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Section 1: 8-K (8-K)

Document


 
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_____________________________________________ 
FORM 8-K
_____________________________________________
 
Current Report
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) November 1, 2018
____________________________________________ 
Marathon Petroleum Corporation
(Exact name of registrant as specified in its charter)
_____________________________________________ 
 
 
 
 
 
Delaware
 
001-35054
 
27-1284632
(State or Other Jurisdiction
of Incorporation)
 
(Commission
File Number)
 
(IRS Employer
Identification Number)
539 South Main Street
Findlay, Ohio
 
45840-3229
(Address of Principal Executive Offices)
 
(Zip Code)
Registrant’s telephone number, including area code:
(419) 422-2121
(Former name or former address, if changed since last report)
 _____________________________________________ 
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
¨
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
¨
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
¨
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
¨
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company o
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

 





Item 2.02
Results of Operations and Financial Condition.
On November 1, 2018, Marathon Petroleum Corporation issued a press release announcing third-quarter 2018 earnings. The press release is being furnished as Exhibit 99.1 to this Current Report and is incorporated herein by reference.

Item 9.01
Financial Statements and Exhibits.
(d)     Exhibits.
 
Exhibit
Number
  
Description
  
Press Release dated November 1, 2018, issued by Marathon Petroleum Corporation





SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
 
 
Marathon Petroleum Corporation
 
 
 
Date: November 1, 2018
By:
 
/s/ John J. Quaid
 
 
 
Name: John J. Quaid
 
 
 
Title: Vice President and Controller


(Back To Top)

Section 2: EX-99.1 (EXHIBIT 99.1)

Exhibit



395589404_mpcnewsreleaseletterheada02.jpg
Marathon Petroleum Corp. Reports Third Quarter 2018 Results

Reported third quarter earnings of $737 million, or $1.62 per diluted share
Refining and Marketing segment income from operations of $666 million as strong market fundamentals supported high utilization
Midstream segment income from operations of $679 million, achieved significant growth with higher volumes and multiple new assets coming online
Generated $1.2 billion in cash from operations during the quarter and returned $607 million to shareholders
Closed Andeavor acquisition on October 1st with integration underway

FINDLAY, Ohio, November 1, 2018 – Marathon Petroleum Corp. (NYSE: MPC) today reported 2018 third quarter earnings of $737 million, or $1.62 per diluted share. Third quarter 2018 earnings included pre-tax charges of $49 million related to pension settlement and transaction costs, or approximately $0.08 per diluted share. This compares with $903 million, or $1.77 per diluted share, in the third quarter of 2017.

“On October 1, we closed on our strategic combination with Andeavor after a vote that demonstrated overwhelming support by both sets of shareholders. We are now the leading, integrated, downstream energy company in the U.S.,” said Gary R. Heminger, chairman and chief executive officer. "As we look forward, we see extraordinary potential across our nationwide platform including over $1 billion of annual run-rate synergies within the first three years."

"This was another impressive quarter," Heminger continued. "Our team's strong execution drove over $1.2 billion of cash from operations, allowing us to return $607 million to shareholders, contributing to the $3.2 billion of capital returned so far in 2018. The market environment appears favorable and our integrated business model enables us to capture opportunities including wider crude differentials and the changing dynamics of low-sulfur fuel requirements which we expect to begin to see in the second half of 2019.”

Segment Results

MPC’s income from operations was $1.40 billion in the third quarter of 2018, compared with $1.58 billion in the third quarter of 2017, driven by strong contributions from the Midstream segment, offset by lower segment income from operations in the Refining and Marketing (R&M) and Speedway segments.


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Three Months Ended 
 September 30
(In millions)
 
2018
 
 
2017
Income from Operations by Segment
 
 
 
 
 
Refining & Marketing
$
666

 
$
1,097

Speedway
 
161

 
 
208

Midstream
 
679

 
 
355

Items not allocated to segments
 
(103
)
 
 
(83
)
        Income from operations(a)
$
1,403

 
$
1,577

(a)
We adopted Accounting Standards Update 2017-07, Retirement Benefits Presentation of Pension and Postretirement Cost, as of Jan. 1, 2018, and applied the standard retrospectively. As a result, we reclassified prior period amounts from selling, general and administrative expenses to net interest and other financial costs to conform to current period presentation.

Refining & Marketing
R&M segment income from operations was $666 million, compared with $1.1 billion in the third quarter of 2017. The year-over-year decrease in R&M segment results was primarily driven by lower Midwest and Gulf Coast crack spreads, partially offset by wider WCS- and WTI- based crude differentials. In addition, R&M segment income was $230 million lower resulting from the February 1, 2018 dropdown transaction. Prior period R&M segment results do not reflect the impact of the dropdown.
Refinery utilization was 97 percent during the quarter. The U.S. Gulf Coast and Chicago LLS blended 6-3-2-1 crack spread on an ex-RIN basis was $8.03 per barrel in the third quarter of 2018 as compared to $8.68 per barrel in the third quarter of 2017. These crack spreads are net of RIN crack adjustments of $1.73 and $4.00 per barrel for the third quarter of 2018 and 2017, respectively.

