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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) August 1, 2019
 _____________________________________________
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 No.)
539 South Main Street
Findlay, Ohio
 
45840

(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))
Securities registered pursuant to Section 12(b) of Act:
Title of each class
Trading
Symbol(s)
Name of each exchange on which registered
Common Stock, par value $.01
MPC
New York Stock Exchange
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 ¨
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. ¨
 






Item 2.02
Results of Operations and Financial Condition.
On August 1, 2019, Marathon Petroleum Corporation (“MPC”) issued a press release announcing second-quarter 2019 earnings. The press release is being furnished as Exhibit 99.1 to this Current Report and is incorporated herein by reference.

Information in this Item 2.02 and Exhibit 99.1 of Item 9.01 below shall not be deemed “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise incorporated by reference into any filing pursuant to the Securities Act of 1933, as amended (the “Securities Act”), or the Exchange Act except as otherwise expressly stated in such a filing.
Item 7.01
Regulation FD Disclosure.
On August 1, 2019, MPC provided an update to the format in which it plans to provide certain financial and statistical market data information, which is available under the “Investor & Market Data” tab on MPC's Investor Relations website at https://www.marathonpetroleum.com/Investors/. The new format is presented in the Second Quarter 2019 Conference Call presentation attached as Exhibit 99.2 to this Current Report on Form 8-K and is incorporated herein by reference.

Going forward, MPC intends to update this information and provide such updated information on its Investor Relations website no later than the close of business on the second business day following the end of each month, and may also provide one to two additional updates within each month. Interested parties may register to receive automatic email alerts when the information is updated by clicking on “Sign Up” at https://www.marathonpetroleum.com/Investors/ and following the instructions provided.

No information contained on or accessible through such website shall be deemed to be part of or incorporated by reference into this report other than the Exhibit 99.2 identified herein.

Information in this Item 7.01 and Exhibit 99.2 of Item 9.01 below shall not be deemed “filed” for the purposes of Section 18 of the Exchange Act, or otherwise incorporated by reference into any filing pursuant to the Securities Act or the Exchange Act except as otherwise expressly stated in such a filing.
Item 9.01
Financial Statements and Exhibits.
(d)     Exhibits.
 
Exhibit
Number
  
Description
  
Press Release issued by Marathon Petroleum Corporation on August 1, 2019
 
Second Quarter 2019 Conference Call presentation





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: August 1, 2019
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


399001065_mpcnewsreleaseletterheada10.jpg


Marathon Petroleum Corp. Reports Second-Quarter Results
Reported second-quarter income of $1.1 billion, or earnings per diluted share of $1.66; adjusted income of $1.1 billion, or adjusted earnings per diluted share of $1.73
Generated $2.6 billion of operating cash flow and returned $852 million of capital to shareholders, including $500 million in share repurchases
Realized synergies of $270 million in the second quarter
Strong retail results driven by exceptional execution across Speedway system
Successfully combined MPLX and ANDX into one public midstream company
Continued focus on portfolio optimization, which could include asset divestitures

FINDLAY, Ohio, Aug. 1, 2019 – Marathon Petroleum Corp. (NYSE: MPC) today reported net income of $1.1 billion, or $1.66 per diluted share, for the second quarter 2019 compared to $1.1 billion, or $2.27 per diluted share, for the second quarter of 2018. Excluding adjustments shown in the accompanying earnings release tables, second quarter 2019 adjusted net income was $1.1 billion, or $1.73 per diluted share, compared to $1.1 billion, or $2.29 per diluted share, for the second quarter of 2018.
 
MPC returned $852 million of capital to shareholders during the second quarter of 2019, including $500 million in share repurchases.

“This quarter we executed across our integrated business and progressed many strategic initiatives,” said Gary R. Heminger, chairman and chief executive officer. “Our retail business, comprised of Speedway and our direct dealer network, had an exceptional quarter and demonstrated its ability to capture value. We simplified our midstream structure into one public company to high-grade commercial opportunities and progressed an impressive slate of high-return projects that are expected to enhance integration across our system. Lastly, today we also highlighted our continued focus on portfolio optimization, which could include asset divestitures to strategically streamline our integrated asset base.

“We are confident that strengthening business fundamentals throughout the year and the competitive advantages of our integrated business model will both support a growing cash flow profile,” said Heminger.

Synergies

MPC realized $270 million of synergies in the second quarter. Some examples of realized synergies include: approximately $60 million of turnaround savings related to lower spending and incremental earnings from completing maintenance under budget and ahead of schedule, approximately $35 million from leveraging scale and logistics assets to optimize Canadian and Bakken supply sources, and approximately $10 million from improved catcracker yields at the company’s Los Angeles refinery.

“Our team’s impressive execution this quarter led to strong realized synergies,” said Heminger. “Combined with our first quarter results, we have realized $403 million of synergies year to date. Our


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progress gives us great confidence in achieving our target of up to $600 million of annual gross run-rate synergies by year-end 2019 and $1.4 billion by the end of 2021.”

Segment Results
In the second quarter of 2019, total income from operations was $2.0 billion compared to $1.7 billion for the second quarter of 2018. Adjusted earnings before interest, taxes, depreciation, and amortization (Adjusted EBITDA) was $3.2 billion in the second quarter of 2019 compared to $2.3 billion for the same quarter last year. Adjusted EBITDA excludes refining planned turnaround costs of $237 million in the second quarter of 2019 and $62 million in the second quarter of 2018.

 
Three Months Ended 
June 30,
(In millions)
 
2019
 
 
2018
Income from Operations by Segment
 
 
 
 
 
Refining & Marketing
$
906

 
$
1,025

Retail
 
493

 
 
159

Midstream
 
878

 
 
617

Items not allocated to segments:
 
 
 
 
 
    Corporate and other unallocated items
 
(179
)
 
 
(81
)
    Transaction-related costs
 
(34
)
 
 
(10
)
    Litigation
 
(22
)
 
 

    Impairments
 

 
 
1

        Income from operations
$
2,042

 
$
1,711



Midstream
Midstream segment income from operations, which primarily reflects the results of MPLX LP (NYSE: MPLX) and Andeavor Logistics (ANDX), was $878 million in the second quarter of 2019, compared with $617 million for the second quarter of 2018. The increase was due to contributions of $223 million from ANDX and a $38 million increase driven primarily by growth across MPLX’s businesses. Segment EBITDA was $1.2 billion in the second quarter 2019 versus $808 million for the same quarter last year.

