2020
ANNUAL REPORT
Table of Contents
President and CEO Letter
Operations Overview
Core Values
Financial Highlights
Sustainability
- Social Responsibility
- Leading in Sustainable Energy
- Safety and Environmental Stewardship
Board of Directors
Executive Team
1
4
6
7
8
8
9
11
12
13
On the cover: Our Dickinson, North Dakota, plant undergoing
conversion to a renewable diesel facility. Construction was
completed and production began in late 2020.
FROM THE PRESIDENT AND CEO
Fellow Shareholders,
2020 was a pivotal year for Marathon as we began a process to
transform the company, lowering our cost structure and shaping
our asset portfolio amid evolving stakeholder expectations and
opportunities created by the energy evolution. While these efforts
continue through 2021, we made significant progress during the year.
Despite the demands of COVID-19, our teams remained focused
on our core values and on their central mission. As a result, we set
a new industry benchmark for certifications in the EPA’s ENERGY
STAR® program and achieved significant improvements over 2019
in our process safety and environmental performance.
Complemented by our ongoing sustainability focus, which inspired
us to take industry-leading actions, our efforts collectively served to
enhance the company’s competitiveness and longevity amid shifting
market dynamics.
Our humanitarian and operational responses to the COVID-19
pandemic reflected our broader vision of sustainability, which
emphasizes delivering essential energy products and services to the
world in ways that create shared value for all our stakeholders – our
people, business partners, customers, communities, governments
and shareholders. We deployed more than 500,000 N95 respirator
masks to frontline healthcare workers in our local communities and
increased our employee giving match from 60% to 100%. The Marathon
Petroleum Foundation also donated $1 million to the American Red
Cross to supply critical resources.
Building Resiliency – Our Strategic Initiatives
We quickly began implementing actions to strengthen the competitive
position of our assets, improve our commercial performance and
lower our cost structure. We made significant moves in our portfolio
in 2020, which included:
• Reaching an agreement with 7-Eleven for the pending sale of our
Speedway retail business for $21 billion, which will help strengthen
our balance sheet and return capital to MPC shareholders.
• Beginning production at our Dickinson, North Dakota, renewable
diesel facility, which is the second largest facility of its kind in the
United States, designed to produce approximately 180 million
gallons per year. This facility is anticipated to reach its full rate of
production by the end of the first quarter of 2021.
• Moving forward with engineering and permitting efforts on a
project to convert our idled Martinez, California, refinery to a facility
that produces renewable transportation fuels. It is anticipated this
project would be commissioned in 2022 and eventually reach a
production capacity of approximately 730 million gallons per year.
MARATHON PETROLEUM CORPORATION I 2020 ANNUAL REPORT I 1
FROM THE PRESIDENT AND CEO
• Advancing several midstream projects that support the goal of
developing long-haul pipelines, including the Wink to Webster crude
oil pipeline, the Whistler natural gas pipeline and the reversal of the
Capline crude pipeline.
• Invested to expand our natural gas processing and fractionation
assets in the Marcellus and Permian basins, our long-term strategic
focus areas.
• Divested or announced plans to divest less strategic assets such
as the Javelina processing facility and several asphalt terminals.
To improve our commercial performance:
• We are leveraging our proximity to key supply sources and demand
hubs, so we can capture higher margins across the value chain.
• We aim to maximize value by enhancing raw material selection in
our refining segment and improving product placement.
• In midstream, we are working to grow our fee-based services
through long-term contracts to provide through-cycle cash
flow stability.
In 2020, our midstream segment, which includes MPLX, earned
$3.7 billion in income from operations, a $113 million increase from the
year before.
To lower our overall cost structure, our 2020 initiatives included:
• Indefinitely idling two higher-cost refineries and advancing plans to
convert one of them to renewable fuel production.
• Reducing our capital spending levels by more than $1.4 billion from
our initial plans for MPC and MPLX.
• Reducing our refining operating expenses by more than $1 billion
and our midstream operating expenses by more than $200 million.
• Applying strict cost management practices to reduce our overall
corporate costs.
Additionally, our 2021 capital spending outlook, excluding MPLX, is
approximately $350 million less than 2020’s total.
Sustainability - Focused on the Future
The goals of our strategic initiatives complement and further enable
our commitment to sustainability, which spans the environmental,
social and governance (ESG) dimensions of our operations. In 2020,
we strengthened our efforts to lower our carbon intensity and
produce a range of fuels that meet the needs of evolving and
emerging consumer demands, consistent with our principles for
Leading in Sustainable Energy. These principles correspond with
several of our most substantial 2020 achievements:
2
• Becoming the first independent U.S. refiner to create a company-
wide goal for reducing greenhouse gas emissions intensity and link
it to employee and executive compensation.
• Becoming the first-ever petroleum refiner to have five refineries
earn ENERGY STAR® certifications in one year.
• Establishing a program to lower methane emissions at our natural
gas gathering and processing assets that included an intensity
reduction target, as well as becoming one of the first companies
to launch a program to track and reduce freshwater withdrawal
intensity across all our refineries.
We made a significant shift and have designated $350 million
in capital spending for renewable projects in 2021, representing
25% of our capital budget, excluding MPLX, and a substantial portion
of our incremental growth capital for the year.
In 2020, we also had several accomplishments in the areas of social
and governance, including a new Human Rights Policy incorporated
in our sustainability reporting, increased participation in our Diversity
& Inclusion programs, comprehensive stakeholder engagement plans
for all major assets and sustainability performance linked to compen-
sation. These efforts contributed to MPC earning high scores from
ESG rating organizations that are monitored by institutional investment
firms. Our scores led to several recognitions, such as placement on
the Dow Jones Sustainability Index and the Forbes JUST 100. Our
comprehensive sustainability framework helps to differentiate us and
provides us with the flexibility to accommodate a variety of emerging
topics and marketplace demands.
As we look ahead in 2021, the availability of COVID-19 vaccines
provides hope for the return of global transportation fuel demand
and economic recovery. Even though many uncertainties still exist,
the world’s need for reliable, affordable and responsibly produced
energy remains important. We believe we can continue to meet this
need through our strategies that will allow us to successfully adapt
to the evolving energy landscape.
Sincerely,
Michael J. Hennigan
President and Chief Executive Officer
MARATHON PETROLEUM CORPORATION I 2020 ANNUAL REPORT I 3
OPERATIONS OVERVIEW
2.9
million
Barrels per calendar day
of crude oil refining capacity
11.8
billion
Standard cubic
feet per day of
natural gas
processing capacity
4
MPC Refinery
MPC Owned Light Product
Terminal
MPC Owned Asphalt/ Heavy Oil
Terminal
MPC Owned and Part-Owned
Marine Facility
MPC/MPLX Pipeline (a)
Cavern
MPC Domestic Marketing Area (d)
MPC International Marketing Area
Ethanol Facility
MPC Biodiesel Facility
Virent (c)
MPC Renewable Diesel Facility
Martinez Renewable Fuels Project
MPLX Owned and Part-Owned
Light Product Terminal
MPLX Owned Asphalt/Heavy Oil
Terminal
MPLX Natural Gas Processing
Complex (b)
MPLX Refining Logistics Asset
MPLX Gathering System
MPLX Owned Marine Facility
North American Retail & Marketing
~12,000
locations*
(a) Includes MPC/MPLX owned and operated lines, MPC/
MPLX interest lines operated by others and MPC/MPLX
operated lines owned by others.
(b) Includes MPLX owned and operated natural gas
processing complexes.
(c) Wholly owned subsidiary of MPC working to commercialize
the conversion of biobased feedstocks into renewable
fuels and chemicals.
(d) Area subject to change following the pending sale of
Speedway.
Illustrative representation of asset map
as of Dec. 31, 2020.
112
Owned and operated
light product and asphalt
terminals
* We expect to sell Speedway,
which represents 3,839 locations.
MARATHON PETROLEUM CORPORATION I 2020 ANNUAL REPORT I 5
CORE VALUES
Our values guide the way we treat each other and all our stakeholders.
We believe our behaviors are just as important as what we do.
Safety and Environmental Stewardship
Protecting our people and the world we all share is a priority to
MPC. We are committed to safe and environmentally responsible
operations to protect the health and safety of our employees,
contractors and communities. This commitment is reflected in our
safety systems design, our well-maintained equipment and our
focus on continuous learning and improvement.
Integrity
Integrity at MPC is more than the business conduct policies and
procedures we follow. We set high expectations for ourselves and
build trust in each other, with business partners, shareholders and
the communities where we work and live. We say what we’re going
to do — and then do it.
Respect
Respect is built upon the principle that every one of us is valuable
and contributes toward achieving our vision. We treat everyone
professionally, with courtesy, honesty and trust. We consider how
other people’s ideas can improve what we do, and we encourage
everyone to openly share their perspectives, ideas and concerns.
Inclusion
We value diversity in culture, background, perspective and experiences.
We strive to provide our employees with a collaborative, supportive
and inclusive work environment where they can maximize their
full potential for personal and business success. This happens when
our employees, contractors and other stakeholders feel valued
themselves and value others for who they are.
Collaboration
We are a company of driven, accomplished professionals who are
more than the sum of their training and experience. We actively
partner with our communities, governments and business partners
to find and create shared value, making a positive difference
together. We foster constructive, solution-oriented dialogues;
we genuinely listen to one another and seek out perspectives
different from our own.
Safety and
Environmental
Stewardship
Integrity
Respect
Inclusion
Collaboration
6
FINANCIAL HIGHLIGHTS
$21 Billion Sale of Speedway
~$4.5 billion in taxes
~$16.5 billion in net proceeds
The company continues to progress activities related to the $21 billion sale of
Speedway to 7-Eleven. We expect to use proceeds from the sale to strengthen
our balance sheet and return capital to shareholders. The arrangement includes
a 15-year fuel supply agreement and the opportunity to supply additional
7-Eleven locations.
$21
Billion
Cash Returned to Shareholders
Total Dividends Paid ($ billions)
$ Per Share
2020
1.5
$2.32
2019
1.4
$2.12
2018
1.0
$1.84
Disciplined Capital Spending in 2021*
• Approximately $350 million less than 2020
• Renewable projects will be a focus, accounting for 25 percent of $1.4 billion
capital budget
MPC Capital Spending ($ millions)
2021 MPC Capital Spending Outlook
3,066
1,748
1,400
57%
R&M
Growth
e w a bles
s Re n
t
c
e
j
o
r
P
g
n
i
o
g
On
2019
2020
2021
Outlook
*Information and related charts include Speedway and exclude MPLX.
11%
Corporate
Other
18%
R&M
Maintenance
3%
MPC Midstream
11%
Speedway
MARATHON PETROLEUM CORPORATION I 2020 ANNUAL REPORT I 7
SUSTAINABILITY
Social Responsibility
Our approach to sustainability encompasses our commitment to
creating shared value with our many stakeholders - empowering
people to achieve more, contributing to progress in our communities
and protecting the environment we all share. We report annually on
our sustainability goals, initiatives and performance in alignment
with the Sustainability Accounting Standards Board (SASB) and
Taskforce for Climate-related Financial Disclosures (TCFD) through
our Sustainability Report and Perspectives on Climate-Related
Scenarios report.
COVID-19 Response
MPC deployed more than 500,000 N95 respirator masks to 45 health
care organizations across 20 states. We also increased our employee
giving match from 60% to 100%. Additionally, the Marathon Petroleum
Foundation donated $1 million to the American Red Cross to help
supply critical resources for disaster relief and support.
Diversity and Inclusion
We have a dedicated Diversity and Inclusion (D&I) Office to manage
our companywide D&I strategy, which incorporates three pillars:
building awareness, increasing representation and ensuring success.
As an element of our D&I strategy, Employee Networks serve six
employee populations – Asian, Black, Hispanic, Veterans, Women
and LGBTQ+ – and each network has an executive sponsor. We
increased to approximately 60 Employee Network chapters across
the company, providing opportunities for meaningful connections
and support. In 2020 and 2021, MPC achieved a Human Rights
Campaign Foundation’s Corporate Equality Index score of 100,
the highest possible score.
Stakeholder Engagement Plans
Stakeholder engagement plans are in place for 100% of our major
assets. These plans help MPC leaders and teams engage stakeholders
in open dialogue to understand needs and concerns, define priorities,
identify resources and pursue shared goals. Our stakeholder
engagement is further strengthened by our commitment to partnering
and investing in communities through grants, as well as giving and
volunteerism by our team members. In 2020, our community
investment through the MPC Foundation, corporate charitable
contributions and employee giving matched by the company
totaled more than $16 million.
8
8
SUSTAINABILITY
Leading in Sustainable Energy
Our principles for Leading in Sustainable Energy guide our efforts in continuing to meet the world’s
energy needs while enhancing our environmental stewardship, including real and quantifiable
reductions in carbon emissions over time.
Lower Carbon Intensity
• Lower the carbon intensity of our operations and the products we process
• Improve the energy efficiency of our operations
• Work with others to improve energy efficiency within the manufacturing, consumer and
transportation sectors
Expand Renewable Fuels and Advanced Technologies
• Increase the volume of renewable fuels we produce and market
• Seek ways to expand the use of renewable energy in our operations
• Innovate and deploy advanced technologies that reduce environmental impact while
enhancing business performance
Conserve Natural Resources
• Advance practices and investments that conserve natural resources
• Reduce waste generated by our operations
• Reduce freshwater withdrawal intensity in our refining operations
The following targets, achievements and activities serve as proof points for our commitment to
executing on our principled sustainability approach.
Emissions Targets
• Greenhouse gas (GHG) emissions intensity: reduce Scope 1 and 2 GHG emissions per barrel-of-
oil-equivalent (BOE) processed to 30% below 2014 levels by 2030, and link annual progress to
employee and executive compensation programs.
• Focus on Methane program: lower methane emissions across our natural gas gathering and
processing assets, decreasing emissions intensity to 50% below 2016 levels by 2025.
MPC Companywide GHG Intensity Target (tonnes CO2e/thousand BOE processed)
29.9
28.3
28.0
30
28
26
24
22
20
26.1
25.3
23.8
23.7
* 2020-2030 GHG emissions
intensity is estimated and
subject to change.
2014
2015
2016
2017
2018
2019
2020
20.9
2030
TARGET
Resource Conservation
• Focus on Water program: more effectively manage the water use of our refineries through
measures anticipated to reduce freshwater withdrawal intensity 20% by 2030.
MARATHON PETROLEUM CORPORATION I 2020 ANNUAL REPORT I 9
SUSTAINABILITY
Leading in Sustainable Energy
Energy Efficiency
• In 2020, we became the first petroleum refiner ever to have five refineries receive
ENERGY STAR® certifications in one year. Additionally, we were the only petroleum refiner
to earn the ENERGY STAR® Partner of the Year – Sustained Excellence Award.
• In the past decade, our Focus on Energy program helped us avoid the equivalent of 1.8 billion
Btu/hr of energy use or roughly the same amount of energy used by about 100,000 homes.
The program’s cost savings are approximately $500 million.
Renewable Fuels and Technologies
• Our Dickinson, North Dakota, renewable diesel facility is the second largest facility of its
kind in the United States, designed to produce approximately 180 million gallons per year.
It makes renewable diesel from corn and soybean oils and is expected to reach its full rate of
production by the end of the first quarter of 2021.
• Progress continues on plans to convert our Martinez, California, refinery into a facility that
produces renewable fuels from lower carbon-intensity renewable feedstocks with an eventual
capacity of approximately 730 million gallons per year. Pending the completion of engineering
and permitting activities, commissioning is expected in 2022 with a potential build to full
capacity in 2023.
• Our Cincinnati biodiesel facility produced more than 80 million gallons of biodiesel in 2020.
We also blended approximately 84 million gallons of biodiesel into the diesel fuel that we
marketed and sold in 2020.
• The joint venture between MPC and The Andersons produced more than 435 million gallons
of ethanol in 2020 across four plants, including one in Greenville, Ohio. We also blended more
than 1.8 billion gallons of ethanol into the gasoline that we marketed and sold in 2020.
• Virent, a wholly-owned subsidiary of MPC in Madison, Wisconsin, is working to commercialize
its BioForming® process, which converts biobased feedstocks, such as sugars, into renewable
fuel. Virent operates a demonstration plant that generates data as part of moving its patented
technology forward.
DICKINSON, NORTH DAKOTA
MARTINEZ, CALIFORNIA
GREENVILLE, OHIO
MADISON, WISCONSIN
10
SUSTAINABILITY
Safety and Environmental Stewardship
As core values, safety and environmental stewardship shape how we approach and execute
every task across our facilities. In 2020, our dedicated teams demonstrated strong safety and
environmental performance, including a nearly 40% reduction in severe process safety events
over 2019 and a 40% reduction in designated environmental incidents over 2019. Our personal
safety performance continues to trend below the U.S. Refining Average.
2020 Tier 3 & 4 Designated Environmental Incidents (DEI) (Count)
135
85
50
44
39
31
DEIs include three categories of environmental incidents:
releases to the environment (air, land or water), environmental
permit exceedances and agency enforcements actions.
This chart includes legacy MPC refineries, Speedway, MPLX
Logistics and Storage, and Cincinnati Renewable Fuels. MPLX
Gathering & Processing data is included as of Jan. 1, 2016.
Legacy Andeavor asset data is included as of Jan. 1, 2018.
2015
2016
2017
2018
2019
2020
2020 Refining OSHA Recordable Rate (Incidents/200,000 hours)
0.7
0.6
0.6
U.S. Refining Average
MPC Refining
0.4
0.4
Based on the U.S. Bureau of Labor Statistics data.
0.36
0.34
0.29
0.27
0.28
0.22
2015
2016
2017
2018
2019
2020
Note: Given the general uncertainty in determining
work-relatedness of COVID-19 cases and to present
accurate, comparable year over year data, this does not
include COVID-19 cases that MPC conservatively recorded
as work-related. Including these cases, MPC’s 2020
Refining OSHA Recordable Rate is 0.32.
2020 Refining Process Safety Event (PSE) Rate (Events/200,000 hours)
0.22
0.16
0.15
0.16
0.18
Tier 1 PSE
Tier 2 PSE
0.08
0.08
0.05
0.05
0.04
0.04
0.04
2015
2016
2017
2018
2019
2020
PSEs are unplanned or uncontrolled releases of a material from
a process. The PSE rate is the count of events per 200,000
hours of work. Tier 1 PSEs are the most serious type. PSE rates
for Andeavor Refining have been included in this chart,
including years prior to our strategic combination.
MARATHON PETROLEUM CORPORATION I 2020 ANNUAL REPORT I 11
BOARD OF DIRECTORS
John P. Surma
Retired Chairman and
Chief Executive Officer,
United States Steel Corporation
- Non-Executive Chairman
of the Board
Abdulaziz F. Alkhayyal
Retired Senior Vice President,
Industrial Relations, Saudi Aramco
- Sustainability Committee Chair
- Audit Committee Member
- Compensation and Organization
Development Committee Member
Evan Bayh
Senior Advisor, Apollo Global
Management
- Corporate Governance and
Nominating Committee Member
- Sustainability Committee Vice Chair
Charles E. Bunch
Retired Chairman of the Board
and Chief Executive Officer,
PPG Industries, Inc.
- Corporate Governance and
Nominating Committee Chair
- Compensation and Organization
Development Committee Member
Jonathan Z. Cohen
Chief Executive Officer and
President, Hepco Capital
Management, LLC
- Audit Committee Member
- Corporate Governance and
Nominating Committee Member
Steven A. Davis
Former Chairman and Chief
Executive Officer, Bob Evans Farms, Inc.
- Compensation and Organization
Development Committee Vice Chair
- Corporate Governance and
Nominating Committee Member
Edward G. Galante
Retired Senior Vice President and
Management Committee Member,
ExxonMobil Corporation
- Compensation and Organization
Development Committee Chair
- Sustainability Committee Member
Michael J. Hennigan
President and Chief Executive Officer,
Marathon Petroleum Corporation
- Sustainability Committee Member
James E. Rohr
Retired Chairman and
Chief Executive Officer,
The PNC Financial Services Group, Inc.
- Audit Committee Vice Chair
- Compensation and Organization
Development Committee Member
Kim K.W. Rucker
Former Executive Vice President,
General Counsel and Secretary,
Andeavor
- Sustainability Committee Member
J. Michael Stice
Dean, Mewbourne College of
Earth & Energy, The University
of Oklahoma
- Audit Committee Member
- Corporate Governance and
Nominating Committee Vice Chair
- Sustainability Committee Member
Susan Tomasky
Retired President, AEP
Transmission, American
Electric Power
- Audit Committee Chair
- Sustainability Committee Member
12
EXECUTIVE TEAM
Michael J. Hennigan
President and
Chief Executive Officer,
and Director
Maryann T. Mannen
Executive Vice
President and
Chief Financial Officer
Brian C. Davis
Executive Vice
President and Chief
Commercial Officer
Timothy T. Griffith
President, Speedway LLC
Raymond L. Brooks
Executive Vice
President, Refining
Suzanne Gagle
General Counsel and
Senior Vice President,
Government Affairs
Fiona C. Laird*
Chief Human Resources
Officer and Senior Vice
President, Communications
Ehren D. Powell*
Chief Digital Officer and
Senior Vice President
C. Tracy Case*
Senior Vice President,
Western Refining
Operations
David R. Heppner*
Senior Vice President,
Strategy and
Business Development
Richard A. Hernadez*
Senior Vice President,
Eastern Refining
Operations
Rick D. Hessling*
Senior Vice President,
Global Feedstocks
Thomas Kaczynski
Senior Vice President,
Finance and Treasurer
Brian K. Partee*
Senior Vice President,
Global Clean Products
John J. Quaid
Senior Vice President
and Controller
James R. Wilkins*
Senior Vice President,
Health, Environment,
Safety and Security
Molly R. Benson*
Vice President, Chief Securities,
Governance & Compliance
Officer and Corporate Secretary
Kristina A Kazarian*
Vice President,
Investor Relations
D. Rick Linhardt*
Vice President, Tax
Glenn M. Plumby*
Executive Vice President
and Chief Operating Officer,
Speedway LLC
* Corporate Officers
MARATHON PETROLEUM CORPORATION I 2020 ANNUAL REPORT I 13
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the fiscal year ended December 31, 2020
OR
☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
Commission file number 001-35054
Marathon Petroleum Corporation
(Exact name of registrant as specified in its charter)
Delaware
(State or other jurisdiction of incorporation or organization)
27-1284632
(I.R.S. Employer Identification No.)
539 South Main Street, Findlay, OH 45840-3229
(Address of principal executive offices) (Zip code)
(419) 422-2121
(Registrant’s telephone number, including area code)
Securities Registered pursuant to Section 12(b) of the Act
Title of each class
Common Stock, par value $.01
Trading symbol(s)
MPC
Name of each exchange on which registered
New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☑ No ☐
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐ No ☑
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange
Act of 1934 during the preceding 12 months and (2) has been subject to such filing requirements for the past 90 days. Yes ☑ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule
405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to
submit such files). Yes ☑ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, accelerated filer, a non-accelerated filer, a smaller reporting company,
or an emerging growth company. See definition of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging
growth company” in Rule 12b-2 of the Exchange Act:
Large Accelerated Filer ☑ Accelerated Filer ☐ Non-accelerated Filer ☐ Smaller reporting company ☐ 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. ☐
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its
internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public
accounting firm that prepared or issued its audit report. ☑
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No ☑
The aggregate market value of Common Stock held by non-affiliates as of June 30, 2020 was approximately $24.3 billion. This amount is
based on the closing price of the registrant’s Common Stock on the New York Stock Exchange on June 30, 2020. Shares of Common Stock
held by executive officers and directors of the registrant are not included in the computation. The registrant, solely for the purpose of this
required presentation, has deemed its directors and executive officers to be affiliates.
There were 651,274,842 shares of Marathon Petroleum Corporation Common Stock outstanding as of February 12, 2021.
Documents Incorporated By Reference
Portions of the registrant’s proxy statement relating to its 2021 Annual Meeting of Shareholders, to be filed with the Securities and Exchange
Commission pursuant to Regulation 14A under the Securities Exchange Act of 1934, are incorporated by reference to the extent set forth in Part
III, Items 10-14 of this Report.
MARATHON PETROLEUM CORPORATION
Unless otherwise stated or the context otherwise indicates, all references in this Annual Report on Form 10-
K to “MPC,” “us,” “our,” “we” or the “Company” mean Marathon Petroleum Corporation and its
consolidated subsidiaries.
TABLE OF CONTENTS
PART I
ITEM 1. BUSINESS
ITEM 1A. RISK FACTORS
ITEM 1B. UNRESOLVED STAFF COMMENTS
ITEM 2. PROPERTIES
ITEM 3. LEGAL PROCEEDINGS
ITEM 4. MINE SAFETY DISCLOSURES
PART II
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER
MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
ITEM 6. SELECTED FINANCIAL DATA
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE
ITEM 9A. CONTROLS AND PROCEDURES
ITEM 9B. OTHER INFORMATION
PART III
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERANCE
ITEM 11. EXECUTIVE COMPENSATION
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT AND RELATED STOCKHOLER MATTERS
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND
DIRECTOR INDEPENDENCE
ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
PART IV
ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
SIGNATURES
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GLOSSARY OF TERMS
Throughout this report, the following company or industry specific terms and abbreviations are used:
ASC
ANS
ASU
ASR
ATB
barrel
CARB
CARBOB
CBOB
EBITDA (a non-GAAP
financial measure)
EPA
FASB
GAAP
IDR
LCM
LIBOR
LIFO
LLS
mbpd
mbpcd
MMcf/d
MMBtu
NYMEX
NYSE
NGL
OSHA
OTC
ppb
RFS2
RIN
SEC
STAR
ULSD
USGC
UST
VIE
VPP
WTI
Accounting Standards Codification
Alaska North Slope crude oil, an oil index benchmark price
Accounting Standards Update
Accelerated share repurchase
Articulated tug barges
One stock tank barrel, or 42 United States gallons liquid volume, used in
reference to crude oil or other liquid hydrocarbons.
California Air Resources Board
California Reformulated Gasoline Blendstock for Oxygenate Blending
Conventional Blending for Oxygenate Blending
Earnings Before Interest, Tax, Depreciation and Amortization
United States Environmental Protection Agency
Financial Accounting Standards Board
Accounting principles generally accepted in the United States
Incentive Distribution Right
Lower of cost or market
London Interbank Offered Rate
Last in, first out
Louisiana Light Sweet crude oil, an oil index benchmark price
Thousand barrels per day
Thousand barrels per calendar day
One million cubic feet of natural gas per day
One million British thermal units per day
New York Mercantile Exchange
New York Stock Exchange
Natural gas liquids, such as ethane, propane, butanes and natural gasoline
United States Occupational Safety and Health Administration
Over-the-Counter
Parts per billion
Revised Renewable Fuel Standard program, as required by the Energy
Independence and Security Act of 2007
Renewable Identification Number
United States Securities and Exchange Commission
South Texas Asset Repositioning
Ultra-low sulfur diesel
U.S. Gulf Coast
Underground storage tank
Variable interest entity
Voluntary Protection Program
West Texas Intermediate crude oil, an oil index benchmark price
1
DISCLOSURES REGARDING FORWARD-LOOKING STATEMENTS
This Annual Report on Form 10-K, particularly Item 1. Business, Item 1A. Risk Factors, Item 3. Legal
Proceedings, Item 7. Management’s Discussion and Analysis of Financial Condition and Results of
Operations and Item 7A. Quantitative and Qualitative Disclosures about Market Risk, includes forward-
looking statements that are subject to risks, contingencies or uncertainties. You can identify forward-
looking statements by words such as “anticipate,” “believe,” “commitment,” “could,” “design,” “estimate,”
“expect,” “forecast,” “goal,” “guidance,” “imply,” “intend,” “may,” “objective,” “opportunity,” “outlook,”
“plan,” “policy,” “position,” “potential,” “predict,” “priority,” “project,” “proposition,” “prospective,”
“pursue,” “seek,” “should,” “strategy,” “target,” “will,” “would” or other similar expressions that convey
the uncertainty of future events or outcomes.
Forward-looking statements include, among other things, statements regarding:
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future financial and operating results;
future levels of capital, environmental or maintenance expenditures, general and administrative
and other expenses;
expected savings from the restructuring or reorganization of business components;
the success or timing of completion of ongoing or anticipated capital or maintenance projects;
business strategies, growth opportunities and expected investment;
consumer demand for refined products, natural gas and NGLs;
the timing and amount of any future common stock repurchases or dividends; and
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.
Our forward-looking 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. Material differences
between actual results and any future performance suggested in our forward-looking statements could result
from a variety of factors, including the following:
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general economic, political or regulatory developments, including changes in governmental
policies relating to refined petroleum products, crude oil, natural gas or NGLs, regulation or
taxation and other economic and political developments;
the magnitude and duration of the COVID-19 pandemic and its effects, including travel
restrictions, business and school closures, increased remote work, stay-at-home orders and other
actions taken by individuals, government and the private sector to stem the spread of the virus;
our ability to successfully complete the planned Speedway sale and realize the expected benefits
within the expected timeframe or at all;
further impairments;
the regional, national and worldwide availability and pricing of refined products, crude oil, natural
gas, NGLs and other feedstocks;
our ability to manage disruptions in credit markets or changes to credit ratings;
the reliability of processing units and other equipment;
the adequacy of capital resources and liquidity, including availability, timing and amounts of free
cash flow necessary to execute business plans and to effect any share repurchases or to maintain or
increase the dividend;
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 degradation of general economic, market, industry or
business conditions as a result of the COVID-19 pandemic (including any related government
policies and actions), other infectious disease outbreaks, natural hazards, extreme weather events
or otherwise;
compliance with federal and state environmental, economic, health and safety, energy and other
policies and regulations and enforcement actions initiated thereunder;
adverse market conditions or other similar risks affecting MPLX;
2
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refining industry overcapacity or under capacity;
changes in producer customers’ drilling plans or in volumes of throughput of crude oil, natural
gas, NGLs, refined products or other hydrocarbon-based products;
non-payment or non-performance by our customers;
changes in the cost or availability of third-party vessels, pipelines, railcars and other means of
transportation for crude oil, natural gas, NGLs, feedstocks and refined products;
the price, availability and acceptance of alternative fuels and alternative-fuel vehicles and laws
mandating such fuels or vehicles;
political and economic conditions in nations that consume refined products, natural gas and NGLs,
including the United States and Mexico, and in crude oil producing regions, including the Middle
East, Africa, Canada and South America;
actions taken by our competitors, including pricing adjustments, expansion of retail activities, the
expansion and retirement of refining capacity and the expansion and retirement of pipeline
capacity, processing, fractionation and treating facilities in response to market conditions;
completion of pipeline projects within the United States;
changes in fuel and utility costs for our facilities;
accidents or other unscheduled shutdowns affecting our refineries, machinery, pipelines,
processing, fractionation and treating facilities or equipment, or those of our suppliers or
customers;
acts of war, terrorism or civil unrest that could impair our ability to produce refined products,
receive feedstocks or to gather, process, fractionate or transport crude oil, natural gas, NGLs or
refined products;
adverse changes in laws including with respect to tax and regulatory matters;
political pressure and influence of environmental groups and other stakeholders upon policies and
decisions related to the production, gathering, refining, processing, fractionation, transportation
and marketing of crude oil or other feedstocks, refined products, natural gas, NGLs or other
hydrocarbon-based products;
labor and material shortages;
the costs, disruption and diversion of management’s attention associated with campaigns
commenced by activist investors;
personnel changes; and
the other factors described in Item 1A. Risk Factors.
We undertake no obligation to update any forward-looking statements except to the extent required by
applicable law.
3
PART I
ITEM 1. BUSINESS
OVERVIEW
Marathon Petroleum Corporation (“MPC”) has over 130 years of experience in the energy business, and is
the largest independent petroleum product refining, marketing, retail and midstream business in the United
States. We operate the nation's largest refining system with approximately 2.9 million barrels per day of
crude oil refining capacity and believe we are one of the largest wholesale suppliers of gasoline and
distillates to resellers in the United States. We also operate Speedway, the second largest chain of
company-owned and operated retail gasoline and convenience stores in the United States, which we have
agreed to sell to 7-Eleven, Inc. (“7-Eleven”) for $21 billion in cash, subject to certain adjustments based on
the levels of cash, debt and working capital at closing and certain other items. We distribute our refined
products through one of the largest terminal operations in the United States and one of the largest private
domestic fleets of inland petroleum product barges. In addition, our integrated midstream energy asset
network links producers of natural gas and NGLs from some of the largest supply basins in the United
States to domestic and international markets.
Our operations consist of two reportable operating segments: Refining & Marketing and Midstream. Each
of these segments is organized and managed based upon the nature of the products and services it offers.
•
Refining & Marketing – refines crude oil and other feedstocks at our refineries in the Gulf Coast,
Mid-Continent and West Coast regions of the United States, purchases refined products and
ethanol for resale and distributes refined products through transportation, storage, distribution and
marketing services provided largely by our Midstream segment. We sell refined products to
wholesale marketing customers domestically and internationally, to buyers on the spot market, to
independent entrepreneurs who operate primarily Marathon® branded outlets, through long-term
supply contracts with direct dealers who operate locations mainly under the ARCO® brand and to
approximately 3,800 Speedway locations.
• Midstream – transports, stores, distributes and markets crude oil and refined products principally
for the Refining & Marketing segment via refining logistics assets, pipelines, terminals, towboats
and barges; gathers, processes and transports natural gas; and gathers, transports, fractionates,
stores and markets NGLs. The Midstream segment primarily reflects the results of MPLX LP
(“MPLX”). MPLX is a diversified, large-cap master limited partnership (“MLP”) formed in 2012
that owns and operates midstream energy infrastructure and logistics assets and provides fuels
distribution services. As of December 31, 2020, we owned the general partner of MPLX and
approximately 62 percent of the outstanding MPLX common units.
Corporate History and Structure
MPC was incorporated in Delaware on November 9, 2009 in connection with an internal restructuring of
Marathon Oil Corporation (“Marathon Oil”). On May 25, 2011, the Marathon Oil board of directors
approved the spinoff of its Refining, Marketing & Transportation Business into an independent, publicly
traded company, MPC, through the distribution of MPC common stock to the stockholders of Marathon Oil
on June 30, 2011. Our common stock trades on the NYSE under the ticker symbol “MPC.”
On October 1, 2018, we acquired Andeavor. Andeavor shareholders received in the aggregate
approximately 239.8 million shares of MPC common stock valued at $19.8 billion and $3.5 billion in cash.
Andeavor was a highly integrated marketing, logistics and refining company operating primarily in the
Western and Mid-Continent United States. Our acquisition of Andeavor in 2018 substantially increased our
geographic diversification and the scale of our assets, which provides increased opportunities to optimize
our system.
Recent Developments
Strategic Actions to Enhance Shareholder Value
Speedway Sale
On August 2, 2020, we entered into a definitive agreement to sell Speedway, our company-owned and
operated retail transportation fuel and convenience store business, to 7-Eleven for $21 billion in cash,
4
subject to certain adjustments based on the levels of cash, debt and working capital at closing and certain
other items. The taxable transaction is targeted to close by the end of the first quarter of 2021, subject to
customary closing conditions and the receipt of regulatory approvals. This transaction is expected to result
in after-tax cash proceeds of approximately $16.5 billion. We expect to use the proceeds from the sale to
strengthen the balance sheet and return capital to shareholders.
In connection with the agreement to sell Speedway, we have agreed to enter into certain ancillary
agreements, including a 15-year fuel supply agreement associated with 7-Eleven or its subsidiaries,
depending on the fuel demand of Speedway and other factors to be set forth in the fuel supply agreement.
Further, we expect incremental opportunities over time to supply 7-Eleven's remaining business as 7-
Eleven's existing arrangements mature and as new locations are added in connection with its announced
U.S. and Canada growth strategy.
As a result of the agreement to sell Speedway, its results are reported separately as discontinued operations
in our consolidated statements of income for all periods presented and its assets and liabilities have been
reclassified in our consolidated balance sheets to assets and liabilities held for sale. Prior to presentation of
Speedway as discontinued operations, Speedway and our retained direct dealer business were the two
reporting units within our Retail segment. Beginning with the third quarter of 2020, the direct dealer
business is managed as part of the Refining & Marketing segment. The results of the Refining & Marketing
segment have been retrospectively adjusted to include the results of the direct dealer business in all periods
presented.
As a result of our agreement to sell Speedway, the following changes in our basis of presentation have
occurred:
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In accordance with ASC 205, Discontinued Operations, intersegment sales from our Refining &
Marketing segment to Speedway are no longer eliminated as intercompany transactions and are
now presented within sales and other operating revenue, since we will continue to supply fuel to
Speedway subsequent to the sale to 7-Eleven. All periods presented have been retrospectively
adjusted to reflect this change.
Beginning August 2, 2020, in accordance with ASC 360, Property, Plant, and Equipment, we
ceased recording depreciation and amortization for Speedway’s property, plant and equipment,
finite-lived intangible assets and right of use lease assets.
Midstream Review
On March 18, 2020, we announced that MPC’s board of directors unanimously decided to maintain MPC’s
current midstream structure, with MPC remaining, through a wholly owned subsidiary, the general partner
of MPLX. This decision concluded a comprehensive evaluation, led by a special committee of the board,
that included extensive input from multiple external advisors and significant feedback from investors.
OUR OPERATIONS
Our operations consist of two reportable operating segments: Refining & Marketing and Midstream.
REFINING & MARKETING
Refineries
We currently own and operate refineries in the Gulf Coast, Mid-Continent and West Coast regions of the
United States with an aggregate crude oil refining capacity of 2,874 mbpcd. During 2020, our refineries
processed 2,418 mbpd of crude oil and 165 mbpd of other charge and blendstocks. During 2019, our
refineries processed 2,902 mbpd of crude oil and 210 mbpd of other charge and blendstocks.
Our refineries include crude oil atmospheric and vacuum distillation, fluid catalytic cracking,
hydrocracking, catalytic reforming, coking, desulfurization and sulfur recovery units. The refineries process
a wide variety of condensate and light and heavy crude oils purchased from various domestic and foreign
suppliers. We produce numerous refined products, ranging from transportation fuels, such as reformulated
gasolines, blend-grade gasolines intended for blending with ethanol and ULSD fuel, to heavy fuel oil and
asphalt. Additionally, we manufacture aromatics, propane, propylene and sulfur. See the Refined Product
Marketing section for further information about the products we produce.
5
Our refineries are integrated with each other via pipelines, terminals and barges to maximize operating
efficiency. The transportation links that connect our refineries allow the movement of intermediate products
between refineries to optimize operations, produce higher margin products and efficiently utilize our
processing capacity. Also, shipping intermediate products between facilities during partial refinery
shutdowns allows us to utilize processing capacity that is not directly affected by the shutdown work.
Following is a description of each of our refineries and their capacity by region.
Gulf Coast Region (1,171 mbpcd)
Galveston Bay, Texas City, Texas Refinery (593 mbpcd)
Our Galveston Bay refinery is a world-class refining complex resulting from the combination of our former
Texas City refinery and Galveston Bay refinery. The refinery is located on the Texas Gulf Coast
approximately 30 miles southeast of Houston, Texas and can process a wide variety of crude oils into
gasoline, distillates, feedstocks, petrochemicals, propane and heavy fuel oil. The refinery has access to the
export market and multiple options to sell refined products. Our cogeneration facility, which supplies the
Galveston Bay refinery, currently has 1,055 megawatts of electrical production capacity and can produce
4.3 million pounds of steam per hour. Approximately 49 percent of the power generated in 2020 was used
at the refinery, with the remaining electricity being sold into the electricity grid.
Garyville, Louisiana Refinery (578 mbpcd)
Our Garyville refinery, which is one of the largest refineries in the U.S., is located along the Mississippi
River in southeastern Louisiana between New Orleans, Louisiana and Baton Rouge, Louisiana. The
Garyville refinery is configured to process a wide variety of crude oils into gasoline, distillates,
petrochemicals, feedstocks, asphalt, propane and heavy fuel oil. The refinery has access to the export
market and multiple options to sell refined products. Our Garyville refinery has earned designation as an
OSHA VPP Star site.
Mid-Continent Region (1,153 mbpcd)
Catlettsburg, Kentucky Refinery (291 mbpcd)
Our Catlettsburg refinery is located in northeastern Kentucky on the western bank of the Big Sandy River,
near the confluence with the Ohio River. The Catlettsburg refinery processes sweet and sour crude oils,
including production from the nearby Utica Shale, into gasoline, distillates, asphalt, petrochemicals, heavy
fuel oil, propane and feedstocks. Our Catlettsburg refinery has earned designation as an OSHA VPP Star
site.
Robinson, Illinois Refinery (253 mbpcd)
Our Robinson refinery is located in southeastern Illinois. The Robinson refinery processes sweet and sour
crude oils into gasoline, distillates, feedstocks, propane, petrochemicals and heavy fuel oil. The Robinson
refinery has earned designation as an OSHA VPP Star site.
Detroit, Michigan Refinery (140 mbpcd)
Our Detroit refinery is located in southwest Detroit. It is the only petroleum refinery currently operating in
Michigan. The Detroit refinery processes sweet and heavy sour crude oils into gasoline, distillates, asphalt,
feedstocks, petrochemicals, propane and heavy fuel oil. Our Detroit refinery has earned designation as an
OSHA VPP Star site.
El Paso, Texas Refinery (131 mbpcd)
Our El Paso refinery is located approximately three miles east of downtown El Paso, Texas. The El Paso
refinery processes sweet and sour crudes into gasoline, distillates, asphalt, heavy fuel oil, propane and
petrochemicals.
St. Paul Park, Minnesota Refinery (104 mbpcd)
Our St. Paul Park refinery is located along the Mississippi River southeast of St. Paul Park, Minnesota. The
St. Paul Park refinery processes sweet and heavy sour crude and manufactures gasoline, distillates, asphalt,
petrochemicals, propane, heavy fuel oil and feedstocks.
Canton, Ohio Refinery (97 mbpcd)
Our Canton refinery is located approximately 60 miles south of Cleveland, Ohio. The Canton refinery
processes sweet and sour crude oils, including production from the nearby Utica Shale, into gasoline,
6
distillates, asphalt, propane, petrochemicals, heavy fuel oil and feedstocks. The Canton refinery has earned
designation as an OSHA VPP Star site.
Mandan, North Dakota Refinery (71 mbpcd)
The Mandan refinery processes primarily sweet domestic crude oil from North Dakota and manufactures
gasoline, distillates, propane, heavy fuel oil and petrochemicals.
Salt Lake City, Utah Refinery (66 mbpcd)
Our Salt Lake City refinery is now the largest in Utah. The Salt Lake City refinery processes crude oil from
Utah, Colorado, Wyoming and Canada to manufacture gasoline, distillates, propane, heavy fuel oil,
feedstocks and petrochemicals.
West Coast Region (550 mbpcd)
Los Angeles, California Refinery (363 mbpcd)
Our Los Angeles refinery is located in Los Angeles County, near the Los Angeles Harbor. The Los Angeles
refinery is the largest refinery on the West Coast and is a major producer of clean fuels. The Los Angeles
refinery processes heavy crude from California’s San Joaquin Valley and Los Angeles Basin as well as
crudes from the Alaska North Slope, South America, West Africa and other international sources and
manufactures cleaner-burning CARB gasoline and CARB diesel fuel, as well as conventional gasoline,
distillates, feedstocks, petrochemicals, heavy fuel oil and propane.
Anacortes, Washington Refinery (119 mbpcd)
Our Anacortes refinery is located about 70 miles north of Seattle on Puget Sound. The Anacortes refinery
processes Canadian crude, domestic crude from North Dakota and Alaska North Slope and international
crudes to manufacture gasoline, distillates, heavy fuel oil, feedstocks, propane and petrochemicals.
Kenai, Alaska Refinery (68 mbpcd)
Our Kenai refinery is located on the Cook Inlet, 60 miles southwest of Anchorage. The Kenai refinery
processes mainly Alaska domestic crude, domestic crude from North Dakota, along with limited
international crude and manufactures distillates, gasoline, heavy fuel oil, feedstocks, asphalt, propane and
petrochemicals.
Planned maintenance activities, or turnarounds, requiring temporary shutdown of certain refinery operating
units, are periodically performed at each refinery. See Item 7. Management’s Discussion and Analysis of
Financial Condition and Results of Operations for additional detail.
Refined Product Yields
The following table sets forth our refinery production by product group for each of the last three years
including production from the refineries acquired in the Andeavor acquisition from October 1, 2018
forward.
(mbpd)
Gasoline
Distillates
Feedstocks and petrochemicals
Asphalt
Propane
Heavy fuel oil
Total
2020
2019
2018
1,314
905
244
81
51
28
1,560
1,087
315
87
55
49
1,107
773
288
69
41
38
2,623
3,153
2,316
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Crude Oil Supply
We obtain the crude oil we refine through negotiated term contracts and purchases or exchanges on the spot
market. Our term contracts generally have market-related pricing provisions. The following table provides
information on our sources of crude oil for each of the last three years. It includes crude sourced for the
refineries acquired in the Andeavor acquisition from October 1, 2018 forward. The crude oil sourced
outside of North America was acquired from various foreign national oil companies, production companies
and trading companies.
(mbpd)
United States
Canada
Middle East and other international
Total
2020
2019
2018
1,650
442
326
2,418
1,962
541
399
2,902
1,319
465
297
2,081
Our refineries receive crude oil and other feedstocks and distribute our refined products through a variety of
channels, including pipelines, trucks, railcars, ships and barges.
Renewable Fuels
During 2020, we completed the conversion of our Dickinson, North Dakota refinery into an approximately
184 million gallons per year renewable diesel facility.
We also progressed activities associated with the conversion of the Martinez refinery to a renewable diesel
facility, including applying for permits, advancing discussions with feedstock suppliers, and beginning
detailed engineering activities. As envisioned, the Martinez facility would start producing approximately
260 million gallons per year of renewable diesel by the second half of 2022, with a potential to build to full
capacity of approximately 730 million gallons per year by the end of 2023. On February 24, 2021, MPC’s
board of directors approved these plans.
We own a biofuel production facility in Cincinnati, Ohio that produces biodiesel, glycerin and other by-
products. The capacity of the plant is approximately 91 million gallons per year.
Our wholly owned subsidiary, Virent, is an advanced biofuels facility in Madison, Wisconsin that is
working to commercialize a process for converting biobased feedstocks into renewable fuels and chemicals.
We hold an ownership interest in ethanol production facilities in Albion, Michigan; Logansport, Indiana;
Greenville, Ohio and Denison, Iowa. These plants have a combined ethanol production capacity of
approximately 475 million gallons per year and are managed by our joint venture partner, The Andersons.
Refined Product Marketing
Our refined products are sold to independent retailers, wholesale customers, our brand jobbers and direct
dealers. In addition, we sell refined products for export to international customers. As of December 31,
2020, there were 7,090 branded outlets in 35 states, the District of Columbia and Mexico where
independent entrepreneurs primarily maintain Marathon-branded outlets. We also have long-term supply
contracts for 1,093 direct dealer locations primarily in Southern California, largely under the ARCO®
brand. We believe we are one of the largest wholesale suppliers of gasoline and distillates to resellers and
consumers within our 41-state market area.
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The following table sets forth our refined product sales volumes by product group for each of the last three
years including sales from the refineries acquired in the Andeavor acquisition from October 1, 2018
forward.
(mbpd)
Gasoline
Distillates
Feedstocks and petrochemicals
Asphalt
Propane
Heavy fuel oil
Total
2020
2019
2018
1,669
1,040
323
86
69
35
1,967
1,205
345
93
72
53
1,416
847
289
70
44
37
3,222
3,735
2,703
Refined Product Sales Destined for Export
We sell gasoline, distillates and asphalt for export, primarily out of our Garyville, Galveston Bay,
Anacortes, Los Angeles and Kenai refineries. The following table sets forth our refined product sales
destined for export by product group for the past three years including sales from the refineries acquired in
the Andeavor acquisition from October 1, 2018 forward.
(mbpd)
Gasoline
Distillates
Other
Total
2020
2019
2018
110
187
43
340
131
215
51
397
117
193
24
334
Gasoline and Distillates
We sell gasoline, gasoline blendstocks and distillates (including No. 1 and No. 2 fuel oils, jet fuel, kerosene
and diesel fuel) to wholesale customers, Marathon-branded jobbers, direct dealers and in the spot market. In
addition, we sell diesel fuel and gasoline for export to international customers. The demand for gasoline
and distillates is seasonal in many of our markets, with demand typically at its highest levels during the
summer months.
Feedstocks and Petrochemicals
We are a producer and marketer of feedstocks and petrochemicals. Product availability varies by refinery
and includes, among others, propylene, naphtha, butane, xylene, benzene, alkylate, cumene, raffinate,
toluene and platformate. We market these products domestically to customers in the chemical, agricultural
and fuel-blending industries. In addition, we produce fuel-grade coke at our Garyville, Detroit, Galveston
Bay and Los Angeles refineries, which is used for power generation and in miscellaneous industrial
applications, and anode-grade coke at our Los Angeles and Robinson refineries, in addition to calcined
coke at our Los Angeles refinery, which are both used to make carbon anodes for the aluminum smelting
industry.
Asphalt
We have refinery-based asphalt production capacity of up to 139 mbpcd, which includes asphalt cements,
polymer-modified asphalt, emulsified asphalt, industrial asphalts and roofing flux. We have a broad
customer base, including asphalt-paving contractors, resellers, government entities (states, counties, cities
and townships) and asphalt roofing shingle manufacturers. We sell asphalt in the domestic and export
wholesale markets via rail, barge and vessel.
Propane
We produce propane at all of our refineries. Propane is primarily used for home heating and cooking, as a
feedstock within the petrochemical industry, for grain drying and as a fuel for trucks and other vehicles.
Our propane sales are split approximately 80 percent and 20 percent between the home heating market and
petrochemical consumers, respectively.
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Heavy Fuel Oil
We produce and market heavy residual fuel oil or related components, including slurry, at all of our
refineries. Heavy residual fuel oil is primarily used in the utility and ship bunkering (fuel) industries,
though there are other more specialized uses of the product.
Terminals and Transportation
We transport, store and distribute crude oil, feedstocks and refined products through pipelines, terminals
and marine fleets owned by MPLX and third parties in our market areas.
We own a fleet of transport trucks and trailers for the movement of refined products and crude oil. In
addition, we maintain a fleet of leased and owned railcars for the movement and storage of refined
products.
The locations and detailed information about our Refining & Marketing assets are included under Item 2.
Properties and are incorporated herein by reference.
Competition, Market Conditions and Seasonality
The downstream petroleum business is highly competitive, particularly with regard to accessing crude oil
and other feedstock supply and the marketing of refined products. We compete with a number of other
companies to acquire crude oil for refinery processing and in the distribution and marketing of a full array
of refined products. Based upon company data as reported in the “The Oil & Gas Journal 2020 Worldwide
Refinery Survey,” we ranked first among U.S. petroleum companies on the basis of U.S. crude oil refining
capacity.
We compete in four distinct markets for the sale of refined products—wholesale, including exports, spot,
branded and retail distribution. Our marketing operations compete with numerous other independent
marketers, integrated oil companies and high-volume retailers. We compete with companies in the sale of
refined products to wholesale marketing customers, including private-brand marketers and large
commercial and industrial consumers; companies in the sale of refined products in the spot market; and
refiners or marketers in the supply of refined products to refiner-branded independent entrepreneurs. In
addition, we compete with producers and marketers in other industries that supply alternative forms of
energy and fuels to satisfy the requirements of our industrial, commercial and retail consumers.
Market conditions in the oil and gas industry are cyclical and subject to global economic and political
events and new and changing governmental regulations. Our operating results are affected by price changes
in crude oil, natural gas and refined products, as well as changes in competitive conditions in the markets
we serve. Price differentials between sweet and sour crude oils, ANS, WTI and LLS crude oils and other
market structure impacts also affect our operating results.
Demand for gasoline, diesel fuel and asphalt is higher during the spring and summer months than during
the winter months in most of our markets, primarily due to seasonal increases in highway traffic and
construction. As a result, the operating results for our Refining & Marketing segment for the first and
fourth quarters may be lower than for those in the second and third quarters of each calendar year.
MIDSTREAM
The Midstream segment primarily includes the operations of MPLX, our sponsored MLP, and certain
related operations retained by MPC.
MPLX
MPLX owns and operates a network of crude oil, natural gas and refined product pipelines and has joint
ownership interests in other crude oil and refined products pipelines. MPLX also owns and operates light
products terminals, storage assets and maintains a fleet of owned and leased towboats and barges. MPLX’s
assets also include natural gas gathering systems and natural gas processing and NGL fractionation
complexes.
10
MPC-Retained Midstream Assets and Investments
We have ownership interests in several crude oil and refined products pipeline systems and pipeline
companies and have indirect ownership interests in two ocean vessel joint ventures through our investment
in Crowley Coastal Partners.
The locations and detailed information about our Midstream assets are included under Item 2. Properties
and are incorporated herein by reference.
Competition, Market Conditions and Seasonality
Our Midstream operations face competition for natural gas gathering, crude oil transportation and in
obtaining natural gas supplies for our processing and related services; in obtaining unprocessed NGLs for
gathering, transportation and fractionation; and in marketing our products and services. Competition for
natural gas supplies is based primarily on the location of gas gathering facilities and gas processing plants,
operating efficiency and reliability, residue gas and NGL market connectivity, the ability to obtain a
satisfactory price for products recovered and the fees charged for the services supplied to the customer.
Competition for oil supplies is based primarily on the price and scope of services, location of gathering/
transportation and storage facilities and connectivity to the best priced markets. Competitive factors
affecting our fractionation services include availability of fractionation capacity, proximity to supply and
industry marketing centers, the fees charged for fractionation services and operating efficiency and
reliability of service. Competition for customers to purchase our natural gas and NGLs is based primarily
on price, credit and market connectivity. In addition, certain of our Midstream operations are subject to rate
regulation, which affects the rates that our common carrier pipelines can charge for transportation services
and the return we obtain from such pipelines.
Our Midstream segment can be affected by seasonal fluctuations in the demand for natural gas and NGLs
and the related fluctuations in commodity prices caused by various factors such as changes in transportation
and travel patterns and variations in weather patterns from year to year.
REGULATORY MATTERS
Our operations are subject to numerous laws and regulations, including those relating to the protection of
the environment. Such laws and regulations include, among others, the Clean Air Act (“CAA”) with respect
to air emissions, the Clean Water Act (“CWA”) with respect to water discharges, the Resource
Conservation and Recovery Act (“RCRA”) with respect to solid and hazardous waste treatment, storage
and disposal, the Comprehensive Environmental Response, Compensation, and Liability Act (“CERCLA”)
with respect to releases and remediation of hazardous substances and the Oil Pollution Act of 1990
(“OPA-90”) with respect to oil pollution and response. In addition, many states where we operate have
similar laws. New laws are being enacted and regulations are being adopted on a continuing basis, and the
costs of compliance with such new laws and regulations are very difficult to estimate until finalized.
For a discussion of environmental capital expenditures and costs of compliance, see Item 7. Management’s
Discussion and Analysis of Financial Condition and Results of Operations-Environmental Matters and
Compliance Costs. For additional information regarding regulatory risks, see Item 1A. Risk Factors.
Air
Greenhouse Gas Emissions
We believe it is likely that the scientific and political attention to greenhouse gas emissions, climate
change, and climate adaptation will continue, with the potential for further regulations that could affect our
operations. Currently, legislative and regulatory measures to address greenhouse gas emissions are in
various phases of review, discussion or implementation. Reductions in greenhouse gas emissions could
result in increased costs to (i) operate and maintain our facilities, (ii) install new emission controls at our
facilities, (iii) capture the emissions from our facilities and (iv) administer and manage any greenhouse gas
emissions programs, including acquiring emission credits or allotments.
In January 2021, President Biden announced that the United States was rejoining the 2015 Paris UN
Climate Change Conference Agreement, effective February 19, 2021. President Biden also issued an
Executive Order on climate change in which he announced putting the U.S. on a path to achieve net-zero
carbon emissions, economy-wide, by 2050. The Executive Order also calls for the federal government to
pause oil and gas leasing on federal lands, reduce methane emissions from the oil and gas sector as quickly
as possible, and requires federal permitting decisions to consider the effects of greenhouse gas emissions
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and climate change. In a second Executive Order, President Biden reestablished a working group to
develop the social cost of carbon and the social cost of methane. The social cost of carbon and social cost of
methane can be used to weigh the costs and benefits of proposed regulations. A higher social cost of carbon
could support more stringent greenhouse gas emission regulation.
States are becoming active in regulating greenhouse gas emissions. These measures may include state
actions to develop statewide or regional programs to impose emission reductions. These measures may also
include low-carbon fuel standards, such as the California program, or a state carbon tax. These measures
could result in increased costs to operate and maintain our facilities, capital expenditures to install new
emission controls and costs to administer any carbon trading or tax programs implemented. For example,
the California state legislature enacted AB 398, which provides direction and parameters on utilizing cap
and trade after 2020 to meet the 40 percent reduction target from 1990 levels by 2030 specified in SB 32.
Compliance with the cap and trade program is demonstrated through a market-based credit system. Much
of the compliance costs associated with these California regulations are ultimately passed on to the
consumer in the form of higher fuel costs. States are increasingly announcing aspirational goals to be net-
zero carbon emissions by a certain date through both legislation and executive orders. To date, these states
have not provided significant details as to achievement of these goals; however, meeting these aspirations
will require a reduction in fossil fuel combustion and/or a mechanism to capture greenhouse gases from the
atmosphere. As a result, we cannot currently predict the impact of these potential regulations on our
liquidity, financial position, or results of operations.
Other Air Emissions
In 2015, United States Environmental Protection Agency (“EPA”) finalized a revision to the National
Ambient Air Quality Standards (“NAAQS”) for ozone. The EPA lowered the primary ozone NAAQS from
75 ppb to 70 ppb. In December 2020, the EPA published a rule maintaining this standard. Designation as a
nonattainment area could result in increased costs associated with, or result in cancellation or delay of,
capital projects at our facilities, or could require nitrogen oxide (“NOx”) and/or volatile organic compound
(“VOC”) reductions that could result in increased costs to our facilities.
In California, the Board for the South Coast Air Quality Management District (“SCAQMD”) passed
amendments to the Regional Clean Air Incentives Market (“RECLAIM”) that became effective in 2016,
requiring a staged reduction of nitrogen oxide emissions through 2022. In 2017, the State of California
passed AB 617, which requires implementation of best available retrofit control technology (“BARCT”) on
specific facilities, including facilities subject to RECLAIM. In response to AB 617, the SCAQMD is
currently working to identify BARCT and determine whether to “sunset” the existing RECLAIM program.
A “sunset” of the RECLAIM program and application of BARCT is expected to result in increased costs to
operate and maintain our Los Angeles refinery.
Water
We maintain numerous discharge permits as required under the National Pollutant Discharge Elimination
System program of the CWA and have implemented systems to oversee our compliance with these permits.
In addition, we are regulated under OPA-90, which, among other things, requires the owner or operator of a
tank vessel or a facility to maintain an emergency plan to respond to releases of oil or hazardous
substances. OPA-90 also requires the responsible company to pay resulting removal costs and damages and
provides for civil penalties and criminal sanctions for violations of its provisions. We operate tank vessels
and facilities from which spills of oil and hazardous substances could occur. We have implemented
emergency oil response plans for all of our components and facilities covered by OPA-90 and we have
established Spill Prevention, Control and Countermeasures plans for all facilities subject to such
requirements. Some coastal states in which we operate have passed state laws similar to OPA-90, but with
expanded liability provisions, that include provisions for cargo owner responsibility as well as ship owner
and operator responsibility.
On October 22, 2019, the EPA and the United States Army Corps of Engineers (“Army Corps”) published
a final rule to repeal the 2015 “Clean Water Rule: Definition of Waters of the United States” (“2015 Rule”),
which amended portions of the Code of Federal Regulations (“CFR”) to restore the regulatory text that
existed prior to the 2015 Rule, effective December 23, 2019. The rule repealing the 2015 Clean Water Rule
has been challenged in multiple federal courts. On April 21, 2020, the EPA and the Army Corps
promulgated the Navigable Waters Protection Rule (“2020 Rule”) to define “waters of the United States.”
The 2020 Rule has been challenged in court. The Biden administration has signaled its intent to revisit the
definition of “waters of the United States,” and replace it with a definition consistent with the 2015 Rule. A
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broader definition could result in increased cost of compliance or increased capital costs for construction of
new facilities or expansion of existing facilities.
In April 2020, the U.S. District Court in Montana vacated Nationwide Permit 12 (“NWP 12”), which
authorizes the placement of fill material in “waters of the United States” for utility line activities as long as
certain best management practices are implemented. The decision was ultimately appealed to the United
States Supreme Court, which partially reversed the district court’s decision, temporarily reinstating NWP
12 for all projects except the Keystone XL oil pipeline. The United States Army Corps of Engineers
subsequently reissued its nationwide permit authorizations on January 13, 2021, by dividing the NWP that
authorizes utility line activities (NWP 12) into three separate NWPs that address the differences in how
different utility line projects are constructed, the substances they convey, and the different standards and
best management practices that help ensure those NWPs authorize only those activities that have no more
than minimal adverse environmental effects. The 2021 authorization may be challenged in court or the
Biden Administration may repeal or replace the 2021 authorization in a subsequent rulemaking. Repeal or
replacement of the rule could impact pipeline maintenance activities.
As part of our emergency response activities, we have used aqueous film forming foam (“AFFF”)
containing per- and polyfluoroalkyl substances (“PFAS”) chemicals as a fire suppressant. At this time,
AFFFs containing PFAS are the only proven foams that can prevent and control most flammable
petroleum-based liquid fires.
In May 2016, the EPA issued lifetime health advisories (“HAs”) and health effects support documents for
two PFAS substances - Perfluorooctanoic Acid (“PFOA”) and Perfluorooctane Sulfonate (“PFOS”). Then,
in February 2019, EPA issued a PFAS Action Plan identifying actions the EPA is planning to take to study
and regulate various PFAS chemicals. The EPA identified that it would evaluate, among other actions, (1)
proposing national drinking water standards for PFOA and PFOS, (2) develop cleanup recommendations
for PFOA and PFOS, (3) evaluate listing PFOA and PFOS as hazardous substances under CERCLA, and
(4) conduct toxicity assessments for other PFAS chemicals. To date EPA has not issued any further
regulations for PFAS under the Trump administration; however, the Biden Administration has indicated its
intent to issue proposed rules to regulate PFAS, which could include the designation of variants of PFAS as
CERCLA hazardous substances and/or establish national drinking water standards. Congress may also take
further action to regulate PFAS. We cannot currently predict the impact of potential statutes or regulations
on our operations or remediation costs.
