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FINDLAY, Ohio — More than a month after an investor group called for Marathon Petroleum Corp. (MPC) to take a closer look at its retail network, the locally-based oil company is reviewing its Speedway convenience store chain.
A special committee of the MPC board of directors "will conduct a full and thorough review of Speedway LLC, with the assistance of an independent financial advisor, to ensure optimum value is being delivered to shareholders over the long term," according to the company.
This review will include a tax-free separation of Speedway to MPC shareholders and other strategic and financial alternatives. An update on the review is expected to be provided by mid-2017.
Enon-based Speedway, an MPC subsidiary, owns and operates the nation's second-largest convenience store chain, with approximately 2,770 convenience stores in 22 states.
The Speedway review is just one of several initiatives aimed at boosting shareholder value that MPC announced Tuesday morning.
In addition to the retail move, the company also:
- Plans to significantly accelerate its dropdown of assets with an estimated $1.4 billion of MLP-eligible annual EBITDA to MPLX LP to be completed as soon as practicable (expected in 2017), subject to requisite approvals and regulatory clearances, including tax.
- Complete its initial evaluation of strategic alternatives for its MPLX general partner interests, including incentive distribution rights, indicating it expects to exchange its economic interests in the general partner for newly issued MPLX common units in conjunction with completion of the dropdowns.
"Driving long-term value for our shareholders has always been and remains a top priority," said Gary R. Heminger, MPC chairman, president and CEO. "We believe MPC is undervalued in the public markets and have been working diligently to execute the initiatives we announced in late October — and this work has positioned us to significantly accelerate the dropdown schedule and provide additional clarity on these transactions and other important steps.
"We remain committed to taking sound, aggressive action for MPC shareholders and we believe today's announcements will unlock substantial value. We are moving ahead expeditiously on these initiatives to further highlight the compelling value in MPC," he added.
The initiatives come on roughly six weeks after Elliot Management Corp. said that MPC is "severely undervalued and that there are readily available steps by which the board can unlock $14 billion–$19 billion in value for shareholders, as CSNews Online previously reported.
The group offers two recommendations to the board: drop down all MLP-qualifying assets to MPLX and conduct a full strategic review to reassess Marathon's current structure.
"We are pleased with the additional decisive actions MPC announced today that will accelerate value creation for all shareholders," said Quentin Koffey, portfolio manager at Elliott Management. "We appreciate the open and candid dialogue we have had with the management team, and expect these additional actions to be important elements of the value realization MPC continues to drive for its shareholders."
According to Heminger, MPC has generated total shareholder return of 179 percent since 2011.
"We are a management team with a long track record of taking aggressive actions to create value," Heminger said during a company conference call Tuesday morning.
"These bold actions started with our separation from Marathon Oil Corp. in 2011," he said, adding that since that time PMC has "successfully created MPLX, diversified our portfolio and tripled stable cash flow as it is related to midstream and retail."
Findlay-based MPC is the nation's third-largest refiner, with a crude oil refining capacity of approximately 1.8 million barrels per calendar day in its seven-refinery system. Marathon brand gasoline is sold through approximately 5,400 independently owned retail outlets across 19 states. Through subsidiaries, MPC owns the general partner of MPLX LP, a midstream master limited partnership.