Retail
Retail segment income from operations was $493 million in the second quarter of 2019, compared with $159 million in the second quarter of 2018. The increase in earnings was largely related to the addition of the legacy Andeavor retail operations and higher fuel and merchandise margin contributions across the legacy Speedway system. Segment EBITDA was $623 million in the second quarter 2019 versus $232 million for the same quarter last year.
Retail fuel margin increased to 26.7 cents per gallon in the second quarter of 2019 from 16.5 cents per gallon in the second quarter of 2018. Same-store merchandise sales increased by 6.3 percent year-over-year and same-store gasoline sales volume decreased by 2.4 percent year-over-year.

Refining & Marketing (R&M)
R&M segment income from operations was $906 million in the second quarter of 2019 compared with $1.0 billion in the same quarter of 2018. The year-over-year decrease was primarily driven by narrower crude differentials and lower product realizations. R&M margin was $15.24 per barrel for the quarter with a clean product yield of 82 percent.


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Segment adjusted EBITDA was $1.6 billion in the second quarter of 2019 versus $1.3 billion for the same quarter last year. Segment adjusted EBITDA excludes refinery planned turnaround costs which totaled $237 million in the second quarter of 2019, as the company completed maintenance work at its Garyville, Los Angeles, and Martinez refineries. This compares to $62 million of turnaround related work in the second quarter of 2018.
Refinery capacity utilization was 97 percent, resulting in total throughputs of 3.1 million barrels per day for the second quarter, which was 1.1 million barrels per day higher than the throughput for the second quarter of last year. The increase was primarily due to the addition of the Andeavor refineries.

Items Not Allocated to Segments and Other
Items not allocated to segments totaled $235 million of expenses in the second quarter of 2019 compared to $90 million in the second quarter of 2018. Second quarter 2019 results include $34 million of transaction-related expenses, $22 million of litigation charges, and the inclusion of legacy Andeavor corporate costs.

Strong Financial Position and Liquidity

As of June 30, 2019, the company had $1.2 billion in cash and cash equivalents (excluding MPLX and ANDX’s cash and cash equivalents of $7 million and $25 million, respectively), approximately $5 billion available under a revolving credit agreement, $1 billion available under a 364-day bank revolving credit facility and $750 million available under its trade receivables securitization facility.

Strategic Update

“This quarter saw significant advancement of strategic initiatives that we expect to enhance the strength and cash generation of our integrated model,” said Heminger.

MPC combined its two midstream businesses, MPLX and ANDX, to simplify its midstream structure into one public company to high-grade commercial opportunities. At the same time, the company progressed numerous high-return projects that are expected to advance its strategy of creating integrated crude oil and natural gas systems from the Permian Basin to the U.S. Gulf Coast.

During the quarter, MPLX announced a final investment decision on the Whistler natural gas pipeline. MPLX also signed definitive agreements on the Wink-to-Webster crude oil pipeline, in which it is expected to have an equity interest. The Gray Oak Pipeline, in which MPC has a 25 percent equity interest, remains on schedule and is expected to be placed in service in the fourth quarter of 2019. These pipelines will help connect growing domestic production with global demand while also providing refining value to MPC’s integrated business.
In the retail segment, Speedway continues to expand its brand through store conversions. As of June 30, 2019, Speedway had completed 237 store conversions in 2019, bringing the total number of conversions since the combination with Andeavor to 407. The company remains on track to complete 700 total cumulative store conversions by the end of 2019 including locations in the Southwest and on the West Coast. In July 2019, Speedway closed on its acquisition of 33 NOCO Express convenience stores in the Buffalo, New York area. The acquisition further expands Speedway’s brand presence in this region while supporting MPC’s Midwest product placement strategy and builds upon prior investments to maximize refinery utilization.

MPC also continues to expand its presence in Mexico. In addition to expanding its refined product distribution into this region, the company now has 155 ARCO stations in Mexico as of June 30, 2019, with plans to continue growing its brand. These stores provide additional product outlets and enhanced integration with the refining business.


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In anticipation of the expected favorable uplift from the International Maritime Organization low-sulfur marine fuel rule, MPC has positioned its integrated business to optimize around changing market dynamics associated with the bunker fuel regulation change in 2020. The company’s preparations have included resid destruction strategies and bunker blending logistics capabilities.

During the quarter, the company progressed the completion of its Garyville crude revamp and coker drum replacement projects. The crude project is expected to be completed by the end of 2019. The coker project is expected to increase unit capacity by approximately 14 percent and remains on track to be completed in two phases, fourth quarter of 2019 and first quarter of 2020. On the logistics side, the company finalized plans to optimize its coker feed and resid processing capabilities between refineries and ensured readiness of its blending and storage capabilities near its key coastal export facilities.

Lastly, the company highlighted its continued focus on portfolio optimization, which could include asset divestitures. Proceeds from any divestitures would be used for general purposes, such as investments in high-return projects as well as debt reduction.

Third Quarter 2019 Outlook
Refining & Marketing Segment:
 
 
Refining operating costs per barrel(a)(b)
$
5.90

Distribution costs (in millions)(a)
$
1,300

Refining planned turnaround costs (in millions)(a)
$
155

Depreciation and amortization (in millions)(a)
$
420

 
 
 
Refinery throughputs (mbpd):
 
 
    Crude oil refined
 
2,900

    Other charge and blendstocks
 
150

        Total
 
3,050

 
 
 
(a) 
We revised our Refining & Marketing segment supplemental reporting in the second quarter. Costs formerly included in MPC’s direct operating costs category are now reported in three categories: operating costs, planned turnaround costs, and depreciation and amortization. We also report distribution costs which are primarily related to transportation and marketing of refined products, including fees paid to MPLX and ANDX.
(b) 
Includes refining major maintenance and operating costs. Excludes turnaround and depreciation and amortization expenses.

Retail Segment:
Range
Speedway fuel sales (millions of gallons)
 
2,525

 
 
2,675

Merchandise sales (in $ millions)
 
1,625

 
 
1,725

 
 
 
 
 
 
Corporate and unallocated items (in $ millions)
 
190

 
 
 


Conference Call

At 9:30 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 “2019 Second-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 https://www.marathonpetroleum.com.