In addition, many states are actively proposing and adopting legislation and regulations relating to the use
of AFFF. Additionally, some states are adopting and proposing state-specific drinking water and cleanup
standards for various PFAS. We cannot currently predict the impact of these regulations on our liquidity,
financial position, or results of operations.
Solid Waste
We continue to seek methods to minimize the generation of hazardous wastes in our operations. RCRA
establishes standards for the management of solid and hazardous wastes. Besides affecting waste disposal
practices, RCRA also addresses the environmental effects of certain past waste disposal operations, the
recycling of wastes and the regulation of USTs containing regulated substances.
Remediation
We own or operate, or have owned or operated, certain convenience stores and other locations where,
during the normal course of operations, releases of refined products from USTs have occurred. Federal and
state laws require that contamination caused by such releases at these sites be assessed and remediated to
meet applicable standards. Penalties or other sanctions may be imposed for noncompliance. The
enforcement of the UST regulations under RCRA has been delegated to the states, which administer their
own UST programs. Our obligation to remediate such contamination varies, depending on the extent of the
releases and the applicable state laws and regulations. A portion of these remediation costs may be
recoverable from the appropriate state UST reimbursement funds once the applicable deductibles have been
satisfied. We also have ongoing remediation projects at a number of our current and former refinery,
terminal and pipeline locations.
Claims under CERCLA and similar state acts have been raised with respect to the clean-up of various waste
disposal and other sites. CERCLA is intended to facilitate the clean-up of hazardous substances without
regard to fault. Potentially responsible parties for each site include present and former owners and operators
of, transporters to and generators of the hazardous substances at the site. Liability is strict and can be joint
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and several. Because of various factors including the difficulty of identifying the responsible parties for any
particular site, the complexity of determining the relative liability among them, the uncertainty as to the
most desirable remediation techniques and the amount of damages and clean-up costs and the time period
during which such costs may be incurred, we are unable to reasonably estimate our ultimate cost of
compliance with CERCLA; however, we do not believe such costs will be material to our business,
financial condition, results of operations or cash flows.
Renewable Fuels and Other Fuels Requirements
The U.S. Congress passed the Energy Independence and Security Act of 2007 (“EISA”), which, among
other things, set a target of 35 miles per gallon for the combined fleet of cars and light trucks in the United
States by model year 2020. In March 2020, the EPA and the National Highway Traffic Safety
Administration (“NHTSA”) released the final Safer Affordable Fuel-Efficient (“SAFE”) Vehicles Rule
setting corporate average fuel economy (“CAFE”) and carbon dioxide (“CO2”) standards for model years
2021-2026 passenger cars and light trucks. The final rule increases the stringency of CAFE and CO2
emission standards by 1.5 percent each year from model years 2021 through 2026. The rule has been
challenged in court and could be revised by the Biden Administration through notice and comment
rulemaking. Higher CAFE standards for cars and light trucks have the potential to reduce demand for our
transportation fuels.
In addition, the NHTSA and the EPA issued rules providing that the Energy Policy and Conservation Act
(“EPCA”) preempts state regulations of tailpipe carbon dioxide emissions, withdrew the waiver granted to
California for its Advanced Clean Car program and determined that the Clean Air Act permits other states
to adopt only those California standards that are designed to control traditional “criteria pollutants.”
California may establish per its Clean Air Act waiver authority different standards that could apply in
multiple states. California’s governor issued an executive order requiring sales of all new passenger
vehicles in the state be zero-emission by 2035. Other states have issued, or may issue, zero emission
vehicle mandates. The Biden Administration could reinstate the California waiver and may take federal
action to incentivize or mandate zero emission vehicle production.
Pursuant to the Energy Policy Act of 2005 and the EISA, the EPA has promulgated a Renewable Fuel
Standard (“RFS”) program that requires certain volumes of renewable fuel be blended with our products.
By November 30 of each year, the EPA is required to promulgate the annual renewable fuel standards for
the following compliance year. In a legal challenge to the 2014-2016 volumes, the D.C. Circuit Court of
Appeals vacated the total renewable volume for 2016 and remanded to the EPA for reconsideration
consistent with the court’s opinion. A rule that increases the total renewable volume for any compliance
year to make up for the 2016 shortfall could increase our cost of compliance with the RFS program, require
us to use carryover RINs and be detrimental to the RIN market.
The EPA has finalized the annual renewable fuel standards for the year 2020. For the first time, the EPA
has proposed to reallocate to non-exempt obligated parties the renewable volume obligations of the refiners
that were granted a small refinery exemption. Also, the Tenth Circuit Court of Appeals held that a small
refinery is eligible for an exemption from the RFS only if it is applying for an extension of its original
exemption. According to the EPA’s data, seven refineries were granted the small refinery exemption in
2015. The United States Supreme Court has granted certiorari in the 10th Circuit case. If the 10th Circuit
decision is upheld, EPA’s reallocation of volumes could be greater than the actual volumes exempted in
2020. The reallocation of volumes under the 2020 rule or the invalidation of past small refinery exemptions
granted to us or other refiners could result in a decrease in the RIN bank, an increase in the price of RINs or
an increase in the amount of renewable fuel we are required to blend, any of which could increase MPC’s
RFS cost of compliance. Further, the EPA has failed to promulgate timely the annual renewable fuel
standards for 2021.
The RFS is satisfied primarily with ethanol blended into gasoline. Vehicle, regulatory and infrastructure
constraints limit the blending of significantly more than 10 percent ethanol into gasoline (“E10”). Since
2016, the volume requirements have resulted in the ethanol content of gasoline exceeding the E10
blendwall, which will require obligated parties to either sell E15 or ethanol flex fuel at levels that exceed
historical levels or retire carryover RINs.
There is currently no regulatory method for verifying the validity of the RINs sold on the open market. We
have developed a RIN integrity program to vet the RINs that we purchase, and we incur costs to audit RIN
generators. Nevertheless, if any of the RINs that we purchase and use for compliance are found to be
invalid, we could incur costs and penalties for replacing the invalid RINs.
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In addition to the federal Renewable Fuel Standards, certain states have, or are considering, promulgation
of state renewable or low carbon fuel standards. For example, California began implementing its Low
Carbon Fuel Standard (“LCFS”) in January 2011. In September 2015, the CARB approved the re-adoption
of the LCFS, which became effective on January 1, 2016, to address procedural deficiencies in the way the
original regulation was adopted. The LCFS was amended again in 2018 with the current version targeting a
20 percent reduction in fuel carbon intensity from a 2010 baseline by 2030. We incur costs to comply with
the California LCFS, and these costs may increase if the cost of LCFS credits increases.
In sum, the RFS has required, and may in the future continue to require, additional capital expenditures or
expenses by us to accommodate increased renewable fuels use. We may experience a decrease in demand
for refined products due to an increase in combined fleet mileage or due to refined products being replaced
by renewable fuels. Demand for our refined products also may decrease as a result of low carbon fuel
standard programs or electric vehicle mandates.
Safety Matters
We are subject to oversight pursuant to the federal Occupational Safety and Health Act, as amended
(“OSHA”), as well as comparable state statutes that regulate the protection of the health and safety of
workers. We believe that we have conducted our operations in substantial compliance with OSHA
requirements, including general industry standards, record-keeping requirements and monitoring of
occupational exposure to regulated substances.
We are also subject at regulated facilities to the OSHA’s Process Safety Management (“PSM”) and EPA’s
Risk Management Program requirements, which are intended to prevent or minimize the consequences of
catastrophic releases of toxic, reactive, flammable or explosive chemicals. The application of these
regulations can result in increased compliance expenditures.
In general, we expect industry and regulatory safety standards to become stricter over time, resulting in
increased compliance expenditures. While these expenditures cannot be accurately estimated at this time,
we do not expect such expenditures will have a material adverse effect on our results of operations.
The DOT has adopted safety regulations with respect to the design, construction, operation, maintenance,
inspection and management of our pipeline assets. These regulations contain requirements for the
development and implementation of pipeline integrity management programs, which include the inspection
and testing of pipelines and the correction of anomalies. These regulations also require that pipeline
operation and maintenance personnel meet certain qualifications and that pipeline operators develop
comprehensive spill response plans.
Tribal Lands
Various federal agencies, including the EPA and the Department of the Interior, along with certain Native
American tribes, promulgate and enforce regulations pertaining to oil and gas operations on Native
American tribal lands where we operate. These regulations include such matters as lease provisions, drilling
and production requirements, and standards to protect environmental quality and cultural resources. In
addition, each Native American tribe is a sovereign nation having the right to enforce certain laws and
regulations and to grant approvals independent from federal, state and local statutes and regulations. These
laws and regulations may increase our costs of doing business on Native American tribal lands and impact
the viability of, or prevent or delay our ability to conduct, our operations on such lands.
TRADEMARKS, PATENTS AND LICENSES
Our Marathon and ARCO trademarks are material to the conduct of our refining and marketing operations,
and our Speedway trademark is material to the conduct of our retail operations. We currently hold a number
of U.S. and foreign patents and have various pending patent applications. Although in the aggregate our
patents and licenses are important to us, we do not regard any single patent or license or group of related
patents or licenses as critical or essential to our business as a whole. In general, we depend on our
technological capabilities and the application of know-how rather than patents and licenses in the conduct
of our operations.
HUMAN CAPITAL
We believe our employees are our greatest source of strength, and our culture reflects the quality of
individuals across our workforce. Our collaborative efforts to foster an inclusive environment, provide
15
broad-based development and mentorship opportunities, recognize and reward accomplishments, and offer
benefits that support the well-being of our employees and their families contribute to increased engagement
and fulfilling careers. Empowering our people and prioritizing accountability also are key components for
developing MPC’s high-performing culture, which is critical to achieving our strategic vision.
Employee Profile
As of December 31, 2020, we employed approximately 57,900 people in full-time and part-time roles.
Excluding employees of Speedway, which is targeted to be sold in the first quarter of 2021, we employ
approximately 18,600 people in full-time and part-time roles. Many of these employees provide services to
MPLX, for which we are reimbursed in accordance with employee service agreements. Approximately
3,770 of the 18,600 employees are covered by collective bargaining agreements.
Talent Management
Executing our strategic vision requires that we attract and retain the best talent. Recruiting and retention
success requires that we effectively nurture new employees, providing opportunities for long-term
engagement and career advancement. We also appropriately reward high-performers and offer competitive
benefits. Our Talent Acquisition team consists of three segments: Executive Recruiting, Experienced
Recruiting and University Recruiting. The specialization within each group allows us to specifically
address MPC’s broad range of current and future talent needs, as well as devote time and attention to
candidates during the hiring process. We value diverse perspectives in the workforce, and accordingly we
seek candidates with a variety of backgrounds and experience. Our primary source of full-time, entry-level
new hires is our intern/co-op program. Through our university recruiters, we offer college students who
have completed their freshman year the opportunity to participate in our hands-on programs focused in
areas of finance and accounting, marketing, engineering and IT.
We provide a broad range of leadership training opportunities to support the development of leaders at all
levels. Our programs, which are offered across the organization are a blended approach of business and
leadership content, with many featuring external faculty. We utilize various learning modalities, such as
visual, audio, print, tactile, interactive, kinesthetic, experiential and leader-teaching-leader to address and
engage different learning styles. We believe networking and access to our executive team are a key
leadership success factor, and we incorporate these opportunities into all of our programs.
Compensation and Benefits
To ensure we are offering competitive pay packages in our recruitment and retention efforts, we annually
benchmark compensation, including base salaries, bonus levels and equity targets. Our annual bonus
program is a critical component of our compensation, as it provides individual reward for MPC’s
achievement against preset financial and sustainability goals, encouraging a sense of employee ownership.
Employees in our officer-level pay grades, as well as senior leaders and most mid-level leaders, are eligible
to receive long-term equity incentive awards as part of their compensation.
We offer comprehensive benefits, including medical, dental and vision insurance for our employees, their
spouses or domestic partners, and their dependents. We also provide retirement programs, life insurance,
education assistance, family assistance, short-term disability and paid vacation and sick time. Following our
acquisition of Andeavor, we enhanced several of our benefits programs to reflect our larger, coast-to-coast
organization. We increased the maximum accrual cap for vacation banks and doubled the number of
college and trade school scholarships offered to the high school senior children of our employees through
the Marathon Petroleum Scholars Program. In addition, we increased our paid parental leave benefit to
eight weeks for birth mothers and four weeks for nonbirth parents, including adoptive and foster parents.
Both full-time and part-time employees are eligible for this benefit. Parents who both work for the
company are each eligible for a parental pay benefit.
Inclusion
Our company-wide Diversity and Inclusion (“D&I”) program is managed by a dedicated D&I Office team
and supported by leadership. Our program is based on our three-pillar D&I strategy, of building awareness,
increasing representation and ensuring success. The strategy focuses on understanding the benefits of
diverse perspectives, increasing diversity across the organization and recognizing that cultural inclusion is
an ongoing process. We have employee networks focusing on six populations: Asian, Black, Hispanic,
Veterans, Women and LGBTQ+. Our employee networks have approximately 60 chapters across the
company and all networks encourage ally membership. This broad support extends also to our leaders
throughout MPC, with each employee network represented by two active executive sponsors. The sponsors
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form several counsels that meet regularly to share updates, gain alignment, build deeper connections across
networks and pursue collaboration ideas. Our employee networks not only provide opportunities for our
employees to make meaningful and supportive connections, but they also serve a significant role in our
D&I strategy.
Safety
We are committed to safe operations to protect the health and safety of our employees, contractors and
communities. Our commitment to safe operations is reflected in our safety systems design, our well-
maintained equipment and by learning from our incidents. Part of our effort to promote safety includes a
management system based on the principles of RC14001®, the Plan-Do-Check-Act continual improvement
cycle, and our Operational Excellence Management System. Together, these components of our safety
management system provide us with a comprehensive approach to managing risks and preventing incidents,
illnesses and fatalities. Additionally, our annual cash bonus program metrics includes several employee,
process and environmental safety metrics.
The COVID-19 pandemic has underscored for us the importance of keeping our employees safe and
healthy. In March 2020, MPC activated its Corporate Emergency Response Team to ensure a consistent
and aggressive response across all facets of our company. The safety and health of our employees,
including our essential personnel, were our top priorities. As part of our existing pandemic plan, we had a
central inventory of N95 respirators, surgical masks, and nitrile gloves to supply to our employees and
contractors when the pandemic began. We implemented a number of protective measures to ensure
employee and contractor safety as they continued to keep our critical operations running safely. We
continue to monitor the situation and adapt our practices as appropriate.
Information about our Executive and Corporate Officers
The executive and corporate officers of MPC are as follows:
Age as of
February 1,
2021
61
58
51
60
55
55
59
41
60
54
61
54
59
47
49
54
54
38
62
61
Name
Michael J. Hennigan
Maryann T. Mannen
Timothy T. Griffith
Raymond L. Brooks
Brian C. Davis
Suzanne Gagle
Fiona C. Laird*
Ehren D. Powell*
C. Tracy Case*
David R. Heppner*
Richard A. Hernandez*
Rick D. Hessling*
Thomas Kaczynski
Brian K. Partee*
John J. Quaid
James R. Wilkins*
Molly R. Benson*
Kristina A. Kazarian*
D. Rick Linhardt*
Glenn M. Plumby*
* Corporate officer.
Position with MPC
President, Chief Executive Officer and Director
Executive Vice President and Chief Financial Officer
President, Speedway LLC
Executive Vice President, Refining
Executive Vice President and Chief Commercial Officer
General Counsel and Senior Vice President, Government Affairs
Chief Human Resources Officer and Senior Vice President,
Communications
Chief Digital Officer and Senior Vice President
Senior Vice President, Western Refining Operations
Senior Vice President, Strategy and Business Development
Senior Vice President, Eastern Refining Operations
Senior Vice President, Global Feedstocks
Senior Vice President, Finance, and Treasurer
Senior Vice President, Global Clean Products
Senior Vice President and Controller
Senior Vice President, Health, Environment, Safety and Security
Vice President, Chief Securities, Governance & Compliance Officer
and Corporate Secretary
Vice President, Investor Relations
Vice President, Tax
Executive Vice President and Chief Operating Officer, Speedway
LLC
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Mr. Hennigan was appointed President and Chief Executive Officer effective March 2020, and as a
member of the Board of Directors effective April 2020. He also has served as Chief Executive Officer of
MPLX since November 2019 and as President since June 2017. Before joining MPLX, Mr. Hennigan was
President, Crude, NGL and Refined Products, of the general partner of Energy Transfer Partners L.P., an
energy service provider. He was President and Chief Executive Officer of Sunoco Logistics Partners L.P.,
an oil and gas transportation, terminalling and storage company, from 2012 to 2017, President and Chief
Operating Officer beginning in 2010, and Vice President, Business Development, beginning in 2009.
Ms. Mannen was appointed Executive Vice President and Chief Financial Officer effective January 25,
2021. Before joining MPC, she served as Executive Vice President and Chief Financial Officer of
TechnipFMC (a successor to FMC Technologies, Inc.), a global leader in subsea, onshore/offshore, and
surface projects for the energy industry, since 2017, having previously served as Executive Vice President
and Chief Financial Officer of FMC Technologies, Inc. since 2014, Senior Vice President and Chief
Financial Officer since 2011, and in various positions of increasing responsibility with FMC Technologies,
Inc. since 1986.
Mr. Griffith was appointed President, Speedway LLC, effective July 2019. Prior to this appointment, he
served as Senior Vice President and Chief Financial Officer beginning in 2015, Vice President, Finance and
Investor Relations, and Treasurer beginning in 2014, and Vice President of Finance and Treasurer
beginning in 2011.
Mr. Brooks was appointed Executive Vice President, Refining, effective October 2018. Prior to this
appointment, he served as Senior Vice President, Refining, beginning in March 2016, General Manager of
the Galveston Bay refinery beginning in 2013, General Manager of the Robinson refinery beginning in
2010, and General Manager of the St. Paul Park, Minnesota refinery beginning in 2006.
Mr. Davis was appointed Executive Vice President and Chief Commercial Officer effective February 1,
2021. Before joining MPC, he spent 32 years with Royal Dutch Shell, a multinational oil and gas company,
in roles spanning the full oil and gas value chain, including most recently as Global Vice President, Energy
Solutions, from 2016 to 2020. Previous positions with Royal Dutch Shell include service as Group Vice
President, Corporate Strategy, from 2014 to 2016, Global Vice President, Base Chemicals, from 2011 to
2014, Global Vice President, Downstream Strategy, from 2009 to 2011 and General Manager, Refining and
Supply Strategy, from 2005 to 2009.
Ms. Gagle was appointed General Counsel and Senior Vice President, Government Affairs, effective
February 24, 2021. Prior to this appointment, she served as General Counsel beginning in March 2016,
Assistant General Counsel, Litigation and Human Resources, beginning in 2011, Senior Group Counsel,
Downstream Operations, beginning in 2010, and Group Counsel, Litigation, beginning in 2003.
Ms. Laird was appointed Chief Human Resources Officer and Senior Vice President, Communications,
effective February 24, 2021. Prior to this appointment, she served as Chief Human Resources Officer
beginning in October 2018, having previously served as Chief Human Resources Officer at Andeavor
beginning in February 2018. Before joining Andeavor, Ms. Laird was Chief Human Resources and
Communications Officer for Newell Brands, a global consumer goods company, beginning in May 2016
and Executive Vice President, Human Resources, for Unilever, a global consumer goods company,
beginning in 2011.
Mr. Powell was appointed Chief Digital Officer and Senior Vice President effective July 20, 2020. Before
joining MPC, he served as Vice President and Chief Information Officer (“CIO”) at GE Healthcare, a
segment of General Electric Company (“GE”) that provides medical technologies and services, beginning
in April 2018, having previously served as Senior Vice President and CIO, Services, of GE, a multinational
conglomerate, since January 2017 and CIO, Power Services, with GE Power since 2014, and in various
positions of increasing responsibility with GE and its subsidiaries since 2000.
Mr. Case was appointed Senior Vice President, Western Refining Operations, effective October 2018.
Prior to this appointment, he served as General Manager of the Garyville refinery beginning in 2014, and
General Manager of the Detroit refinery beginning in 2010.
Mr. Heppner was appointed Senior Vice President, Strategy and Business Development, effective
February 24, 2021. Prior to this appointment, he served as Vice President, Commercial and Business
Development, beginning in October 2018, Senior Vice President of Engineering Services and Corporate
Support of Speedway LLC beginning in 2014, and Director, Wholesale Marketing, beginning in 2010.
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Mr. Hernandez was appointed Senior Vice President, Eastern Refining Operations, effective October
2018. Prior to this appointment, he served as General Manager of the Galveston Bay refinery beginning in
February 2016, and General Manager of the Catlettsburg refinery beginning in 2013.
Mr. Hessling was appointed Senior Vice President, Global Feedstocks, effective February 24, 2021. Prior
to this appointment, he served as Senior Vice President, Crude Oil Supply and Logistics, beginning in
October 2018, Manager, Crude Oil & Natural Gas Supply and Trading, beginning in 2014, and Crude Oil
Logistics & Analysis Manager beginning in 2011.
Mr. Kaczynski was appointed Senior Vice President, Finance, and Treasurer effective February 24, 2021.
Prior to this appointment, he served as Vice President, Finance, and Treasurer since 2015. Before joining
MPC, Mr. Kaczynski was Vice President and Treasurer of Goodyear Tire and Rubber Company, one of the
world’s largest tire manufacturers, beginning in 2014, and Vice President, Investor Relations, beginning in
2013.
Mr. Partee was appointed Senior Vice President, Global Clean Products, effective February 24, 2021.
Prior to this appointment, he served as Senior Vice President, Marketing, beginning in October 2018, Vice
President, Business Development, beginning in February 2018, Director of Business Development
beginning in January 2017, Manager of Crude Oil Logistics beginning in 2014, and Vice President,
Business Development and Franchise, at Speedway beginning in 2012.
Mr. Quaid was appointed Senior Vice President and Controller effective April 1, 2020. Prior to this
appointment, he served as Vice President and Controller beginning in 2014. Before joining MPC, Mr.
Quaid was Vice President of Iron Ore at United States Steel Corporation, an integrated steel producer,
beginning in 2014, and Vice President and Treasurer beginning in 2011.
Mr. Wilkins was appointed Senior Vice President, Health, Environment, Safety and Security, effective
February 24, 2021. Prior to this appointment, he served as Vice President, Environment, Safety and
Security, beginning in October 2018, Director, Environment, Safety, Security and Product Quality,
beginning in February 2016, and Director, Refining Environmental, Safety, Security and Process Safety
Management, beginning in 2013.
Ms. Benson was appointed Vice President, Chief Securities, Governance & Compliance Officer and
Corporate Secretary effective June 2018, having previously served as Vice President, Chief Compliance
Officer and Corporate Secretary since March 2016. Prior to her 2016 appointment, she served as Assistant
General Counsel, Corporate and Finance, beginning in 2012, and Group Counsel, Corporate and Finance,
beginning in 2011.
Ms. Kazarian was appointed Vice President, Investor Relations, effective April 2018. Before joining
MPC, she was Managing Director and head of the MLP, Midstream and Refining Equity Research teams at
Credit Suisse, a global investment bank and financial services company, beginning in September 2017.
Previously, Ms. Kazarian was Managing Director of MLP, Midstream and Natural Gas Equity Research at
Deutsche Bank, a global investment bank and financial services company, beginning in 2014, and an
analyst specializing on various energy industry subsectors with Fidelity Management & Research
Company, a privately held investment manager, beginning in 2005.
Mr. Linhardt was appointed Vice President, Tax, effective February 2018. Prior to this appointment, he
served as Director of Tax beginning in June 2017, and Manager of Tax Compliance beginning in 2013.
Mr. Plumby was appointed Executive Vice President and Chief Operating Officer, Speedway LLC,
effective August 2019. Prior to this appointment, he served as Senior Vice President and Chief Operating
Officer, Speedway LLC, beginning in January 2018, Senior Vice President of Operations, Speedway LLC,
beginning in 2013, and Vice President of Operations, Speedway LLC, beginning in 2010.
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Available Information
and our Code of Ethics
for Senior Financial Officers,
General information about MPC, including our Corporate Governance Principles, our Code of Business
Conduct
at
www.marathonpetroleum.com under the “Investors” tab by selecting “Corporate Governance.” In addition,
our Code of Business Conduct and Code of Ethics for Senior Financial Officers are also available in this
same location. We will post on our website any amendments to, or waivers from, either of our codes
requiring disclosure under applicable rules within four business days of the amendment or waiver. Charters
for the Audit Committee, Compensation and Organization Development Committee, Corporate Governance
and Nominating Committee and Sustainability Committee are also available at this site under the “About”
tab by selecting “Board of Directors.”
can be
found
MPC uses its website, www.marathonpetroleum.com, as a channel for routine distribution of important
information, including news releases, analyst presentations, financial information and market data. Our
Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K, as well
as any amendments and exhibits to those reports, are available free of charge through our website as soon
as reasonably practicable after the reports are filed or furnished with the SEC. These documents are also
available in hard copy, free of charge, by contacting our Investor Relations office. In addition, our website
allows investors and other interested persons to sign up to automatically receive email alerts when we post
news releases and financial information on our website. Information contained on our website is not
incorporated into this Annual Report on Form 10-K or other securities filings.
ITEM 1A. RISK FACTORS
You should carefully consider each of the following risks and all the other information contained in this
Annual Report on Form 10-K in evaluating us and our common stock. Although the risks are organized by
headings, and each risk is discussed separately, many are interrelated. Our business, financial condition,
results of operations and cash flows could be materially and adversely affected by these risks, and, as a
result, the trading price of our common stock could decline.
Business and Operational Risks
The COVID-19 pandemic resulted in a significant decrease in demand for the petroleum products
that we manufacture, sell, transport and store, which has had, and may continue to have, a material
and adverse effect on our business and on general economic, financial and business conditions.
The COVID-19 pandemic continues to negatively impact worldwide economic and commercial activity.
Travel restrictions, business and school closures, increased remote work, stay-at-home orders and other
actions taken by individuals, governments and the private sector to stem the spread of the virus have
significantly reduced global economic activity, significantly reduced demand for the petroleum products
that we manufacture, sell, transport and store, and contributed to increased market and oil price volatility.
Our refinery utilization and operating margins and other aspects of our business have been adversely
impacted by these developments.
During 2020, there were significant variations in the market prices of products held in our inventories. In
each quarter of 2020, these variations required us to record either inventory valuation charges or benefits to
reflect the valuation of our inventories at the lower of cost or market.
Depending on future movements of refined product prices, future inventory valuation adjustments could
have a negative or positive effect on our financial performance. In addition, a sustained period of low crude
oil prices may also result in significant financial constraints on certain producers from which we acquire
our crude oil, which could result in long term crude oil supply constraints for our business. Such conditions
could also result in an increased risk that our customers and other counterparties may be unable to fully
fulfill their obligations in a timely manner, or at all.
Resurgences in COVID-19 infections could result in the imposition of new stay-at-home orders or other
restrictions to slow the spread of the virus, which could further weaken demand for the petroleum products
we manufacture, sell, transport and store, and could contribute to increased market and oil price volatility.
A prolonged period of economic slowdown or recession, or a protracted period of depressed prices for
crude oil or refined petroleum products, could continue to have significant and adverse consequences for
our financial condition and the financial condition of our customers, suppliers and other counterparties, and
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could diminish our liquidity, trigger additional impairments and negatively affect our ability to obtain
adequate crude oil volumes and to market certain of our products at favorable prices, or at all.
The ultimate extent to which COVID-19 will continue to negatively affect us and our customers, suppliers
and other counterparties will depend largely on the length and severity of the pandemic; actions taken by
individuals, governments and the private sector to stem the spread of the virus; general economic
conditions; and the availability and widespread distribution and use of safe and effective vaccines, all of
which cannot be predicted with certainty.
Our financial results are affected by volatile refining margins, which are dependent on factors
beyond our control.
Our operating results, cash flows, future rate of growth, the carrying value of our assets and our ability to
execute share repurchases and continue the payment of our base dividend are highly dependent on the
margins we realize on our refined products. Historically, refining and marketing margins have been
volatile, and we believe they will continue to be volatile. Our margins from the sale of gasoline and other
refined products are influenced by a number of conditions, including the price of crude oil. The price of
crude oil and the price at which we can sell our refined products may fluctuate independently due to a
variety of regional and global market factors that are beyond our control, including:
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worldwide and domestic supplies of and demand for crude oil and refined products;
transportation infrastructure availability, local market conditions and operation levels of other
refineries in our markets;
natural gas and electricity supply costs incurred by refineries;
political instability, threatened or actual terrorist incidents, armed conflict or other global political
conditions;
local weather conditions;
seasonality of demand in our marketing areas due to increased highway traffic in the spring and
summer months;
natural disasters such as hurricanes and tornadoes;
domestic and foreign governmental regulations and taxes; and
local, regional, national and worldwide economic conditions.
Some of these factors can vary by region and may change quickly, adding to market volatility, while others
may have longer-term effects. The longer-term effects of these and other factors on refining and marketing
margins are uncertain. We purchase our crude oil and other refinery feedstocks weeks before we refine
them and sell the refined products. Price level changes during the period between purchasing feedstocks
and selling the refined products from these feedstocks can have a significant effect on our financial results.
We also purchase refined products manufactured by others for resale to our customers. Price changes
during the periods between purchasing and reselling those refined products can have a material and adverse
effect on our business, financial condition, results of operations and cash flows.
Lower refining and marketing margins have in the past, and may in the future, lead us to reduce the amount
of refined products we produce, which may reduce our revenues, income from operations and cash flows.
Significant reductions in refining and marketing margins could require us to reduce our capital
expenditures, impair the carrying value of our assets (such as property, plant and equipment, inventory or
goodwill), and require us to re-evaluate practices regarding our repurchase activity and dividends.
Legal, technological, political and scientific developments regarding emissions and fuel efficiency
may decrease demand for transportation fuels.
Developments aimed at reducing greenhouse gas emissions or increasing vehicle efficiency may decrease
the demand or increase the cost for our transportation fuels. In March 2020, the U.S. Environmental
Protection Agency (the “EPA”) and the U.S. Department of Transportation’s National Highway Traffic
Safety Administration (“NHTSA”) released the final Safer Affordable Fuel-Efficient (“SAFE”) Vehicles
Rule setting corporate average fuel economy (“CAFE”) and carbon dioxide (“CO2”) standards for model
years 2021 through 2026 passenger cars and light trucks. The final rule increases the stringency of CAFE
and CO2 emission standards by 1.5 percent each year from model years 2021 through 2026. The rule has
been challenged in court and could be revised by the Biden Administration through notice and comment
rulemaking. In addition, California’s governor issued an executive order requiring sales of all new
passenger vehicles in the state be zero-emission by 2035. Other states have, or may issue, zero-emission
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vehicle mandates. Future developments involving climate change and environmental laws and regulations
may require heightened fuel efficiency standards.
Government efforts to steer the public toward non-petroleum-based fuel dependent modes of transportation
may foster a negative perception toward transportation fuels or increase costs for our products. New
technologies that increase fuel efficiency or offer alternative vehicle power sources and the proliferation of
alternative-fuel vehicles (i.e., vehicles that do not use petroleum-based transportation fuels or that are
powered by hybrid engines) may result in decreased demand for petroleum-based transportation fuel. These
developments could have a material and adverse effect on our business, financial condition, results of
operations and cash flows.
Our operations are subject to business interruptions and casualty losses, which could materially and
adversely affect our operations, financial condition, results of operations and cash flows.
Our operations are subject to business interruptions, such as scheduled and unscheduled refinery
turnarounds, unplanned maintenance, explosions, fires, refinery or pipeline releases, power outages, severe
weather, labor disputes, acts of terrorism, or other natural or man-made disasters. The inability to operate
one or more of our facilities due to any of these events could significantly impair our ability to manufacture
our products.
Explosions, fires, refinery or pipeline releases, product quality or other incidents may result in serious
personal injury or loss of human life, significant damage to property and equipment, environmental
pollution, impairment of operations and substantial losses to us. We have experienced certain of these
incidents in the past. For assets located near populated areas, the level of damage resulting from these risks
could be greater.
In addition, we operate in and adjacent to environmentally sensitive waters where tanker, pipeline, rail car
and refined product transportation and storage operations are closely regulated by federal, state and local
agencies and monitored by environmental interest groups. Certain of our refineries receive crude oil and
other feedstocks by tanker or barge. MPLX operates a fleet of boats and barges to transport light products,
heavy oils, crude oil, renewable fuels, chemicals and feedstocks to and from refineries and terminals owned
by MPC. Transportation and storage of crude oil, other feedstocks and refined products over and adjacent
to water involves inherent risk and subjects us to the provisions of the OPA-90 and state laws in U.S.
coastal and Great Lakes states and states bordering inland waterways on which we operate, as well as
international laws in the jurisdictions in which we operate. If we are unable to promptly and adequately
contain any accident or discharge involving tankers, pipelines, rail cars or above ground storage tanks
transporting or storing crude oil, other feedstocks or refined products, we may be subject to substantial
liability. In addition, the service providers contracted to aid us in a discharge response may be unavailable
due to weather conditions, governmental regulations or other local or global events.
Damages resulting from an incident involving any of our assets or operations may result in our being
named as a defendant in one or more lawsuits asserting potentially substantial claims or in our being
assessed potentially substantial fines by governmental authorities.
We rely on the performance of our information technology systems, and the interruption or failure of
any information technology system, including an interruption or failure due to a cybersecurity
breach, could have an adverse effect on our business, financial condition, results of operations and
cash flows.
We are heavily dependent on our information technology systems (and those of our third-party business
partners, whether cloud-based or hosted on proprietary servers), including our network infrastructure and
cloud applications, for the safe and effective operation of our business. We rely on such systems to process,
transmit and store electronic information, including financial records and personally identifiable
information such as employee, customer, investor and payroll data, and to manage or support a variety of
business processes, including our supply chain, pipeline operations, gathering and processing operations,
retail sales, credit card payments and authorizations at our retail outlets, financial transactions, banking and
numerous other processes and transactions. Our systems and infrastructure are subject to damage or
interruption from a number of potential sources including natural disasters, malware, power failures, cyber-
attacks and other events. We also face various other cybersecurity threats from criminal hackers and
employee malfeasance, including threats to gain unauthorized access to our computer network and systems
or render data or systems unusable.
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Our cybersecurity protections, infrastructure protection technologies, disaster recovery plans and employee
training may not be sufficient to defend us against all unauthorized attempts to access our information. We
have been and may in the future be subject to attempts to gain unauthorized access to our computer network
and systems. To date, the impacts of prior events have not had a material adverse effect on us.
Any cybersecurity incident involving our information technology systems or those of our third-party
business partners could result in theft, destruction, loss, misappropriation or release of confidential financial
and other data, intellectual property, customer awards or loyalty points; give rise to remediation or other
expenses; expose us to liability under federal and state laws; reduce our customers’ willingness to do
business with us; disrupt the services we provide to customers; and subject us to litigation and legal liability
under federal and state laws. Any of such results could have a material and adverse effect on our reputation,
business, financial condition, results of operations and cash flows.
Competition in our industry is intense, and very aggressive competition could adversely impact our
business.
We compete with a broad range of refining and marketing companies, including certain multinational oil
companies. Competitors with integrated operations with exploration and production resources and broader
access to resources may be better able to withstand volatile market conditions and to bear the risks inherent
in the refining industry. For example, competitors that engage in exploration and production of crude oil
may be better positioned to withstand periods of depressed refining margins or feedstock shortages.
We have agreed to sell Speedway to 7-Eleven. Nevertheless, pending closing of the Speedway sale, which
remains subject to customary closing conditions and the receipt of regulatory approvals, we still face strong
competition in the market for the retail sale of transportation fuels and merchandise. Our competitors
include outlets owned or operated by fully integrated major oil companies or their dealers or jobbers, and
other well-recognized national or regional retail outlets, often selling transportation fuels and merchandise
at very competitive prices. Non-traditional transportation fuel retailers, such as supermarkets, club stores
and mass merchants, may be better able to withstand volatile market conditions or levels of low or no
profitability in the retail segment of the market. These retailers may use promotional pricing or discounts,
both at the pump and in the store, to encourage in-store merchandise sales, which could in turn pressure us
to offer similar discounts. Additionally, the loss of market share by our convenience stores to these and
other retailers relating to either transportation fuels or merchandise could have a material adverse effect on
our business, financial condition, results of operations and cash flows.
We are subject to interruptions of supply and increased costs as a result of our reliance on third-
party transportation of crude oil and refined products.
We utilize the services of third parties to transport crude oil and refined products to and from our refineries.
In addition to our own operational risks, we could experience interruptions of supply or increases in costs to
deliver refined products to market if the ability of the pipelines, railways or vessels to transport crude oil or
refined products is disrupted because of weather events, accidents, governmental regulations or third-party
actions.
In particular, pipelines or railroads provide a nearly exclusive form of transportation of crude oil to, or
refined products from, some of our refineries. A prolonged interruption, material reduction or cessation of
service of such a pipeline or railway, whether due to private party or governmental action or other reason,
or any other prolonged disruption of the ability of the trucks, pipelines, railways or vessels to transport
crude oil or refined products to or from one or more of our refineries, could have a material adverse effect
on our business, financial condition, results of operations and cash flows.
A significant decrease in oil and natural gas production in MPLX’s areas of operation may adversely
affect MPLX’s business, financial condition, results of operations and cash available for distribution
to its unitholders, including MPC.
A significant portion of MPLX’s operations is dependent on the continued availability of natural gas and
crude oil production. The production from oil and natural gas reserves and wells owned by its producer
customers will naturally decline over time, which means that MPLX’s cash flows associated with these
wells will also decline over time. To maintain or increase throughput levels and the utilization rate of
MPLX’s facilities, MPLX must continually obtain new oil, natural gas, NGL and refined product supplies,
which depend in part on the level of successful drilling activity near its facilities, its ability to compete for
volumes from successful new wells and its ability to expand its system capacity as needed.
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We have no control over the level of drilling activity in the areas of MPLX’s operations, the amount of
reserves associated with the wells or the rate at which production from a well will decline. In addition, we
have no control over producers or their production decisions, which are affected by demand, prevailing and
projected energy prices, drilling costs, operational challenges, access to downstream markets, the level of
reserves, geological considerations, governmental regulations and the availability and cost of capital.
Reductions in exploration or production activity in MPLX’s areas of operations could lead to reduced
throughput on its pipelines and utilization rates of its facilities.
Decreases in energy prices can decrease drilling activity, production rates and investments by third parties
in the development of new oil and natural gas reserves. The prices for oil, natural gas and NGLs depend
upon factors beyond our control, including global and local demand, production levels, changes in
interstate pipeline gas quality specifications, imports and exports, seasonality and weather conditions,
economic and political conditions domestically and internationally and governmental regulations. Sustained
periods of low prices could result in producers deciding to limit their oil and gas drilling operations, which
could substantially delay the production and delivery of volumes of oil, natural gas and NGLs to MPLX’s
facilities and adversely affect their revenues and cash available for distribution to us.
This impact may also be exacerbated due to the extent of MPLX’s commodity-based contracts, which are
more directly impacted by changes in natural gas and NGL prices than its fee-based contracts due to frac
spread exposure and may result in operating losses when natural gas becomes more expensive on a Btu
equivalent basis than NGL products. In addition, the purchase and resale of natural gas and NGLs in the
ordinary course exposes our Midstream operations to volatility in natural gas or NGL prices due to the
potential difference in the time of the purchases and sales and the potential difference in the price
associated with each transaction, and direct exposure may also occur naturally as a result of production
processes. Also, the significant volatility in natural gas, NGL and oil prices could adversely impact
MPLX’s unit price, thereby increasing its distribution yield and cost of capital. Such impacts could
adversely impact MPLX’s ability to execute its long‑term organic growth projects, satisfy obligations to its
customers and make distributions to unitholders at intended levels, and may also result in non-cash
impairments of long-lived assets or goodwill or other-than-temporary non-cash impairments of our equity
method investments.
Severe weather events and other climate conditions may adversely affect our facilities and ongoing
operations.
Our facilities are subject to potential acute physical risks, such as floods, hurricane-force winds, wildfires
and snowstorms, and potential chronic physical risks, such as sea-level rise or water shortages. If any such
events were to occur, they could have an adverse effect on our assets and operations. We have incurred and
will continue to incur additional costs to protect our assets and operations from such physical risks and
employ the evolving technologies and processes available to mitigate such risks. To the extent such severe
weather events or other climate conditions increase in frequency and severity, we may be required to
modify operations and incur costs that could materially and adversely affect our business, financial
condition, results of operations and cash flows.
We are subject to risks arising from our operations outside the United States and generally to
worldwide political and economic developments.
We operate and sell some of our products outside the United States, particularly in Mexico, South America
and Asia. Our business, financial condition, results of operations and cash flows could be negatively
impacted by disruptions in any of these markets, including economic instability, restrictions on the transfer
of funds, duties and tariffs, transportation delays, difficulty in enforcing contractual provisions, import and
export controls, changes in governmental policies, labor unrest, security issues involving key personnel and
changing regulatory and political environments. Global outbreaks of infectious diseases, such as the current
COVID-19 pandemic, could affect demand for refined products and economic conditions generally. In
addition, if trade relationships deteriorate with these countries, if existing trade agreements are modified or
terminated, if new economic sanctions relevant to such jurisdictions are passed or if taxes, border
adjustments or tariffs make trading with these countries more costly, it could have a material adverse effect
on our business, financial condition, results of operations and cash flows.
We are required to comply with U.S. and international laws and regulations, including those involving anti-
bribery, anti-corruption and anti-money laundering. For example, the Foreign Corrupt Practices Act and
similar laws and regulations prohibit improper payments to foreign officials for the purpose of obtaining or
retaining business or gaining any business advantage. Our compliance policies and programs mandate
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compliance with all applicable anti-corruption laws but may not be completely effective in ensuring our
compliance. Our training and compliance program and our internal control policies and procedures may not
always protect us from violations committed by our employees or agents. Actual or alleged violations of
these laws could disrupt our business and cause us to incur significant legal expenses, and could result in a
material adverse effect on our reputation, business, financial condition, results of operations and cash flows.
More broadly, political and economic factors in global markets could impact crude oil and other feedstock
supplies and could have a material adverse effect on us in other ways. Hostilities in the Middle East or the
occurrence or threat of future terrorist attacks could adversely affect the economies of the U.S. and other
developed countries. A lower level of economic activity could result in a decline in energy consumption,
which could cause our revenues and margins to decline and limit our future growth prospects. These risks
could lead to increased volatility in prices for refined products, NGLs and natural gas. Additionally, these
risks could increase instability in the financial and insurance markets and make it more difficult or costly
for us to access capital and to obtain the insurance coverage that we consider adequate. Additionally, tax
policy, legislative or regulatory action and commercial restrictions could reduce our operating profitability.
For example, the U.S. government could prevent or restrict exports of refined products, NGLs, natural gas
or the conduct of business in or with certain foreign countries. In addition, foreign countries could restrict
imports, investments or commercial transactions.
Our investments in joint ventures could be adversely affected by our reliance on our joint venture
partners and their financial condition, and our joint venture partners may have interests or goals
that are inconsistent with ours.
We conduct some of our operations through joint ventures in which we share control over certain economic
and business interests with our joint venture partners. Our joint venture partners may have economic,
business or legal interests or goals that are inconsistent with our goals and interests or may be unable to
meet their obligations. Failure by us, or an entity in which we have an interest, to adequately manage the
risks associated with any acquisitions or joint ventures could have a material adverse effect on the financial
condition or results of operations of our joint ventures and adversely affect our reputation, business,
financial condition, results of operations and cash flows.
Terrorist attacks aimed at our facilities or that impact our customers or the markets we serve could
adversely affect our business.
Refining, gathering and processing, pipeline and terminal infrastructure, and other energy assets, may be
future targets of terrorist organizations. Any terrorist attack on our facilities, those of our customers and, in
some cases, those of other energy assets, could have a material adverse effect on our business. Similarly,
any future terrorist attacks that severely disrupt the markets we serve could materially and adversely affect
our results of operations, financial position and cash flows.
Financial Risks
We have significant debt obligations; therefore, our business, financial condition, results of
operations and cash flows could be harmed by a deterioration of our credit profile or downgrade of
our credit ratings, a decrease in debt capacity or unsecured commercial credit available to us, or by
factors adversely affecting credit markets generally.
At December 31, 2020, our total debt obligations for borrowed money and finance lease obligations were
$32.17 billion, including $20.54 billion of obligations of MPLX and its subsidiaries and $130 million of
obligations of Speedway. We may incur substantial additional debt obligations in the future.
Our indebtedness may impose various restrictions and covenants on us that could have material adverse
consequences, including:
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increasing our vulnerability to changing economic, regulatory and industry conditions;
limiting our ability to compete and our flexibility in planning for, or reacting to, changes in our
business and the industry;
limiting our ability to pay dividends to our stockholders;
limiting our ability to borrow additional funds; and
requiring us to dedicate a substantial portion of our cash flow from operations to payments on our
debt, thereby reducing funds available for working capital, capital expenditures, acquisitions, share
repurchases, dividends and other purposes.
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A decrease in our debt or commercial credit capacity, including unsecured credit extended by third-party
suppliers, or a deterioration in our credit profile could increase our costs of borrowing money and limit our
access to the capital markets and commercial credit. Our credit rating is determined by independent credit
rating agencies. We cannot provide assurance that any of our credit ratings will remain in effect for any
given period of time or that a rating will not be lowered or withdrawn entirely by a rating agency if, in its
judgment, circumstances so warrant. The planned Speedway sale could be a factor causing or contributing
to a future determination by one or more of the rating agencies to lower our credit rating. Any changes in
our credit capacity or credit profile could materially and adversely affect our business, financial condition,
results of operations and cash flows.
We have a trade receivables securitization facility that provides liquidity of up to $750 million depending
on the amount of eligible domestic trade accounts receivables outstanding. In periods of lower prices, we
may not have sufficient eligible accounts receivables to support full availability of this facility.
Our working capital, cash flows and liquidity can be significantly affected by decreases in commodity
prices.
Payment terms for our crude oil purchases are generally longer than the terms we extend to our customers
for refined product sales. As a result, the payables for our crude oil purchases are proportionally larger than
the receivables for our refined product sales. Due to this net payables position, a decrease in commodity
prices generally results in a use of working capital, and given the significant volume of crude oil that we
purchase the impact can materially affect our working capital, cash flows and liquidity.
The expected phase out of LIBOR could impact the interest rates paid on our variable rate
indebtedness and could cause our interest expense to increase.
A portion of our borrowing capacity and outstanding indebtedness bears interest at a variable rate based on
LIBOR. The ICE Benchmark Administration Limited (“ICE”) announced that it will cease calculating and
publishing all USD LIBOR tenors on June 30, 2023 and cease calculating and publishing certain USD
LIBOR tenors on December 31, 2021. Further, U.K. and U.S. regulatory authorities have recently issued
statements encouraging banks to cease entering into new USD LIBOR based loans as soon as possible and
by no later than December 31, 2021 and to continue to transition away from USD LIBOR based loans in
preparation of ICE ceasing to calculate and public LIBOR based rates on June 30, 2023. These
developments may cause fluctuations in LIBOR rates and pricing of USD LIBOR based loans that are not
transitioned to a new benchmark rate.
The agreements that govern our variable rate indebtedness contain customary transition and fallback
provisions in contemplation of the cessation of LIBOR. Nevertheless, at this time, it is not possible to
predict the effect that these developments, any discontinuance, modification or other reforms to LIBOR or
any other reference rate, or the establishment of alternative reference rates may have on LIBOR, other
benchmarks or floating rate indebtedness. Uncertainty as to the nature of such potential discontinuance,
modification, alternative reference rates or other reforms may materially adversely affect the trading market
for securities linked to such benchmarks. Furthermore, the use of alternative reference rates or other
reforms could cause the market value of, the applicable interest rate on and the amount of interest paid on
our floating rate indebtedness to be materially different than expected and could materially adversely
impact our ability to refinance such floating rate indebtedness or raise future indebtedness on a cost
effective basis.
We may incur losses and additional costs as a result of our forward-contract activities and derivative
transactions.
We currently use commodity derivative instruments, and we expect to continue their use in the future. If the
instruments we use to hedge our exposure to various types of risk are not effective, we may incur losses.
Derivative transactions involve the risk that counterparties may be unable to satisfy their obligations to us.
The risk of counterparty default is heightened in a poor economic environment. In addition, we may be
required to incur additional costs in connection with future regulation of derivative instruments to the extent
it is applicable to us.
We do not insure against all potential losses, and, therefore, our business, financial condition, results
of operations and cash flows could be adversely affected by unexpected liabilities and increased costs.
We maintain insurance coverage in amounts we believe to be prudent against many, but not all, potential
liabilities arising from operating hazards. Uninsured liabilities arising from operating hazards such as
explosions, fires, refinery or pipeline releases, cybersecurity breaches or other incidents involving our
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assets or operations, could reduce the funds available to us for capital and investment spending and could
have a material adverse effect on our business, financial condition, results of operations and cash flows.
Historically, we also have maintained insurance coverage for physical damage and resulting business
interruption to our major facilities, with significant self-insured retentions. In the future, we may not be able
to maintain insurance of the types and amounts we desire at reasonable rates.
We have recorded goodwill and other intangible assets that could become further impaired and
result in material non-cash charges to our results of operations.
We accounted for the Andeavor and other acquisitions using the acquisition method of accounting, which
requires that the assets and liabilities of the acquired business be recorded to our balance sheet at their
respective fair values as of the acquisition date. Any excess of the purchase consideration over the fair
value of the acquired net assets is recognized as goodwill.
As of December 31, 2020, our balance sheet reflected $8.3 billion and $2.4 billion of goodwill and other
intangible assets, respectively. In 2020, we recorded approximately $7.4 billion and $177 million in
goodwill and other intangible asset impairment expense, respectively. To the extent the value of goodwill
or intangible assets becomes further impaired, we may be required to incur additional material non-cash
charges relating to such impairment. Our operating results may be significantly impacted from both the
impairment and the underlying trends in the business that triggered the impairment.
Large capital projects can take years to complete, and market conditions could deteriorate
significantly between the project approval date and the project startup date, negatively impacting
project returns.
We have several large capital projects underway, including the activities associated with the conversion of
the Martinez refinery to a renewable diesel facility. Delays in completing capital projects or making
required changes or upgrades to our facilities could subject us to fines or penalties as well as affect our
ability to supply certain products we produce. Such delays or cost increases may arise as a result of
unpredictable factors, many of which are beyond our control, including:
•
•
•
•
•
denials of, delays in receiving, or revocations of requisite regulatory approvals or permits;
unplanned increases in the cost of construction materials or labor;
disruptions in transportation of components or construction materials;
adverse weather conditions, natural disasters or other events (such as equipment malfunctions,
explosions, fires or spills) affecting our facilities, or those of vendors or suppliers;
shortages of sufficiently skilled labor, or labor disagreements resulting in unplanned work
stoppages;
• market-related increases in a project’s debt or equity financing costs;
•
•
nonperformance by, or disputes with, vendors, suppliers, contractors or subcontractors; and
delays due to citizen, state or local political or activist pressure.
Any one or more of these factors could have a significant impact on our ongoing capital projects. If we
were unable to make up the delays associated with such factors or to recover the related costs, or if market
conditions change, it could materially and adversely affect our business, financial condition, results of
operations and cash flows.
Legal and Regulatory Risks
We expect to continue to incur substantial capital expenditures and operating costs to meet the
requirements of evolving environmental or other laws or regulations. Future environmental laws and
regulations may impact our current business plans and reduce demand for our products.
Our business is subject to numerous environmental laws and regulations. These laws and regulations
continue to increase in both number and complexity and affect our business. Laws and regulations expected
to become more stringent relate to the following:
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•
•
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the emission or discharge of materials into the environment,
solid and hazardous waste management,
the regulatory classification of materials currently or formerly used in our business,
pollution prevention,
greenhouse gas emissions,
climate change,
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•
•
•
•
•
characteristics and composition of transportation fuels, including the quantity of renewable fuels
that must be blended into transportation fuels,
public and employee safety and health,
permitting,
inherently safer technology, and
facility security.
The specific impact of laws and regulations, and their enforcement, on us and our competitors may vary
depending on a number of factors, including the age and location of operating facilities, marketing areas,
crude oil and feedstock sources, production processes and subsequent judicial interpretation of such laws
and regulations. We have incurred and will continue to incur substantial capital, operating and maintenance,
and remediation expenditures to modify operations, install pollution control equipment, perform site
cleanups or curtail operations. We may also face liability for personal injury, property damage, natural
resource damage or clean-up costs due to alleged contamination and/or exposure to chemicals or other
regulated materials, such as various perfluorinated compounds,
including perfluorooctanoate,
perfluorooctane sulfonate, perfluorohexane sulfonate, or other per-and polyfluoroalkyl substances, benzene,
MTBE and petroleum hydrocarbons, at or from our facilities. Such expenditures could materially and
adversely affect our business, financial condition, results of operations and cash flows.
Increased regulation of hydraulic fracturing and other oil and gas production activities could result
in reductions or delays in U.S. production of crude oil and natural gas, which could adversely affect
our results of operations and financial condition.
While we do not conduct hydraulic fracturing operations, we do provide gathering, processing and
fractionation services with respect to natural gas and natural gas liquids produced by our customers as a
result of such operations. Our refineries are also supplied in part with crude oil produced from
unconventional oil shale reservoirs. A range of federal, state and local laws and regulations currently
govern or, in some cases, prohibit, hydraulic fracturing in some jurisdictions. Stricter laws, regulations and
permitting processes may be enacted in the future. For example, President Biden has suspended new oil and
gas permitting on public lands and properties, and has proposed modifying royalties to account for climate
costs. If these or other federal, state and local legislation and regulatory initiatives relating to hydraulic
fracturing or other oil and gas production activities are enacted or expanded, such efforts could impede oil
and gas production, increase producers’ cost of compliance, and result in reduced volumes available for our
midstream assets to gather, process and fractionate.
Climate change and greenhouse gas emission regulation could affect our operations, energy
consumption patterns and regulatory obligations, any of which could affect our results of operations
and financial condition.
Currently, multiple legislative and regulatory measures to address greenhouse gas (including carbon
dioxide, methane and nitrous oxides) and other emissions are in various phases of consideration,
promulgation or implementation. These include actions to develop international, federal, regional or
statewide programs, which could require reductions in our greenhouse gas or other emissions, establish a
carbon tax and decrease the demand for refined products. Requiring reductions in these emissions could
result in increased costs to (i) operate and maintain our facilities, (ii) install new emission controls at our
facilities and (iii) administer and manage any emissions programs, including acquiring emission credits or
allotments.
For example, in 2017, the California state legislature adopted AB 398, which provides direction and
parameters on utilizing cap and trade after 2020 to meet the 40 percent reduction target from 1990 levels by
2030 specified in SB 32. Compliance with the cap and trade program is demonstrated through a market-
based credit system. Additionally, the CARB is now exploring the potential for additional greenhouse gas
reductions by 2045 via a yet undefined carbon neutrality standard. Other states are proposing, or have
already promulgated, low carbon fuel standards or similar initiatives to reduce emissions from the
transportation sector. If we are unable to pass the costs of compliance on to our customers, sufficient credits
are unavailable for purchase, we have to pay a significantly higher price for credits, or if we are otherwise
unable to meet our compliance obligation, our financial condition and results of operations could be
adversely affected.
Regional and state climate change and air emissions goals and regulatory programs are complex, subject to
change and considerable uncertainty due to a number of factors including technological feasibility, legal
challenges and potential changes in federal policy. Increasing concerns about climate change and carbon
28
intensity have also resulted in societal concerns and a number of international and national measures to
limit greenhouse gas emissions. Additional stricter measures and investor pressure can be expected in the
future and any of these changes may have a material adverse impact on our business or financial condition.
International climate change-related efforts, such as the 2015 United Nations Conference on Climate
Change, which led to the creation of the Paris Agreement, may impact the regulatory framework of states
whose policies directly influence our present and future operations. Though the United States had
withdrawn from the Paris Agreement, President Biden issued an executive order recommitting the United
States to the Paris Agreement on January 20, 2021. President Biden also issued an Executive Order on
climate change in which he announced putting the U.S. on a path to achieve net-zero carbon emissions,
economy-wide, by 2050. The Executive Order also calls for the federal government to pause oil and gas
leasing on federal lands, reduce methane emissions from the oil and gas sector as quickly as possible, and
requires federal permitting decisions to consider the effects of greenhouse gas emissions and climate
change. In a second Executive Order, President Biden reestablished a working group to develop the social
cost of carbon and the social cost of methane. The social cost of carbon and social cost of methane can be
used to weigh the costs and benefits of proposed regulations. A higher social cost of carbon could support
more stringent greenhouse gas emission regulation.
The scope and magnitude of the changes to U.S. climate change strategy under the Biden administration
and future administrations, however, remain subject to the passage of legislation and interpretation and
action of federal and state regulatory bodies; therefore, the impact to our industry and operations due to
greenhouse gas regulation is unknown at this time.
Energy assets and companies are subject to increasing environmental and climate-related litigation.
Governmental and other entities in various U.S. states have filed lawsuits against coal, gas, oil and
petroleum companies, including us. The lawsuits allege damages as a result of climate change and the
plaintiffs are seeking unspecified damages and abatement under various tort theories. Similar lawsuits may
be filed in other jurisdictions. Additionally, private plaintiffs and government parties have undertaken
efforts to shut down energy assets by challenging operating permits, the validity of easements or the
compliance with easement conditions. For example, the Dakota Access Pipeline, in which MPLX has a
minority interest, has been subject to litigation in which plaintiffs have challenged the validity of an
easement necessary for the operation of the pipeline and demanded a permanent shutdown of the pipeline.
There remains a high degree of uncertainty regarding the ultimate outcome of these types of proceedings, as
well as their potential effect on our business, financial condition, results of operation and cash flows.
We are subject to risks associated with societal and political pressures and other forms of opposition
to the development, transportation and use of carbon-based fuels. Such risks could adversely impact
our business and ability to realize certain growth strategies.
We operate and develop our business with the expectation that regulations and societal sentiment will
continue to enable the development, transportation and use of carbon-based fuels. However, policy
decisions relating to the production, refining, transportation, storage and marketing of carbon-based fuels
are subject to political pressures and the influence and protests of environmental and other special interest
groups.
The approval process for storage and transportation projects has become increasingly challenging, due in
part to state and local concerns related to pipelines, negative public perception regarding the oil and gas
industry, and concerns regarding greenhouse gas emissions downstream of pipeline operations. In addition,
government disruptions may delay or halt the granting and renewal of permits, licenses and other items
required by us and our customers to conduct our business. Our expansion or construction projects may not
be completed on schedule (or at all), or at the budgeted cost. We also may be required to incur additional
costs and expenses in connection with the design and installation of our facilities due to their location and
the surrounding terrain. We may be required to install additional facilities, incur additional capital and
operating expenditures, or experience interruptions in or impairments of our operations to the extent that
the facilities are not designed or installed correctly.
Moreover, our revenues may not increase immediately upon the expenditure of funds on a particular
project. For instance, if we build a new pipeline, the construction will occur over an extended period of
time and we may not receive any material increases in revenues until after completion of the project, if at
all. Delays or cost increases related to capital spending programs involving engineering, procurement and
construction of facilities (including improvements and repairs to our existing facilities) could adversely
29
affect our ability to achieve forecasted internal rates of return and operating results, thereby limiting our
ability to grow and generate cash flows.
Regulatory and other requirements concerning the transportation of crude oil and other
commodities by rail may cause increases in transportation costs or limit the amount of crude oil that
we can transport by rail.
We rely on a variety of systems to transport crude oil, including rail. Rail transportation is regulated by
federal, state and local authorities. New regulations or changes in existing regulations could result in
increased compliance expenditures. For example, in 2015, the U.S. Department of Transportation issued
new standards and regulations applicable to crude-by-rail transportation (Enhanced Tank Car Standards and
Operational Controls for High-Hazard Flammable Trains). These or other regulations that require the
reduction of volatile or flammable constituents in crude oil that is transported by rail, change the design or
standards for rail cars used to transport the crude oil we purchase, change the routing or scheduling of trains
carrying crude oil, or require any other changes that detrimentally affect the economics of delivering North
American crude oil by rail could increase the time required to move crude oil from production areas to our
refineries, increase the cost of rail transportation and decrease the efficiency of shipments of crude oil by
rail within our operations. Any of these outcomes could have a material adverse effect on our business and
results of operations.
Historic or current operations could subject us to significant legal liability or restrict our ability to
operate.
We currently are defending litigation and anticipate we will be required to defend new litigation in the
future. Our operations, including those of MPLX, and those of our predecessors could expose us to
litigation and civil claims by private plaintiffs for alleged damages related to contamination of the
environment or personal injuries caused by releases of hazardous substances from our facilities, products
liability, consumer credit or privacy laws, product pricing or antitrust laws or any other laws or regulations
that apply to our operations. While an adverse outcome in most litigation matters would not be expected to
be material to us, in class-action litigation, large classes of plaintiffs may allege damages relating to
extended periods of time or other alleged facts and circumstances that could increase the amount of
potential damages. Attorneys general and other government officials have in the past and may in the future
pursue litigation in which they seek to recover civil damages from companies on behalf of a state or its
citizens for a variety of claims, including violation of consumer protection and product pricing laws or
natural resources damages. We are defending litigation of that type and anticipate that we will be required
to defend new litigation of that type in the future. If we are not able to successfully defend such litigation, it
may result in liability to our company that could materially and adversely affect our business, financial
condition, results of operations and cash flows. In addition to substantial liability, plaintiffs in litigation
may also seek injunctive relief which, if imposed, could have a material adverse effect on our future
business, financial condition, results of operations and cash flows.
A portion of our workforce is unionized, and we may face labor disruptions that could materially and
adversely affect our business, financial condition, results of operations and cash flows.
