Marathon Petroleum's Q2 Earnings: Navigating Refining Headwinds and Midstream Growth

Marathon Petroleum Corp. (NYSE: MPC) is set to report its Q2 2025 earnings on August 5, offering investors a critical update on its refining and midstream operations. As the largest U.S. refiner, MPC's performance hinges on two key questions: Can its refining margins recover from recent declines, and is its midstream expansion positioning the company for sustained growth? The answers could determine whether the stock, which has dropped sharply in recent weeks, offers value for long-term investors.

Refining Margins: A Temporary Downturn or Structural Shift?

MPC's refining business faces headwinds. Q2 EBITDA for its Refining & Marketing (R&M) segment is expected to drop to $489 million, a sharp decline from $2.0 billion in Q1 2024. Margins per barrel fell to $13.38 in Q1 2025 from $19.35 in Q1 2024, driven by lower crack spreads—the profit margin between crude oil and refined products—and elevated planned turnaround costs. Q1 2025 alone saw $454 million in such costs, with another $265 million anticipated in Q2.

Yet, these challenges may be temporary. Turnarounds are routine maintenance events that depress short-term profits but ensure long-term operational efficiency. Crude throughput remains stable at 2.8 mbpd, and regional performance offers mixed but hopeful signals. While Gulf Coast margins were pressured by high turnaround costs ($2.23/barrel), Mid-Continent refining improved to $13.03/barrel, reflecting better operational execution. The West Coast, though still down year-on-year, maintained the strongest margins at $17.94/barrel.