Midstream
Midstream segment income from operations, which largely reflects MPLX LP (NYSE: MPLX), was $679 million in the quarter, compared with $355 million in the third quarter of 2017. The results include $230 million from the February 1, 2018 drop of refining logistics and fuels distribution services to MPLX. Prior period Midstream segment results do not reflect the impact of these businesses. The incremental $94 million increase in third quarter Midstream segment results were driven by strong pipeline throughput volumes as well as record gathered, processed and fractionated volumes.
During the quarter, MPLX announced several new projects. First, the company plans to participate in a new 600-mile crude pipeline running from the Permian Basin to the Texas Gulf Coast region. Second, the company also plans to jointly develop the Whistler Pipeline, a 2.0 billion cubic feet per day (bcf/d) pipeline designed to deliver natural gas to the Agua Dulce market hub. Lastly, the company announced the acquisition of a Gulf Coast export terminal in Mt. Airy, Louisiana with 4 million barrels of third-party leased storage capacity and a 120 thousand barrel-per-day (mbpd) dock.
Additionally in October, MPLX announced with Crimson Midstream, LLC the commencement of an open season on the proposed 600 mbpd Swordfish Pipeline from St. James, Louisiana, and Raceland, Louisiana, to the Louisiana Offshore Oil Port LLC (LOOP) terminal facility in Clovelly, Louisiana.


2





Speedway
Speedway segment income from operations was $161 million in the quarter, compared with $208 million in the third quarter of 2017. The year-over-year decrease in segment results was primarily related to higher operating expenses and lower light product margins. Speedway’s gasoline and distillate margin decreased to 16.51 cents per gallon in the third quarter of 2018 compared with 17.72 cents per gallon in the third quarter of 2017 primarily due to the effects of rising crude oil prices.
For the quarter, same-store merchandise sales increased by 4.9 percent and same-store gasoline sales volume decreased by 1.2 percent year-over-year. Expenses increased $28 million, primarily due to higher labor and benefits costs. Depreciation was $8 million higher, primarily due to increased investment in the business.

MPC has begun the process of converting the Andeavor company-owned-and-operated stores to the Speedway brand. Since the closing of the transaction on October 1st, roughly 90 sites in the St. Paul and Minneapolis markets have been converted and the company expects to complete approximately 200 sites in total by the end of 2018.

Items Not Allocated to Segments
Items not allocated to segments totaled $103 million of expenses in the third quarter of 2018, compared with $83 million in the third quarter of 2017. The increase was due to transaction costs related to the combination with Andeavor and increased employee benefit costs.

Strong Financial Position and Liquidity
On September 30, 2018, the company had $5.0 billion of cash and cash equivalents, including the approximately $3.5 billion necessary to close the Andeavor transaction on October 1, 2018; $2.5 billion available under a revolving credit agreement and full availability under its $750 million trade receivables securitization facility.
During the quarter, MPC returned $607 million to MPC shareholders, including $400 million in share repurchases. MPC remains committed to its disciplined capital strategy and returning capital beyond the needs of the business in a manner consistent with maintaining the company’s current investment-grade credit profile.

MPC Revolving Credit Agreements
On August 28, 2018, in connection with the Andeavor transaction, MPC entered into agreements with a syndicate of lenders to replace MPC’s previous credit facilities. The facilities, which became effective October 1, 2018, provide for a $5 billion five-year revolving credit agreement that expires in 2023 and a $1.0 billion 364-day revolving credit agreement that expires in 2019.
The financial covenants and the interest rate terms contained in the new credit agreements are substantially the same as those contained in the previous bank revolving credit facilities.


3





MPC Senior Notes
As a result of the completion of the Andeavor transaction, MPC assumed an aggregate principal amount of $3.375 billion senior notes issued by Andeavor. On October 2, 2018, approximately $2.905 billion aggregate principal amount of Andeavor’s outstanding senior notes were part of an exchange offer and consent solicitation undertaken by MPC and Andeavor, where unsecured notes were exchanged for new unsecured senior notes issued by MPC having the same maturity and interest rates as the Andeavor senior notes and cash.

Other Strategic Updates
In October, MPC began evaluating the financial business plans of Andeavor Logistics LP (NYSE: ANDX), with the intent to move toward financial policies more consistent with its approach towards MPLX. This approach includes meaningfully higher distribution coverage, leverage levels at or below 4.0x EBITDA, no planned public equity issuances, and independent sustainability with limited parent support.
MPC plans to engage advisors and begin the process of assessing all options for the two MLPs, which could include MPLX acquiring ANDX and ANDX acquiring MPLX.

Conference Call
At 9 a.m. EDT today, MPC will hold a conference call and webcast to discuss the reported results and provide an update on company operations. Interested parties may listen by visiting MPC’s website at http://www.marathonpetroleum.com and clicking on the “2018 Third Quarter Financial Results” link. A replay of the webcast will be available on the company’s website for two weeks. Financial information, including the earnings release and other investor-related material, will also be available online prior to the conference call and webcast at http://ir.marathonpetroleum.com.