Approximately 3,771 of our employees are covered by collective bargaining agreements. Of these
employees, approximately 192 employees at our St. Paul Park refinery are covered by a collective
bargaining agreement which expired on December 31, 2020. Approximately 231 employees at our El Paso
refinery are covered by a collective bargaining agreement scheduled to expire in April 2021.
Approximately 2,390 employees at our Anacortes, Canton, Catlettsburg, Galveston Bay, Los Angeles,
Mandan, Martinez and Salt Lake City refineries are covered by collective bargaining agreements that are
due to expire on February 1, 2022. The remaining 958 hourly represented employees are covered by
collective bargaining agreements with expiration dates ranging from 2021 to 2024. These agreements may
be renewed at an increased cost to us. In addition, we have experienced in the past, and may experience in
the future, work stoppages as a result of labor disagreements. For example, approximately 192 workers at
our St. Paul Park refinery have been on strike since January 21, 2021. Any prolonged work stoppages
disrupting operations could have a material adverse effect on our business, financial condition, results of
operations and cash flows.
In addition, California requires refinery owners to pay prevailing wages to contract craft workers and
restricts refiners’ ability to hire qualified employees to a limited pool of applicants. Legislation or changes
in regulations could result in labor shortages, higher labor costs, and an increased risk that contract workers
become joint employees, which could trigger bargaining issues, and wage and benefit consequences,
especially during critical maintenance and construction periods.
30
One of our subsidiaries acts as the general partner of a master limited partnership, which may
expose us to certain legal liabilities.
One of our subsidiaries acts as the general partner of MPLX, a master limited partnership. Our control of
the general partner of MPLX may increase the possibility of claims of breach of fiduciary duties, including
claims of conflicts of interest. Any liability resulting from such claims could have a material adverse effect
on our future business, financial condition, results of operations and cash flows.
If foreign investment in us or MPLX exceeds certain levels, MPLX could be prohibited from
operating inland river vessels, which could adversely affect MPLX’s business, financial condition,
results of operations and cash available for distribution to its unitholders, including MPC.
The Shipping Act of 1916 and Merchant Marine Act of 1920 (collectively, the “Maritime Laws”), generally
require that vessels engaged in U.S. coastwise trade be owned by U.S. citizens. Among other requirements
to establish citizenship, entities that own such vessels must be owned at least 75 percent by U.S. citizens. If
we fail to maintain compliance with the Maritime Laws, MPLX would be prohibited from operating vessels
in the U.S. inland waters. Such a prohibition could materially and adversely affect our business, financial
condition, results of operations and cash flows.
Our operations could be disrupted if we are unable to maintain or obtain real property rights
required for our business.
We do not own all of the land on which certain of our assets are located, particularly our midstream assets,
but rather obtain the rights to construct and operate such assets on land owned by third parties and
governmental agencies for a specific period of time. Therefore, we are subject to the possibility of more
burdensome terms and increased costs to retain necessary land use if our leases, rights-of-way or other
property rights lapse, terminate or are reduced or it is determined that we do not have valid leases, rights-
of-way or other property rights. Any loss of or reduction in these rights, including loss or reduction due to
legal, governmental or other actions or difficulty renewing leases, right-of-way agreements or permits on
satisfactory terms or at all, could have a material adverse effect on our business, financial condition, results
of operations and cash flows.
Certain of our facilities are located on Native American tribal lands and are subject to various
federal and tribal approvals and regulations, which may increase our costs and delay or prevent our
efforts to conduct planned operations.
Various federal agencies within the U.S. Department of the Interior, particularly the Bureau of Indian
Affairs, Bureau of Land Management, and the Office of Natural Resources Revenue, along with each
Native American tribe, regulate natural gas and oil operations on Native American tribal lands, including
drilling and production requirements and environmental standards. In addition, each Native American tribe
is a sovereign nation having the right to enforce laws and regulations and to grant approvals independent
from federal, state and local statutes and regulations. These tribal laws and regulations include various
taxes, fees, requirements to employ Native American tribal members and other conditions that apply to
operators and contractors conducting operations on Native American tribal lands. Persons conducting
operations on tribal lands are generally subject to the Native American tribal court system. In addition, if
our relationships with any of the relevant Native American tribes were to deteriorate, we could face
significant risks to our ability to continue operations on Native American tribal lands. One or more of these
factors may increase our cost of doing business on Native American tribal lands and impact the viability of,
or prevent or delay our ability to conduct operations on such lands.
The Court of Chancery of the State of Delaware will be, to the extent permitted by law, the sole and
exclusive forum for substantially all disputes between us and our shareholders.
Our Restated Certificate of Incorporation provides that the Court of Chancery of the State of Delaware will
be the sole and exclusive forum for:
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•
•
•
any derivative action or proceeding brought on behalf of MPC;
any action asserting a claim of breach of a fiduciary duty owed by any director or officer of MPC
to MPC or its stockholders
any action asserting a claim against MPC arising pursuant to any provision of the General
Corporation Law of the State of Delaware, MPC’s Restated Certificate of Incorporation, any
Preferred Stock Designation or the Bylaws of MPC; or
any other action asserting a claim against MPC or any Director or officer of MPC that is governed
by or subject to the internal affairs doctrine for choice of law purposes.
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The forum selection provision may restrict a stockholder’s ability to bring a claim against us or directors or
officers of MPC in a forum that it finds favorable, which may discourage stockholders from bringing such
claims at all. Alternatively, if a court were to find the forum selection provision contained in our Restated
Certificate of Incorporation to be inapplicable or unenforceable in an action, we may incur additional costs
associated with resolving such action in another forum, which could materially adversely affect our
business, financial condition and results of operations. However, the forum selection provision does not
apply to any claims, actions or proceedings arising under the Securities Act or the Exchange Act.
Provisions in our corporate governance documents could operate to delay or prevent a change in
control of our company, dilute the voting power or reduce the value of our capital stock or affect its
liquidity.
The existence of some provisions within our restated certificate of incorporation and amended and restated
bylaws could discourage, delay or prevent a change in control of us that a stockholder may consider
favorable. These include provisions:
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•
providing that our board of directors fixes the number of members of the board;
providing for the division of our board of directors into three classes with staggered terms;
providing that only our board of directors may fill board vacancies;
limiting who may call special meetings of stockholders;
prohibiting stockholder action by written consent, thereby requiring stockholder action to be taken
at a meeting of the stockholders;
establishing advance notice requirements for nominations of candidates for election to our board
of directors or for proposing matters that can be acted on by stockholders at stockholder meetings;
establishing supermajority vote requirements for certain amendments to our restated certificate of
incorporation;
providing that our directors may only be removed for cause;
authorizing a large number of shares of common stock that are not yet issued, which would allow
our board of directors to issue shares to persons friendly to current management, thereby
protecting the continuity of our management, or which could be used to dilute the stock ownership
of persons seeking to obtain control of us; and
authorizing the issuance of “blank check” preferred stock, which could be issued by our board of
directors to increase the number of outstanding shares and thwart a takeover attempt.
Our restated certificate of incorporation also authorizes us to issue, without the approval of our
stockholders, one or more classes or series of preferred stock having such designation, powers, preferences
and relative, participating, optional and other special rights, including preferences over our common stock
respecting dividends and distributions, as our board of directors generally may determine. The terms of one
or more classes or series of preferred stock could dilute the voting power or reduce the value of our
common stock. For example, we could grant holders of preferred stock the right to elect some number of
our board of directors in all events or on the happening of specified events or the right to veto specified
transactions. Similarly, the repurchase or redemption rights or liquidation preferences we could assign to
holders of preferred stock could affect the residual value of our common stock.
Finally, to facilitate compliance with the Maritime Laws, our restated certificate of incorporation limits the
aggregate percentage ownership by non-U.S. citizens of our common stock or any other class of our capital
stock to 23 percent of the outstanding shares. We may prohibit transfers that would cause ownership of our
common stock or any other class of our capital stock by non-U.S. citizens to exceed 23 percent. Our
restated certificate of incorporation also authorizes us to effect any and all measures necessary or desirable
to monitor and limit foreign ownership of our common stock or any other class of our capital stock. These
limitations could have an adverse impact on the liquidity of the market for our common stock if holders are
unable to transfer shares to non-U.S. citizens due to the limitations on ownership by non-U.S. citizens. Any
such limitation on the liquidity of the market for our common stock could adversely impact the market
price of our common stock.
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Strategic Transaction Risks
Our pending sale of Speedway to 7-Eleven is subject to conditions, including certain conditions that
may not be satisfied or completed on a timely basis, if at all. Failure to complete the Speedway sale
could have a material and adverse effect on us. Even if completed, the Speedway sale may not achieve
the intended benefits.
We have announced our agreement to sell Speedway, our company-owned and operated retail
transportation fuel and convenience store business, to 7-Eleven. The sale, which is targeted for completion
in the first quarter of 2021, is subject to customary conditions. We and 7-Eleven may be unable to satisfy
such conditions to the closing of the sale in a timely manner or at all and, accordingly, the Speedway sale
may be delayed or may not be completed. Failure to complete the Speedway sale could have a material and
adverse effect on us, including by delaying our strategic and other objectives relating to the separation of
Speedway and adversely affecting our plans to use the proceeds from the sale to strengthen our balance
sheet and return capital to our shareholders. Even if the sale is completed, we may not realize some or all
the expected benefits. For example, we may be unable to utilize the proceeds from the sale as anticipated or
capture the value we expect from our plans to strengthen our balance sheet and return capital to our
shareholders. Executing the Speedway sale will require significant time and attention from management,
which could divert attention from the management of our operations and the pursuit of our business
strategies. If the proposed Speedway sale is completed, our diversification of revenue sources will
diminish, and it is possible that our business, financial condition, results of operations and cash flows may
be subject to increased volatility as a result.
General Risk Factors
Significant stockholders may attempt to effect changes at our company or acquire control over our
company, which could impact the pursuit of business strategies and adversely affect our results of
operations and financial condition.
Our stockholders may from time to time engage in proxy solicitations, advance stockholder proposals or
otherwise attempt to effect changes or acquire control over our company. Campaigns by stockholders to
effect changes at publicly traded companies are sometimes led by investors seeking to increase short-term
stockholder value through actions such as financial restructuring, increased debt, special dividends, stock
repurchases or sales of assets or the entire company. Responding to proxy contests and other actions by
activist stockholders can be costly and time-consuming and could divert the attention of our board of
directors and senior management from the management of our operations and the pursuit of our business
strategies. As a result, stockholder campaigns could adversely affect our results of operations and financial
condition.
Future acquisitions will involve the integration of new assets or businesses and may present
substantial risks that could adversely affect our business, financial conditions, results of operations
and cash flows.
Future transactions involving the addition of new assets or businesses will present potential risks, which
may include, among others:
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inaccurate assumptions about future synergies, revenues, capital expenditures and operating costs;
an inability to successfully integrate, or a delay in the successful integration of, assets or
businesses we acquire;
a decrease in our liquidity resulting from using a portion of our available cash or borrowing
capacity under our revolving credit agreement to finance transactions;
a significant increase in our interest expense or financial leverage if we incur additional debt to
finance transactions;
the assumption of unknown environmental and other liabilities, losses or costs for which we are
not indemnified or for which our indemnity is inadequate;
the diversion of management’s attention from other business concerns;
the loss of customers or key employees from the acquired business; and
the incurrence of other significant charges, such as impairment of goodwill or other intangible
assets, asset devaluation or restructuring charges.
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Compliance with and changes in tax laws could materially and adversely impact our financial
condition, results of operations and cash flows.
We are subject to extensive tax liabilities, including federal and state income taxes and transactional taxes
such as excise, sales and use, payroll, franchise, withholding and property taxes. New tax laws and
regulations and changes in existing tax laws and regulations could result in increased expenditures by us for
tax liabilities in the future and could materially and adversely impact our financial condition, results of
operations and cash flows.
Additionally, many tax liabilities are subject to periodic audits by taxing authorities, and such audits could
subject us to interest and penalties.
ITEM 1B. UNRESOLVED STAFF COMMENTS
None.
ITEM 2. PROPERTIES
We believe that our properties and facilities are adequate for our operations and that our facilities are
adequately maintained. See the following sections for details of our assets by segment.
REFINING & MARKETING
The table below sets forth the location and crude oil refining capacity for each of our refineries as of
December 31, 2020. Refining throughput can exceed crude oil refining capacity due to the processing of
other charge and blendstocks in addition to crude oil and the timing of planned turnaround and major
maintenance activity.
Refinery
Gulf Coast Region
Galveston Bay, Texas City, Texas
Garyville, Louisiana
Subtotal Gulf Coast region
Mid-Continent Region
Catlettsburg, Kentucky
Robinson, Illinois
Detroit, Michigan
El Paso, Texas
St. Paul Park, Minnesota
Canton, Ohio
Mandan, North Dakota
Salt Lake City, Utah
Subtotal Mid-Continent region
West Coast Region
Los Angeles, California
Anacortes, Washington
Kenai, Alaska
Subtotal West Coast region
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Crude Oil Refining
Capacity (mbpcd)
593
578
1,171
291
253
140
131
104
97
71
66
1,153
363
119
68
550
2,874
The following table sets forth the location and capacity of our renewable fuel production facilities as of
December 31, 2020.
Location
Dickinson, North Dakota
Cincinnati, Ohio
Capacity
(gallons per year)
184 million
91 million
The company also progressed activities associated with the conversion of the Martinez refinery to a
renewable diesel facility. The full capacity of the Martinez facility would be approximately 730 million
gallons per year.
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The following table sets forth the approximate number of locations where jobbers maintain branded outlets,
marketing fuels under the Marathon, Shell, ARCO, Mobil, Tesoro and other brands, as of December 31,
2020.
Location
Alabama
Alaska
Arizona
California
Colorado
District of Columbia
Florida
Georgia
Idaho
Illinois
Indiana
Iowa
Kentucky
Louisiana
Maryland
Mexico
Michigan
Minnesota
Mississippi
Nevada
New Mexico
New York
North Carolina
North Dakota
Ohio
Oregon
Pennsylvania
South Carolina
South Dakota
Tennessee
Texas
Utah
Virginia
Washington
West Virginia
Wisconsin
Wyoming
Total
Number of
Branded Outlets
392
44
95
98
12
2
668
365
100
201
642
4
515
37
53
261
779
295
105
13
36
49
203
113
819
45
88
116
30
409
3
96
160
67
107
63
5
7,090
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The Refining & Marketing segment sells transportation fuels through long-term fuel supply contracts to
direct dealer locations, primarily under the ARCO brand. The following table sets forth the number of
direct dealer locations by state as of December 31, 2020.
Location
Arizona
California
Nevada
New Mexico
Texas
Washington
Total
Number of
Locations
72
944
63
12
1
1
1,093
The following table sets forth details about our Refining & Marketing owned and operated terminals as of
December 31, 2020. See the Midstream - MPLX section for information with respect to MPLX owned and
operated terminals.
Owned and Operated Terminals
Light Products Terminals:
Alaska
New York
Ohio
Subtotal light products terminals
Asphalt Terminals:
Florida
Indiana
Kentucky
Louisiana
Michigan
New York
Ohio
Pennsylvania
Tennessee
Subtotal asphalt terminals
Total owned and operated terminals
Number of
Terminals
Tank Storage
Capacity
(thousand barrels)
1
1
1
3
1
1
4
1
1
1
4
1
2
16
19
206
328
125
659
263
120
548
54
12
417
1,006
355
483
3,258
3,917
37
MIDSTREAM - MPLX
The following tables set forth certain information relating to MPLX’s crude oil, refined products and water
pipeline and gathering systems and storage assets as of December 31, 2020.
Diameter
(inches)
2” - 48”
4” - 36”
3”- 6”
4” - 8”
Pipeline System or Storage Asset
Total crude oil pipeline systems(b)(c)(d)
Total refined products pipeline systems(b)(e)(f)
Water pipeline systems:
Belfield water system
Green River water system
Total
Barge Docks (thousand barrels)
Storage assets (thousand barrels):
Refinery Logistics - tank storage(g)
Mt. Airy Terminal
Tank Farms
Caverns
Length
(miles)
Capacity(a)
8,125
5,655
106
11
117
Various
Various
Various
Various
2,490
96,357
5,307
32,911
4,375
(a)
(b)
(c)
(d)
(e)
(f)
(g)
All capacities reflect 100 percent of the pipeline systems’ and barge docks’ average capacity in thousands of barrels per day and
100 percent of the available storage capacity of our caverns and tank farms in thousands of barrels.
Includes pipelines leased from third parties.
Includes approximately 1,916 miles of pipeline in which MPLX has a 9.2 percent ownership interest, 168 miles of pipeline in
which MPLX has a 35.0 percent ownership interest, 48 miles of pipeline in which MPLX has a 40.7 percent ownership interest,
57 miles of pipeline in which MPLX has a 58.5 percent ownership interest, 107 miles of pipeline in which MPLX has a 67.0
percent ownership interest and 975 miles of pipeline in which MPLX has a 17.0 percent ownership interest.
Includes approximately 696 miles of inactive pipeline.
Includes approximately 1,830 miles of pipeline in which MPLX has a 24.5 percent ownership interest, 87 miles of pipeline in
which MPLX has a 65.16 percent ownership interest and 43 miles of refined product pipeline in which MPLX has a 25 percent
interest.
Includes approximately 247 miles of inactive pipeline.
Refining logistics assets also include rail racks, truck racks and docks.
38
The following table sets forth details about MPLX owned and operated terminals as of December 31, 2020.
Additionally, MPLX operates one leased terminal and has partial ownership interest in one terminal.
Owned and Operated Terminals
Refined Products Terminals:
Number of
Terminals
Tank Storage
Capacity
(thousand barrels)
Alabama
Alaska
California
Florida
Georgia
Idaho
Illinois
Indiana
Kentucky
Louisiana
Michigan
Minnesota
New Mexico
North Carolina
North Dakota
Ohio
Pennsylvania
South Carolina
Tennessee
Texas
Utah
Washington
West Virginia
Subtotal light products terminals
Asphalt Terminals
Arizona
California
Minnesota
Nevada(a)
New Mexico
Texas
Subtotal asphalt terminals
Total owned and operated terminals
(a) MPLX accounts for as an equity method investment.
2
3
8
4
4
3
4
6
6
1
8
1
3
3
1
12
1
1
4
1
1
4
2
83
3
3
1
1
1
1
10
93
443
1,510
3,421
3,407
982
998
1,221
3,229
2,587
97
2,440
13
711
1,508
1
3,218
390
371
1,149
72
47
908
1,587
30,310
538
701
529
273
38
193
2,272
32,582
The following table sets forth details about MPLX barges and towboats as of December 31, 2020.
Class of Equipment
Inland tank barges(a)
Inland towboats
(a) All of our barges are double-hulled.
Number
in Class
Capacity
(thousand barrels)
300
23
7,931
N/A
39
The following tables set forth certain information relating to MPLX’s consolidated and operated joint
venture gas processing facilities, fractionation facilities, natural gas gathering systems, NGL pipelines and
natural gas pipelines as of December 31, 2020. All throughputs and utilizations included are weighted-
averages for days in operation.
Gas Processing Complexes
Marcellus Shale
Utica Shale
Southern Appalachia
Southwest(b)
Bakken
Rockies
Total
Design
Throughput
Capacity
(MMcf/d)
Natural Gas
Throughput
(MMcf/d)(a)
Utilization
of Design
Capacity(a)
6,172
1,325
620
2,067
190
1,472
11,846
5,629
578
231
1,361
136
502
8,437
91 %
44 %
37 %
68 %
72 %
34 %
72 %
(a) Natural gas throughput is a weighted average for days in operation. The utilization of design capacity has been calculated using
the weighted average design throughput capacity.
(b) Centrahoma Processing LLC’s processing capacity of 550 MMcf/d and actual throughput of 176 MMcf/d are not included in this
table as MPLX owns a non-operating 40 percent interest in this joint venture.
Fractionation & Condensate Stabilization
Complexes
Marcellus Shale
Utica Shale
Southern Appalachia
Southwest
Bakken
Rockies
Total
Design
Throughput
Capacity
(mbpd)
NGL
Throughput
(mbpd)(a)
Utilization
of Design
Capacity(a)
427
23
24
11
34
61
580
310
12
12
7
25
4
370
82 %
52 %
50 %
64 %
74 %
7 %
69 %
(a) NGL throughput is a weighted average for days in operation. The utilization of design capacity has been calculated using the
weighted average design throughput capacity.
De-ethanization Complexes
Marcellus Shale
Utica Shale
Southwest
Total
Design
Throughput
Capacity
(mbpd)
NGL
Throughput
(mbpd)(a)
Utilization
of Design
Capacity(a)
273
40
18
331
187
6
11
204
68 %
15 %
61 %
62 %
(a) NGL throughput is a weighted average for days in operation. The utilization of design capacity has been calculated using the
weighted average design throughput capacity.
40
Natural Gas Gathering Systems
Marcellus Shale
Utica Shale
Southwest
Bakken
Rockies
Total
Design
Throughput
Capacity
(MMcf/d)
Natural Gas
Throughput
(MMcf/d)(a)
Utilization
of Design
Capacity(a)
1,547
3,183
2,770
194
1,486
9,180
1,349
1,818
1,483
137
544
5,331
87 %
57 %
54 %
71 %
37 %
58 %
(a) Natural gas throughput is a weighted average for days in operation. The utilization of design capacity has been calculated using
the weighted average design throughput capacity.
The following tables set forth certain information relating to MPLX’s NGL pipelines as of December 31,
2020.
NGL Pipelines
Marcellus Shale
Utica Shale
Southern Appalachia
Southwest(a)
Bakken
Rockies
(a)
Includes 38 miles of inactive pipeline.
Diameter
(inches)
4” - 20”
4”- 12”
6” - 8”
6”
8” - 12”
8”
Length
(miles)
442
119
138
50
84
10
Design
Throughput
Capacity
(mbpd)
Various
Various
35
39
80
15
MIDSTREAM - MPC-RETAINED ASSETS AND INVESTMENTS
The following tables set forth certain information related to our crude oil and refined products pipeline
systems not owned by MPLX.
As of December 31, 2020, we had partial ownership interests in the following pipeline companies.
Pipeline Company
Crude oil pipeline companies:
Capline Pipeline Company LLC
Gray Oak Pipeline, LLC
LOOP(a)
Total
Refined products pipeline companies:
Ascension Pipeline Company LLC
Centennial Pipeline LLC(b)
Muskegon Pipeline LLC
Wolverine Pipe Line Company
Total
Diameter
(inches)
Length
(miles)
Ownership
Interest
Operated
by MPL
40”
8”-30”
48”
12”
24”-26”
10”-12”
6”-18”
644
850
48
1,494
32
796
170
798
1,796
33 %
25 %
10 %
50 %
50 %
60 %
6 %
Yes
No
No
No
Yes
Yes
No
(a)
(b)
Represents interest retained by MPC and excludes MPLX’s 40.7 percent ownership interest in LOOP. Pipeline mileage is
excluded from total as it is included with MPLX assets.
All system pipeline miles are inactive.
41
As of December 31, 2020, we had a partial ownership interest in the following crude oil terminal.
Terminal
South Texas Gateway Terminal LLC(a)
Ownership
Interest
25%
Tank Storage
Capacity
(million barrels)
8.6
(a)
The tank storage capacity represents the capacity when the terminal is fully operational.
The following table sets forth details about the assets held by two ocean vessel joint ventures in which we
hold a 50% interest as of December 31, 2020.
Class of Equipment
Jones Act product tankers(a)
750 Series ATB vessels(b)
Number
in Class
Capacity
(thousand barrels)
4
3
1,320
990
(a)
(b)
Represents ownership through our indirect noncontrolling interest in Crowley Ocean Partners.
Represents ownership through our indirect noncontrolling interest in Crowley Blue Water Partners.
42
DISCONTINUED OPERATIONS
Speedway sells transportation fuels and merchandise through convenience stores it owns and operates,
primarily under the Speedway brand. The following table sets forth the number of company-owned
convenience stores by state as of December 31, 2020.
Location
Alabama
Alaska
Arizona
California
Colorado
Connecticut
Delaware
Florida
Georgia
Idaho
Illinois
Indiana
Kentucky
Massachusetts
Michigan
Minnesota
Nevada
New Hampshire
New Jersey
New Mexico
New York
North Carolina
Ohio
Oregon
Pennsylvania
Rhode Island
South Carolina
South Dakota
Tennessee
Texas
Utah
Virginia
Washington
West Virginia
Wisconsin
Wyoming
Total
Number of
Convenience Stores
5
31
92
489
12
1
4
197
9
5
129
307
147
108
306
193
9
12
64
118
328
264
488
12
110
19
47
1
53
31
30
59
30
57
69
3
3,839
43
ITEM 3. LEGAL PROCEEDINGS
We are the subject of, or a party to, a number of pending or threatened legal actions, contingencies and
commitments involving a variety of matters, including laws and regulations relating to the environment.
While it is possible that an adverse result in one or more of the lawsuits or proceedings in which we are a
defendant could be material to us, based upon current information and our experience as a defendant in
other matters, we believe that these lawsuits and proceedings, individually or in the aggregate, will not have
a material adverse effect on our consolidated results of operations, financial position or cash flows.
Litigation
Climate Change
Governmental and other entities in various states have filed lawsuits against energy companies, including
MPC. The lawsuits allege damages as a result of climate change and the plaintiffs are seeking unspecified
damages and abatement under various tort theories. Similar lawsuits may be filed in other jurisdictions. The
names of the courts in which the proceedings are pending and the dates instituted are as follows:
Plaintiff
County of San Mateo, California
Date Instituted
July 17, 2017
County of Marin, California
July 17, 2017
City of Imperial Beach, California
July 17, 2017
County of Santa Cruz, California
City of Santa Cruz, California
December 20,
2017
December 20,
2017
City of Richmond, California
January 22, 2018
State of Rhode Island
Mayor and City Council of
Baltimore, Maryland
Pacific Coast Federation of
Fishermen’s Associations, Inc.
City and County of Honolulu,
Hawaii
City of Charleston, South Carolina
State of Delaware
County of Maui, Hawaii
City of Annapolis, Maryland
July 2, 2018
July 20, 2018
November 14,
2018
March 9, 2020
September 9,
2020
September 10,
2020
October 12, 2020
February 22,
2021
Name of Court(s) where pending
U.S. District Court (Northern District of
California); U.S. Court of Appeals for the
Ninth Circuit; U.S. Supreme Court
U.S. District Court (Northern District of
California); U.S. Court of Appeals for the
Ninth Circuit; U.S. Supreme Court
U.S. District Court (Northern District of
California); U.S. Court of Appeals for the
Ninth Circuit; U.S. Supreme Court
U.S. District Court (Northern District of
California); U.S. Court of Appeals for the
Ninth Circuit; U.S. Supreme Court
U.S. District Court (Northern District of
California); U.S. Court of Appeals for the
Ninth Circuit; U.S. Supreme Court
U.S. District Court (Northern District of
California); U.S. Court of Appeals for the
Ninth Circuit; U.S. Supreme Court
Superior Court of Providence County; U.S.
Supreme Court
Circuit Court of Baltimore City; U.S.
Supreme Court
U.S. District Court (Northern District of
California)
U.S. District Court (District of Hawaii)
U.S. District Court (District of South
Carolina)
U.S. District Court (District of Delaware)
U.S. District Court (District of Hawaii)
Circuit Court for Anne Arundel County,
Maryland
Dakota Access Pipeline
In connection with MPLX’s 9.19 percent indirect interest in a joint venture (“Dakota Access”) that owns
and operates the Dakota Access Pipeline and Energy Transfer Crude Oil Pipeline projects, (collectively the
“Bakken Pipeline system” or “DAPL”), MPLX has entered into a Contingent Equity Contribution
Agreement whereby MPLX LP, along with the other joint venture owners in the Bakken Pipeline system,
has agreed to make equity contributions to the joint venture upon certain events occurring to allow the
entities that own and operate the Bakken Pipeline system to satisfy their senior note payment obligations.
The senior notes were issued to repay amounts owed by the pipeline companies to fund the cost of
construction of the Bakken Pipeline system.
44
In March 2020, the U.S. District Court for the District of Columbia (the “D.D.C.”) ordered the U.S. Army
Corps of Engineers (“Army Corps”), which granted permits and an easement for the Bakken Pipeline
system, to conduct a full environmental impact statement (“EIS”), and further requested briefing on
whether an easement necessary for the operation of the Bakken Pipeline system should be vacated while the
EIS is being prepared.
On July 6, 2020, the D.D.C. ordered vacatur of the easement to cross Lake Oahe during the pendency of an
EIS and further ordered a shut down of the pipeline by August 5, 2020. The D.D.C. denied a motion to stay
that order. Dakota Access and the Army Corps appealed the D.D.C.’s order to the U.S. Court of Appeals
for the District of Columbia Circuit (the “Court of Appeals”). On July 14, 2020, the Court of Appeals
issued an administrative stay while the court considered Dakota Access and the Army Corps’ emergency
motion for stay pending appeal. On August 5, 2020, the Court of Appeals stayed the D.D.C.’s injunction
that required the pipeline be shutdown and emptied of oil by August 5, 2020. The Court of Appeals denied
a stay of the D.D.C.’s March order, which required the EIS, and further denied a stay of the D.D.C.’s July
order, which vacated the easement. On January 26, 2021, the Court of Appeals upheld the D.D.C.’s order
vacating the easement while the Army Corps prepares the EIS. The Court of Appeals reversed the D.D.C.’s
order to the extent it directed that the pipeline be shutdown and emptied of oil. In the D.D.C., briefing has
been completed for a renewed request for an injunction. The pipeline remains operational.
If the pipeline is temporarily shut down pending completion of the EIS, MPLX would have to contribute its
9.19 percent pro rata share of funds required to pay interest accruing on the notes and any portion of the
principal that matures while the pipeline is shutdown. It is also expected that MPLX would contribute its
9.19 percent pro rata share of any costs to remediate any deficiencies to reinstate the permit and/or return
the pipeline into operation. If the vacatur of the easement permit results in a permanent shutdown of the
pipeline, MPLX would have to contribute its 9.19 percent pro rata share of the cost to redeem the bonds
(including the one percent redemption premium required pursuant to the indenture governing the notes) and
any accrued and unpaid interest. As of December 31, 2020, our maximum potential undiscounted payments
under the Contingent Equity Contribution Agreement were approximately $230 million and we had an
investment of $465 million in MarEn Bakken Company LLC, which includes our 9.19 percent direct
interest in Dakota Access.
Tesoro High Plains Pipeline
In early July 2020, MPLX received a Notification of Trespass Determination from the Bureau of Indian
Affairs (“BIA”) relating to a portion of the Tesoro High Plains Pipeline that crosses the Fort Berthold
Reservation in North Dakota. The notification covered the rights of way for 23 tracts of land and demanded
the immediate cessation of pipeline operations. The notification also assessed trespass damages of
approximately $187 million. MPLX appealed this determination, which triggered an automatic stay of the
requested pipeline shutdown and payment. On October 29, the Assistant Secretary - Indian Affairs issued
an order vacating the BIA’s trespass order and requiring the Regional Director for the BIA Great Plains
Region to issue a new decision on or before December 15 covering all 34 tracts at issue. On December 15,
the Regional Director of the BIA issued a new trespass notice to THPP consistent with the Assistant
Secretary of Indian Affairs order vacating the prior trespass order. The new order found that THPP was in
trespass and assessed trespass damages of approximately $4MM (including interest). The order also
required THPP to immediately cease and desist use of the portion of the pipeline that crosses the property at
issue. The new order was appealed, and was upheld by the Assistant Secretary - Indian Affairs. THPP has
complied with the Regional Director’s December 15, 2020 notice. On February 12, 2021, landowners filed
suit in the U.S. District Court for the District of North Dakota, requesting, among other things, that
decisions by the Assistant Secretary - Indian Affairs and the Interior Board of Indian Appeals be vacated as
to the award of damages to plaintiffs.
MPLX continues to work towards a settlement of this matter with holders of the property rights at issue.
Environmental Proceedings
Item 103 of Regulation S-K promulgated by the SEC requires disclosure of certain environmental matters
when a governmental authority is a party to the proceedings and such proceedings involve potential
monetary sanctions, unless we reasonably believe that the matter will result in no monetary sanctions, or in
monetary sanctions, exclusive of interest and costs, of less than $300,000. The following matters are
disclosed in accordance with that requirement. We do not currently believe that the eventual outcome of
any such matters, individually or in the aggregate, could have a material adverse effect on our business,
financial condition, results of operations or cash flows.
45
Martinez Refinery
We are currently negotiating the settlement of 141 NOVs received from the Bay Area Air Quality
Management District (“BAAQMD”). The NOVs were issued from 2011 to 2019 and allege violations of air
quality regulations and the idled Martinez refinery’s air permit. While we are negotiating a settlement of the
allegations with the BAAQMD through two separate enforcement actions, we cannot currently estimate the
timing of the resolution of these matters.
On July 18, 2016, the U.S. Department of Justice (“DOJ”) lodged a complaint on behalf of the EPA and a
Consent Decree in the U.S. Court for the Western District of Texas. Among other things, the Consent
Decree required that the Martinez refinery meet certain annual emission limits for NOx by July 1, 2018. In
February 2018, TRMC informed the EPA that it would need additional time to satisfy requirements of the
Consent Decree. In the fourth quarter of 2019, TRMC and the United States entered into an agreement to
amend the Consent Decree to resolve these issues. In light of the actions to strategically reposition the
Martinez refinery to a renewable diesel facility, we are renegotiating the Consent Decree modification.
Subject to final approval by the court, we expect that the renegotiated Consent Decree modification will no
longer require the installation of a Selective Catalytic Reduction system to control NOx emissions from the
now-idled fluid catalytic cracking unit, but will result in an increased civil penalty.
Gathering and Processing
In November 2020, we received an offer from the EPA to settle multiple alleged violations of the National
Emission Standards for Hazardous Air Pollutants by the Chapita, Coyote Wash, Island, River Bend and
Wonsits Valley Compressor Stations in Utah. The proposed settlement consists of an injunctive relief
package, mitigation project and proposed penalty in excess of $300,000. We continue to negotiate a
settlement of the allegations and cannot currently estimate the timing of the resolution of this matter.
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable.
46
PART II
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED
STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
Our common stock is listed on the NYSE and traded under the symbol “MPC.” As of February 12, 2021,
there were 30,210 registered holders of our common stock.
Issuer Purchases of Equity Securities
The following table sets forth a summary of our purchases during the quarter ended December 31, 2020, of
equity securities that are registered by MPC pursuant to Section 12 of the Securities Exchange Act of 1934,
as amended:
Period
10/01/2020-10/31/2020
11/01/2020-11/30/2020
12/01/2020-12/31/2020
Total
Total Number
of Shares
Purchased(a)
Average
Price Paid
per Share(b)
5,973
$
256
35,811
42,040
28.19
30.18
40.76
38.91
Total Number of
Shares Purchased as
Part of Publicly
Announced Plans
or Programs
Maximum Dollar
Value of Shares that
May Yet Be Purchased
Under the Plans
or Programs(c)
$
2,954,604,016
2,954,604,016
2,954,604,016
—
—
—
—
(a)
(b)
(c)
The amounts in this column include 5,973, 256 and 35,811 shares of our common stock delivered by employees to MPC, upon
vesting of restricted stock, to satisfy tax withholding requirements in October, November and December, respectively.
Amounts in this column reflect the weighted average price paid for shares tendered to us in satisfaction of employee tax
withholding obligations upon the vesting of restricted stock granted under our stock plans.
On April 30, 2018, we announced that our board of directors had approved a $5 billion share repurchase authorization in addition
to the remaining authorization pursuant to the May 31, 2017 announcement. These share purchase authorizations have no
expiration date. The share repurchase authorization announced on April 30, 2018, together with prior authorizations, results in a
total of $18 billion of share repurchase authorizations since January 1, 2012.
47
ITEM 6. SELECTED FINANCIAL DATA
The following table should be read in conjunction with Item 7. Management’s Discussion and Analysis of
Financial Condition and Results of Operations and Item 8. Financial Statements and Supplementary Data.
(In millions, except per share data)
Statements of Income Data
Sales and other operating revenue(c)(d)
Income (loss) from continuing operations
Income (loss) from continuing operations per
share:
Basic
Diluted
Dividends per share
(In millions)
Balance Sheet Data
Total assets
Long-term debt(e)
Year Ended December 31,
2020
2019
2018(a)
2017(b)
2016
$ 69,779 $ 111,148 $ 86,086 $ 67,009 $ 55,641
(12,247)
4,462
4,690
3,265
1,623
$ (16.99) $
2.78 $
4.06 $
5.29 $
(16.99)
2.32
2.76
2.12
4.00
1.84
5.24
1.52
0.80
0.80
1.36
2020
2019
December 31,
2018(a)
2017
2016
$ 85,158 $ 98,556 $ 92,940 $ 49,047 $ 44,413
31,584
28,724
27,420
12,946
10,572
(a)
(b)
(c)
(d)
(e)
On October 1, 2018, we acquired Andeavor. The financial results for these operations are included in our consolidated results
from the date of acquisition, excluding the results reclassified to discontinued operations due to the planned Speedway sale.
Earnings for 2017 include a tax benefit of approximately $1.5 billion, or $2.93 per diluted share, as a result of re-measuring
certain net deferred tax liabilities using the lower corporate tax rate enacted in the fourth quarter of 2017.
As a result of the agreement to sell Speedway, its results are reported separately as discontinued operations for all periods
presented. Refining & Marketing intersegment sales to Speedway that were previously eliminated in consolidation are reported
as third party sales as we will continue to supply fuel to Speedway following its disposition.
The 2020, 2019 and 2018 periods reflect an election to present certain taxes on a net basis concurrent with our adoption of ASU
2014-09, Revenue - Revenue from Contracts with Customers (“ASC 606”).
Includes amounts due within one year. Excludes debt obligations of Speedway, which have been reclassified as liabilities held
for sale.
48
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
All statements in this section, other than statements of historical fact, are forward-looking statements that
are inherently uncertain. See “Disclosures Regarding Forward-Looking Statements” and Item 1A. Risk
Factors for a discussion of the factors that could cause actual results to differ materially from those
projected in these statements. The following information concerning our business, results of operations and
financial condition should also be read in conjunction with the information included under Item 1.
Business, Item 1A. Risk Factors, Item 6. Selected Financial Data and Item 8. Financial Statements and
Supplementary Data.
EXECUTIVE SUMMARY
Business Update
The outbreak of COVID-19 and its development into a pandemic in March 2020 have resulted in
significant economic disruption globally. Actions taken by various governmental authorities, individuals
and companies around the world to prevent the spread of COVID-19 through social distancing have
restricted travel, many business operations, public gatherings and the overall level of individual movement
and in-person interaction across the globe.
This has in turn significantly reduced global economic activity, including a dramatic reduction in airline
flights and a decrease in motor vehicle use. As a result, there has been a decline in the demand for the
refined petroleum products that we manufacture and sell, which coupled with a decline in the price of crude
oil for most of 2020 resulted in a significant decrease in the price and volume of our production and sales of
refined petroleum products.
During 2020, there were significant variations in the market prices of products held in our inventories. In
each quarter of 2020, these variations required us to record either inventory valuation charges or benefits to
reflect the valuation of our inventories at the lower of cost or market.
We have been and continue to actively respond to the impacts that these matters are having on our business.
Our response has focused on establishing three strategic short-term priorities:
Strengthen Competitive Position of Assets
We are committed to positioning our assets so that we are a leader in operational, financial, and
sustainability performance and are evaluating the strength and fit of assets in our portfolio. Our goal is that
each individual asset generates free-cash-flow back to the business and contributes to shareholder returns.
With our investments we are focused on high returning projects that we believe will enhance the
competitiveness of our portfolio, including our investments in sustainable fuels and technologies that lower
our carbon intensity as the global energy mix evolves.
Improve Commercial Performance
We are focused on leveraging advantaged raw material selection, new approaches in the commercial space
to be more dynamic amidst changing market conditions, and achieving technology improvements to
advance our commercial performance.
Lower Cost Structure
We are committed to achieving operational excellence by reducing costs, improving efficiency, and driving
operational improvements. In response to the pandemic, in March of 2020, we committed to immediately
reducing our capital spending and operating expenses. We accomplished our goal of significantly reducing
our capital spending levels by over $1.4 billion from our initial 2020 plans. We also reduced our 2020
forecasted operating expenses by more than our target of $950 million.
In connection with these three strategic short-term priorities, in the third quarter of 2020 we announced
strategic actions to lay a foundation for long-term success, including plans to optimize our assets and
structurally lower costs in 2021 and beyond. These actions included indefinitely idling the Gallup refinery,
initiating actions to strategically reposition the Martinez refinery to a renewable diesel facility and the
approval of an involuntary workforce reduction plan. In connection with these strategic actions, we
recorded restructuring expenses of $367 million for the year ended December 31, 2020.
49
In addition to these measures to address our operations, throughout the year we took action to address our
liquidity as outlined below:
•
•
•
•
•
•
Share repurchases were temporarily suspended. The timing and amount of future repurchases will
depend upon several factors, including market and business conditions.
On April 27, 2020, we entered into an additional $1.0 billion 364-day revolving credit facility,
which expires in 2021, to provide incremental liquidity and financial flexibility during the
commodity price and demand downturn. In February 2021, we elected to terminate this credit
agreement as we no longer believe the facility is necessary as an additional source for liquidity,
and we do not intend to replace it.
On April 27, 2020, we closed on the issuance of $2.5 billion of senior notes. Proceeds from the
senior notes were used to pay down certain amounts outstanding on the five-year revolving credit
facility.
During June 2020, we repaid the remaining amounts outstanding on the five-year revolving credit
facility.
On September 23, 2020, we entered into a 364-day revolving credit agreement, which provides for
a $1.0 billion unsecured revolving credit facility that matures in September 2021, and which
replaced a similar 364-day revolving credit agreement that expired on September 28, 2020.
At December 31, 2020, we had $6.73 billion available on our variable credit facilities, net of
commercial paper borrowings of $1.02 billion.
Many uncertainties remain with respect to COVID-19, including its resulting economic effects, and we are
unable to predict the ultimate economic impacts from COVID-19 and how quickly national economies can
recover once the pandemic ultimately subsides. However, the adverse impact of the economic effects on
MPC has been and will likely continue to be significant. We believe we have proactively addressed many
of the known impacts of COVID-19 to the extent possible and will strive to continue to do so, but there can
be no guarantee the measures will be fully effective.
Other Strategic Updates
The Dickinson, North Dakota, renewable fuels facility began ramping operations at the end of 2020 and is
on-track to reach full production by the end of the first quarter of 2021. At full capacity, the facility is
expected to produce 184 million gallons per year of renewable diesel from corn and soybean oil. MPC
intends to sell the renewable diesel into the California market to comply with the California Low Carbon
Fuel Standard.
During the fourth quarter of 2020, we also progressed activities associated with the conversion of the
Martinez refinery to a renewable diesel facility, including applying for permits, advancing discussions with
feedstock suppliers, and beginning detailed engineering activities. As envisioned, the Martinez facility
would start producing approximately 260 million gallons per year of renewable diesel by the second half of
2022, with a potential to build to full capacity of approximately 730 million gallons per year by the end of
2023. On February 24, 2021, MPC’s board of directors approved these plans.
On November 2, 2020, MPLX announced the authorization of a unit repurchase program for the repurchase
of up to $1 billion of its outstanding common units held by the public. MPLX may utilize various methods
to effect the repurchases, which could include open market repurchases, negotiated block transactions,
tender offers, accelerated unit repurchases or open market solicitations for units, some of which may be
effected through Rule 10b5-1 plans. The timing and amount of repurchases will depend upon several
factors, including market and business conditions, and repurchases may be initiated, suspended or
discontinued at any time. The repurchase authorization has no expiration date.
During the year ended December 31, 2020, 1,473,843 MPLX common units were repurchased at an
average cost per unit of $22.29. Total cash paid for units repurchased during the year was $33 million and
$967 million of repurchase authorization remained outstanding on the program as of December 31, 2020.
50
Results
Select results for continuing operations for 2020 and 2019 are reflected in the following table.
(In millions)
Income (loss) from continuing operations by segment
Refining & Marketing(a)
Midstream
Corporate(b)
Items not allocated to segments:
Impairments(c)
Restructuring expense(d)
Litigation
Gain on sale of assets
Transaction-related costs(e)
Equity method investment restructuring gains(c)
Income (loss) from continuing operations
Net interest and other financial costs
Income (loss) from continuing operations before income taxes
Provision (benefit) for income taxes on continuing operations
2020
2019
$
(5,189) $
3,708
(800)
2,856
3,594
(833)
(9,741)
(1,239)
(367)
84
66
(8)
—
(12,247)
1,365
(13,612)
(2,430)
—
(22)
—
(153)
259
4,462
1,229
3,233
784
2,449
Income (loss) from continuing operations, net of tax
$
(11,182) $
(a)
(b)
(c)
(d)
(e)
Includes LIFO liquidation charge of $561 million for 2020.
Reflects corporate costs of $26 million and $28 million for 2020 and 2019, respectively, that are no longer allocated to
Speedway under discontinued operations accounting.
2020 reflects impairments of goodwill, equity method investments and long-lived assets. 2019 reflects impairments of goodwill
and equity method investments.
2020 restructuring expense include $195 million for exit costs related to the Martinez and Gallup refineries and $172 million of
employee separation costs.
2020 and 2019 include costs incurred in connection with the Midstream strategic review and other related efforts. 2019 includes
employee severance, retention and other costs related to the acquisition of Andeavor. Effective October 1, 2019, we discontinued
reporting Andeavor transaction-related costs as one year has passed since the acquisition and these costs are immaterial. Costs
incurred in connection with the Speedway separation are included in discontinued operations.
Select results for discontinued operations are reflected in the following table.
(In millions)
Income from discontinued operations
Speedway(a)
Transaction-related costs(b)
Income from discontinued operations
Net interest and other financial costs
Income from discontinued operations before income taxes
Provision for income taxes on discontinued operations
2020
2019
$
1,701 $
1,121
(114)
(7)
1,587
20
1,567
362
1,114
18
1,096
290
806
Income from discontinued operations, net of tax
$
1,205 $
(a)
(b)
As of August 2, 2020, MPC ceased recording depreciation and amortization for Speedway. Asset write-offs and retirement
charges, which totaled $7 million for the fourth quarter of 2020, are presented as depreciation and amortization in our financial
statements. Speedway depreciation and amortization was $244 million and $413 million for the twelve months ended
December 31, 2020 and 2019, respectively.
Costs related to the Speedway separation.
51
The following table includes net income (loss) per diluted share data.
Net income (loss) per diluted share
Continuing operations
Discontinued operations
Net income (loss) attributable to MPC
2020
2019
$
$
(16.99) $
1.86
(15.13) $
2.76
1.21
3.97
During 2020, actions taken by various governmental authorities, individuals and companies to prevent the
spread of COVID-19 through social distancing restricted travel, many business operations, public
gatherings and the overall level of individual movement and in-person interaction in the areas where we
operate which impacted demand for our products. Net income attributable to MPC decreased $12.46
billion, or $19.10 per diluted share, in 2020 compared to 2019 primarily due to a loss in our Refining &
Marketing segment, goodwill and long-lived asset impairment charges of $8.43 billion and impairments of
equity method investments of $1.32 billion during the period primarily driven by the effects of COVID-19
and the decline in commodity prices, and restructuring expenses of $367 million related to the idling of the
Martinez and Gallup refineries and costs related to our announced workforce reduction.
The loss from operations in our Refining & Marketing segment is primarily due to decreases in refined
product sales volumes, prices and margins during 2020 and includes a charge of $561 million for the twelve
months ended December 31, 2020 to reflect a LIFO liquidation for our crude oil and refined product
inventories. The costs of inventories in the historical LIFO layers which were liquidated were higher than
current costs, which resulted in increased cost of revenues and decreased income from operations. These
results were partially offset by increased income from discontinued operations, which relates to Speedway,
in 2020 compared to 2019 largely due to higher fuel margins partially offset by lower fuel volumes. In
addition, as of August 2, 2020, MPC ceased recording depreciation and amortization for Speedway. See
Item 8. Financial Statements and Supplementary Data – Note 5 for additional information on discontinued
operations.
Refer to the Results of Operations section for a discussion of financial results by segment for the three
years ended December 31, 2020.
MPLX
We received limited partner distributions of $1.79 billion and $1.82 billion from MPLX and Andeavor
Logistics LP (“ANDX”) during 2020 and 2019, respectively.
We owned approximately 647 million MPLX common units at December 31, 2020 with a market value of
$14.02 billion based on the December 31, 2020 closing unit price of $21.65. On January 28, 2021, MPLX
declared a quarterly cash distribution of $0.6875 per common unit, which was paid February 12, 2021. As a
result, MPLX made distributions totaling $714 million to its common unitholders. MPC’s portion of this
distribution was approximately $445 million.
On July 31, 2020, Western Refining Southwest, Inc. (now known as Western Refining Southwest LLC)
(“WRSW”), a wholly owned subsidiary of MPC, entered into a Redemption Agreement (the “Redemption
Agreement”) with MPLX, pursuant to which MPLX transferred to WRSW all of the outstanding
membership interests in Western Refining Wholesale, LLC, (“WRW”) in exchange for the redemption of
MPLX common units held by WRSW. The transaction effected the transfer to MPC of the Western
wholesale distribution business that MPLX acquired as a result of its acquisition of ANDX. Beginning in
the third quarter of 2020, the results of these operations are presented in MPC’s Refining & Marketing
segment.
At the closing, per the terms of Redemption Agreement, MPLX redeemed 18,582,088 MPLX common
units held by WRSW. The number of redeemed units was calculated by dividing WRW’s aggregate
valuation of $340 million by the simple average of the volume weighted average New York Stock
Exchange prices of an MPLX common unit for the ten trading days ending at market close on July 27,
2020. The transaction resulted in a minor decrease in MPC’s ownership interest in MPLX.
See Item 8. Financial Statements and Supplementary Data – Note 6 for additional information on MPLX.
52
Liquidity
Our liquidity, excluding MPLX, totaled $7.3 billion at December 31, 2020 consisting of:
(In millions)
Bank revolving credit facility(a)
364 day bank revolving credit facility
364 day bank revolving credit facility(b)
Trade receivables facility(c)
Commercial paper borrowings(d)
Total
Cash and cash equivalents(e)
Total liquidity
Total
Capacity
December 31, 2020
Outstanding
Borrowings
Available
Capacity
$
5,000 $
1 $
1,000
1,000
750
—
—
—
—
—
$
7,750 $
1 $
$
4,999
1,000
1,000
750
(1,024)
6,725
540
7,265
(a)
(b)
(c)
Outstanding borrowings include $1 million in letters of credit outstanding under this facility. Excludes MPLX’s $3.5 billion
bank revolving credit facility, which had $175 million borrowings and no of letters of credit outstanding as of December 31,
2020.
In February 2021, we elected to cancel one of the $1.0 B 364-day revolving credit agreements prior to its maturity in April 2021.
Availability under our $750 million trade receivables facility is a function of eligible trade receivables, which will be lower in a
sustained lower price environment for refined products.
(d) We do not intend to have outstanding commercial paper borrowings in excess of available capacity under bank revolving credit
facilities.
(e)
Includes cash and cash equivalents classified as assets held for sale of $140 million (see Item 8. Financial Statements and
Supplementary Data – Note 5) and excludes $15 million of MPLX cash and cash equivalents.
On November 15, 2020, all of the $650 million outstanding aggregate principal amount of 3.400% senior
notes due December 2020 were redeemed at a price equal to par.
On October 1, 2020, all of the $475 million outstanding aggregate principal amount of 5.375% senior notes
due October 2022, including the portion of such notes for which Andeavor was the obligor, were redeemed
at a price equal to par.
MPLX’s liquidity totaled $4.84 billion at December 31, 2020. As of December 31, 2020, MPLX had cash
and cash equivalents of $15 million, $3.33 billion available under its $3.5 billion revolving credit
agreement and $1.5 billion available through its intercompany loan agreement with MPC.
On December 29, 2020, MPLX announced the redemption of all the $750 million outstanding aggregate
principal amount of 5.250% senior notes due January 2025. The notes were redeemed on January 15, 2021
at a price equal to 102.625% of the principal amount. These notes are included in long-term debt due within
one year in our consolidated balance sheet as of December 31, 2020.
See Item 8. Financial Statements and Supplementary Data – Note 22 for information on our new bank
revolving credit facilities.
OVERVIEW OF SEGMENTS
Refining & Marketing
Refining & Marketing segment income from operations depends largely on our Refining & Marketing
margin, refining operating costs, refining planned turnarounds, distribution costs, depreciation expenses
and refinery throughputs. Our total refining capacity was 2,874 mbpcd, 3,067 mbpcd and 3,021 mbpcd as
of December 31, 2020, 2019 and 2018, respectively.
Our Refining & Marketing margin is the difference between the prices of refined products sold and the
costs of crude oil and other charge and blendstocks refined, including the costs to transport these inputs to
our refineries and the costs of products purchased for resale. The crack spread is a measure of the difference
between market prices for refined products and crude oil, commonly used by the industry as a proxy for the
refining margin. Crack spreads can fluctuate significantly, particularly when prices of refined products do
not move in the same relationship as the cost of crude oil. As a performance benchmark and a comparison
53
with other industry participants, we calculate Gulf Coast, Mid-Continent and West Coast crack spreads that
we believe most closely track our operations and slate of products. The following will be used for these
crack-spread calculations:
•
•
•
The Gulf Coast crack spread uses three barrels of LLS crude producing two barrels of USGC
CBOB gasoline and one barrel of USGC ULSD;
The Mid-Continent crack spread uses three barrels of WTI crude producing two barrels of Chicago
CBOB gasoline and one barrel of Chicago ULSD; and
The West Coast crack spread uses three barrels of ANS crude producing two barrels of LA
CARBOB and one barrel of LA CARB Diesel.
Our refineries process a variety of sweet and sour grades of crude oil, which typically can be purchased at a
discount to the crude oils referenced in our Gulf Coast, Mid-Continent and West Coast crack spreads. The
amount of these discounts, which we refer to as the sweet differential and the sour differential, can vary
significantly, causing our Refining & Marketing margin to differ from blended crack spreads. In general,
larger sweet and sour differentials will enhance our Refining & Marketing margin.
Future crude oil differentials will be dependent on a variety of market and economic factors, as well as U.S.
energy policy.
The following table provides sensitivities showing an estimated change in annual net income due to
potential changes in market conditions.
(In millions, after-tax)
Blended crack spread sensitivity(a) (per $1.00/barrel change)
Sour differential sensitivity(b) (per $1.00/barrel change)
Sweet differential sensitivity(c) (per $1.00/barrel change)
Natural gas price sensitivity(d) (per $1.00/MMBtu)
$
838
396
381
275
(a)
(b)
(c)
(d)
Crack spread based on 40 percent LLS, 40 percent WTI and 20 percent ANS with Gulf Coast, Mid-Continent and West Coast
product pricing, respectively, and assumes all other differentials and pricing relationships remain unchanged.
Sour crude oil basket consists of the following crudes: ANS, Argus Sour Crude Index, Maya and Western Canadian Select. We
expect approximately 51 percent of the crude processed at our refineries in 2021 will be sour crude.
Sweet crude oil basket consists of the following crudes: Bakken, Brent, LLS, WTI-Cushing and WTI-Midland. We expect
approximately 49 percent of the crude processed at our refineries in 2021 will be sweet crude.
This is consumption based exposure for our Refining & Marketing segment and does not include the sales exposure for our
Midstream segment.
In addition to the market changes indicated by the crack spreads, the sour differential and the sweet
differential, our Refining & Marketing margin is impacted by factors such as:
•
•
•
•
•
•
•
the selling prices realized for refined products;
the types of crude oil and other charge and blendstocks processed;
our refinery yields;
the cost of products purchased for resale;
the impact of commodity derivative instruments used to hedge price risk;
the potential impact of LCM adjustments to inventories in periods of declining prices: and
the potential impact of LIFO liquidation charges due to draw-downs from historic inventory
levels.
Inventories are stated at the lower of cost or market. Costs of crude oil, refinery feedstocks and refined
products are stated under the LIFO inventory costing method and aggregated on a consolidated basis for
purposes of assessing if the cost basis of these inventories may have to be written down to market values.
At December 31, 2020, market values for refined products exceed their cost basis and, therefore, there is no
LCM inventory valuation reserve at the end of the year. Based on movements of refined product prices,
future inventory valuation adjustments could have a negative effect to earnings. Such losses are subject to
reversal in subsequent periods if prices recover.
54
Refining & Marketing segment income from operations is also affected by changes in refining operating
costs and refining planned turnaround costs in addition to committed distribution costs. Changes in
operating costs are primarily driven by the cost of energy used by our refineries, including purchased
natural gas, and the level of maintenance costs. Refining planned turnarounds, requiring temporary
shutdown of certain refinery operating units, are periodically performed at each refinery. Distribution costs
primarily include long-term agreements with MPLX, as discussed below, which are based on committed
volumes and will negatively impact income from operations in periods when throughput or sales are lower
or refineries are idled.
The following table lists the refineries that had significant planned turnaround and major maintenance
activities for each of the last three years and only reflects the activity for the acquired refineries after
October 1, 2018.
Year
2020
2019
2018
Refinery
Canton, Catlettsburg, El Paso, Galveston Bay, Garyville, Kenai, Los Angeles and Salt Lake City
Catlettsburg, Gallup, Galveston Bay, Garyville, Los Angeles, Martinez, Robinson and St. Paul Park
Canton, Detroit, Galveston Bay and Martinez
We have various long-term, fee-based commercial agreements with MPLX. Under these agreements,
MPLX, which is reported in our Midstream segment, provides transportation, storage, distribution and
marketing services to our Refining & Marketing segment. Certain of these agreements include
commitments for minimum quarterly throughput and distribution volumes of crude oil and refined products
and minimum storage volumes of crude oil, refined products and other products. Certain other agreements
include commitments to pay for 100 percent of available capacity for certain marine transportation and
refining logistics assets.
Midstream
Our Midstream segment transports, stores, distributes and markets crude oil and refined products,
principally for our Refining & Marketing segment. The profitability of our pipeline transportation
operations primarily depends on tariff rates and the volumes shipped through the pipelines. The
profitability of our marine operations primarily depends on the quantity and availability of our vessels and
barges. The profitability of our light product terminal operations primarily depends on the throughput
volumes at these terminals. The profitability of our fuels distribution services primarily depends on the
sales volumes of certain refined products. The profitability of our refining logistics operations depends on
the quantity and availability of our refining logistics assets. A majority of the crude oil and refined product
shipments on our pipelines and marine vessels and the refined product throughput at our terminals serve our
Refining & Marketing segment and our refining logistics assets and fuels distribution services are used
solely by our Refining & Marketing segment.
As discussed above in the Refining & Marketing section, MPLX, which is reported in our Midstream
segment, has various long-term, fee-based commercial agreements related to services provided to our
Refining & Marketing segment. Under these agreements, MPLX has received various commitments of
minimum throughput, storage and distribution volumes as well as commitments to pay for all available
capacity of certain assets. The volume of crude oil that we transport is directly affected by the supply of,
and refiner demand for, crude oil in the markets served directly by our crude oil pipelines, terminals and
marine operations. Key factors in this supply and demand balance are the production levels of crude oil by
producers in various regions or fields, the availability and cost of alternative modes of transportation, the
volumes of crude oil processed at refineries and refinery and transportation system maintenance levels. The
volume of refined products that we transport, store, distribute and market is directly affected by the
production levels of, and user demand for, refined products in the markets served by our refined product
pipelines and marine operations. In most of our markets, demand for gasoline and distillate peaks during
the summer driving season, which extends from May through September of each year, and declines during
the fall and winter months. As with crude oil, other transportation alternatives and system maintenance
levels influence refined product movements.
Our Midstream segment also gathers and processes natural gas and NGLs. NGL and natural gas prices are
volatile and are impacted by changes in fundamental supply and demand, as well as market uncertainty,
availability of NGL transportation and fractionation capacity and a variety of additional factors that are
beyond our control. Our Midstream segment profitability is affected by prevailing commodity prices
primarily as a result of processing or conditioning at our own or third‑party processing plants, purchasing
55
and selling or gathering and transporting volumes of natural gas at index‑related prices and the cost of
third‑party transportation and fractionation services. To the extent that commodity prices influence the level
of natural gas drilling by our producer customers, such prices also affect profitability.
RESULTS OF OPERATIONS
The following discussion includes comments and analysis relating to our results of operations for the years
ended December 31, 2020, 2019 and 2018. These amounts include the results of Andeavor from the
October 1, 2018 acquisition date forward. This discussion should be read in conjunction with Item 8.
Financial Statements and Supplementary Data and is intended to provide investors with a reasonable basis
for assessing our historical operations, but should not serve as the only criteria for predicting our future
performance.
Consolidated Results of Operations
(In millions)
Revenues and other income:
Sales and other operating revenues(a)
Income (loss) from equity method
investments(b)
Net gain on disposal of assets
Other income
2020
2019
2020 vs.
2019
Variance
2018
2019 vs.
2018
Variance
$ 69,779 $ 111,148 $ (41,369) $ 86,086 $ 25,062
(935)
70
118
312
278
127
(1,247)
(208)
(9)
299
6
198
13
272
(71)
Total revenues and other income
69,032
111,865
(42,833)
86,589
25,276
Costs and expenses:
Cost of revenues (excludes items
below)
Impairment expense
Depreciation and amortization
Selling, general and administrative
expenses
Restructuring expenses
Other taxes
Total costs and expenses
Income (loss) from continuing
operations
Net interest and other financial costs
Income (loss) from continuing
operations before income taxes
Provision (benefit) for income taxes
on continuing operations
Income (loss) from continuing
operations, net of tax
Income from discontinued operations,
net of tax
Net income (loss)
Less net income (loss) attributable to:
Redeemable noncontrolling interest
Noncontrolling interests
Net income (loss) attributable to
MPC
65,733
99,228
(33,495)
77,047
22,181
8,426
3,375
1,197
3,225
7,229
150
—
2,170
2,710
3,192
(482)
2,276
367
668
—
561
367
107
—
406
1,197
1,055
916
—
155
81,279
107,403
(26,124)
81,899
25,504
(12,247)
1,365
4,462
1,229
(16,709)
4,690
136
993
(13,612)
3,233
(16,845)
3,697
(228)
236
(464)
(2,430)
784
(3,214)
764
20
(11,182)
2,449
(13,631)
2,933
1,205
806
399
673
(9,977)
3,255
(13,232)
3,606
81
(232)
81
537
—
(769)
75
751
(484)
133
(351)
6
(214)
$
(9,826) $
2,637 $ (12,463) $
2,780 $
(143)
(a)
(b)
In accordance with discontinued operations accounting, Speedway sales to retail customers and net results are reflected in
Income from discontinued operations, net of tax, and Refining & Marketing intercompany sales to Speedway are now presented
as third-party sales for all periods presented.
