Marathon Oil, the Texas-based integrated oil firm, should consider splitting its refining and exploration businesses to unlock shareholder value Deutsche Bank said in a note to clients today. The bank also raised its rating on Marathon to ''buy'' from ''hold.''
Marathon (MRO) considered the idea of splitting its upstream and downstream businesses in 2008, but plunging commodities prices caused by the onset of the global financial crisis forced the company to scuttle those plans. ''Marathon could release major shareholder value by taking action,'' Deutsche said in the note.
The bank said Marathon's refining business is now outperforming the exploration unit and noted the company's Garyville refinery in Louisiana is a highly profitable asset. Marathon's other refineries are located in the mid-continent market and benefit from rising supplies of U.S. and Canadian oil, Reuters reported, citing Deutsche.
Marathon continues to operate as an integrated company but its board has said in the past that it would not rule out revisiting a separation in the future, Reuters reported, citing a Marathon representative.