2018 Investor Day
Marathon Petroleum Corporation, MPLX LP, and Andeavor Logistics LP will host their 2018 Investor Day at the Mandarin Oriental Hotel in New York City on December 4, 2018 at 8:30 a.m. EST. Reservations are required to attend. Interested parties can request an invitation by contacting the Investor Relations department via email at investorrelations@marathonpetroleum.com. The presentation will also be webcast live at http://marathonpetroleum.com, http://mplx.com, and http://andeavorlogistics.com.

###



4




About Marathon Petroleum Corporation

Marathon Petroleum Corporation (NYSE: MPC) is a leading, integrated, downstream energy company headquartered in Findlay, Ohio. The company operates the nation's largest refining system with over 3.0 million barrels per day of crude oil capacity across sixteen refineries. MPC's marketing system includes approximately 7,800 branded locations across the United States, including approximately 5,600 Marathon brand retail outlets. Speedway LLC, an MPC subsidiary, owns and operates approximately 3,900 retail convenience stores across the United States. MPC also owns the general partner and majority limited partner interests in two midstream companies, MPLX LP (NYSE: MPLX) and Andeavor Logistics LP (NYSE: ANDX), which own and operate gathering, processing, and fractionation assets, as well as crude oil and light product transportation and logistics infrastructure.


Investor Relations Contact:
Kristina Kazarian (419) 421-2071

Media Contact:
Chuck Rice (419) 421-2521


References to Earnings
References to earnings mean net income attributable to MPC from the statements of income. Unless otherwise indicated, references to earnings and earnings per share are MPC’s share after excluding amounts attributable to noncontrolling interests.

Forward-looking Statements
This press release contains forward-looking statements within the meaning of federal securities laws regarding Marathon Petroleum Corporation (MPC). These forward-looking statements relate to, among other things, the acquisition of Andeavor and include expectations, estimates and projections concerning the business and operations, strategic initiatives and value creation plans of MPC. In accordance with "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995, these statements are accompanied by cautionary language identifying important factors, though not necessarily all such factors, that could cause future outcomes to differ materially from those set forth in the forward-looking statements. You can identify forward-looking statements by words such as "anticipate," "believe," "could," "design," "estimate," "expect," "forecast," "goal," "guidance," "imply," "intend," "may," "objective," "opportunity," "outlook," "plan," "position," "potential," "predict," "project," "prospective," "pursue," "seek," "should," "strategy," "target," "would," "will" or other similar expressions that convey the uncertainty of future events or outcomes. Such forward-looking statements are not guarantees of future performance and are subject to risks, uncertainties and other factors, some of which are beyond the company's control and are difficult to predict. Factors that could cause MPC's actual results to differ materially from those implied in the forward-looking statements include: the risk that the cost savings and any other synergies from the Andeavor transaction may not be fully realized or may take longer to realize than expected; disruption from the Andeavor transaction making it more difficult to maintain relationships with customers, employees or suppliers; risks relating to any unforeseen liabilities of Andeavor; future levels of revenues, refining and marketing margins, operating costs, retail gasoline and distillate margins, merchandise margins, income from operations, net income or earnings per share; the regional, national and worldwide availability and pricing of refined products, crude oil, natural gas, NGLs and other feedstocks; consumer demand for refined products; our ability to manage disruptions in credit markets or changes to our credit rating; future levels of capital, environmental or maintenance expenditures, general and administrative and other expenses; the success or timing of completion of ongoing or anticipated capital or maintenance projects; the reliability of processing units and other equipment; business strategies, growth opportunities


5




and expected investment; MPC's share repurchase authorizations, including the timing and amounts of any common stock repurchases; the adequacy of our capital resources and liquidity, including but not limited to, availability of sufficient cash flow to execute our business plan and to effect any share repurchases, including within the expected timeframe; the effect of restructuring or reorganization of business components; the potential effects of judicial or other proceedings on our business, financial condition, results of operations and cash flows; continued or further volatility in and/or degradation of general economic, market, industry or business conditions; compliance with federal and state environmental, economic, health and safety, energy and other policies and regulations, including the cost of compliance with the Renewable Fuel Standard, and/or enforcement actions initiated thereunder; the anticipated effects of actions of third parties such as competitors, activist investors or federal, foreign, state or local regulatory authorities or plaintiffs in litigation; the impact of adverse market conditions or other similar risks to those identified herein affecting MPLX or ANDX; and the factors set forth under the heading "Risk Factors" in MPC's Annual Report on Form 10-K for the year ended Dec. 31, 2017, and in MPC's Form 10-Q for the quarter ended June 30, 2018, filed with Securities and Exchange Commission (SEC). We have based our forward-looking statements on our current expectations, estimates and projections about our industry. We caution that these statements are not guarantees of future performance and you should not rely unduly on them, as they involve risks, uncertainties, and assumptions that we cannot predict. In addition, we have based many of these forward-looking statements on assumptions about future events that may prove to be inaccurate. While our management considers these assumptions to be reasonable, they are inherently subject to significant business, economic, competitive, regulatory and other risks, contingencies and uncertainties, most of which are difficult to predict and many of which are beyond our control. Accordingly, our actual results may differ materially from the future performance that we have expressed or forecast in our forward-looking statements. We undertake no obligation to update any forward-looking statements except to the extent required by applicable law. Copies of MPC's Form 10-K and Forms 10-Q are available on the SEC website, MPC's website at http://ir.marathonpetroleum.com or by contacting MPC's Investor Relations office. Copies of MPLX's Form 10-K are available on the SEC website, MPLX's website at http://ir.mplx.com or by contacting MPLX's Investor Relations office. Copies of ANDX's Form 10-K are available on the SEC website, ANDX's website at http://ir.andeavorlogistics.com or by contacting ANDX's Investor Relations office.



