Marathon Oil Corp
The move, which will take effect beginning June 30, 2011, will create the fifth-largest U.S. refiner and revives a plan the company had shelved in December 2008 when the financial crisis hit commodity markets.
The substantial improvement in the global business and financial environments over the last two years has created the conditions under which we believe it is now appropriate to move forward with the formation of two strong independent energy companies. Clarence P. Cazalot, Jr, Marathon president and CEO, said in a statement.
Earlier this week, analysts at Deutsche Bank said the company should split because Marathon's refining arm was outperforming its exploration arm, and that its newly expanded Garyville, Louisiana, refinery was one of the lowest cost plants in the country.
The company's six refineries are located in the mid-continent and Southeast U.S. markets and have 1,142,000 barrels per day (bpd) of crude oil refining capacity,
But another analyst was skeptical of the move.
I'm not convinced it creates value. We've been through this a couple times with this name, haven't we? Making a decision like this in response to short-term market trends, in my view, is just not appropriate, said Mark Gilman, analyst at The Benchmark Co.
Shares of the company rose 10.5 percent to $44.81 in premarket trading.
(Additional reporting by Ernest Scheyder, editing by Maureen Bavdek, Dave Zimmerman)