refining margins have declined from
the high levels of the second and third quarters and we are
experiencing very high price volatility, crude oil prices are
in a range that is supportive of global demand growth," Bill
Klesse, Valero's chief executive, said in a statement.
Valero is also seeing continued demand for fuel from
international markets despite the economic uncertainty in
Western Europe, Klesse said.
Valero's profit soared to $1.2 billion, or $2.11 per share,
up from $303 million, or 53 cents per share, in the year-ago
quarter. Wall Street analysts had forecast earnings of $1.94
per share, according to Thomson Reuters I/B/E/S.
Valero, the largest independent U.S. refining company,
spent about $1.6 billion to acquire businesses in Britain and
Ireland, including the purchase of the Pembroke refinery from
Chevron Corp .
Last month, it finalized the purchase of the Meraux
refinery in Louisiana from Murphy Oil Corp.
Marathon Petroleum posted a third-quarter profit of $1.13
billion, or $3.16 per share, compared with $277 million, or 77
cents per share, a year earlier.
Analysts had expected Marathon Petroleum to report a profit
of $2.58 per share, according to data from Thomson Reuters
Marathon Oil Corp reported a 42 percent drop in
third-quarter profit on higher taxes and lower production, but
results topped Wall Street estimates.
Marathon Oil plans to sell up to $3 billion in assets it no
longer considers strategic over the next two to three years to
focus on growing acreage in basins like the Eagle Ford Shale in
South Texas, the company said in a statement.
Oil and natural gas production was 343,000 barrels oil
equivalent (boe) per day, down 15 percent from a year ago when
Libyan output was available.
Marathon Oil does not expect a quick return to Libya
because time is needed to secure its operations and to assess
whatever damage may have been done to equipment, Dave Roberts,
head of Marathon Oil's exploration and production unit, told
investors on a conference call.
"(It will be) still some time away before you will see us
talk with any confidence about Libya," Roberts said.
Still, the National Transitional Council is eager for the
company's return and has said it will honor contracts struck
with the previous government, Roberts said.
Valero's shares edged down 20 cents to $24.40 and Marathon
Petroleum's edged down 7 cents to $35.83. Marathon Oil shares
rose 2 cents to $35.92.