6




Consolidated Statements of Income (Unaudited)

Three Months Ended 
 September 30
 
Nine Months Ended 
 September 30
(In millions, except per-share data)
 
2018
 
 
2017
 
 
2018
 
 
2017
Revenues and other income:
 
 
 
 
 
 
 
 
 
 
 
    Sales and other operating revenues(a)
$
22,787

 
$
19,053

 
$
63,599

 
$
53,220

    Sales to related parties
 
201

 
 
157

 
 
572

 
 
458

    Income from equity method investments
 
96

 
 
84

 
 
262

 
 
224

    Net gain on disposal of assets
 
1

 
 

 
 
6

 
 
12

    Other income
 
47

 
 
92

 
 
122

 
 
219

        Total revenues and other income
 
23,132

 
 
19,386

 
 
64,561

 
 
54,133

Costs and expenses:
 
 
 
 
 
 
 
 
 
 
 
    Cost of revenues (excludes items below)(a)
 
20,457

 
 
16,617

 
 
57,344

 
 
47,664

    Purchases from related parties
 
149

 
 
148

 
 
428

 
 
420

    Depreciation and amortization
 
555

 
 
517

 
 
1,616

 
 
1,574

    Selling, general and administrative expenses(b)
 
445

 
 
411

 
 
1,271

 
 
1,286

    Other taxes
 
123

 
 
116

 
 
348

 
 
339

        Total costs and expenses
 
21,729

 
 
17,809

 
 
61,007

 
 
51,283

Income from operations(b)
 
1,403

 
 
1,577

 
 
3,554

 
 
2,850

    Net interest and other financial costs(b)
 
240

 
 
158

 
 
618

 
 
465

Income before income taxes
 
1,163

 
 
1,419

 
 
2,936

 
 
2,385

    Provision for income taxes
 
222

 
 
415

 
 
525

 
 
706

Net income
 
941

 
 
1,004

 
 
2,411

 
 
1,679

Less net income attributable to:
 
 
 
 
 
 
 
 
 
 
 
Redeemable noncontrolling interest
 
19

 
 
16

 
 
55

 
 
49

Noncontrolling interests
 
185

 
 
85

 
 
527

 
 
214

Net income attributable to MPC
$
737

 
$
903

 
$
1,829

 
$
1,416

 
 
 
 
 
 
 
 
 
 
 
 
Per-share data
 
 
 
 
 
 
 
 
 
 
 
Basic:
 
 
 
 
 
 
 
 
 
 
 
    Net income attributable to MPC per share
$
1.63

 
$
1.79

 
$
3.96

 
$
2.75

    Weighted average shares:
 
451

 
 
504

 
 
462

 
 
514

Diluted:
 
 
 
 
 
 
 
 
 
 
 
    Net income attributable to MPC per share
$
1.62

 
$
1.77

 
$
3.92

 
$
2.73

    Weighted average shares:
 
456

 
 
508

 
 
466

 
 
518

 
 
 
 
 
 
 
 
 
 
 
 
(a)
We adopted Accounting Standards Update 2014-09, Revenue - Revenue from contracts with customers, as of Jan. 1, 2018, and elected to report certain taxes on a net basis. We applied the standard using the modified retrospective method and, therefore, comparative information continues to reflect certain taxes on a gross basis.
(b) 
We adopted Accounting Standards Update 2017-07, Retirement Benefits Presentation of Pension and Postretirement Cost, as of Jan. 1, 2018, and applied the standard retrospectively. As a result, we reclassified prior period amounts from selling, general and administrative expenses to net interest and other financial costs to conform to current period presentation.



