2021
ANNUAL REPORT
TABLE OF CONTE NTS
PRESIDENT AND CEO LETTER
OPERATIONS OVERVIEW
CORE VALUES
FINANCIAL HIGHLIGHTS
SUSTAINABILITY
BOARD OF DIRECTORS
EXECUTIVE TEAM
1
4
6
7
8
12
13
On the cover: Operator Jason Green
at MPC’s refinery in El Paso, Texas
FRO M THE PR ES IDENT AND CE O
Fellow Shareholders,
During a year of continued global health and
economic challenges, Marathon Petroleum
Corporation (MPC) built on the foundation created
by the three strategic priorities we established in
2020 to drive stability and recovery across our
business. We also took significant steps to shape
our future growth opportunities, resulting in
immediate and long-term value creation.
As the global economy began to rebound with
the availability of COVID-19 vaccines and then
faced challenges from variants of the disease,
we effectively managed our business operations
to navigate these market fluctuations. Our
comprehensive pandemic response plan focused
on protecting our employees, contractors and
communities, so we could continue safely and
reliably providing essential fuels that help keep
the world moving. We shared timely information
and guidance with our workforce and offered
our people COVID-19 vaccines as they became
available. We also supported our employees and
communities as they worked to recover from
natural disasters, including the devastation in
Louisiana caused by Hurricane Ida.
Through it all, we began shaping a more distinct
path forward for our future by continuing to
challenge ourselves to lead in sustainable energy:
to meet the energy needs of today while investing
in an energy-diverse future. We are guided by our
overarching goal of manufacturing and delivering
essential energy products and services in ways
that enhance our financial performance while
lowering the carbon intensity of our operations
and the consumption of natural resources.
MP C 2021 ANNUAL R EP ORT
1
FRO M THE PRES IDENT A N D CE O
BUILD ING ON STRATE GIC
EXECUTI ON
The three strategic priorities we
established in 2020 – strengthening
the competitive position of our assets,
embedding a low-cost culture, and
improving our commercial performance
– target aspects of our business that are
within our control. Executing on these
priorities throughout 2021, bolstered by
the unwavering foundation of our Core
Values and the resiliency and creativity
of our talented teams, helped to drive
stronger through-cycle earnings and
position MPC favorably for future success.
As we look ahead in
2022 and beyond,
we believe the future
for MPC is bright.
Our relentless focus
on our strategic
priorities will
continue to create
incremental value for
shareholders...
STRENGTHENING THE COMPETITIVE
POSITION OF OUR ASSETS
After closing the sale of our Speedway
retail business for $21 billion, including
approximately $17.2 billion in after tax
proceeds, we took immediate steps to
return capital to shareholders and reduce
debt. We committed to completing $10
billion in share repurchases by the end
of 2022 and had achieved approximately
55% of our overall goal through the
end of January. We also reduced debt
by $4.6 billion. In February 2022, we
announced Board authorization for an
additional $5 billion in incremental
share repurchases.
Our Dickinson, North Dakota, renewable
diesel facility became fully operational
2
MP C 2021 ANN UAL REPORT
in the spring of 2021. With a production
capacity of 184 million gallons a year, it
is the second largest facility of its kind
in the United States. Dickinson also
generates a carbon intensity level that is
approximately 50% lower than when it
operated as a petroleum refinery.
Substantial strides were made toward
converting our Martinez, California,
refinery into a renewable fuels facility,
including publication of the project’s
draft environmental impact report
and completion of the report’s public
comment period. We are currently
progressing through the remaining
stages of permitting and continue to
target starting production at the facility
in the second half of 2022. In 2023, we
anticipate ramping up pretreatment
capabilities and increasing production
to the full capacity of 730 million gallons
per year.
The performance of our MPLX midstream
segment throughout 2021 reflected
the resilience of our logistics business
and the benefits of an integrated value
chain. For the year, MPLX distributed
$2.2 billion to MPC, and ongoing capital
discipline within MPLX continues to
enhance free cash-flow potential.
EMBEDDING A LOW-COST CULTURE
Our ongoing efforts to not only lower
costs but embed a truly low-cost
culture in our management across
the company yielded $1.5 billion in
structural cost reductions in 2021.
A primary factor behind these savings
was lowering operating costs in our
refining segment from $6 per barrel
to $5 per barrel, which amounted to
$1 billion in cost reductions. We also
decreased expenses by $400 million
across MPLX and eliminated $100
million in corporate costs.
IMPROVING COMMERCIAL
PERFORMANCE
We initiated a number of efforts
designed to enable our teams to better
anticipate and respond to commercial
opportunities in what continues to be a
very dynamic marketplace.
We gained access to logistically
advantaged feedstocks for our Dickinson
renewable diesel facility.
• Our Beatrice, Nebraska, pretreatment
facility, which we acquired in 2020,
began operations, processing
advantaged feedstock for transport
to Dickinson. The facility uses
Midwestern agricultural feedstocks,
such as corn oil, soybean oil and
rendered fats.
• We also formed a joint venture
with ADM to produce soybean oil
for Dickinson. The joint venture will
own and operate ADM’s previously
announced soybean processing
complex in Spiritwood, North
Dakota. When complete in 2023, this
facility will source and process local
soybeans to supply Dickinson with
approximately 5,000 barrels a day of
locally advantaged feedstock.
• Additional feedstock for Dickinson
will come from our Cincinnati,
Ohio, pretreatment facility, which
recently began operating after being
converted from a biodiesel plant.
In March 2022, we announced an
agreement with Neste to form a 50/50
joint venture for the Martinez Renewable
Fuels facility, with each company
contributing feedstocks and sharing
production output to market under our
respective brands. We have reduced our
capital outlay and improved the project
economics while gaining a partner with
complementary capabilities to advance
our project’s objectives.
INVESTING FOR
THE LONG TERM:
A S USTAINA BLE FUTU RE
In addition to continuing capital
investments to maintain and improve our
refineries, as we respond to the energy
evolution, we strive to be a market leader
in producing and delivering renewable
fuels, using renewable energy sources
and deploying emerging technologies
that reduce environmental impact. These
objectives motivated several related
refinery conversion project.
When complete, the Martinez
Renewable Fuels facility, which we
will co-own with our partner Neste,
will be larger than any renewable
diesel production facility operating
in the U.S. today. Yet, the converted
facility is expected to generate 60%
fewer GHG emissions than it did as a
petroleum refinery.
As we look ahead in 2022 and beyond,
we believe the future for MPC is bright.
Our relentless focus on our strategic
priorities will continue to create
incremental value for shareholders,
and our commitment to challenging
ourselves to lead in sustainable
energy will drive long-term benefits
for our people and the many other
stakeholders engaged in our business
and in shaping our future. I encourage
you to learn more about our efforts
in sustainability, including steps
we’ve outlined to support a just and
responsible transition, and keep up with
the latest developments across our
business by visiting our website at
www.marathonpetroleum.com.
None of these accomplishments
would have been possible without the
dedication and determination of our
people. I’m proud of their efforts and
grateful for their commitment to
making MPC and our shareholders
successful. Thank you for your
continued support of our company.
Sincerely,
Michael J. Hennigan
President and Chief
Executive Officer
initiatives in 2021, including:
• We set a target to reduce our
freshwater withdrawal intensity 20%
from 2016 levels by 2030. This goal
added to our previously established
targets for reducing Scope 1 and 2
greenhouse gas (GHG) emissions
intensity 30% below 2014 levels by
2030 and for lowering methane
emissions intensity 50% from 2016
levels by 2025 across our natural gas
gathering and processing operations.
• Earlier in 2022, we also announced
a 2030 target to reduce absolute
Scope 3 – Category 11 GHG emissions
by 15% below 2019 levels. To date,
we’re the only U.S. downstream
energy company that has publicly
set an absolute reduction target for
Scope 3 emissions.
• Our continuing focus on energy
efficiency was recognized with a
second consecutive ENERGY STAR®
Partner of the Year – Sustained
Excellence Award from the U.S.
Environmental Protection Agency.
We were the only company with
fuels manufacturing as its primary
business to earn this recognition.
• To further progress our sustainability
objectives, we added a diversity,
equity and inclusion (DE&I)
component to the metrics that
determine our annual employee
bonus compensation. This made
us the first independent, U.S.
downstream energy company to
link a DE&I metric to compensation,
which is intended to help ensure
we have the diversity of thought
necessary to take on tomorrow’s
opportunities and challenges.
In 2021, we hired and promoted
a number of Black, Indigenous,
People of Color (BIPOC) and
women leaders across the company
and exceeded our hiring goal for
BIPOC candidates.
In 2022, we are committed to continued
sustainability progress, with a focus
on investing a significant portion of
our planned growth capital spending
for the year to support our Martinez
MP C 2021 ANNUAL R EP ORT
3
®
OPERATIONS OVE RVIEW
Note: Illustrative representation of asset map
As of 03/2022
(a) Includes MPC/MPLX owned and operated lines,
MPC/MPLX interest lines operated by others and
MPC/MPLX operated lines owned by others.
(b) Wholly owned subsidiary of MPC working to
commercialize the conversion of biobased
feedstocks into renewable fuels and chemicals.
(c) Includes MPLX owned and operated natural gas
processing complexes.
4
MP C 2021 ANN UAL REPORT
Note: Illustrative representation of asset map
As of 03/2022
(a) Includes MPC/MPLX owned and operated lines,
MPC/MPLX interest lines operated by others and
MPC/MPLX operated lines owned by others.
(b) Wholly owned subsidiary of MPC working to
commercialize the conversion of biobased
feedstocks into renewable fuels and chemicals.
(c) Includes MPLX owned and operated natural gas
processing complexes.
®
2.9
MILLION
BARRELS PER CALENDAR
DAY OF CRUDE OIL
REFINING CAPACITY
2.4
BILLION
GALLONS OF
RENEWABLE FUEL
DELIVERED IN 2021
42.8
MILLION
BARRELS OF TERMINAL
STORAGE CAPACITY
~19,000
MILES OF PIPELINE WE
OWN, LEASE OR HAVE AN
OWNERSHIP INTEREST IN
11.8
BILLION
STANDARD CUBIC FEET
PER DAY OF NATURAL GAS
PROCESSING CAPACITY
~8,250
NORTH AMERICAN
RETAIL AND MARKETING
LOCATIONS
320
VESSELS AND BARGES
OWNED AND OPERATED
THROUGH MARINE
BUSINESS
MP C 2021 ANNUAL R EP ORT
5
MPC Refinery
MPC Owned and Part-Owned
Light Product Terminal
MPC Owned Asphalt/
Heavy Oil Terminal
MPC Owned and Part-Owned
Marine Facility
MPC/MPLX Pipeline(a)
Martinez Renewable
Fuels Project
MPC Domestic
Marketing Area
MPC International
Marketing Area
Ethanol Facility
(joint venture with The Andersons)
MPC Renewable Feedstock
Processing Facility
Virent(b)
®
MPC Renewable
Diesel Facility
MPLX Owned and Part-Owned
Light Product Terminal
MPLX Owned Asphalt/
Heavy Oil Terminal
MPLX Natural Gas
Processing Complex(c)
MPLX Refining
Logistics Asset
MPLX Gathering
System
MPLX Owned
Marine Facility
Cavern
CORE VALUES
Our values guide
the way we treat
each other and all
our stakeholders.
We believe how
we do our work is
just as important
as what we do.