2020 includes $1.32 billion of impairment expense. See Item 8. Financial Statements and Supplementary Data – Note 7 for
further information.
56
2020 Compared to 2019
Net income (loss) attributable to MPC decreased $12.46 billion in 2020 compared to 2019 primarily due to
impairment expenses for goodwill and long-lived assets of $8.43 billion, impairments of equity method
investments of $1.32 billion, decreased refined product sales volumes, prices and margin, a charge of $561
million to reflect a LIFO liquidation in our crude oil and refined product inventories and restructuring
expenses of $367 million. These changes were partially offset by reduced operating costs and increased
income from discontinued operations, which represents Speedway. See Segment Results for additional
information.
Total revenues and other income decreased $42.83 billion in 2020 compared to 2019 primarily due to:
•
•
•
decreased sales and other operating revenues of $41.37 billion primarily due to decreased Refining
& Marketing segment refined product sales volumes, which decreased 513 mbpd, or 14 percent,
and lower average refined product sales prices, which decreased $0.55 per gallon, or 31 percent,
largely due to reduced travel and business operations associated with the COVID-19 pandemic;
decreased income from equity method investments of $1.25 billion largely due to impairments of
equity method investments of $1.32 billion primarily driven by the effects of COVID-19 and the
decline in commodity prices; and
decreased net gain on disposal of assets of $208 million mainly due to the absence of $259 million
of non-cash gains related to obtaining equity investments in Capline Pipeline Company LLC
(“Capline LLC”) and The Andersons in exchange for contributing assets in 2019. This decrease
was offset by net gains on disposal of assets in 2020 largely due to the sale of three asphalt
terminals and other Refining & Marketing assets.
Total costs and expenses decreased $26.12 billion in 2020 compared to 2019 primarily due to:
•
•
•
•
•
decreased cost of revenues of $33.50 billion primarily due to reduced travel and business
operations associated with the COVID-19 pandemic, partially offset by increased cost of revenues
of $561 million to reflect LIFO liquidations for our crude oil and refined product inventories. The
costs of inventories in the historical LIFO layers liquidated were higher than current costs, which
resulted in the LIFO liquidation charge;
impairment expense of $8.43 billion recorded in 2020 for goodwill and long-lived assets of $7.39
billion and $1.03 billion, respectively, primarily driven by the effects of COVID-19 and the
decline in commodity prices. It also includes impairment of long-lived assets primarily related to
the repositioning of the Martinez refinery compared to impairment expense of $1.20 billion
recorded in 2019 primarily related to MPLX goodwill associated with the ANDX gathering and
processing businesses acquired as part of the Andeavor acquisition;
decreased selling, general and administrative expenses of $482 million mainly due to decreases in
salaries and employee-related expenses, transaction-related expenses, credit card processing fees
for brand customers and contract services expenses;
restructuring expense of $367 million related to the idling of the Martinez and Gallup refineries
and costs related to our announced workforce reduction. See See Item 8. Financial Statements and
Supplementary Data – Note 4 for additional information; and
increased other taxes of $107 million primarily due to increased property and environmental taxes
of approximately $78 million and $69 million, respectively. Property taxes increased in the current
period mainly due to the absence of property tax refunds and tax exemptions received in 2019 and
environmental taxes increased largely due to the reinstatement of the Oil Spill Tax in 2020, which
was not in effect for all of 2019. These increases were offset by a state tax refund and reduced
payroll tax expenses.
Net interest and other financial costs increased $136 million largely due to increased MPC borrowings and
foreign currency exchange losses and decreased interest income. We capitalized interest of $129 million in
2020 and $158 million in 2019. See Item 8. Financial Statements and Supplementary Data – Note 22 for
further details.
Provision for income taxes decreased $3.21 billion primarily due to decreased income before taxes of
$16.85 billion. The effective tax rate of 18 percent in 2020 is lower than the U.S. statutory rate of 21
percent, primarily due to a significant amount of our pre-tax loss consisting of non-tax deductible goodwill
impairment charges, partially offset by the tax rate differential resulting from the expected net operating
57
loss carryback provided under the Coronavirus Aid, Relief, and Economic Security Act. Additionally, our
effective tax rate is generally benefited by our noncontrolling interest in MPLX, but this benefit was lower
for the year ended December 31, 2020 due to goodwill and other impairment charges recorded by MPLX.
The effective tax rate of 24 percent in 2019 is higher than the U.S. statutory rate of 21 percent, primarily
due to permanent tax differences related to goodwill impairment and state and local tax expense, partially
offset by permanent tax differences related to net income attributable to noncontrolling interests. See
Item 8. Financial Statements and Supplementary Data – Note 15 for further details.
Noncontrolling interests decreased $769 million mainly due to MPLX’s net loss primarily resulting from
impairment expense recognized during 2020.
2019 Compared to 2018
Net income attributable to MPC decreased $143 million primarily due to impairment expense of $1.20
billion and an increase in net interest and other financial costs, partially offset by a decrease in net income
attributable to noncontrolling interests and increased income from discontinued operations in 2019. See
Segment Results for additional information.
Total revenues and other income increased $25.28 billion in 2019 compared to 2018 primarily due to:
•
•
increased sales and other operating revenues of $25.06 billion mainly due to an increase in our
Refining & Marketing segment refined product sales volumes, which increased 1,032 mbpd
largely due to the Andeavor acquisition on October 1, 2018, partially offset by lower average
refined product sales prices, which decreased $0.09 per gallon; and
increased net gain on disposal of assets of $272 million mainly due to $259 million of non-cash
gains related to obtaining equity investments in Capline LLC and The Andersons in exchange for
contributing assets in 2019.
Total costs and expenses increased $25.50 billion in 2019 compared to 2018 primarily due to:
•
•
•
•
•
increased cost of revenues of $22.18 billion primarily due to the inclusion of costs related to the
Andeavor operations following the acquisition;
increased impairment expense of $1.20 billion primarily related to MPLX goodwill associated
with the ANDX gathering and processing businesses acquired as part of the Andeavor acquisition;
increased depreciation and amortization of $1.06 billion, primarily due to the depreciation of the
fair value of the assets acquired in connection with the Andeavor acquisition;
increased selling, general and administrative expenses of $916 million mainly due to the inclusion
of costs related to Andeavor operations following the acquisition and reflecting MPC’s
classification of those costs and expenses; and
increased other taxes of $155 million primarily due to the inclusion of other taxes related to the
acquired Andeavor operations.
Net interest and other financial costs increased $236 million mainly due to debt assumed in the acquisition
of Andeavor and increased MPLX borrowings, partially offset by a decrease in pension settlement losses of
$44 million. We capitalized interest of $158 million in 2019 and $80 million in 2018. See Item 8. Financial
Statements and Supplementary Data – Note 22 for further details.
Provision for income taxes on continuing operations increased $20 million primarily due to non-deductible
goodwill impairments partially offset by decreased income from continuing operations $464 million. The
effective tax rate of 24 percent in 2019 is higher than the U.S. statutory rate of 21 percent, primarily due to
permanent tax differences related to goodwill impairment and state and local tax expense, partially offset
by permanent tax differences related to net income attributable to noncontrolling interests. The effective tax
rate of 21 percent in 2018 is consistent with the U.S. statutory rate of 21 percent, as permanent benefit
differences related to income attributable to noncontrolling interest were offset by state and local tax
expense. See Item 8. Financial Statements and Supplementary Data – Note 15 for further details.
Noncontrolling interests decreased $214 million mainly due lower MPLX net income primarily as a result
of the $1.2 billion goodwill impairment charge recorded in 2019.
58
Results of Discontinued Operations
The results of Speedway are presented as discontinued operations in our consolidated financial statements.
The following includes key financial and operating data for Speedway for the years ended December 31,
2020, 2019 and 2018.
Key Financial and Operating Data
Speedway fuel sales (millions of gallons)
Speedway fuel margin (dollars per gallon)(a)(b)
Merchandise sales (in millions)
Merchandise margin (in millions)(b)(c)
Same store gasoline sales volume (period over period)(d)
Same store merchandise sales (period over period)(d)(e)
Convenience stores at period-end
2020
5,919
2019
7,658
2018
6,293
$ 0.3452
$ 0.2434
$ 0.2122
$
$
6,384
1,846
$
$
6,305
1,827
$
$
5,232
1,486
(20.0) %
(0.2) %
3,839
(3.3) %
5.4 %
3,898
(1.5) %
4.2 %
3,923
(a)
(b)
(c)
(d)
(e)
The price paid by consumers less the cost of refined products, excluding transportation, consumer excise taxes and bankcard
processing fees (where applicable), divided by gasoline and distillate sales volume.
See “Non-GAAP Measures” section for reconciliation and further information regarding this non-GAAP measure.
The price paid by consumers less the cost of merchandise.
Same store comparison includes only locations owned at least 13 months.
Excludes cigarettes.
2020 Compared to 2019
Income from discontinued operations, net of tax, increased $399 million primarily due to higher fuel
margins partially offset by lower fuel volumes. Changes in fuel sales volumes were primarily due to the
effects of the COVID-19 pandemic which resulted in restricted travel, social distancing and reduced
business operations. In addition, fuel sales volumes decreased as a result of an agreement between
Speedway and Pilot Travel Centers (“PTC”), effective October 1, 2019, in which PTC supplies, prices and
sells diesel fuel at certain Speedway and PTC locations with both companies sharing in the diesel fuel
margins.
Beginning August 2, 2020, in accordance with ASC 360, Property, Plant, and Equipment, we ceased
recording depreciation and amortization for Speedway’s property, plant and equipment, finite-lived
intangible assets and right of use lease assets. As a result, Speedway depreciation and amortization was
$244 million and $413 million for the twelve months ended December 31, 2020 and 2019, respectively.
The Speedway fuel margin increased to 34.52 cents per gallon in 2020 compared with 24.34 cents per
gallon in 2019.
2019 Compared to 2018
Income from discontinued operations, net of tax, increased $133 million primarily due to higher fuel and
merchandise margins largely related to the addition of the Andeavor retail operations. These increases were
partially offset by increases in operating expenses and depreciation primarily related to the locations
acquired from Andeavor.
The Speedway fuel margin increased to 24.34 cents per gallon in 2019 compared with 21.22 cents per
gallon in 2018.
59
Segment Results
Our Refining & Marketing and Midstream segment income (loss) from continuing operations was
approximately $(1.48) billion, $6.45 billion and $5.41 billion for the years ended December 31, 2020, 2019
and 2018, respectively.
Refining & Marketing
Beginning with the third quarter of 2020, the direct dealer business is managed as part of the Refining &
Marketing segment. The results of the Refining & Marketing segment have been retrospectively adjusted to
include the results of the direct dealer business in all periods presented.
The following includes key financial and operating data for 2020, 2019 and 2018. Our results include the
results of Andeavor from the October 1, 2018 acquisition date forward.
(a)
Includes intersegment sales to Midstream and sales destined for export.
60
In millionsRefining & MarketingRevenues$66,247$107,408$82,821202020192018In millionsRefining & MarketingIncome (Loss) fromOperations$(5,189)$2,856$2,654202020192018mbpdRefined Product SalesVolumes (a)3,2223,7352,703202020192018Dollars per gallonAverage Refined ProductSales Prices$1.24$1.79$1.88202020192018 Refining & Marketing Operating Statistics
2020
2019
2018
Net refinery throughput (mbpd)
Refining & Marketing margin, excluding LIFO
liquidation charge(a)(b)(c)
LIFO liquidation charge
Refining & Marketing margin per barrel(a)(b)(c)
Less:
Refining operating costs per barrel(d)
Distribution costs per barrel(a)
Refining planned turnaround costs per barrel
Depreciation and amortization per barrel(a)
Plus:
Biodiesel tax credit(e)
Other per barrel(f)
2,583
3,112
2,274
$
8.96 $
14.77 $
14.50
(0.59)
8.37
—
14.77
—
14.50
5.68
5.37
0.88
1.96
—
0.03
5.66
4.52
0.65
1.58
0.08
0.08
4.99
4.24
0.80
1.45
—
0.18
3.20
2.74
Refining & Marketing segment income (loss) per barrel
Fees paid to MPLX included in distribution costs above
$
$
(5.49) $
3.66 $
2.52 $
2.84 $
(a)
(b)
(c)
(d)
(e)
(f)
Includes direct dealer results due to our third quarter change in segment presentation.
Sales revenue less cost of refinery inputs and purchased products, divided by net refinery throughput.
See “Non-GAAP Measures” section for reconciliation and further information regarding this non-GAAP measure.
Includes refining operating and major maintenance costs. Excludes planned turnaround and depreciation and amortization
expense.
Reflects a benefit of $93 million in 2019 for the biodiesel tax credit attributable to volumes blended in 2018.
Includes income from equity method investments, net gain on disposal of assets and other income.
61
The following table presents certain benchmark prices in our marketing areas and market indicators that we
believe are helpful in understanding the results of our Refining & Marketing segment. The results of the
Andeavor businesses are only included in our results from October 1, 2018 forward. The benchmark crack
spreads below do not reflect the market cost of RINs necessary to meet EPA renewable volume obligations
for attributable products under the Renewable Fuel Standard.
Benchmark spot prices (dollars per gallon)
2020
2019
2018
Chicago CBOB unleaded regular gasoline
$
Chicago ultra-low sulfur diesel
USGC CBOB unleaded regular gasoline
USGC ultra-low sulfur diesel
LA CARBOB
LA CARB diesel
Market Indicators (dollars per barrel)
LLS
WTI
ANS
Crack Spreads
USGC LLS 3-2-1
Mid-Continent WTI 3-2-1
West Coast ANS 3-2-1
Blended 3-2-1(a)
Crude Oil Differentials
Sweet
Sour
1.07
1.19
1.10
1.20
1.28
1.30
41.15
39.34
42.28
3.77
5.34
9.26
5.64
$
$
$
1.67
1.86
1.63
1.88
1.98
2.01
$
62.69
57.04
65.04
$
8.22
$
14.61
17.30
12.83
$
$
$
(1.07)
$
(2.35)
$
(3.45)
(3.15)
1.86
2.07
1.83
2.05
2.06
2.14
69.93
64.10
68.46
7.91
14.02
11.66
10.62
(3.83)
(7.60)
(a)
The blended crack spread for the fourth quarter of 2020 is weighted 40 percent of the USGC crack spread, 40 percent of the Mid-
Continent crack spread and 20 percent of the West Coast crack spread. The blended crack spreads for the first three quarters of
2020, all of 2019 and the fourth quarter of 2018 are weighted 38 percent of the USGC crack spread, 38 percent of the Mid-
Continent crack spread and 24 percent of the West Coast crack spread. The blended crack spread for the first three quarters of
2018 reflects the average weighting of 60 percent of the USGC crack spread and 40 percent of the Mid-Continent crack spread.
These blends are based on MPC’s refining capacity by region in each period.
2020 Compared to 2019
Refining & Marketing segment revenues decreased $41.16 billion primarily due to lower refined product
sales volumes, which decreased 513 mbpd, and decreased average refined product sales prices of $0.55 per
gallon.
Refinery crude oil capacity utilization was 82 percent during 2020 and net refinery throughputs decreased
529 mbpd primarily due to reducing throughputs during the COVID-19 pandemic.
Refining & Marketing segment income from operations decreased $8.05 billion primarily driven by lower
blended crack spreads.
Refining & Marketing margin, excluding LIFO liquidation charge, was $8.96 per barrel for 2020 compared
to $14.77 per barrel for 2019. Refining & Marketing margin is affected by the market indicators shown
earlier, which use spot market values and an estimated mix of crude purchases and product sales. Based on
the market indicators and our crude oil throughput, we estimate a net negative impact of $9.75 billion on
Refining & Marketing margin, primarily due to lower crack spreads. Our reported Refining & Marketing
margin differs from market indicators due to the mix of crudes purchased and their costs, the effects of
market structure on our crude oil acquisition prices, RIN prices on the crack spread and other items like
refinery yields and other feedstock variances, direct dealer fuel margin, and for 2020, a LIFO liquidation
charge of $561 million. For 2019, the Refining & Marketing segment income from operations also reflects
a benefit of $93 million for the biodiesel tax credit attributable to volumes blended in 2018. These factors
had an estimated net positive impact on Refining & Marketing segment income from operations of
62
approximately $800 million, including the LIFO liquidation charge, in 2020 compared to 2019 resulting in
a capture rate of 102 percent in 2020 and 96 percent in 2019.
For the year ended December 31, 2020, refining operating costs, excluding depreciation and amortization,
were $5.37 billion. This was a decrease of $1.06 billion, and a per barrel increase of $0.02 due to lower
refinery throughput, compared to the year ended December 31, 2019 as we took actions to reduce costs in
response to the economic effects of COVID-19, including operating at lower throughput at our refineries
and idling portions of our refining capacity. Net refinery throughput was 529 mbpd lower in 2020
Distribution costs, excluding depreciation and amortization, were $5.08 billion and $5.13 billion for 2020
and 2019, respectively, and include fees paid to MPLX of $3.46 billion and $3.22 billion for 2020 and
2019, respectively. On a per barrel basis, distribution costs, excluding depreciation and amortization,
increased $0.85 primarily due to lower throughput partially offset by a decrease in costs.
Refining planned turnaround costs increased $92 million, or $0.23 per barrel, due to the timing of
turnaround activity and a decrease in throughput.
Depreciation and amortization per barrel increased by $0.38, primarily due to a decrease in throughput and
increased costs.
We purchase RINs to satisfy a portion of our RFS2 compliance. Our expenses associated with purchased
RINs were $606 million in 2020 and $356 million in 2019 and are included in Refining & Marketing
margin. The increase in 2020 was primarily due to higher weighted average RIN costs, partially offset by a
decrease in our RIN obligations.
2019 Compared to 2018
Refining & Marketing segment revenues increased $24.6 billion in 2019 compared to 2018 primarily due to
higher refined product sales volumes, which increased 1,032 mbpd, largely due to the acquisition of
Andeavor on October 1, 2018, partially offset by decreased average refined product sales prices of $.09 per
gallon.
Refinery crude oil capacity utilization was 96 percent during 2019 and net refinery throughputs increased
838 mbpd primarily due to the refineries acquired from Andeavor.
Refining & Marketing segment income from operations increased $202 million primarily due to a full year
of direct dealer sales and an increase in Refining & Marketing margin on a per barrel basis partially offset
by higher operating, distribution and depreciation and amortization costs. The increases in costs and
expenses were primarily due to increased sales and production volumes following the Andeavor
acquisition.
Refining & Marketing margin was $14.77 per barrel for 2019 compared to $14.50 per barrel for 2018.
Refining & Marketing margin is affected by the market indicators shown earlier, which use spot market
values and an estimated mix of crude purchases and product sales. Based on the market indicators and our
crude oil throughput, we estimate a net positive impact of $4.46 billion on Refining & Marketing margin,
primarily due to an approximate $5.35 billion benefit from increased throughput volume, mainly attributed
to the Andeavor acquisition, partially offset by narrower sour and sweet crude oil differentials. Our
reported Refining & Marketing margin differs from market indicators due to the mix of crudes purchased
and their costs, the effects of market structure on our crude oil acquisition prices, RIN prices on the crack
spread and other items like refinery yields and other feedstock variances and direct dealer fuel margin. For
2019, the Refining & Marketing segment income from operations also reflects a benefit of $93 million for
the biodiesel tax credit attributable to volumes blended in 2018. These factors had an estimated net positive
impact on Refining & Marketing segment income from operations of approximately $370 million in 2019
compared to 2018 resulting in a capture rate of 96 percent in 2019 compared to 92 percent in 2018.
For the year ended December 31, 2019, refining operating costs, excluding depreciation and amortization,
were $6.42 billion. This was an increase of $2.28 billion, and a per barrel increase of $0.67. Distribution
costs, excluding depreciation and amortization, were $5.13 billion and $3.52 billion, and include fees paid
to MPLX of $3.22 billion and $2.28 billion, for 2019 and 2018, respectively. This was an increase of $1.61
billion, or $0.28 per barrel. Excluding depreciation and amortization, refining operating costs and
distribution costs increased primarily due to the inclusion of costs for the refining operations acquired from
Andeavor. The per barrel increases, among other items, reflect the addition of Andeavor’s West Coast
63
refineries, which generally have higher operating costs than other regions in which we operate due to
specific geographical location and regulatory factors.
Refining planned turnaround costs decreased $76 million, or $0.15 per barrel, due to the timing of
turnaround activity.
Depreciation and amortization per barrel increased by $0.13, primarily due to the fair value of assets
acquired from Andeavor as of October 1, 2018. During 2019, we recorded a $0.01 per barrel adjustment to
reduce depreciation and amortization, which reflects the cumulative effects related to a measurement period
adjustment arising from the finalization of purchase accounting.
We purchase RINs to satisfy a portion of our RFS2 compliance. Our expenses associated with purchased
RINs were $356 million in 2019 and $316 million in 2018. The increase in 2019 was primarily due to an
increase in our RIN obligations resulting from the acquisition of Andeavor, partially offset by lower
weighted average RIN costs.
Supplemental Refining & Marketing Statistics
Refining & Marketing Operating Statistics
Refined product export sales volumes (mbpd)(a)
Crude oil capacity utilization percent(b)
Refinery throughputs (mbpd):
Crude oil refined
Other charge and blendstocks
Net refinery throughput
Sour crude oil throughput percent
Sweet crude oil throughput percent
Refined product yields (mbpd):
Gasoline
Distillates
Feedstocks and petrochemicals
Asphalt
Propane
Heavy fuel oil
Total
2020
2019
2018
340
82
2,418
165
2,583
49
51
1,314
905
244
81
51
28
397
96
2,902
210
3,112
48
52
1,560
1,087
315
87
55
49
334
96
2,081
193
2,274
52
48
1,107
773
288
69
41
38
2,623
3,153
2,316
(a)
(b)
Represents fully loaded export cargoes for each time period. These sales volumes are included in the total sales volumes
amounts.
Based on calendar-day capacity, which is an annual average that includes down time for planned maintenance and other normal
operating activities.
64
Midstream
(a)
(b)
On owned common-carrier pipelines, excluding equity method investments.
Includes amounts related to unconsolidated equity method investments on a 100 percent basis.
65
In millionsMidstream Revenues$8,438$8,438$8,760$8,760$6,660$6,660$3,599$3,843$3,331$4,839$4,917$3,329Third PartyIntersegment - Refining & Marketing202020192018In millionsMidstream Incomefrom Operations$3,708$3,594$2,752202020192018mbpdPipeline Throughputs (a)4,8055,2454,177202020192018mbpdTerminal Throughput2,6733,2791,901202020192018MMcf/dGatheringSystemThroughput(b)5,4756,0944,779202020192018MMcf/dNatural GasProcessed (b)8,6138,6617,199202020192018mbpdC2 (Ethane) +NGLsFractionated(b)562534464202020192018 Benchmark Prices
2020
2019
2018
Natural Gas NYMEX HH ($ per MMBtu)
C2 + NGL Pricing ($ per gallon)(a)
$
$
2.13
0.43
$
$
2.53
0.52
$
$
3.07
0.78
(a)
C2 + NGL pricing based on Mont Belvieu prices assuming an NGL barrel of approximately 35 percent ethane, 35 percent
propane, six percent Iso-Butane, 12 percent normal butane and 12 percent natural gasoline.
2020 Compared to 2019
Midstream segment revenue decreased $322 million primarily due to decreased demand for the products
that we produce and transport due to the current macro-economic conditions in addition to lower natural
gas prices.
In 2020, Midstream segment income from operations increased $114 million mainly due stable, fee-based
earnings in the current business environment, contributions from organic growth projects and reduced
operating expenses.
2019 Compared to 2018
Midstream segment revenue increased $2.10 billion primarily due to the inclusion of ANDX revenues
subsequent to the Andeavor acquisition on October 1, 2018. On July 30, 2019, MPLX acquired ANDX. In
addition, 2019 reflects twelve months of fees charged for fuels distribution and refining logistics services
provided to our Refining & Marketing segment following the February 1, 2018 dropdown to MPLX.
MPLX revenues from refining logistics and fuels distribution services provided to MPC were $1.48 billion
and $1.36 billion for the years ended December 31, 2019 and 2018, respectively.
In 2019, Midstream segment income from operations increased $842 million largely due to contributions
from ANDX in addition to growth across MPLX’s businesses.
Corporate
Key Financial Information (in millions)
2020
2019
2018
Corporate(a)
$
(800)
$
(833)
$
(528)
(a)
Corporate and other unallocated items consists primarily of MPC’s corporate administrative expenses and costs related to certain
non-operating assets, except for corporate overhead expenses attributable to MPLX, which are included in the Midstream
segment. Corporate overhead expenses are not allocated to the Refining & Marketing segment.
2020 Compared to 2019
Corporate expenses decreased $33 million in 2020 compared to 2019 largely due to decreased salaries and
contract services expenses, partially offset by increased expenses due to an information systems integration
project. 2020 and 2019 corporate expenses include expenses of $26 million and $28 million, respectively,
which are no longer allocable to Speedway due to discontinued operations accounting.
2019 Compared to 2018
Corporate expenses increased $305 million in 2019 compared to 2018 largely due to the inclusion of costs
and expenses related to Andeavor operations. 2019 and 2018 corporate expenses include expenses of $28
million and $26 million, respectively, which are no longer allocable to Speedway due to discontinued
operations accounting.
66
Items not Allocated to Segments
Our chief operating decision maker evaluates the performance of our segments using segment income from
operations. Items identified in the table below are either believed to be non-recurring in nature or not
believed to be allocable, controlled by the segment or are not tied to the operational performance of the
segment.
Key Financial Information (in millions)
2020
2019
2018
Items not allocated to segments:
Impairments
Restructuring expense
Litigation
Gain on sale of assets
Transaction-related costs(a)
Equity method investment restructuring gains
$
(9,741)
$
(1,239)
$
(367)
84
66
(8)
—
—
(22)
—
(153)
259
9
—
—
—
(197)
—
(a)
2020 and 2019 includes costs incurred in connection with the Midstream strategic review and other related efforts. Both 2019
and 2018 include employee severance, retention and other costs related to the acquisition of Andeavor. Effective October 1,
2019, we have discontinued reporting Andeavor transaction-related costs as one year has passed since the acquisition and these
costs are immaterial. Costs incurred in connection with the Speedway separation are included in discontinued operations.
2020 Compared to 2019
Unallocated items include impairment charges of $9.74 billion which includes $8.43 billion related to
goodwill and long-lived assets and $1.32 billion related to equity method investments. See Item 8.
Financial Statements and Supplementary Data – Note 7 for additional information.
During 2020, we indefinitely idled our Gallup refinery, initiated actions to strategically reposition our
Martinez refinery to a renewable diesel facility and approved an involuntary workforce reduction plan. In
connection with these strategic actions, we recorded restructuring expenses of $367 million for the year
ended December 31, 2020. See Item 8. Financial Statements and Supplementary Data – Note 4 for
additional information.
Other unallocated items in 2020 include a favorable litigation settlement of $84 million and gain on sale of
assets of $66 million related to the sale of three asphalt terminals and certain other Refining & Marketing
assets.
2019 Compared to 2018
Unallocated items in 2019 include $259 million of non-cash gains related to obtaining equity investments
in Capline LLC and The Andersons in exchange for contributing assets. See Item 8. Financial Statements
and Supplementary Data – Note 17 for additional information.
In 2019, other unallocated items also include transaction-related costs of $153 million and a litigation
reserve adjustment of $22 million. The transaction-related costs recognized during the year include the
recognition of an obligation for vacation benefits provided to former Andeavor employees in the first
quarter as well as employee retention, severance and other costs and the Midstream strategic review and
other related efforts.
Impairment charges of $1.24 billion in 2019 primarily relate to MPLX goodwill associated with the ANDX
gathering and processing businesses acquired as part of the Andeavor acquisition. See Item 8. Financial
Statements and Supplementary Data – Note 19 for additional information.
67
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:
Refining & Marketing Margin
Refining margin is defined as sales revenue less the cost of refinery inputs and purchased products and
excludes other items reflected in the table below.
Reconciliation of Refining & Marketing income from operations to Refining & Marketing gross
margin and Refining & Marketing margin
(In millions)
2020
2019
2018
Refining & Marketing income (loss) from operations
$
(5,189) $
2,856 $
2,654
Plus (Less):
Selling, general and administrative expenses
2,030
2,211
1,479
Income from equity method investments
Net gain on disposal of assets
Other income
Refining & Marketing gross margin
Plus (Less):
Operating expenses (excluding depreciation and
amortization)
Depreciation and amortization
Gross margin excluded from Refining & Marketing
margin(a)
Other taxes included in Refining & Marketing margin
Biodiesel tax credit
Refining & Marketing margin
(2)
(1)
(35)
(11)
(8)
(43)
(3,197)
5,005
9,694
1,857
(365)
(79)
—
10,710
1,780
(621)
(11)
(93)
(15)
(4)
(125)
3,989
7,406
1,207
(506)
(61)
—
$
7,910 $
16,770 $
12,035
(a)
The gross margin, excluding depreciation and amortization, of operations that support Refining & Marketing such as biodiesel
and ethanol ventures, power facilities and processing of credit card transactions.
Speedway Fuel Margin
Speedway fuel margin is defined as the price paid by consumers less the cost of refined products, including
transportation, consumer excise taxes and bankcard processing fees (where applicable).
Speedway Merchandise Margin
Speedway merchandise margin is defined as the price paid by consumers less the cost of merchandise.
68
Reconciliation of Speedway income from discontinued operations to Speedway gross margin and
Speedway margin
(In millions)
2020
2019
2018
Income from discontinued operations
$
1,587
$
1,114
$
881
Plus (Less):
Operating, selling, general and administrative
expenses
Income from equity method investments
Net gain on disposal of assets
Other income
Speedway gross margin
Plus (Less):
Depreciation and amortization
Speedway margin
Speedway margin:
Fuel margin
Merchandise margin
Other margin
Speedway margin
2,376
(93)
(1)
(170)
3,699
2,371
1,753
(82)
(29)
(44)
(74)
(17)
(7)
3,330
2,536
244
413
$
3,943
$
3,743
$
$
$
2,043
1,846
54
$
1,864
1,827
52
320
2,856
1,336
1,486
34
$
3,943
$
3,743
$
2,856
LIQUIDITY AND CAPITAL RESOURCES
Cash Flows
Our cash and cash equivalents balance was $415 million at December 31, 2020 compared to $1.39 billion
at December 31, 2019, excluding $140 million and $134 million, respectively, of cash and cash equivalents
related to the discontinued operations of Speedway which are included in assets held for sale. Net cash
provided by (used in) operating activities, investing activities and financing activities for the past three
years is presented in the following table.
(In millions)
Net cash provided by (used in):
Operating activities
Investing activities
Financing activities
Total
2020
2019
2018
$
2,419
$
9,441
$
(3,257)
(135)
(6,261)
(3,376)
$
(973)
$
(196)
$
6,158
(7,670)
222
(1,290)
Net cash provided by operating activities decreased $7.02 billion in 2020 compared to 2019, primarily due
to a decrease in operating results and an unfavorable change in working capital of $43 million. Net cash
provided by operating activities increased $3.28 billion in 2019 compared to 2018, primarily due to an
increase in operating results, excluding impairment expenses, and a favorable change in working capital of
$978 million. The above changes in working capital exclude changes in short-term debt.
For 2020, changes in working capital were a net $314 million source of cash, primarily due to the effect of
decreases in energy commodity prices and inventory and refined product volumes on working capital.
Accounts payable decreased primarily due to lower crude payable prices. Current receivables decreased
primarily due to lower crude and refined product receivable prices and refined product volumes. Inventories
decreased mainly due to decreases in refined product, crude and materials & supplies inventories.
For 2019, changes in working capital were a net $357 million source of cash, primarily due to the effect of
increases in energy commodity prices and volumes on working capital. Accounts payable increased
primarily due to higher crude oil payable price and volumes. Current receivables increased primarily due to
69
increases in crude and refined product receivable volumes and prices. Inventories increased primarily due
to increases in refined product and materials & supplies inventories partially offset by a decrease in crude
inventory.
For 2018, changes in working capital were a net $621 million use of cash, primarily due to the effect of
decreases in energy commodity prices on working capital. Accounts payable decreased primarily due to
lower crude oil payable prices. Inventories decreased primarily due to a decrease in crude and refined
product inventories. Current receivables decreased primarily due to lower crude oil receivable prices. All of
these effects exclude the working capital acquired in connection with the acquisition of Andeavor.
Cash flows used in investing activities decreased $3.00 billion in 2020 compared to 2019 and decreased
$1.41 billion in 2019 compared to 2018.
•
•
•
•
Cash used for additions to property, plant and equipment was primarily due to spending in our
Midstream and Refining & Marketing segments in 2020. See discussion of capital expenditures
and investments under the “Capital Spending” section.
Cash used for acquisitions of $3.82 billion in 2018 primarily includes cash paid to Andeavor
stockholders of $3.5 billion in connection with the acquisition of Andeavor on October 1, 2018.
Net investments were a use of cash of $348 million in 2020 compared to $966 million in 2019 and
$393 million in 2018. Investments in 2020 are largely due to investments in the South Texas
Gateway Terminal, the Gray Oak Pipeline and the Whistler Pipeline. Investments in 2019 are
largely due to investments in connection with the Gray Oak Pipeline, which began initial start-up
in the fourth quarter, the Wink to Webster Pipeline, the Whistler Pipeline and other Midstream
projects.
Cash provided by disposal of assets totaled $150 million, $47 million and $22 million in 2020,
2019 and 2018, respectively. The increase in 2020 is mainly due to the sale of three asphalt
terminals and other Refining & Marketing assets. The increase in 2019 is primarily due to
proceeds from the sale of assets in our Retail segment.
The consolidated statements of cash flows exclude changes to the consolidated balance sheets that did not
affect cash. A reconciliation of additions to property, plant and equipment to total capital expenditures and
investments follows for each of the last three years.
(In millions)
Additions to property, plant and equipment per
consolidated statements of cash flows
Asset retirement expenditures
Increase (decrease) in capital accruals
Total capital expenditures
Investments in equity method investees
2020
2019
2018
$
2,787
$
4,810
$
3,179
—
(518)
2,269
485
1
(303)
4,508
1,064
5,572
$
8
268
3,455
409
3,864
Total capital expenditures and investments
$
2,754
$
Financing activities were a use of cash of $135 million in 2020, a use of cash of $3.38 billion in 2019 and a
source of cash of $222 million in 2018.
•
Long-term debt borrowings and repayments, including debt issuance costs, were a net $1.65
billion source of cash in 2020 compared to a $1.18 billion source of cash in 2019 and a $5.36
billion source of cash in 2018. During 2020, MPC issued $2.5 billion of senior notes, redeemed
$1.13 billion of senior notes, borrowed and repaid $4.23 billion under its revolving credit facility,
borrowed and repaid $3.55 billion under its trade receivables facility and had net borrowings of
$1.02 billion under its commercial paper program. MPLX issued $3.0 billion of senior notes,
which were used to repay $1.0 billion of outstanding borrowings under its term loan, $1.0 billion
of floating rate senior notes and to redeem $750 million of fixed rate senior notes, and had net
borrowings of $175 million under its revolving credit facility. During 2019, MPLX issued $2
billion of floating rate notes, the proceeds of which were used to repay various outstanding MPLX
borrowings and for general business purposes, and had net borrowings of $1 billion under its term
loan agreement. In addition, MPLX repaid $500 million of senior notes. During 2018, MPLX
issued $7.75 billion of senior notes, redeemed $750 million of senior notes, borrowed and repaid
$4.1 billion under a term loan agreement, and borrowed and repaid $1.41 billion and $1.92 billion,
70
•
•
•
respectively, under the MPLX Credit Agreement. In addition, MPC redeemed $600 million of
senior notes. See Item 8. Financial Statements and Supplementary Data – Note 22 for additional
information on our long-term debt.
Cash used in common stock repurchases totaled $1.95 billion in 2019 and $3.29 billion in 2018.
See the “Capital Requirements” section for further discussion of our stock repurchases.
Cash used in dividend payments totaled $1.51 billion in 2020, $1.40 billion in 2019 and $954
million in 2018. The increase in 2020 is primarily due to an increase in our base dividend, partially
offset by a reduction of shares resulting from share repurchases in 2019. The increase in 2019 was
primarily due a net increase in the number of shares outstanding due to the approximate 239.8
million shares issued in connection with the Andeavor acquisition and a $0.28 per share increase
in our base dividend, partially offset by a reduction of shares resulting from share repurchases.
Dividends per share were $2.32 in 2020, $2.12 in 2019 and $1.84 in 2018.
Distributions to noncontrolling interests increased $342 million in 2019 compared to 2018,
primarily due to increases in MPLX units outstanding and MPLX’s distribution per common unit.
Distributions to noncontrolling interests included ANDX’s distribution per common unit paid in
the first and second quarter of 2019, prior to the merger of ANDX and MPLX, and the fourth
quarter of 2018 subsequent to the acquisition of Andeavor on October 1, 2018.
Derivative Instruments
See Item 7A. Quantitative and Qualitative Disclosures about Market Risk for a discussion of derivative
instruments and associated market risk.
Capital Resources
MPC, Excluding MPLX
We control MPLX through our ownership of the general partner, however, the creditors of MPLX do not
have recourse to MPC’s general credit through guarantees or other financial arrangements. The assets of
MPLX can only be used to settle its own obligations and its creditors have no recourse to our assets.
Therefore, in the following table, we present the liquidity of MPC, excluding MPLX. MPLX liquidity is
discussed in the following section.
Our liquidity, excluding MPLX, totaled $7.3 billion at December 31, 2020 consisting of:
(In millions)
Bank revolving credit facility(a)
364 day bank revolving credit facility
364 day bank revolving credit facility(b)
Trade receivables facility(c)
Commercial paper borrowings(d)
Total
Cash and cash equivalents(e)
Total liquidity
Total
Capacity
December 31, 2020
Outstanding
Borrowings
Available
Capacity
$
5,000 $
1 $
1,000
1,000
750
—
—
—
—
—
$
7,750 $
1 $
$
4,999
1,000
1,000
750
(1,024)
6,725
540
7,265
(a)
(b)
(c)
Outstanding borrowings include $1 million in letters of credit outstanding under this facility. Excludes MPLX’s $3.5 billion
bank revolving credit facility, which had $175 million borrowings and no of letters of credit outstanding as of December 31,
2020.
In February 2021, we elected to cancel one of the $1.0 B 364-day revolving credit agreements prior to its maturity in April 2021.
Availability under our $750 million trade receivables facility is a function of eligible trade receivables, which will be lower in a
sustained lower price environment for refined products.
(d) We do not intend to have outstanding commercial paper borrowings in excess of available capacity under bank revolving credit
facilities.
(e)
Includes cash and cash equivalents classified as assets held for sale of $140 million (see Item 8. Financial Statements and
Supplementary Data – Note 5) and excludes $15 million of MPLX cash and cash equivalents.
Because of the alternatives available to us, including internally generated cash flow and access to capital
markets, including a commercial paper program, we believe that our short-term and long-term liquidity is
adequate to fund not only our current operations, but also our near-term and long-term funding
requirements, including capital spending programs, dividend payments, defined benefit plan contributions,
71
repayment of debt maturities and other amounts that may ultimately be paid in connection with
contingencies. During the year ended December 31, 2020, share repurchases were temporarily suspended,
which has helped preserve our liquidity during the COVID-19 pandemic. The timing and amount of future
repurchases will depend upon several factors, including market and business conditions, and such
repurchases may be initiated, suspended or discontinued at any time.
On August 2, 2020, we entered into a definitive agreement to sell Speedway, our company-owned and
operated retail transportation fuel and convenience store business, to 7-Eleven for $21 billion in cash,
subject to certain adjustments based on the levels of cash, debt and working capital at closing and certain
other items. The taxable transaction is targeted to close in the first quarter of 2021, subject to customary
closing conditions and the receipt of regulatory approvals. This transaction is expected to result in after-tax
cash proceeds of approximately $16.5 billion. The company expects to use the proceeds from the sale to
strengthen the balance sheet and return capital to shareholders.
Additionally, we have recorded an income tax receivable within other current assets in our balance sheet of
approximately $2.1 billion which is expected to be received during the second half of 2021.
We established a commercial paper program that allows us to have a maximum of $2 billion in commercial
paper outstanding, with maturities up to 397 days from the date of issuance. We do not intend to have
outstanding commercial paper borrowings in excess of available capacity under our bank revolving credit
facilities. At December 31, 2020, we had $1.02 billion outstanding under the commercial paper program,
which matures on various dates in the first quarter of 2021.
On September 23, 2020, MPC entered into a 364-day credit agreement with a syndicate of lenders. This
revolving credit agreement provides for a $1.0 billion unsecured revolving credit facility that matures in
September 2021, and replaces a similar 364-day revolving credit agreement that expired on September 28,
2020.
On April 27, 2020, MPC entered into a 364-day revolving credit agreement that provided for a $1.0 billion
unsecured revolving credit facility that was scheduled to mature in April 2021. In February 2021, we
elected to terminate this credit agreement. This facility provided MPC additional liquidity and financial
flexibility during the then ongoing commodity price and demand downturn. We no longer believe the
facility is necessary as an additional source for liquidity, and we do not intend to replace it. No early
termination fees were incurred by MPC in connection with the termination of this credit agreement.
On April 27, 2020, we closed on the issuance of $2.5 billion in aggregate principal amount of senior notes
in a public offering, consisting of $1.25 billion aggregate principal amount of 4.500% unsecured senior
notes due May 2023 and $1.25 billion aggregate principal amount of 4.700% unsecured senior notes due
May 2025. MPC used the net proceeds from this offering to repay amounts outstanding under its five-year
revolving credit facility.
The MPC credit agreements and our trade receivables facility contain representations and warranties,
affirmative and negative covenants and events of default that we consider usual and customary for
agreements of these types. The financial covenant requires us to maintain, as of the last day of each fiscal
quarter, a ratio of Consolidated Net Debt to Total Capitalization (as defined in the MPC credit agreements)
of no greater than 0.65 to 1.00. Other covenants restrict us and/or certain of our subsidiaries from incurring
debt, creating liens on assets and entering into transactions with affiliates. As of December 31, 2020, we
were in compliance with the covenants contained in the MPC credit agreements and our trade receivables
facility, including the financial covenant with a ratio of Consolidated Net Debt to Total Capitalization of
0.37 to 1.00.
Our intention is to maintain an investment-grade credit profile. As of February 1, 2021, the credit ratings on
our senior unsecured debt are as follows.
Company
MPC
Rating Agency
Rating
Moody’s
Baa2 (negative outlook)
Standard & Poor’s
BBB (negative outlook)
Fitch
BBB (negative outlook)
The ratings reflect the respective views of the rating agencies. Although it is our intention to maintain a
credit profile that supports an investment-grade rating, there is no assurance that these ratings will continue
72
for any given period of time. The ratings may be revised or withdrawn entirely by the rating agencies if, in
their respective judgments, circumstances so warrant.
None of the MPC credit agreements or our trade receivables facility or senior notes contains credit rating
triggers that would result in the acceleration of interest, principal or other payments in the event that our
credit ratings are downgraded. However, any downgrades of our senior unsecured debt could increase the
applicable interest rates, yields and other fees payable under such agreements and may limit our flexibility
to obtain financing in the future, including to refinance existing indebtedness. In addition, a downgrade of
our senior unsecured debt rating to below investment-grade levels could, under certain circumstances,
decrease the amount of trade receivables that are eligible to be sold under our trade receivables facility,
impact our ability to purchase crude oil on an unsecured basis and could result in us having to post letters of
credit under existing transportation services or other agreements.
See Item 8. Financial Statements and Supplementary Data – Note 22 for further discussion of our debt.
MPLX
MPLX’s liquidity totaled $4.84 billion at December 31, 2020 consisting of:
(In millions)
MPLX bank revolving credit facility
MPC intercompany loan agreement
Total
Cash and cash equivalents
Total liquidity
Total
Capacity
December 31, 2019
Outstanding
Borrowings
Available
Capacity
$
$
3,500 $
175 $
1,500
—
5,000 $
175 $
$
3,325
1,500
4,825
15
4,840
On August 18, 2020, MPLX issued $3.0 billion aggregate principal amount of senior notes in a public
offering, consisting of $1.5 billion aggregate principal amount of 1.750% senior notes due March 2026 and
$1.5 billion aggregate principal amount of 2.650% senior notes due August 2030. The net proceeds were
used to repay $1.0 billion of outstanding borrowings under the MPLX term loan agreement, to repay the
$1.0 billion floating rate senior notes due September 2021, to redeem all of the $300 million aggregate
principal amount of MPLX’s 6.250% senior notes due October 2022 and to redeem the $450 million
aggregate principal amount of 6.375% senior notes due May 2024, including the portion of such notes
issued by ANDX. The remaining proceeds were used for general business purposes.
The MPLX credit agreement contains certain representations and warranties, affirmative and restrictive
covenants and events of default that we consider to be usual and customary for an agreement of this type.
The financial covenant requires MPLX to maintain a ratio of Consolidated Total Debt as of the end of each
fiscal quarter to Consolidated EBITDA (both as defined in the MPLX credit agreement) for the prior four
fiscal quarters of no greater than 5.0 to 1.0 (or 5.5 to 1.0 for up to two fiscal quarters following certain
acquisitions). Consolidated EBITDA is subject to adjustments for certain acquisitions completed and
capital projects undertaken during the relevant period. Other covenants restrict MPLX and/or certain of its
subsidiaries from incurring debt, creating liens on assets and entering into transactions with affiliates. As of
December 31, 2020, MPLX was in compliance with the covenants, including the financial covenant with a
ratio of Consolidated Total Debt to Consolidated EBITDA of 3.8 to 1.0.
Our intention is to maintain an investment-grade credit profile for MPLX. As of February 1, 2021, the
credit ratings on MPLX’s senior unsecured debt are as follows.
Company
MPLX
Rating Agency
Rating
Moody’s
Standard & Poor’s
Fitch
Baa2 (negative outlook)
BBB (negative outlook)
BBB (negative outlook)
The ratings reflect the respective views of the rating agencies. Although it is our intention to maintain a
credit profile that supports an investment-grade rating for MPLX, there is no assurance that these ratings
73
will continue for any given period of time. The ratings may be revised or withdrawn entirely by the rating
agencies if, in their respective judgments, circumstances so warrant.
Neither the MPLX credit agreement or term loan agreement contains credit rating triggers that would result
in the acceleration of interest, principal or other payments in the event that MPLX credit ratings are
downgraded. However, any downgrades of MPLX senior unsecured debt could increase the applicable
interest rates, yields and other fees payable under such agreements. In addition, a downgrade of MPLX
senior unsecured debt ratings to below investment-grade levels may limit MPLX’s ability to obtain future
financing, including to refinance existing indebtedness.
See Item 8. Financial Statements and Supplementary Data – Note 22 for further discussion of MPLX’s
debt.
Capital Requirements
Capital Spending
MPC’s capital investment plan for 2021 totals approximately $1.4 billion for capital projects and
investments, excluding capitalized interest, potential acquisitions and MPLX’s capital investment plan.
MPC’s 2021 capital investment plan includes all of the planned capital spending for Refining & Marketing,
and Corporate as well as a portion of the planned capital investments in Midstream and Speedway’s capital
spending for the first quarter which is now reported separately as discontinued operations. The remainder of
the planned capital spending for Midstream reflects the capital investment plan for MPLX. We
continuously evaluate our capital plan and make changes as conditions warrant. The 2021 capital
investment plan for MPC and MPLX and capital expenditures and investments for each of the last three
years are summarized by segment below.
(In millions)
Capital expenditures and investments:(a)
MPC, excluding MPLX
Refining & Marketing
Midstream - Other
Corporate and Other(b)
2021 Plan
2020
2019
2018
$
1,050
$
1,170
$
2,045
$
1,077
50
150
221
80
360
100
70
77
Total MPC, excluding MPLX
$
1,250
$
1,471
$
2,505
$
1,224
MPC discontinued operations - Speedway
$
150
$
277
$
561
$
440
Midstream - MPLX(c)
$
1,000
$
1,177
$
2,930
$
2,560
(a)
(b)
(c)
Capital expenditures exclude changes in capital accruals.
Excludes capitalized interest of $106 million, $137 million and $80 million for 2020, 2019 and 2018, respectively. The 2021
capital investment plan excludes capitalized interest.
The MPLX capital investment plan excludes project reimbursements paid by MPC to MPLX and return of capital from MPLX’s
joint venture partners.
Refining & Marketing
The Refining & Marketing segment’s forecasted 2021 capital spending and investments is approximately
$1.05 billion. This amount includes approximately $800 million of growth capital focused on on-going
projects, such as the first phase of the Martinez facility conversion, the STAR project, and projects that we
expect will help us reduce future operating costs. Maintenance capital is expected to be $250 million.
Major capital projects completed over the last three years have prepared us to increase our diesel
production, process light crude oil, increase our export capabilities and meet the transportation fuel
regulatory mandate (Tier 3 fuel standards). In addition, the STAR investment project at our Galveston Bay
refinery is progressing according to plan and is scheduled to complete in 2022.
Midstream
MPLX’s capital investment plan includes $800 million of organic growth capital and approximately $200
million of maintenance capital. This growth plan is focused on investments in projects that deliver the
highest returns as we continue to optimize our assets. These investments are focused on crude oil and
natural gas logistics systems to transport products from the Permian to the U.S. Gulf Coast and increase our
74
export capabilities. This provides for additional flexibility and competitive advantages in how we operate
our assets as these projects further enhance our full value chain capture. Other investments include the
addition of approximately 400 MMcf/d of processing capacity at two gas processing plants, one in the
Marcellus region which is expected to be completed in 2021, and one in the Southwest region, which is
expected to be completed in 2022.
Major capital projects over the last three years included investments for the development of natural gas and
natural gas liquids infrastructure to support MPLX’s producer customers, primarily in the Marcellus, Utica
and Permian regions and development of various crude oil and refined petroleum products infrastructure
projects.
The remaining Midstream segment’s forecasted 2021 capital spend, excluding MPLX, is approximately
$50 million which primarily relates to investments in equity affiliates.
Corporate and Other
The 2021 capital forecast includes approximately $150 million to support corporate activities. Major
projects over the last three years included upgrades to information technology systems.
Speedway
Speedway’s 2021 capital forecast for the first quarter of approximately $150 million is focused on new
store growth in existing and new markets, commercial fueling/diesel expansion, food service through store
remodels and equipment replacement/store maintenance.
Major capital projects over the last three years included converting recently acquired locations to the
Speedway brand and systems, building new store locations, remodeling and rebuilding existing locations in
core markets and building out our network of commercial fueling lane locations to capitalize on diesel
demand growth.
Dividends
On January 29, 2021, we announced our board of directors approved a $0.58 per share dividend, payable
March 10, 2021 to shareholders of record at the close of business on February 17, 2021.
Share Repurchases
During the year ended December 31, 2020, share repurchases were temporarily suspended, which has
helped preserve our liquidity during the COVID-19 pandemic. The timing and amount of future
repurchases will depend upon several factors, including market and business conditions, and such
repurchases may be initiated, suspended or discontinued at any time. Since January 1, 2012, our board of
directors has approved $18.0 billion in total share repurchase authorizations and we have repurchased a
total of $15.0 billion of our common stock, leaving approximately $3.0 billion available for repurchases as
of December 31, 2020. Under these authorizations, we have acquired 327 million shares at an average cost
per share of $46.05. The table below summarizes our total share repurchases. See Item 8. Financial
Statements and Supplementary Data – Note 12 for further discussion of the share repurchase plans.
(In millions, except per share data)
Number of shares repurchased
Cash paid for shares repurchased
Average cost per share
2020
2019
2018
—
—
—
$
$
34
1,950
58.87
$
$
47
3,287
69.46
$
$
We may utilize various methods to effect the repurchases, which could include open market repurchases,
negotiated block transactions, tender offers, accelerated share repurchases or open market solicitations for
shares, some of which may be effected through Rule 10b5-1 plans.
MPLX Unit Repurchases
On November 2, 2020, MPLX announced the board authorization of a unit repurchase program for the
repurchase of up to $1 billion of MPLX’s outstanding common units held by the public. MPLX may utilize
various methods to effect the repurchases, which could include open market repurchases, negotiated block
transactions, tender offers, accelerated unit repurchases or open market solicitations for units, some of
which may be effected through Rule 10b5-1 plans. The timing and amount of repurchases will depend upon
75
several factors, including market and business conditions, and repurchases may be initiated, suspended or
discontinued at any time. The repurchase authorization has no expiration date.
During the year ended December 31, 2020, 1,473,843 MPLX common units had been repurchased at an
average cost per unit of $22.29. Total cash paid for units repurchased during the year was $33 million and
$967 million remained outstanding on the program for future repurchases as of December 31, 2020. As of
December 31, 2020, MPLX had agreements to acquire 99,406 additional common units for $2 million,
which settled in early January 2021.
Other Capital Requirements
In 2020, we made contributions totaling $3 million to our funded pension plans. For 2021, we have $65
million of required funding and we may make voluntary contributions to our funded pension plans at our
discretion.
We have $1.0 billion of 5.125 percent senior notes due in March 2021 that will be paid utilizing existing
resources.
As of December 31, 2020, $141 million of restructuring expenses were accrued as restructuring reserves in
our consolidated balance sheet and we expect cash payments for the majority of these reserves to occur
within the next nine months.
We may, from time to time, repurchase notes in the open market, in tender offers, in privately-negotiated
transactions or otherwise in such volumes, at such prices and upon such other terms as we deem
appropriate.
76
Contractual Cash Obligations
The table below provides aggregated information on our consolidated obligations to make future payments
under existing contracts as of December 31, 2020. The contractual obligations detailed below do not
include our contractual obligations to MPLX under various fee-based commercial agreements as these
transactions are eliminated in the consolidated financial statements.
(In millions)
Long-term debt(a)
Finance lease obligations(b)
Operating lease obligations
Purchase obligations:(c)
Crude oil, feedstock, refined
product and renewable fuel
contracts(d)
Transportation and related
contracts
Contracts to acquire property,
plant and equipment
Service, materials and other
contracts(e)
Total purchase obligations
Other long-term liabilities reported in
the consolidated balance sheet(f)
Total contractual cash
obligations
Total
2021
2022-2023
2024-2025 Later Years
$ 48,061 $
4,069 $
7,514 $
7,233 $
29,245
853
1,665
91
544
200
616
160
281
402
224
11,504
10,657
596
207
44
5,998
768
1,685
1,408
2,137
1,682
1,580
100
2
—
5,096
24,280
1,315
14,320
1,160
3,541
883
2,500
1,738
3,919
1,734
261
518
522
433
$ 76,593 $ 19,285 $ 12,389 $ 10,696 $
34,223
(a)
(b)
(c)
(d)
(e)
(f)
Includes interest payments of $16.59 billion for our senior notes and the MPLX senior notes, commitment and administrative
fees for our credit agreements, the MPLX credit agreement and term loan agreement and our trade receivables facility.
Finance lease obligations represent future minimum payments.
Includes both short- and long-term purchases obligations.
These contracts include variable price arrangements. For purposes of this disclosure we have estimated prices to be paid
primarily based on futures curves for the commodities to the extent available.
Primarily includes contracts to purchase services such as utilities, supplies and various other maintenance and operating services.
Primarily includes obligations for pension and other postretirement benefits including medical and life insurance, which we have
estimated through 2030. See Item 8. Financial Statements and Supplementary Data – Note 26.
Off-Balance Sheet Arrangements
Off-balance sheet arrangements comprise those arrangements that may potentially impact our liquidity,
capital resources and results of operations, even though such arrangements are not recorded as liabilities
under accounting principles generally accepted in the United States. Our off-balance sheet arrangements are
limited to indemnities and guarantees that are described below. Although these arrangements serve a
variety of our business purposes, we are not dependent on them to maintain our liquidity and capital
resources, and we are not aware of any circumstances that are reasonably likely to cause the off-balance
sheet arrangements to have a material adverse effect on liquidity and capital resources.
We have provided various guarantees related to equity method investees. In conjunction with our spinoff
from Marathon Oil, we entered into various indemnities and guarantees to Marathon Oil. These
arrangements are described in Item 8. Financial Statements and Supplementary Data – Note 29.
TRANSACTIONS WITH RELATED PARTIES
We believe that transactions with related parties were conducted on terms comparable to those with
unaffiliated parties. See Item 8. Financial Statements and Supplementary Data – Note 10 for discussion of
activity with related parties.
77
ENVIRONMENTAL MATTERS AND COMPLIANCE COSTS
We have incurred and may continue to incur substantial capital, operating and maintenance, and
remediation expenditures as a result of environmental laws and regulations. If these expenditures, as with
all costs, are not ultimately reflected in the prices of our products and services, our operating results will be
adversely affected. We believe that substantially all of our competitors must comply with similar
environmental laws and regulations. However, the specific impact on each competitor may vary depending
on a number of factors, including the age and location of its operating facilities, marketing areas,
production processes and whether it is also engaged in the petrochemical business or the marine
transportation of crude oil and refined products.
Legislation and regulations pertaining to fuel specifications, climate change and greenhouse gas emissions
have the potential to materially adversely impact our business, financial condition, results of operations and
cash flows, including costs of compliance and permitting delays. The extent and magnitude of these adverse
impacts cannot be reliably or accurately estimated at this time because specific regulatory and legislative
requirements have not been finalized and uncertainty exists with respect to the measures being considered,
the costs and the time frames for compliance, and our ability to pass compliance costs on to our customers.
Our environmental expenditures, including non-regulatory expenditures, for each of the last three years
were:
(In millions)
Capital
Compliance:(a)
Operating and maintenance
Remediation(b)
Total
2020
2019
2018
$
121
$
528
$
360
469
40
630
$
547
56
$
1,131
$
493
31
884
(a)
(b)
Based on the American Petroleum Institute’s definition of environmental expenditures.
These amounts include spending charged against remediation reserves, where permissible, but exclude non-cash provisions
recorded for environmental remediation.
We accrue for environmental remediation activities when the responsibility to remediate is probable and the
amount of associated costs can be reasonably estimated. As environmental remediation matters proceed
toward ultimate resolution or as additional remediation obligations arise, charges in excess of those
previously accrued may be required.
New or expanded environmental requirements, which could increase our environmental costs, may arise in
the future. It is not possible to predict all of the ultimate costs of compliance, including remediation costs
that may be incurred and penalties that may be imposed.
Our environmental capital expenditures accounted for 6 percent, 12 percent and 11 percent of capital
expenditures, for 2020, 2019 and 2018, respectively, excluding acquisitions. Our environmental capital
expenditures are expected to approximate $39 million, or 2 percent, of total planned capital expenditures in
2021. Actual expenditures may vary as the number and scope of environmental projects are revised as a
result of improved technology or changes in regulatory requirements and could increase if additional
projects are identified or additional requirements are imposed.
For more information on environmental regulations that impact us, or could impact us, see Item 1. Business
– Regulatory Matters and Item 1A. Risk Factors.
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CRITICAL ACCOUNTING ESTIMATES
The preparation of financial statements in accordance with GAAP requires us to make estimates and
assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets
and liabilities as of the date of the consolidated financial statements and the reported amounts of revenues
and expenses during the respective reporting periods. Accounting estimates are considered to be critical if
(1) the nature of the estimates and assumptions is material due to the levels of subjectivity and judgment
necessary to account for highly uncertain matters or the susceptibility of such matters to change; and (2) the
impact of the estimates and assumptions on financial condition or operating performance is material. Actual
results could differ from the estimates and assumptions used.
Fair Value Estimates
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly
transaction between market participants at the measurement date. There are three approaches for measuring
the fair value of assets and liabilities: the market approach, the income approach and the cost approach,
each of which includes multiple valuation techniques. The market approach uses prices and other relevant
information generated by market transactions involving identical or comparable assets or liabilities. The
income approach uses valuation techniques to measure fair value by converting future amounts, such as
cash flows or earnings, into a single present value amount using current market expectations about those
future amounts. The cost approach is based on the amount that would currently be required to replace the
service capacity of an asset. This is often referred to as current replacement cost. The cost approach
assumes that the fair value would not exceed what it would cost a market participant to acquire or construct
a substitute asset of comparable utility, adjusted for obsolescence.
The fair value accounting standards do not prescribe which valuation technique should be used when
measuring fair value and does not prioritize among the techniques. These standards establish a fair value
hierarchy that prioritizes the inputs used in applying the various valuation techniques. Inputs broadly refer
to the assumptions that market participants use to make pricing decisions, including assumptions about risk.
Level 1 inputs are given the highest priority in the fair value hierarchy while Level 3 inputs are given the
lowest priority. The three levels of the fair value hierarchy are as follows:
•
•
•
Level 1 – Observable inputs that reflect unadjusted quoted prices for identical assets or liabilities
in active markets as of the measurement date. Active markets are those in which transactions for
the asset or liability occur in sufficient frequency and volume to provide pricing information on an
ongoing basis.
Level 2 – Observable market-based inputs or unobservable inputs that are corroborated by market
data. These are inputs other than quoted prices in active markets included in Level 1, which are
either directly or indirectly observable as of the measurement date.
Level 3 – Unobservable inputs that are not corroborated by market data and may be used with
internally developed methodologies that result in management’s best estimate of fair value.
Valuation techniques that maximize the use of observable inputs are favored. Assets and liabilities are
classified in their entirety based on the lowest priority level of input that is significant to the fair value
measurement. The assessment of the significance of a particular input to the fair value measurement
requires judgment and may affect the placement of assets and liabilities within the levels of the fair value
hierarchy. We use an income or market approach for recurring fair value measurements and endeavor to use
the best information available. See Item 8. Financial Statements and Supplementary Data – Note 20 for
disclosures regarding our fair value measurements.