7




Supplemental Statistics (Unaudited)
 
Three Months Ended 
 September 30
 
Nine Months Ended 
 September 30
(In millions)
 
2018
 
 
2017
 
 
2018
 
 
2017
Income from Operations by Segment
 
 
 
 
 
 
 
 
 
 
 
  Refining & Marketing(a)
$
666

 
$
1,097

 
$
1,558

 
$
1,589

  Speedway
 
161

 
 
208

 
 
415

 
 
581

  Midstream(a)
 
679

 
 
355

 
 
1,863

 
 
996

  Items not allocated to segments:
 
 
 
 
 
 
 
 
 
 
 
      Corporate and other unallocated items(b)(c)
 
(103
)
 
 
(85
)
 
 
(283
)
 
 
(251
)
      Litigation
 

 
 

 
 

 
 
(86
)
      Impairments
 

 
 
2

 
 
1

 
 
21

Income from operations(b)
 
1,403

 
 
1,577

 
 
3,554

 
 
2,850

Net interest and other financial costs(b)
 
240

 
 
158

 
 
618

 
 
465

Income before income taxes
 
1,163

 
 
1,419

 
 
2,936

 
 
2,385

Provision for income taxes
 
222

 
 
415

 
 
525

 
 
706

Net income
 
941

 
 
1,004

 
 
2,411

 
 
1,679

Less net income attributable to:
 
 
 
 
 
 
 
 
 
 
 
Redeemable noncontrolling interest
 
19

 
 
16

 
 
55

 
 
49

Noncontrolling interests
 
185

 
 
85

 
 
527

 
 
214

Net income attributable to MPC
$
737

 
$
903

 
$
1,829

 
$
1,416

 
 
 
 
 
 
 
 
 
 
 
 
Capital Expenditures and Investments(d)
 
 
 
 
 
 
 
 
 
 
 
  Refining & Marketing
$
226

 
$
198

 
$
613

 
$
570

  Speedway
 
98

 
 
108

 
 
225

 
 
221

  Midstream
 
593

 
 
423

 
 
1,676

 
 
1,267

  Corporate and Other(e)
 
28

 
 
32

 
 
97

 
 
92

      Total
$
945

 
$
761

 
$
2,611

 
$
2,150

 
 
 
 
 
 
 
 
 
 
 
 
(a)
On Feb. 1, 2018, we contributed certain refining logistics assets and fuels distribution services to MPLX. The results of these businesses are reported in the Midstream segment prospectively from Feb. 1, resulting in a net increase of $230 million and $643 million to Midstream segment results and a net decrease to Refining & Marketing segment results of the same amounts in the third quarter and first nine months of 2018, respectively. No effect was given to prior periods as these entities were not considered businesses prior to Feb. 1, 2018.
(b) 
We adopted Accounting Standards Update 2017-07, Retirement Benefits Presentation of Pension and Postretirement Cost, as of Jan. 1, 2018, and applied the standard retrospectively. As a result, we reclassified prior period amounts from selling, general and administrative expenses to net interest and other financial costs to conform to current period presentation.
(c) 
Includes transaction-related costs from the Andeavor merger of $4 million and $14 million in the three and nine months ended September 30, 2018, respectively.
(d) 
Capital expenditures include changes in capital accruals and investments in affiliates, excluding acquisitions.
(e) 
Includes capitalized interest of $21 million, $13 million, $55 million and $39 million, respectively.




8





Supplementary Statistics (Unaudited) (continued)

Three Months Ended 
 September 30
 
Nine Months Ended 
 September 30
 
 
2018
 
 
2017
 
 
2018
 
 
2017
MPC Consolidated Refined Product Sales Volumes (thousands of barrels per day (mbpd)(a)
 
2,394

 
 
2,357

 
 
2,358

 
 
2,272

Refining & Marketing (R&M) Operating Statistics
 
 
 
 
 
 
 
 
 
 
 
R&M refined product sales volume (mbpd)(b)
 
2,382

 
 
2,357

 
 
2,346

 
 
2,263

Export sales volume (mbpd)(c)

280



331



289



291

R&M margin (dollars per barrel)(d)
$
14.25

 
$
14.14

 
$
13.48

 
$
12.42

Crude oil capacity utilization (percent)(e)
 
97.4

 
 
101.5

 
 
96.7

 
 
95.8

Refinery throughputs (mbpd):(f)
 
 
 
 
 
 
 
 
 
 
 
    Crude oil refined
 
1,833

 
 
1,845

 
 
1,819

 
 
1,741

    Other charge and blendstocks
 
199

 
 
172

 
 
173

 
 
176

        Total
 
2,032

 
 
2,017

 
 
1,992

 
 
1,917

Sour crude oil throughput (percent)
 
52

 
 
57

 
 
53

 
 
61

WTI-priced crude oil throughput (percent)
 
30

 
 
23

 
 
28

 
 
20

Refined product yields (mbpd):(f)
 
 
 
 
 
 
 
 
 
 
 
    Gasoline
 
942

 
 
939

 
 
942

 
 
910

    Distillates
 
676

 
 
673

 
 
659

 
 
627

    Propane
 
40

 
 
38

 
 
37

 
 
35

    Feedstocks and special products
 
313

 
 
298

 
 
294

 
 
285

    Heavy fuel oil
 
29

 
 
45

 
 
30

 
 
36

    Asphalt
 
73

 
 
67

 
 
68

 
 
64

        Total
 
2,073

 
 
2,060

 
 
2,030

 
 
1,957

Refinery direct operating costs ($/barrel):(g)
 
 
 
 
 
 
 
 
 
 
 