6
M PC 2021 ANNUAL REPORT
SAFE TY AND EN VIRONMEN TAL
STEWARDSHIP
• Protect our people and the world we all share
• Aim for an accident-free, incident-free
workplace
• Commit to safe and environmentally
responsible operations
INTEG RITY
• Set high expectations for ourselves and
build trust in each other, with business
partners, shareholders and the communities
where we work and live
• Say what we’re going to do — and then do it
RESPECT
• Treat everyone professionally, with courtesy,
honesty and trust
• Consider how other people’s ideas can
improve what we do and encourage
everyone to openly share their perspectives,
ideas and concerns
INCLUSION
• Value diversity in culture, background,
perspective and experiences
• 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
COLLABORATION
• Actively partner with our stakeholders to
find and create shared value, making a
positive difference together
• Foster constructive, solution-oriented dialogues
• Genuinely listen to one another and seek out
perspectives different from our own
FI NANC IAL H IGHLIGHTS
$21 BI LLION SALE OF SPEE DWAY
In May 2021, we closed our sale of Speedway and took immediate steps to execute on our plan to strengthen our
balance sheet and return capital to shareholders. With approximately $17.2 billion in after-tax proceeds from the
sale, MPC committed to $10 billion in share repurchases by the end of 2022, and reduced debt by $4.6 billion.
R ET URNI NG CAPITA L TO SH AR E H O LDE RS
On our fourth quarter 2021 earnings call in
February 2022, we reported the completion
of approximately 55% of the $10 billion
share repurchase program, and announced
authorization for an additional $5 billion in
incremental share repurchases.
5.0
5.0
4 .5
5.5
4 .5
10.0
5.5
S
N
O
L
L
I
I
B
$
DIVIDENDS PAID
Completed Share
Repurchases
Share Purchase
Authorizations
Remaining Share
Repurchases
$10 Billion
Repurchase Program
Incremental
$5 Billion Authorization
$15 Billion
I
S
N
O
L
L
B
$
I
1.40
1.5 1
1.48
Total Cash Returned to Shareholders: $6.14 billion
Income from Continuing Operations: $4.3 billion
2021
2019
2020
2021
CONTI NUATI ON OF DISCIPL INE D C APITA L S PE N DING
• Our projected capital spending amount for 2022 is approximately 30% below 2019’s level.
• A significant portion of MPC’s planned growth capital spending for the year will support the conversion
of our Martinez, California, refinery into a renewable fuels facility.
SUSTAINING AND GROWTH CAPITAL*
2022 CAPITAL SPENDING OUTLOOK
2, 505
1,735
1,47 1
1 ,066
Martinez Refinery
Conversion
I
S
N
O
L
L
M
$
I
2019
2020
2021
2022
Outlook
*Does not include capital associated with Speedway-discontinued
operations, MPLX capital spending or capitalized interest
R&M GROWTH
E S
L
B
A
W
E
N
E
R
ONGOING PROJECTS
CORPORATE/OTHER
R&M MAINTENANCE
MP C 2021 ANNUAL R EP ORT
7
SUSTAINABILITY
By challenging ourselves to lead in sustainable energy, we are working to meet the needs of today while
investing in an energy-diverse future. We’re focused on strengthening the resiliency of our business by
lowering carbon intensity and conserving natural resources; innovating for the future by investing in
renewables and emerging technologies; and embedding sustainability in decision-making and in how we
engage our people and many stakeholders.
Our progress toward these objectives is evident from recognition we have received from prominent
environmental, social and governance (ESG) rating organizations.
Member of
S&P Global
Dow Jones
Sustainability
Indices
Top
Decile
ESG Ratings
AWA R D S
100%
score
Dow Jones
Sustainability North
America Index for
third straight year
for S&P Global, MSCI
and Sustainalytics in
the U.S. Oil and Gas
Refining and Marketing
sector
MPLX named ESG Top
Performer in the public
midstream category from
Hart Energy
on Human Rights
Campaign’s Corporate
Equality Index
STRENGTH ENING R ESILIENCY
In seeking to reduce consumption of natural resources, we established a target for lowering our freshwater
withdrawal intensity. This goal added to our existing targets for reducing greenhouse gas (GHG) emissions
intensity and for lowering methane emissions intensity. In February 2022, we also established a 2030 target
to reduce absolute Scope 3 - Category 11 GHG emissions by 15% below 2019 levels. Additionally, MPLX
established a new 2030 target to reduce methane emissions intensity from its natural gas gathering and
processing operations by 75% below 2016 levels.
30%
Target: Reduce Scope
1 and 2 GHG emissions
intensity 30% by 2030
from 2014 levels
0%
Progress
at 23%
30%
Target: Reduce MPLX G&P
methane emissions intensity
50% by 2025 and 75% by
2030 from 2016 levels
50%
Progress:
at 45%
75%
0%
20%
Target: Reduce
freshwater withdrawal
intensity 20% by 2030
from 2016 levels
2021 estimated values are preliminary and subject to change
2021 estimated values are preliminary and subject to change
Progress
at 9%
20%
0%
Progress shown through 2020
For the second consecutive year, we earned the ENERGY STAR® Partner
of the Year – Sustained Excellence Award from the U.S. Environmental
Protection Agency. This honor acknowledged superior leadership, innovation
and commitment to environmental protection based on the energy efficiency
of our facilities through a corporate-wide, portfolio-based energy program.
We were the only company with fuels manufacturing as its primary business
to earn this recognition.
2021
SECOND CONSECUTIVE YEAR
8
MP C 2021 ANN UAL REPORT
SUSTAI NABILITY
IN NOVATI NG FOR TH E FUTUR E
We strive to be a market leader in the production and delivery of renewable fuels, seek ways to expand the
use of renewable energy in our operations, and deploy emerging technologies that reduce environmental
impact while enhancing business performance.
We brought our Dickinson, North Dakota, renewable diesel facility to full operating capacity, and started
up pretreatment facilities in Beatrice, Nebraska, and Cincinnati, Ohio, which will supply Dickinson with
Midwestern agricultural feedstocks such as corn oil, soybean oil and rendered fats.* We also made
substantial strides toward converting our Martinez, California, refinery into a renewable fuels facility. It is
currently targeted to begin operating in the second half of 2022 and reach full production capacity of 730
million gallons per year in 2023.
Martinez Renewable Fuels**
730 million
gallons/year capacity
60% reduction
in GHG emissions compared to
previous refinery operations
**Construction permitting in process
Dickinson Renewable Diesel Facility
184 million
gallons/year capacity
Second largest
in the U.S. among currently
operating facilities
Producing a
~50% lower
carbon intensity
renewable
diesel
Our Virent subsidiary helped make aviation history by
contributing to the creation of 100% sustainable aviation
fuel (SAF) for the very first commercial passenger flight
to use SAF in one engine and petroleum-based jet fuel
in the other. Through its proprietary BioForm® process,
Virent used corn sugar to produce synthesized aromatic
kerosene, which was a critical fuel component that
made the 100% SAF possible. We continue to evaluate
our path forward for Virent, including the regulatory
environment for cost efficient returns.
(l-r) MPC Executive Vice President, Refining, Ray Brooks and Virent President and
General Counsel Dave Kettner after flying on board the historic Dec. 1 flight, which
showed sustainable aviation is possible without modifying modern airline engines.
*Our Cincinnati, Ohio, pretreatment facility was converted from its original
configuration as a biodiesel plant, and start up occurred in January 2022.
MP C 2021 ANNUAL R EP ORT
9
SUSTAINABILITY
EMBEDD IN G SUSTAIN ABILITY
We hold a companywide commitment to protecting the health and
safety of our employees and the public, responsibly managing our
social impacts, promoting diversity, equity and inclusion (DE&I), and
maintaining accountable and transparent governance.
Energized Workforce
Almost 3,500 employees belong to our 63 employee network
chapters across 13 states. These groups focus on six populations —
Asian, Black, Hispanic, Veterans, Women and LGBTQ+ — and are led
by employees with active involvement from executive leadership
sponsors. These networks connect colleagues from across the
company and provide opportunities for personal and professional
development, networking and community involvement.
Guided by a dedicated DE&I team and supported by leadership
companywide, our diversity strategy focuses on:
• Building awareness of the benefits of diverse perspectives
•
Increasing representation across the organization
• Ensuring success through commitment to ongoing
programs that support diverse employees
• Applying measurement and accountability to foster an
inclusive work environment with opportunities for all
employees to grow and develop
Thriving
Communities
Community
Investment
Priorities
Workforce
Development
Sustainability
1 0
MP C 2021 ANN UAL REPORT
Stakeholder Engagement
Our broader concept of sustainability emphasizes creating shared
value for all our stakeholders – our people, business partners,
customers, communities, governments and shareholders. To this
end, our charitable giving focuses on three priorities: thriving
communities, workforce development and sustainability. In 2021,
we increased the corporate match for employee giving from 60%
to 100%. As a company, we invested more than $20 million in the
communities where we live and work as well as broader causes.
Our employees contributed almost $4 million in additional support.
We expanded our engagement of business partners by
strengthening our Supply Chain Sustainability Program, which
includes a Supplier Code of Conduct. This code outlines our
expectations for suppliers to comply with environmental, social
and governance (ESG) clauses in their MPC contracts and adhere
to our fundamental values, policies and procedures in how they
do business. In 2021, a system was put into place to evaluate Tier 1
critical suppliers.
SUSTAI NABILITY
Safety and Environmental Stewardship
Our Core Values of safety and environmental stewardship drive our emphasis on continual improvement in
protecting the health and safety of our workforce and the communities where we operate. Our goal is an
incident-free workplace, so everyone can return home to their loved ones. Our personal safety performance
continues to trend better than the U.S. refining average.
2021 Tier 3 & 4 Designated
Environmental Incidents (DEI)
Count
2021 Refining OSHA Recordable Rate
Incidents/200,000 hours
2021 Refining Process Safety Event
(PSE) Rate
Events/200,000 hours
135
85
50
55
U.S. Refining Average
MPC Refining
Tier 1 PSE
Tier 2 PSE
0.5
0.4
0.4
0.27 0.28 0.22 0.34
0.18
0.16
0.16
0.05
0.08
0.06
0.04
0.04
2018 2019 2020 2021
2018 2019 2020 2021
2018
2019
2020
2021
DEIs include three categories of environmental
incidents: releases to the environment (air, land
or water), environmental permit exceedances
and agency enforcements actions.
Based on the U.S. Bureau of Labor Statistics data.
Note: We had fewer incidents in 2021 than in all prior
years shown except 2020. The increase in the 2021
rate is largely a reflection of a significant reduction in
exposure hours.
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.
Transparent Governance
Our corporate impacts, risks and opportunities are identified
and managed by company leadership with oversight from our
Board. An additional layer of oversight exists with our Enterprise
Risk Management (ERM) Program. As part of our broader
commitment to transparent governance, in 2021 we were the
first independent U.S. downstream energy company to link a
DE&I metric to compensation. Our ESG metric, which includes
DE&I, greenhouse gas intensity and environmental and safety
performance components, is weighted at 20% of our annual
cash bonus program.
ESG PERFORMANCE METRICS
TIED TO BONUS COMPENSATION
Greenhouse Gas
(GHG) Intensity
Process Safety Events
(PSE) Rate
5 %
5
%
5
%
5 %
Designated
Environmental Incidents (DEI)
Diversity, Equity
& Inclusion (DE&I)
MP C 2021 ANNUAL R EP ORT 11
BOARD OF DIR ECTOR S
John P. Surma
Retired Chairman and
Chief Executive Officer,
United States Steel Corporation
- Non-Executive Chairman
of the Board
Evan Bayh
Senior Advisor,
Apollo Global Management
- Corporate Governance and
Nominating Committee Member
- Sustainability and Public Policy
Committee Chair
Jonathan Z. Cohen
Chief Executive Officer and
President, Hepco Capital
Management, LLC
- Audit 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 and Public Policy
Committee Member
Kim K.W. Rucker
Former Executive Vice President,
General Counsel and Secretary,
Andeavor
- Sustainability and Public Policy
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 and Public Policy
Committee Member
1 2
MP C 2021 ANN UAL REPORT
Abdulaziz F. Alkhayyal
Retired Senior Vice President,
Industrial Relations, Saudi Aramco
- Audit Committee Member
- Compensation and Organization
Development Committee Member
- Sustainability and Public Policy
Committee Vice Chair
Charles E. Bunch
Retired Chairman of the
Board and Chief Executive Officer,
PPG Industries, Inc.