###

About Marathon Petroleum Corporation

Marathon Petroleum Corporation (MPC) is a leading, integrated, downstream energy company headquartered in Findlay, Ohio. The company operates the nation’s largest refining system with more than 3 million barrels per day of crude oil capacity across 16 refineries. MPC’s marketing system includes branded locations across the United States, including Marathon brand retail outlets. Speedway LLC, an MPC subsidiary, owns and operates retail convenience stores across the United States. MPC also owns the general partner and majority limited partner interest in MPLX LP, a midstream company which owns and operates gathering, processing, and fractionation assets, as well as crude oil and light product transportation and logistics infrastructure. More information is available at www.marathonpetroleum.com.


Investor Relations Contacts: (419) 421-2071
Kristina Kazarian, Vice President, Investor Relations
Taryn Erie, Manager, Investor Relations
Doug Wendt, Manager, Investor Relations

Media Contacts:
Hamish Banks, Vice President, Communications (419) 421-2521
Jamal Kheiry, Manager, Communications (419) 421-3312


References to Earnings and Defined Terms
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. Discretionary free cash flow is defined as operating cash flow less maintenance and regulatory capital.

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, MPC’s acquisition of Andeavor and include expectations, estimates and projections concerning the business and operations, strategy 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,“ “policy,” “position,” “potential,” “predict,” “priority,” “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


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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; risks related to the acquisition of Andeavor Logistics LP by MPLX LP (MPLX), including the risk that anticipated opportunities and any other synergies from or anticipated benefits of the transaction may not be fully realized or may take longer to realize than expected, including whether the transaction will be accretive within the expected timeframe or at all, or disruption from the transaction making it more difficult to maintain relationships with customers, employees or suppliers; the ability to complete any divestitures on commercially reasonable terms and/or within the expected timeframe, and the effects of any such divestitures on the business, financial condition, results of operations and cash flows; 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; the ability to manage disruptions in credit markets or changes to credit ratings; 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 and expected investment; share repurchase authorizations, including the timing and amounts of any common stock repurchases; the adequacy of capital resources and liquidity, including but not limited to, availability of sufficient cash flow to execute business plans and to effect any share repurchases or dividend increases, including within the expected timeframe; the effect of restructuring or reorganization of business components; the potential effects of judicial or other proceedings on the 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; 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, 2018, filed with the SEC. Copies of MPC's Form 10-K are available on the SEC website, MPC's website at https://www.marathonpetroleum.com/Investors/ 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.


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.


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Consolidated Statements of Income (Unaudited)

Three Months Ended 
June 30,
 
Six Months Ended 
June 30,
(In millions, except per-share data)
 
2019
 
 
2018
 
 
2019
 
 
2018
Revenues and other income:
 
 
 
 
 
 
 
 
 
 
 
    Sales and other operating revenues
$
33,547

 
$
22,317

 
$
61,814

 
$
41,183

    Income from equity method investments
 
107

 
 
80

 
 
206

 
 
166

    Net gain on disposal of assets
 
4

 
 
3

 
 
218

 
 
5

    Other income
 
30

 
 
45

 
 
65

 
 
75

        Total revenues and other income
 
33,688

 
 
22,445

 
 
62,303

 
 
41,429

Costs and expenses:
 
 
 
 
 
 
 
 
 
 
 
    Cost of revenues (excludes items below)
 
29,682

 
 
19,655

 
 
55,642

 
 
37,166

    Depreciation and amortization
 
886

 
 
533

 
 
1,805

 
 
1,061

    Selling, general and administrative expenses
 
904

 
 
424

 
 
1,785

 
 
826

    Other taxes
 
174

 
 
122

 
 
360

 
 
225

        Total costs and expenses
 
31,646

 
 
20,734

 
 
59,592

 
 
39,278

Income from operations
 
2,042

 
 
1,711

 
 
2,711

 
 
2,151

    Net interest and other financial costs
 
322

 
 
195

 
 
628

 
 
378

Income before income taxes
 
1,720

 
 
1,516

 
 
2,083

 
 
1,773

    Provision for income taxes
 
353

 
 
281

 
 
457

 
 
303

Net income
 
1,367

 
 
1,235

 
 
1,626

 
 
1,470

Less net income attributable to:
 
 
 
 
 
 
 
 
 
 
 
Redeemable noncontrolling interest
 
21

 
 
20

 
 
41

 
 
36

Noncontrolling interests
 
240

 
 
160

 
 
486

 
 
342

Net income attributable to MPC
$
1,106

 
$
1,055

 
$
1,099

 
$
1,092

 
 
 
 
 
 
 
 
 
 
 
 
Per-share data
 
 
 
 
 
 
 
 
 
 
 
Basic:
 
 
 
 
 
 
 
 
 
 
 
    Net income attributable to MPC per share
$
1.67

 
$
2.30

 
$
1.65

 
$
2.34

    Weighted average shares:
 
662

 
 
459

 
 
667

 
 
467

Diluted:
 
 
 
 
 
 
 
 
 
 
 
    Net income attributable to MPC per share
$
1.66

 
$
2.27

 
$
1.63

 
$
2.31

    Weighted average shares:
 
666

 
 
464

 
 
672

 
 
472

 
 
 
 
 
 
 
 
 
 
 
 



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Income Summary (Unaudited)
 
Three Months Ended 
June 30,
 
Six Months Ended 
June 30,
(In millions)
 
2019(a)
 
 
2018
 
 
2019(a)
 
 
2018
Income from Operations by segment
 
 
 
 
 
 
 
 
 
 
 
  Refining & Marketing
$
906

 
$
1,025

 
$
572

 
$
892

  Retail
 
493

 
 
159

 
 
663

 
 
254

  Midstream
 
878

 
 
617

 
 
1,786

 
 
1,184

  Items not allocated to segments:
 
 
 
 
 
 
 
 
 
 
 
      Corporate and other unallocated items
 
(179
)
 
 
(81
)
 
 
(370
)
 
 
(170
)
      Capline restructuring gain
 

 
 

 
 
207

 
 

      Transaction-related costs(b)
 
(34
)
 
 
(10
)
 
 
(125
)
 
 
(10
)
      Litigation
 
(22
)
 
 

 
 
(22
)
 
 

      Impairments
 

 
 
1

 
 

 
 
1

Income from operations
 
2,042

 
 
1,711

 
 
2,711

 
 
2,151

Net interest and other financial costs
 
322

 
 
195

 
 
628

 
 
378

Income before income taxes
 
1,720

 
 
1,516

 
 
2,083

 
 
1,773

Provision for income taxes
 
353

 
 
281

 
 
457

 
 
303

Net income
 
1,367

 
 
1,235

 
 
1,626

 
 
1,470

Less net income attributable to:
 
 
 
 
 
 
 
 
 
 
 
Redeemable noncontrolling interest
 
21

 
 
20

 
 
41

 
 
36

Noncontrolling interests
 
240

 
 
160

 
 
486

 
 
342

Net income attributable to MPC
$
1,106

 
$
1,055

 
$
1,099

 
$
1,092

 
 
 
 
 
 
 
 
 
 
 
 
(a) 
Includes the results of Andeavor from the October 1, 2018 acquisition date forward.
(b) 
Includes costs related to the Andeavor acquisition including financial advisor and legal fees, employee severance, and other expenses.