Significant uses of fair value measurements include:
•
•
•
•
•
•
assessment of impairment of long-lived assets;
assessment of impairment of intangible assets:
assessment of impairment of goodwill;
assessment of impairment of equity method investments;
recorded values for assets acquired and liabilities assumed in connection with acquisitions; and
recorded values of derivative instruments.
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Impairment Assessments of Long-Lived Assets, Intangible Assets, Goodwill and Equity Method
Investments
Fair value calculated for the purpose of testing our long-lived assets, intangible assets, goodwill and equity
method investments for impairment is estimated using the expected present value of future cash flows
method and comparative market prices when appropriate. Significant judgment is involved in performing
these fair value estimates since the results are based on forecasted financial information prepared using
significant assumptions including:
•
•
•
•
Future operating performance. Our estimates of future operating performance are based on our
analysis of various supply and demand factors, which include, among other things, industry-wide
capacity, our planned utilization rate, end-user demand, capital expenditures and economic
conditions. Such estimates are consistent with those used in our planning and capital investment
reviews.
Future volumes. Our estimates of future refinery, pipeline throughput and natural gas and natural
gas liquid processing volumes are based on internal forecasts prepared by our Refining &
Marketing and Midstream segments operations personnel. Assumptions about the effects of
COVID-19 on our future volumes are inherently subjective and contingent upon the duration of
the pandemic, which is difficult to forecast.
Discount rate commensurate with the risks involved. We apply a discount rate to our cash flows
based on a variety of factors, including market and economic conditions, operational risk,
regulatory risk and political risk. This discount rate is also compared to recent observable market
transactions, if possible. A higher discount rate decreases the net present value of cash flows.
Future capital requirements. These are based on authorized spending and internal forecasts.
Assumptions about the effects of COVID-19 and the macroeconomic environment are inherently subjective
and contingent upon the duration of the pandemic and its impact on the macroeconomic environment,
which is difficult to forecast. We base our fair value estimates on projected financial information which we
believe to be reasonable. However, actual results may differ from these projections.
The need to test for impairment can be based on several indicators, including a significant reduction in
prices of or demand for products produced, a weakened outlook for profitability, a significant reduction in
pipeline throughput volumes, a significant reduction in natural gas or natural gas liquids processed, a
significant reduction in refining margins, other changes to contracts or changes in the regulatory
environment. The following sections detail our critical accounting estimates related to impairment
assessments for long-lived assets, goodwill and equity method investments.
Long-lived Asset Impairment Assessments
Long-lived assets used in operations are assessed for impairment whenever changes in facts and
circumstances indicate that the carrying value of the assets may not be recoverable based on the expected
undiscounted future cash flow of an asset group. For purposes of impairment evaluation, long-lived assets
must be grouped at the lowest level for which independent cash flows can be identified, which generally is
the refinery and associated distribution system level for Refining & Marketing segment assets, and the plant
level or pipeline system level for Midstream segment assets. If the sum of the undiscounted estimated
pretax cash flows is less than the carrying value of an asset group, fair value is calculated, and the carrying
value is written down to the calculated fair value. The Company’s consolidated long-lived asset balance
was $43 billion as of December 31, 2020.
During the first quarter of 2020, we identified long-lived asset impairment triggers relating to all of our
refinery asset groups within the Refining & Marketing segment as a result of decreases to the Refining &
Marketing segment expected future cash flows. The cash flows associated with these assets were
significantly impacted by the effects of COVID-19 and commodity price declines. We assessed each
refinery asset group for impairment by comparing the undiscounted estimated pretax cash flows to the
carrying value of each asset group. Of the 16 refinery asset groups, only the Gallup refinery’s carrying
value exceeded its undiscounted estimated pretax cash flows. It was determined that the fair value of the
Gallup refinery’s property, plant and equipment was less than the carrying value. As a result, we recorded a
charge of $142 million in the first quarter of 2020 to impairment expense on the consolidated statements of
income. The fair value measurements for the Gallup refinery assets represent Level 3 measurements.
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During the second quarter of 2020, we identified long-lived asset impairment triggers relating to all of our
refinery asset groups within the Refining & Marketing segment, except the Gallup refinery which had been
impaired in the first quarter, as a result of continued macroeconomic developments impacting the Refining
& Marketing segment expected future cash flows. All of these refinery asset groups undiscounted estimated
pretax cash flows exceeded the carrying value by at least 17 percent.
On August 3, 2020, we announced our plans to evaluate possibilities to strategically reposition our
Martinez refinery, including the potential conversion of the refinery into a renewable diesel facility.
Subsequent to August 3, 2020, we progressed activities associated with the conversion of the Martinez
refinery to a renewable diesel facility, including applying for permits, advancing discussions with feedstock
suppliers, and beginning detailed engineering activities. As envisioned, the Martinez facility would start
producing approximately 260 million gallons per year of renewable diesel by the second half of 2022, with
a potential to build to full capacity of approximately 730 million gallons per year by the end of 2023. As a
result of the progression of these activities, we identified assets that would be repurposed and utilized in a
renewable diesel facility configuration and assets that would be abandoned since they had no function in a
renewable diesel facility configuration. This change in our intended use for the Martinez refinery is a long-
lived asset impairment trigger for the assets that would be repurposed and remain as part of the Martinez
asset group. We assessed the asset group for impairment by comparing the undiscounted estimated pretax
cash flows to the carrying value of the asset group and the undiscounted estimated pretax cash flows
exceeded the Martinez asset group carrying value. We recorded impairment expense of $342 million for the
abandoned assets as we are no longer using these assets and have no expectation to use these assets in the
future. Additionally, as a result of our efforts to progress the conversion of Martinez refinery into a
renewable diesel facility, MPLX cancelled in-process capital projects related to its Martinez refinery
logistics operations resulting in impairments of $27 million in the third quarter.
In the fourth quarter of 2020, we concluded the evaluation of our intended use of MPLX terminal assets
near the Gallup refinery and determined that the assets were abandoned, resulting in an impairment charge
of $67 million. Following this conclusion, we revised the estimate of the salvage value for the Gallup
refinery asset group resulting in an additional $44 million impairment charge. These charges are included in
impairment expense on our consolidated statements of income.
The determination of undiscounted estimated pretax cash flows for our long-lived asset impairment tests
utilized significant assumptions including management’s best estimates of the expected future cash flows,
allocation of certain Refining & Marketing segment cash flows to the individual refineries, the estimated
useful lives of the asset groups, and the salvage values of the refineries. The determinations of expected
future cash flows and the salvage values of refineries require considerable judgment and are sensitive to
changes in underlying assumptions and factors. As a result, there can be no assurance that the estimates and
assumptions made for purposes of our impairment analysis will prove to be an accurate prediction of the
future. Should our assumptions significantly change in future periods, it is possible we may determine the
carrying values of additional refinery asset groups exceed the undiscounted estimated pretax cash flows of
their refinery asset groups, which would result in future impairment charges.
During the first quarter of 2020, MPLX identified an impairment trigger relating to asset groups within its
Western Gathering & Processing (“G&P”) reporting unit as a result of significant changes to expected
future cash flows for these asset groups resulting from the effects of COVID-19. The cash flows associated
with these assets were significantly impacted by volume declines reflecting decreased forecasted producer
customer production as a result of lower commodity prices. MPLX assessed each asset group within the
Western G&P reporting unit for impairment. It was determined that the fair value of the East Texas G&P
asset group’s underlying assets was less than the carrying value. As a result, MPLX recorded impairment
charges totaling $350 million related to its property, plant and equipment and intangibles, which are
included in impairment expense on our consolidated statements of income. Fair value of MPLX’s PP&E
was determined using a combination of an income and cost approach. The income approach utilized
significant assumptions including management’s best estimates of the expected future cash flows and the
estimated useful life of the asset group. The cost approach utilized assumptions for the current replacement
costs of similar assets adjusted for estimated depreciation and deterioration of the existing equipment. The
fair value of the intangibles was determined based on applying the multi-period excess earnings method,
which is an income approach. Key assumptions included management’s best estimates of the expected
future cash flows from existing customers, customer attrition rates and the discount rate. Fair value
determinations require considerable judgment and are sensitive to changes in underlying assumptions and
factors. As a result, there can be no assurance that the estimates and assumptions made for purposes of the
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impairment analysis will prove to be an accurate prediction of the future. The fair value measurements for
the asset group fair values represent Level 3 measurements.
Goodwill Impairment Assessments
Unlike long-lived assets, goodwill is subject to annual, or more frequent if necessary, impairment testing at
the reporting unit level. A goodwill impairment loss is measured as the amount by which a reporting unit's
carrying value exceeds its fair value, without exceeding the recorded amount of goodwill. As of
December 31, 2020, we had a total of $8.26 billion of goodwill recorded on our consolidated balance sheet,
which was associated with four of our eight reporting units. An additional reporting unit, Speedway, has
goodwill of $4.4 billion and is reported within assets held for sale on our consolidated balance sheets.
The outbreak of COVID-19, its development into a pandemic and the decline in commodity prices during
the first quarter of 2020 had significant effects on our business. See “Business Update” in Item 1. Business
above. Due to these developments, we performed impairment assessments during the first quarter of 2020
as discussed further below.
Prior to performing our goodwill impairment assessment as of March 31, 2020, we had goodwill totaling
approximately $20 billion associated with eight of our 10 reporting units. As part of this assessment, we
recorded goodwill impairment of $7.33 billion in the first quarter of 2020 related to our Refining &
Marketing and MPLX’s Eastern Gathering & Processing reporting units. The Refining & Marketing and
Eastern Gathering & Processing reporting units recorded goodwill impairment charges of $5.52 billion and
$1.81 billion, respectively, which fully impaired both reporting units’ historical goodwill balances. These
goodwill impairment expenses are primarily driven by the effects of COVID-19, the decline in commodity
prices and the slowing of drilling activity which has reduced production growth forecasts from MPLX’s
producer customers. For the remaining six reporting units with goodwill, we determined that no significant
adjustments to the carrying value of goodwill were necessary. The impairment assessment performed as of
March 31, 2020 resulted in the fair value of the reporting units exceeding their carrying value by
percentages ranging from approximately 8.5 percent to 270.0 percent. MPLX’s Crude Gathering reporting
unit had goodwill totaling $1.1 billion at March 31, 2020 and MPLX’s fair value estimate for this reporting
unit exceeded the reporting unit carrying value by 8.5 percent. The operations that make up this reporting
unit were acquired by MPLX when it acquired ANDX. We accounted for the October 1, 2018 acquisition
of Andeavor (through which we acquired control of ANDX), using the acquisition method of accounting,
which required Andeavor assets and liabilities to be recorded at the acquisition date fair value. As such,
given the short amount of time from when fair value was established to the date of the impairment test, the
amount by which the fair value exceeded the carrying value within this reporting unit is not unexpected. An
increase of one percentage point to the discount rate used to estimate the fair value of this reporting unit
would not have resulted in goodwill impairment as of March 31, 2020. No other reporting units had fair
values exceeding carrying values of less than 20 percent.
Prior to performing our annual impairment assessment as of November 30, 2020, MPC had goodwill
totaling approximately $8.26 billion associated with four reporting units. Additionally, a fifth reporting
unit, Speedway, is reported in assets held for sale in our consolidated balance sheets and has $4.4 billion of
goodwill. Management performed a qualitative assessment for three reporting units as we determined it was
more likely than not that the fair values of the reporting units exceeded the carrying values. A quantitative
assessment was last performed on these reporting units either on November 30, 2019 or March 31, 2020
and these reporting units’ fair values exceeded carrying values by a range of approximately 90 percent to
270 percent. A quantitative assessment was performed for the remaining two reporting units which resulted
in the fair value of the reporting units exceeding their carrying value by percentages ranging from
approximately 9 percent to 42 percent. The reporting unit whose fair value exceeded its carrying amount by
9 percent, our Crude Gathering Reporting unit, had goodwill totaling $1.1 billion at December 31, 2020.
The excess fair value over carrying value for this reporting unit is consistent with prior assessments. An
increase of one percentage point to the discount rate used to estimate the fair value of this reporting unit
would not have resulted in goodwill impairment as of November 30, 2020.
Significant assumptions used to estimate the reporting units’ fair value included estimates of future cash
flows and market information for comparable assets. If estimates for future cash flows, which are impacted
by future margins on products produced or sold, future volumes, and capital requirements, were to decline,
the overall reporting units’ fair values would decrease, resulting in potential goodwill impairment charges.
Fair value determinations require considerable judgment and are sensitive to changes in underlying
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assumptions and factors. As a result, there can be no assurance that the estimates and assumptions made for
purposes of the impairment tests will prove to be an accurate prediction of the future.
Equity Method Investment Impairment Assessment
Equity method investments are assessed for impairment whenever factors indicate an other than temporary
loss in value. Factors providing evidence of such a loss include the fair value of an investment that is less
than its carrying value, absence of an ability to recover the carrying value or the investee’s inability to
generate income sufficient to justify our carrying value. During the first quarter of 2020, we recorded $1.32
billion of equity method investment impairment charges to income from equity method investments in the
consolidated statements of income. The impairment charges primarily related to MPLX recording an other
than temporary impairment totaling $1.26 billion, of which $1.25 billion related to MarkWest Utica EMG,
L.L.C and its investment in Ohio Gathering Company, L.L.C. The fair value of the investments was
determined based upon applying the discounted cash flow method, which is an income approach. The
discounted cash flow fair value estimate is based on known or knowable information at the interim
measurement date. The significant assumptions that were used to develop the estimate of the fair value
under the discounted cash flow method include management’s best estimates of the expected future cash
flows, including prices and volumes, the weighted average cost of capital and the long-term growth rate.
Fair value determinations require considerable judgment and are sensitive to changes in underlying
assumptions and factors. As such, the fair value of these equity method investments represents a Level 3
measurement. As a result, there can be no assurance that the estimates and assumptions made for purposes
of the impairment test will prove to be an accurate prediction of the future. The impairment was recorded
through “Income from equity method investments.” The impairments were largely due to a reduction in
forecasted volumes gathered and processed by the systems operated by the joint ventures. At December 31,
2020, we had $5.42 billion of investments in equity method investments recorded on our consolidated
balance sheet.
An estimate of the sensitivity to net income resulting from impairment calculations is not practicable, given
the numerous assumptions (e.g., pricing, volumes and discount rates) that can materially affect our
estimates. That is, unfavorable adjustments to some of the above listed assumptions may be offset by
favorable adjustments in other assumptions.
See Item 8. Financial Statements and Supplementary Data – Note 17 for additional information on our
equity method investments. See Item 8. Financial Statements and Supplementary Data – Note 19 for
additional information on our goodwill and intangibles, including a table summarizing our recorded
goodwill by segment.
Acquisitions
In accounting for business combinations, acquired assets, assumed liabilities and contingent consideration
are recorded based on estimated fair values as of the date of acquisition. The excess or shortfall of the
purchase price when compared to the fair value of the net tangible and identifiable intangible assets
acquired, if any, is recorded as goodwill or a bargain purchase gain, respectively. A significant amount of
judgment is involved in estimating the individual fair values of property, plant and equipment, intangible
assets, contingent consideration and other assets and liabilities. We use all available information to make
these fair value determinations and, for certain acquisitions, engage third-party consultants for valuation
assistance.
The fair value of assets and liabilities, including contingent consideration, as of the acquisition date are
often estimated using a combination of approaches, including the income approach, which requires us to
project future cash flows and apply an appropriate discount rate; the cost approach, which requires
estimates of replacement costs and depreciation and obsolescence estimates; and the market approach
which uses market data and adjusts for entity-specific differences. The estimates used in determining fair
values are based on assumptions believed to be reasonable but which are inherently uncertain. Accordingly,
actual results may differ materially from the projected results used to determine fair value.
See Item 8. Financial Statements and Supplementary Data – Note 8 for additional information on our
acquisitions. See Item 8. Financial Statements and Supplementary Data – Note 20 for additional
information on fair value measurements.
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Derivatives
We record all derivative instruments at fair value. Substantially all of our commodity derivatives are
cleared through exchanges which provide active trading information for identical derivatives and do not
require any assumptions in arriving at fair value. Fair value estimation for all our derivative instruments is
discussed in Item 8. Financial Statements and Supplementary Data – Note 20. Additional information about
derivatives and their valuation may be found in Item 7A. Quantitative and Qualitative Disclosures about
Market Risk.
Variable Interest Entities
We evaluate all legal entities in which we hold an ownership or other pecuniary interest to determine if the
entity is a VIE. Our interests in a VIE are referred to as variable interests. Variable interests can be
contractual, ownership or other pecuniary interests in an entity that change with changes in the fair value of
the VIE’s assets. When we conclude that we hold an interest in a VIE we must determine if we are the
entity’s primary beneficiary. A primary beneficiary is deemed to have a controlling financial interest in a
VIE. This controlling financial interest is evidenced by both (a) the power to direct the activities of the VIE
that most significantly impact the VIE’s economic performance and (b) the obligation to absorb losses that
could potentially be significant to the VIE or the right to receive benefits that could potentially be
significant to the VIE. We consolidate any VIE when we determine that we are the primary beneficiary. We
must disclose the nature of any interests in a VIE that is not consolidated.
Significant judgment is exercised in determining that a legal entity is a VIE and in evaluating our interest in
a VIE. We use primarily a qualitative analysis to determine if an entity is a VIE. We evaluate the entity’s
need for continuing financial support; the equity holder’s lack of a controlling financial interest; and/or if
an equity holder’s voting interests are disproportionate to its obligation to absorb expected losses or receive
residual returns. We evaluate our interests in a VIE to determine whether we are the primary beneficiary.
We use a primarily qualitative analysis to determine if we are deemed to have a controlling financial
interest in the VIE, either on a standalone basis or as part of a related party group. We continually monitor
our interests in legal entities for changes in the design or activities of an entity and changes in our interests,
including our status as the primary beneficiary to determine if the changes require us to revise our previous
conclusions.
Changes in the design or nature of the activities of a VIE, or our involvement with a VIE, may require us to
reconsider our conclusions on the entity’s status as a VIE and/or our status as the primary beneficiary. Such
reconsideration requires significant judgment and understanding of the organization. This could result in
the deconsolidation or consolidation of the affected subsidiary, which would have a significant impact on
our financial statements.
Variable Interest Entities are discussed in Item 8. Financial Statements and Supplementary Data – Note 9.
Pension and Other Postretirement Benefit Obligations
Accounting for pension and other postretirement benefit obligations involves numerous assumptions, the
most significant of which relate to the following:
•
•
•
•
•
the discount rate for measuring the present value of future plan obligations;
the expected long-term return on plan assets;
the rate of future increases in compensation levels;
health care cost projections; and
the mortality table used in determining future plan obligations.
We utilize the work of third-party actuaries to assist in the measurement of these obligations. We have
selected different discount rates for each of our pension plans and retiree health and welfare based on the
projected benefit payment patterns of each individual plan. The selected rates are compared to various
similar bond indices for reasonableness. In determining the assumed discount rates, we use our third-party
actuaries’ discount rate models. These models calculate an equivalent single discount rate for the projected
benefit plan cash flows using yield curves derived from Aa or higher corporate bond yields. The yield
curves represent a series of annualized individual spot discount rates from 0.5 to 99 years. The bonds used
have an average rating of Aa or higher by a recognized rating agency and generally only non-callable bonds
are included. Outlier bonds that have a yield to maturity that deviate significantly from the average yield
within each maturity grouping are not included. Each issue is required to have at least $250 million par
value outstanding.
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Of the assumptions used to measure the year-end obligations and estimated annual net periodic benefit cost,
the discount rate has the most significant effect on the periodic benefit cost reported for the plans.
Decreasing the discount rates of 2.55 percent for our pension plans and 2.60 percent for our other
postretirement benefit plans by 0.25 percent would increase pension obligations and other postretirement
benefit plan obligations by $110 million and $42 million, respectively, and would increase defined benefit
pension expense and other postretirement benefit plan expense by $15 million and $3 million, respectively.
The long-term asset rate of return assumption considers the asset mix of the plans (currently targeted at
approximately 50 percent equity securities and 50 percent fixed income securities for the primary funded
pension plan), past performance and other factors. Certain components of the asset mix are modeled with
various assumptions regarding inflation and returns. In addition, our long-term asset rate of return
assumption is compared to those of other companies and to historical returns for reasonableness. We used
the 6.00 percent long-term rate of return to determine our 2020 defined benefit pension expense. After
evaluating activity in the capital markets, along with the current and projected plan investments, we
decreased the asset rate of return for our primary plan to 5.75 percent effective for 2021. Decreasing the
5.75 percent asset rate of return assumption by 0.25 percentage points would increase our defined benefit
pension expense by $5 million.
Compensation change assumptions are based on historical experience, anticipated future management
actions and demographics of the benefit plans.
Health care cost trend assumptions are developed based on historical cost data, the near-term outlook and
an assessment of likely long-term trends.
We utilized the 2020 mortality tables from the U.S. Society of Actuaries.
Item 8. Financial Statements and Supplementary Data – Note 26 includes detailed information about the
assumptions used to calculate the components of our annual defined benefit pension and other
postretirement plan expense, as well as the obligations and accumulated other comprehensive loss reported
on the year-end balance sheets.
ACCOUNTING STANDARDS NOT YET ADOPTED
As discussed in Item 8. Financial Statements and Supplementary Data – Note 3 to our audited consolidated
financial statements, certain new financial accounting pronouncements will be effective for our financial
statements in the future.
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ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
RISK
General
We are exposed to market risks related to the volatility of crude oil and refined product prices. We employ
various strategies, including the use of commodity derivative instruments, to hedge the risks related to these
price fluctuations. We are also exposed to market risks related to changes in interest rates and foreign
currency exchange rates. As of December 31, 2020, we did not have any financial derivative instruments to
hedge the risks related to interest rate fluctuations; however, we have used them in the past, and we
continually monitor the market and our exposure and may enter into these agreements again in the future.
We are at risk for changes in fair value of all of our derivative instruments; however, such risk should be
mitigated by price or rate changes related to the underlying commodity or financial transaction.
We believe that our use of derivative instruments, along with our risk assessment procedures and internal
controls, does not expose us to material adverse consequences. While the use of derivative instruments
could materially affect our results of operations in particular quarterly or annual periods, we believe that the
use of these instruments will not have a material adverse effect on our financial position or liquidity.
See Item 8. Financial Statements and Supplementary Data – Notes 20 and 21 for more information about
the fair value measurement of our derivatives, as well as the amounts recorded in our consolidated balance
sheets and statements of income. We do not designate any of our commodity derivative instruments as
hedges for accounting purposes.
Commodity Price Risk
Refining & Marketing
Our strategy is to obtain competitive prices for our products and allow operating results to reflect market
price movements dictated by supply and demand. We use a variety of commodity derivative instruments,
including futures and options, as part of an overall program to hedge commodity price risk. We also do a
limited amount of trading not directly related to our physical transactions.
We use commodity derivative instruments on crude oil and refined product inventories to hedge price risk
associated with inventories above or below LIFO inventory targets. We also use derivative instruments
related to the acquisition of foreign-sourced crude oil and ethanol blended with refined petroleum products
to hedge price risk associated with market volatility between the time we purchase the product and when
we use it in the refinery production process or it is blended. In addition, we may use commodity derivative
instruments on fixed price contracts for the sale of refined products to hedge risk by converting the refined
product sales to market-based prices. The majority of these derivatives are exchange-traded contracts but
we also enter into over-the-counter swaps, options and over-the-counter options. We closely monitor and
hedge our exposure to market risk on a daily basis in accordance with policies approved by our board of
directors. Our positions are monitored daily by a risk control group to ensure compliance with our stated
risk management policy.
Midstream
NGL and natural gas prices are volatile and are impacted by changes in fundamental supply and demand, as
well as market uncertainty, availability of NGL transportation and fractionation capacity and a variety of
additional factors that are beyond MPLX’s control. MPLX may at times use a variety of commodity
derivative instruments, including futures and options, as part of an overall program to economically hedge
commodity price risk. A portion of MPLX’s profitability is directly affected by prevailing commodity
prices primarily as a result of purchasing and selling NGLs and natural gas at index-related prices. To the
extent that commodity prices influence the level of drilling by MPLX producer customers, such prices also
indirectly affect profitability. MPLX may enter into derivative contracts, which are primarily swaps traded
on the OTC market as well as fixed price forward contracts. MPLX’s risk management policy does not
allow it to enter into speculative positions with its derivative contracts. Execution of MPLX’s hedge
strategy and the continuous monitoring of commodity markets and its open derivative positions are carried
out by its hedge committee, comprised of members of senior management.
To mitigate MPLX’s cash flow exposure to fluctuations in the price of NGLs, it may use NGL derivative
swap contracts. A small portion of its NGL price exposure may be managed by using crude oil contracts.
To mitigate MPLX’s cash flow exposure to fluctuations in the price of natural gas, it may use natural gas
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derivative swap contracts, taking into account the partial offset of its long and short natural gas positions
resulting from normal operating activities.
MPLX would be exposed to additional commodity risk in certain situations such as if producers
under‑deliver or over‑deliver products or if processing facilities are operated in different recovery modes.
In the event that MPLX has derivative positions in excess of the product delivered or expected to be
delivered, the excess derivative positions may be terminated.
MPLX management conducts a standard credit review on counterparties to derivative contracts, and it has
provided the counterparties with a guaranty as credit support for its obligations. MPLX uses standardized
agreements that allow for offset of certain positive and negative exposures in the event of default or other
terminating events, including bankruptcy.
Open Derivative Positions and Sensitivity Analysis
The following table includes the composition of net losses/gains on our commodity derivative positions for
the years ended December 31, 2020 and 2019, respectively.
(In millions)
Realized gain (loss) on settled derivative positions
Unrealized loss on open net derivative positions
Net loss
2020
2019
$
$
69
38
107
$
$
48
(144)
(96)
See Item 8. Financial Statements and Supplementary Data – Note 21 for additional information on our open
derivative positions at December 31, 2020.
Sensitivity analysis of the incremental effects on income from operations (“IFO”) of hypothetical 10
percent and 25 percent increases and decreases in commodity prices for open commodity derivative
instruments as of December 31, 2020 is provided in the following table.
(In millions)
As of December 31, 2020
Crude
Refined products
Blending products
Soybean oil
Embedded derivatives
Change in IFO from a
Hypothetical Price
Increase of
Change in IFO from a
Hypothetical Price
Decrease of
10%
25%
10%
25%
$
$
32
24
(3)
(8)
(6)
80
61
(8)
(19)
(16)
$
$
(32)
(24)
3
8
6
(80)
(61)
8
19
16
We remain at risk for possible changes in the market value of commodity derivative instruments; however,
such risk should be mitigated by price changes in the underlying physical commodity. Effects of these
offsets are not reflected in the above sensitivity analysis.
We evaluate our portfolio of commodity derivative instruments on an ongoing basis and add or revise
strategies in anticipation of changes in market conditions and in risk profiles. Changes to the portfolio after
December 31, 2020 would cause future IFO effects to differ from those presented above.
Interest Rate Risk
Our use of fixed or variable-rate debt directly exposes us to interest rate risk. Fixed rate debt, such as our
senior notes, exposes us to changes in the fair value of our debt due to changes in market interest rates.
Fixed rate debt also exposes us to the risk that we may need to refinance maturing debt with new debt at
higher rates or that our current fixed rate debt may be higher than the current market. Variable-rate debt,
such as borrowings under our revolving credit facilities, exposes us to short-term changes in market rates
that impact our interest expense. See Item 8. Financial Statements and Supplementary Data – Note 22 for
additional information on our debt.
87
Sensitivity analysis of the effect of a hypothetical 100-basis-point change in interest rates on long-term
debt, including the portion classified as current and excluding finance leases, as of December 31, 2020 is
provided in the following table. Fair value of cash and cash equivalents, receivables, accounts payable and
accrued interest approximate carrying value and are relatively insensitive to changes in interest rates due to
the short-term maturity of the instruments. Accordingly, these instruments are excluded from the table.
(In millions)
Long-term debt
Fixed-rate
Variable-rate
Fair
Value(a)
Change in
Fair Value(b)
Change in Net Income for the
Twelve Months Ended
December 31, 2020(c)
$
$
33,003
$
2,898
2,199
n/a
$
n/a
31
(a)
(b)
(c)
Fair value was based on market prices, where available, or current borrowing rates for financings with similar terms and
maturities.
Assumes a 100-basis point decrease in the weighted average yield-to-maturity at December 31, 2020.
Assumes a 100-basis-point change in interest rates. The change in net income was based on the weighted average balance of debt
outstanding for the year ended December 31, 2020.
See Item 8. Financial Statements and Supplementary Data – Note 20 for additional information on the fair
value of our debt.
Foreign Currency Exchange Rate Risk
We are impacted by foreign exchange rate fluctuations related to some of our purchases of crude oil
denominated in Canadian dollars. We did not utilize derivatives to hedge our market risk exposure to these
foreign exchange rate fluctuations in 2020.
Counterparty Risk
We are subject to risk of loss resulting from nonpayment by our customers to whom we provide services,
lease assets, or sell natural gas or NGLs. We believe that certain contracts would allow us to pass those
losses through to our customers, thus reducing our risk, when we are selling NGLs and acting as our
producer customers’ agent. Our credit exposure related to these customers is represented by the value of
our trade receivables or lease receivables. Where exposed to credit risk, we analyze the customer’s financial
condition prior to entering into a transaction or agreement, establish credit terms and monitor the
appropriateness of these terms on an ongoing basis. In the event of a customer default, we may sustain a
loss and our cash receipts could be negatively impacted.
We are subject to risk of loss resulting from nonpayment or nonperformance by counterparties to our
derivative contracts. Our credit exposure related to commodity derivative instruments is represented by the
fair value of contracts with a net positive fair value at the reporting date. Outstanding instruments expose us
to credit loss in the event of nonperformance by the counterparties to the agreements. Should the
creditworthiness of one or more of our counterparties decline, our ability to mitigate nonperformance risk is
limited to a counterparty agreeing to either a voluntary termination and subsequent cash settlement or a
novation of the derivative contract to a third party. In the event of a counterparty default, we may sustain a
loss and our cash receipts could be negatively impacted.
88
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Index
MANAGEMENT’S RESPONSIBLITIES FOR FINANCIAL STATEMENTS
MANAGEMENT’S REPORT ON INTERNAL CONTROL OVER
FINANCIAL REPORTING
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
AUDITED CONSOLIDATED FINANCIAL STATEMENTS:
CONSOLIDATED STATEMENTS OF INCOME
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED STATEMENTS OF CASH FLOWS
CONSOLIDATED STATEMENTS OF EQUITY AND
REDEEMABLE NONCONTROLLING INTEREST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED)
Page
90
90
91
95
96
97
98
100
101
161
89
MANAGEMENT’S RESPONSIBILITIES FOR FINANCIAL STATEMENTS
The accompanying consolidated financial statements of Marathon Petroleum Corporation and its
subsidiaries (“MPC”) are the responsibility of management and have been prepared in conformity with
accounting principles generally accepted in the United States of America. They necessarily include some
amounts that are based on best judgments and estimates. The financial information displayed in other
sections of this Annual Report on Form 10-K is consistent with these consolidated financial statements.
MPC seeks to assure the objectivity and integrity of its financial records by careful selection of its
managers, by organizational arrangements that provide an appropriate division of responsibility and by
communications programs aimed at assuring that its policies and methods are understood throughout the
organization.
The board of directors pursues its oversight role in the area of financial reporting and internal control over
financial reporting through its Audit Committee. This committee, composed solely of independent
directors, regularly meets (jointly and separately) with the independent registered public accounting firm,
management and internal auditors to monitor the proper discharge by each of their responsibilities relative
to internal accounting controls and the consolidated financial statements.
/s/ Michael J. Hennigan
Michael J. Hennigan
President and
Chief Executive Officer
/s/ Maryann T. Mannen
Maryann T. Mannen
Executive Vice President and
Chief Financial Officer
/s/ John J. Quaid
John J. Quaid
Senior Vice President and
Controller
MANAGEMENT’S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING
MPC’s management is responsible for establishing and maintaining adequate internal control over financial
reporting (as defined in Rule 13a-15(f) under the Securities Exchange Act of 1934, as amended). An
evaluation of the design and effectiveness of our internal control over financial reporting, based on the
framework in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring
Organizations of the Treadway Commission, was conducted under the supervision and with the
participation of management, including our chief executive officer and chief financial officer. Based on the
results of this evaluation, MPC’s management concluded that its internal control over financial reporting
was effective as of December 31, 2020.
The effectiveness of MPC’s internal control over financial reporting as of December 31, 2020 has been
audited by PricewaterhouseCoopers LLP, an independent registered public accounting firm, as stated in
their report which is included herein.
/s/ Michael J. Hennigan
Michael J. Hennigan
President and
Chief Executive Officer
/s/ Maryann T. Mannen
Maryann T. Mannen
Executive Vice President and
Chief Financial Officer
90
Report of Independent Registered Public Accounting Firm
To the Board of Directors and Stockholders of Marathon Petroleum Corporation
Opinions on the Financial Statements and Internal Control over Financial Reporting
We have audited the accompanying consolidated balance sheets of Marathon Petroleum Corporation and its
subsidiaries (the “Company”) as of December 31, 2020 and 2019, and the related consolidated statements
of income, of comprehensive income, of equity and redeemable noncontrolling interest and of cash flows
for each of the three years in the period ended December 31, 2020, including the related notes (collectively
referred to as the “consolidated financial statements”). We also have audited the Company's internal control
over financial reporting as of December 31, 2020, based on criteria established in Internal Control -
Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway
Commission (COSO).
In our opinion, the consolidated financial statements referred to above present fairly, in all material
respects, the financial position of the Company as of December 31, 2020 and 2019, and the results of its
operations and its cash flows for each of the three years in the period ended December 31, 2020 in
conformity with accounting principles generally accepted in the United States of America. Also in our
opinion, the Company maintained, in all material respects, effective internal control over financial reporting
as of December 31, 2020, based on criteria established in Internal Control - Integrated Framework (2013)
issued by the COSO.
Basis for Opinions
The Company's management is responsible for these consolidated financial statements, for maintaining
effective internal control over financial reporting, and for its assessment of the effectiveness of internal
control over financial reporting, included in the accompanying Management’s Report on Internal Control
Over Financial Reporting. Our responsibility is to express opinions on the Company’s consolidated
financial statements and on the Company's internal control over financial reporting based on our audits. We
are a public accounting firm registered with the Public Company Accounting Oversight Board (United
States) (PCAOB) and are required to be independent with respect to the Company in accordance with the
U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange
Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we
plan and perform the audits to obtain reasonable assurance about whether the consolidated financial
statements are free of material misstatement, whether due to error or fraud, and whether effective internal
control over financial reporting was maintained in all material respects.
Our audits of the consolidated financial statements included performing procedures to assess the risks of
material misstatement of the consolidated financial statements, whether due to error or fraud, and
performing procedures that respond to those risks. Such procedures included examining, on a test basis,
evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also
included evaluating the accounting principles used and significant estimates made by management, as well
as evaluating the overall presentation of the consolidated financial statements. Our audit of internal control
over financial reporting included obtaining an understanding of internal control over financial reporting,
assessing the risk that a material weakness exists, and testing and evaluating the design and operating
effectiveness of internal control based on the assessed risk. Our audits also included performing such other
procedures as we considered necessary in the circumstances. We believe that our audits provide a
reasonable basis for our opinions.
91
Definition and Limitations of Internal Control over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance
regarding the reliability of financial reporting and the preparation of financial statements for external
purposes in accordance with generally accepted accounting principles. A company’s internal control over
financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that,
in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the
company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit
preparation of financial statements in accordance with generally accepted accounting principles, and that
receipts and expenditures of the company are being made only in accordance with authorizations of
management and directors of the company; and (iii) provide reasonable assurance regarding prevention or
timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a
material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect
misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk
that controls may become inadequate because of changes in conditions, or that the degree of compliance
with the policies or procedures may deteriorate.
Critical Audit Matters
The critical audit matters communicated below are matters arising from the current period audit of the
consolidated financial statements that were communicated or required to be communicated to the audit
committee and that (i) relate to accounts or disclosures that are material to the consolidated financial
statements and (ii) involved our especially challenging, subjective, or complex judgments. The
communication of critical audit matters does not alter in any way our opinion on the consolidated financial
statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing
separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.
Long-Lived Asset Recoverability Tests – Refinery Asset Groups
As described in Notes 2 and 7 to the consolidated financial statements and as disclosed by management, the
Company’s consolidated long-lived asset balance was $43 billion as of December 31, 2020, which includes
the refinery asset groups within the Refining & Marketing segment. Management reviews long-lived assets
for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset
group may not be recoverable. If the sum of the undiscounted estimated pretax cash flows is less than the
carrying value of an asset group, fair value is determined, and the carrying value is written down to the
determined fair value. During the first and second quarters of 2020, management identified long-lived asset
triggers relating to all of their refinery asset groups, except the Gallup refinery in the second quarter as it
had been impaired to its estimated salvage value in the first quarter, as a result of decreases to the Refining
& Marketing segment expected future cash flows. The cash flows associated with these assets were
significantly impacted by the effects of COVID-19 and commodity price declines in the first quarter and
continued unfavorable macroeconomic conditions in the second quarter. Management performed
recoverability tests for each refinery asset group by comparing the undiscounted estimated pretax cash
flows to the carrying value of each asset group. The determination of undiscounted estimated pretax cash
flows for the first and second quarter refinery asset group recoverability tests utilized significant
assumptions including management’s best estimates of the expected future cash flows, allocation of
Refining & Marketing segment cash flows to the individual refinery asset groups, the estimated useful life
of certain refinery asset groups, and the estimated salvage value of certain refinery asset groups.
The principal considerations for our determination that performing procedures relating to the long-lived
asset recoverability tests of the refinery asset groups performed by management in the first and second
quarters of 2020 is a critical audit matter are (i) the significant judgment by management when developing
the undiscounted estimated pretax cash flows of the refinery asset groups; and (ii) the high degree of
auditor judgment, subjectivity, and effort in performing procedures and evaluating management’s
recoverability tests and the significant assumption related to allocation of Refining & Marketing segment
cash flows to individual refinery asset groups.
Addressing the matter involved performing procedures and evaluating audit evidence in connection with
forming our overall opinion on the consolidated financial statements. These procedures included testing the
effectiveness of controls relating to management’s long-lived asset recoverability tests, including controls
over the allocation of the undiscounted estimates of pretax cash flows to individual refinery asset groups.
92
These procedures also included, among others (i) testing management’s process for developing the
undiscounted estimated pretax cash flows utilized for the recoverability tests; (ii) evaluating the
appropriateness of the undiscounted estimated pretax cash flow model used; (iii) testing the completeness
and accuracy of underlying data used by management in the model; and (iv) evaluating the reasonableness
of the significant assumption related to the allocation of Refining & Marketing segment cash flows to
individual refineries. Evaluating the reasonableness of this significant assumption involved (i) evaluating
the appropriateness of management’s allocation of Refining & Marketing segment cash flows to individual
refinery asset groups; (ii) evaluating the appropriateness, completeness, and accuracy of underlying data
used to allocate Refining & Marketing segment cash flows to individual refinery asset groups; and (iii)
considering whether the data used in the allocation was consistent with evidence obtained in other areas of
the audit. Professionals with specialized skill and knowledge were utilized to assist in evaluating the
appropriateness of the Company’s undiscounted estimated pretax cash flow model.
Goodwill Impairment Tests – Certain Midstream Reporting Units
As described in Notes 7 and 19 to the consolidated financial statements and as disclosed by management,
the Company’s consolidated goodwill balance was $8,256 million as of December 31, 2020, which
includes, within the Midstream segment, the goodwill associated with MPLX’s Crude Gathering reporting
unit of $1.1 billion. As described by management, within the Midstream segment, the Company recorded
an impairment charge of $1.81 billion in the first quarter of 2020 related to MPLX’s Eastern Gathering &
Processing reporting unit, which fully impaired the reporting unit’s historical goodwill balance.
Management annually evaluates goodwill for impairment as of November 30, as well as whenever events
or changes in circumstances indicate it is more likely than not that the fair value of a reporting unit with
goodwill is less than its carrying amount. The overall deterioration in the economy and the environment in
which MPLX and its customers operate, as well as a sustained decrease in the MPLX unit price, were
considered triggering events requiring an impairment test during the first quarter of 2020. The fair values of
the reporting units were determined based on applying both a discounted cash flow method, or income
approach, as well as a market approach. Significant assumptions that were used to estimate the MPLX
Eastern Gathering and Processing and MPLX Crude Gathering reporting units’ fair values under the
discounted cash flow method included management’s best estimates of the discount rate, as well as
estimates of future cash flows, which are impacted primarily by producer customers’ development plans,
which impact future volumes and capital requirements.
The principal considerations for our determination that performing procedures relating to the goodwill
impairment tests of the Company’s Crude Gathering and Eastern Gathering and Processing reporting units
of the Midstream segment is a critical audit matter are (i) the significant judgment by management when
estimating the fair value of the reporting units; and (ii) the high degree of auditor judgment, subjectivity,
and effort in performing procedures and evaluating management’s significant assumption related to future
volumes.
Addressing the matter involved performing procedures and evaluating audit evidence in connection with
forming our overall opinion on the consolidated financial statements. These procedures included testing the
effectiveness of controls relating to management’s goodwill impairment tests, including controls over the
estimation of the fair value of the Crude Gathering and Eastern Gathering and Processing reporting units.
These procedures also included, among others (i) testing management’s process for developing the fair
value estimates; (ii) evaluating the appropriateness of the income and market approaches used; (iii) testing
the completeness and accuracy of underlying data used by management in the approaches; and (iv)
evaluating the reasonableness of the significant assumption related to future volumes. Professionals with
specialized skill and knowledge were utilized to assist in evaluating the appropriateness of the Company’s
income and market approaches. Evaluating the assumption related to future volumes involved (i)
considering whether the assumption used was reasonable considering past performance of each reporting
unit, producer customers’ historical and future production volumes, and industry outlook reports; and (ii)
considering whether the assumption was consistent with evidence obtained in other areas of the audit.
Equity Method Investment Impairment Test - MarkWest Utica EMG, L.L.C.
As described in Notes 7 and 17 to the consolidated financial statements, the Company’s consolidated equity
method investment balance was $5,422 million as of December 31, 2020, which included a balance of $698
million related to MarkWest Utica EMG, L.L.C. During the first quarter of 2020, the Company recorded an
impairment charge of $1.25 billion related to MarkWest Utica EMG, L.L.C. As disclosed by management,
equity method investments are assessed for impairment whenever factors indicate an other than temporary
93
loss in value. As a result of the overall deterioration in the economy and the environment in which MPLX
and its customers operate, there was a reduction in forecasted volumes processed by the systems operated
by MarkWest Utica EMG, L.L.C. These were considered events requiring an impairment test during the
first quarter of 2020. The fair value of the investment was determined based on applying a discounted cash
flow method, an income approach. Significant assumptions that were used to develop the estimate of the
fair value under the discounted cash flow method include management’s best estimates of the expected
future cash flows, including prices and volumes, the weighted average cost of capital and the long-term
growth rate.
The principal considerations for our determination that performing procedures relating to the impairment
test of the Company’s equity method investment in MarkWest Utica EMG, L.L.C. is a critical audit matter
are (i) the significant judgment by management when estimating the fair value of the investment; and (ii)
the high degree of auditor judgment, subjectivity, and effort in performing procedures and evaluating
management’s significant assumption related to future volumes.
Addressing the matter involved performing procedures and evaluating audit evidence in connection with
forming our overall opinion on the consolidated financial statements. These procedures included testing the
effectiveness of controls relating to management’s equity method investment impairment test, including
controls over the estimation of the fair value of the investment in MarkWest Utica EMG, L.L.C. These
procedures also included, among others (i) testing management’s process for developing the fair value
estimate; (ii) evaluating the appropriateness of the discounted cash flow method used; (iii) testing the
completeness and accuracy of underlying data used by management in the method; and (iv) evaluating the
reasonableness of the significant assumption related to future volumes. Evaluating the assumption related to
future volumes involved (i) considering whether the assumption used was reasonable considering past
performance of MarkWest Utica EMG, L.L.C., producer customers’ historical and future production
volumes, and industry outlook reports; and (ii) considering whether the assumption was consistent with
evidence obtained in other areas of the audit.
/s/ PricewaterhouseCoopers LLP
Toledo, Ohio
February 26, 2021
We have served as the Company’s auditor since 2010.
94
MARATHON PETROLEUM CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
(In millions, except per share data)
Revenues and other income:
Sales and other operating revenues
Income (loss) from equity method investments(a)
Net gain on disposal of assets
Other income
Total revenues and other income
Costs and expenses:
Cost of revenues (excludes items below)
Impairment expense
Depreciation and amortization
Selling, general and administrative expenses
Restructuring expenses
Other taxes
Total costs and expenses
Income (loss) from continuing operations
Net interest and other financial costs
Income (loss) from continuing operations before income taxes
Provision (benefit) for income taxes on continuing operations
Income (loss) from continuing operations, net of tax
Income from discontinued operations, net of tax
Net income (loss)
Less net income (loss) attributable to:
Redeemable noncontrolling interest
Noncontrolling interests
Net income (loss) attributable to MPC
Per share data (See Note 11)
Basic:
Continuing operations
Discontinued operations
Net income (loss) per share
Weighted average shares outstanding
Diluted:
Continuing operations
Discontinued operations
Net income (loss) per share
Weighted average shares outstanding
2020
2019
2018
$ 69,779 $ 111,148 $ 86,086
299
6
198
86,589
312
278
127
111,865
(935)
70
118
69,032
65,733
8,426
3,375
2,710
367
668
81,279
(12,247)
1,365
(13,612)
(2,430)
(11,182)
1,205
(9,977)
99,228
1,197
3,225
3,192
—
561
107,403
4,462
1,229
3,233
784
2,449
806
3,255
77,047
—
2,170
2,276
—
406
81,899
4,690
993
3,697
764
2,933
673
3,606
81
(232)
(9,826) $
81
537
2,637 $
75
751
2,780
(16.99) $
1.86
(15.13) $
2.78 $
1.22
4.00 $
649
659
(16.99) $
1.86
(15.13) $
2.76 $
1.21
3.97 $
649
664
4.06
1.30
5.36
518
4.00
1.28
5.28
526
$
$
$
$
$
(a)
2020 includes impairment expense. See Note 7 for further information.
The accompanying notes are an integral part of these consolidated financial statements.
95
MARATHON PETROLEUM CORPORATION
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Millions of dollars)
Net income (loss)
Other comprehensive income (loss):
Defined benefit plans:
Actuarial changes, net of tax of $(51), $(40) and $14,
respectively
Prior service, net of tax of $(11), $(17) and $12,
respectively
Other, net of tax of $—, $(1) and $1, respectively
Other comprehensive income (loss)
Comprehensive income (loss)
Less comprehensive income (loss) attributable to:
Redeemable noncontrolling interest
Noncontrolling interests
2020
2019
2018
$
(9,977) $
3,255 $
3,606
(157)
(34)
(1)
(192)
(10,169)
81
(232)
(147)
(27)
(2)
(176)
3,079
81
537
75
8
4
87
3,693
75
751
Comprehensive income (loss) attributable to MPC
$
(10,018) $
2,461 $
2,867
The accompanying notes are an integral part of these consolidated financial statements.
96
MARATHON PETROLEUM CORPORATION
CONSOLIDATED BALANCE SHEETS
(Millions of dollars, except share data)
Assets
Current assets:
Cash and cash equivalents
Receivables, less allowance for doubtful accounts of $18 and $17,
respectively
Inventories
Other current assets
Assets held for sale
Total current assets
Equity method investments
Property, plant and equipment, net
Goodwill
Right of use assets
Other noncurrent assets
Total assets
Liabilities
Current liabilities:
Accounts payable
Payroll and benefits payable
Accrued taxes
Debt due within one year
Operating lease liabilities
Other current liabilities
Liabilities held for sale
Total current liabilities
Long-term debt
Deferred income taxes
Defined benefit postretirement plan obligations
Long-term operating lease liabilities
Deferred credits and other liabilities
Total liabilities
Commitments and contingencies (see Note 29)
Redeemable noncontrolling interest
Equity
MPC stockholders’ equity:
$
$
Preferred stock, no shares issued and outstanding (par value $0.01 per
share, 30 million shares authorized)
Common stock:
Issued – 980 million and 978 million shares (par value $0.01 per share,
2 billion shares authorized)
Held in treasury, at cost – 329 million and 329 million shares
Additional paid-in capital
Retained earnings
Accumulated other comprehensive loss
Total MPC stockholders’ equity
Noncontrolling interests
Total equity
Total liabilities, redeemable noncontrolling interest and equity
$
December 31,
2020
2019
$
415 $
1,393
5,760
7,999
2,724
11,389
28,287
5,422
39,035
8,256
1,521
2,637
85,158 $
7,803 $
732
1,105
2,854
497
822
1,850
15,663
28,730
6,203
2,121
1,014
1,207
54,938
7,233
9,804
893
11,135
30,458
6,568
40,870
15,650
1,806
3,204
98,556
11,222
987
1,015
704
514
758
1,748
16,948
28,020
6,392
1,617
1,300
1,172
55,449
968
968
—
—
10
(15,157)
33,208
4,650
(512)
22,199
7,053
29,252
85,158 $
10
(15,143)
33,157
15,990
(320)
33,694
8,445
42,139
98,556
The accompanying notes are an integral part of these consolidated financial statements.
97
MARATHON PETROLEUM CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Millions of dollars)
Operating activities:
Net income (loss)
Adjustments to reconcile net income (loss) to net cash provided by
operating activities:
2020
2019
2018
$ (9,977) $ 3,255 $ 3,606
Amortization of deferred financing costs and debt discount
Impairment expense
Depreciation and amortization
Pension and other postretirement benefits, net
Deferred income taxes
Net gain on disposal of assets
(Income) loss from equity method investments
Distributions from equity method investments
Income from discontinued operations
Changes in income tax receivable
Changes in the fair value of derivative instruments
Changes in operating assets and liabilities, net of effects of
businesses acquired:
Current receivables
Inventories
Current accounts payable and accrued liabilities
Right of use assets and operating lease liabilities, net
All other, net
Cash provided by operating activities - continuing operations
Cash provided by operating activities - discontinued operations
Net cash provided by operating activities
Investing activities:
Additions to property, plant and equipment
Acquisitions, net of cash acquired
Disposal of assets
Investments – acquisitions, loans and contributions
– redemptions, repayments and return of capital
All other, net
Cash used in investing activities - continuing operations
Cash used in investing activities - discontinued operations
Net cash used in investing activities
Financing activities:
Commercial paper – issued
– repayments
Long-term debt – borrowings
– repayments
Debt issuance costs
Issuance of common stock
Common stock repurchased
Dividends paid
Distributions to noncontrolling interests
Contributions from noncontrolling interests
Repurchases of noncontrolling interests
All other, net
Net cash provided by (used in) financing activities
Net change in cash, cash equivalents and restricted cash
69
8,426
3,375
220
(241)
(70)
935
577
(1,205)
(1,807)
45
1,465
1,750
(2,927)
(19)
191
807
1,612
2,419
(2,787)
—
150
(485)
137
63
(2,922)
(335)
(3,257)
33
1,197
3,225
(68)
807
(278)
(312)
569
(806)
(358)
(8)
(1,717)
(362)
2,453
(9)
355
7,976
1,465
9,441
(4,810)
(129)
47
(1,064)
98
81
(5,777)
(484)
(6,261)
70
—
2,170
93
14
(6)
(299)
458
(673)
238
(62)
1,277
965
(2,801)
—
49
5,099
1,059
6,158
(3,179)
(3,822)
22
(409)
16
69
(7,303)
(367)
(7,670)
2,055
(1,031)
17,082
(15,380)
(50)
11
—
(1,510)
(1,244)
—
(33)
(35)
(135)
(973) $
—
—
14,274
(13,073)
(22)
10
(1,950)
(1,398)
(1,245)
97
—
(69)
(3,376)
—
—
13,476
(8,032)
(86)
24
(3,287)
(954)
(903)
12
—
(28)
222
(196) $ (1,290)
$
The accompanying notes are an integral part of these consolidated financial statements.
98
MARATHON PETROLEUM CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Millions of dollars)
Cash, cash equivalents and restricted cash balances from:
Continuing operations - beginning of year
Discontinued operations - beginning of year(a)
Less: Discontinued operations - end of year(a)
Continuing operations - end of year
2020
2019
2018
2,849
1,519
1,395
166
206
134
140
206
134
416 $ 1,395 $ 1,519
$
(a)
Reported as assets held for sale on our consolidated balance sheets.
The accompanying notes are an integral part of these consolidated financial statements.
99
MARATHON PETROLEUM CORPORATION
CONSOLIDATED STATEMENTS OF EQUITY AND REDEEMABLE NONCONTROLLING INTEREST
MPC Stockholders’ Equity
(Shares in millions;
amounts in millions of dollars)
Balance as of December 31, 2017
Cumulative effect of adopting new
accounting standards
Net income
Dividends declared on common stock
($1.84 per share)
Distributions to noncontrolling
interests
Contributions from noncontrolling
interests
Other comprehensive income
Shares repurchased
Stock based compensation
Equity transactions of MPLX &
ANDX
Issuance of shares for Andeavor
acquisition
Noncontrolling interest acquired
from Andeavor
Balance as of December 31, 2018
Net income
Dividends declared on common stock
($2.12 per share)
Distributions to noncontrolling
interests
Contributions from noncontrolling
interests
Other comprehensive loss
Shares repurchased
Stock based compensation
Equity transactions of MPLX &
ANDX
Balance as of December 31, 2019
Net income (loss)
Common Stock
Treasury Stock
Shares
Amount
Shares
Amount
Additional
Paid-in
Capital
Retained
Earnings
Accumulated
Other
Comprehensive
Income (Loss)
Non-
controlling
Interests
Total
Equity
Redeemable
Non-
controlling
Interest
734
$
7
(248) $ (9,869) $ 11,262
$ 12,864
$
(231) $
6,795
$ 20,828
$
1,000
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
(47)
(3,287)
—
—
—
—
—
—
—
1
1
—
(18)
345
—
—
—
—
2,357
240
2
—
(1)
19,765
—
—
—
—
—
66
2,780
(955)
—
—
—
—
—
—
—
—
—
—
—
—
—
87
—
—
—
—
—
2
68
751
3,531
—
(955)
—
75
—
(832)
(832)
(71)
12
—
—
14
12
87
(3,287)
342
(2,927)
(570)
—
19,766
5,059
5,059
—
—
—
—
—
—
—
975
$
10
(295) $ (13,175) $ 33,729
$ 14,755
$
(144) $
8,874
$ 44,049
$
1,004
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
(34)
(1,950)
—
—
—
—
—
—
3
—
—
(18)
112
—
—
—
—
(684)
2,637
(1,402)
—
—
—
—
—
—
—
—
—
—
(176)
—
—
—
537
3,174
—
(1,402)
81
—
(1,164)
(1,164)
(81)
97
—
—
7
94
97
(176)
(1,950)
101
(590)
978
$
10
(329) $ (15,143) $ 33,157
$ 15,990
$
(320) $
8,445
$ 42,139
$
—
—
—
Dividends declared on common stock
($2.32 per share)
—
—
—
Distributions to noncontrolling
interests
Other comprehensive loss
Stock based compensation
—
—
—
—
—
—
2
—
—
Equity transactions of MPLX
—
—
—
—
—
—
—
(14)
—
—
—
—
—
92
(41)
(9,826)
(1,514)
—
—
—
—
—
—
—
(192)
—
—
(232)
(10,058)
—
(1,514)
(1,163)
(1,163)
—
8
(5)
(192)
86
(46)
Balance as of December 31, 2020
980
$
10
(329) $ (15,157) $ 33,208
$ 4,650
$
(512) $
7,053
$ 29,252
$
968
The accompanying notes are an integral part of these consolidated financial statements.
100
—
—
—
—
(36)
968
81
—
(81)
—
—
—
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. DESCRIPTION OF THE BUSINESS AND BASIS OF PRESENTATION
Description of the Business
We are a leading, integrated, downstream energy company headquartered in Findlay, Ohio. We operate the
nation's largest refining system. We sell refined products to wholesale marketing customers domestically
and internationally, to buyers on the spot market and to independent entrepreneurs who operate
approximately 7,100 branded outlets. We also sell transportation fuel to consumers through approximately
1,090 direct dealer locations under long-term supply contracts. MPC’s midstream operations are primarily
conducted through MPLX LP (“MPLX”), which owns and operates crude oil and light product
transportation and logistics infrastructure as well as gathering, processing, and fractionation assets. We own
the general partner and a majority limited partner interest in MPLX.
On August 2, 2020, we entered into a definitive agreement to sell Speedway, our company-owned and
operated retail transportation fuel and convenience store business, to 7-Eleven, Inc. (“7-Eleven”) for $21
billion in cash, subject to certain adjustments based on the levels of cash, debt and working capital at
closing and certain other items. The taxable transaction is targeted to close by the end of the first quarter of
2021, subject to customary closing conditions and the receipt of regulatory approvals. We will retain our
direct dealer business.
As a result of the agreement to sell Speedway, its results are reported separately as discontinued operations
in our consolidated statements of income for all periods presented and its assets and liabilities have been
presented in our consolidated balance sheets as assets and liabilities held for sale. In addition, we separately
disclosed the operating and investing cash flows of Speedway as discontinued operations within our
consolidated statements of cash flow. See Note 5 for discontinued operations disclosures.
Prior to presentation of Speedway as discontinued operations, Speedway and our retained direct dealer
business were the two reporting units within our Retail segment. Beginning with the third quarter of 2020,
the direct dealer business is managed as part of the Refining & Marketing segment. The results of the
Refining & Marketing segment have been retrospectively adjusted to include the results of the direct dealer
business in all periods presented. See Note 13 for our segment reporting disclosures.
Refer to Note 8 for further information on the Andeavor acquisition, which closed on October 1, 2018, and
to Notes 6 and 13 for additional information about our operations.
Basis of Presentation
All significant intercompany transactions and accounts have been eliminated.
As a result of our agreement to sell Speedway, the following changes in our basis of presentation have
occurred:
•
•
In accordance with ASC 205, Discontinued Operations, intersegment sales from our Refining &
Marketing segment to Speedway are no longer eliminated as intercompany transactions and are
now presented within sales and other operating revenue, since we will continue to supply fuel to
Speedway subsequent to the sale to 7-Eleven. All periods presented have been retrospectively
adjusted to reflect this change.
Beginning August 2, 2020, in accordance with ASC 360, Property, Plant, and Equipment, we
ceased recording depreciation and amortization for Speedway’s property, plant and equipment,
finite-lived intangible assets and right of use lease assets.
Certain prior period financial statement amounts have been reclassified to conform to current period
presentation.
101
2. SUMMARY OF PRINCIPAL ACCOUNTING POLICIES
Principles Applied in Consolidation
These consolidated financial statements include the accounts of our majority-owned, controlled subsidiaries
and MPLX. As of December 31, 2020, we owned the general partner and 62 percent of the outstanding
MPLX common units. Due to our ownership of the general partner interest, we have determined that we
control MPLX and therefore we consolidate MPLX and record a noncontrolling interest for the interest
owned by the public. Changes in ownership interest in consolidated subsidiaries that do not result in a
change in control are recorded as equity transactions.
Investments in entities over which we have significant influence, but not control, are accounted for using
the equity method of accounting. This includes entities in which we hold majority ownership but the
minority shareholders have substantive participating rights. Income from equity method investments
represents our proportionate share of net income generated by the equity method investees.
Differences in the basis of the investments and the separate net asset values of the investees, if any, are
amortized into net income over the remaining useful lives of the underlying assets and liabilities, except for
any excess related to goodwill. Equity method investments are evaluated for impairment whenever changes
in the facts and circumstances indicate an other than temporary loss in value has occurred. When the loss is
deemed to be other than temporary, the carrying value of the equity method investment is written down to
fair value.
Use of Estimates
The preparation of financial statements in accordance with generally accepted accounting principles
requires management to make estimates and assumptions that affect the reported amounts of assets and
liabilities and the disclosure of contingent assets and liabilities as of the date of the consolidated financial
statements and the reported amounts of revenues and expenses during the respective reporting periods.
Revenue Recognition
We recognize revenue based on consideration specified in contracts or agreements with customers when we
satisfy our performance obligations by transferring control over products or services to a customer.
Concurrent with our adoption of ASU 2014-09, Revenue from Contracts with Customers (“ASC 606”), as
of January 1, 2018, we made an accounting policy election that all taxes assessed by a governmental
authority that are both imposed on and concurrent with a revenue-producing transaction and collected from
our customers will be recognized on a net basis within sales and other operating revenues.
Our revenue recognition patterns are described below by reportable segment:
•
Refining & Marketing - The vast majority of our Refining & Marketing contracts contain pricing
that is based on the market price for the product at the time of delivery. Our obligations to deliver
product volumes are typically satisfied and revenue is recognized when control of the product
transfers to our customers. Concurrent with the transfer of control, we typically receive the right to
payment for the delivered product, the customer accepts the product and the customer has
significant risks and rewards of ownership of the product. Payment terms require customers to pay
shortly after delivery and do not contain significant financing components.
• Midstream - Midstream revenue transactions typically are defined by contracts under which we
sell a product or provide a service. Revenues from sales of product are recognized when control of
the product transfers to the customer. Revenues from sales of services are recognized over time
when the performance obligation is satisfied as services are provided in a series. We have elected
to use the output measure of progress to recognize revenue based on the units delivered, processed
or transported. The transaction prices in our Midstream contracts often have both fixed
components, related to minimum volume commitments, and variable components, which are
primarily dependent on volumes. Variable consideration will generally not be estimated at contract
inception as the transaction price is specifically allocable to the services provided at each period
end.
Refer to Note 23 for disclosure of our revenue disaggregated by segment and product line and to Note 13
for a description of our reportable segment operations.