- Compensation and Organization
Development Committee Member
- Corporate Governance and
Nominating Committee Chair
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
Michael J. Hennigan
President and Chief Executive Officer,
Marathon Petroleum Corporation
- Sustainability and Public Policy
Committee Member
Frank M. Semple
Retired Chairman, President and
Chief Executive Officer,
MarkWest Energy Partners, L.P.
- Audit Committee Member
- Compensation and Organization
Development Committee Member
Susan Tomasky
Retired President,
AEP Transmission,
American Electric Power
- Audit Committee Chair
- Sustainability and Public Policy
Committee Member
Michael J. Hennigan
President and
Chief Executive Officer,
and Director
Raymond L. Brooks
Executive Vice
President, Refining
EXECUTIVE TEAM
Maryann T. Mannen
Executive Vice
President and
Chief Financial Officer
Suzanne Gagle
General Counsel and
Senior Vice President,
Government Affairs
Fiona C. Laird*
Chief Human Resources Officer
and Senior Vice President,
Communications
C. Kristopher Hagedorn
Senior Vice President and
Controller
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
Ehren D. Powell*
Senior Vice President and
Chief Digital Officer
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
*Corporate Officers
MP C 2021 ANNUAL R EP ORT 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, 2021
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)
(State or other jurisdiction of incorporation or organization)
(I.R.S. Employer Identification No.)
Delaware
27-1284632
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, 2021 was approximately $38.5 billion. This amount is based
on the closing price of the registrant’s Common Stock on the New York Stock Exchange on June 30, 2021. 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 565,212,958 shares of Marathon Petroleum Corporation Common Stock outstanding as of February 15, 2022.
Documents Incorporated By Reference
Portions of the registrant’s proxy statement relating to its 2022 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.
[This page intentionally left blank]
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 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 9C. DISCLOSURES REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS
PART III
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
ITEM 11. EXECUTIVE COMPENSATION
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED
STOCKHOLDER 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
Page
4
17
29
30
37
39
40
41
68
71
125
125
125
126
126
127
127
127
128
133
[This page intentionally left blank]
GLOSSARY OF TERMS
Throughout this report, the following company or industry specific terms and abbreviations are used:
ASC
ANS
ASU
ATB
barrel
CARB
CARBOB
CBOB
EBITDA
EPA
ESG
FASB
GAAP
GHG
LCFS
LCM
LIBOR
LIFO
LLS
mbbls
mbpd
mbpcd
MEH
MMcf/d
MMBtu
NGL
NYMEX
NYSE
OSHA
OTC
PP&E
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
Articulated tug barges
One stock tank barrel, or 42 U.S. 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 (a non-GAAP financial measure)
U.S. Environmental Protection Agency
Environmental, social and governance
Financial Accounting Standards Board
Accounting principles generally accepted in the United States
Greenhouse gas
Low Carbon Fuel Standard
Lower of cost or market
London Interbank Offered Rate
Last in, first out
Louisiana Light Sweet crude oil, an oil index benchmark price
Thousands of barrels
Thousand barrels per day
Thousand barrels per calendar day
Magellan East Houston crude oil, an oil index benchmark price
One million cubic feet of natural gas per day
One million British thermal units per day
Natural gas liquids, such as ethane, propane, butanes and natural gasoline
New York Mercantile Exchange
New York Stock Exchange
U. S. Occupational Safety and Health Administration
Over-the-Counter
Property, plant and equipment
Revised Renewable Fuel Standard program, as required by the Energy Independence and Security Act
of 2007
Renewable Identification Number
U.S. 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:
•
•
•
•
•
•
•
•
•
•
future financial and operating results;
ESG goals and targets, including those related to GHG emissions, diversity and inclusion and ESG reporting;
our plans to achieve our ESG goals and targets and to monitor and report progress thereon;
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 maintenance projects or transactions;
business strategies, growth opportunities and expected investments;
consumer demand for refined products, natural gas and NGLs;
the timing, amount and form of future capital return transactions at MPC or MPLX; and
the anticipated effects of actions of third parties such as competitors, activist investors, 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:
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
general economic, political or regulatory developments, including inflation, changes in governmental policies relating to
refined petroleum products, crude oil, natural gas or NGLs, or taxation;
the magnitude, duration and extent of future resurgences 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, governments and the private sector to stem the spread of the virus;
further impairments;
the regional, national and worldwide availability and pricing of refined products, crude oil, natural gas, NGLs and other
feedstocks;
disruptions in credit markets or changes to credit ratings;
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, 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 risks affecting MPLX;
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;
2
•
•
•
•
•
•
•
•
•
•
•
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, Russia, Africa, Canada and South
America;
actions taken by our competitors, including pricing adjustments, 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, means of transportation, 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;
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 history in the energy business, and is a leading, integrated,
downstream energy company. 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 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, including renewable 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, including renewable diesel, 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 and through long-term supply contracts with direct dealers who operate locations
mainly under the ARCO® brand.
• 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, 2021, we owned the general partner of MPLX and approximately 64 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 May 14, 2021, we completed the sale of Speedway, our company-owned and operated retail transportation fuel and
convenience store business, to 7-Eleven, Inc. (“7-Eleven”) for cash proceeds of $21.38 billion ($17.22 billion after cash-tax
payments). This transaction resulted in a pretax gain of $11.68 billion ($8.02 billion after income taxes), after deducting the book
value of the net assets and certain other adjustments. MPC remains committed to executing its plan to use the net proceeds
from the sale to strengthen the balance sheet and return capital to shareholders.
4
OUR OPERATIONS
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 2,887 mbpcd. During 2021, our refineries processed 2,621 mbpd of crude oil and 178
mbpd of other charge and blendstocks. During 2020, our refineries processed 2,418 mbpd of crude oil and 165 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.
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 (1,178 mbpcd)
Galveston Bay, Texas City, Texas Refinery (593 mbpcd)
Our Galveston Bay refinery is our largest refining complex, and is a combination of our former Texas City refinery and Galveston
Bay refinery. The refinery is located on the Texas Gulf Coast 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 45 percent of the power generated in 2021 was used at the refinery, with the remaining electricity being sold into
the electricity grid.
Garyville, Louisiana Refinery (585 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 (1,159 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, propane, feedstocks and heavy fuel oil. 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 (133 mbpcd)
Our El Paso refinery is located east of downtown El Paso. The El Paso refinery processes sweet and sour crudes into gasoline,
distillates, heavy fuel oil, asphalt, propane and petrochemicals.
5
St. Paul Park, Minnesota Refinery (105 mbpcd)
Our St. Paul Park refinery is located along the Mississippi River southeast of St. Paul Park. 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 (100 mbpcd)
Our Canton refinery is located south of Cleveland, Ohio. The Canton refinery processes sweet and sour crude oils, including
production from the nearby Utica Shale, into gasoline, distillates, asphalt, propane, petrochemicals, feedstocks and heavy fuel
oil. The Canton refinery has earned designation as an OSHA VPP Star site.
Mandan, North Dakota Refinery (71 mbpcd)
The Mandan refinery is located outside of Bismarck, North Dakota. The Mandan refinery processes primarily sweet domestic
crude oil from North Dakota and manufactures gasoline, distillates, propane, heavy fuel oil, feedstocks and petrochemicals.
Salt Lake City, Utah Refinery (66 mbpcd)
Our Salt Lake City refinery is the largest in Utah and is located north of downtown Salt Lake City. The Salt Lake City refinery
processes crude oil from Utah, Colorado, Wyoming and Canada to manufacture gasoline, distillates, petrochemicals, heavy fuel
oil, propane and feedstocks.
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 cleaner burning CARB 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 CARB gasoline and CARB diesel fuel, as well as
conventional gasoline, distillates, feedstocks, petrochemicals, propane and heavy fuel oil.
Anacortes, Washington Refinery (119 mbpcd)
Our Anacortes refinery is located 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, 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.
(mbpd)
Gasoline
Distillates(a)
Feedstocks and petrochemicals(a)
Asphalt
Propane
Heavy fuel oil
Total
(a) Product yields include renewable production.
2021
2020
2019
1,446
1,314
965
250
91
52
31
905
244
81
51
28
1,560
1,087
315
87
55
49
2,835
2,623
3,153
6
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. 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
2021
2020
2019
1,890
445
286
2,621
1,650
442
326
2,418
1,962
541
399
2,902
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
The Dickinson, North Dakota, renewable fuels facility began operations at the end of 2020 and reached full design operating
capacity in the second quarter of 2021. The facility has the capacity to produce 184 million gallons per year of renewable diesel
from corn oil, soybean oil, fats, and greases. The produced renewable diesel generates federal RINs and LCFS credits when
sold in California or similar markets. These instruments are used to help meet our Renewable Fuel Standard and LCFS
compliance obligations as a petroleum fuel producer.
On February 24, 2021, we announced our plan to strategically reposition the Martinez refinery to a renewable diesel facility.
Converting the Martinez facility from refining petroleum to manufacturing renewable fuels signals our strong commitment to
producing a substantial level of lower carbon-intensity fuels in California. As envisioned, the Martinez facility would start
producing approximately 260 million gallons per year of renewable diesel by the second half of 2022, with pretreatment
capabilities coming online in 2023. The facility is expected to be capable of producing approximately 730 million gallons per year
by the end of 2023.
Our wholly owned subsidiary, Virent, operates an advanced biofuels facility in Madison, Wisconsin at which it is working to
commercialize a process for converting biobased feedstocks into renewable fuels and chemicals. During 2021, Virent contributed
to an aviation industry first, as United Airlines flew an aircraft full of passengers using 100 percent sustainable aviation fuel
(“SAF”) in one engine and petroleum-based jet fuel in the other. Virent used its BioForm® process to produce synthesized
aromatic kerosene – a critical component that made the 100 percent SAF possible.
On December 14, 2021, we finalized the formation of a joint venture with Archer-Daniels-Midland Company (“ADM”) for the
production of soybean oil to supply rapidly growing demand for renewable diesel fuel. The joint venture, which is named Green
Bison Soy Processing, LLC, will own and operate a soybean processing complex in Spiritwood, North Dakota, with ADM owning
75 percent of the joint venture and MPC owning 25 percent. When complete in 2023, the Spiritwood facility will source and
process local soybeans and supply the resulting soybean oil exclusively to MPC. The Spiritwood complex is expected to produce
approximately 600 million pounds of refined soybean oil annually, enough feedstock for approximately 75 million gallons of
renewable diesel per year.
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 Sales
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, 2021, there were 7,159 brand jobber outlets in
37 states, the District of Columbia and Mexico where independent entrepreneurs primarily maintain Marathon-branded outlets.
We also have long-term supply contracts for 1,086 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 market area.
7
The following table sets forth our refined product sales volumes by product group for each of the last three years.
(mbpd)
Gasoline(b)
Distillates(b)
Feedstocks and petrochemicals(b)
Asphalt
Propane
Heavy fuel oil
Total
2021(a)
2020(a)
2019(a)
1,834
1,089
293
94
76
39
1,669
1,040
323
86
69
35
1,967
1,205
345
93
72
53
3,425
3,222
3,735
(a) Refined product sales include volumes marketed directly to end-users and trading/supply volumes such as bulk sales to large unbranded
resellers and other downstream companies.