     
Capital Expenditures and Investments (Unaudited)
 
Three Months Ended 
June 30,
 
Six Months Ended 
June 30,
(In millions)
 
2019(a)
 
 
2018
 
 
2019(a)
 
 
2018
Refining & Marketing
$
430

 
$
196

 
$
824

 
$
387

Retail
 
120

 
 
88

 
 
193

 
 
127

Midstream
 
814

 
 
601

 
 
1,637

 
 
1,083

Corporate and Other(b)
 
38

 
 
33

 
 
79

 
 
69

    Total
$
1,402

 
$
918

 
$
2,733

 
$
1,666

 
 
 
 
 
 
 
 
 
 
 
 
(a) 
Includes the results of Andeavor from the October 1, 2018 acquisition date forward.
(b) 
Includes capitalized interest of $34 million, $16 million, $65 million and $34 million, respectively.



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Refining & Marketing Operating Statistics (Unaudited)
 
Three Months Ended 
June 30,
 
Six Months Ended 
June 30,
 
 
2019
 
 
2018
 
 
2019
 
 
2018
Refining & Marketing margin per barrel(a)
$
15.24

 
$
15.40

 
$
13.23

 
$
13.08

Less:
 
 
 
 
 
 
 
 
 
 
 
Refining operating costs per barrel(b)
 
5.35

 
 
4.19

 
 
5.47

 
 
4.72

Distribution costs per barrel(c)
 
4.48

 
 
4.17

 
 
4.56

 
 
3.93

Other per barrel(d)
 
(0.04
)
 
 
(0.18
)
 
 
(0.06
)
 
 
(0.14
)
Refining planned turnaround costs per barrel
 
0.83

 
 
0.33

 
 
0.75

 
 
0.66

Depreciation and amortization per barrel
 
1.44

 
 
1.36

 
 
1.49

 
 
1.41

Refining & Marketing segment income per barrel
$
3.18

 
$
5.53

 
$
1.02

 
$
2.50

 
 
 
 
 
 
 
 
 
 
 
 
Refining & Marketing refined product sales volume
(mbpd)(e)
 
3,814

 
 
2,392

 
 
3,742

 
 
2,327

Crude oil capacity utilization (percent)(f)
 
97

 
 
100

 
 
96

 
 
96

Refinery throughputs (mbpd):(g)
 
 
 
 
 
 
 
 
 
 
 
    Crude oil refined
 
2,937

 
 
1,878

 
 
2,902

 
 
1,812

    Other charge and blendstocks
 
198

 
 
160

 
 
207

 
 
160

        Total
 
3,135

 
 
2,038

 
 
3,109

 
 
1,972

Sour crude oil throughput (percent)
 
47

 
 
55

 
 
49

 
 
53

Sweet crude oil throughput (percent)
 
53

 
 
45

 
 
51

 
 
47

Refined product yields (mbpd):(g)
 
 
 
 
 
 
 
 
 
 
 
    Gasoline
 
1,528

 
 
970

 
 
1,531

 
 
943

    Distillates
 
1,080

 
 
691

 
 
1,086

 
 
651

    Propane
 
57

 
 
40

 
 
55

 
 
35

    Feedstocks and special products
 
370

 
 
278

 
 
350

 
 
283

    Heavy fuel oil
 
51

 
 
27

 
 
48

 
 
31

    Asphalt
 
83

 
 
72

 
 
81

 
 
65

        Total
 
3,169

 
 
2,078

 
 
3,151

 
 
2,008

(a) 
Sales revenue less cost of refinery inputs and purchased products, divided by total refinery throughputs.
(b) 
Includes refining major maintenance and operating costs. Excludes turnaround and depreciation and amortization expense.
(c) 
Includes fees paid to our two sponsored master limited partnerships, MPLX and ANDX, on a per barrel throughput basis, these fees were $2.80, $3.21, $2.81 and $3.01, respectively. Excludes depreciation and amortization expense.
(d) 
Includes income from equity method investments, net gain on disposal of assets and other income.
(e) 
Includes intersegment sales.
(f) 
Based on calendar day capacity, which is an annual average that includes downtime for planned maintenance and other normal operating activities.
(g) 
Excludes inter-refinery volumes of 102 mbpd, 64 mbpd, 88 mbpd and 53 mbpd, respectively.





8




Refining & Marketing Operating Statistics by Region (Unaudited)
 
Three Months Ended 
June 30,
 
Six Months Ended 
June 30,
 
 
2019
 
 
2018
 
 
2019
 
 
2018
Gulf Coast
 
 
 
 
 
 
 
 
 
 
 
Refining & Marketing margin dollars per barrel(a)
$
9.32

 
$
N/A

 
$
8.58

 
$
N/A

Refining operating costs per barrel(b)
$
4.03

 
$
3.69

 
$
3.95

 
 
4.47

Refining planned turnaround costs per barrel
$
0.23

 
$
0.08

 
$
0.20

 
 
0.72

Refining depreciation and amortization per barrel
$
1.03

 
$
0.99

 
$
1.08

 
 
1.04

 
 
 
 
 
 
 
 
 
 
 
 
Refinery throughputs (mbpd):(c)
 
 
 
 
 
 
 
 
 
 
 
    Crude oil refined
 
1,154

 
 
1,156

 
 
1,162

 
 
1,106

    Other charge and blendstocks
 
177

 
 
190

 
 
173

 
 
179

        Total
 
1,331

 
 
1,346

 
 
1,335

 
 
1,285

Sour crude oil throughput (percent)
 
59

 
 
65

 
 
61

 
 
63

Sweet crude oil throughput (percent)
 
41

 
 
35

 
 
39

 
 
37

Refined product yields (mbpd):(c)
 
 
 
 
 
 
 
 
 
 
 
    Gasoline
 
564

 
 
570

 
 
569

 
 
552

    Distillates
 
440

 
 
458

 
 
443

 
 
410

    Propane
 
29

 
 
26

 
 