    Planned turnaround and major maintenance
$
1.77

 
$
1.20

 
$
1.64

 
$
1.69

    Depreciation and amortization
 
1.29

 
 
1.34

 
 
1.31

 
 
1.44

    Other manufacturing(h)
 
3.54

 
 
3.83

 
 
3.71

 
 
4.10

        Total
$
6.60

 
$
6.37

 
$
6.66

 
$
7.23

R&M Operating Statistics by Region - Gulf Coast
 
 
 
 
 
 
 
 
 
 
 
Refinery throughputs (mbpd):(i)
 
 
 
 
 
 
 
 
 
 
 
    Crude oil refined
 
1,150

 
 
1,123

 
 
1,121

 
 
1,041

    Other charge and blendstocks
 
204

 
 
217

 
 
187

 
 
219

        Total
 
1,354

 
 
1,340

 
 
1,308

 
 
1,260

Sour crude oil throughput (percent)
 
63

 
 
69

 
 
62

 
 
75

WTI-priced crude oil throughput (percent)
 
17

 
 
14

 
 
15

 
 
10

Refined product yields (mbpd):(i)
 
 
 
 
 
 
 
 
 
 
 
    Gasoline
 
567

 
 
538

 
 
557

 
 
525

    Distillates
 
442

 
 
438

 
 
421

 
 
393

    Propane
 
27

 
 
25

 
 
24

 
 
25

    Feedstocks and special products
 
314

 
 
326

 
 
301

 
 
310

    Heavy fuel oil
 
16

 
 
31

 
 
18

 
 
24

    Asphalt
 
22

 
 
19

 
 
21

 
 
17

        Total
 
1,388

 
 
1,377

 
 
1,342

 
 
1,294



9




Supplementary Statistics (Unaudited) (continued)
 
Three Months Ended 
 September 30
 
Nine Months Ended 
 September 30
 
 
2018
 
 
2017
 
 
2018
 
 
2017
Refinery direct operating costs ($/barrel):(g)
 
 
 
 
 
 
 
 
 
 
 
    Planned turnaround and major maintenance
$
0.64

 
$
0.90

 
$
1.30

 
$
1.86

    Depreciation and amortization
 
1.03

 
 
1.05

 
 
1.03

 
 
1.15

    Other manufacturing(h)
 
3.20

 
 
3.52

 
 
3.43

 
 
3.81

        Total
$
4.87

 
$
5.47

 
$
5.76

 
$
6.82

R&M Operating Statistics by Region - Midwest
 
 
 
 
 
 
 
 
 
 
 
Refinery throughputs (mbpd):(i)
 
 
 
 
 
 
 
 
 
 
 
    Crude oil refined
 
683

 
 
722

 
 
698

 
 
700

    Other charge and blendstocks
 
49

 
 
35

 
 
39

 
 
31

        Total
 
732

 
 
757

 
 
737

 
 
731

Sour crude oil throughput (percent)
 
34

 
 
38

 
 
37

 
 
41

WTI-priced crude oil throughput (percent)
 
52

 
 
38

 
 
49

 
 
34

Refined product yields (mbpd):(i)
 
 
 
 
 
 
 
 
 
 
 
    Gasoline
 
375

 
 
401

 
 
385

 
 
385

    Distillates
 
234

 
 
235

 
 
238

 
 
234

    Propane
 
13

 
 
14

 
 
13

 
 
11

    Feedstocks and special products
 
53

 
 
50

 
 
46

 
 
47

    Heavy fuel oil
 
13

 
 
15

 
 
12

 
 
13

    Asphalt
 
51

 
 
48

 
 
47

 
 
47

        Total
 
739

 
 
763

 
 
741

 
 
737

Refinery direct operating costs ($/barrel):(g)
 
 
 
 
 
 
 
 
 
 
 
    Planned turnaround and major maintenance
$
3.74

 
$
1.60

 
$
2.13

 
$
1.22

    Depreciation and amortization
 
1.68

 
 
1.72

 
 
1.70

 
 
1.80

    Other manufacturing(h)
 
3.89

 
 
3.96

 
 
3.96

 
 
4.19

        Total
$
9.31

 
$
7.28

 
$
7.79

 
$
7.21

Speedway Operating Statistics
 
 
 
 
 
 
 
 
 
 
 
Convenience stores at period-end
 
2,745

 
 
2,734

 
 
 
 
 
 
Gasoline and distillate sales (millions of gallons)
 
1,474

 
 
1,464

 
 
4,317

 
 
4,332

Gasoline and distillate margin (dollars per gallon)(j)
$
0.1651

 
$
0.1772

 
$
0.1620

 
$
0.1727

Merchandise sales (in millions)
$
1,339

 
$
1,295

 
$
3,753

 
$
3,693

Merchandise margin (in millions)
$
384

 
$
374

 
$
1,069

 
$
1,065

Merchandise margin percent
 
28.7
 %
 
 
28.9
 %
 
 
28.5
 %
 
 
28.8
 %
Same store gasoline sales volume (period over period)(k)
 