(b) Sales include renewable products.
Refined Product Sales Destined for Export
We sell gasoline, distillates and asphalt for export, primarily out of our Garyville, Galveston Bay, Anacortes and Los Angeles
refineries. The following table sets forth our refined product sales destined for export by product group for the past three years.
(mbpd)
Gasoline
Distillates
Other
Total
Gasoline and Distillates
2021
2020
2019
154
162
55
371
110
187
43
340
131
215
51
397
We sell gasoline, gasoline blendstocks and distillates (including No. 1 and No. 2 fuel oils, jet fuel, kerosene, diesel fuel and
renewable diesel) to wholesale customers, 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, xylene, benzene, butane, alkylate, raffinate, cumene, platformate and toluene. 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 141 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 industrial/petrochemical consumers, respectively.
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.
8
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.
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 MEH 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.
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.
9
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.
Rate Regulation
Some of our existing pipelines are considered interstate common carrier pipelines subject to regulation by the Federal Energy
Regulatory Commission (“FERC”) under the Interstate Commerce Act (the “ICA”), Energy Policy Act of 1992 (“EPAct 1992”) and
the rules and regulations promulgated under those laws. The ICA and FERC regulations require that tariff rates for oil pipelines, a
category that includes crude oil and petroleum product pipelines, be just and reasonable and the terms and conditions of service
must not be unduly discriminatory. The ICA permits interested persons to challenge newly proposed tariff rates or terms and
conditions of service, or any change to tariff rates or terms and conditions of service, and authorizes FERC to suspend the
effectiveness of such proposal or change for a period of time to investigate. If, upon completion of an investigation, FERC finds
that the new or changed service or rate is unlawful, it is authorized to require the carrier to refund the revenues in excess of the
prior tariff collected during the pendency of the investigation. An interested person may also challenge existing terms and
conditions of service or rates and FERC may order a carrier to change its terms and conditions of service or rates prospectively.
Upon an appropriate showing, a shipper may also obtain reparations for damages sustained during the two years prior to the
filing of a complaint.
EPAct 1992 deemed certain interstate petroleum pipeline rates then in effect to be just and reasonable under the ICA. These
rates are commonly referred to as “grandfathered rates.” Our rates for interstate transportation service in effect for the 365-day
period ending on the date of the passage of EPAct 1992 were deemed just and reasonable and therefore are grandfathered.
Subsequent changes to those rates are not grandfathered. New rates have since been established after EPAct 1992 for certain
pipelines, and the rates for certain of our refined products pipelines have subsequently been approved as market-based rates.
FERC permits regulated oil pipelines to change their rates within prescribed ceiling levels that are tied to an inflation index. A
carrier must, as a general rule, utilize the indexing methodology to change its rates. Cost-of-service ratemaking, market-based
rates and settlement rates are alternatives to the indexing approach and may be used in certain specified circumstances to
change rates.
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 February 2021, the Interagency Working Group on the Social Cost of Greenhouse Gases published interim estimates of the
social cost of carbon, methane and nitrous oxide and is expected to finalize its estimates in 2022. The social cost of carbon,
methane and nitrous oxide can be used to weigh the costs and benefits of proposed regulations. A higher social cost 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 report emissions and 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, California has enacted a cap-and-trade program. Much of the compliance
costs associated with the California program 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
10
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 2021, EPA announced it is reconsidering the National Ambient Air Quality Standards (“NAAQS”) for ozone and particulate
matter. Lowering of the NAAQS and subsequent 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 emission reductions that could result in
increased costs to our facilities.
In California, the Governing Board for the South Coast Air Quality Management District (“SCAQMD”) adopted Rule 1109.1 in
November 2021, which establishes Best Available Retrofit Control Technology (“BARCT”) oxides of nitrogen (“NOx”) and carbon
monoxide (“CO”) emission limits for combustion equipment at petroleum refineries. These new requirements will replace the
Regional Clean Air Incentives Market (“RECLAIM”) cap-and-trade program which has required a staged refinery-wide reduction
of NOx emissions over the last several years and will result in additional emission reductions from our Los Angeles Refinery.
Compliance with Rule 1109.1 is being phased in through 2032 and will 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, 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, 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 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. A challenge of the 2021 authorization is
currently pending before the U.S. District Court in Montana and the plaintiffs request the court vacate and remand the 2021
authorization. Also, a petition has been filed with the United States Army Corps of Engineers asking it to revoke the 2021
authorization. The Biden Administration could repeal or replace the 2021 authorization in a subsequent rulemaking. The repeal,
vacatur, revocation or replacement of the 2021 authorization could impact pipeline construction and 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 vapor and fire suppressant. At this time, AFFFs containing PFAS are the only
proven foams that can prevent and control a flammable petroleum-based liquid fire involving a large storage tank or tank
containment area.
In May 2016, EPA issued lifetime health advisory levels (“HALs”) 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 it is planning to take to study and regulate various PFAS chemicals. 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. EPA did not issue any further regulations for PFAS under the Trump
administration. In October 2021, EPA updated the 2019 PFAS Action Plan. The Biden Administration has drafted a proposed rule
that would designate variants of PFAS as CERCLA hazardous substances. Additional PFAS regulation could include the
designation of PFAS as a RCRA hazardous waste and/or the establishment of national drinking water standards. Congress may
11
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 AFFFs containing
PFAS. Additionally, many states are using EPA HALs for PFOS and PFOA and some states are adopting and proposing state-
specific drinking water and cleanup standards for various PFAS, including but not limited to PFOS and PFOA. 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 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.
Vehicle and Fuel Requirements
Fuel Economy and Greenhouse Gas Emission Standards for Vehicles
The National Highway Traffic Safety Administration (“NHTSA”) establishes corporate average fuel economy (“CAFE”) standards
for passenger cars and light trucks. In addition, EPA establishes carbon dioxide (“CO2”) emission standards for passenger cars
and light trucks. At the direction of President Biden in his executive order setting a goal that 50 percent of all new passenger cars
and light trucks sold in 2030 be zero emission vehicles, EPA and NHTSA in 2021 issued separate proposed rules setting more
stringent requirements for reductions through model year 2026. NHTSA’s proposed amended CAFE standards would increase in
stringency from model year 2023 levels by eight percent per year over model years 2024-2026. EPA’s revised model year
2023-2026 CO2 emission standards, which were finalized in December 2021, result in average fuel economy of 40 mpg in model
year 2026. Higher CAFE and CO2 emission standards for cars and light trucks reduce demand for our transportation fuels.
In addition, California may establish per its Clean Air Act waiver authority different standards that could apply in multiple states.
EPA has proposed a rule that would reinstate California’s waiver for its Advanced Clean Car program, which includes
requirements for zero emission vehicle sales through 2025. California’s governor has also 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.
Renewable Fuels Standards and Low Carbon Fuel Standards
Pursuant to the Energy Policy Act of 2005 and the EISA, Congress established a Renewable Fuel Standard (“RFS”) program that
requires annual volumes of renewable fuel be blended into domestic transportation fuel. The statutory volumes apply through
calendar year 2022, after which EPA is required to set the annual volumes in accordance with statutory factors. When EPA
promulgates the annual renewable fuel volume obligations, EPA may reduce the amount of renewable fuel that must be blended
using its waiver or reset authority.
In its most recent annual rulemaking, EPA has proposed the annual renewable fuel standards for the years 2021 and 2022 and
has also proposed reopening the renewable fuel standards for 2020 given the unique and unprecedented conditions caused by
the COVID pandemic. Because the 2020 and 2021 standards would be promulgated after-the-fact, EPA is setting the standards
to align with actual renewable fuel volumes. For 2022, EPA is proposing standards above the original 2020 standards. EPA is
also proposing to add in a supplemental 500 million gallon total renewable fuel obligation to address the D.C. Circuit Court’s
12
remand of the 2016 annual renewable fuel standards. The supplemental 500-million-gallon obligation would be split between
2022 and 2023.
EPA’s policy on granting small refinery exemption petitions has changed under the Biden Administration. In December 2021, EPA
proposed to deny 65 small refinery exemption petitions currently pending before the agency. In addition, EPA is re-evaluating 31
small refinery exemptions that had been granted for compliance year 2018 after the D.C. Circuit court remanded the decisions to
EPA for further consideration. Under its new policy, EPA may reverse its original decision and deny these 31 petitions. All these
actions – the increase in 2022 standards, the 2016 supplemental volume, EPA’s reversal of exemptions previously 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.
There is currently no regulatory method for verifying the validity of most 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.
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 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 LCFS programs, 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 (“OSH Act”), 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 regulations promulgated pursuant to the OSH Act, including general industry
standards, record-keeping requirements and monitoring of occupational exposure to regulated substances.
We are also subject at regulated facilities to the Occupational Safety and Health Administration’s Process Safety Management
(“PSM”) and EPA’s Risk Management Program (“RMP”) 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 more stringent 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 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. 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.
13
HUMAN CAPITAL
We believe our employees are our greatest asset of strength, and our culture reflects the quality of individuals across our
workforce. Our collaborative efforts to foster an inclusive environment, provide 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, 2021, we employed approximately 17,700 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 3,760
of our 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 long-term incentive targets. Our annual bonus program is a critical
component of our compensation, as it provides individual rewards for MPC’s achievement against preset financial and ESG
goals, encouraging a sense of employee ownership. Employees in our executive-level pay grades, as well as senior leaders and
most mid-level leaders, are eligible to receive long-term incentive awards to align their compensation to the interests of
shareholders.
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. In addition, we provide generous paid parental leave benefits for birth
mothers and nonbirth parents; and, parents who both work for the Company are each eligible for the benefit. Further, we have a
substantial accrual cap for vacation banks and also award a significant number of college and trade school scholarships to the
high school senior children of our employees through the Marathon Petroleum Scholars Program. Both full-time and part-time
employees are eligible for these benefits.
Inclusion
Our company-wide Diversity, Equity and Inclusion ("DE&I") program is guided by a dedicated DE&I team led by our Vice
President Talent Acquisition and Diversity, Equity & Inclusion and supported by leadership company-wide. Our program is based
on our four-pillar DE&I strategy of building awareness, increasing representation, ensuring success, and measurement and
accountability. 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 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 DE&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 our Operational Excellence Management System, which expands on the
RC14001® scope, incorporates a Plan-Do-Check-Act continual improvement cycle, and aligns with ISO 9001, incorporating
quality and an increased stakeholder and process focus. Together, these components of our safety management system provide
14
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.
In 2021, MPC continued to run its critical operations and facilities safely through the ongoing pandemic. In addition to COVID-19
protection measures implemented in 2020 (e.g., masking, social distancing, barriers, etc.), MPC promoted vaccinations through
education campaigns and onsite clinics. Thousands of employees were inoculated at vaccine points of distribution set up onsite
or through collaborative efforts with local public health clinics. As a result of these measures, MPC was able to welcome most
non-essential employees back into the workplace in the spring of 2021. We continue to monitor the situation and adapt our
COVID protocols as appropriate.
Information about our Executive and Corporate Officers
The executive and corporate officers of MPC are as follows:
Name
Michael J. Hennigan
Maryann T. Mannen
Raymond L. Brooks
Suzanne Gagle
Fiona C. Laird*
C. Kristopher Hagedorn
David R. Heppner*
Richard A. Hernandez*
Rick D. Hessling*
Thomas Kaczynski
Brian K. Partee*
Ehren D. Powell*
James R. Wilkins*
Molly R. Benson*
Kristina A. Kazarian*
D. Rick Linhardt*
* Corporate officer.
