October 30, 2014 / 4:03 PM / 3 years ago

UPDATE 1-Marathon's 3rd qtr profit rises 75 pct on shale boost

(Adds details on MLP growth, Capline evaluating options)

HOUSTON, Oct 30 (Reuters) - Marathon Petroleum Corp. on Thursday posted third- quarter net income of $672 million, a 75 percent jump from the same period a year earlier, as cheap inland crudes from the shale revolution boost the profits of U.S. refiners.

Net income per share was $2.36, up from $0.54 a year ago, the company said in a statement on Thursday.

Like its peer, Phillips 66, Marathon is emphasizing growth in midstream services as companies race to build new infrastructure to move growing U.S. crude production to refineries and markets.

Both companies are focusing much of their growth efforts on their Master Limited Partnerships (MLP) in the midstream space and have told investors they may drop down some of their midstream assets into their MLP structures. Marathon's MLP is known as MPLX LP.

"The opportunities for drop-downs of MPC's existing midstream assets, along with organic investments at MPC and MPLX, enable both MPC and MPLX to continue to participate in the energy infrastructure development taking place in the U.S.," Chief Executive Gary Heminger said in a statement.

Wells Fargo said management's commitment to accelerate growth of the MLP pleased investors. Heminger said unitholders of MPLX could expect average annual distribution growth in the mid-20 percent range over the next five years.

Shares of Marathon rose almost 4 percent to $90.81 and units of MPLX shot up nearly 10 percent to $66.

Marathon also said it would sell its remaining 31 percent stake in MPLX Pipe Line Holdings LP to MPLX as it grows the MLP.

CAPLINE REVERSAL?

Separately, Marathon said it was studying options for the 1.2-million-barrel-a-day Capline crude pipeline, the biggest in the mainland United States, as the North American oil boom upends flows across the continent.

Shipping volumes on the pipeline, which run south to north from the Gulf Coast to Illinois, have fallen steeply in recent years as midwestern refiners tap into the growing supply of Canadian and North Dakota crude to replace costly imports via Capline.

Traders and analysts have speculated for several years that the line could be reversed to carry Canadian crude to U.S. Gulf Coast refineries, allowing it to increase throughput.

"This analysis is being conducted to address the expanding crude oil supply in North America and the significant changes in crude oil demand patterns," Marathon Petroleum Corp, which operates the line, said in the statement.

Marathon and co-owners Plains All American Pipeline LP and BP Plc said they planned to complete the study in the first quarter of 2015. (Additional reporting by Jessica Resnick-Ault in New York; Reporting By Terry Wade; Editing by Alan Crosby)

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