After many months of dithering, OPEC at last agreed to cut production this week.

Ordinarily, this should be bad news for an oil refiner such as Marathon Petroleum (MPC) - Get Marathon Petroleum Corporation (MPC) Report , because higher oil prices can hurt margins.

But the stock has risen in the past couple of weeks after activist hedge fund Elliott Management , which owns about 4% of Marathon's shares, sent a letter to the company with recommendations on how to unlock shareholder value. There are more gains in store for investors if Marathon follows Elliott Management's advice.

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The hedge fund was founded by billionaire Paul Singer and is known for its 15-year fight with Argentina over the nation's 2001 default. It also pressed for changes to the structure of Anheuser Busch Inbev's (BUD) - Get Anheuser-Busch InBev SA/NV Sponsored ADR Report  acquisition of SABMiller.

Elliott Management said the stock could soar 60% to 80% if Marathon Petroleum moved all assets that qualify to its master limited partnership MPLX (MPLX) - Get MPLX LP Report  and conducted a full strategic review.

The hedge fund also said that Marathon Petroleum should consider splitting itself up into three separate companies: the Speedway chain of gas stations and convenience stores, the midstream operation and the refining business.

Marathon's wholly owned retail marketing subsidiary, Speedway, is the nation's second-largest chain in this space, with exposure in about 2,770 locations in 22 states. About 6.04 billion gallons of fuel was sold by Speedway in 2015, and $4.88 billion was netted as merchandise sales in 2015. The 5,400 Marathon brand locations (owned by others) in 19 states are also pretty big, with 5.02 billion gallons of fuel sold to branded locations in 2015.

Although Marathon's business is diversified and arguably is safer as a result, its valuation doesn't appear to show that.

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At a forward price-to-earnings ratio of about 14, Marathon shares are cheaper than rivals such as Tesoro (14.3), or Western Refining (WNR) (21).

We saw tremendous value unlocked back in 2012 when ConocoPhillips (COP) - Get ConocoPhillips Report completed the spinoff of Phillips 66 (PSX) - Get Phillips 66 Report , which was a refining, marketing, chemicals and transportation arm. Phillips 66 is valued at $44 billion today.

Interestingly, the plan to unlock value by spinning off assets was considered by Marathon's management itself in 2011

Elliott has already tasted success with gas and oil producer Hess (HES) - Get Hess Corporation (HES) Report . The hedge fund forced the company to offload its gas stations and exit its refining business. But lower crude prices have been a drag on the producer's fortunes.

One only needs to wait and watch what happens at Marathon Petroleum in the coming days. This stock could continue to surprise its investors.


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This article is commentary by an independent contributor. At the time of publication, the author held no positions in the stocks mentioned.