Age as of
February 1,
2022
62
59
61
56
60
45
55
62
55
60
48
42
55
55
39
63
Position with MPC
President, Chief Executive Officer and Director
Executive Vice President and Chief Financial Officer
Executive Vice President, Refining
General Counsel and Senior Vice President, Government Affairs
Chief Human Resources Officer and Senior Vice President, Communications
Senior Vice President and Controller
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 Chief Digital Officer
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
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 Chairman of the Board of MPLX since April 2020, as Chief Executive Officer
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 and as a member of
MPLX’s Board of Directors effective February 1, 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. 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.
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.
15
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. Hagedorn was appointed Senior Vice President and Controller effective September 2021. Prior to this appointment, he
served as MPLX’s Vice President and Controller since October 2017. Before joining MPLX, he was Vice President and Controller
at CONSOL Energy Inc., a Pennsylvania-based natural gas and coal producer and exporter, beginning in 2015, Assistant
Controller beginning in 2014 and Director, Financial Accounting, beginning in 2012. Mr. Hagedorn was Chief Accounting Officer
for CONE Midstream Partners LP, a publicly traded master limited partnership with gathering assets in the Appalachian Basin,
from 2014 to 2015. Previously, he served in positions of increasing responsibility with PricewaterhouseCoopers LLP beginning in
1998.
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.
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. Powell was appointed Senior Vice President and Chief Digital Officer 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. 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.
16
Available Information
General information about MPC, including our Corporate Governance Principles, our Code of Business Conduct and our Code of
Ethics for Senior Financial Officers, can be found at www.marathonpetroleum.com under the “Investors” tab by selecting
“Corporate Governance.” 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
and Public Policy Committee are also available at this site under the “About” tab by selecting “Board of Directors.”
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, or on the
SEC’s website at www.sec.gov. 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. We have in the past
been adversely affected by certain of, and may in the future be affected by, these risks. You should not interpret the disclosure of
any risk factor to imply that the risk has not already materialized.
Business and Operational Risks
The COVID-19 pandemic 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 and existing COVID-19 mitigation measures continue to have adverse effects on global travel and
economic activity and, consequently, demand for the petroleum products that we manufacture, sell, transport and store.
Significant uncertainty remains as to the extent to which further resurgences in the virus, the emergence of new variants and
waning vaccine effectiveness may spur future actions by individuals, governments and the private sector to stem the spread of
the virus. Refinery utilization rates and refined product demand—particularly with respect to jet fuel—remain below historical
levels.
The extent to which the COVID-19 pandemic continues to impact global economic conditions, our business and the business of
our customers, suppliers and other counterparties, will depend largely on future developments that remain uncertain and cannot
be predicted, such as the length and severity of the pandemic; the social, economic and epidemiological effects of COVID-19
mitigation measures; the extent to which individuals acquire and retain immunity; emerging virus variants and how those new
variants of the disease affect the human body; and general economic conditions.
New or additional mitigation measures required by national, state or local governments, such as vaccine or testing mandates,
may result in increased operating costs, increased employee attrition and difficulty in securing future workforce needs, and may
adversely affect discretionary and business travel.
Additionally, the continuation of the pandemic could precipitate or aggravate the other risks identified in this Form 10-K, which in
turn could further materially and adversely affect our business, financial condition and results of operations, including in ways not
currently known or considered by us to present significant risks.
We may be negatively impacted by inflation.
Increases in inflation may have an adverse effect on us. Current and future inflationary effects may be driven by, among other
things, supply chain disruptions and governmental stimulus or fiscal policies. Continuing increases in inflation could impact the
commodity markets generally, the overall demand for our products, our costs for feedstocks, labor, material and services and the
margins we are able to realize on our products and services, all of which could have an adverse impact on our business,
financial position, results of operations and cash flows. Inflation may also result in higher interest rates, which in turn would result
in higher interest expense related to our variable rate indebtedness and any borrowings we undertake to refinance existing fixed
rate indebtedness.
17
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 and other feedstocks. The prices of feedstocks and the prices at which we can sell our refined products fluctuate
independently due to a variety of regional and global market factors that are beyond our control, including:
•
•
•
•
•
•
•
•
worldwide and domestic supplies of and demand for feedstocks and refined products;
transportation infrastructure cost and availability;
operation levels of other refineries in our markets;
the development by competitors of new refining or renewable conversion capacity;
natural gas and electricity supply costs;
political instability, threatened or actual terrorist incidents, armed conflict or other global political or economic conditions;
local weather conditions; and
the occurrence of other risks described herein.
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 generally
purchase our 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, fuel efficiency and alternative fuel
vehicles may decrease demand for petroleum-based transportation fuels.
Developments aimed at reducing vehicle emissions, increasing vehicle efficiency or reducing the sale of new petroleum-fueled
vehicles may decrease the demand and may 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 increased the stringency of CAFE and CO2 emission standards by 1.5 percent each year from model years 2021
through 2026. In 2020, California’s governor issued an executive order requiring all new passenger vehicles sold in the state be
zero-emission by 2035. Other jurisdictions have issued or considered issuing similar mandates, and we expect this trend will
continue.
Moreover, consumer acceptance and market penetration of electric, hybrid and alternative fuel vehicles continues to increase. In
2021, several automobile manufacturers jointly announced their shared goal that 40-50% of their new vehicle sales be battery
electric, fuel cell or plug-in hybrid vehicles by 2030. Other automobile manufacturers have similar, or more aggressive, goals with
respect to vehicle electrification.
Together, these trends and developments have had and are expected to continue to have an adverse effect on sales of our
petroleum-based transportation fuels, which in turn 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.
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. These types of incidents adversely affect our operations and may result in serious personal
injury or loss of human life, significant damage to property and equipment, impaired ability to manufacture our products,
environmental pollution, and substantial losses. We have experienced certain of these incidents in the past.
For assets located near populated areas, the level of damage resulting from such an incident 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
18
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 are increasingly dependent on the performance of our information technology systems and those of our third-party
business partners and service providers.
We are increasingly dependent on our information technology systems and those of our third-party business partners and service
providers 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 and investor data,
and to manage or support a variety of business processes, including our supply chain, pipeline operations, gathering and
processing operations, credit card payments and authorizations at certain of our customers’ retail outlets, financial transactions,
banking and numerous other processes and transactions.
Our systems (and those of our third-party business partners and service providers) are subject to numerous and evolving
cybersecurity threats and attacks, including ransomware and other malware, and phishing and social engineering schemes,
which can compromise our ability to operate, and the confidentiality, availability, and integrity of data in our systems or those of
our third-party business partners and service providers. These and other cybersecurity threats may originate with criminal
attackers, state-sponsored actors or employee error or malfeasance. Because the techniques used to obtain unauthorized
access, or to disable or degrade systems continuously evolve and have become increasingly complex and sophisticated, and
can remain undetected for a period of time despite efforts to detect and respond in a timely manner, we (and our third-party
business partners and service providers) are subject to the risk of cyberattacks.
Our cybersecurity and infrastructure protection technologies, disaster recovery plans and systems, employee training and vendor
risk management may not be sufficient to defend us against all unauthorized attempts to access our information or impact our
systems. We and our third-party vendors and service providers have been and may in the future be subject to cybersecurity
events of varying degrees. To date, the impacts of prior events have not had a material adverse effect on us.
Cybersecurity events involving our information technology systems or those of our third-party business partners and service
providers can result in theft, destruction, loss, misappropriation or release of confidential financial data, regulated personally
identifiable information, intellectual property and other information; give rise to remediation or other expenses; result in litigation,
claims and increased regulatory review or scrutiny; reduce our customers’ willingness to do business with us; disrupt our
operations and the services we provide to customers; and subject us to litigation and legal liability under international, U.S.
federal and state laws. Any of such results could have a material adverse effect on our reputation, business, financial condition,
results of operations and cash flows.
The availability and cost of renewable identification numbers could have an adverse effect on our financial condition
and results of operations.
Pursuant to the Energy Policy Act of 2005 and the EISA, Congress established a Renewable Fuel Standard (“RFS”) program that
requires annual volumes of renewable fuel be blended into domestic transportation fuel. A Renewable Identification Number
(“RIN”) is assigned to each gallon of renewable fuel produced in, or imported into, the United States. As a producer of petroleum-
based motor fuels, we are obligated to blend renewable fuels into the products we produce at a rate that is at least
commensurate to EPA’s quota and, to the extent we do not, we must purchase RINs in the open market to satisfy our obligation
under the RFS program. We are exposed to the volatility in the market price of RINs. We cannot predict the future prices of RINs.
RINs prices are dependent upon a variety of factors, including EPA regulations, the availability of RINs for purchase, and levels
of transportation fuels produced, which can vary significantly from quarter to quarter. Additionally, the status of EPA RFS
exemptions may impact the price of RINs. EPAs policy on granting certain RFS exemptions has changed under the Biden
administration, and some previously granted exemptions have been the subject of legal proceedings that may ultimately result in
the reversal of past exemptions. EPA’s reversal of exemptions previously 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. There is currently no regulatory method for verifying the
validity of most 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. See Item 1. Business – Regulatory Matters for
additional information on these and other regulatory compliance matters.
19
Competitors that produce their own supply of feedstocks, own their own retail sites, or have greater financial resources
may have a competitive advantage.
The refining and marketing industry is highly competitive with respect to both feedstock supply and refined petroleum products.
We compete with many companies for available supplies of crude oil and other feedstocks, and we do not produce any of our
crude oil feedstocks. Our competitors include multinational, integrated major oil companies that can obtain a significant portion of
their feedstocks from company-owned production. Competitors that produce crude oil are at times better positioned to withstand
periods of depressed refining margins or feedstock shortages.
We also compete with other companies for customers for our refined petroleum products. The independent entrepreneurs who
operate primarily Marathon-branded outlets and the direct dealer locations we supply compete with other convenience store
chains, outlets owned or operated by 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. The loss of market share by those who
operate our branded outlets and the direct dealer locations we supply could adversely affect 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 or limited 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, can adversely affect us.
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.
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 lead to decreases in 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 can result in producers deciding to limit their oil and gas drilling
operations, which can 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.
20
Severe weather events and other climate conditions may adversely affect our facilities and ongoing operations.
Our facilities are subject to acute physical risks, such as floods, hurricane-force winds, wildfires and winter storms, and chronic
physical risks, such as sea-level rise or water shortages. For example, in 2021, our Galveston Bay refinery was adversely
affected by Winter Storm Uri and our Garyville refinery was adversely affected by Hurricane Ida. The occurrence of these and
similar events have had, and may in the future 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. 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, political and social unrest, security issues involving key personnel and changing regulatory
and political environments. Future outbreaks of infectious diseases could affect demand for refined products and economic
conditions generally, as the COVID-19 pandemic has done over the last two years. In addition, the deterioration of trade
relationships, modification or termination of existing trade agreements, imposition of new economic sanctions against Russia or
other countries and the effects of potential responsive countermeasures, or increased taxes, border adjustments or tariffs can
make international business operations more costly, which can 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. 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, Russia or elsewhere or the occurrence or threat
of future terrorist attacks could adversely affect the economies of the U.S. and other countries. Lower levels of economic activity
often result in a decline in energy consumption, which may 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 or revoke or refuse to grant necessary permits.
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 or other targeted operational disruptions may affect our facilities or those of our customers and
suppliers.
Refining, gathering and processing, pipeline and terminal infrastructure, and other energy assets, may be the subject of terrorist
attacks or other targeted operational disruptions. Any attack or targeted disruption of our operations, those of our customers or, in
some cases, those of other energy industry participants, could have a material and adverse effect on our business. Similarly, any
similar event that severely disrupts the markets we serve could materially and adversely affect our results of operations, financial
position and cash flows.
