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Independent oil refiner and marketer, Marathon Petroleum Corp (MPC - Analyst Report), has provided a weak second-quarter 2013 interim update.

Marathon Petroleum projects its second-quarter net income between $570.0 million to $600.0 million or $1.75 to $1.85 per share in comparison to a profit of $814.0 million or $2.38 per share in the year-ago period. The company added that one-time expenses of 12 cents per share, connected with pension settlement, will be included in the estimate of second-quarter 2013.

Marathon Petroleum reveals that the result of its Refining and Marketing segment for the second quarter 2013 is primarily affected by lower crude oil price differentials and other factors. Moreover, the company believes that the weak price differentials were owing to the Renewable Fuels Standard law. Consequently, Marathon Petroleum expects this unit’s result in the second quarter to be weaker than the previous year’s comparable quarter.

Marathon Petroleum expects to release its second-quarter 2013 earnings result on Aug 1, 2013, before the opening bell. The Zacks Consensus Estimate for Marathon Petroleum’s second quarter is $2.62 per share.

Findlay, Ohio-based Marathon Petroleum is the fourth-largest domestic refiner with a combined crude oil processing capacity of approximately 1.7 million barrels per day through seven refineries. A major advantage for the company is its proprietary access to pipelines, which inhibit low-cost competitors from supplying to Marathon Petroleum’s key markets.  

On the flip side, reformulating policies to regulate fuel and lower emission from refinery operations require Marathon Petroleum to divert cash flow, affecting profitability adversely.

Marathon Petroleum currently retains a Zacks Rank #3 (Hold), implying that it is expected to perform in line with the broader U.S. equity market over the next one to three months.

Meanwhile one can look at stocks in the exploration and production sector like PetroQuest Energy Inc. (PQ - Snapshot Report), W&T Offshore Inc. (WTI - Snapshot Report) and Matador Resources Company (MTDR - Snapshot Report) with a favorable Zacks Rank. All the firms currently retain a Zacks Rank #1 (Strong Buy).

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