28

 
 
22

    Feedstocks and special products
 
293

 
 
290

 
 
293

 
 
294

    Heavy fuel oil
 
15

 
 
16

 
 
14

 
 
20

    Asphalt
 
21

 
 
23

 
 
21

 
 
20

        Total
 
1,362

 
 
1,383

 
 
1,368

 
 
1,318

 
 
 
 
 
 
 
 
 
 
 
 
Mid-Continent
 
 
 
 
 
 
 
 
 
 
 
Refining & Marketing margin per barrel(a)
$
20.21

 
$
N/A

 
$
17.84

 
$
N/A

Refining operating costs per barrel(b)
$
4.82

 
$
4.70

 
$
5.21

 
$
4.80

Refining planned turnaround costs per barrel
$
0.27

 
$
0.76

 
$
0.47

 
$
0.51

Refining depreciation and amortization per barrel
$
1.46

 
$
1.66

 
$
1.55

 
$
1.71

 
 
 
 
 
 
 
 
 
 
 
 
Refinery throughputs (mbpd):(c)
 
 
 
 
 
 
 
 
 
 
 
    Crude oil refined
 
1,155

 
 
722

 
 
1,106

 
 
706

    Other charge and blendstocks
 
48

 
 
34

 
 
52

 
 
34

        Total
 
1,203

 
 
756

 
 
1,158

 
 
740

Sour crude oil throughput (percent)
 
28

 
 
39

 
 
27

 
 
38

Sweet crude oil throughput (percent)
 
72

 
 
61

 
 
73

 
 
62

Refined product yields (mbpd):(c)
 
 
 
 
 
 
 
 
 
 
 
    Gasoline
 
626

 
 
400

 
 
612

 
 
391

    Distillates
 
412

 
 
233

 
 
400

 
 
241

    Propane
 
20

 
 
14

 
 
19

 
 
13

    Feedstocks and special products
 
71

 
 
52

 
 
55

 
 
42

    Heavy fuel oil
 
16

 
 
11

 
 
16

 
 
11

    Asphalt
 
61

 
 
49

 
 
59

 
 
45

        Total
 
1,206

 
 
759

 
 
1,161

 
 
743



9




 
Three Months Ended 
June 30,
 
Six Months Ended 
June 30,
 
 
2019
 
 
2018
 
 
2019
 
 
2018
West Coast
 
 
 
 
 
 
 
 
 
 
 
Refining & Marketing margin per barrel(a)
$
17.77

 
$
N/A

 
$
14.33

 
$
N/A

Refining operating costs per barrel(b)
$
8.01

 
$

 
$
8.10

 
$

Refining planned turnaround costs per barrel
$
2.80

 
$

 
$
2.18

 
$

Refining depreciation and amortization per barrel
$
1.29

 
$

 
$
1.31

 
$

 
 
 
 
 
 
 
 
 
 
 
 
Refinery throughputs (mbpd):(c)
 
 
 
 
 
 
 
 
 
 
 
    Crude oil refined
 
628

 
 

 
 
634

 
 

    Other charge and blendstocks
 
75

 
 

 
 
70

 
 

        Total
 
703

 
 

 
 
704

 
 

Sour crude oil throughput (percent)
 
58

 
 

 
 
66

 
 

Sweet crude oil throughput (percent)
 
42

 
 

 
 
34

 
 

Refined product yields (mbpd):(c)
 
 
 
 
 
 
 
 
 
 
 
    Gasoline
 
338

 
 

 
 
350

 
 

    Distillates
 
228

 
 

 
 
243

 
 

    Propane
 
8

 
 

 
 
8

 
 

    Feedstocks and special products
 
104

 
 

 
 
84

 
 

    Heavy fuel oil
 
24

 
 

 
 
24

 
 

    Asphalt
 
1

 
 

 
 
1

 
 

        Total
 
703

 
 

 
 
710

 
 

 
 
 
 
 
 
 
 
 
 
 
 
(a) 
Sales revenue less cost of refinery inputs and purchased products, divided by refinery throughputs, excluding inter-refinery transfer volumes.
(b)
Includes refining major maintenance and operating costs. Excludes turnaround and depreciation and amortization expense.
(c) 
Includes inter-refinery transfer volumes.

Retail Operating Statistics (Unaudited)
 
Three Months Ended 
June 30,
 
Six Months Ended 
June 30,
 
 
2019
 
 
2018
 
 
2019
 
 
2018
Speedway fuel sales (millions of gallons)
 
1,957

 
 
1,450

 
 
3,828

 
 
2,843

Direct dealer fuel sales (millions of gallons)
 
646

 
 
 N/A
 
 
1,276

 
 
 N/A
Retail fuel margin (dollars per gallon)(a)
$
0.2666

 
$
0.1645

 
$
0.2200

 
$
0.1604

Merchandise sales (in millions)
$
1,620

 
$
1,285

 
$
3,033

 
$
2,414

Merchandise margin (in millions)
$
471

 
$
366

 
$
878

 
$
685

Merchandise margin percent
 
29.1
 %
 
 
28.5
 %
 
 
29.0
 %
 
 
28.4
 %
Same store gasoline sales volume (period over period)(b)
 
(2.4
)%
 
 
(2.6
)%
 
 
(2.8
)%
 
 
(2.1
)%
Same store merchandise sales (period over period)(b)(c)
 
6.3
 %
 
 
2.9
 %
 
 
5.9
 %
 
 
2.6
 %
Total convenience stores at period-end
 
3,913

 
 
2,744

 
 
 
 
 
 
Direct dealer locations at period-end
 
1,062

 
 
 N/A
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(a) 
Includes bankcard processing fees (as applicable).
(b) 
Same store comparison includes only locations owned at least 13 months.
(c) 
Excludes cigarettes.


10





Midstream Operating Statistics (Unaudited)
 
Three Months Ended 
June 30,
 
Six Months Ended 
June 30,
 
 
2019
 
 
2018
 
 
2019
 
 
2018
Pipeline throughputs (mbpd)(a)
 
5,178

 
 
3,789

 
 
5,214

 
 
3,625

Terminal throughput (mbpd)
 
3,287

 
 
1,485

 
 
3,254

 
 
1,465

Gathering system throughput (million cubic feet per day)(b)
 
5,948

 
 
4,295

 
 
5,950

 
 
4,233

Natural gas processed (million cubic feet per day)(b)
 
8,535

 
 
6,850

 
 
8,528

 
 
6,740

C2 (ethane) + NGLs fractionated (mbpd)(b)
 
520

 
 
439

 
 
517

 
 
432

 
 
 
 
 
 
 
 
 
 
 
 
(a) 
Includes common-carrier pipelines and private pipelines contributed to MPLX. Excludes equity method affiliate pipeline volumes.
(b) 
Includes amounts related to unconsolidated equity method investments on a 100% basis.