21
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, 2021, our total debt obligations for borrowed money and finance lease obligations were $25.95 billion, including
$18.91 billion of obligations of MPLX and its subsidiaries. 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:
•
•
•
•
•
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.
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. Any changes in our credit capacity or credit profile could materially
and adversely affect our business, financial condition, results of operations and cash flows.
Significant variations in the market prices of crude oil and refined products can affect our financial performance.
During 2020, there were significant variations in the market prices of products held in our inventories. Those significant 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. 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.
A continued period of economic slowdown or recession, or a protracted period of depressed prices for crude oil or refined
petroleum products, could have significant and adverse consequences for our financial condition and the financial condition of
our customers, suppliers and other counterparties, and 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.
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.
Increases in interest rates could adversely impact our share price, our ability to issue equity or incur debt for
acquisitions or other purposes and our ability to make dividends at our intended levels.
Our revolving credit facility has a variable interest rate. As a result, future interest rates on our debt could be higher than current
levels, causing our financing costs to increase accordingly. In addition, we may in the future refinance outstanding borrowings
under our revolving credit facility with fixed-rate indebtedness. Interest rates payable on fixed-rate indebtedness typically are
higher than the short-term variable interest rates that we pay on borrowings under our revolving credit facility. We also have other
fixed-rate indebtedness that we may need or desire to refinance in the future at or prior to the applicable stated maturity. A rising
interest rate environment could have an adverse impact on our share price and our ability to issue equity or incur debt for
acquisitions or other purposes and to make dividends at our intended levels.
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. On July 27,
2017, the Financial Conduct Authority (the authority that regulates LIBOR), or FCA, announced that it intends to stop compelling
banks to submit rates for the calculation of LIBOR after 2021. Subsequently, on March 5, 2021, ICE Benchmark Administration
Limited (the entity that calculates and publishes LIBOR), or IBA, and FCA made public statements regarding the future cessation
of LIBOR. According to the FCA, IBA will permanently cease to publish each of the LIBOR settings on either December 31, 2021
22
or June 30, 2023. IBA did not identify any successor administrator in its announcement. The announced final publication date for
1-week and 2-month LIBOR settings and all settings for non-USD LIBOR was December 31, 2021. The announced final
publication date for overnight, 1-month, 3-month, 6-month and 12-month LIBOR settings is June 30, 2023. It is unclear whether
new methods of calculating LIBOR will be established such that it continues to exist after such end dates, and there is
considerable uncertainty regarding the publication or representativeness of LIBOR beyond such end dates. The U.S. Federal
Reserve, in conjunction with the Alternative Reference Rates Committee, is seeking to replace U.S. dollar LIBOR with a newly
created index (the secured overnight financing rate or SOFR), calculated based on repurchase agreements backed by treasury
securities.
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 in the United Kingdom, the United States or elsewhere 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. Restricted access to
capital markets and/or increased borrowing costs could have an adverse effect on our results of operations, cash flows, financial
condition and liquidity.
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 assets or operations can 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, 2021, our balance sheet reflected $8.3 billion and $2.2 billion of goodwill and other intangible assets,
respectively. We have in the past recorded significant impairments of our goodwill. 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, whether due to inflation or other factors;
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;
23
• market-related increases in a project’s debt or equity financing costs;
•
•
•
global supply chain disruptions;
nonperformance by, or disputes with, vendors, suppliers, contractors or subcontractors; and
delays due to citizen, state or local political or activist pressure.
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.
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 and services.
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:
•
•
•
•
•
•
•
•
•
•
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,
climate change and greenhouse gas emissions,
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 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 have incurred and may in the future incur liability for personal injury, property damage, natural resource
damage or clean-up costs due to alleged contamination and/or exposure to chemicals such as benzene and MTBE. There is also
increased regulatory interest in per- and polyfluoroalkyl substances (“PFAS”), which we expect will lead to increased monitoring
and remediation obligations and potential liability related thereto. 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. If 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.
The tax treatment of publicly traded partnerships or an investment in MPLX units could be subject to potential
legislative, judicial or administrative changes and differing interpretations, possibly on a retroactive basis.
The present U.S. federal income tax treatment of publicly traded partnerships, including MPLX, or an investment in MPLX
common units may be modified by administrative, legislative or judicial interpretation at any time. From time to time, the
President and members of the U.S. Congress propose and consider substantive changes to the existing U.S. federal income tax
24
laws that would affect publicly traded partnerships, including proposals that would eliminate MPLX’s ability to qualify for
partnership tax treatment.
For example, the Biden Administration’s May 2021 budget proposal included a proposal that would have repealed the application
of the qualifying income exception to partnerships with income and gains from activities relating to fossil fuels for taxable years
beginning after 2026.
We are unable to predict whether any such changes will ultimately be enacted. Any modification to the U.S. federal income tax
laws and interpretations thereof may or may not be applied retroactively and could make it more difficult or impossible for MPLX
to meet the exception for certain publicly traded partnerships to be treated as partnerships for U.S. federal income tax purposes
or increase the amount of taxes payable by unitholders in publicly traded partnerships.
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, California and Washington have enacted cap-and-trade programs. 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.
Certain municipalities have also proposed or enacted restrictions on the installation of natural gas appliances and infrastructure
in new residential or commercial construction, which could affect demand for the natural gas that MPLX transports and stores.
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 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 companies are subject to increasing environmental and climate-related litigation.
Governmental and other entities in various U.S. states have filed lawsuits against various energy 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 sought 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.
25
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. Additionally, societal sentiment regarding carbon-based fuels may adversely
impact our reputation and ability to attract and retain employees.
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. 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.
Increasing attention to environmental, social and governance matters may impact our business and financial results.
In recent years, increasing attention has been given to corporate activities related to environmental, social and governance
(“ESG”) matters in public discourse and the investment community. A number of advocacy groups, both domestically and
internationally, have campaigned for governmental and private action to promote ESG-related change at public companies,
including, but not limited to, through the investment and voting practices of investment advisers, pension funds, universities and
other members of the investing community. These activities include increasing attention and demands for action related to
climate change and energy transition matters, such as promoting the use of substitutes to fossil fuel products and encouraging
the divestment of fossil fuel equities, as well as pressuring lenders and other financial services companies to limit or curtail
activities with fossil fuel companies. If this were to continue, it could have a material adverse effect on our access to capital.
Members of the investment community have begun to screen companies such as ours for sustainability performance, including
practices related to GHG emission reduction and energy transition strategies. If we are unable to find economically viable, as
well as publicly acceptable, solutions that reduce our GHG emissions, reduce GHG intensity for new and existing projects,
increase our non-fossil fuel product portfolio, and/or address other ESG-related stakeholder concerns, our business and results
of operations could be materially and adversely affected.
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. 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.
26
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 3,762 of our employees are covered by collective bargaining agreements. Approximately 2,545 refinery
employees are covered by collective bargaining agreements that were set to expire on January 31, 2022, but have been
extended by mutual agreement, subject to a 24-hour written notice of cancellation by either party. The remaining 1,217 hourly
represented employees are covered by collective bargaining agreements with expiration dates ranging from 2022 to 2026. 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 170 workers at our St. Paul Park refinery
were on strike from January 21, 2021 until July 5, 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.
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, we could be prohibited from operating vessels engaged in
U.S. coastwise trade, which could adversely affect our business, financial condition, results of operations and cash
flows.
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, we
would be prohibited from operating vessels in the U.S. inland waters or otherwise in U.S. coastwise trade. 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. For example, a portion of the Tesoro High Plains pipeline in North Dakota remains
shut down following delays in renewing a right-of-way necessary for the operation of a section of the pipeline. Any loss of or
reduction in our real property 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 can 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, along with each
Native American tribe, regulate natural gas and oil operations on Native American tribal lands. 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.
27
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:
•
•
•
•
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.
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:
•
•
•
•
•
•
•
•
•
•
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.
28
Strategic Transaction Risks
We may fail to realize all of the anticipated benefits of the Speedway sale.
On May 14, 2021, we completed the sale of Speedway, our company-owned and operated retail transportation fuel and
convenience store business, to 7-Eleven. We may not realize some or all the expected benefits of the sale. For example, we may
be unable to utilize fully 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. Following the completion of the sale, our diversification of revenue
sources diminished, and 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 risks, which may include, among others:
•
•
•
•
•
•
•
•
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.
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, transactional taxes, and 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.
29
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, 2021.
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
Total
Crude Oil Refining
Capacity (mbpcd)
593
585
1,178
291
253
140
133
105
100
71
66
1,159
363
119
68
550
2,887
The Dickinson, North Dakota, renewable fuels facility has the capacity to produce 184 million gallons per year of renewable
diesel from corn oil, soybean oil, fats, and greases. 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 is expected to be approximately 730
million gallons per year.
30
The following table sets forth the approximate number of locations where jobbers maintain branded outlets, marketing fuels
under the Marathon, ARCO, Shell, Mobil, Tesoro and other brands, as of December 31, 2021.
Location
Alabama
Alaska
Arizona
California
Colorado
District of Columbia
Florida
Georgia
Idaho
Illinois
Indiana
Iowa
Kentucky
Louisiana
Maryland
Massachusetts
Mexico
Michigan
Minnesota
Mississippi
Nevada
New Mexico
New York
North Carolina
North Dakota
Ohio
Oregon
Pennsylvania
Rhode Island
South Carolina
South Dakota
Tennessee
Texas
Utah
Virginia
Washington
West Virginia
Wisconsin
Wyoming
Total
Number of
Branded Outlets
395
42
83
109
12
2
664
384
105
199
640
4
513
38
55
1
279
761
291
106
15
41
56
208
114
820
42
87
2
115
33
409
5
99
171
85
111
58
5
7,159
31
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,
2021.
Location
Arizona
California
Nevada
Total
Number of
Locations
68
955
63
1,086
The following table sets forth details about our Refining & Marketing owned and operated terminals as of December 31, 2021.
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
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
2
1
1
4
1
1
1
4
1
2
16
18
306
328
634
263
121
549
54
12
417
2,207
451
483
4,557
5,191
32
MIDSTREAM - MPLX
The following tables set forth certain information relating to MPLX’s crude oil, refined products and water pipeline, gathering
systems and storage assets as of December 31, 2021.
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 (mbpd)
Storage assets: (mbbls)
Refining Logistics(g)
Tank Farms
Caverns
Diameter
(inches)
2” - 48”
4” - 42”
3”- 4”
4” - 8”
Length
(miles)
8,752
6,465
103
11
114
Capacity(a)
Various
Various
Various
Various
2,010
95,271
35,144
4,764
(a)
(b)
(c)
(d)
(e)
(f)
(g)
Capacity for the Barge Docks is shown as 100 percent of the throughput capacity. Capacity for Tank Farms is shown as 100 percent of the
available storage capacity. Capacity for caverns is shown as the storage commitment in mbbls.
Includes pipelines leased from third parties.
Includes approximately 1,916 miles of pipeline in which MPLX has a 9 percent ownership interest, 168 miles of pipeline in which MPLX has
a 35 percent ownership interest, 48 miles of pipeline in which MPLX has a 41 percent ownership interest, 57 miles of pipeline in which
MPLX has a 59 percent ownership interest, 522 miles of pipeline in which MPLX has an 11 percent ownership interest, 107 miles of pipeline
in which MPLX has a 67 percent ownership interest and 975 miles of pipeline in which MPLX has a 17 percent ownership interest.
Includes approximately 1,161 miles of inactive pipeline.