(1.2
)%
 
 
(3.1
)%
 
 
(1.8
)%
 
 
(1.6
)%
Same store merchandise sales (period over period)(k)(l)
 
4.9
 %
 
 
0.3
 %
 
 
3.4
 %
 
 
1.5
 %
Midstream Operating Statistics
 
 
 
 
 
 
 
 
 
 
 
Crude oil & refined product pipeline throughputs (mbpd)(m)
 
3,829

 
 
3,562

 
 
3,694

 
 
3,299

Terminal throughput (mbpd)
 
1,474

 
 
1,496

 
 
1,468

 
 
1,470

Gathering system throughput (million cubic feet per day)(n)
 
4,737

 
 
3,729

 
 
4,403

 
 
3,415

Natural gas processed (million cubic feet per day)(n)
 
7,171

 
 
6,581

 
 
6,874

 
 
6,336

C2 (ethane) + NGLs fractionated (mbpd)(n)
 
488

 
 
397

 
 
451

 
 
384

 
 
 
 
 
 
 
 
 
 
 
 
(a) 
Total average daily volumes of refined product sales to wholesale, branded and retail customers.
(b) 
Includes intersegment sales.
(c) 
Represents fully loaded export cargoes for each time period. These sales volumes are included in the total sales volume amounts.
(d) 
Sales revenue less cost of refinery inputs and purchased products, divided by total refinery throughputs.


10




(e) 
Based on calendar-day capacity, which is an annual average that includes down time for planned maintenance and other normal operating activities.
(f) 
Excludes inter-refinery volumes of 54 mbpd and 80 mbpd for the third quarter of 2018 and 2017, respectively and 53 mbpd and 74 mbpd for the nine months ended September 30, 2018, and 2017, respectively.
(g) 
Per barrel of total refinery throughputs. Effective with the Feb. 1, 2018, dropdown, direct operating costs related to certain refining logistics assets are now reported in the Midstream segment. Comparative information has not been adjusted.
(h) 
Includes utilities, labor, routine maintenance and other operating costs.
(i) 
Includes inter-refinery transfer volumes.
(j) 
The price paid by consumers less the cost of refined products, including transportation, consumer excise taxes and bank card processing fees, divided by gasoline and distillate sales volumes.
(k) 
Same store comparison includes only locations owned at least 13 months.
(l) 
Excludes cigarettes.
(m) 
Includes common-carrier pipelines and private pipelines owned or operated by MPLX, excluding equity method investments.
(n) 
Includes amounts related to unconsolidated equity method investments on a 100% basis.


Segment Earnings Before Interest, Taxes, Depreciation & Amortization (Segment EBITDA) (Unaudited)
 
Three Months Ended 
 September 30
 
Nine Months Ended 
 September 30
(In millions)
 
2018
 
 
2017
 
 
2018
 
 
2017
Segment EBITDA(a)
 
 
 
 
 
 
 
 
 
 
 
  Refining & Marketing(b)
$
923

 
$
1,363

 
$
2,319

 
$
2,394

  Speedway
 
237

 
 
276

 
 
643

 
 
778

  Midstream(b)
 
884

 
 
524

 
 
2,440

 
 
1,524

    Total Segment EBITDA(a)
 
2,044

 
 
2,163

 
 
5,402

 
 
4,696

Total segment depreciation & amortization
 
(538
)
 
 
(503
)
 
 
(1,566
)
 
 
(1,530
)
Items not allocated to segments
 
(103
)
 
 
(83
)
 
 
(282
)
 
 
(316
)
Income from operations
 
1,403

 
 
1,577

 
 
3,554

 
 
2,850

Net interest and other financial costs
 
240

 
 
158

 
 
618

 
 
465

Income before income taxes
 
1,163

 
 
1,419

 
 
2,936

 
 
2,385

Income tax provision
 
222

 
 
415

 
 
525

 
 
706

Net income
 
941

 
 
1,004

 
 
2,411

 
 
1,679

Less net income attributable to:
 
 
 
 
 
 
 
 
 
 
 
Redeemable noncontrolling interest
 
19

 
 
16

 
 
55

 
 
49

Noncontrolling interests
 
185

 
 
85

 
 
527

 
 
214

Net income attributable to MPC
$
737

 
$
903

 
$
1,829

 
$
1,416

 
 
 
 
 
 
 
 
 
 
 
 
(a) 
Segment EBITDA represents segment earnings before interest and financing costs, interest income, income taxes and depreciation and amortization expense. Segment EBITDA is used by some investors and analysts to analyze and compare companies on the basis of operating performance. Segment EBITDA should not be considered as an alternative to net income attributable to MPC, income before income taxes, cash flows from operating activities or any other measure of financial performance presented in accordance with accounting principles generally accepted in the United States. Segment EBITDA may not be comparable to similarly titled measures used by other entities.
(b) 
On Feb. 1, 2018, we contributed certain refining logistics assets and fuels distribution services to MPLX. The results of these businesses are reported in the Midstream segment prospectively from Feb. 1, resulting in a net increase of $230 million and $643 million to Midstream segment results and a net decrease to Refining & Marketing segment results of the same amounts in the third quarter and first nine months of 2018, respectively. No effect was given to prior periods as these entities were not considered businesses prior to Feb. 1, 2018.



