October 27, 2016 / 12:07 PM / 10 months ago

UPDATE 2-Marathon Petroleum profit misses; strategic moves planned

(Adds Jana statement, MPLX background, share movement)

By Vishaka George

Oct 27 (Reuters) - Marathon Petroleum Corp reported a much smaller-than-expected quarterly profit on lower pricing and said it would place some assets into MPLX Inc, the master limited partnership that it spun off in 2012.

These assets would contribute about $350 million of annual earnings before interest, taxes, depreciation and amortization by the end of 2017.

Shares of Marathon were down 4.4 percent at $42.30 in morning trading, while MPLX rose 4.3 percent to $33.28.

The 2012 spinoff of pipelines and other midstream assets came after pressure from activist hedge fund Jana Partners, which remains a Marathon shareholder.

Jana Managing Partner Barry Rosenstein expressed support for the shift of assets to MPLX and the possible changes to Marathon's financial reporting that would result.

Marathon, whose operations are primarily in the U.S. Midwest, Southeast and Gulf Coast, said its refining and marketing gross margin fell nearly 38 percent to $10.75 per barrel in the third quarter.

Refiners' margins have fallen this year as high fuel inventories drag down prices for products such as gasoline.

"Despite a challenging quarter, we remain optimistic as we move forward into 2017, given the signs of market rebalancing and sustained strong demand," Chief Executive Officer Gary Heminger said.

Net income attributable to Marathon fell to $145 million, or 27 cents per share, from $948 million, or $1.76 per share, a year earlier.

Excluding special items, earnings were 58 cents per share, below the analysts' average estimate of 81 cents, according to Thomson Reuters I/B/E/S.

The company recorded an impairment charge of $267 million after it and partner Enbridge Inc shelved the Sandpiper Pipeline project.

Revenue and other income fell 12.3 percent to $16.46 billion. (Additional reporting by Michael Flaherty in New York; Editing by Lisa Von Ahn)

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