Includes approximately 1,830 miles of pipeline in which MPLX has a 25 percent ownership interest, 87 miles of pipeline in which MPLX has
a 65 percent ownership interest, 78 miles of pipeline in which MPLX has a 25 percent interest, 323 miles of pipeline in which MPLX has an 8
percent interest, 498 miles of pipeline in which MPLX has a 38 percent interest and 17 miles of pipeline in which MPLX has a 50 percent
interest.
Includes approximately 201 miles of inactive pipeline.
Refining logistics assets primarily include tankage.
33
The following table sets forth details about MPLX owned and operated terminals as of December 31, 2021. Additionally, MPLX
operates one leased terminal and has partial ownership interest in one terminal.
Number of
Terminals
Tank Storage Capacity
(thousand barrels)
Owned and Operated Terminals
Refined Products Terminals:
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
2
3
8
4
4
3
4
6
6
2
8
1
3
3
1
12
1
1
4
1
1
4
2
84
3
3
1
1
1
1
10
94
443
1,572
3,483
3,383
982
1,000
1,124
3,217
2,587
5,404
2,440
13
481
1,356
—
3,200
390
371
1,149
73
21
920
1,587
35,196
554
786
529
283
38
194
2,384
37,580
Total owned and operated terminals
(a) MPLX accounts for this terminal as an equity method investment.
The following table sets forth details about MPLX barges and towboats as of December 31, 2021.
Class of Equipment
Inland tank barges(a)
Inland towboats
(a) All of our barges are double-hulled.
Number
in Class
Capacity
(thousand barrels)
297
23
7,832
N/A
34
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 and for the year
ended December 31, 2021. All throughputs and utilizations included are weighted-averages for days in operation.
Gas Processing Complexes
Marcellus Operations
Utica Operations
Southern Appalachia Operations
Southwest Operations(b)(c)
Bakken Operations
Rockies Operations
Design
Throughput
Capacity
(MMcf/d)
Natural Gas
Throughput
(MMcf/d)(a)
Utilization
of Design
Capacity(a)
6,320
1,325
495
2,125
185
1,177
5,639
482
231
1,301
149
429
91 %
36 %
47 %
66 %
81 %
36 %
72 %
Total
(a) Natural gas throughput is a weighted average for days in operation. The utilization of design capacity has been calculated using the
11,627
8,231
weighted average design throughput capacity.
(b) Centrahoma Processing LLC’s processing capacity of 550 MMcf/d and actual throughput of 170 MMcf/d are not included in this table as
MPLX owns a non-operating 40 percent interest in this joint venture.
(c)
The Southwest Operations include throughput for a complex which was sold by MPLX on February 12, 2021. The capacity for this facility is
not included in the table above. The processing volumes calculated for the number of days MPLX owned these assets during 2021 were 96
MMcf/d.
Fractionation & Condensate Stabilization Complexes
Marcellus Operations
Utica Operations
Southern Appalachia Operations
Bakken Operations
Design
Throughput
Capacity
(mbpd)
NGL
Throughput
(mbpd)(a)
Utilization
of Design
Capacity(a)
413
23
24
33
314
13
12
23
76 %
57 %
50 %
70 %
Rockies Operations
Total(b)
(a) NGL throughput is a weighted average for days in operation. The utilization of design capacity has been calculated using the weighted
498
366
4
5
80 %
73 %
average design throughput capacity.
(b)
The total does not include throughput for a complex which was sold by MPLX on February 12, 2021. The fractionated volumes calculated for
the number of days MPLX owned these assets during 2021 were 11 mbpd and the throughput for the year was 1 mbpd.
Design
Throughput
Capacity
(mbpd)
NGL
Throughput
(mbpd)(a)
Utilization
of Design
Capacity(a)
De-ethanization Complexes
Marcellus Operations
Utica Operations
Rockies Operations
Total(b)
(a) NGL throughput is a weighted average for days in operation. The utilization of design capacity has been calculated using the weighted
191
5
—
196
269
40
5
314
71 %
13 %
— %
63 %
average design throughput capacity.
(b)
The total does not include throughput for a complex which was sold by MPLX on February 12, 2021. The fractionated volumes calculated for
the number of days MPLX owned these assets during 2021 were 6 mbpd and the throughput for the year was 1 mbpd.
35
86 %
53 %
54 %
79 %
31 %
56 %
Natural Gas Gathering Systems
Marcellus Operations
Utica Operations
Southwest Operations
Design
Throughput
Capacity
(MMcf/d)
1,547
3,183
2,960
Natural Gas
Throughput
(MMcf/d)(a)
Utilization
of Design
Capacity(a)
1,336
1,690
1,494
Bakken Operations
Rockies Operations(b)
Total
(a) Natural gas throughput is a weighted average for days in operation. The utilization of design capacity has been calculated using the
5,131
1,486
9,365
461
189
150
weighted average design throughput capacity.
(b)
This region does not include MPLX’s operated joint venture, Rendezvous Gas Services, L.L.C. (“RGS”), which has a gathering capacity of
1,032 MMcf/d; this system supports other systems which are included in the Rockies region and that throughput is presented in the table
above. The third party volumes gathered for RGS during the year ended December 31, 2021 were 127 MMcf/d.
The following tables set forth certain information relating to MPLX’s NGL pipelines as of December 31, 2021.
NGL Pipelines
Marcellus Operations
Utica Operations
Southern Appalachia Operations
Southwest Operations(a)
Bakken Operations
Rockies Operations
(a)
Includes 38 miles of inactive pipeline.
Diameter
(inches)
Length
(miles)
4” - 20”
4”- 12”
6” - 8”
6”
8” - 12”
8”
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, 2021, 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
845
48
1,489
32
793
170
798
1,793
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.
36
As of December 31, 2021, we had a partial ownership interest in the following crude oil terminal.
Terminal
South Texas Gateway Terminal LLC
Ownership
Interest
25%
Tank Storage Capacity
(million barrels)
8.6
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, 2021.
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.
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.
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.
Climate Change Litigation
Governmental and other entities in various states have filed climate-related lawsuits against a number of 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
December 20, 2017
City of Santa Cruz, California
December 20, 2017
City of Richmond, California
January 22, 2018
State of Rhode Island
July 2, 2018
Mayor and City Council of
Baltimore, Maryland
Pacific Coast Federation of
Fishermen’s Associations, Inc.
City and County of Honolulu, Hawaii
July 20, 2018
November 14, 2018
March 9, 2020
City of Charleston, South Carolina
State of Delaware
September 9, 2020
September 10, 2020
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. District Court (Northern District of California); U.S. Court
of Appeals for the Ninth Circuit
U.S. District Court (Northern District of California); U.S. Court
of Appeals for the Ninth Circuit
U.S. District Court (Northern District of California); U.S. Court
of Appeals for the Ninth Circuit
U.S. District Court (Northern District of California); U.S. Court
of Appeals for the Ninth Circuit
U.S. District Court (Northern District of California); U.S. Court
of Appeals for the Ninth Circuit
Superior Court of Providence County; U.S. Court of Appeals
for the First Circuit
Circuit Court of Baltimore City; U.S. Court of Appeals for the
Fourth Circuit
U.S. District Court (Northern District of California)
U.S. District Court (District of Hawaii); U.S. Court of Appeals
for the Ninth Circuit; Circuit Court of the First Circuit (State of
Hawaii)
U.S. District Court (District of South Carolina)
U.S. District Court (District of Delaware); U.S. Court of
Appeals for the Third Circuit
37
Plaintiff
County of Maui, Hawaii
Date Instituted
October 12, 2020
City of Annapolis, Maryland
Anne Arundel County, Maryland
February 22, 2021
April 26, 2021
Dakota Access Pipeline
Name of Court(s) where pending
U.S. District Court (District of Hawaii); U.S. Court of Appeals
for the Ninth Circuit; Circuit Court of the First Circuit (State of
Hawaii)
U.S. District Court (District of Maryland)
U.S. District Court (District of Maryland)
MPLX holds a 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. In
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 prepare an environmental impact statement (“EIS”)
relating to an easement under Lake Oahe in North Dakota. The D.D.C. later vacated the easement. The EIS is currently
expected to be completed in the second half of 2022.
In May 2021, the D.D.C. denied a renewed request for an injunction to shut down the pipeline while the EIS is being prepared. In
June 2021, the D.D.C. issued an order dismissing without prejudice the tribes’ claims against the Dakota Access Pipeline. The
litigation could be reopened or new litigation challenging the EIS, once completed, could be filed. The pipeline remains
operational.
MPLX has entered into a Contingent Equity Contribution Agreement whereby it, 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. If the
pipeline were temporarily shut down, 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. MPLX also expects to
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 1% redemption premium required
pursuant to the indenture governing the notes) and any accrued and unpaid interest. As of December 31, 2021, our maximum
potential undiscounted payments under the Contingent Equity Contribution Agreement were approximately $230 million.
Tesoro High Plains Pipeline
In July 2020, Tesoro High Plains Pipeline Company, LLC (“THPP”), a subsidiary of 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 demanded the immediate cessation of pipeline operations and
assessed trespass damages of approximately $187 million. On appeal, the Assistant Secretary - Indian Affairs vacated the BIA’s
trespass order and remanded to the Regional Director for the BIA Great Plains Region to issue a new decision based on
specified criteria. On December 15, 2020, the Regional Director of the BIA issued a new trespass notice to THPP, finding that
THPP was in trespass and assessing trespass damages of approximately $4 million (including interest). The order also required
that THPP 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. In March 2021, THPP received a copy of an order purporting to vacate
all orders related to THPP’s alleged trespass issued by the BIA between July 2, 2020 and January 14, 2021. The order directs
the Regional Director of the BIA to reconsider the issue of THPP’s alleged trespass and issue a new order, if necessary, after all
interested parties have had an opportunity to be heard. On April 23, 2021, THPP filed a lawsuit in the District of North Dakota
against the United States of America, the U.S. Department of the Interior and the BIA (together, the U.S. Government Parties”)
challenging the March order purporting to vacate all previous orders related to THPP’s alleged trespass. On February 8, 2022,
the U.S. Government Parties filed their answer to THPP’s suit, asserting counterclaims for trespass and ejectment. The U.S.
Government Parties claim THPP is in continued trespass with respect to the pipeline and seek disgorgement of pipeline profits
from June 1, 2013 to present, removal of the pipeline and remediation. We intend to vigorously defend ourselves against these
counterclaims. We continue to work towards a settlement of this matter with holders of the property rights at issue.
Martinez Refinery
We are currently negotiating the settlement of 99 NOVs received from the Bay Area Air Quality Management District
(“BAAQMD”). The NOVs were issued from 2011 to 2018 and allege violations of air quality regulations and the idled Martinez
refinery’s air permit. 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 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 2018, TRMC informed EPA that it would need additional time to satisfy
requirements of the Consent Decree. In 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, contingent
38
on TRMC completing the conversion of the Martinez refinery to renewable diesel production, 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
As previously disclosed, MPLX has been negotiating with EPA with respect to 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. We are in the process of finalizing a settlement with EPA pursuant to which MPLX expects to pay a cash
penalty in excess of $300,000 and enter into a consent decree covering MPLX gas plants and compressor stations located in
Utah, North Dakota and Wyoming. We expect the settlement will be finalized later in 2022.
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable.
