The Andersons Marathon Ethanol LLC (“TAME”), a joint venture of The Andersons Inc. (ANDE) and Marathon Petroleum Company LP, entered into a supply contract with Continental Carbonic Products Inc. Marathon Petroleum Company LP is a wholly owned subsidiary of Marathon Oil Corporation (MRO).
Under the terms of the agreement, TAME will supply carbon dioxide (CO2) from its facility in Greenville, Ohio, which will be used by Continental Carbonic to construct a new 50,000 square-feet dry ice manufacturing plant, Greenville Dry Ice Plant.
Carbon dioxide, a by-product of ethanol production process, when liquefied is the main element for the production of dry ice. The newly-constructed plant at Greenville will be targeted toward the enhancement of the dry ice market and will have more than 70 full-time workers at full production.
Ohio-based Marathon Petroleum Company LP was formed in 2005 and manages the downstream operations of Marathon Oil Corporation including oil refining, transportation and marketing operations.
We appreciate Marathon’s endeavors to diversify its operations in various markets.
Marathon has a lineup of a number of development projects all over the globe, which will prove to be beneficial for the company in the coming quarters. Moreover, the company’s exploration and production assets in the fields in Angola, the Gulf of Mexico and Canada’s oil sands offer a compelling long-term growth visibility.
However, the U.S. refining industry is exhibiting a negative outlook for 2010–2011 and the increased use of ethanol and other bio-fuels could potentially lead to reduced demand for petroleum-based refined products. These factors are expected to weigh down margins and earnings of the downstream segments of Marathon.
We are maintaining our long-term Neutral recommendation on the stock. Marathon currently retains a Zacks #3 Rank (short-term Hold rating).
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