11




Select Financial Data (Unaudited)
(In millions)
September 30 
 2018
 
June 30 
 2018
Cash and cash equivalents
$
4,992

 
$
4,999

MPLX debt
 
12,890

 
 
11,875

Total consolidated debt
 
18,449

 
 
17,267

Redeemable noncontrolling interest
 
1,003

 
 
1,003

Equity
 
19,031

 
 
18,818

Debt-to-total-capital ratio (percent)
 
48

 
 
47

Shares outstanding
 
451

 
 
456

 
 
 
 
 
 
Net cash provided by operations (quarter ended)
$
1,182

 
$
2,386

 
 
 
 
 
 

 
Three Months Ended 
 September 30
 
Nine Months Ended 
 September 30
 
 
2018
 
 
2017
 
 
2018
 
 
2017
Dividends paid per share
$
0.46

 
$
0.40

 
$
1.38

 
$
1.12

 
 
 
 
 
 
 
 
 
 
 
 


Reconciliation of Refining & Marketing Margin to Refining & Marketing Income from Operations

 
Three Months Ended 
 September 30
 
Nine Months Ended 
 September 30
(In millions)
 
2018
 
 
2017
 
 
2018
 
 
2017
Refining & Marketing income from operations
$
666

 
$
1,097

 
$
1,558

 
$
1,589

Plus:
 
 
 
 
 
 
 
 
 
 
 
Refinery direct operating costs(a)
 
992

 
 
933

 
 
2,912

 
 
3,029

Refinery depreciation and amortization
 
241

 
 
249

 
 
712

 
 
755

Other:
 
 
 
 
 
 
 
 
 
 
 
Operating expenses, net(a)(b)
 
748

 
 
328

 
 
2,101

 
 
1,075

Depreciation and amortization
 
16

 
 
17

 
 
49

 
 
50

Refining & Marketing margin(c)
$
2,663

 
$
2,624

 
$
7,332

 
$
6,498

(a) 
Excludes depreciation and amortization.
(b) 
Includes fees paid to MPLX for various midstream services. MPLX's results are reported in MPC's Midstream segment.
(c) 
Refining & Marketing margin is defined as sales revenue less cost of refinery inputs and purchased products, excluding any LCM inventory market adjustment. We believe this non-GAAP financial measure is useful to investors and analysts to assess our ongoing financial performance because, when reconciled to its most comparable GAAP measure, it provides improved comparability between periods through the exclusion of certain items that we believe are not indicative of our core operating performance and that may obscure our underlying business results and trends. This measure should not be considered a substitute for, or superior to, measures of financial performance prepared in accordance with GAAP, and our calculations thereof may not be comparable to similarly titled measures reported by other companies.



12




Reconciliation of Speedway Total Margin to Speedway Income from Operations
 
Three Months Ended 
 September 30
 
Nine Months Ended 
 September 30
(in millions)
 
2018
 
 
2017
 
 
2018
 
 
2017
Speedway income from operations
$
161

 
$
208

 
$
415

 
$
581

Plus (Less):
 
 
 
 
 
 
 
 
 
 
 
Operating, selling, general and administrative expenses
 
418

 
 
390

 
 
1,203

 
 
1,133

Depreciation and amortization
 
76

 
 
68

 
 
228

 
 
197

Income from equity method investments
 
(18
)
 
 
(20
)
 
 
(51
)
 
 
(54
)
Net gain on disposal of assets
 
(1
)
 
 
(2
)
 
 
(1
)
 
 
(12
)
Other income
 
(2
)
 
 
(3
)
 
 
(5
)
 
 
(9
)
Speedway total margin
$
634

 
$
641

 
$
1,789

 
$
1,836

 
 
 
 
 
 
 
 
 
 
 
 
Speedway total margin:(a)
 
 
 
 
 
 
 
 
 
 
 
Gasoline and distillate margin
$
243

 
$
259

 
$
699

 
$
748

Merchandise margin
 
384

 
 
374

 
 
1,069

 
 
1,065

Other margin
 
7

 
 
8

 
 
21

 
 
23

Speedway total margin
$
634

 
$
641

 
$
1,789

 
$
1,836

(a) 
Speedway gasoline and distillate margin is defined as the price paid by consumers less the cost of refined products, including transportation, consumer excise taxes and bank card processing fees and excluding any LCM inventory market adjustment. Speedway merchandise margin is defined as the price paid by consumers less the cost of merchandise. We believe these non-GAAP financial measures are useful to investors and analysts to assess our ongoing financial performance because, when reconciled to the most comparable GAAP measures, they provide improved comparability between periods through the exclusion of certain items that we believe are not indicative of our core operating performance and that may obscure our underlying business results and trends. These measures should not be considered a substitute for, or superior to, measures of financial performance prepared in accordance with GAAP, and our calculations thereof may not be comparable to similarly titled measures reported by other companies.



13

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