Select Financial Data (Unaudited)
(In millions)
June 30, 2019
 
March 31 
2019
Cash and cash equivalents
$
1,247

 
$
877

MPC debt
 
9,142

 
 
9,150

MPLX debt
 
14,036

 
 
13,833

ANDX debt
 
5,229

 
 
5,132

Total consolidated debt
 
28,407

 
 
28,115

Redeemable noncontrolling interest
 
1,005

 
 
1,004

Equity
 
43,061

 
 
42,858

Shares outstanding
 
660

 
 
667

 
 
 
 
 
 

 
Three Months Ended 
June 30,
 
Six Months Ended 
June 30,
 
 
2019
 
 
2018
 
 
2019
 
 
2018
Cash provided by operations
$
2,622

 
$
2,386

 
$
4,245

 
$
2,249

Dividends paid per share
$
0.53

 
$
0.46

 
$
1.06

 
$
0.92

 
 
 
 
 
 
 
 
 
 
 
 


Non-GAAP Financial Measures
Management uses certain financial measures to evaluate our operating performance that are calculated and presented on the basis of methodologies other than in accordance with GAAP. We believe these non-GAAP financial measures are useful to investors and analysts to assess our ongoing financial performance because, when reconciled to their most comparable GAAP financial 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. The non-GAAP financial measures we use are as follows:



11




Adjusted Net Income Attributable to MPC
Adjusted net income attributable to MPC is defined as net income attributable to MPC excluding the items in the table below, along with their related income tax effect. We have excluded these items because we believe that they are not indicative of our core operating performance and that their exclusion results in an important measure of our ongoing financial performance to better assess our underlying business results and trends.

Adjusted Diluted Earnings Per Share
Adjusted diluted earnings per share is defined as adjusted net income attributable to MPC divided by the number of weighted-average shares outstanding in the applicable period, assuming dilution.


Reconciliation of Net Income Attributable to MPC to Adjusted Net Income Attributable to MPC
 
Three Months Ended 
June 30,
 
Six Months Ended 
June 30,
(In millions)
 
2019
 
 
2018
 
 
2019
 
 
2018
Net income attributable to MPC
$
1,106

 
$
1,055

 
$
1,099

 
$
1,092

Pre-tax adjustments:
 
 
 
 
 
 
 
 
 
 
 
Capline restructuring gain
 

 
 

 
 
(207
)
 
 

Transaction-related costs
 
34

 
 
10

 
 
125

 
 
10

Litigation
 
22

 
 

 
 
22

 
 

Impairments
 

 
 
(1
)
 
 

 
 
(1
)
Out of period tax adjustment
 

 
 

 
 
36

 
 

Tax impact of adjustments(a)
 
(14
)
 
 
(2
)
 
 
14

 
 
(2
)
Adjusted net income attributable to MPC
$
1,148

 
$
1,062

 
$
1,089

 
$
1,099

 
 
 
 
 
 
 
 
 
 
 
 
Diluted earnings per share
$
1.66

 
$
2.27

 
$
1.63

 
$
2.31

Adjusted diluted earnings per share(b)
$
1.73

 
$
2.29

 
$
1.62

 
$
2.33

(a) 
We generally tax effect taxable adjustments to reported earnings using a combined federal and state statutory rate of approximately 24 percent.
(b) 
Weighted-average diluted shares outstanding and income allocated to participating securities, if applicable, in the adjusted earnings per share calculation are the same as those used in the GAAP diluted earnings per share calculation.



Adjusted EBITDA & Segment Adjusted EBITDA
Adjusted EBITDA and Segment Adjusted EBITDA represent earnings before net interest and other financial costs, income taxes, depreciation and amortization expense as well as adjustments to exclude refining turnaround costs and items not allocated to segment results. We believe these non-GAAP financial measures are useful to investors and analysts to analyze and compare our operating performance between periods by excluding items that do not reflect the core operating results of our business or in the case of turnarounds, which provide benefits over multiple years. We also believe that excluding turnaround costs from this metric is useful for comparability to other companies as certain of our competitors defer these costs and amortize them between turnarounds. Adjusted EBITDA and Segment Adjusted EBITDA should not be considered as a substitute for, or superior to segment income (loss) from operations, 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 GAAP. Adjusted EBITDA and Segment Adjusted EBITDA may not be comparable to similarly titled measures reported by other companies.


12





Reconciliation of Net Income Attributable to MPC to Adjusted EBITDA
 
Three Months Ended 
June 30,
 
Six Months Ended 
June 30,
(In millions)
 
2019
 
 
2018
 
 
2019
 
 
2018
Net income attributable to MPC
$
1,106

 
$
1,055

 
$
1,099

 
$
1,092

Plus (Less):
 
 
 
 
 
 
 
 
 
 
 
Net interest and other financial costs
 
322

 
 
195

 
 
628

 
 
378

Net income attributable to noncontrolling interests
 
261

 
 
180

 
 
527

 
 
378

Provision for income taxes
 
353

 
 
281

 
 
457

 
 
303

Depreciation and amortization
 
886

 
 
533

 
 
1,805

 
 
1,061

Refining planned turnaround costs
 
237

 
 
62

 
 
423

 
 
235

Capline restructuring gain
 

 
 

 
 
(207
)
 
 

Transaction-related costs
 
34

 
 
10

 
 
125

 
 
10

Litigation
 
22

 
 

 
 
22

 
 

Impairments
 

 
 
(1
)
 
 

 
 
(1
)
Adjusted EBITDA
$
3,221

 
$
2,315

 
$
4,879

 
$
3,456



Reconciliation of Segment Income From Operations to Segment Adjusted EBITDA and Adjusted EBITDA
 
Three Months Ended 
June 30,
 
Six Months Ended 
June 30,
(In millions)
 
2019
 
 
2018
 
 
2019
 
 
2018
Refining & Marketing Segment
 
 
 
 
 
 
 
 
 
 
 
Segment income from operations
$
906

 
$
1,025

 
$
572

 
$
892

Add: Depreciation and amortization
 
411

 
 
252

 
 
838

 
 
504

        Refining planned turnaround costs
 
237

 
 