102
Crude Oil and Refined Product Exchanges and Matching Buy/Sell Transactions
We enter into exchange contracts and matching buy/sell arrangements whereby we agree to deliver a
particular quantity and quality of crude oil or refined products at a specified location and date to a particular
counterparty and to receive from the same counterparty the same commodity at a specified location on the
same or another specified date. The exchange receipts and deliveries are nonmonetary transactions, with the
exception of associated grade or location differentials that are settled in cash. The matching buy/sell
purchase and sale transactions are settled in cash. No revenues are recorded for exchange and matching
buy/sell transactions as they are accounted for as exchanges of inventory. The exchange transactions are
recognized at the carrying amount of the inventory transferred.
Cash and Cash Equivalents
Cash and cash equivalents include cash on hand and on deposit and investments in highly liquid debt
instruments with maturities of three months or less.
Restricted Cash
Restricted cash consists of cash and investments that must be maintained as collateral for letters of credit
issued to certain third-party producer customers. The balances will be outstanding until certain capital
projects are completed and the third party releases the restriction.
Accounts Receivable and Allowance for Doubtful Accounts
Our receivables primarily consist of customer accounts receivable. Customer receivables are recorded at the
invoiced amounts and generally do not bear interest. Allowances for doubtful accounts are generally
recorded when it becomes probable the receivable will not be collected and are booked to bad debt expense.
The allowance for doubtful accounts is the best estimate of the amount of probable credit losses in customer
accounts receivable. We review the allowance quarterly and past-due balances over 180 days are reviewed
individually for collectability.
We mitigate credit risk with master netting agreements with companies engaged in the crude oil or refinery
feedstock trading and supply business or the petroleum refining industry. A master netting agreement
generally provides for a once per month net cash settlement of the accounts receivable from and the
accounts payable to a particular counterparty.
Leases
Contracts with a term greater than one year that convey the right to direct the use of and obtain substantially
all of the economic benefit of an asset are accounted for as right of use assets.
Right of use asset and lease liability balances are recorded at the commencement date at present value of
the fixed lease payments using a secured incremental borrowing rate with a maturity similar to the lease
term because our leases do not provide implicit rates. We have elected to include both lease and non-lease
components in the present value of the lease payments for all lessee asset classes with the exception of our
marine and third-party contractor service equipment leases. The lease component of the payment for the
marine and equipment asset classes is determined using a relative standalone selling price. See Note 28 for
additional disclosures about our lease contracts.
Inventories
Inventories are carried at the lower of cost or market value. Cost of inventories is determined primarily
under the LIFO method. Costs for crude oil and refined product inventories are aggregated on a
consolidated basis for purposes of assessing if the LIFO cost basis of these inventories may have to be
written down to market value.
Derivative Instruments
We use derivatives to economically hedge a portion of our exposure to commodity price risk and,
historically, to interest rate risk. Our use of selective derivative instruments that assume market risk is
limited. All derivative instruments (including derivative instruments embedded in other contracts) are
recorded at fair value. Certain commodity derivatives are reflected on the consolidated balance sheets on a
net basis by counterparty as they are governed by master netting agreements. Cash flows related to
derivatives used to hedge commodity price risk and interest rate risk are classified in operating activities
with the underlying transactions.
103
Derivatives not designated as accounting hedges
Derivatives that are not designated as accounting hedges may include commodity derivatives used to hedge
price risk on (1) inventories, (2) fixed price sales of refined products, (3) the acquisition of foreign-sourced
crude oil, (4) the acquisition of ethanol for blending with refined products, (5) the sale of NGLs, (6) the
purchase of natural gas and (7) the purchase of soybean oil. Changes in the fair value of derivatives not
designated as accounting hedges are recognized immediately in net income.
Concentrations of credit risk
All of our financial instruments, including derivatives, involve elements of credit and market risk. The most
significant portion of our credit risk relates to nonperformance by counterparties. The counterparties to our
financial instruments consist primarily of major financial institutions and companies within the energy
industry. To manage counterparty risk associated with financial instruments, we select and monitor
counterparties based on an assessment of
if
available. Additionally, we limit the level of exposure with any single counterparty.
their financial strength and on credit ratings,
Property, Plant and Equipment
Property, plant and equipment are recorded at cost and depreciated on a straight-line basis over the
estimated useful lives of the assets, which range from one year to 61 years. Such assets are reviewed for
impairment whenever events or changes in circumstances indicate that the carrying amount of an asset
group may not be recoverable. If the sum of the expected undiscounted future cash flows from the use of
the asset group and its eventual disposition is less than the carrying amount of the asset group, an
impairment assessment is performed and the excess of the book value over the fair value of the asset group
is recorded as an impairment loss.
When items of property, plant and equipment are sold or otherwise disposed of, any gains or losses are
reported in net income. Gains on the disposal of property, plant and equipment are recognized when earned,
which is generally at the time of closing. If a loss on disposal is expected, such losses are recognized when
the assets are classified as held for sale.
Interest expense is capitalized for qualifying assets under construction. Capitalized interest costs are
included in property, plant and equipment and are depreciated over the useful life of the related asset.
Goodwill and Intangible Assets
Goodwill represents the excess of the purchase price over the estimated fair value of the net assets acquired
in the acquisition of a business. Goodwill is not amortized, but rather is tested for impairment at the
reporting unit level annually and when events or changes in circumstances indicate that the fair value of a
reporting unit with goodwill has been reduced below carrying value. If we determine, based on a qualitative
assessment, that it is not more likely than not that a reporting unit’s fair value is less than its carrying
amount, no further impairment testing is required. If we do not perform a qualitative assessment or if that
assessment indicates that further impairment testing is required, the fair value of each reporting unit is
determined using an income and/or market approach which is compared to the carrying value of the
reporting unit. If the carrying amount of the reporting unit exceeds its fair value, an impairment loss would
be recognized in an amount equal to that excess, limited to the total amount of goodwill allocated to that
reporting unit. The fair value under the income approach is calculated using the expected present value of
future cash flows method. Significant assumptions used in the cash flow forecasts include future net
operating margins, future volumes, discount rates, and future capital requirements.
Amortization of intangibles with definite lives is calculated using the straight-line method, which is
reflective of the benefit pattern in which the estimated economic benefit is expected to be received over the
estimated useful life of the intangible asset. Intangibles subject to amortization are reviewed for impairment
whenever events or changes in circumstances indicate that the carrying amount of the intangible may not be
recoverable. If the sum of the expected undiscounted future cash flows related to the asset is less than the
carrying amount of the asset, an impairment loss is recognized based on the fair value of the asset.
Intangibles not subject to amortization are tested for impairment annually and when circumstances indicate
that the fair value is less than the carrying amount of the intangible. If the fair value is less than the carrying
value, an impairment is recorded for the difference.
104
Major Maintenance Activities
Costs for planned turnaround and other major maintenance activities are expensed in the period
incurred. These types of costs include contractor repair services, materials and supplies, equipment rentals
and our labor costs.
Environmental Costs
Environmental expenditures for additional equipment that mitigates or prevents future contamination or
improves environmental safety or efficiency of the existing assets are capitalized. We recognize
remediation costs and penalties when the responsibility to remediate is probable and the amount of
associated costs can be reasonably estimated. The timing of remediation accruals coincides with completion
of a feasibility study or the commitment to a formal plan of action. Remediation liabilities are accrued
based on estimates of known environmental exposure and are discounted when the estimated amounts are
reasonably fixed and determinable. If recoveries of remediation costs from third parties are probable, a
receivable is recorded and is discounted when the estimated amount is reasonably fixed and determinable.
Asset Retirement Obligations
The fair value of asset retirement obligations is recognized in the period in which the obligations are
incurred if a reasonable estimate of fair value can be made. The majority of our recognized asset retirement
liability relates to conditional asset retirement obligations for removal and disposal of fire-retardant
material from certain refining facilities. The remaining recognized asset retirement liability relates to other
refining assets, certain pipelines and processing facilities and other related pipeline assets. The fair values
recorded for such obligations are based on the most probable current cost projections.
Asset retirement obligations have not been recognized for some assets because the fair value cannot be
reasonably estimated since the settlement dates of the obligations are indeterminate. Such obligations will
be recognized in the period when sufficient information becomes available to estimate a range of potential
settlement dates. The asset retirement obligations principally include the hazardous material disposal and
removal or dismantlement requirements associated with the closure of certain refining, terminal, pipeline
and processing assets.
Our practice is to keep our assets in good operating condition through routine repair and maintenance of
component parts in the ordinary course of business and by continuing to make improvements based on
technological advances. As a result, we believe that generally these assets have no expected settlement date
for purposes of estimating asset retirement obligations since the dates or ranges of dates upon which we
would retire these assets cannot be reasonably estimated at this time.
Income Taxes
Deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to
differences between the financial statement carrying amounts of assets and liabilities and their tax
bases. Deferred tax assets are recorded when it is more likely than not that they will be realized. The
realization of deferred tax assets is assessed periodically based on several factors, primarily our expectation
to generate sufficient future taxable income.
Stock-Based Compensation Arrangements
The fair value of stock options granted to our employees is estimated on the date of grant using the Black-
Scholes option pricing model. The model employs various assumptions based on management’s estimates
at the time of grant, which impact the calculation of fair value and ultimately, the amount of expense that is
recognized over the vesting period of the stock option award. Of the required assumptions, the expected life
of the stock option award and the expected volatility of our stock price have the most significant impact on
the fair value calculation. The average expected life is based on our historical employee exercise
behavior. The assumption for expected volatility of our stock price reflects a weighting of 50 percent of our
common stock implied volatility and 50 percent of our common stock historical volatility.
The fair value of restricted stock awards granted to our employees is determined based on the fair market
value of our common stock on the date of grant. The fair value of performance unit awards granted to our
employees is estimated on the date of grant using a Monte Carlo valuation model.
105
Our stock-based compensation expense is recognized based on management’s estimate of the awards that
are expected to vest, using the straight-line attribution method for all service-based awards with a graded
vesting feature. If actual forfeiture results are different than expected, adjustments to recognized
compensation expense may be required in future periods. Unearned stock-based compensation is charged to
equity when restricted stock awards are granted. Compensation expense is recognized over the vesting
period and is adjusted if conditions of the restricted stock award are not met.
Business Combinations
We recognize and measure the assets acquired and liabilities assumed in a business combination based on
their estimated fair values at the acquisition date. Any excess or surplus of the purchase consideration when
compared to the fair value of the net tangible assets acquired, if any, is recorded as goodwill or gain from a
bargain purchase. For material acquisitions, management engages an independent valuation specialist to
assist with the determination of fair value of the assets acquired, liabilities assumed, noncontrolling interest,
if any, and goodwill, based on recognized business valuation methodologies. An income, market or cost
valuation method may be utilized to estimate the fair value of the assets acquired, liabilities assumed, and
noncontrolling interest, if any, in a business combination. The income valuation method represents the
present value of future cash flows over the life of the asset using: (i) discrete financial forecasts, which rely
on management’s estimates of revenue and operating expenses; (ii) long-term growth rates; and
(iii) appropriate discount rates. The market valuation method uses prices paid for a reasonably similar asset
by other purchasers in the market, with adjustments relating to any differences between the assets. The cost
valuation method is based on the replacement cost of a comparable asset at prices at the time of the
acquisition reduced for depreciation of the asset. If the initial accounting for the business combination is
incomplete by the end of the reporting period in which the acquisition occurs, an estimate will be
recorded. Subsequent to the acquisition date, and not later than one year from the acquisition date, we will
record any material adjustments to the initial estimate based on new information obtained that would have
existed as of the date of the acquisition. Any adjustment that arises from information obtained that did not
exist as of the date of the acquisition will be recorded in the period of the adjustment. Acquisition-related
costs are expensed as incurred in connection with each business combination.
Environmental Credits and Obligations
In order to comply with certain regulations, specifically the RFS2 requirements implemented by the EPA
and the cap-and-trade emission reduction program and low carbon fuel standard implemented by the state
of California, we are required to reduce our emissions, blend certain levels of biofuels or obtain allowances
or credits to offset the obligations created by our operations. In regard to each program, we record an asset,
included in other current or other noncurrent assets on the balance sheet, for allowances or credits owned in
excess of our anticipated current period compliance requirements. The asset value is based on the product
of the excess allowances or credits as of the balance sheet date, if any, and the weighted average cost of
those allowances or credits. We record a liability, included in other current or other noncurrent liabilities on
the balance sheet, when we are deficient allowances or credits based on the product of the deficient amount
as of the balance sheet date, if any, and the market price of the allowances or credits at the balance sheet
date. The cost of allowances or credits used for compliance is reflected in cost of revenues on the income
statement. Any gains or losses on the sale or expiration of allowances or credits are classified as other
income on the income statement. Proceeds from the sale of allowances or credits are reported in investing
activities - all other, net on the cash flow statement.
3. ACCOUNTING STANDARDS
Recently Adopted
Effective January 1, 2020, we adopted ASU 2016-13, “Financial Instruments-Credit Losses (Topic 326):
Measurement of Credit Losses on Financial Instruments,” using the modified retrospective transition
method. The amendment requires entities to consider a broader range of information to estimate expected
credit losses, which may result in earlier recognition of losses. The ASU requires the company to utilize an
expected loss methodology in place of the incurred loss methodology for financial instruments, including
trade receivables, and off-balance sheet credit exposures. Adoption of the standard did not have a material
impact on our financial statements.
106
We are exposed to credit losses primarily through our sales of refined petroleum products, crude oil and
midstream services. We assess each customer’s ability to pay through our credit review process. The credit
review process considers various factors such as external credit ratings, a review of financial statements to
determine liquidity, leverage, trends and business specific risks, market information, pay history and our
business strategy. Customers that do not qualify for payment terms are required to prepay or provide a letter
of credit. We monitor our ongoing credit exposure through timely review of customer payment activity. At
December 31, 2020, we reported $5,760 million of accounts and notes receivable, net of allowances of $18
million.
We are also exposed to credit losses from off-balance sheet exposures, such as guarantees of joint venture
debt. See Note 29 for more information on these off-balance sheet exposures.
We also adopted the following ASUs during 2020, none of which had a material impact to our financial
statements or financial statement disclosures:
ASU
2018-13
2020-04
Fair Value Measurement (Topic 820): Disclosure Framework - Changes to the
Disclosure Requirements for Fair Value Measurement
Effective Date
January 1, 2020
Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate
Reform on Financial Reporting
April 1, 2020
Not Yet Adopted
ASU 2019-12, Income Taxes (Topic 740) - Simplifying the Accounting for Income Taxes
In December 2019, the FASB issued new guidance to simplify the accounting for income taxes.
Amendments include removal of certain exceptions to the general principles of ASC 740 and simplification
in several other areas such as accounting for a franchise tax or similar tax that is partially based on
income. The change is effective for fiscal years beginning after December 15, 2020, and interim periods
within those fiscal years. Early adoption is permitted in any interim or annual period, with any adjustments
reflected as of the beginning of the fiscal year of adoption. We do not expect the application of this ASU to
have a material impact on our consolidated financial statements.
4. RESTRUCTURING
During the third quarter of 2020, we indefinitely idled our refinery located in Gallup, New Mexico and
initiated actions to strategically reposition our Martinez, California refinery to a renewable diesel facility.
We also approved an involuntary workforce reduction plan. In connection with these strategic actions, we
recorded restructuring expenses of $367 million in 2020.
The indefinite idling of the Gallup refinery and actions to strategically reposition the Martinez refinery to a
renewable diesel facility resulted in $195 million of restructuring expenses. Of the $195 million of
restructuring expenses, we expect $130 million to settle in cash for costs related to decommissioning
refinery processing units and storage tanks and fulfilling environmental remediation obligations.
Additionally, we recorded a non-cash reserve against our materials and supplies inventory at these facilities
of $51 million.
The involuntary workforce reduction plan, together with employee reductions resulting from our actions
affecting the Gallup and Martinez refineries, affected approximately 2,050 employees. We recorded $172
million of restructuring expenses for separation benefits payable under our employee separation plan and
certain collective bargaining agreements that we expect to settle in cash. Certain of the affected MPC
employees provided services to MPLX. MPLX has various employee services agreements and secondment
agreements with MPC pursuant to which MPLX reimburses MPC for employee costs, along with the
provision of operational and management services in support of MPLX’s operations. Pursuant to such
agreements, MPC was reimbursed by MPLX for $37 million of the $172 million of restructuring expenses
recorded for these actions.
Restructuring expenses were accrued as restructuring reserves within accounts payable, payroll and benefits
payable, other current liabilities and deferred credits and other liabilities within our consolidated balance
sheets. We expect cash payments for the majority of these reserves to occur within the next nine months.
107
(In millions)
Restructuring reserve balance at September 30, 2020(a)
Adjustments
Cash payments
Employee
separation
costs
Exit and
disposal
costs
$
158 $
133 $
14
(134)
5
(35)
Restructuring reserve balance at December 31, 2020
$
38 $
103 $
(a)
The restructuring reserve was zero until the third quarter of 2020.
Total
291
19
(169)
141
5. DISCONTINUED OPERATIONS AND ASSETS HELD FOR SALE
On August 2, 2020, we entered into a definitive agreement to sell Speedway to 7-Eleven for $21 billion,
subject to certain adjustments based on the levels of cash, debt and working capital at closing and certain
other items. The taxable transaction is targeted to close in the first quarter of 2021, subject to customary
closing conditions and the receipt of regulatory approvals.
As a result of the agreement to sell Speedway, its results are reported separately as discontinued operations,
net of tax, in our consolidated statements of income for all periods presented and its assets and liabilities
have been presented in our consolidated balance sheets as assets and liabilities held for sale. Additionally,
beginning August 2, 2020, in accordance with ASC 360, Property, Plant, and Equipment, we ceased
recording depreciation and amortization for Speedway’s property, plant and equipment, finite-lived
intangible assets and right of use lease assets. In addition, we separately disclosed the operating and
investing cash flows of Speedway as discontinued operations within our consolidated statements of cash
flow.
The following tables present Speedway results as reported in income from discontinued operations, net of
tax, within our consolidated statements of income and the carrying value of assets and liabilities as
presented within assets and liabilities held for sale on our consolidated balance sheets.
(In millions)
Total revenues and other income
Costs and expenses:
2020
2019
2018
$
19,920 $
26,793 $
22,051
Cost of revenues (excludes items below)
17,573
24,860
20,557
Depreciation and amortization
Selling, general and administrative expenses
Other taxes
Total costs and expenses
Income from operations
Net interest and other financial costs
Income before income taxes
Provision for income taxes
244
323
193
18,333
1,587
20
1,567
362
413
216
190
25,679
1,114
18
1,096
290
Income from discontinued operations, net of tax
$
1,205 $
806 $
320
142
151
21,170
881
10
871
198
673
108
(In millions)
Assets
Cash and cash equivalents
Receivables
Inventories
Other current assets
Equity method investments
Property, plant and equipment, net
Goodwill
Right of use assets
Other noncurrent assets
Total assets classified as held for sale
Liabilities
Accounts payable
Payroll and benefits payable
Accrued taxes
Debt due within one year
Operating lease liabilities
Other current liabilities
Long-term debt
Defined benefit postretirement plan obligations
Long-term operating lease liabilities
Deferred credits and other liabilities
Total liabilities classified as held for sale
Separation Agreements
December 31,
2020
2019
$
140 $
134
217
438
34
311
4,784
4,390
719
168
11,201 $
300 $
168
178
8
94
170
122
25
598
86
1,749 $
246
439
28
330
4,745
4,390
653
170
11,135
401
139
171
7
90
139
107
26
575
93
1,748
$
$
$
In connection with the definitive agreement to sell Speedway, we have agreed to enter into a 15-year fuel
supply agreement, at closing, through which we will continue to supply fuel to Speedway subsequent to the
sale to 7-Eleven. Due to our expected continuing involvement with Speedway through a fuel supply
agreement, intersegment sales from our Refining & Marketing segment to Speedway are no longer
eliminated as intercompany transactions and are now presented within sales and other operating revenue.
Purchase of Speedway’s Interest in PFJ Southeast
During the fourth quarter of 2020, Pilot Travel Centers LLC exercised an option to purchase our 29 percent
interest in PFJ Southeast LLC (“PFJ”), subject to customary closing conditions and the receipt of regulatory
approvals. PFJ has been accounted for as an asset held for sale as of September 30, 2020 and is reported as
the equity method investment balance in the above table.
6. MASTER LIMITED PARTNERSHIP
We own the general partner and a majority limited partner interest in MPLX, which owns and operates
crude oil and light product transportation and logistics infrastructure as well as gathering, processing, and
fractionation assets. We control MPLX through our ownership of the general partner interest and, as of
December 31, 2020, we owned approximately 62 percent of the outstanding MPLX common units.
Javelina Assets Held-for-Sale
On December 23, 2020, MPLX entered into an agreement with a third party to sell all of its equity interests
in MarkWest Javelina Company, L.L.C., MarkWest Javelina Pipeline Company, L.L.C. and MarkWest Gas
Services, L.L.C. (collectively, “Javelina”). Javelina’s assets and liabilities have been presented within our
consolidated balance sheets as assets and liabilities held for sale as of December 31, 2020. On February 12,
2021, MPLX completed the sale of Javelina.
109
Unit Repurchase Program
On November 2, 2020, MPLX announced the board authorization of a unit repurchase program for the
repurchase of up to $1 billion of MPLX’s outstanding common units held by the public. MPLX may utilize
various methods to effect the repurchases, which could include open market repurchases, negotiated block
transactions, tender offers, accelerated unit repurchases or open market solicitations for units, some of
which may be effected through Rule 10b5-1 plans. The timing and amount of repurchases will depend upon
several factors, including market and business conditions, and repurchases may be initiated, suspended or
discontinued at any time. The repurchase authorization has no expiration date.
During the year ended December 31, 2020, 1,473,843 common units had been repurchased at an average
cost per unit of $22.29. Total cash paid for units repurchased during the year was $33 million and $967
million remained outstanding on the program for future repurchases as of December 31, 2020. As of
December 31, 2020, MPLX had agreements to acquire 99,406 additional common units for $2 million,
which settled in early January 2021.
Redemption of Business from MPLX
On July 31, 2020, Western Refining Southwest, Inc. (now known as Western Refining Southwest LLC)
(“WRSW”), a wholly owned subsidiary of MPC, entered into a Redemption Agreement (the “Redemption
Agreement”) with MPLX, pursuant to which MPLX transferred to WRSW all of the outstanding
membership interests in Western Refining Wholesale, LLC, (“WRW”) in exchange for the redemption of
MPLX common units held by WRSW. The transaction effects the transfer to MPC of the Western
wholesale distribution business that MPLX acquired as a result of its acquisition of Andeavor Logistics LP
(“ANDX”). Beginning in the third quarter of 2020, the results of these operations are presented in MPC’s
Refining & Marketing segment.
At the closing, per the terms of Redemption Agreement, MPLX redeemed 18,582,088 MPLX common
units (the “Redeemed Units”) held by WRSW. The number of Redeemed Units was calculated by dividing
WRW’s aggregate valuation of $340 million by the simple average of the volume weighted average NYSE
prices of an MPLX common unit for the ten trading days ending at market close on July 27, 2020. The
transaction resulted in a minor decrease in MPC’s ownership interest in MPLX.
MPLX’s Acquisition of ANDX
On July 30, 2019, MPLX completed its acquisition of ANDX, and ANDX survived as a wholly owned
subsidiary of MPLX. At the effective time of the ANDX acquisition, each common unit held by ANDX’s
public unitholders was converted into the right to receive 1.135 MPLX common units. ANDX common
units held by MPC were converted into the right to receive 1.0328 MPLX common units. Additionally, as a
result of MPLX’s acquisition of MPLX, 600,000 ANDX preferred units were converted into 600,000
preferred units of MPLX (“Series B preferred units”). Series B preferred unitholders are entitled to receive,
when and if declared by the board of directors of MPLX’s general partner, a fixed distribution of $68.75
per unit, per annum, payable semi-annually in arrears on February 15 and August 15, or the first business
day thereafter, up to and including February 15, 2023. After February 15, 2023, the holders of Series B
preferred units are entitled to receive cumulative, quarterly distributions payable in arrears on the 15th day
of February, May, August and November of each year, or the first business day thereafter, based on a
floating annual rate equal to the three month LIBOR plus 4.652 percent.
MPC accounted for this transaction as a common control transaction, as defined by ASC 805, which
resulted in an increase to noncontrolling interest and a decrease to additional paid-in capital of
approximately $55 million, net of tax. During the third quarter of 2019, we pushed down to MPLX the
portion of the goodwill attributable to ANDX as of October 1, 2018, the date of our acquisition of
Andeavor. Due to this push down of goodwill, we also recorded an incremental $642 million deferred tax
liability associated with the portion of the non-deductible goodwill attributable to the noncontrolling
interest in MPLX with an offsetting reduction of our additional paid-in capital balance. We have
consolidated ANDX since we acquired Andeavor on October 1, 2018 in accordance with ASC 810.
110
Dropdowns to MPLX and GP/IDR Exchange
On February 1, 2018, we contributed our refining logistics assets and fuels distribution services to MPLX
in exchange for $4.1 billion in cash and approximately 112 million common units and 2 million general
partner units from MPLX. MPLX financed the cash portion of the transaction with a $4.1 billion 364-day
term loan facility, which was entered into on January 2, 2018. We agreed to waive approximately one-third
of the first quarter 2018 distributions on the common units issued in connection with this transaction. The
contributions of these assets were accounted for as transactions between entities under common control and
we did not record a gain or loss.
Immediately following the February 1, 2018 dropdown to MPLX, our IDRs were cancelled and our
economic general partner interest was converted into a non-economic general partner interest, all in
exchange for 275 million newly issued MPLX common units (“GP/IDR Exchange”). As a result of this
transaction, the general partner units and IDRs were eliminated, are no longer outstanding and no longer
participate in distributions of cash from MPLX.
Agreements
We have various long-term, fee-based commercial agreements with MPLX. Under these agreements,
MPLX provides transportation, storage, distribution and marketing services to us. With certain exceptions,
these agreements generally contain minimum volume commitments. These transactions are eliminated in
consolidation but are reflected as intersegment transactions between our Refining & Marketing and
Midstream segments. We also have agreements with MPLX that establish fees for operational and
management services provided between us and MPLX and for executive management services and certain
general and administrative services provided by us to MPLX. These transactions are eliminated in
consolidation but are reflected as intersegment transactions between our Corporate and Midstream
segments.
Noncontrolling Interest
As a result of equity transactions of MPLX and ANDX, we are required to adjust non-controlling interest
and additional paid-in capital. Changes in MPC’s additional paid-in capital resulting from changes in its
ownership interest in MPLX and ANDX were as follows:
(In millions)
Increase due to the issuance of MPLX common units and general
partner units to MPC
Increase due to GP/IDR Exchange
Increase (decrease) due to the issuance of MPLX & ANDX
common units
Tax impact
Increase (decrease) in MPC's additional paid-in capital, net of tax
2020
2019
2018
$
— $
— $
—
(27)
(14)
—
(51)
(633)
1,114
1,808
6
(571)
$
(41) $
(684) $
2,357
7.
IMPAIRMENTS
The outbreak of COVID-19 and its development into a pandemic in March 2020 have resulted in
significant economic disruption globally. Actions taken by various governmental authorities, individuals
and companies around the world to prevent the spread of COVID-19 through social distancing have
restricted travel, many business operations, public gatherings and the overall level of individual movement
and in-person interaction across the globe. These actions have, in turn significantly reduced global
economic activity and resulted in a decrease in motor vehicle usage and demand for gasoline and a dramatic
reduction in airline flights. These macroeconomic conditions and certain global geopolitical events in the
first quarter of 2020 contributed to a significant decline in crude oil prices as well as an increase in crude
oil price volatility. The decrease in demand for refined petroleum products has resulted in a significant
decrease in the price and volume of the refined petroleum products we produce and sell as compared to
2019.
During the first quarter of 2020, the overall deterioration in the economy and the environment in which we
operate, the related changes to our expected future cash flows, as well as a sustained decrease in share price
were considered triggering events requiring the performance of various tests of the carrying values of our
assets. Triggering events requiring the performance of various tests of the carrying value of our Midstream
111
assets were also identified by MPLX as a result of the overall deterioration in the economy and the
environment in which MPLX and its customers operate, which led to a reduction in forecasted volumes
processed by the systems operated by MarkWest Utica EMG, L.L.C., MPLX’s equity method investee, as
well as a sustained decrease in the MPLX unit price. These tests resulted in the majority of the impairment
charges in 2020, as discussed below.
The table below provides information related to the impairments recognized during 2020 and 2019, along
with the location of these impairments within the consolidated statements of income.
(In millions)
Goodwill
Equity method investments
Long-lived assets
Total impairments
Income Statement Line
Impairment expense
2020
2019
$
7,394 $
1,197
Income (loss) from equity method investments
Impairment expense(a)
1,315
1,032
42
—
$
9,741 $
1,239
(a)
The remaining difference not described in the narrative below is related to certain immaterial Midstream assets.
Goodwill
During the first quarter of 2020, we recorded an impairment of goodwill of $7.33 billion. See Note 19 for
detail by segment. The goodwill impairment within the Refining & Marketing segment was primarily
driven by the effects of COVID-19 and the decline in commodity prices. The impairment within the
Midstream segment was primarily driven by additional information related to the slowing of drilling
activity, which has reduced production growth forecasts from MPLX’s producer customers.
During the third quarter of 2020, we recorded an impairment of goodwill of $64 million. The $64 million of
goodwill was transferred from our Midstream segment to our Refining & Marketing segment during the
third quarter of 2020 in connection with the transfer to MPC of the MPLX wholesale distribution business
as described in Note 6. The transfer required goodwill impairment tests for the transferor and transferee
reporting units. Our Refining & Marketing reporting unit that recorded the $64 million impairment expense
has no remaining goodwill.
The fair values of the reporting units for the first quarter of 2020 goodwill impairment analysis were
determined based on applying both a discounted cash flow method, or income approach, as well as a
market approach. The discounted cash flow fair value estimate is based on known or knowable information
at the measurement date. The significant assumptions that were used to develop the estimates of the fair
values under the discounted cash flow method included management’s best estimates of the expected future
results and discount rates, which range from 9.0 percent to 13.5 percent across all reporting units.
Significant assumptions that were used to estimate the MPLX Eastern Gathering and Processing and MPLX
Crude Gathering reporting units’ fair values under the discounted cash flow method included
management’s best estimates of the discount rate, as well as estimates of future cash flows, which are
impacted primarily by producer customer’s development plans, which impact future volumes and capital
requirements. Fair value determinations require considerable judgment and are sensitive to changes in
underlying assumptions and factors. As a result, there can be no assurance that the estimates and
assumptions made for purposes of the interim goodwill impairment test will prove to be an accurate
prediction of the future. The fair value measurements for the individual reporting units’ overall fair values
represent Level 3 measurements.
During the fourth quarter of 2019, we recorded an impairment of goodwill in our Midstream segment. As a
result of the merger of MPLX and ANDX in 2019 and subsequent changes to MPLX’s internal
organization structure, the number of reporting units within our Midstream segment was reduced from 16 to
7 in conjunction with the annual impairment test, however, this change in structure did not have any impact
on MPC’s operating segments. Reporting units are determined based on the way in which segment
management operates and reviews each operating segment. MPLX performed a goodwill impairment
assessment prior to the change in reporting units in addition to performing an impairment assessment
immediately following the change in their reporting units. Significant assumptions used to estimate the
reporting units’ fair value include the discount rate as well as estimates of future cash flows, which are
impacted primarily by producer customers’ development plans, which impact future volumes and capital
requirements. After MPLX performed its evaluations related to the impairment of goodwill, we recorded an
impairment of $1,156 million prior to the change in reporting units and additional impairment of $41
million subsequent to the change in reporting units. The remainder of the reporting units fair values were in
112
excess of their carrying values. The impairment was primarily driven by the updated guidance related to the
slowing of drilling activity which has reduced production growth forecasts from MPLX’s producer
customers.
The fair value of the reporting units for the fourth quarter of 2019 goodwill impairment analysis was
determined based on applying both a discounted cash flow or income approach as well as a market
approach. The discounted cash flow fair value estimate is based on known or knowable information at the
measurement date. The significant assumptions that were used to develop the estimates of the fair values
under the discounted cash flow method included management’s best estimates of the expected future results
and discount rates, which range from 9.0 percent to 10.0 percent. Fair value determinations require
considerable judgment and are sensitive to changes in underlying assumptions and factors. As a result,
there can be no assurance that the estimates and assumptions made for purposes of the annual goodwill
impairment test will prove to be an accurate prediction of the future. The fair value measurements for the
individual reporting units’ overall fair values, and the fair values of the goodwill assigned thereto, represent
Level 3 measurements.
Equity Method Investments
During the first quarter of 2020, we recorded equity method investment impairment charges totaling
$1.315 billion, of which $1.25 billion related to MarkWest Utica EMG, L.L.C. and its investment in Ohio
Gathering Company, L.L.C. The impairments were largely due to a reduction in forecasted volumes
gathered and processed by the systems operated by the equity method investments. The fair value of the
investments were determined based upon applying a discounted cash flow method, an income approach.
The discounted cash flow fair value estimate is based on known or knowable information at the interim
measurement date. The significant assumptions that were used to develop the estimate of the fair value
under the discounted cash flow method include management’s best estimates of the expected future cash
flows, including prices and volumes, the weighted average cost of capital and the long-term growth rate.
Fair value determinations require considerable judgment and are sensitive to changes in underlying
assumptions and factors. As a result, there can be no assurance that the estimates and assumptions made for
purposes of the impairment test will prove to be an accurate prediction of the future. The fair value of these
equity method investments represents a Level 3 measurement.
During the fourth quarter of 2019, two joint ventures in which MPLX has an interest recorded impairments,
which impacted the amount of income from equity method investments during the period by approximately
$28 million. For one of the joint ventures, MPLX also had a basis difference which was being amortized
over the life of the underlying assets. As a result of the impairment recorded by the joint venture, MPLX
also assessed this basis difference for impairment and recorded approximately $14 million of impairment
expense during the fourth quarter related to this investment.
Long-lived Assets
Long-lived assets (primarily consisting of property, plant and equipment, intangible assets other than
goodwill, and right of use assets) used in operations are assessed for impairment whenever changes in facts
and circumstances indicate that the carrying value of the assets may not be recoverable based on the
expected undiscounted future cash flow of an asset group. For purposes of impairment evaluation, long-
lived assets must be grouped at the lowest level for which independent cash flows can be identified, which
generally is the refinery and associated distribution system level for Refining & Marketing segment assets
and the plant level or pipeline system level for Midstream segment assets. If the sum of the undiscounted
estimated pretax cash flows is less than the carrying value of an asset group, fair value is determined, and
the carrying value is written down to the determined fair value.
During the first quarter of 2020, we identified long-lived asset impairment triggers relating to all of our
refinery asset groups within the Refining & Marketing segment as a result of decreases to the Refining &
Marketing segment expected future cash flows. The cash flows associated with these assets were
significantly impacted by the effects of COVID-19 and commodity price declines. We performed
recoverability tests for each refinery asset group by comparing the undiscounted estimated pretax cash
flows to the carrying value of each asset group. Only the Gallup refinery’s carrying value exceeded its
undiscounted estimated pretax cash flows. It was determined that the fair value of the Gallup refinery’s
property, plant and equipment was less than the carrying value. As a result, we recorded a charge of $142
million in the first quarter of 2020 to impairment expense on the consolidated statements of income. The
fair value measurements for the Gallup refinery assets represent Level 3 measurements.
113
During the second quarter of 2020, we identified long-lived asset impairment triggers relating to all of our
refinery asset groups within the Refining & Marketing segment, except the Gallup refinery as it had been
impaired to its estimated salvage value in the first quarter, as a result of continued unfavorable
macroeconomic conditions impacting the Refining & Marketing segment expected future cash flows. We
performed recoverability tests for each refinery asset group by comparing the undiscounted estimated
pretax cash flows to the carrying value of each asset group. All of these refinery asset groups’ undiscounted
estimated pretax cash flows exceeded their carrying value by at least 17 percent.
The determination of undiscounted estimated pretax cash flows for the first and second quarter refinery
asset group recoverability tests utilized significant assumptions including management’s best estimates of
the expected future cash flows, allocation of certain Refining & Marketing segment cash flows to the
individual refinery asset groups, the estimated useful life of certain refinery asset groups, and the estimated
salvage value of certain refinery asset groups.
On August 3, 2020, we announced our plans to evaluate possibilities to strategically reposition our
Martinez refinery, including the potential conversion of the refinery into a renewable diesel facility.
Subsequent to August 3, 2020, we progressed activities associated with the conversion of the Martinez
refinery to a renewable diesel facility, including applying for permits, advancing discussions with feedstock
suppliers, and beginning detailed engineering activities. As envisioned, the Martinez facility would start
producing approximately 260 million gallons per year of renewable diesel by the second half of 2022, with
a potential to build to full capacity of approximately 730 million gallons per year by the end of 2023. As a
result of the progression of these activities, we identified assets that would be repurposed and utilized in a
renewable diesel facility configuration and assets that would be abandoned since they had no function in a
renewable diesel facility configuration. This change in our intended use for the Martinez refinery is a long-
lived asset impairment trigger for the assets that would be repurposed and remain as part of the Martinez
asset group. We assessed the asset group for impairment by comparing the undiscounted estimated pretax
cash flows to the carrying value of the asset group and the undiscounted estimated pretax cash flows
exceeded the Martinez asset group carrying value. We recorded impairment expense of $342 million for the
abandoned assets as we are no longer using these assets and have no expectation to use these assets in the
future. Additionally, as a result of our efforts to progress the conversion of Martinez refinery into a
renewable diesel facility, MPLX cancelled in-process capital projects related to its Martinez refinery
logistics operations resulting in impairments of $27 million in the third quarter of 2020.
In the fourth quarter of 2020, we concluded the evaluation of our intended use of MPLX terminal assets
near the Gallup refinery and determined that the assets were abandoned, resulting in an impairment charge
of $67 million. Following this conclusion, we revised the estimate of the salvage value for the Gallup
refinery asset group resulting in an additional $44 million impairment charge. These charges are included in
impairment expense on our consolidated statements of income.
The determinations of expected future cash flows and the salvage values of refineries, as described earlier,
require considerable judgment and are sensitive to changes in underlying assumptions and factors. As a
result, there can be no assurance that the estimates and assumptions made for purposes of our impairment
analysis will prove to be an accurate prediction of the future. Should our assumptions significantly change
in future periods, it is possible we may determine the carrying values of certain of our refinery asset groups
exceed the undiscounted estimated pretax cash flows of their refinery asset groups, which would result in
future impairment charges.
During the first quarter of 2020, we identified an impairment trigger relating to asset groups within
MPLX’s Western Gathering and Processing (“G&P”) reporting unit as a result of significant changes to
expected future cash flows for these asset groups resulting from the effects of COVID-19. The cash flows
associated with these assets were significantly impacted by volume declines reflecting decreased forecasted
producer customer production as a result of lower commodity prices. We assessed each asset group within
the Western G&P reporting unit for impairment. It was determined that the fair value of the East Texas
G&P asset group’s underlying assets were less than the carrying value. As a result, MPLX recorded
impairment charges totaling $350 million related to its property, plant and equipment and intangibles,
which are included in impairment expense on our consolidated statements of income. Fair value of
property, plant and equipment was determined using a combination of an income and cost approach. The
income approach utilized significant assumptions including management’s best estimates of the expected
future cash flows and the estimated useful life of the asset group. The cost approach utilized assumptions
for the current replacement costs of similar assets adjusted for estimated depreciation and deterioration of
the existing equipment and economic obsolescence. The fair value of the intangibles was determined based
114
on applying the multi-period excess earnings method, which is an income approach. Key assumptions
included management’s best estimates of the expected future cash flows from existing customers, customer
attrition rates and the discount rate. Fair value determinations require considerable judgment and are
sensitive to changes in underlying assumptions and factors. As a result, there can be no assurance that the
estimates and assumptions made for purposes of the impairment analysis will prove to be an accurate
prediction of the future. The fair value measurements for the asset group fair values represent Level 3
measurements.
8. ACQUISITIONS
Acquisition of Andeavor
On October 1, 2018, we acquired Andeavor. Under the terms of the merger agreement, Andeavor
stockholders had the option to choose 1.87 shares of MPC common stock or $152.27 in cash per share of
Andeavor common stock. The merger agreement included election proration provisions that resulted in
approximately 22.9 million shares of Andeavor common stock being converted into cash consideration and
the remaining 128.2 million shares of Andeavor common stock being converted into stock consideration.
Andeavor stockholders received in the aggregate approximately 239.8 million shares of MPC common
stock and approximately $3.5 billion in cash in connection with the Andeavor acquisition. The fair value of
the MPC shares issued was determined on the basis of the closing market price of MPC’s common shares
on the acquisition date. The cash portion of the purchase price was funded using cash on hand.
At the time of the acquisition, all Andeavor equity awards, with the exception of non-employee director
units, were converted to MPC equity awards. The converted equity awards continue to be governed by the
same terms and conditions as were applicable to such Andeavor equity awards immediately prior to the
acquisition. We recognized $203 million of purchase consideration to reflect the portion of the fair value of
the time-based converted equity awards attributable to pre-combination service completed by the award
holders. The non-employee director units were accelerated in full and cancelled and the holders of such
units received an amount of cash equal to the number of shares of Andeavor common stock subject to such
non-employee director units multiplied by the cash consideration per share.
Our financial results reflect the results of Andeavor from October 1, 2018, the date of the acquisition.
The components of the fair value of consideration transferred are as follows:
(In millions)
Fair value of MPC shares issued
Cash payment to Andeavor stockholders
Cash settlement of non-employee director units
Fair value of converted equity awards
Total fair value of consideration transferred
$
19,766
3,486
7
203
$
23,462
The purchase consideration allocation resulted in the recognition of $17.3 billion in goodwill, of which $1.0
billion is tax deductible due to a carryover basis from Andeavor. Our Refining & Marketing, Midstream
and former Retail segment recognized $5.2 billion, $8.1 billion and $3.9 billion of goodwill, respectively.
The recognized goodwill represents the value expected to be created by further optimization of crude
supply, a nationwide retail and marketing platform, diversification of our refining and midstream footprints
and optimization of information systems and business processes. See Note 7 for information regarding
impairments recorded in 2020 and 2019.
We recognized $47 million in acquisition costs. Additionally, we recognized various other transaction-
related costs, including employee-related costs associated with the Andeavor acquisition. All of these costs
are reflected in selling, general and administrative expenses. The employee-related costs are primarily due
to pre-existing Andeavor change in control and equity award agreements that create obligations and
accelerated equity vesting upon MPC notifying employees of significant changes to or elimination of their
responsibilities.
Andeavor’s results have been included in MPC’s financial statements for the period subsequent to the date
of the acquisition on October 1, 2018. Andeavor contributed revenues of approximately $11.3 billion
including Speedway for the period from October 1 through December 31, 2018. We do not believe it is
115
practical to disclose Andeavor’s contribution to earnings for the period from October 1, 2018 through
December 31, 2018 as our integration efforts have resulted in the elimination of Andeavor stand-alone
discrete financial information due mainly to our inclusion of Andeavor inventory in our consolidated LIFO
inventory pools, which does not allow us to objectively distinguish the cost of sales between the two
historical reporting entities.
Pro Forma Financial Information
The following unaudited pro forma financial information presents consolidated results assuming the
Andeavor acquisition occurred on January 1, 2017.
(In millions)
Sales and other operating revenues
Net income attributable to MPC
2018
$ 131,921
4,218
The pro forma information includes adjustments to align accounting policies, an adjustment to depreciation
expense to reflect the increased fair value of property, plant and equipment, increased amortization expense
related to identifiable intangible assets and the related income tax effects. The pro forma information does
not reflect the following
•
•
A $727 million effect on net income attributable to MPC related to purchase accounting related
inventory effects and transaction-related costs as these charges do not have a continuing impact on
the consolidated results.
The application of discontinued operations accounting for Speedway as the information required
to apply discontinued operations accounting for periods prior to our ownership is not readily
available.
Acquisition of Terminal and Retail Locations in New York
During the third quarter of 2019, we acquired a 900,000-barrel capacity light product and asphalt terminal
and 33 NOCO Express retail stores in Buffalo, Syracuse and Rochester, New York, from NOCO
Incorporated for total consideration of $135 million.
Based on the final fair value estimates of assets acquired and liabilities assumed at the acquisition date, $38
million of the purchase price was allocated to property, plant and equipment, $3 million to inventory and
$94 million to goodwill. Goodwill is tax deductible and represents the value expected to be created by
geographically expanding our retail platform and the assembled workforce. The terminal is accounted for
within the Refining & Marketing segment and the retail stores were accounted for within our former Retail
segment.
The amount of revenue and income from operations associated with the acquisition from the acquisition
date to December 31, 2019 did not have a material impact on the consolidated financial statements. In
addition, assuming the acquisition had occurred on January 1, 2018, the consolidated pro forma results
would not have been materially different from the reported results.
Acquisition of Express Mart
During the fourth quarter of 2018, Speedway acquired 78 transportation fuel and convenience store
locations from Petr-All Petroleum Consulting Corporation for total consideration of $266 million. These
stores are located primarily in the Syracuse, Rochester and Buffalo markets in New York and operate under
the Express Mart brand.
Based on the final fair value estimates of assets acquired and liabilities assumed at the acquisition date, $97
million of the purchase price was allocated to property, plant and equipment, $9 million to inventory, $2
million to intangibles and $158 million to goodwill. Goodwill is tax deductible and represents the value
expected to be created by geographically expanding our retail platform and the assembled workforce.
The amount of revenue and income from operations associated with the acquisition from the acquisition
date to December 31, 2018 did not have a material impact on the consolidated financial statements. In
addition, assuming the acquisition had occurred on January 1, 2017, the consolidated pro forma results
would not have been materially different from the reported results.
116
Acquisition of Mt. Airy Terminal
On September 26, 2018, MPLX acquired an eastern U.S. Gulf Coast export terminal (“Mt. Airy Terminal”)
from Pin Oak Holdings, LLC for total consideration of $451 million. At the time of the acquisition, the
terminal included tanks with 4 million barrels of third-party leased storage capacity and a dock with 120
mbpd of capacity. The Mt. Airy Terminal is located on the Mississippi River between New Orleans and
Baton Rouge, near several Gulf Coast refineries, including our Garyville Refinery, and numerous rail lines
and pipelines. The Mt. Airy Terminal is accounted for within the Midstream segment. In the first quarter of
2019, an adjustment to the initial purchase price was made for approximately $5 million related to the final
settlement of the acquisition. This reduced the total purchase price to $446 million and resulted in $336
million of property, plant and equipment, $121 million of goodwill and the remainder being attributable to
net liabilities assumed.
Goodwill represents the significant growth potential of the terminal due to the multiple pipelines and rail
lines which cross the property, the terminal’s position as an aggregation point for liquids growth in the
region for both ocean-going vessels and inland barges, the proximity of the terminal to our Garyville
refinery and other refineries in the region as well as the opportunity to construct an additional dock at the
site. All of the goodwill recognized related to this transaction is tax deductible.
The amount of revenue and income from operations associated with the acquisition from the terminal
acquisition date to December 31, 2018 did not have a material impact on the consolidated financial
statements. In addition, assuming the terminal acquisition had occurred on January 1, 2017, the
consolidated pro forma results would not have been materially different from the reported results.
9. VARIABLE INTEREST ENTITIES
Consolidated VIE
We control MPLX through our ownership of its general partner. MPLX is a VIE because the limited
partners do not have substantive kick-out or participating rights over the general partner. We are the
primary beneficiary of MPLX because in addition to our significant economic interest, we also have the
ability, through our ownership of the general partner, to control the decisions that most significantly impact
MPLX. We therefore consolidate MPLX and record a noncontrolling interest for the interest owned by the
public. We also record a redeemable noncontrolling interest related to MPLX’s Series A preferred units.
The creditors of MPLX do not have recourse to MPC’s general credit through guarantees or other financial
arrangements, except as noted. MPC has effectively guaranteed certain indebtedness of LOOP LLC
(“LOOP”) and LOCAP LLC (“LOCAP”), in which MPLX holds an interest. See Note 29 for more
information. The assets of MPLX can only be used to settle its own obligations and its creditors have no
recourse to our assets, except as noted earlier.
117
The following table presents balance sheet information for the assets and liabilities of MPLX, which are
included in our balance sheets.
(In millions)
Assets
Cash and cash equivalents
Receivables, less allowance for doubtful accounts
Inventories
Other current assets
Assets held for sale
Equity method investments
Property, plant and equipment, net
Goodwill
Right of use assets
Other noncurrent assets
Liabilities
Accounts payable
Payroll and benefits payable
Accrued taxes
Debt due within one year
Operating lease liabilities
Liabilities held for sale
Other current liabilities
Long-term debt
Deferred income taxes
Long-term operating lease liabilities
Deferred credits and other liabilities
Non-Consolidated VIEs
Crowley Coastal Partners
December 31,
2020
December 31,
2019
$
$
$
$
15
478
118
67
188
4,036
21,418
7,657
309
1,006
468
4
76
764
63
101
297
19,375
12
244
437
15
615
110
110
—
5,275
22,174
9,536
365
1,323
744
5
80
9
66
—
259
19,704
12
302
409
In May 2016, Crowley Coastal Partners LLC (“Crowley Coastal Partners”) was formed to own an interest
in both Crowley Ocean Partners LLC (“Crowley Ocean Partners”) and Crowley Blue Water Partners LLC
(“Crowley Blue Water Partners”). We have determined that Crowley Coastal Partners is a VIE based on the
terms of the existing financing arrangements for Crowley Blue Water Partners and Crowley Ocean Partners
and the associated debt guarantees by MPC and Crowley. Our maximum exposure to loss at December 31,
2020 was $424 million, which includes our equity method investment in Crowley Coastal Partners and the
debt guarantees provided to each of the lenders to Crowley Blue Water Partners and Crowley Ocean
Partners. We are not the primary beneficiary of this VIE because we do not have the ability to control the
activities that significantly influence the economic outcomes of the entity and, therefore, do not consolidate
the entity.
MPLX VIEs
For those entities that have been deemed to be VIEs, neither MPLX nor any of its subsidiaries have been
deemed to be the primary beneficiary due to voting rights on significant matters. While we have the ability
to exercise influence through participation in the management committees which make all significant
decisions, we have equal influence over each committee as a joint interest partner and all significant
decisions require the consent of the other investors without regard to economic interest and as such we have
determined that these entities should not be consolidated and apply the equity method of accounting with
respect to our investments in each entity.
Sherwood Midstream has been deemed the primary beneficiary of Sherwood Midstream Holdings due to its
controlling financial interest through its authority to manage the joint venture. As a result, Sherwood
Midstream consolidates Sherwood Midstream Holdings.
118
MPLX’s maximum exposure to loss as a result of its involvement with equity method investments includes
its equity investment, any additional capital contribution commitments and any operating expenses incurred
by the subsidiary operator in excess of its compensation received for the performance of the operating
services.
We account for our ownership interest in each of these investments as an equity method investment. See
Note 17 for ownership percentages and investment balances related to our non-consolidated VIEs.
10. RELATED PARTY TRANSACTIONS
Transactions with related parties were as follows:
(In millions)
Sales to related parties
Purchases from related parties
2020
2019
2018
$
123 $
91 $
738
763
14
610
Sales to related parties, which are included in sales and other operating revenues, consist primarily of
refined product sales to certain of our equity affiliates.
Purchases from related parties are included in cost of revenues. We obtain utilities, transportation services
and purchase ethanol from certain of our equity affiliates.
11. EARNINGS PER SHARE
We compute basic earnings (loss) per share by dividing net income (loss) attributable to MPC less income
allocated to participating securities by the weighted average number of shares of common stock
outstanding. Since MPC grants certain incentive compensation awards to employees and non-employee
directors that are considered to be participating securities, we have calculated our earnings (loss) per share
using the two-class method. Diluted income (loss) per share assumes exercise of certain stock-based
compensation awards, provided the effect is not anti-dilutive.
119
(In millions, except per share data)
Income (loss) from continuing operations, net of tax
2020
(11,182) $
$
2019
2018
2,449 $
2,933
Less: Net income (loss) attributable to noncontrolling interest
Net income allocated to participating securities
Income (loss) from continuing operations available to
common stockholders
Income from discontinued operations, net of tax
(151)
1
(11,032)
1,205
618
1
1,830
806
826
1
2,106
673
Income (loss) available to common stockholders
$
(9,827) $
2,636 $
2,779
Weighted average common shares outstanding:
Basic
Effect of dilutive securities
Diluted
649
—
649
659
5
664
Income (loss) available to common stockholders per share:
Basic:
Continuing operations
Discontinued operations
Net income (loss) per share
Diluted:
Continuing operations
Discontinued operations
Net income (loss) per share
$
(16.99) $
2.78 $
1.86
1.22
$
(15.13) $
4.00 $
$
(16.99) $
2.76 $
1.86
1.21
$
(15.13) $
3.97 $
518
8
526
4.06
1.30
5.36
4.00
1.28
5.28
The following table summarizes the shares that were anti-dilutive, and therefore, were excluded from the
diluted share calculation.
(In millions)
2020
2019
2018
Shares issuable under stock-based compensation plans
11
3
—
12. EQUITY
As of December 31, 2020, we had $2.96 billion of remaining share repurchase authorizations from our
board of directors. We may utilize various methods to effect the repurchases, which could include open
market repurchases, negotiated block transactions, tender offers, accelerated share repurchases or open
market solicitations for shares, some of which may be effected through Rule 10b5-1 plans. The timing and
amount of future repurchases will depend upon several factors, including market and business conditions,
and such repurchases may be initiated, suspended or discontinued at any time.
Total share repurchases were as follows for the respective periods:
(In millions, except per share data)
Number of shares repurchased
Cash paid for shares repurchased
Average cost per share
2020
2019
2018
—
— $
— $
34
1,950 $
58.87 $
47
3,287
69.46
$
$
120
13. SEGMENT INFORMATION
On August 2, 2020, we entered into a definitive agreement to sell Speedway to 7-Eleven for $21 billion in
cash, subject to certain adjustments based on the levels of cash, debt and working capital at closing and
certain other items. In connection with the announced sale, we reassessed our organizational structure and
management of segments. As a result of this assessment, we have made the following changes for all
periods presented:
•
•
•
•
•
Speedway’s results are presented separately as discontinued operations. See Note 5 for related
disclosures.
Refining & Marketing intersegment sales to Speedway that were previously eliminated in
consolidation are reported as third party sales as we will continue to supply fuel to Speedway
following its disposition.
The retained direct dealer business results, previously included in the Retail segment, are reported
within the Refining & Marketing segment.
As a result of the above, we no longer present a separate Retail segment, which had included these
two businesses.
Corporate costs are no longer allocated to Speedway under discontinued operations accounting.
We have two reportable segments: Refining & Marketing and Midstream. Each of these segments is
organized and managed based upon the nature of the products and services it offers.
• Refining & Marketing – refines crude oil and other feedstocks at our refineries in the Gulf Coast,
Mid-Continent and West Coast regions of the United States, purchases refined products and ethanol
for resale and distributes refined products through transportation, storage, distribution and marketing
services provided largely by our Midstream segment. We sell refined products to wholesale
marketing customers domestically and internationally, to buyers on the spot market, to independent
entrepreneurs who operate primarily Marathon® branded outlets, through long-term supply contracts
with direct dealers who operate locations mainly under the ARCO® brand and to approximately
3,800 Speedway locations.
• Midstream – transports, stores, distributes and markets crude oil and refined products principally for
the Refining & Marketing segment via refining logistics assets, pipelines, terminals, towboats and
barges; gathers, processes and transports natural gas; and gathers, transports, fractionates, stores and
markets NGLs. The Midstream segment primarily reflects the results of MPLX.
On October 1, 2018, we acquired Andeavor and its results are included in each of our segments from the
date of the acquisition. Also, on February 1, 2018, we contributed certain refining logistics assets and fuels
distribution services to MPLX. The results of these new businesses are reported in the Midstream segment
prospectively from February 1, 2018, resulting in a net reduction to Refining & Marketing segment results
and a net increase to Midstream segment results of the same amount. No effect was given to prior periods
as these entities were not considered businesses prior to February 1, 2018.
Segment income from operations represents income (loss) from operations attributable to the reportable
segments. Corporate administrative expenses, except for those attributable to MPLX, and costs related to
certain non-operating assets are not allocated to the Refining & Marketing segment. In addition, certain
items that affect comparability (as determined by the chief operating decision maker (“CODM”)) are not
allocated to the reportable segments. Assets by segment are not a measure used to assess the performance
of the company by the CODM and thus are not reported in our disclosures.
121
(In millions)
Year Ended December 31, 2020
Revenues:
Third party(a)
Intersegment
Segment revenues
Segment income from operations
Supplemental Data
Depreciation and amortization(b)
Capital expenditures and investments(c)
(In millions)
Year Ended December 31, 2019
Revenues:
Third party(a)
Intersegment
Segment revenues
Segment income from operation
Supplemental Data
Depreciation and amortization(b)
Capital expenditures and investments(c)
(In millions)
Year Ended December 31, 2018
Revenues:
Third party(a)
Intersegment
Segment revenues
Segment income from operations
Supplemental Data
Depreciation and amortization(b)
Capital expenditures and investments(c)
Refining &
Marketing Midstream
Total
$
66,180 $
3,599 $
69,779
67
4,839
4,906
$
$
66,247 $
8,438 $
74,685
(5,189) $
3,708 $
(1,481)
1,857
1,170
1,353
1,398
3,210
2,568
Refining &
Marketing Midstream
Total
$ 107,305 $
3,843 $ 111,148
103
4,917
5,020
$ 107,408 $
8,760 $ 116,168
$
2,856 $
3,594 $
6,450
1,780
2,045
1,267
3,290
3,047
5,335
Refining &
Marketing Midstream
Total
$
82,755 $
3,331 $
86,086
66
3,329
3,395
$
$
82,821 $
6,660 $
89,481
2,654 $
2,752 $
5,406
1,207
1,077
885
2,630
2,092
3,707
(a)
(b)
(c)
Includes Refining & Marketing sales to Speedway (as discussed above) and related party sales. See Note 10 for additional
information.
Differences between segment totals and MPC consolidated totals represent amounts related to corporate and other items not
allocated to segments.
Includes changes in capital expenditure accruals and investments in affiliates.
122
The following reconciles segment income (loss) from operations to income (loss) from continuing
operations before income taxes as reported in the consolidated statements of income:
(In millions)
Segment income (loss) from operations
Corporate(a)
Items not allocated to segments:
Impairments(b)
Restructuring expenses(c)
Litigation
Gain on sale of assets
Transaction-related costs(d)
Equity method investment restructuring gains(e)
Income (loss) from continuing operations
Net interest and other financial costs
2020
2019
2018
$
(1,481) $
6,450 $
5,406
(800)
(833)
(528)
(9,741)
(367)
84
66
(8)
—
(12,247)
1,365
(1,239)
—
(22)
—
(153)
259
4,462
1,229
9
—
—
—
(197)
—
4,690
993
Income (loss) from continuing operations before income taxes $
(13,612) $
3,233 $
3,697
(a)
(b)
(c)
(d)
(e)
Corporate consists primarily of MPC’s corporate administrative expenses and costs related to certain non-operating assets,
except for corporate overhead expenses attributable to MPLX, which are included in the Midstream segment. Corporate includes
corporate costs of $26 million, $28 million and $26 million for 2020, 2019 and 2018, respectively, that are no longer allocable to
Speedway under discontinued operations accounting.
2020 reflects impairments of goodwill, equity method investments and long lived assets. 2019 reflects impairments of goodwill
and equity method investments. See Note 7. 2018 includes MPC’s share of gains from the sale of assets remaining from the
Sandpiper pipeline project, which was cancelled and impaired in 2016.
See Note 4.
2020 and 2019 includes costs incurred in connection with the Midstream strategic review and other related efforts. Both 2019
and 2018 include employee severance, retention and other costs related to the acquisition of Andeavor. Effective October 1,
2019, we have discontinued reporting Andeavor transaction-related costs as one year has passed since the acquisition and these
costs are immaterial. Costs incurred in connection with the Speedway separation are included in discontinued operations. See
Note 5.
Includes gains related to The Andersons Marathon Holdings LLC and Capline Pipeline Company LLC. See Note 17.
The following reconciles segment capital expenditures and investments to total capital expenditures:
(In millions)
Segment capital expenditures and investments
Less investments in equity method investees
Plus items not allocated to segments:
Corporate
Capitalized interest
Total capital expenditures(a)
2020
2019
2018
2,568 $
485
5,335 $
1,064
3,707
409
80
106
2,269 $
100
137
4,508 $
77
80
3,455
$
$
(a)
Includes changes in capital expenditure accruals. See Note 24 for a reconciliation of total capital expenditures to additions to
property, plant and equipment as reported in the consolidated statements of cash flows.
Since we will continue to supply fuel to Speedway following its disposition, we have reported intersegment
sales to Speedway, that were previously eliminated in consolidation, as third party sales in all periods
presented. Sales to Speedway from the Refining & Marketing segment represented 11 percent, 12 percent
and 13 percent of our total annual revenues for the years ended December 31, 2020, 2019 and 2018,
respectively. See Note 23 for the disaggregation of our revenue by segment and product line.
We do not have significant operations in foreign countries. Therefore, revenues in foreign countries and
long-lived assets located in foreign countries, including property, plant and equipment and investments, are
not material to our operations.
123
14. NET INTEREST AND OTHER FINANCIAL COSTS
Net interest and other financial costs were as follows:
(In millions)
Interest income
Interest expense
Interest capitalized
Pension and other postretirement non-service costs(a)
(Gain) loss on extinguishment of debt
Other financial costs
Net interest and other financial costs
2020
2019
2018
$
$
(9) $
1,462
(129)
11
(9)
39
1,365 $
(40) $
1,389
(158)
4
—
34
1,229 $
(87)
1,025
(80)
53
64
18
993
(a)
See Note 26.
15. INCOME TAXES
On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) was enacted
by Congress and signed into law by President Trump in response to the COVID-19 pandemic. The CARES
Act contained a net operating loss (“NOL”) carryback provision, which allowed MPC to carryback our
2020 taxable loss to 2015 and later years. The five-year NOL carryback is available for all businesses
producing taxable losses in 2018 through 2020. Based on the NOL carryback, as provided by the CARES
Act, we recorded an income tax receivable of $2.1 billion in other current assets to reflect our estimate of
the tax refund we expect to receive from our 2020 federal tax return. The refund is expected to be received
during the second half of 2021.
