The refiner Marathon Petroleum Corp. said Tuesday that it lost $9 billion in the first quarter as the coronavirus pandemic slashed demand for the fuels the company manufactures.
The large loss compared to a $7 million loss in the same quarter a year earlier. Revenues fell about 17 percent to $24 billion from nearly 29 billion in the first quarter of 2019.
The declines show the immense effect the pandemic has had on energy companies since the virus was first discovered late last year in China. Marathon Petroleum, headquartered in Findlay, Ohio, owns the Galveston Bay Refinery in Texas City, where it employs about 1,800.
CEO Michael Hennigan, who was appointed as CEO in March after longtime CEO Gary Heminger retired, said the economic fallout of the pandemic has forced the company to reduce capital spending by nearly one-third, to $3 billion, for 2020. Marathon Petroleum’s refineries are processing at an average of about 66 percent capacity because of the plunge in demand.
“The actions taken to prevent the spread of the virus have significantly reduced global economic activity and demand for our products,” Hennigan said. “Our refining operating areas have been particularly hard hit in the upper Midwest and on the west coast.”
The company attributed its first-quarter results in part to pre-tax charges of $12.4 billion mostly related to non-cash impairments.
Further reductions are planned “across all segments of the business,” the company said in a statement, including $250 million to the refining business, a 16 percent cut. About 60 percent of Marathon Petroleum’s original $1.5 billion budget for refining and marketing was intended for two projects, one in Galveston.
In 2018, the company’s former Texas City refinery merged with its nearby Galveston Bay refinery; the company plans to fully integrate the Texas City refinery and add 40,000 barrels per day of crude processing capacity to Galveston Bay by 2021.
The second project is in Dickinson, N.D., where the company plans to convert its refinery to a renewable diesel facility, which will be able to process refined soy oil and other organic feed stocks by the end of the year.
Executives said both projects will still move forward. Among his other priorities, Hennigan said one of is to establish a stronger presence in Houston.
“I’m a big believer that the Houston market is the center of the oil market in the U.S.” he said, “just like New York is the center of the financial markets, so having a Houston presence I think is really important for us.”
Marathon Petroleum stock fell about 1 percent Tuesday to close at $31.14 a share.
Story was updated 12:00 pm Wednesday, May 6 to clarify that of Marathon Petroleum’s net loss of $10.2 billion, $9.2 billion was attributable to the company.