62

 
 
423

 
 
235

Segment Adjusted EBITDA
$
1,554

 
$
1,339

 
$
1,833

 
$
1,631

Retail Segment
 
 
 
 
 
 
 
 
 
 
 
Segment income from operations
$
493

 
$
159

 
$
663

 
$
254

Add: Depreciation and amortization
 
130

 
 
73

 
 
256

 
 
152

Segment EBITDA
$
623

 
$
232

 
$
919

 
$
406

Midstream Segment
 
 
 
 
 
 
 
 
 
 
 
Segment income from operations
$
878

 
$
617

 
$
1,786

 
$
1,184

Add: Depreciation and amortization
 
318

 
 
191

 
 
625

 
 
372

Segment EBITDA
$
1,196

 
$
808

 
$
2,411

 
$
1,556

 
 
 
 
 
 
 
 
 
 
 
 
Segment Adjusted EBITDA
$
3,373

 
$
2,379

 
$
5,163

 
$
3,593

Corporate and other unallocated items
 
(179
)
 
 
(81
)
 
 
(370
)
 
 
(170
)
Add: Depreciation and amortization
 
27

 
 
17

 
 
86

 
 
33

Adjusted EBITDA
$
3,221

 
$
2,315

 
$
4,879

 
$
3,456





13




Refining & Marketing Margin
Refining margin is defined as sales revenue less the cost of refinery inputs and purchased products and excludes any LCM inventory market adjustment.
Reconciliation of Refining & Marketing Income from Operations to Refining & Marketing Margin
 
Three Months Ended 
June 30,
 
Six Months Ended 
June 30,
(In millions)
 
2019
 
 
2018
 
 
2019
 
 
2018
Refining & Marketing income from operations
$
906

 
$
1,025

 
$
572

 
$
892

Plus (Less):
 
 
 
 
 
 
 
 
 
 
 
Refining operating costs(a)
 
1,527

 
 
776

 
 
3,079

 
 
1,685

Refining depreciation and amortization
 
368

 
 
235

 
 
755

 
 
471

Refining planned turnaround costs
 
237

 
 
62

 
 
423

 
 
235

Distribution costs(b)
 
1,277

 
 
774

 
 
2,567

 
 
1,403

Distribution depreciation and amortization
 
43

 
 
17

 
 
83

 
 
33

Income from equity method investments
 
(3
)
 
 
(4
)
 
 
(4
)
 
 
(7
)
Net gain on disposal of assets
 

 
 
(3
)
 
 
(6
)
 
 
(4
)
Other income
 
(8
)
 
 
(27
)
 
 
(22
)
 
 
(39
)
Refining & Marketing margin
$
4,347

 
$
2,855

 
$
7,447

 
$
4,669

 
 
 
 
 
 
 
 
 
 
 
 
Refining & Marketing margin by region:
 
 
 
 
 
 
 
 
 
 
 
Gulf Coast
$
1,090

 
$
N/A

 
$
2,007

 
$
N/A

Mid-Continent
 
2,193

 
 
N/A

 
 
3,710

 
 
N/A

West Coast
 
1,064

 
 
N/A

 
 
1,730

 
 
N/A

Refining & Marketing margin
$
4,347

 
$
N/A

 
$
7,447

 
$
N/A

(a) 
Includes refining major maintenance and operating costs. Excludes turnaround and depreciation and amortization expense.
(b)  
Includes fees paid to our two sponsored master limited partnerships, MPLX and ANDX, of $798 million, $596 million, $1,584 million and $1,074 million, respectively. Excludes depreciation and amortization expense.


14




Retail Fuel Margin
Retail fuel margin is defined as the price paid by consumers or direct dealers less the cost of refined products, including transportation, consumer excise taxes and bankcard processing fees (where applicable) and excluding any LCM inventory market adjustment.
Retail Merchandise Margin
Retail merchandise margin is defined as the price paid by consumers less the cost of merchandise.
Reconciliation of Retail Income from Operations to Retail Total Margin
 
Three Months Ended 
June 30,
 
Six Months Ended 
June 30,
(in millions)
 
2019
 
 
2018
 
 
2019
 
 
2018
Retail income from operations
$
493

 
$
159

 
$
663

 
$
254

Plus (Less):
 
 
 
 
 
 
 
 
 
 
 
Operating, selling, general and administrative expenses
 
597

 
 
401

 
 
1,180

 
 
785

Depreciation and amortization
 
130

 
 
73

 
 
256

 
 
152

Income from equity method investments
 
(21
)
 
 
(19
)
 
 
(38
)
 
 
(33
)
Net gain on disposal of assets
 

 
 

 
 
(2
)
 
 

Other income
 
(4
)
 
 
(2
)
 
 
(6
)
 
 
(3
)
Retail total margin
$
1,195

 
$
612

 
$
2,053

 
$
1,155

 
 
 
 
 
 
 
 
 
 
 
 
Retail total margin:
 
 
 
 
 
 
 
 
 
 
 
Fuel margin
$
694

 
$
239

 
$
1,123

 
$
456

Merchandise margin
 
471

 
 
366

 
 
878

 
 
685

Other margin
 
30

 
 
7

 
 
52

 
 
14

Retail total margin
$
1,195

 
$
612

 
$
2,053

 
$
1,155





15

(Back To Top)

Section 3: EX-99.2 (EXHIBIT 99.2)

mpc2q19slidesfinal
Second Quarter 2019 Conference Call August 1, 2019


 
Forward-Looking Statements and Additional Information Forward-Looking Statements This presentation 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, MPC’s acquisition of Andeavor and include expectations, estimates and projections concerning the business and operations, strategy 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,“ “policy,” "position," "potential," "predict," “priority,” "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; risks related to the acquisition of Andeavor Logistics LP by MPLX LP (MPLX), including the risk that anticipated opportunities and any other synergies from or anticipated benefits of the transaction may not be fully realized or may take longer to realize than expected, including whether the transaction will be accretive within the expected timeframe or at all, or disruption from the transaction making it more difficult to maintain relationships with customers, employees or suppliers; the ability to complete any divestitures on commercially reasonable terms and/or within the expected timeframe, and the effects of any such divestitures on the business, financial condition, results of operations and cash flows; 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; the ability to manage disruptions in credit markets or changes to credit ratings; 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 and expected investment; share repurchase authorizations, including the timing and amounts of any common stock repurchases; the adequacy of capital resources and liquidity, including but not limited to, availability of sufficient cash flow to execute business plans and to effect any share repurchases or dividend increases, including within the expected timeframe; the effect of restructuring or reorganization of business components; the potential effects of judicial or other proceedings on the 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; 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, 2018, filed with the SEC. Copies of MPC's Form 10-K are available on the SEC website, MPC's website at https://www.marathonpetroleum.com/Investors/ 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. 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 respective 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. Non-GAAP Financial Measures Adjusted earnings, adjusted EBITDA, cash provided from operations before changes in working capital, Refining and Marketing margin and Retail total margin are non-GAAP financial measures provided in this presentation. Reconciliations to the nearest GAAP financial measures are included in the Appendix to this presentation. These non-GAAP financial measures are not defined by GAAP and should not be considered in isolation or as an alternative to net income attributable to MPC, net cash provided by (used in) operating, investing and financing activities, Refining and Marketing income from operations, Speedway income from operations or other financial measures prepared in accordance with GAAP. 2