In the absence of the CARES Act NOL legislation, businesses would account for taxable losses as deferred
tax assets and could realize the deferred tax asset by offsetting the losses against taxable income earned in
future periods. Due to the corporate tax rate change from 35 percent to the current 21 percent under the Tax
Cut and Jobs Act of 2017, taxpayers may recover taxes paid in tax years before 2018 at a 35 percent federal
income tax rate. The limitation on the percentage of taxable income that may be offset by the NOL,
formerly 80 percent of income, was eliminated for years beginning before 2021.
The provision (benefit) for income taxes from continuing operations consisted of:
(In millions)
Current:
Federal
State and local
Foreign
Total current
Deferred:
Federal
State and local
Foreign
Total deferred
2020
2019
2018
$
(2,267) $
(52) $
69
9
28
1
(2,189)
(23)
90
(347)
16
(241)
742
56
9
807
674
54
22
750
(119)
149
(16)
14
764
Income tax provision (benefit)
$
(2,430) $
784 $
124
A reconciliation of the federal statutory income tax rate to the effective tax rate applied to income (loss)
from continuing operations before income taxes follows:
Federal statutory rate
State and local income taxes, net of federal income tax effects
Goodwill impairment
Noncontrolling interests
Legislation
Other
2020
2019
2018
21 %
21 %
21 %
2
(8)
—
4
(1)
2
5
(4)
—
—
5
—
(5)
—
—
Effective tax rate applied to income (loss) from continuing
operations before income taxes
18 %
24 %
21 %
Deferred tax assets and liabilities resulted from the following:
(In millions)
Deferred tax assets:
Employee benefits
Environmental remediation
Finance lease obligations
Debt financing
Operating lease liabilities
Net operating loss carryforwards
Foreign currency
Tax credit carryforwards
Other
Total deferred tax assets
Deferred tax liabilities:
Property, plant and equipment
Inventories
Investments in subsidiaries and affiliates
Goodwill and other intangibles
Right of use assets
Other
Total deferred tax liabilities
Net deferred tax liabilities
December 31,
2020
2019
$
$
647 $
95
103
6
453
232
—
19
74
1,629
3,195
800
3,331
34
451
18
7,829
6,200 $
693
99
105
17
498
18
15
14
57
1,516
3,301
652
3,114
304
498
19
7,888
6,372
The above table reflects reclassifications of December 31, 2019 balances from property, plant and
equipment to finance lease obligations, operating lease liabilities, goodwill and other intangibles and right
of use assets to correct the presentation of these deferred tax assets and liabilities that were previously
presented as property, plant and equipment deferred tax liabilities.
125
Net deferred tax liabilities were classified in the consolidated balance sheets as follows:
(In millions)
Assets:
Other noncurrent assets
Liabilities:
Deferred income taxes(a)
Net deferred tax liabilities
December 31,
2020
2019
$
3 $
20
6,203
$
6,200 $
6,392
6,372
(a)
The deferred income tax assets and liabilities associated with discontinued operations remain in our balance sheet rather than
being included in the carrying amount of assets and liabilities that are held for sale, as the sale is structured as a sale of assets.
These discontinued operations deferred income tax assets and liabilities will be realized upon the sale of Speedway.
At December 31, 2020 and 2019, federal operating loss carryforwards were $4 million and $7 million,
respectively, which includes a mix of indefinite carryforward ability and expiration periods ranging from
2022 through 2037. As of December 31, 2020 and 2019, state and local operating loss carryforwards were
$228 million and $11 million, respectively, which includes a mix of indefinite carryforward ability and
expiration periods ranging from 2021 through 2042.
As of December 31, 2020 and 2019, $11 million of valuation allowances have been recorded related to
income taxes. A federal valuation allowance was established for December 31, 2020 and 2019, of
$2 million, primarily due to the expected realizability of foreign tax credits. A state and local valuation
allowance was established as of December 31, 2020 and 2019, of $9 million, based on expected
realizability of state and local tax operating losses.
MPC is continuously undergoing examination of its U.S. federal income tax returns by the Internal
Revenue Service (“IRS”). Since 2012, we have continued to participate in the Compliance Assurance
Process (“CAP”). CAP is a real-time audit of the U.S. Federal income tax return that allows the IRS,
working in conjunction with MPC, to determine tax return compliance with the U.S. Federal tax law prior
to filing the return. This program provides us with greater certainty about our tax liability for years under
examination by the IRS. While Andeavor also underwent continual IRS examination, it did not participate
in the CAP for tax periods prior to October 1, 2018.
Andeavor and its subsidiaries’ IRS audits have been completed through the 2015 tax year. We believe
adequate provisions have been established for potential tax in periods not closed to examination. Further,
we are routinely involved in U.S. state income tax audits. We believe all other audits will be resolved with
the amounts provided for these liabilities. As of December 31, 2020, our federal income tax returns remain
subject to examination for years 2016 through 2019. As of December 31, 2020, we have various state and
local income tax returns subject to examination for years 2006 through 2019, depending on jurisdiction.
The following table summarizes the activity in unrecognized tax benefits:
(In millions)
January 1 balance
Additions for tax positions of prior years
Reductions for tax positions of prior years
Settlements
Statute of limitations
Acquired from Andeavor
December 31 balance
2020
2019
2018
$
$
32 $
12
(18)
(3)
—
—
23 $
211 $
2
(2)
(19)
(160)
—
32 $
19
—
(5)
—
(12)
209
211
If the unrecognized tax benefits as of December 31, 2020 were recognized, $14 million would affect our
effective income tax rate. There were $9 million of uncertain tax positions as of December 31, 2020 for
which it is reasonably possible that the amount of unrecognized tax benefits would significantly decrease
during the next twelve months. For tax years 2009 and 2010, Andeavor had asserted a federal income tax
claim for $159 million from the income tax effect of the receipt of the ethanol blender’s excise tax credit,
for which the tax benefit was not recorded. The statute of limitations for the IRS appeal process expired
during the fourth quarter 2019 since the ability to obtain a refund was remote.
126
Pursuant to our tax sharing agreement with Marathon Oil, the unrecognized tax benefits related to pre-
spinoff operations for which Marathon Oil was the taxpayer remain the responsibility of Marathon Oil and
we have indemnified Marathon Oil accordingly. See Note 29 for indemnification information.
Interest and penalties related to income taxes are recorded as part of the provision for income taxes. Such
interest and penalties were net expenses (benefits) of $(19) million, $(2) million and $1 million in 2020,
2019 and 2018, respectively. As of December 31, 2020 and 2019, $(5) million and $7 million of interest
and penalties were accrued related to income taxes.
16. INVENTORIES
(In millions)
Crude oil
Refined products
Materials and supplies
Total
December 31,
2020
2019
$
$
2,588 $
4,478
933
7,999 $
3,472
5,359
973
9,804
The LIFO method accounted for 88 percent and 90 percent of total inventory value at December 31, 2020
and 2019, respectively. There was no excess of replacement or current cost over our stated LIFO cost as of
December 31, 2020. Current acquisition costs were estimated to exceed the LIFO inventory value by $787
million at December 31, 2019
The cost of inventories of crude oil and refined products is determined primarily under the LIFO method.
During 2020, we recorded a $561 million charge to reflect LIFO liquidations for our crude oil and refined
product inventories. The costs of inventories in the historical LIFO layers which were liquidated were
higher than current costs, which resulted in the charge to cost of revenues. There were no liquidations of
LIFO inventories in 2019 and 2018. .
17. EQUITY METHOD INVESTMENTS
The Andersons Marathon Holdings LLC
Effective October 1, 2019, The Andersons, Inc. and MPC contributed jointly owned equity interests in
three ethanol entities into a new legal entity, The Andersons Marathon Holdings LLC (“TAMH”).
Concurrently, The Andersons, Inc. contributed a wholly-owned ethanol facility to TAMH. In accordance
with ASC 845, we derecognized the historical cost of our equity method investments in the legacy entities
amounting to $123 million and recognized the new equity method investment in TAMH at fair value. We
used a combination of market, income and cost approaches to determine the fair value of our ownership
interest in TAMH with more reliance on the market and income approaches. The estimated cash flows used
in the income approach were discounted using a weighted average cost of capital estimate and the market
approach utilized EBITDA and capacity multiples for similar companies and transactions. This is a
nonrecurring fair value measurement and is recognized in Level 3 of the fair value hierarchy. We estimated
the fair value of our ownership interest to be $175 million. The excess of the estimated fair value of our
ownership interest over the carrying value of the derecognized net assets resulted in a $52 million non-cash
net gain recorded as a net gain on disposal of assets in the accompanying consolidated statements of
income.
Capline LLC
During the three months ended March 31, 2019, we executed agreements with Capline Pipeline Company
LLC (“Capline LLC”) to contribute our 33 percent undivided interest in the Capline pipeline system in
exchange for a 33 percent ownership interest in Capline LLC. In connection with our execution of these
agreements, Capline LLC initiated a binding open season for southbound service from Patoka, Illinois to St.
James, Louisiana or Liberty, Mississippi with an additional origination point at Cushing, Oklahoma.
Service from Cushing, Oklahoma is part of a joint tariff with Diamond pipeline.
127
In accordance with ASC 810, we derecognized our undivided interest amounting to $143 million of net
assets and recognized the Capline LLC ownership interest we received at fair value. We used an income
approach to determine the fair value of our ownership interest under a Monte Carlo simulation method. We
estimated the fair value of our ownership interest to be $350 million. This is a nonrecurring fair value
measurement and is categorized in Level 3 of the fair value hierarchy. The Monte Carlo simulation inputs
include ranges of tariff rates, operating volumes, operating cost and capital expenditure assumptions. The
estimated cash flows were discounted using a Monte Carlo market participant weighted average cost of
capital estimate. None of the inputs to the Monte Carlo simulation are individually significant. The excess
of the estimated fair value of our ownership interest over the carrying value of the derecognized net assets
resulted in a $207 million non-cash net gain recorded as a net gain on disposal of assets in the
accompanying consolidated statements of income.
As the Capline system is currently idled, Capline LLC is unable to fund its operations without financial
support from its equity owners and is a VIE. MPC is not deemed to be the primary beneficiary, due to our
inability to unilaterally control significant decision-making rights. Our maximum exposure to loss as a
result of our involvement with Capline LLC includes our equity investment, any additional capital
contribution commitments and any operating expenses incurred by Capline LLC in excess of compensation
received for performance of the operating services.
128
Investments in Equity Method Affiliates
(Dollars in millions)
Refining & Marketing
The Andersons Marathon Holdings LLC
Watson Cogeneration Company
Refining & Marketing Total
Midstream
MPLX
Andeavor Logistics Rio Pipeline LLC
Centrahoma Processing LLC
Explorer Pipeline Company
Illinois Extension Pipeline Company, L.L.C
LOOP LLC
MarEn Bakken Company LLC
MarkWest EMG Jefferson Dry Gas Gathering Company,
L.L.C.
MarkWest Utica EMG, L.L.C.
Minnesota Pipe Line Company, LLC
Rendezvous Gas Services, L.L.C.
Sherwood Midstream Holdings LLC
Sherwood Midstream LLC
Whistler Pipeline LLC
Wink to Webster Pipeline LLC(a)
W2W Holdings LLC(a)
Other(b)
MPLX Total
MPC-Retained
Capline Pipeline Company LLC
Crowley Coastal Partners, LLC
Gray Oak Pipeline, LLC
LOOP LLC
South Texas Gateway Terminal LLC
Other(b)
MPC-Retained Total
Midstream Total
Total
Ownership as of
December 31,
2020
Carrying value at
December 31,
2020
2019
VIE
50%
51%
67%
40%
25%
35%
41%
25%
67%
57%
17%
78%
51%
50%
38%
—%
50%
33%
50%
25%
10%
25%
X
X
X
X
X
X
X
X
X
X
X
X
X
$
$
$
159 $
25
184 $
177
26
203
194 $
145
72
254
252
465
202
153
83
265
238
481
307
698
188
159
148
557
185
—
72
340
302
1,984
190
170
157
537
134
126
—
253
$ 4,036 $ 5,275
$
390 $
190
342
63
168
49
374
188
298
59
85
86
$ 1,202 $ 1,090
$ 5,238 $ 6,365
$ 5,422 $ 6,568
(a)
(b)
During 2020, MPLX contributed its ownership in Wink to Webster Pipeline LLC to W2W Holdings LLC.
Some investments included within “Other” have been deemed to be VIEs.
129
Summarized financial information for all equity method investments in affiliated companies, combined,
was as follows:
(In millions)
Income statement data:
Revenues and other income
Income from operations
Net income
Balance sheet data – December 31:
Current assets
Noncurrent assets
Current liabilities
Noncurrent liabilities
2020
2019
2018
$
3,013 $
3,282 $
599
454
1,176
987
3,092
1,105
972
$
1,298 $
1,195
17,697
754
4,736
16,362
997
2,769
As of December 31, 2020, the carrying value of our equity method investments was $361 million higher
than the underlying net assets of investees. This basis difference is being amortized into net income over
the remaining estimated useful lives of the underlying net assets, except for $199 million of excess related
to goodwill and other non-depreciable assets.
Dividends and partnership distributions received from equity method investees (excluding distributions that
represented a return of capital previously contributed) were $577 million, $569 million and $458 million in
2020, 2019 and 2018.
See Note 7 for information regarding impairments of equity method investments.
18. PROPERTY, PLANT AND EQUIPMENT
(In millions)
Refining & Marketing(a)
Midstream
Corporate
Total
Less accumulated depreciation(b)
Property, plant and equipment, net
Estimated
Useful Lives
4 -30 years
1 -61 years
4 - 40 years
December 31,
2020
2019
$
30,306 $
29,101
27,677
1,356
59,339
20,304
27,193
1,292
57,586
16,716
$
39,035 $
40,870
(a)
(b)
Recast to include the direct dealer business. See Note 13 for additional information.
The December 31, 2020 balance includes property, plant and equipment impairment charges recorded during 2020. See Note 7
for additional information.
Property, plant and equipment includes gross assets acquired under finance leases of $819 million and $740
million at December 31, 2020 and 2019, respectively, with related amounts in accumulated depreciation of
$272 million and $215 million at December 31, 2020 and 2019. Property, plant and equipment includes
construction in progress of $1.83 billion and $3.12 billion at December 31, 2020 and 2019, respectively,
which primarily relates to capital projects at our refineries and midstream facilities.
19. GOODWILL AND INTANGIBLES
Goodwill
Management annually evaluates goodwill for impairment as of November 30, as well as whenever events
or changes in circumstances indicate it is more likely than not that the fair value of a reporting unit with
goodwill is less than its carrying amount. In 2020 and 2019, we recorded impairments of goodwill as
130
outlined in Note 7. There were no other impairments of goodwill required based on our annual test of
goodwill in 2020 and 2019.
The changes in the carrying amount of goodwill for 2019 and 2020 were as follows:
(In millions)
Balance at January 1, 2019
Acquisitions
Purchase price allocation adjustments
Impairments(b)
Dispositions
Balance at December 31, 2019
Transfers
Impairments(b)
Balance at December 31, 2020
Refining &
Marketing(a)
$
5,511 $
Midstream
Total
10,323 $
15,834
—
408
(1,197)
(17)
38
992
(1,197)
(17)
38
584
—
—
$
6,133 $
9,517 $
15,650
8
(5,580)
(8)
(1,814)
$
561 $
7,695 $
—
(7,394)
8,256
(a)
(b)
Recast to include the direct dealer business. See Note 13 for additional information.
See Note 7.
Intangible Assets
Our definite lived intangible assets as of December 31, 2020 and 2019 are as shown below.
(In millions)
Customer contracts and
relationships
Brand rights and tradenames
Royalty agreements
Other
Total
December 31, 2020
December 31, 2019
Gross
Accumulated
Amortization
Net
Gross
Accumulated
Amortization
Net
$ 3,359 $
1,119 $ 2,240 $ 3,271 $
612 $ 2,659
100
133
36
35
87
27
65
46
9
100
133
36
20
78
24
80
55
12
$ 3,628 $
1,268 $ 2,360 $ 3,540 $
734 $ 2,806
At both December 31, 2020 and 2019, we had indefinite lived intangible assets $71 million, which are
emission allowance credits.
Amortization expense for 2020 and 2019 was $336 million and $357 million, respectively. Estimated future
amortization expense for the next five years related to the intangible assets at December 31, 2020 is as
follows:
(In millions)
2021
2022
2023
2024
2025
$
347
346
330
277
257
131
20. FAIR VALUE MEASUREMENTS
Fair Values – Recurring
The following tables present assets and liabilities accounted for at fair value on a recurring basis as of
December 31, 2020 and 2019 by fair value hierarchy level. We have elected to offset the fair value amounts
recognized for multiple derivative contracts executed with the same counterparty, including any related
cash collateral as shown below; however, fair value amounts by hierarchy level are presented on a gross
basis in the following tables.
Fair Value Hierarchy
December 31, 2020
Level 1
Level 2
Level 3
Netting and
Collateral(a)
Net Carrying
Value on
Balance Sheet(b)
Collateral
Pledged
Not Offset
(In millions)
Assets:
Commodity contracts
$
82 $
6 $ — $
(80) $
8 $
31
Liabilities:
Commodity contracts
Embedded derivatives in
commodity contracts
(In millions)
Assets:
$
81 $
10 $ — $
(91) $
— $
—
—
63
—
63
—
—
Fair Value Hierarchy
December 31, 2019
Level 1
Level 2
Level 3
Netting and
Collateral(a)
Net Carrying
Value on
Balance Sheet(b)
Collateral
Pledged
Not Offset
Commodity contracts
$
57 $
6 $ — $
(55) $
8 $
73
Liabilities:
Commodity contracts
Embedded derivatives in
commodity contracts
$
95 $
11 $ — $
(106) $
— $
—
—
60
—
60
—
—
(a)
Represents the impact of netting assets, liabilities and cash collateral when a legal right of offset exists. As of December 31,
2020, cash collateral of $11 million was netted with mark-to-market liabilities. As of December 31, 2019, cash collateral of $51
million was netted with mark-to-market derivative liabilities.
(b) We have no derivative contracts which are subject to master netting arrangements reflected gross on the balance sheet.
Commodity derivatives in Level 1 are exchange-traded contracts for crude oil and refined products
measured at fair value with a market approach using the close-of-day settlement prices for the
market. Commodity derivatives are covered under master netting agreements with an unconditional right to
offset. Collateral deposits in futures commission merchant accounts covered by master netting agreements
related to Level 1 commodity derivatives are classified as Level 1 in the fair value hierarchy.
Level 2 instruments are valued based on quoted prices for similar assets and liabilities in active markets,
and inputs other than quoted prices, such as liquidity, that are observable for the asset or liability.
Commodity derivatives in Level 2 are OTC contracts, which are valued using market quotations from
independent price reporting agencies, third-party brokers and commodity exchange price curves that are
corroborated with market data.
Level 3 instruments include embedded derivatives in commodity contracts. The embedded derivative
liability relates to a natural gas purchase agreement embedded in a keep‑whole processing agreement. The
fair value calculation for these Level 3 instruments at December 31, 2020 used significant unobservable
inputs including: (1) NGL prices interpolated and extrapolated due to inactive markets ranging from $0.47
to $1.09 per gallon with a weighted average of $0.59 per gallon and (2) the probability of renewal of 100
percent for the first and second five-year term of the natural gas purchase agreement and the related keep-
whole processing agreement. Increases or decreases in the fractionation spread result in an increase or
decrease in the fair value of the embedded derivative liability.
132
The following is a reconciliation of the beginning and ending balances recorded for net liabilities classified
as Level 3 in the fair value hierarchy.
(In millions)
Beginning balance
Unrealized and realized losses included in net income
Settlements of derivative instruments
Ending balance
The amount of total losses for the period included in earnings attributable to
the change in unrealized losses relating to assets still held at the end of
period:
See Note 21 for the income statement impacts of our derivative instruments.
Fair Values – Reported
2020
2019
60 $
9
(6)
63 $
61
5
(6)
60
4 $
5
$
$
$
We believe the carrying value of our other financial instruments, including cash and cash equivalents,
receivables, accounts payable and certain accrued liabilities approximate fair value. Our fair value
assessment incorporates a variety of considerations, including the short-term duration of the instruments
and the expected insignificance of bad debt expense, which includes an evaluation of counterparty credit
risk. The borrowings under our revolving credit facilities and term loan facility, which include variable
interest rates, approximate fair value. The fair value of our fixed and floating rate long-term debt is based
on prices from recent trade activity and is categorized in Level 3 of the fair value hierarchy. The carrying
and fair values of our debt were approximately $31.1 billion and $34.9 billion at December 31, 2020,
respectively, and approximately $28.3 billion and $30.1 billion at December 31, 2019, respectively. These
carrying and fair values of our debt exclude the unamortized issuance costs which are netted against our
total debt.
21. DERIVATIVES
For further information regarding the fair value measurement of derivative instruments, including any
effect of master netting agreements or collateral, see Note 20. See Note 2 for a discussion of the types of
derivatives we use and the reasons for them. We do not designate any of our commodity derivative
instruments as hedges for accounting purposes.
The following table presents the fair value of derivative instruments as of December 31, 2020 and 2019 and
the line items in the balance sheets in which the fair values are reflected. The fair value amounts below are
presented on a gross basis and do not reflect the netting of asset and liability positions permitted under the
terms of our master netting arrangements including cash collateral on deposit with, or received from,
brokers. We offset the recognized fair value amounts for multiple derivative instruments executed with the
same counterparty in our financial statements when a legal right of offset exists. As a result, the asset and
liability amounts below will not agree with the amounts presented in our consolidated balance sheets.
(In millions)
Balance Sheet Location
Commodity derivatives
Other current assets
Other current liabilities(a)
Deferred credits and other liabilities(a)
December 31, 2020
Asset
Liability
$
88 $
—
—
91
7
56
133
(In millions)
Balance Sheet Location
Commodity derivatives
Other current assets
Other current liabilities(a)
Deferred credits and other liabilities(a)
(a)
Includes embedded derivatives.
December 31, 2019
Asset
Liability
$
63 $
—
—
106
5
55
The table below summarizes open commodity derivative contracts for crude oil, refined products and
blending products as of December 31, 2020.
(Units in thousands of barrels)
Exchange-traded(a)
Crude oil
Refined products
Blending products
Soybean oil
Percentage of contracts
that expire next quarter
Position
Long
Short
81.9%
89.0%
100.0%
100.0%
17,474
13,923
3,206
558
11,197
9,354
3,987
1,117
(a)
Included in exchange-traded are spread contracts in thousands of barrels: Refined products - 935 long and 455 short
The following table summarizes the effect of all commodity derivative instruments in our consolidated
statements of income:
(In millions)
Income Statement Location
Sales and other operating revenues
Cost of revenues
Other income
Total
Gain (Loss)
2020
2019
2018
$
72 $
(19) $
34
1
(77)
—
$
107 $
(96) $
13
(59)
—
(46)
134
22. DEBT
Our outstanding borrowings at December 31, 2020 and 2019 consisted of the following:
(In millions)
Marathon Petroleum Corporation:
Commercial paper
Senior notes
Notes payable
Finance lease obligations
MPLX LP:
Bank revolving credit facility
Term loan facility
Senior notes
Finance lease obligations
Total debt
Unamortized debt issuance costs
Unamortized (discount) premium, net
Amounts due within one year
December 31,
2020
December 31,
2019
$
$
1,024
9,849
1
634
175
—
20,350
11
—
8,474
1
574
—
1,000
19,100
19
$
32,044
$
29,168
(154)
(306)
(2,854)
(134)
(310)
(704)
Total long-term debt due after one year
$
28,730
$
28,020
Commercial Paper
On February 26, 2016, we established a commercial paper program that allows us to have a maximum of $2
billion in commercial paper outstanding, with maturities up to 397 days from the date of issuance. We do
not intend to have outstanding commercial paper borrowings in excess of available capacity under our bank
revolving credit facilities.
135
MPC Senior Notes
(In millions)
Marathon Petroleum Corporation:
Senior notes, 3.400% due December 2020
Senior notes, 5.125% due March 2021
Senior notes, 5.375% due October 2022
Senior notes, 4.500% due May 2023
Senior notes, 4.750% due December 2023
Senior notes, 5.125% due April 2024
Senior notes, 3.625% due September 2024
Senior notes, 4.700% due May 2025
Senior notes, 5.125% due December 2026
Senior notes, 3.800% due April 2028
Senior notes, 6.500% due March 2041
Senior notes, 4.750% due September 2044
Senior notes, 5.850% due December 2045
Senior notes, 4.500% due April 2048
Andeavor senior notes, 3.800% - 5.375% due 2022 - 2048
Senior notes, 5.000%, due September 2054
Total
December 31,
2020
2019
$
—
$
1,000
—
1,250
614
241
750
1,250
719
496
1,250
800
250
498
331
400
650
1,000
337
—
614
241
750
—
719
496
1,250
800
250
498
469
400
$
9,849
$
8,474
On April 27, 2020, we issued $2.5 billion aggregate principal amount of senior notes in a public offering,
consisting of $1.25 billion aggregate principal amount of 4.500% unsecured senior notes due May 2023 and
$1.25 billion aggregate principal amount of 4.700% unsecured senior notes due May 2025. MPC used the
net proceeds from this offering to repay amounts outstanding under its five-year revolving credit facility.
On October 1, 2020, all of the $475 million outstanding aggregate principal amount of 5.375% senior notes
due October 2022, including the portion of such notes for which Andeavor was the obligor, were redeemed
at a price equal to par.
On November 15, 2020, all of the $650 million outstanding aggregate principal amount of 3.400% senior
notes due December 2020 were redeemed at a price equal to par.
Interest on each series of senior notes is payable semi-annually in arrears. The MPC senior notes are
unsecured and unsubordinated obligations of MPC and rank equally with all of MPC’s other existing and
future unsecured and unsubordinated indebtedness. The MPC senior notes are non-recourse and structurally
subordinated to the indebtedness of our subsidiaries, including the outstanding indebtedness of Andeavor,
MPLX and ANDX. The Andeavor senior notes are unsecured, unsubordinated obligations of Andeavor and
are non-recourse to MPC and any of MPC’s subsidiaries other than Andeavor.
MPLX Term Loan Facility
The $1.0 billion of outstanding borrowings under the MPLX term loan facility was repaid during 2020 with
net proceeds from the issuance of MPLX senior notes discussed below.
136
MPLX Senior Notes
(In millions)
MPLX LP:
Floating rate notes due September 2021
Floating rate notes due September 2022
Senior notes, 6.250% due October 2022
Senior notes, 3.500% due December 2022
Senior notes, 3.375% due March 2023
Senior notes, 4.500% due July 2023
Senior notes, 6.375% due May 2024
Senior notes, 4.875% due December 2024
Senior notes, 5.250% due January 2025
Senior notes, 4.000% due February 2025
Senior notes, 4.875% due June 2025
MarkWest senior notes, 4.500% - 4.875% due 2023 - 2025
Senior notes, 1.750% due March 2026
Senior notes, 4.125% due March 2027
Senior notes, 4.250% due December 2027
Senior notes, 4.000% due March 2028
Senior notes, 4.800% due February 2029
Senior notes, 2.650% due August 2030
Senior notes, 4.500% due April 2038
Senior notes, 5.200% due March 2047
Senior notes, 5.200% due December 2047
ANDX senior notes, 3.500% - 5.250% due 2022 - 2047
Senior notes, 4.700% due April 2048
Senior notes, 5.500% due February 2049
Senior notes, 4.900% due April 2058
Total
2020 Activity
December 31,
2020
2019
$
—
$
1,000
—
486
500
989
—
1,149
708
500
1,189
23
1,500
1,250
732
1,250
750
1,500
1,750
1,000
487
87
1,500
1,500
500
1,000
1,000
266
486
500
989
381
1,149
708
500
1,189
23
—
1,250
732
1,250
750
—
1,750
1,000
487
190
1,500
1,500
500
$
20,350
$
19,100
On August 18, 2020, MPLX issued $3.0 billion aggregate principal amount of senior notes in a public
offering, consisting of $1.5 billion aggregate principal amount of 1.750% senior notes due March 2026 and
$1.5 billion aggregate principal amount of 2.650% senior notes due August 2030. The net proceeds were
used to repay $1.0 billion of outstanding borrowings under the MPLX term loan agreement, to repay the
$1.0 billion aggregate principal amount of floating rate senior notes due September 2021, to redeem all of
the $300 million aggregate principal amount of MPLX’s 6.250% senior notes due October 2022 and to
redeem the $450 million aggregate principal amount of 6.375% senior notes due May 2024, including the
portion of such notes issued by ANDX. The remaining net proceeds were used for general business
purposes.
On December 29, 2020, MPLX announced the redemption of all the $750 million outstanding aggregate
principal amount of 5.250% senior notes due January 2025, including the portion of such notes issued by
ANDX. The notes were redeemed on January 15, 2021 at a price equal to 102.625% of the principal
amount. These notes are included in long-term debt due within one year in our consolidated balance sheet
as of December 31, 2020.
2019 Activity
On September 9, 2019, MPLX issued $2.0 billion aggregate principal amount of floating rate senior notes
in a public offering, consisting of $1.0 billion aggregate principal amount of notes due September 2021 and
$1.0 billion aggregate principal amount of notes due September 2022. Net proceeds from the issuance of
137
the floating rate senior notes were used to repay MPLX’s existing indebtedness and/or for general business
purposes. The interest rate applicable to the floating rate senior notes due September 2021 is LIBOR plus
0.9% per annum while the interest rate applicable to the floating rate senior notes due September 2022 is
LIBOR plus 1.1% per annum. Interest is payable in March, June, September and December, commencing
on December 9, 2019. Both series of floating rate notes are callable, in whole or in part, at par plus accrued
and unpaid interest at any time on or after September 10, 2020.
In connection with MPLX’s acquisition of ANDX on July 30, 2019, MPLX assumed ANDX’s outstanding
senior notes, which had an aggregate principal amount of $3.75 billion, with interest rates ranging from
3.500% to 6.375% and maturity dates ranging from 2019 to 2047. On September 23, 2019, approximately
$3.06 billion aggregate principal amount of ANDX’s outstanding senior notes were exchanged for new
unsecured senior notes issued by MPLX having the same maturity and interest rates as the ANDX senior
notes in an exchange offer and consent solicitation undertaken by MPLX, leaving approximately $690
million aggregate principal of outstanding senior notes issued by ANDX. Of this, $500 million was related
to the 5.500% unsecured senior notes due 2019. The principal amount of $500 million and accrued interest
of $14 million was paid on October 15, 2019, which included interest through the payoff date.
Interest on each series of MPLX fixed rate senior notes is payable semi-annually in arrears. The MPLX
senior notes are unsecured, unsubordinated obligations of MPLX and are non-recourse to MPC and its
subsidiaries other than MPLX and MPLX GP LLC, as the general partner of MPLX except as otherwise
noted.
Schedule of Maturities
Principal maturities of long-term debt, excluding finance lease obligations, as of December 31, 2020 for the
next five years are as follows:
(In millions)
2021
2022
2023
2024
2025
$
1,750
1,500
3,600
2,376
2,950
Available Capacity under our Facilities as of December 31, 2020
(Dollars in millions)
MPC, excluding MPLX
MPC 364-day bank
revolving credit facility
MPC 364-day bank
revolving credit facility
MPC bank revolving credit
facility(a)
MPC trade receivables
securitization facility(b)
MPLX
MPLX bank revolving
credit facility(c)
Total
Capacity
Outstanding
Borrowings
Outstanding
Letters
of Credit
Available
Capacity
Weighted
Average
Interest
Rate
Expiration
$ 1,000 $
— $
— $
1,000
— September 2021
1,000
5,000
750
—
—
—
—
1,000
— April 2021
1
4,999
— October 2023
—
750
—
July 2021
3,500
175
—
3,325
1.36
July 2024
(a)
(b)
(c)
Borrowed $4.225 billion and repaid $4.225 billion during the year ended December 31, 2020.
Borrowed $3.550 billion and repaid $3.550 billion during the year ended December 31, 2020. Availability under our
$750 million trade receivables facility is a function of eligible trade receivables, which will be lower in a sustained lower price
environment for refined products.
Borrowed $3.815 billion and repaid $3.640 billion during the year ended December 31, 2020.
138
MPC Revolving Credit Agreements
On August 28, 2018, in connection with the Andeavor acquisition, MPC entered into a credit agreement
with a syndicate of lenders providing for a $5.0 billion five-year revolving credit facility that expires in
2023. The five-year credit agreement became effective on October 1, 2018.
On September 23, 2020, MPC entered into a 364-day credit agreement with a syndicate of lenders. This
revolving credit agreement provides for a $1.0 billion unsecured revolving credit facility that matures in
September 2021, and replaces a similar 364-day revolving credit agreement that expired on September 28,
2020.
On April 27, 2020, MPC entered into an additional 364-day revolving credit agreement that provides for a
$1.0 billion unsecured revolving credit facility that matures in April 2021. In February 2021, we elected to
terminate this credit agreement. This facility provided us with additional liquidity and financial flexibility
during the then ongoing commodity price and demand downturn. There were no borrowings under this
credit facility, and we determined that the incremental borrowing capacity of the facility was no longer
necessary. We do not intend to replace this facility. We incurred no early termination fees as a result of the
early termination of this credit agreement.
MPC has an option under its $5.0 billion five-year credit agreement to increase the aggregate commitments
by up to an additional $1.0 billion, subject to, among other conditions, the consent of the lenders whose
commitments would be increased. In addition, MPC may request up to two one-year extensions of the
maturity date of the five-year credit agreement subject to, among other conditions, the consent of lenders
holding a majority of the commitments, provided that the commitments of any non-consenting lenders will
terminate on the then-effective maturity date. The five-year credit agreement includes sub-facilities for
swing-line loans of up to $250 million and letters of credit of up to $2.2 billion (which may be increased to
up to $3.0 billion upon receipt of additional letter of credit issuing commitments).
Borrowings under the MPC credit agreements bear interest, at our election, at either the Adjusted LIBO
Rate or the Alternate Base Rate (both as defined in the MPC credit agreements), plus an applicable margin.
We are charged various fees and expenses under the MPC credit agreements, including administrative agent
fees, commitment fees on the unused portion of the commitments and fees related to issued and outstanding
letters of credit. The applicable margins to the benchmark interest rates and the commitment fees payable
under the MPC credit agreements fluctuate based on changes, if any, to our credit ratings.
The MPC credit agreements contain certain representations and warranties, affirmative and restrictive
covenants and events of default that we consider to be usual and customary for arrangements of this type,
including a financial covenant that requires us to maintain a ratio of Consolidated Net Debt to Total
Capitalization (each as defined in the MPC credit agreements) of no greater than 0.65 to 1.00 as of the last
day of each fiscal quarter. The covenants also restrict, among other things, our ability and/or the ability of
certain of our subsidiaries to incur debt, create liens on assets or enter into transactions with affiliates. As of
December 31, 2020, we were in compliance with the covenants contained in the MPC credit agreements.
Trade Receivables Securitization Facility
The trade receivables facility consists of our wholly-owned subsidiaries selling or contributing on an on-
going basis all of their trade receivables, together with all related security and interests in the proceeds
thereof, without recourse, to another wholly-owned, bankruptcy-remote special purpose subsidiary, MPC
Trade Receivables Company LLC (“TRC”), in exchange for a combination of cash, equity and/or
borrowings under a subordinated note issued by TRC. TRC, in turn, has the ability to sell undivided
ownership interests in qualifying trade receivables, together with all related security and interests in the
proceeds thereof, without recourse, to the purchasing group in exchange for cash proceeds. The trade
receivables facility also provides for the issuance of letters of credit up to $750 million, provided that the
aggregate credit exposure of the purchasing group, including outstanding letters of credit, may not exceed
the lesser of $750 million or the balance of qualifying trade receivables at any one time.
To the extent that TRC retains an ownership interest in the receivables it has purchased or received under
the facility, such interest will be included in our consolidated financial statements solely as a result of the
consolidation of the financial statements of TRC with those of MPC. The receivables sold or contributed to
TRC are available first and foremost to satisfy claims of the creditors of TRC and are not available to
satisfy the claims of creditors of MPC. TRC has granted a security interest in all of its assets to the
purchasing group to secure its obligations under the Receivables Purchase Agreement.
139
Proceeds from the sale of undivided percentage ownership interests in qualifying receivables under the
trade receivables facility are reflected as debt on our consolidated balance sheet. We remain responsible for
servicing the receivables sold to the purchasing group. TRC pays floating-rate interest charges and usage
fees on amounts outstanding under the trade receivables facility, if any, unused fees on the portion of
unused commitments and certain other fees related to the administration of the facility and letters of credit
that are issued and outstanding under the trade receivables facility.
The receivables purchase agreement and receivables sale agreement contain representations and covenants
that we consider usual and customary for arrangements of this type. Trade receivables are subject to
customary criteria, limits and reserves before being deemed to qualify for sale by TRC pursuant to the trade
receivables facility. In addition, further purchases of qualified trade receivables under the trade receivables
facility are subject to termination, and TRC may be subject to default fees, upon the occurrence of certain
amortization events that are included in the receivables purchase agreement, all of which we consider to be
usual and customary for arrangements of this type. As of December 31, 2020, we were in compliance with
the covenants contained in the receivables purchase agreement and receivables sale agreement.
MPLX Credit Agreement
Upon the completion of the merger of MPLX and ANDX on July 30, 2019, the MPLX bank revolving
credit facility was amended and restated to increase the borrowing capacity to $3.5 billion and to extend the
maturity date to July 30, 2024. The ANDX revolving and dropdown credit facilities were terminated and all
outstanding balances were repaid and funded with borrowings under the amended and restated MPLX $3.5
billion bank revolving credit facility.
The MPLX credit agreement includes letter of credit issuing capacity of up to approximately $300 million
and swingline loan capacity of up to $150 million. The revolving borrowing capacity may be increased by
up to an additional $1.0 billion, subject to certain conditions, including the consent of the lenders whose
commitments would increase.
Borrowings under the MPLX credit agreement bear interest, at MPLX’s election, at the Adjusted LIBO
Rate or the Alternate Base Rate (both as defined in the MPLX credit agreement) plus an applicable margin.
MPLX is charged various fees and expenses in connection with the agreement, including administrative
agent fees, commitment fees on the unused portion of the commitments and fees with respect to issued and
outstanding letters of credit. The applicable margins to the benchmark interest rates and the commitment
fees payable under the MPLX credit agreement fluctuate based on changes, if any, to MPLX’s credit
ratings.
The MPLX credit agreement contains certain representations and warranties, affirmative and restrictive
covenants and events of default that we consider to be usual and customary for an agreement of this type,
including a financial covenant that requires MPLX to maintain a ratio of Consolidated Total Debt as of the
end of each fiscal quarter to Consolidated EBITDA (both as defined in the MPLX credit agreement) for the
prior four fiscal quarters of no greater than 5.0 to 1.0 (or 5.5 to 1.0 for up to two fiscal quarters following
certain acquisitions). Consolidated EBITDA is subject to adjustments for certain acquisitions completed
and capital projects undertaken during the relevant period. The covenants also restrict, among other things,
MPLX’s ability and/or the ability of certain of its subsidiaries to incur debt, create liens on assets and enter
into transactions with affiliates. As of December 31, 2020, MPLX was in compliance with the covenants
contained in the MPLX credit agreement.
140
23. REVENUE
As discussed in Notes 1 and 13, the presentation of Refining & Marketing segment revenues reflects
changes associated with the expected sale of Speedway and our new reportable segments. The following
table presents our revenues disaggregated by segment and product line:
(In millions)
Year Ended December 31, 2020
Refined products
Crude oil
Midstream services and other
Sales and other operating revenues
(In millions)
Year Ended December 31, 2019
Refined products
Crude oil
Midstream services and other
Sales and other operating revenues
(In millions)
Year Ended December 31, 2018
Refined products
Crude oil
Midstream services and other
Sales and other operating revenues
Refining &
Marketing Midstream
Total
$
61,648 $
641 $
62,289
4,023
509
—
2,958
4,023
3,467
$
66,180 $
3,599 $
69,779
Refining &
Marketing Midstream
Total
$ 102,316 $
818 $ 103,134
4,402
587
—
3,025
4,402
3,612
$ 107,305 $
3,843 $ 111,148
Refining &
Marketing Midstream
Total
$
78,952 $
945 $
79,897
3,345
458
—
2,386
3,345
2,844
$
82,755 $
3,331 $
86,086
We do not disclose information on the future performance obligations for any contract with expected
duration of one year or less at inception. As of December 31, 2020, we do not have future performance
obligations that are material to future periods.
Receivables
On the accompanying consolidated balance sheets, receivables, less allowance for doubtful accounts
primarily consists of customer receivables. Significant, non-customer balances included in our receivables
at December 31, 2020 include matching buy/sell receivables of $2.08 billion.
141
24. SUPPLEMENTAL CASH FLOW INFORMATION
(In millions)
2020
2019
2018
Net cash provided by operating activities included:
Interest paid (net of amounts capitalized)
$
1,235 $
1,168 $
Net income taxes paid to (received from) taxing authorities
Cash paid for amounts included in the measurement of
lease liabilities
Payments on operating leases(a)
Interest payments under finance lease obligations(a)
Net cash provided by financing activities included:
Principal payments under finance lease obligations(a)
Non-cash investing and financing activities:
Capital leases
Right of use assets obtained in exchange for new operating
lease obligations(a)
Right of use assets obtained in exchange for new finance
lease obligations(a)
Contribution of assets(b)
Fair value of assets acquired(c)
Acquisition:
Fair value of MPC shares issued
Fair value of converted equity awards
(179)
491
651
25
66
—
343
110
—
—
—
—
642
28
48
—
329
80
266
525
—
—
(a)
(b)
(c)
Disclosure added in 2019 following the adoption of ASC 842.
2019 includes the contribution of net assets to TAMH and Capline LLC. See Note 17.
2019 includes the recognition of TAMH and Capline LLC equity method investments. See Note 17.
887
424
—
—
—
172
—
—
—
—
19,766
203
(In millions)
Cash and cash equivalents(a)
Restricted cash(b)
Cash, cash equivalents and restricted cash
December 31,
2020
December 31,
2019
$
$
415 $
1
416 $
1,393
2
1,395
(a)
(b)
Excludes $140 million and $134 million of cash included in assets held for sale representing Speedway store cash.
The restricted cash balance is included within other current assets on the consolidated balance sheets.
The consolidated statements of cash flows exclude changes to the consolidated balance sheets that did not
affect cash. The following is a reconciliation of additions to property, plant and equipment to total capital
expenditures:
(In millions)
Additions to property, plant and equipment per the
consolidated statements of cash flows
Asset retirement expenditures
Increase (decrease) in capital accruals
Total capital expenditures
2020
2019
2018
$
2,787 $
4,810 $
3,179
—
(518)
1
(303)
8
268
$
2,269 $
4,508 $
3,455
142
25. ACCUMULATED OTHER COMPREHENSIVE LOSS
The following table shows the changes in accumulated other comprehensive loss by component. Amounts
in parentheses indicate debits.
(In millions)
Pension
Benefits
Other
Benefits
Gain on
Cash Flow
Hedge
Workers
Compensation
Total
Balance as of December 31, 2018
$
(132) $
(23) $
2 $
9 $
(144)
Other comprehensive income (loss)
before reclassifications, net of tax of
$(52)
Amounts reclassified from accumulated
other comprehensive loss:
Amortization – prior service credit(a)
– actuarial loss(a)
– settlement loss(a)
Other
Tax effect
Other comprehensive loss
(71)
(92)
—
1
(162)
(45)
22
9
—
5
(80)
—
(1)
—
—
—
(93)
—
—
—
(1)
—
(1)
—
—
—
(4)
1
(2)
(45)
21
9
(5)
6
(176)
(320)
Balance as of December 31, 2019
$
(212) $
(116) $
1 $
7 $
(In millions)
Balance as of December 31, 2019
Other comprehensive income (loss)
before reclassifications, net of tax of
$(65)
Amounts reclassified from accumulated
other comprehensive loss:
Amortization – prior service credit(a)
– actuarial loss(a)
– settlement loss(a)
Other
Tax effect
Pension
Benefits
Other
Benefits
Gain on
Cash Flow
Hedge
Workers
Compensation
Total
$
(212) $
(116) $
1 $
7 $
(320)
(136)
(67)
—
4
(199)
(45)
36
22
—
(3)
—
3
—
—
(1)
—
—
—
—
—
—
—
—
(6)
1
(45)
39
22
(6)
(3)
Other comprehensive loss
Balance as of December 31, 2020
(126)
(338) $
(65)
(181) $
$
—
1 $
(1)
6 $
(192)
(512)
(a)
These accumulated other comprehensive loss components are included in the computation of net periodic benefit cost. See
Note 26.
143
26. PENSION AND OTHER POSTRETIREMENT BENEFITS
We have noncontributory defined benefit pension plans covering substantially all employees. Benefits
under these plans have been based primarily on age, years of service and final average pensionable
earnings. The years of service component of these formulae was frozen as of December 31, 2009. Certain
of the pensionable earnings components were frozen as of December 31, 2012. Benefits for service
beginning January 1, 2010 and beginning on January 1, 2016 are based on a cash balance formula with an
annual percentage of eligible pay credited based upon age and years of service or at a flat rate of eligible
pay, depending on covered employee group. Substantially all of our employees also accrue benefits under a
defined contribution plan.
(In millions)
Cash balance weighted average interest crediting rates
2020
2019
2018
3.00 %
3.18 %
3.00 %
We also have other postretirement benefits covering most employees. Retiree health care benefits are
provided through comprehensive hospital, surgical, major medical benefit, prescription drug and related
health benefit provisions subject to various cost sharing features. Retiree life insurance benefits are
provided to a closed group of retirees. Other postretirement benefits are not funded in advance.
In connection with the Andeavor acquisition, we assumed a number of additional qualified and
nonqualified noncontributory benefit pension plans, covering substantially all former Andeavor
employees. Benefits under these plans are determined based on final average compensation and years of
service through December 31, 2010 and a cash balance formula for service beginning January 1,
2011. These plans were frozen as of December 31, 2018. Further, as of December 31, 2019, the qualified
plans were merged with our existing qualified plans in which the actuarial assumptions were materially the
same between the plans. We also assumed a number of additional postretirement benefits covering eligible
employees. These benefits were merged with our existing benefits beginning January 1, 2019.
Obligations and Funded Status
The accumulated benefit obligation for all defined benefit pension plans was $3,369 million and $3,013
million as of December 31, 2020 and 2019.
The following summarizes our defined benefit pension plans that have accumulated benefit obligations in
excess of plan assets.
(In millions)
Projected benefit obligations
Accumulated benefit obligations
Fair value of plan assets
December 31,
2020
2019
$
3,671 $
3,369
2,621
3,220
3,013
2,531
144
The following summarizes the projected benefit obligations and funded status for our defined benefit
pension and other postretirement plans:
(In millions)
Change in benefit obligations:
Benefit obligations at January 1
Service cost
Interest cost
Actuarial loss(a)
Benefits paid
Plan amendments
Benefit obligations at December 31
Change in plan assets:
Fair value of plan assets at January 1
Actual return on plan assets
Employer contributions
Benefits paid from plan assets
Fair value of plan assets at December 31
Pension Benefits
Other Benefits
2020
2019
2020
2019
$
3,220 $
2,761 $
1,020 $
302
98
373
(322)
—
3,671
2,531
327
85
(322)
2,621
234
107
400
(282)
—
3,220
2,090
435
288
(282)
2,531
35
32
83
(39)
—
874
31
37
123
(43)
(2)
1,131
1,020
—
—
39
(39)
—
—
—
43
(43)
—
Funded status of plans at December 31
$
(1,050) $
(689) $
(1,131) $
(1,020)
Amounts recognized in the consolidated
balance sheets:
Current liabilities
Noncurrent liabilities
Accrued benefit cost
Pretax amounts recognized in
accumulated other comprehensive
loss:(b)
Net actuarial loss
Prior service cost (credit)
$
(9) $
(47) $
(51) $
(1,041)
(642)
(1,080)
(46)
(974)
$
(1,050) $
(689) $
(1,131) $
(1,020)
$
699 $
577 $
219 $
(204)
(250)
32
139
32
(a)
(b)
The primary driver of the actuarial loss for the pension plans in 2020 and 2019 was the decrease in interest rates. The plans also
saw moderate losses related to demographic experience in each year.
Amounts exclude those related to LOOP and Explorer, equity method investees with defined benefit pension and postretirement
plans for which net losses of $16 million and less than $1 million were recorded in accumulated other comprehensive loss in
2020, reflecting our ownership share.
145
Components of Net Periodic Benefit Cost and Other Comprehensive Loss
The following summarizes the net periodic benefit costs and the amounts recognized as other
comprehensive loss for our defined benefit pension and other postretirement plans.
(In millions)
Components of net periodic benefit
cost:
Service cost
Interest cost
Expected return on plan assets
Amortization – prior service credit
– actuarial loss
– settlement loss
Net periodic benefit cost(a)
Other changes in plan assets and
benefit obligations recognized in
other comprehensive loss (pretax):
Actuarial (gain) loss
Prior service cost (credit)
Amortization of actuarial loss
Amortization of prior service credit
Total recognized in other
comprehensive loss
Total recognized in net
periodic benefit cost and
other comprehensive loss
Pension Benefits
Other Benefits
2020
2019
2018
2020
2019
2018
$
283 $
218 $
147 $
35 $
31 $
98
(133)
(45)
36
20
107
(127)
(45)
22
9
83
(109)
(33)
31
53
32
—
—
3
—
37
—
—
—
—
$
259 $
184 $
172 $
70 $
68 $
30
30
—
(3)
1
—
58
$
179 $
92 $
65 $
83 $
123 $
(72)
—
(56)
45
—
(31)
45
(90)
(84)
33
—
(3)
—
(2)
—
—
34
(1)
3
$
168 $
106 $
(76) $
80 $
121 $
(36)
$
427 $
290 $
96 $
150 $
189 $
22
(a)
Net periodic benefit cost reflects a calculated market-related value of plan assets which recognizes changes in fair value over
three years.
For certain of our pension plans, lump sum payments to employees retiring in 2020, 2019 and 2018
exceeded the plan’s total service and interest costs expected for those years. Settlement losses are required
to be recorded when lump sum payments exceed total service and interest costs. As a result, pension
settlement expenses were recorded in 2020, 2019 and 2018.
Plan Assumptions
The following summarizes the assumptions used to determine the benefit obligations at December 31, and
net periodic benefit cost for the defined benefit pension and other postretirement plans for 2020, 2019 and
2018.
Weighted-average assumptions used to determine
benefit obligation:
Discount rate
Rate of compensation increase
Weighted-average assumptions used to determine
net periodic benefit cost:
Pension Benefits
Other Benefits
2020
2019
2018
2020
2019
2018
2.44 % 3.08 % 4.21 % 2.55 % 3.00 % 4.26 %
5.70 % 4.90 % 5.00 % 5.70 % 4.90 % 5.00 %
Discount rate
Expected long-term return on plan assets
Rate of compensation increase
3.00 % 4.07 % 3.89 % 3.23 % 4.30 % 3.72 %
5.75 % 6.00 % 6.15 % — % — % — %
5.70 % 4.90 % 4.80 % 5.70 % 4.90 % 5.00 %
146
Expected Long-term Return on Plan Assets
The overall expected long-term return on plan assets assumption is determined based on an asset rate-of-
return modeling tool developed by a third-party investment group. The tool utilizes underlying assumptions
based on actual returns by asset category and inflation and takes into account our asset allocation to derive
an expected long-term rate of return on those assets. Capital market assumptions reflect the long-term
capital market outlook. The assumptions for equity and fixed income investments are developed using a
building-block approach, reflecting observable inflation information and interest rate information available
in the fixed income markets. Long-term assumptions for other asset categories are based on historical
results, current market characteristics and the professional judgment of our internal and external investment
teams.
Assumed Health Care Cost Trend
The following summarizes the assumed health care cost trend rates.
Health care cost trend rate assumed for the following year:
Medical: Pre-65
Prescription drugs
Rate to which the cost trend rate is assumed to decline (the ultimate
trend rate):
Medical: Pre-65
Prescription drugs
Year that the rate reaches the ultimate trend rate:
Medical: Pre-65
Prescription drugs
December 31,
2020
2019
2018
6.00 %
7.00 %
6.20 %
8.10 %
6.80 %
9.50 %
4.50 %
4.50 %
4.50 %
4.50 %
4.50 %
4.50 %
2028
2028
2027
2027
2027
2027
Increases in the post-65 medical plan premium for the Marathon Petroleum Health Plan and the Marathon
Petroleum Retiree Health Plan are the lower of the trend rate or four percent.
Plan Investment Policies and Strategies
The investment policies for our pension plan assets reflect the funded status of the plans and expectations
regarding our future ability to make further contributions. Long-term investment goals are to: (1) manage
the assets in accordance with the legal requirements of all applicable laws; (2) diversify plan investments
across asset classes to achieve an optimal balance between risk and return and between income and growth
of assets through capital appreciation; and (3) source benefit payments primarily through existing plan
assets and anticipated future returns.
The investment goals are implemented to manage the plans’ funded status volatility and minimize future
cash contributions. The asset allocation strategy will change over time in response to changes primarily in
funded status, which is dictated by current and anticipated market conditions, the independent actions of
our investment committee, required cash flows to and from the plans and other factors deemed appropriate.
Such changes in asset allocation are intended to allocate additional assets to the fixed income asset class
should the funded status improve. The fixed income asset class shall be invested in such a manner that its
interest rate sensitivity correlates highly with that of the plans’ liabilities. Other asset classes are intended to
provide additional return with associated higher levels of risk. Investment performance and risk is
measured and monitored on an ongoing basis through quarterly investment meetings and periodic asset and
liability studies. At December 31, 2020, the primary plan’s targeted asset allocation was 50 percent equity,
private equity, real estate, and timber securities and 50 percent fixed income securities.
Fair Value Measurements
Plan assets are measured at fair value. The following provides a description of the valuation techniques
employed for each major plan asset category at December 31, 2020 and 2019.
Cash and cash equivalents
Cash and cash equivalents include a collective fund serving as the investment vehicle for the cash reserves
and cash held by third-party investment managers. The collective fund is valued at net asset value (“NAV”)
147
on a scheduled basis using a cost approach, and is considered a Level 2 asset. Cash and cash equivalents
held by third-party investment managers are valued using a cost approach and are considered Level 2.
Equity
Equity investments includes common stock, mutual and pooled funds. Common stock investments are
valued using a market approach, which are priced daily in active markets and are considered Level 1.
Mutual and pooled equity funds are well diversified portfolios, representing a mix of strategies in domestic,
international and emerging market strategies. Mutual funds are publicly registered, valued at NAV on a
daily basis using a market approach and are considered Level 1 assets. Pooled funds are valued at NAV
using a market approach and are considered Level 2.
Fixed Income
Fixed income investments include corporate bonds, U.S. dollar treasury bonds and municipal bonds. These
securities are priced on observable inputs using a combination of market, income and cost approaches.
These securities are considered Level 2 assets. Fixed income also includes a well diversified bond portfolio
structured as a pooled fund. This fund is valued at NAV on a daily basis using a market approach and is
considered Level 2. Other investments classified as Level 1 include mutual funds that are publicly
registered, valued at NAV on a daily basis using a market approach.
Private Equity
Private equity investments include interests in limited partnerships which are valued using information
provided by external managers for each individual investment held in the fund. These holdings are
considered Level 3.
Real Estate
Real estate investments consist of interests in limited partnerships. These holdings are either appraised or
valued using the investment manager’s assessment of assets held. These holdings are considered Level 3.
Other
Other investments include two limited liability companies (“LLCs”) with no public market. The LLCs were
formed to acquire timberland in the northwest U.S. These holdings are either appraised or valued using the
investment manager’s assessment of assets held. These holdings are considered Level 3. Other investments
classified as Level 1 include publicly traded depository receipts.
The following tables present the fair values of our defined benefit pension plans’ assets, by level within the
fair value hierarchy, as of December 31, 2020 and 2019.
(In millions)
Cash and cash equivalents
Equity:
Common stocks
Mutual funds
Pooled funds
Fixed income:
Corporate
Government
Pooled funds
Private equity
Real estate
Other
December 31, 2020
Level 1
Level 2
Level 3
Total
$
— $
23 $
— $
23
51
353
—
—
327
—
—
—
—
3
—
794
746
128
131
—
—
3
—
—
—
—
—
—
23
20
19
54
353
794
746
455
131
23
20
22
Total investments, at fair value
$
731 $
1,828 $
62 $
2,621
148
(In millions)
Cash and cash equivalents
Equity:
Common stocks
Mutual funds
Pooled funds
Fixed income:
Corporate
Government
Pooled funds
Private equity
Real estate
Other
December 31, 2019
Level 1
Level 2
Level 3
Total
$
— $
22 $
— $
22
125
188
—
160
113
—
—
—
58
135
—
442
815
217
229
—
—
(46)
—
—
—
—
—
—
30
24
19
260
188
442
975
330
229
30
24
31
Total investments, at fair value
$
644 $
1,814 $
73 $
2,531
The following is a reconciliation of the beginning and ending balances recorded for plan assets classified as
Level 3 in the fair value hierarchy:
(In millions)
Beginning balance
Actual return on plan assets:
Realized
Unrealized
Purchases
Sales
Ending balance
(In millions)
Beginning balance
Actual return on plan assets:
Realized
Unrealized
Purchases
Sales
Ending balance
Cash Flows
2020
Private
Equity
Real Estate
Other
$
30 $
24 $
6
(4)
—
(9)
1
(3)
1
(3)
$
23 $
20 $
2019
Private
Equity
Real Estate
Other
$
41 $
29 $
5
(3)
1
(14)
2
(2)
1
(6)
$
30 $
24 $
19
—
—
—
—
19
18
—
1
—
—
19
Contributions to defined benefit plans
Our funding policy with respect to the funded pension plans is to contribute amounts necessary to satisfy
minimum pension funding requirements, including requirements of the Pension Protection Act of 2006,
plus such additional, discretionary, amounts from time to time as determined appropriate by management.
In 2020, we made contributions totaling $3 million to our funded pension plans. For 2021, we have
$65 million of required funding, but we may also make voluntary contributions to our funded pension plans
149
at our discretion. Cash contributions to be paid from our general assets for the unfunded pension and
postretirement plans are estimated to be approximately $82 million and $52 million, respectively, in 2021.
Estimated future benefit payments
The following gross benefit payments, which reflect expected future service, as appropriate, are expected to
be paid in the years indicated.
(In millions)
2021
2022
2023
2024
2025
2026 through 2030
Pension Benefits
Other Benefits
$
185 $
189
194
206
212
1,172
52
52
52
52
53
280
Contributions to defined contribution plan
We also contribute to a defined contribution plan for eligible employees. Contributions to this plan totaled
$180 million, $181 million and $118 million in 2020, 2019 and 2018, respectively.
Multiemployer Pension Plan
We contribute to one multiemployer defined benefit pension plan under the terms of a collective-bargaining
agreement that covers some of our union-represented employees. The risks of participating in this
multiemployer plan are different from single-employer plans in the following aspects:
•
•
•
Assets contributed to the multiemployer plan by one employer may be used to provide benefits
to employees of other participating employers.
If a participating employer stops contributing to the plan, the unfunded obligations of the plan
may be borne by the remaining participating employers.
If we choose to stop participating in the multiemployer plan, we may be required to pay that
plan an amount based on the underfunded status of the plan, referred to as a withdrawal liability.
Our participation in this plan for 2020, 2019 and 2018 is outlined in the table below. The “EIN” column
provides the Employee Identification Number for the plan. The most recent Pension Protection Act zone
status available in 2020 and 2019 is for the plan’s year ended December 31, 2019 and December 31, 2018,
respectively. The zone status is based on information that we received from the plan and is certified by the
plan’s actuary. Among other factors, plans in the red zone are generally less than 65 percent funded. The
“FIP/RP Status Pending/Implemented” column indicates a financial improvement plan or a rehabilitation
plan has been implemented. The last column lists the expiration date of the collective-bargaining agreement
to which the plan is subject. There have been no significant changes that affect the comparability of 2020,
2019 and 2018 contributions. Our portion of the contributions does not make up more than five percent of
total contributions to the plan.
Pension
Protection
Act Zone
Status
EIN
2020
2019
FIP/
RP Status
Pending/
Implemented
MPC Contributions
(In millions)
2020
2019
2018
Expiration Date of
Collective –
Bargaining
Agreement
Surcharge
Imposed
366044243
Red
Red
Implemented
$
5 $
4 $
4
No
January 31, 2024
Pension Fund
Central States,
Southeast and
Southwest Areas
Pension Plan
(a)
(a)
This agreement has a minimum contribution requirement of $338 per week per employee for 2021. A total of 275 employees
participated in the plan as of December 31, 2020.
Multiemployer Health and Welfare Plan
We contribute to one multiemployer health and welfare plan that covers both active employees and retirees.
Through the health and welfare plan employees receive medical, dental, vision, prescription and disability
coverage. Our contributions to this plan totaled $7 million, $6 million and $6 million for 2020, 2019 and
2018, respectively.
150
27. STOCK-BASED COMPENSATION
Description of the Plans
Effective April 26, 2012, our employees and non-employee directors became eligible to receive equity
awards under the Amended and Restated Marathon Petroleum Corporation 2012 Incentive Compensation
Plan (“MPC 2012 Plan”). The MPC 2012 Plan authorizes the Compensation and Organization
Development Committee of our board of directors (“Committee”) to grant non-qualified or incentive stock
options, stock appreciation rights, stock awards (including restricted stock and restricted stock unit awards),
cash awards and performance awards to our employees and non-employee directors. Under the MPC 2012
Plan, no more than 50 million shares of our common stock may be delivered and no more than 20 million
shares of our common stock may be the subject of awards that are not stock options or stock appreciation
rights. In the sole discretion of the Committee, 20 million shares of our common stock may be granted as
incentive stock options. Shares issued as a result of awards granted under these plans are funded through
the issuance of new MPC common shares.
Prior to April 26, 2012, our employees and non-employee directors were eligible to receive equity awards
under the Marathon Petroleum Corporation 2011 Second Amended and Restated Incentive Compensation
Plan (“MPC 2011 Plan”).
