HOUSTON (Reuters) - Marathon Petroleum Corp MPC.N, the largest U.S. oil refiner, warned on Wednesday of a first-quarter loss on a roughly $7.8 billion write-down from a sharp fall in fuel demand.
Stay-at-home orders designed to contain the coronavirus pandemic have decimated travel and forced businesses to shut down, cutting worldwide demand for oil by a third, or about 30 million barrels a day. In the United States, gasoline demand has dropped by half.
Other top oil refiners including Exxon Mobil, XOM.N Royal Dutch Shell RDSa.L and Valero Energy VLO.N have cut output by as much as a third, halted new projects and sent contract workers home to avoid illnesses and reduce operating costs.
Marathon forecast a loss before charges of up to $250 million for the quarter ended March 31, in a regulatory filing here. The company is scheduled to report results on May 5.
Lower fuels prices have sharply cut the value of Marathon’s stocks and it forecast inventory adjustments of up to $3.3 billion in the quarter. It said non-cash impairments to investments could reach up to $1.4 billion.
Marathon has deferred spending and tax payments for the first quarter, halted share repurchases and added to its financial reserves. To bolster its finances, Marathon said it has drawn on a $3.5 billion credit facility and plans to seek a one-year, $1 billion loan.
Its shares closed up 4% to $24.69 on Wednesday, before Marathon released its warning. In after-hours trade the shares were up 12 cents to $24.18.
Two years ago, Marathon acquired rival Andeavor, bringing its total processing capacity to about 3.1 million barrels per day. But its business has struggled and the company recently shook up top management and pledged to spin off its Speedway retail gasoline business.
Rival Valero Energy earlier this month warned of an up to $2.1 billion first quarter loss and withdrew its full-year outlook, citing business losses from coronavirus.
By Gary McWilliams in Houston; additional reporting by Taru Jain in Bengaluru; Editing by Maju Samuel and Leslie Adler
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