 
Strategic Overview & Updates 3


 
Midstream Strategic Update Successfully combined MPLX and ANDX into one public company . Continue focus on portfolio optimization . Streamline capex focusing on most attractive returns . Advance development of integrated Permian crude oil and natural gas logistics systems . Invest in logistics projects to enhance MPC’s integrated value . Expand third-party business to capture additional profit Disciplined investments and enhanced cash flow stability 4


 
Second Quarter Highlights $ Millions (unless otherwise noted) 2Q19 Adjusted Earnings per Share ($/share)(a) $1.73 Adjusted EBITDA $3,221 Net Income $1,106 Cash from Operations, excluding Working Capital $2,823 Realized Synergies $270 Share Repurchases + Dividends $852 (a) Based on weighted average diluted shares of 666 million shares 5


 
Second Quarter Highlights (cont’d) 2Q 2019 vs. 1Q 2019 Adjusted EBITDA Reconciliation to Net Income 3,500 +1,275 3,221 3,000 -20 -56 2,500 2,000 +327 1,658 -1,123 $MM 1,500 -19 1,106 1,000 -936 500 0 1Q 2019 Midstream Retail Refining & Corporate and 2Q 2019 Transaction Turnaround Interest, 2Q 2019 Net Adj. EBITDA Marketing Unallocated Adj. EBITDA and Litigation and D&A Taxes, and NCI Income Items 6


 
Realized Synergies – 2Q 2019 . 2Q19 realized synergies of $270 million, includes $34 million of one-time synergies (a) Refining & Marketing Retail Corporate ($ MM) ($ MM) ($ MM) Total: 199 Total: 32 Total: 39 One-time(a): 23 One-time(a): 11 One-time(a): - Synergy Examples: . Turnaround cost savings and . Goods and services contract incremental earnings renegotiations . Catalyst re-use cost savings . Midwest crude supply optimization . Improved catcracker yields . Retail labor model optimization . Improved gasoline blending . Reduction in overhead costs (a) One-time: Synergies not expected to recur past 2019 7


 
Realized Synergies – YTD (a) Capex Reduction Cost Reduction Profit Enhancement 403 288 199 89 68 47 32 39 15 29 1Q19 2Q19 YTD'19 1Q19 2Q19 YTD'19 1Q19 2Q19 YTD'19 YTD'19 Refining & Retail Corporate Total Marketing On track to achieve expected 2019 gross run-rate synergies of up to $600 million (a) Includes synergies not expected to recur past 2019 8


 
Midstream EBITDA 2Q 2019 vs. 1Q 2019 1,400 . MPLX gathered, processed, 1,215 +7 1,196 and fractionated volumes 1,200 -16 -10 up >13% versus 2Q18 1,000 . Expect to add 600 MMcf/d 800 of processing capacity in $MM second half of 2019 600 400 . Progressed multiple crude and natural gas pipeline 200 initiatives (Whistler, Capline, W2W, Gray Oak) 0 1Q 2019 MPLX ANDX Other 2Q 2019 EBITDA Midstream EBITDA 9


 
Retail EBITDA 2Q 2019 vs. 1Q 2019 . Strong fuel margins 800 +64 +12 . 6.3% year-over-year increase 623 600 +265 in same store merchandise -14 sales 400 . Closed on acquisition of 33 $MM 296 stores in July 200 . Converted 407 stores to Speedway since combination (700 targeted by year-end 0 1Q 2019 Fuel Merchandise Operating Other 2Q 2019 2019) EBITDA Expense EBITDA (a) (a) Reflects operating, selling, general and administrative expenses. 10


 
Refining & Marketing Adjusted EBITDA 2Q 2019 vs 1Q 2019 . Strong execution with 97% utilization 1,800 +25 +13 1,600 +398 1,554 -10 . Completed planned 1,400 maintenance at Los Angeles, 1,200 +173 Martinez, and Garyville 1,000 +676 . Capture below historical $MM 800 levels due to West Coast 600 turnarounds and non- 400 transportation fuels pricing 279 200 0 . System fully prepared for 1Q 2019 Mid-Con USGC West Coast Operating Distribution Other 2Q 2019 IMO 2020 Adj. EBITDA Margin Margin Margin Costs (a) Costs (b) Adj. EBITDA (a) Includes refining major maintenance and operating costs. Excludes refining planned turnaround and D&A expense. (b) Excludes D&A expense 11


 
Total Consolidated Cash Flow 2Q 2019 4,000 +2,823 +275 3,500 -201 MPLX +203 3,000 ANDX + 97 MPC - 8 2,500 -1,448 2,000 $MM 1,500 +88 -852 1,247 1,000 877 -315 500 0 3/31/2019 Operating Cash Working Net Debt Capital Return of Net Distributions Other 6/30/2019 Cash Balance Flow before Capital Expenditures, Capital to to NCI Cash Balance Working Capital Investments Shareholders (a) (a) $352 MM dividends plus $500 MM share repurchases Note: Excludes restricted cash 12


 
Third-Quarter 2019 Outlook Other Crude Total Depreciation Charge/ Sweet Sour Operating Distribution Planned Throughput Throughput and Feedstocks Crude Crude Cost (b) Cost (c) Turnaround (a) (a) Amortization Throughput (a) $/BBL of Total in MBPD Percent of Throughput $MM $MM $MM Throughput Gulf Coast Region 1,100 175 1,275 37% 63% $4.40 $20 $135 Mid-Con Region 1,150 50 1,200 71% 29% $5.15 $110 $160 3Q 2019 3Q West Coast Region Projected 650 50 700 47% 53% $8.70 $25