In connection with the Andeavor acquisition in October of 2018, we converted the outstanding option and
equity incentive awards (other than awards held by non-employee directors of Andeavor, which awards
were paid out in connection with the acquisition) under the Andeavor plans to awards that provide for
rights to acquire (in the case of options) or be settled in or otherwise determined in reference to shares of
MPC common stock in place of shares of Andeavor common stock (in the case of equity incentive
awards). As part of that conversion, we used an exchange ratio for the respective share prices of Andeavor
common stock and MPC common stock to ensure that the award holders’ economic opportunity remained
constant, and for converted awards, which included a performance component, performance was
determined at the time of the conversion and the awards became subject to a time-based vesting only
design. The converted awards otherwise continue to be subject to the terms and conditions of their award
agreements and the applicable Andeavor plan under which such awards were granted.
Stock-Based Awards under the Plans
We expense all share-based payments to employees and non-employee directors based on the grant date fair
value of the awards over the requisite service period, adjusted for estimated forfeitures.
Stock Options
We grant stock options to certain officer and non-officer employees. All of the stock options granted in
2020 were granted under the MPC 2012 Plan. Stock options awarded under the MPC 2011 Plan and the
MPC 2012 Plan represent the right to purchase shares of our common stock at its fair market value, which
is the closing price of MPC’s common stock on the date of grant. Stock options have a maximum term of
ten years from the date they are granted, and vest over a requisite service period of three years. We use the
Black Scholes option-pricing model to estimate the fair value of stock options granted, which requires the
input of subjective assumptions.
Restricted Stock and Restricted Stock Units
We grant restricted stock and restricted stock units to employees and non-employee directors. In general,
restricted stock and restricted stock units granted to employees vest over a requisite service period of three
years. Restricted stock and restricted stock unit awards granted to officers are subject to an additional one
year holding period after the three-year vesting period. Restricted stock recipients have the right to vote
such stock; however, dividends are accrued and when vested are payable at the dates specified in the
awards. The non-vested shares are not transferable and are held by our transfer agent. The fair values of
restricted stock are equal to the market price of our common stock on the grant date. Restricted stock units
granted to non-employee directors are considered to vest immediately at the time of the grant for
accounting purposes, as they are non-forfeitable, but are not issued until the director’s departure from the
board of directors. Restricted stock unit recipients do not have the right to vote any shares of stock and
accrue dividend equivalents which when vested are payable at the dates specified in the awards.
151
Performance Units
We grant performance unit awards to certain officer employees. Performance units are dollar denominated.
The target value of all performance units is $1.00, with actual payout up to $2.00 per unit (up to 200
percent of target). Performance units issued under the MPC 2012 Plan have a 36-month requisite service
period. The payout value of these awards will be determined by the relative ranking of the total shareholder
return (“TSR”) of MPC common stock compared to the TSR of a select group of peer companies, as well as
the Standard & Poor’s 500 Energy Index fund over an average of four measurement periods. These awards
will be settled 25 percent in MPC common stock and 75 percent in cash. The number of shares actually
distributed will be determined by dividing 25 percent of the final payout by the closing price of MPC
common stock on the day the Committee certifies the final TSR rankings, or the next trading day if the
certification is made outside of normal trading hours. The performance units paying out in cash are
accounted for as liability awards and recorded at fair value with a mark-to-market adjustment made each
quarter. The performance units that settle in shares are accounted for as equity awards and do not receive
dividend equivalents.
Total Stock-Based Compensation Expense
The following table reflects activity related to our stock-based compensation arrangements, including the
converted awards related to the acquisition of Andeavor:
(In millions)
2020
2019
2018
Stock-based compensation expense
$
100 $
153 $
127
Tax benefit recognized on stock-based compensation expense
Cash received by MPC upon exercise of stock option awards
Tax (expense)/benefit received for tax deductions for stock
awards exercised
25
11
16
35
10
(3)
31
24
14
Stock Option Awards
The Black Scholes option-pricing model values used to value stock option awards granted were determined
based on the following weighted average assumptions:
Weighted average exercise price per share
Expected life in years
Expected volatility
Expected dividend yield
Risk-free interest rate
2020
2019
2018
$ 28.78
$ 61.92
$ 67.71
5.9
39 %
4.7 %
0.6 %
6.0
32 %
3.4 %
2.4 %
6.2
34 %
3.0 %
2.7 %
Weighted average grant date fair value of stock option awards
granted
$
7.40
$ 13.65
$ 17.21
The expected life of stock options granted is based on historical data and represents the period of time that
options granted are expected to be held prior to exercise. The 2020 assumption for expected volatility of
our stock price reflects a weighting of 50 percent of our common stock implied volatility and 50 percent of
our common stock historical volatility. The risk-free interest rate for periods within the expected life of the
option is based on the U.S. Treasury yield curve in effect at the time of the grant.
152
The following is a summary of our common stock option activity in 2020:
Weighted
Average
Exercise
Price
Number of
Shares
Weighted
Average
Remaining
Contractual
Terms
(in years)
Aggregate
Intrinsic
Value
(in millions)
Outstanding at December 31, 2019
10,018,367 $
42.55
Granted
Exercised
Forfeited or expired
Outstanding at December 31, 2020
Vested and expected to vest at December 31,
2020
Exercisable at December 31, 2020
2,770,139
(1,016,593)
(472,132)
11,299,781
11,243,905
7,641,774
28.78
14.15
37.77
41.95
29.28
42.61
$
5.2
3.6
76
42
The intrinsic value of options exercised by MPC employees during 2020, 2019 and 2018 was $25 million,
$23 million and $44 million, respectively.
As of December 31, 2020, unrecognized compensation cost related to stock option awards was $15 million,
which is expected to be recognized over a weighted average period of 1.8 years.
Restricted Stock and Restricted Stock Unit Awards
The following is a summary of restricted stock award activity of our common stock in 2020:
Restricted Stock
Restricted Stock Units
Number of
Shares
Weighted
Average
Grant Date
Fair Value
Number of
Units
Weighted
Average
Grant Date
Fair Value
Unvested at December 31, 2019
1,349,798 $
62.20
1,481,746 $
Granted
Vested
Forfeited
Unvested at December 31, 2020
2,463
(646,358)
(125,924)
579,979
56.49
3,076,347
61.58
62.11
(823,111)
(410,658)
62.89
3,324,324
82.39
22.82
77.01
27.76
35.34
The following is a summary of the values related to restricted stock and restricted stock unit awards held by
MPC employees and non-employee directors:
Restricted Stock
Restricted Stock Units
Intrinsic Value of
Awards Vested
During the Period
(in millions)
Weighted
Average Grant
Date Fair Value of
Awards Granted
During the Period
Intrinsic Value of
Awards Vested
During the Period
(in millions)
Weighted
Average Grant
Date Fair Value of
Awards Granted
During the Period
$
18 $
56.49 $
59 $
32
49
61.14
71.19
120
39
22.82
58.30
72.43
2020
2019
2018
As of December 31, 2020, unrecognized compensation cost related to restricted stock awards was $19
million, which is expected to be recognized over a weighted average period of 1.0 year. Unrecognized
compensation cost related to restricted stock unit awards was $43 million, which is expected to be
recognized over a weighted average period of 1.76 years.
153
Performance Unit Awards
The following table presents a summary of the 2020 activity for performance unit awards to be settled in
shares:
Unvested at December 31, 2019
Granted
Vested
Forfeited
Unvested at December 31, 2020
Number of
Units
Weighted
Average Grant
Date Fair Value
11,199,500 $
3,360,000
(3,490,750)
(58,713)
11,010,037
0.80
0.89
0.89
0.75
0.80
The number of shares that would be issued upon target vesting, using the closing price of our common
stock on December 31, 2020 would be 320,661 shares.
As of December 31, 2020, unrecognized compensation cost related to equity-classified performance unit
awards was $2 million, which is expected to be recognized over a weighted average period of 1.94 years.
Performance units to be settled in MPC shares have a grant date fair value calculated using a Monte Carlo
valuation model, which requires the input of subjective assumptions. The following table provides a
summary of these assumptions:
Risk-free interest rate
Look-back period (in years)
Expected volatility
0.9 %
2.8
30.4 %
2.5 %
2.8
29.7 %
Grant date fair value of performance units granted
$
0.89
$
0.72
$
2.3 %
2.8
34.0 %
0.83
2020
2019
2018
The risk-free interest rate for the remaining performance period as of the grant date is based on the U.S.
Treasury yield curve in effect at the time of the grant. The look-back period reflects the remaining
performance period at the grant date. The assumption for the expected volatility of our stock price reflects
the average MPC common stock historical volatility.
MPLX Awards
Compensation expense for awards of MPLX units are not material to our consolidated financial statements
for 2020.
28. LEASES
Lessee
We lease a wide variety of facilities and equipment including land and building space, office and field
equipment, storage facilities and transportation equipment. Our remaining lease terms range from less than
one year to 58 years. Most long-term leases include renewal options ranging from less than one year to 49
years and, in certain leases, also include purchase options. The lease term included in the measurement of
right of use assets and lease liabilities includes options to extend or terminate our leases that we are
reasonably certain to exercise.
154
Under ASC 842, the components of lease cost are shown below. Lease costs for operating leases are
recognized on a straight line basis and are reflected in the income statement based on the leased asset’s use.
Lease costs for finance leases are reflected in depreciation and amortization and in net interest and other
financial costs.
(In millions)
Finance lease cost:
Amortization of right of use assets
Interest on lease liabilities
Operating lease cost
Variable lease cost
Short-term lease cost
Total lease cost
Supplemental balance sheet data related to leases were as follows:
(In millions)
Operating leases
Assets
Right of use assets
Liabilities
Operating lease liabilities
Long-term operating lease liabilities
Total operating lease liabilities
Weighted average remaining lease term (in years)
Weighted average discount rate
Finance leases
Assets
Property, plant and equipment, gross
Less accumulated depreciation
Property, plant and equipment, net
Liabilities
Debt due within one year
Long-term debt
Total finance lease liabilities
2020
2019
$
72 $
35
658
60
631
59
37
660
68
735
$
1,456 $
1,559
December 31,
2020
2019
$
$
$
$
$
$
$
1,521
497
1,014
1,511
4.8
3.68 %
819
272
547
69
576
645
$
$
$
$
$
$
$
1,806
514
1,300
1,814
5.1
3.91 %
740
215
525
56
537
593
Weighted average remaining lease term (in years)
Weighted average discount rate
10.7
5.33 %
11.6
6.63 %
155
As of December 31, 2020, maturities of lease liabilities for operating lease obligations and finance lease
obligations having initial or remaining non-cancellable lease terms in excess of one year are as follows:
(In millions)
2021
2022
2023
2024
2025
2026 and thereafter
Gross lease payments
Less: imputed interest
Total lease liabilities
Lessor
Operating
Finance
$
544 $
373
243
170
111
224
1,665
154
$
1,511 $
91
99
101
84
76
402
853
208
645
MPLX has certain natural gas gathering, transportation and processing agreements in which it is considered
to be the lessor under several operating lease arrangements in accordance with GAAP. MPLX’s primary
natural gas lease operations relate to a natural gas gathering agreement in the Marcellus Shale for which it
earns a fixed-fee for providing gathering services to a single producer using a dedicated gathering system.
As the gathering system is expanded, the fixed-fee charged to the producer is adjusted to include the
additional gathering assets in the lease. The primary term of the natural gas gathering arrangement expires
in 2038 and will continue thereafter on a year-to-year basis until terminated by either party. Other
significant natural gas implicit leases relate to a natural gas processing agreement in the Marcellus Shale
and a natural gas processing agreement in the Southern Appalachia region for which MPLX earns
minimum monthly fees for providing processing services to a single producer using a dedicated processing
plant. The primary term of these natural gas processing agreements expires during 2027 and 2023,
respectively, and will continue thereafter on a year-to-year basis until terminated by either party.
MPLX did not elect to use the practical expedient to combine lease and non-lease components for lessor
arrangements. The tables below represent the portion of the contract allocated to the lease component based
on relative standalone selling price. Lessor agreements are currently deemed operating, as MPLX elected
the practical expedient to carry forward historical classification conclusions. If and when a modification of
an existing agreement occurs and the agreement is required to assessed under ASC 842, MPLX assesses the
amended agreement and makes a determination as to whether a reclassification of the lease is required.
Our revenue from implicit lease arrangements, excluding executory costs, totaled approximately $273
million and $254 million in 2020 and 2019, respectively. Under ASC 840, our revenue from implicit lease
arrangements, excluding executory costs, totaled approximately $221 million in 2018. The following is a
schedule of minimum future rentals on the non‑cancellable operating leases as of December 31, 2020:
(In millions)
2021
2022
2023
2024
2025
2026 and thereafter
Total minimum future rentals
$
186
181
178
174
142
999
$
1,860
156
The following schedule summarizes our investment in assets held for operating lease by major classes as of
December 31, 2020 and 2019:
(In millions)
Gathering and transportation
Processing and fractionation
Terminals
Land, building and other
Property, plant and equipment
Less accumulated depreciation
December 31,
2020
2019
$
990 $
867
128
15
2,000
430
980
855
83
17
1,935
327
1,608
Total property, plant and equipment, net
$
1,570 $
29. COMMITMENTS AND CONTINGENCIES
We are the subject of, or a party to, a number of pending or threatened legal actions, contingencies and
commitments involving a variety of matters, including laws and regulations relating to the environment.
Some of these matters are discussed below. For matters for which we have not recorded a liability, we are
unable to estimate a range of possible loss because the issues involved have not been fully developed
through pleadings, discovery or court proceedings. However, the ultimate resolution of some of these
contingencies could, individually or in the aggregate, be material.
Environmental Matters
We are subject to federal, state, local and foreign laws and regulations relating to the environment. These
laws generally provide for control of pollutants released into the environment and require responsible
parties to undertake remediation of hazardous waste disposal sites and certain other locations including
presently or formerly owned or operated retail marketing sites. Penalties may be imposed for
noncompliance.
At December 31, 2020 and 2019, accrued liabilities for remediation totaled $397 million and $396 million,
respectively. It is not presently possible to estimate the ultimate amount of all remediation costs that might
be incurred or the penalties, if any, that may be imposed. Receivables for recoverable costs from certain
states, under programs to assist companies in clean-up efforts related to underground storage tanks at
presently or formerly owned or operated retail marketing sites, were $7 million and $9 million at
December 31, 2020 and 2019, respectively.
Governmental and other entities in various states have filed lawsuits against energy companies, including
MPC. The lawsuits allege damages as a result of climate change and the plaintiffs are seeking unspecified
damages and abatement under various tort theories. We are currently subject to such proceedings in federal
or state courts in California, Delaware, Maryland, Hawaii, Rhode Island and South Carolina. Similar
lawsuits may be filed in other jurisdictions. At this early stage, the ultimate outcome of these matters
remain uncertain, and neither the likelihood of an unfavorable outcome nor the ultimate liability, if any, can
be determined.
We are involved in a number of environmental enforcement matters arising in the ordinary course of
business. While the outcome and impact on us cannot be predicted with certainty, management believes the
resolution of these environmental matters will not, individually or collectively, have a material adverse
effect on our consolidated results of operations, financial position or cash flows.
Asset Retirement Obligations
Our short-term asset retirement obligations were $14 million and $20 million at December 31, 2020 and
2019, respectively, which are included in other current liabilities in our consolidated balance sheets. Our
long-term asset retirement obligations were $183 million and $184 million at December 31, 2020 and 2019,
respectively, which are included in deferred credits and other liabilities in our consolidated balance sheets.
157
Other Legal Proceedings
In early July 2020, MPLX received a Notification of Trespass Determination from the Bureau of Indian
Affairs (“BIA”) relating to a portion of the Tesoro High Plains Pipeline (“THPP”), which crosses the Fort
Berthold Reservation in North Dakota. The notification covered the rights of way for 23 tracts of land and
demanded the immediate cessation of pipeline operations. The notification also assessed trespass damages
of approximately $187 million. MPLX appealed this determination, which triggered an automatic stay of
the requested pipeline shutdown and payment. On October 29, the Assistant Secretary - Indian Affairs
issued an order vacating the BIA’s trespass order and requiring the Regional Director for the BIA Great
Plains Region to issue a new decision on or before December 15 covering all 34 tracts at issue. On
December 15, the Regional Director of the BIA issued a new trespass notice to THPP consistent with the
Assistant Secretary of Indian Affairs order vacating the prior trespass order. The new order found that
THPP was in trespass and assessed trespass damages of approximately $4 million (including interest),
which has been paid. The order also required THPP to immediately cease and desist use of the portion of
the pipeline that crosses the property at issue. THPP has complied with the Regional Director’s December
15, 2020 notice. On February 12, 2021, landowners filed suit in the U.S. District Court for the District of
North Dakota, requesting, among other things, that decisions by the Assistant Secretary - Indian Affairs and
the Interior Board of Indian Appeals be vacated as to the award of damages to plaintiffs.
MPLX continues to work towards a settlement of this matter with holders of the property rights at issue.
Management does not believe the ultimate resolution of this matter will have a material adverse effect on
our consolidated financial position, results of operations, or cash flows.
We are also a party to a number of other lawsuits and other proceedings arising in the ordinary course of
business. While the ultimate outcome and impact to us cannot be predicted with certainty, we believe that
the resolution of these other lawsuits and proceedings will not have a material adverse effect on our
consolidated financial position, results of operations or cash flows.
Guarantees
We have provided certain guarantees, direct and indirect, of the indebtedness of other companies. Under the
terms of most of these guarantee arrangements, we would be required to perform should the guaranteed
party fail to fulfill its obligations under the specified arrangements. In addition to these financial
guarantees, we also have various performance guarantees related to specific agreements.
Guarantees related to indebtedness of equity method investees
LOOP and LOCAP
MPC and MPLX hold interests in an offshore oil port, LOOP, and MPLX holds an interest in a crude oil
pipeline system, LOCAP. Both LOOP and LOCAP have secured various project financings with
throughput and deficiency agreements. Under the agreements, MPC, as a shipper, is required to advance
funds if the investees are unable to service their debt. Any such advances are considered prepayments of
future transportation charges. The duration of the agreements varies but tend to follow the terms of the
underlying debt, which extend through 2037. Our maximum potential undiscounted payments under these
agreements for the debt principal totaled $171 million as of December 31, 2020.
Dakota Access Pipeline
In connection with MPLX’s approximate 9.19 percent indirect interest in a joint venture (“Dakota Access”)
that owns and operates the Dakota Access Pipeline and Energy Transfer Crude Oil Pipeline projects,
collectively referred to as the Bakken Pipeline system or DAPL, MPLX entered into a Contingent Equity
Contribution Agreement. MPLX, along with the other joint venture owners in the Bakken Pipeline system,
has agreed to make equity contributions to the joint venture upon certain events occurring to allow the
entities that own and operate the Bakken Pipeline system to satisfy their senior note payment obligations.
The senior notes were issued to repay amounts owed by the pipeline companies to fund the cost of
construction of the Bakken Pipeline system.
In March 2020, the U.S. District Court for the District of Columbia (the “D.D.C.”) ordered the U.S. Army
Corps of Engineers (“Army Corps”), which granted permits and an easement for the Bakken Pipeline
system, to conduct a full environmental impact statement (“EIS”), and further requested briefing on
whether an easement necessary for the operation of the Bakken Pipeline system should be vacated while the
EIS is being prepared.
158
On July 6, 2020, the D.D.C. ordered vacatur of the easement to cross Lake Oahe during the pendency of an
EIS and further ordered a shut down of the pipeline by August 5, 2020. The D.D.C. denied a motion to stay
that order. Dakota Access and the Army Corps appealed the D.D.C.’s orders to the U.S. Court of Appeals
for the District of Columbia Circuit (the “Court of Appeals”). On July 14, 2020, the Court of Appeals
issued an administrative stay while the court considered Dakota Access and the Army Corps’ emergency
motion for stay pending appeal. On August 5, 2020, the Court of Appeals stayed the D.D.C.’s injunction
that required the pipeline be shutdown and emptied of oil by August 5, 2020. The Court of Appeals denied
a stay of the D.D.C.’s March order, which required the EIS, and further denied a stay of the D.D.C.’s July
order, which vacated the easement. On January 26, 2021, the Court of Appeals upheld the D.D.C.’s order
vacating the easement while the Army Corps prepares the EIS. The Court of Appeals reversed the D.D.C.’s
order to the extent it directed that the pipeline be shutdown and emptied of oil. In the D.D.C., briefing has
been completed for a renewed request for an injunction. The pipeline remains operational.
If the pipeline is temporarily shut down pending completion of the EIS, MPLX would have to contribute its
9.19 percent pro rata share of funds required to pay interest accruing on the notes and any portion of the
principal that matures while the pipeline is shutdown. It is expected that MPLX would contribute its 9.19
percent pro rata share of any costs to remediate any deficiencies to reinstate the permit and/or return the
pipeline into operation. If the vacatur of the easement permit results in a permanent shutdown of the
pipeline, MPLX would have to contribute its 9.19 percent pro rata share of the cost to redeem the bonds
(including the one percent redemption premium required pursuant to the indenture governing the notes) and
any accrued and unpaid interest. As of December 31, 2020, our maximum potential undiscounted payments
under the Contingent Equity Contribution Agreement were approximately $230 million.
Crowley Ocean Partners and Crowley Blue Water Partners
In connection with our 50 percent ownership in Crowley Ocean Partners, we have agreed to conditionally
guarantee our portion of the obligations of the joint venture and its subsidiaries under a senior secured term
loan agreement. The term loan agreement provides for loans of up to $325 million to finance the acquisition
of four product tankers. MPC’s liability under the guarantee for each vessel is conditioned upon the
occurrence of certain events, including if we cease to maintain an investment grade credit rating or the
charter for the relevant product tanker ceases to be in effect and is not replaced by a charter with an
investment grade company on certain defined commercial terms. As of December 31, 2020, our maximum
potential undiscounted payments under this agreement for debt principal totaled $119 million.
In connection with our 50 percent indirect interest in Crowley Blue Water Partners, we have agreed to
provide a conditional guarantee of up to 50 percent of its outstanding debt balance in the event there is no
charter agreement in place with an investment grade customer for the entity’s three vessels as well as other
financial support in certain circumstances. As of December 31, 2020, our maximum potential undiscounted
payments under this arrangement was $115 million.
Marathon Oil indemnifications
The separation and distribution agreement and other agreements with Marathon Oil to effect our spinoff
provide for cross-indemnities between Marathon Oil and us. In general, Marathon Oil is required to
indemnify us for any liabilities relating to Marathon Oil’s historical oil and gas exploration and production
operations, oil sands mining operations and integrated gas operations, and we are required to indemnify
Marathon Oil for any liabilities relating to Marathon Oil’s historical refining, marketing and transportation
operations. The terms of these indemnifications are indefinite and the amounts are not capped.
Other guarantees
We have entered into other guarantees with maximum potential undiscounted payments totaling $99
million as of December 31, 2020, which primarily consist of a commitment to contribute cash to an equity
method investee for certain catastrophic events, in lieu of procuring insurance coverage, a commitment to
fund a share of the bonds issued by a government entity for construction of public utilities in the event that
other industrial users of the facility default on their utility payments and leases of assets containing general
lease indemnities and guaranteed residual values.
General guarantees associated with dispositions
Over the years, we have sold various assets in the normal course of our business. Certain of the related
agreements contain performance and general guarantees, including guarantees regarding inaccuracies in
representations, warranties, covenants and agreements, and environmental and general indemnifications
that require us to perform upon the occurrence of a triggering event or condition. These guarantees and
159
indemnifications are part of the normal course of selling assets. We are typically not able to calculate the
maximum potential amount of future payments that could be made under such contractual provisions
because of the variability inherent in the guarantees and indemnities. Most often, the nature of the
guarantees and indemnities is such that there is no appropriate method for quantifying the exposure because
the underlying triggering event has little or no past experience upon which a reasonable prediction of the
outcome can be based.
Contractual Commitments and Contingencies
At December 31, 2020 and 2019, our contractual commitments to acquire property, plant and equipment
and advance funds to equity method investees totaled $1.7 billion and $1.6 billion, respectively.
Certain natural gas processing and gathering arrangements require us to construct natural gas processing
plants, natural gas gathering pipelines and NGL pipelines and contain certain fees and charges if specified
construction milestones are not achieved for reasons other than force majeure. In certain cases, certain
producer customers may have the right to cancel the processing arrangements if there are significant delays
that are not due to force majeure.
160
SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED)
As a result of the agreement to sell Speedway, Speedway’s results are reported separately as discontinued
operations in our consolidated statements of income for all periods presented.
Prior to presentation of Speedway as discontinued operations, Speedway and our retained direct dealer
business were the two reporting units within our Retail segment. Beginning with the third quarter of 2020,
the direct dealer business is managed as part of the Refining & Marketing segment. The results of the
Refining & Marketing segment have been retrospectively adjusted to include the results of the direct dealer
business in all periods presented.
In accordance with ASC 205, Discontinued Operations, intersegment sales from our Refining & Marketing
segment to Speedway are no longer eliminated as intercompany transactions and are now presented within
sales and other operating revenue, since we will continue to supply fuel to Speedway subsequent to the sale
to 7-Eleven. All periods presented have been retrospectively adjusted to reflect this change.
(In millions, except per share data)
Sales and other operating revenues
Income (loss) from continuing operations
Income (loss) from continuing operations, net of
tax
Net income (loss)
Net income (loss) attributable to MPC
Income (loss) from continuing operations per
share(a):
Basic
Diluted
(In millions, except per share data)
Sales and other operating revenues
Income from continuing operations
Income from continuing operations, net of tax
Net income
Net income (loss) attributable to MPC
Income (loss) from continuing operations per
share(a):
Basic
Diluted
2020
Quarter Ended
March 31
June 30
September
30
December
31
$
22,204 $
12,195 $
17,408 $
17,972
(12,155)
(10,536)
(10,218)
(9,234)
575
84
276
9
(1,057)
(980)
(609)
(886)
390
250
574
285
$
(14.74) $
(0.28) $
(1.93) $
(14.74)
(0.28)
(1.93)
(0.06)
(0.06)
2019
Quarter Ended
March 31
June 30
September
30
December
31
$
25,349 $
30,239 $
27,552 $
28,008
526
150
259
(7)
1,698
1,109
1,367
1,106
1,680
1,113
1,367
1,095
558
77
262
443
$
(0.17) $
(0.17)
1.28 $
1.27
1.28 $
1.27
0.40
0.40
(a)
The sum of the per-share amounts for the four quarters may not always equal the annual per-share amounts due to differences in
the average number of shares outstanding during the respective periods.
161
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE
None.
ITEM 9A. CONTROLS AND PROCEDURES
Disclosure Controls and Procedures
An evaluation of the effectiveness of the design and operation of our disclosure controls and procedures (as
defined in Rule 13a-15(e) under the Securities Exchange Act of 1934, as amended) was carried out under
the supervision and with the participation of our management, including our chief executive officer and
chief financial officer. Based upon that evaluation, the chief executive officer and chief financial officer
concluded that the design and operation of these disclosure controls and procedures were effective as of
December 31, 2020, the end of the period covered by this Annual Report on Form 10-K.
Changes in Internal Control over Financial Reporting
During the quarter ended December 31, 2020, there were no changes in our internal control over financial
reporting that have materially affected, or are reasonably likely to materially affect, our internal control
over financial reporting.
ITEM 9B. OTHER INFORMATION
On February 24, 2021, we provided notice to terminate our $1.0 billion 364-day revolving credit agreement
(the “April 2020 MPC 364-Day Credit Agreement”), dated as of April 27, 2020, by and among MPC, as
borrower, the banks party thereto and JPMorgan Chase Bank, N.A. as administrative agent, which was
scheduled to expire on April 26, 2021. The material terms and conditions of the April 2020 MPC 364-Day
Credit Agreement were described in our Current Report on Form 8-K filed on April 27, 2020 (the “Credit
Agreement Form 8-K”) which description is incorporated by reference herein. That description is also
qualified by reference to the full text of the April 2020 MPC 364-Day Credit Agreement, which is filed as
Exhibit 10.1 to the Credit Agreement Form 8-K. There were no borrowings under the credit facility
established under the April 2020 MPC 364-Day Credit Agreement, and we determined that the incremental
borrowing capacity provided by the New MPC 364-Day Credit Agreement was no longer necessary.
Certain parties to the New MPC 364-Day Revolving Credit Agreement have in the past performed, and
may in the future from time to time perform, investment banking, financial advisory, lending or commercial
banking services for us and our affiliates, for which they have received, and may in the future receive,
customary compensation and reimbursement of expenses.
162
PART III
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
Information concerning our executive officers is included in Part I, Item 1 of this Annual Report on Form
10-K. Information concerning our directors is incorporated by reference to “Corporate Governance—
Proposal 1. Election of Directors” in our Proxy Statement for the 2021 Annual Meeting of Shareholders, to
be filed with the SEC within 120 days of December 31, 2020 (the “Proxy Statement”).
Our Code of Business Conduct, which applies to all of our directors, officers and employees, defines our
expectations for ethical decision-making, accountability and responsibility. Our Code of Ethics for Senior
Financial Officers, which is specifically applicable to our President and Chief Executive Officer, Executive
Vice President and Chief Financial Officer, Senior Vice President and Controller, Vice President, Finance
and Treasurer, and other leaders performing similar roles, affirms the principle that the honesty, integrity
and sound judgment of our senior executives with responsibility for preparation and certification of our
financial statements is essential to the proper functioning and success of our company. These codes are
available on our website at www.marathonpetroleum.com/Investors/Corporate-Governance/. We will post
on our website any amendments to, or waivers from, either of these codes requiring disclosure under
applicable rules within four business days following the amendment or waiver.
The other information required by this Item is incorporated by reference to “Corporate Governance—Board
Leadership and Function—Board Committees” in our Proxy Statement.
ITEM 11. EXECUTIVE COMPENSATION
Information required by this Item is incorporated by reference to “Executive Compensation,” “Executive
Compensation—Executive Compensation Tables” and “Corporate Governance—Director Compensation”
in our Proxy Statement.
163
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT AND RELATED STOCKHOLDER MATTERS
Information concerning security ownership of certain beneficial owners and management required by this
Item is incorporated by reference to “Other Information—Stock Ownership Information” in our Proxy
Statement.
Securities Authorized for Issuance Under Equity Compensation Plans
The following table provides information as of December 31, 2020 with respect to shares of our common
stock that may be issued under the MPC 2012 Plan, the MPC 2011 Plan and the Andeavor Plans:
Number of
securities to be
issued upon exercise
of outstanding
options, warrants
and rights(a)
Weighted-
average exercise
price of
outstanding
options, warrants
and rights(b)
Number of securities
remaining available
for future issuance
under equity
compensation
plans (excluding
securities reflected in
the first column)(c)
14,833,695 $
41.95
31,784,613
—
14,833,695
—
N/A
—
31,784,613
Plan category
Equity compensation plans approved
by stockholders
Equity compensation plan not approved
by stockholders
Total
(a)
Includes the following:
1)
2)
3)
11,299,781 stock options granted pursuant to the MPC 2012 Plan and the MPC 2011 Plan and not forfeited, cancelled or
expired as of December 31, 2020.
2,892,592 restricted stock units granted pursuant to the MPC 2012 Plan and the MPC 2011 Plan for shares unissued and
not forfeited, cancelled or expired as of December 31, 2020. The amounts in column (a) do not include (i) 709,416
restricted stock units granted under the Andeavor Plans and not forfeited, cancelled or expired as of December 31, 2020, or
(ii) 598,767 shares of restricted stock outstanding as of December 31, 2020.
641,322 shares as the maximum potential number of shares that could be issued in settlement of performance units
outstanding as of December 31, 2020 pursuant to the MPC 2012 Plan, based on the closing price of our common stock on
December 31, 2020 of $41.36 per share. The number of shares reported for this award vehicle may overstate dilution. See
Note 27 for more information on performance unit awards granted under the MPC 2012 Plan.
(b)
(c)
Restricted stock, restricted stock units and performance units are not taken into account in the weighted-average exercise price as
such awards have no exercise price.
Reflects the shares available for issuance pursuant to the MPC 2012 Plan. All granting authority under the MPC 2011 Plan was
revoked following the approval of the MPC 2012 Plan by shareholders on April 25, 2012, and all granting power under the
Andeavor Plans was revoked at the time of the Andeavor Merger. No more than 12,112,418 of the shares reported in this column
may be issued for awards other than stock options or stock appreciation rights. The number of shares reported in this column
assumes 641,322 as the maximum potential number of shares that could be issued pursuant to the MPC 2012 Plan in settlement
of performance units outstanding as of December 31, 2020, based on the closing price of our common stock on December 31,
2020, of $41.36 per share. The number of shares assumed for this award vehicle may understate the number of shares available
for issuance pursuant to the MPC 2012 Plan. See Note 27 for more information on performance unit awards granted pursuant to
the MPC 2012 Plan. Shares related to grants made pursuant to the MPC 2012 Plan that are forfeited, cancelled or expire
unexercised become immediately available for issuance under the MPC 2012 Plan.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND
DIRECTOR INDEPENDENCE
Information required by this Item is incorporated by reference to “Other Information—Related Party
Transactions” and “Corporate Governance—Board Composition and Director Selection—Director
Independence” in our Proxy Statement.
ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
Information required by this Item is incorporated by reference to “Audit Matters—Auditor Fees and
Services” in our Proxy Statement.
164
PART IV
ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
A. Documents Filed as Part of the Report
1. Financial Statements (see Part II, Item 8. of this Annual Report on Form 10-K regarding financial
statements)
2. Financial Statement Schedules
Financial statement schedules required under SEC rules but not included in this Annual Report on Form
10-K are omitted because they are not applicable or the required information is contained in the
consolidated financial statements or notes thereto.
3. Exhibits:
Exhibit
Number
2
2.1 †
2.2 †
2.3
2.4
2.5 †
2.6 †
2.7
3
3.1
3.2
4
Exhibit Description
Form
Exhibit
Filing
Date
SEC
File No.
Filed
Herewith
Furnished
Herewith
Incorporated by Reference
Plan of Acquisition, Reorganization,
Arrangement, Liquidation or
Succession
Separation and Distribution Agreement,
dated as of May 25, 2011, among
Marathon Oil Corporation, Marathon Oil
Company and Marathon Petroleum
Corporation
Agreement and Plan of Merger, dated as
of April 29, 2018, by and among
Marathon Petroleum Corporation,
Andeavor, Mahi Inc. and Mahi LLC
Amendment to Agreement and Plan of
Merger, dated as of July 3, 2018, by and
among Andeavor, Marathon Petroleum
Corporation, Mahi Inc. and Mahi LLC
Second Amendment to Agreement and
Plan of Merger, dated as of September
18, 2018, by and among Andeavor,
Marathon Petroleum Corporation, Mahi
Inc. and Mahi LLC
Agreement and Plan of Merger, dated as
of May 7, 2019, by and among Andeavor
Logistics LP, Tesoro Logistics GP, LLC,
MPLX LP, MPLX GP LLC and MPLX
MAX LLC
Purchase and Sale Agreement, dated as of
August 2, 2020, by and between MPC,
the MPC subsidiaries party thereto and 7-
Eleven, Inc.
Amendment to Purchase and Sale
Agreement, dated as of October 16, 2020,
by and among MPC, the MPC
subsidiaries party thereto and 7-Eleven,
Inc.
Articles of Incorporation and Bylaws
Restated Certificate of Incorporation of
Marathon Petroleum Corporation, dated
October 1, 2018
Amended and Restated Bylaws of
Marathon Petroleum Corporation, dated
as of February 27, 2019
Instruments Defining the Rights of
Security Holders, Including Indentures,
and Description of Registrant’s
Securities
10
2.1
5/26/2011
001-35054
8-K
2.1
4/30/2018
001-35054
S-4/A
2.2
7/5/2018
333-225244
8-K
2.1
9/18/2018
001-35054
8-K
2.1
5/8/2019
001-35054
8-K
2.1
8/3/2020
001-35054
X
8-K
3.2
10/1/2018
001-35054
10-K
3.2
2/28/2019
001-35054
Pursuant to Item 601(b)(4) of Regulation S-K, certain instruments with respect to long-term debt issues have been omitted where the
amount of securities authorized under such instruments does not exceed 10 percent of the total consolidated assets of the Registrant.
The Registrant hereby agrees to furnish a copy of any such instrument to the Securities and Exchange Commission upon its request.
4.1
001-35054
3/29/2011
4.1
10
Indenture, dated as of February 1, 2011,
between Marathon Petroleum Corporation
and The Bank of New York Mellon Trust
Company, N.A., as Trustee
165
Exhibit
Number
4.2
4.3
10
10.1
10.2
10.3
10.4 *
10.5 *
10.6 *
10.7 *
10.8 *
10.9 *
10.10 *
10.11 *
10.12 *
10.13 *
10.14 *
10.15 *
10.16 *
10.17 *
Exhibit Description
Indenture, dated February 12, 2015,
between MPLX LP and The Bank of
New York Mellon Trust Company, N.A.,
as Trustee
Description of Securities
Material Contracts
Receivables Purchase Agreement, dated
as of December 18, 2013, by and among
MPC Trade Receivables Company LLC,
Marathon Petroleum Company LP, The
Bank of Tokyo-Mitsubishi UFJ, Ltd.,
New York Branch, as administrative agent
and sole lead arranger, certain committed
purchasers and conduit purchasers that are
parties thereto from time to time and
certain other parties thereto from time to
time as managing agents and letter of
credit issuers
Second Amended and Restated
Receivables Sale Agreement, dated as of
December 18, 2013, by and between
Marathon Petroleum Company LP and
MPC Trade Receivables Company LLC
Omnibus Agreement, dated as of October
31, 2012, among Marathon Petroleum
Corporation, Marathon Petroleum
Company LP, MPL Investment LLC,
MPLX Operations LLC, MPLX
Terminal and Storage LLC, MPLX Pipe
Line Holdings LP, Marathon Pipe Line
LLC, Ohio River Pipe Line LLC, MPLX
LP and MPLX GP LLC
Marathon Petroleum Corporation
Second Amended and Restated 2011
Incentive Compensation Plan
Marathon
Corporation
Petroleum
Policy for Recoupment of Annual Cash
Bonus Amounts
Marathon Petroleum Corporation
Deferred Compensation Plan for
Non-Employee Directors
Marathon Petroleum Amended and
Restated Excess Benefit Plan
Marathon Petroleum Amended and
Restated Deferred Compensation Plan
Marathon Petroleum Corporation
Executive Tax, Estate, and
Financial Planning Program
Speedway Excess Benefit Plan
Speedway Deferred Compensation Plan
Form of Marathon Petroleum
Corporation Amended and Restated 2011
Incentive Compensation Plan
Nonqualified Stock Option Award
Agreement – Section 16 Officer
Form of Marathon Petroleum Corporation
2011 Incentive Compensation Plan
Supplemental Nonqualified Stock Option
Award Agreement – Section 16 Officer
Form of Marathon Petroleum
Corporation 2011 Incentive
Compensation Plan Supplemental
Restricted Stock Unit Award Agreement
– Non-Employee Director
Marathon Petroleum Corporation
Amended and Restated Executive Change
in Control Severance Benefits Plan
Form of Marathon Petroleum
Corporation Restricted Stock Award
Agreement – Officer
Form of Marathon Petroleum
Corporation Nonqualified Stock Option
Award Agreement – Officer
Incorporated by Reference
Form
8-K
Exhibit
4.1
Filing
Date
2/12/2015
SEC
File No.
001-35714
Filed
Herewith
Furnished
Herewith
8-K
10.1
12/23/2013
001-35054
X
8-K
10.2
12/23/2013
001-35054
8-K
10.2
11/6/2012
001-35054
S-3
4.3
12/7/2011
333-175286
10-K
10.10
2/29/2012
001-35054
10-K
10.13
2/28/2013
001-35054
10-K
10.14
2/24/2017
001-35054
10-K
10.13
2/29/2012
001-35054
10-K
10.14
2/29/2012
001-35054
10-K
10-K
8-K
10.15
10.16
10.6
2/29/2012
001-35054
2/29/2012
001-35054
7/7/2011
001-35054
8-K
10.2
12/7/2011
001-35054
10-K
10.22
2/29/2012
001-35054
10-K
10.21
2/28/2018
001-35054
10-Q
10.4
5/9/2012
001-35054
10-Q
10.5
5/9/2012
001-35054
166
Exhibit
Number
10.18 *
10.19 *
10.20 *
10.21 *
10.22 *
10.23
10.24 *
10.25 *
10.26 *
10.27 *
10.28 *
10.29 *
10.30 *
10.31 *
10.32 *
10.33 *
10.34 *
10.35
Exhibit Description
MPC Non-Employee Director
Phantom Unit Award Policy
Form of Marathon Petroleum
Corporation Restricted Stock Award
Agreement – Officer
Form of Marathon Petroleum
Corporation Nonqualified Stock Option
Award Agreement – Officer
MPLX LP – Form of MPC Officer
Phantom Unit Award Agreement
First Amendment to the Marathon
Petroleum Corporation Amended and
Restated 2011 Incentive Compensation
Plan
First Amendment to Receivables Purchase
Agreement, dated July 20, 2016, by and
among MPC Trade Receivables Company
LLC, Marathon Petroleum Company LP,
The Bank of Tokyo-Mitsubishi UFJ, Ltd.,
New York Branch, as administrative agent
and sole lead arranger, certain committed
purchasers and conduit purchasers that are
parties thereto from time to time and
certain other parties thereto from time to
time as managing agents and letter of
credit issuers
Form of Marathon Petroleum
Corporation Restricted Stock Award
Agreement - Officer
Form of Marathon Petroleum
Corporation Nonqualified Stock Option
Award Agreement - Officer
Form of MPLX LP Phantom Unit
Award Agreement - Marathon
Petroleum Corporation Officer
MPLX LP Executive Change in
Control Severance Benefits Plan
MPLX LP 2018 Incentive
Compensation Plan
Form of Marathon Petroleum
Corporation Restricted Stock Award
Agreement - Officer
Form of MPLX LP Performance Unit
Award Agreement - Marathon Petroleum
Corporation Officer
Form of MPLX LP Phantom Unit
Award Agreement - Marathon
Petroleum Corporation Officer
Form of MPLX LP Performance
Unit Award Agreement
Form of MPLX LP Phantom Unit
Award Agreement - Officer
Form of MPLX LP Phantom Unit
Award Agreement - Officer - Three Year
Cliff Vesting
Five Year Revolving Credit Agreement,
dated as of August 28, 2018, among MPC,
as borrower, JPMorgan Chase Bank,
N.A., as administrative agent, each of
JPMorgan Chase Bank, N.A., Wells Fargo
Securities, LLC, Barclays Bank PLC,
Citibank, N.A., Merrill Lynch, Pierce,
Fenner & Smith Incorporated, Mizuho
Bank, Ltd., MUFG Bank, Ltd. and RBC
Capital Markets, as joint lead arrangers
and joint bookrunners, Wells Fargo Bank,
National Association, as syndication
agent, each of Bank of America, N.A.,
Barclays Bank PLC, Citibank N.A.,
Mizuho Bank, Ltd., MUFG Bank, Ltd.,
and Royal Bank of Canada, as
documentation agents, and the other
lenders and issuing banks that are parties
thereto
Incorporated by Reference
Form
10-K
Exhibit
10.32
Filing
Date
2/28/2013
SEC
File No.
001-35054
Filed
Herewith
Furnished
Herewith
10-Q
10.2
5/9/2013
001-35054
10-Q
10.3
5/9/2013
001-35054
10-Q
10.4
5/9/2013
001-35054
10-Q
10.1
8/3/2015
001-35054
8-K
10.3
7/26/2016
001-35054
10-Q
10.2
5/2/2016
001-35054
10-Q
10.3
5/2/2016
001-35054
10-Q
10.5
5/2/2016
001-35054
10-Q
10.4
10/30/2017
001-35054
8-K
10.1
3/5/2018
001-35714
10-Q
10.4
4/30/2018
001-35054
10-Q
10.5
4/30/2018
001-35054
10-Q
10.6
4/30/2018
001-35054
10-Q
10.7
4/30/2018
001-35054
10-Q
10.8
4/30/2018
001-35054
10-Q
10.9
4/30/2018
001-35054
8-K
10.1
8/31/2018
001-35054
167
Incorporated by Reference
Form
10-K
Exhibit
10.68
Filing
Date
2/21/2018
SEC
File No.
001-03473
(Andeavor)
Filed
Herewith
Furnished
Herewith
10.41 *
Andeavor 2018 Market Stock Unit
Award Grant Letter
8-K
10.3
2/20/2018
Exhibit
Number
10.36 *
10.37 *
10.38 *
10.39 *
10.40 *
Exhibit Description
Andeavor 2011 Long-Term Incentive
Plan (as amended and restated)
Form of Executive Officer Synergy
Incentive Award Agreement
Form of Chief Executive Officer
Synergy Incentive Award Agreement
Andeavor 2018 Performance Share
Award Grant Letter
Andeavor Performance Share
Awards Granted in 2018 Summary of
Key Provisions
10.42 *
10.43 *
10.44 *
10.45
10.46
10.47
10.48 *
10.49 *
10.50 *
10.51
10.52 *
10.53 *
10.54 *
Andeavor Market Stock Unit
Awards Granted in 2018 Summary
of Key Provisions
Marathon Petroleum Corporation
Deferred Compensation Plan for
Non-Employee Directors, as amended
and restated January 1, 2019
Conversion Notice for Andeavor Awards
First Amendment to Fourth Amended and
Restated Omnibus Agreement, dated as of
January 30, 2019, among Andeavor LLC,
Marathon Petroleum Company LP,
Tesoro Refining & Marketing Company
LLC, Tesoro Companies, Inc., Tesoro
Alaska Company LLC, Andeavor
Logistics LP and Tesoro Logistics GP,
LLC
Fourth Amended and Restated Omnibus
Agreement, dated as of October 30, 2017,
among Andeavor, Tesoro Refining &
Marketing Company LLC, Tesoro
Companies, Inc., Tesoro Alaska Company
LLC, Tesoro Logistics LP and Tesoro
Logistics GP, LLC
Third Amended and Restated Schedules
to Fourth Amended and Restated
Omnibus Agreement, effective August 6,
2018, by and among Andeavor, Tesoro
Refining & Marketing Company LLC,
Tesoro Companies, Inc., Tesoro Alaska
Company LLC, Andeavor Logistics LP
and Tesoro Logistics GP, LLC
MPLX LP 2018 Incentive Compensation
Plan MPC Non-Employee Director
Phantom Unit Award Policy
Amended and Restated Marathon
Petroleum Corporation 2012 Incentive
Compensation Plan
First Amendment to the Amended and
Restated Marathon Petroleum Corporation
2012 Incentive Compensation Plan
Cooperation Agreement, dated as of
December 15, 2019, by and among
Marathon Petroleum Corporation,
MPLX LP, Elliott Associates, L.P.,
Elliott International, L.P. and Elliott
International Capital Advisors Inc.
Restricted Stock Award Agreement -
Officer
Nonqualified Stock Option
Award Agreement - Officer
8-K
8-K
8-K
10.1
1/30/2019
001-35054
10.2
1/30/2019
001-35054
10.1
2/20/2018
8-K
10.2
2/20/2018
001-03473
(Andeavor)
001-03473
(Andeavor)
001-03473
(Andeavor)
001-03473
(Andeavor)
8-K
10.4
2/20/2018
10-K
10.75
2/28/2019
001-35054
10-K
10-K
10.76
10.77
2/28/2019
001-35054
2/28/2019
001-35054
8-K
10.2
10/31/2017
001-35143
(ANDX)
10-Q
10.2
11/7/2018
001-35143
(ANDX)
10-K
10.86
2/28/2019
001-35054
10-K
10.87
2/28/2019
001-35054
10-K
10.84
2/28/2020
001-35054
8-K
10.1
12/16/2019
001-35054
10-Q
10.1
5/9/2019
001-35054
10-Q
10.2
5/9/2019
001-35054
Performance Unit Award Agreement 2019
- 2021 Performance Cycle
10-Q
10.3
5/9/2019
001-35054
168
Exhibit
Number
10.55
10.56
10.57
10.58
10.59 *
10.60 *
10.61 *
10.62 *
10.63 *
Exhibit Description
Second Amendment to Receivables
Purchase Agreement, dated July 19, 2019,
by and among MPC Trade Receivables
Company LLC, as seller, Marathon
Petroleum Company LP, as servicer,
MUFG Bank, Ltd., as administrative
agent, certain committed purchasers and
conduit purchasers that are parties thereto
from time to time and certain other parties
thereto from time to time as managing
agents and letter of credit issuers
Omnibus Amendment No. 1 to Second
Amended and Restated Receivables Sale
Agreement, Receivables Purchase
Agreement and Performance Undertaking,
dated as of October 1, 2020, by and
among Marathon Petroleum Corporation,
Marathon Petroleum Company LP, MPC
Trade Receivables Company LLC,
Marathon Petroleum Trading Canada
LLC, MUFG Bank, Ltd., as the
administrative agent, certain committed
purchasers and conduit purchasers that are
parties thereto from time to time and
certain other parties thereto from time to
time as managing agents and letter of
credit issuers
Amended and Restated Credit Agreement,
dated as of July 26, 2019, by and among
MPLX LP, as borrower, Wells Fargo
Bank, National Association, as
administrative agent, each of Wells Fargo
Securities, LLC, JPMorgan Chase Bank,
N.A., Barclays Bank PLC, BofA
Securities, Inc., Citigroup Global Markets
Inc., Mizuho Bank, Ltd., MUFG Bank,
Ltd. and Royal Bank of Canada, as joint
lead arrangers and joint bookrunners,
JPMorgan Chase Bank, N.A., as
syndication agent, each of Bank of
America, N.A., Barclays Bank PLC,
Citigroup Global Markets Inc., Mizuho
Bank, Ltd., MUFG Bank, Ltd. and Royal
Bank of Canada, as documentation agents,
and the other lenders and issuing banks
that are parties thereto
Waiver and Second Amendment to
Fourth Amended and Restated Omnibus
Agreement, dated as of July 29, 2019, by
and among MPC, Andeavor Logistics LP,
Tesoro Logistics GP, LLC, Tesoro
Refining & Marketing Company LLC,
Tesoro Companies, Inc., Tesoro Alaska
Company LLC, Andeavor Logistics GP
LLC and Marathon Petroleum Company
LP
Form of 2020 Officer RSU
Award Agreement
Form of 2020 Officer Stock
Option Award Agreement
Form of 2020 Officer Performance
Unit Award Agreement 2020 - 2022
Performance Cycle
Form of 2020 MPLX LP Phantom
Unit Award Agreement - MPC Officer
Form of MPLX LP Performance
Unit Award Agreement 2020-2022
Performance Cycle - MPC Officer
Incorporated by Reference
Form
8-K
Exhibit
10.1
Filing
Date
7/25/2019
SEC
File No.
001-35054
Filed
Herewith
Furnished
Herewith
10-Q
10.3
11/6/2020
001-35054
8-K
10.2
8/1/2019
001-35054
8-K
10.3
8/1/2019
001-35054
10-Q
10.2
5/7/2020
001-35054
10-Q
10.3
5/7/2020
001-35054
10-Q
10.4
5/7/2020
001-35054
10-Q
10.5
5/7/2020
001-35054
10-Q
10.6
5/7/2020
001-35054
169
Exhibit
Number
10.64
10.65 *
10.66 *
10.67
10.68
10.69 *
10.70 *
10.71 *
10.72 *
10.73 *
10.74 *
10.75 *
10.76 *
21.1
23.1
24.1
31.1
Exhibit Description
Revolving Credit Agreement, dated as of
September 23, 2020, by and among
Marathon Petroleum Corporation, as
borrower, JPMorgan Chase Bank, N.A.,
as administrative agent, each of JPMorgan
Chase Bank, N.A., Wells Fargo
Securities, LLC, Barclays Bank PLC,
BofA Securities, Inc., Citibank, N.A.,
Mizuho Bank, Ltd., MUFG Bank, Ltd.,
Royal Bank of Canada and TD Securities
(USA) LLC, as joint lead arrangers and
joint bookrunners, Wells Fargo Bank,
National Association, as syndication
agent, each of Bank of America, N.A.,
Barclays Bank PLC, Citibank, N.A.,
Mizuho Bank, Ltd., MUFG Bank, Ltd.,
Royal Bank of Canada and TD Securities
(USA) LLC, as documentation agents,
and the other lenders and issuing banks
that are parties thereto
Chief Executive Officer RSU
Award Agreement
Letter Agreement with Timothy T.
Griffith, dated November 13, 2020
Aircraft Time Sharing Agreement, dated
as of December 29, 2020, by and between
Marathon Petroleum Company LP and
Michael J. Hennigan
364-Day Revolving Credit Agreement,
dated as of April 27, 2020, by and among
Marathon Petroleum Corporation, as
borrower, JPMorgan Chase Bank, N.A.,
as administrative agent, each of JPMorgan
Chase Bank, N.A., Citibank, N.A.(“Citi”),
Mizuho Bank, Ltd. (“Mizuho”), Barclays
Bank PLC, MUFG Union Bank, N.A.,
Royal Bank of Canada and TD Securities
(USA) LLC, as joint lead arrangers and
bookrunners, Citi and Mizuho, as
syndication agents, and the other agents
and lenders that are parties thereto
Form of 2021 MPC Officer RSU
Award Agreement
Form of 2021 MPC Performance
Share Unit Award Agreement 2021 -
2023 Performance Cycle
Form of 2021 MPLX LP Phantom
Unit Award Agreement - MPC Officer
2021 Marathon Petroleum Annual Cash
Bonus Program
Marathon Petroleum Executive Deferred
Compensation Plan, effective January 1,
2021
Marathon Petroleum Executive Deferred
Compensation Plan Adoption Agreement,
effective January 1, 2021
Form of 2021 MPC Restricted Stock
Unit Award – Broad-Based Employees
Form of 2021 MPC Performance
Share Unit Award Agreement –
2021-2023 Performance Cycle –
Broad-Based Employees
List of Subsidiaries
Consent of Independent Registered Public
Accounting Firm
Power of Attorney of Directors
and Officers of Marathon
Petroleum Corporation
Certification of Chief Executive Officer
pursuant to Rule 13(a)-14 and 15(d)-14
under the Securities Exchange Act of
1934.
Incorporated by Reference
Form
8-K
Exhibit
10.1
Filing
Date
9/28/2020
SEC
File No.
001-35054
Filed
Herewith
Furnished
Herewith
10-Q
10.2
11/6/2020
001-35054
8-K
10.1
11/18/2020
001-35054
8-K
10.1
4/27/2020
001-35054
X
X
X
X
X
X
X
X
X
X
X
X
X
170
Incorporated by Reference
Exhibit
Number
31.2
32.1
32.2
101.INS
Exhibit Description
Form
Exhibit
Certification of Chief Financial Officer
pursuant to Rule 13(a)-14 and 15(d)-14
under the Securities Exchange Act of
1934.
Certification of Chief Executive Officer
pursuant to 18 U.S.C. Section 1350.
Certification of Chief Financial Officer
pursuant to 18 U.S.C. Section 1350.
Inline XBRL Instance Document - the
instance document does not appear in the
Interactive Data File because its XBRL
tags are embedded with the Inline XBRL
document.
101.SCH Inline XBRL Taxonomy Extension
Schema Document.
101.PRE
101.CAL
101.DEF
Inline XBRL Taxonomy Extension
Presentation Linkbase Document.
Inline XBRL Taxonomy Extension
Calculation Linkbase Document.
Inline XBRL Taxonomy Extension
Definition Linkbase Document.
101.LAB Inline XBRL Taxonomy Extension Label
Linkbase Document.
104
Cover Page Interactive Data File
(formatted as Inline XBRL and contained
in Exhibit 101).
Filing
Date
SEC
File No.
Filed
Herewith
X
Furnished
Herewith
X
X
X
X
X
X
X
X
†
*
The exhibits and schedules have been omitted pursuant to Item 601(b)(2) of Regulation S-K and will be provided to the
Securities and Exchange Commission upon request.
Indicates management contract or compensatory plan, contract or arrangement in which one or more directors or executive
officers of the Registrant may be participants.
171
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant
has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
SIGNATURES
February 26, 2021
MARATHON PETROLEUM CORPORATION
By: /s/ John J. Quaid
John J. Quaid
Senior Vice President and Controller
172
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by
the following persons on February 26, 2021 on behalf of the registrant and in the capacities indicated.
Signature
Title
/s/ Michael J. Hennigan
Michael J. Hennigan
/s/ Maryann T. Mannen
Maryann T. Mannen
Director, President and Chief Executive Officer
(principal executive officer)
Executive Vice President and Chief Financial Officer
(principal financial officer)
/s/ John J. Quaid
John J. Quaid
Senior Vice President and Controller
(principal accounting officer)
*
Abdulaziz F. Alkhayyal
*
Evan Bayh
*
Charles E. Bunch
*
Jonathan Z. Cohen
*
Steven A. Davis
*
Edward G. Galante
*
James E. Rohr
*
Kim K.W. Rucker
*
J. Michael Stice
*
John P. Surma
*
Susan Tomasky
Director
Director
Director
Director
Director
Director
Director
Director
Director
Chairman of the Board
Director
173
* The undersigned, by signing his name hereto, does sign and execute this report pursuant to the Power of
Attorney executed by the above-named directors and officers of the registrant, which is being filed herewith
on behalf of such directors and officers.
By: /s/ Michael J. Hennigan
February 26, 2021
Michael J. Hennigan
Attorney-in-Fact
174
CORPORATE INFORMATION
Corporate Headquarters
539 South Main St. Findlay, OH 45840
Dividends on common stock, as may be declared by the Board of Directors, are typically
paid mid-month in March, June, September and December.
Marathon Petroleum Corporation
Website: www.marathonpetroleum.com
Investor Relations Office
539 South Main St., Findlay, OH 45840
ir@marathonpetroleum.com
Dividend Checks Not Received / Electronic Deposit If you do not receive your dividend
check on the appropriate payment date, we suggest that you wait at least 10 days after
the payment date to allow for any delay in mail delivery. After that time, advise
Computershare by phone or in writing to issue a replacement check. You may contact
Computershare to authorize electronic deposit of your dividends into your bank account.
Kristina Kazarian
Vice President, Investor Relations
(419) 421-2071
Notice of Annual Meeting
The 2021 Annual Meeting of
Shareholders will be held in a virtual-only
format via live webcast on April 28, 2021.
Independent Accountants
PricewaterhouseCoopers LLP
406 Washington St., Suite 200
Toledo, OH 43604
Stock Exchange Listing
New York Stock Exchange
Common Stock Symbol: MPC
Principal Stock Transfer Agent
Computershare
Shareholder correspondence
should be mailed to:
P.O. Box 505000
Louisville, KY 40233-5000
Overnight correspondence
should be mailed to:
462 South 4th St., Suite 1600
Louisville, KY 40202
866-820-7494 (toll free –
U.S., Canada, Puerto Rico)
781-575-2176 (other non-U.S.
jurisdictions)
web.queries@computershare.com
Annual Report on Form 10-K
Additional copies of the
Marathon Petroleum Corporation
2020 Annual Report may be
obtained by contacting:
Corporate Communications
539 South Main St.
Findlay, OH 45840
(419) 421-3577
Book-entry Form of Stock Ownership Marathon Petroleum Corporation exclusively
maintains book-entry form of stockholder ownership. Account statements issued by
stock transfer agent, Computershare, shall serve as stockholders’ record of ownership.
Questions regarding stock ownership should be directed to Computershare.
Taxpayer Identification Number Federal law requires that each stockholder provide
a certified taxpayer identification number (TIN) for his/her stockholder account. For
individual stockholders, your TIN is your Social Security number. If you do not provide
a certified TIN, Computershare may be required to withhold 24% for federal income
taxes from your dividends.
Address Change It is important that you notify Computershare immediately, by phone,
in writing or by fax, when you change your address. Seasonal addresses can be entered
for your account.
Stock Return Performance Graph The following performance graph compares the
cumulative total return, assuming the reinvestment of dividends, of a $100 investment
in our common stock from Dec. 31, 2015, to Dec. 31, 2020, compared to the cumulative
total return of a $100 investment in the S&P 500 Index and an index of peer companies
(selected by us) for the same period. Our peer group consists of the following companies
that engage in domestic refining operations: BP plc, Chevron Corporation, Exxon Mobil
Corporation, HollyFrontier Corporation, PBF Energy Inc., Phillips 66 and Valero Energy
Corporation.
The following performance graph is not “soliciting material” and will not be deemed
to be filed with the Securities and Exchange Commission (SEC) or incorporated by
reference into any of MPC’s filings with the SEC, except to the extent that we specifically
incorporate it by reference into any such filings.
COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN* (in dollars)
Among Marathon Petroleum Corporation, the S&P 500 Index, and a peer group.
Marathon Petroleum Corporation
S&P 500
Peer Group
200
150
100
50
2015
2016
2017
2018
2019
2020
* $100 invested on 12/31/15 in stock or index, including reinvestment of
dividends. Fiscal year ending December 31, 2020.
MARATHON PETROLEUM CORPORATION I 2020 ANNUAL REPORT
MARATHON PETROLEUM CORPORATION
539 SOUTH MAIN STREET
FINDLAY, OHIO 45840
Disclosures Regarding Forward-Looking Statements
This summary annual report wrap includes forward-looking statements. You can identify our forward-looking statements by words such as “anticipate,”
“believe,” “commitment,” “could,” “design,” “estimate,” “expect,” “forecast,” “goal,” “guidance,” “imply,” “intend,” “may,” “objective,” “opportunity,” “outlook,”
“plan,” “policy,” “position,” “potential,” “predict,” “principle,” “priority,” “project,” “proposition,” “prospective,” “pursue,” “seek,” “should,” “strategy,” “target,”
“will,” “would,” or other similar expressions that convey the uncertainty of future events or outcomes. We have based our forward-looking statements on our
current expectations, estimates and projections about our business and 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, including statements regarding the completion of our planned sale of Speedway and the expected benefits thereof, 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. In accordance with “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995, we have included in
our attached Form 10-K for the year ended Dec. 31, 2020, cautionary language identifying important factors, though not necessarily all such factors, that
could cause actual results to differ materially from those set forth in the forward-looking statements.