39
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 15, 2022, there were 28,357
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, 2021, of equity securities that
are registered by MPC pursuant to Section 12 of the Securities Exchange Act of 1934, as amended:
Period
10/01/2021-10/31/2021
11/01/2021-11/30/2021
12/01/2021-12/31/2021
Total
Total Number of
Shares
Purchased(a)
Average
Price Paid
per Share(b)
7,999,599
$
16,968,226
18,475,376
43,443,201
65.67
63.95
63.16
63.93
Total Number of
Shares Purchased as
Part of Publicly
Announced Plans
or Programs
Millions of Dollars
Maximum Dollar Value
of Shares that May Yet
Be Purchased Under
the Plans or
Programs(c)
7,996,619
$
16,968,158
18,475,376
43,440,153
7,517
6,432
5,265
(a)
(b)
The amounts in this column include 2,980, 68 and 0 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 repurchased under our share repurchase authorizations and for
shares tendered to us in satisfaction of employee tax withholding obligations upon the vesting of restricted stock granted under our stock
plans. The weighted average price includes commissions paid to brokers during the quarter.
(c) 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. On May 14, 2021, we announced that our board of directors had
approved an additional $7.1 billion share repurchase authorization. On February 2, 2022, we announced that our board of directors had
approved an additional $5 billion share repurchase authorization, which authorization is not reflected in this column. These share
repurchase authorizations have no expiration date.
40
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 and Item 8. Financial Statements and Supplementary Data.
EXECUTIVE SUMMARY
Business Update
For the twelve months ended December 31, 2021, we continued to see recovery in the environment in which our business
operates, albeit in some markets and regions more or less than others. The increased availability of vaccinations and the
reductions in travel and business restrictions appeared to drive increased economic activity, including the opening of many
businesses and schools, as well as more in-person interaction broadly. Demand for gasoline and distillates, excluding jet fuel,
have returned to near 2019 pre-pandemic levels. Permanent remote work and teleconferencing arrangements may continue to
impact demand for our refined products. While we have seen improved results through 2021, we are unable to predict the
potential effects that further resurgences of COVID-19 may have on our financial position and results.
In response to this business environment, we continue to focus on the following priorities for our business:
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. A near-
term focus has been securing advantaged renewable feedstocks as we continue to advance our renewable fuels production
capabilities. This includes exploring joint venture opportunities and strategic alliances within the renewable fuels value chain.
Continued Capital Discipline and Focus on Low-Cost Culture
We are committed to achieving operational excellence by reducing costs, improving efficiency, driving operational improvements
and being disciplined in capital allocation. This means lowering our costs in all aspects of our business and challenging
ourselves to be disciplined in every dollar we spend across our organization. We look to optimize our portfolio of investment
opportunities to ensure efficient deployment of capital focusing on projects with the highest returns.
In connection with our commitment to lower cost and strengthen the competitive position of our assets, 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. Our results for the year ended December 31, 2021 reflect the favorable effects from these cost reduction actions.
Many uncertainties remain with respect to COVID-19, and we are unable to predict the ultimate economic impacts from
COVID-19 and how quickly the U.S. and economies around the world can recover once the pandemic ultimately subsides.
However, the adverse impact of the economic effects on MPC have been and may continue to be significant.
Commitment to Sustainability
Our approach to sustainability spans the environmental, social and governance dimensions of our business. That means
strengthening resiliency by lowering the carbon intensity and conserving natural resources; innovating for the future by investing
in renewables and emerging technologies; and embedding sustainability in decision-making and in how we engage our people
and many stakeholders. Specifically, we established a 2030 target to reduce our absolute Scope 3 - Category 11 GHG emissions
by 15% below 2019 levels. Additionally, MPLX established a new 2030 target to reduce methane emissions intensity by 75%
below 2016 levels. The reduction target applies to MPLX’s natural gas gathering and processing operations and represents an
expansion of the existing 2025 target, established in 2020, to reduce methane emissions intensity by 50% below 2016 levels.
41
Strategic Updates
On February 2, 2022, we announced our board of directors approved an incremental $5.0 billion share repurchase authorization.
The authorization has no expiration date. As of December 31, 2021, MPC had $5.27 billion remaining under its share repurchase
authorizations prior to this additional authorization.
On December 14, 2021, we finalized the formation of a joint venture with Archer-Daniels-Midland Company (“ADM”) for the
production of soybean oil to supply rapidly growing demand for renewable diesel fuel. The joint venture, which is named Green
Bison Soy Processing, LLC, will own and operate a soybean processing complex in Spiritwood, North Dakota, with ADM owning
75 percent of the joint venture and MPC owning 25 percent. When complete in 2023, the Spiritwood facility will source and
process local soybeans and supply the resulting soybean oil exclusively to MPC. The Spiritwood complex is expected to produce
approximately 600 million pounds of refined soybean oil annually, enough feedstock for approximately 75 million gallons of
renewable diesel per year.
On May 14, 2021, we completed the sale of Speedway, our company-owned and operated retail transportation fuel and
convenience store business, to 7-Eleven for cash proceeds of $21.38 billion. This transaction resulted in a pretax gain of
$11.68 billion ($8.02 billion after income taxes) after deducting the book value of the net assets and certain other adjustments.
MPC remains committed to executing its plan to use the net proceeds from the sale to strengthen the balance sheet and return
capital to shareholders.
In connection with the Speedway sale, our board of directors approved an additional $7.1 billion share repurchase authorization
bringing total share repurchase authorizations to $10.0 billion prior to the June tender offer discussed below.
•
•
During 2021, including the modified Dutch auction tender offer discussed below, MPC repurchased approximately 76
million shares of its common stock and paid approximately $4.65 billion of cash, with an additional $85 million of cash
paid in the first quarter of 2022 in connection with the settlement of certain late December repurchases.
During the second quarter of 2021, MPC completed a modified Dutch auction tender offer, purchasing 15,573,365
shares of its common stock at a purchase price of $63.00 per share, for an aggregate purchase price of approximately
$981 million, excluding fees and expenses related to the tender offer.
During 2021, we reduced debt through the following actions:
•
•
•
•
On December 2, 2021, all of the $1.25 billion outstanding aggregate principal amount of MPC's 4.5% senior notes due
May 2023 and the $850 million outstanding aggregate principal amount of MPC’s 4.75% senior notes due December
2023, including the portion of such notes for which Andeavor LLC was the obligor, were redeemed at a price equal to
par, plus a make-whole premium calculated in accordance with the terms of the senior notes and accrued and unpaid
interest to, but not including, the redemption date. MPC funded the redemption amount with cash on hand.
In June 2021,we redeemed all of the $300 million outstanding aggregate principal amount of MPC’s 5.125% senior
notes due April 2024 at a price equal to 100.854% of the principal amount, plus accrued and unpaid interest to, but not
including, the redemption date.
In May 2021, we repaid all outstanding commercial paper borrowings, which, along with cash, had been used to finance
the fourth quarter 2020 repayments of two series of MPC’s senior notes in the aggregate total principal amount of $1.13
billion.
On March 1, 2021, we repaid the $1 billion outstanding aggregate principal amount of MPC’s 5.125% senior notes due
March 2021.
On February 24, 2021, we announced our plan to strategically reposition the Martinez refinery to a renewable diesel facility.
Converting the Martinez facility from refining petroleum to manufacturing renewable fuels signals our strong commitment to
producing a substantial level of lower carbon-intensity fuels in California. As envisioned, the Martinez facility would start
producing approximately 260 million gallons per year of renewable diesel by the second half of 2022, with pretreatment
capabilities coming online in 2023. The facility is expected to be capable of producing approximately 730 million gallons per year
by the end of 2023.
The Dickinson, North Dakota, renewable fuels facility began operations at the end of 2020 and reached full design operating
capacity in the second quarter of 2021. The facility has the capacity to produce 184 million gallons per year of renewable diesel
from corn oil, soybean oil, fats, and greases. The produced renewable diesel generates federal RINs and LCFS credits when
sold in California or similar markets. These instruments are used to help meet our Renewable Fuel Standard and LCFS
compliance obligations as a petroleum fuel producer.
Effective Tax Rate
Our effective income tax rate is affected by the weighting of income from our wholly owned operations versus net income
attributable to noncontrolling interests. Additionally, tax rate differences can arise from non-forecasted discrete items. During
operating environments when refining margins approximate historical averages, we generally expect our effective tax rate to be
between 18 percent and 21 percent, excluding discrete tax items. A reconciliation of the statutory tax rate of 21 percent to our
42
effective tax rate of 9 percent for the period ended December 31, 2021 is included in Item 8. Financial Statements and
Supplementary Data – Note14.
Results
Select results for continuing operations for 2021 and 2020 are reflected in the following table.
(In millions)
Refining & Marketing(a)
Midstream
Corporate
Items not allocated to segments:
Impairment and idling expenses(b)
Restructuring expenses(c)
Litigation
Gain on sale of assets
Transaction-related costs(d)
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
2021
2020
$
1,016
$
4,061
(696)
(81)
—
—
—
—
4,300
1,483
2,817
264
(5,189)
3,708
(800)
(9,741)
(367)
84
66
(8)
(12,247)
1,365
(13,612)
(2,430)
Income (loss) from continuing operations, net of tax
$
2,553
$
(11,182)
(a)
(b)
(c)
(d)
Includes LIFO liquidation charge of $561 million for 2020.
2021 includes impairment expenses related to long-lived assets and equity method investments. 2020 includes impairments of goodwill,
equity method investments and long-lived assets.
2020 restructuring expenses include $195 million for exit costs related to the Martinez and Gallup refineries and $172 million of employee
separation costs.
2020 includes costs incurred in connection with the Midstream strategic review.
Select results for discontinued operations are reflected in the following table.
(In millions)
Speedway
Gain on sale of assets
Transaction-related costs(a)
Income from discontinued operations
Net interest and other financial costs
Income from discontinued operations before income taxes
Provision for income taxes on discontinued operations
2021
2020
$
613
$
11,682
(46)
12,249
6
12,243
3,795
1,701
—
(114)
1,587
20
1,567
362
1,205
Income from discontinued operations, net of tax
$
8,448
$
(a)
Costs related to the Speedway separation.
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
2021
2020
$
$
2.02
$
13.22
15.24
$
(16.99)
1.86
(15.13)
Net income attributable to MPC increased $19.56 billion, or $30.37 per diluted share, in 2021 compared to 2020 primarily due to
the gain on the sale of Speedway, the absence of impairment expenses and a LIFO liquidation charge and increases in average
refined product sales prices and volumes, partially offset by a partial period of income from discontinued operations due to the
sale of the Speedway business on May 14, 2021.
See Item 8. Financial Statements and Supplementary Data – Note 5 for additional information on discontinued operations.
43
Refer to the Results of Operations section for a discussion of financial results by segment for the three years ended
December 31, 2021.
MPLX
We received limited partner distributions of $2.16 billion and $1.79 billion from MPLX during 2021 and 2020, respectively. The
increase in 2021 is primarily due to a special distribution amount of $0.5750 per common unit in the third quarter of 2021. We
owned approximately 647 million MPLX common units at December 31, 2021 with a market value of $19.16 billion based on the
December 31, 2021 closing unit price of $29.59. On January 25, 2022, MPLX declared a quarterly cash distribution of $0.7050
per common unit, which was paid February 14, 2022. As a result, MPLX made distributions totaling $715 million to its common
unitholders. MPC’s portion of this distribution was approximately $456 million.
During the year ended December 31, 2021, MPLX repurchased 23 million common units at an average cost per unit of $27.52
and paid $630 million of cash. As of December 31, 2021, $337 million remained available under the authorization for future
repurchases.
See Item 8. Financial Statements and Supplementary Data – Note 6 for additional information on MPLX.
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 2,887 mbpcd, 2,874 mbpcd and 3,067 mbpcd as of December 31, 2021, 2020 and 2019, 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 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 MEH crude producing two barrels of USGC CBOB gasoline and one
barrel of USGC ULSD. In the first quarter of 2021, we transitioned to MEH crude from LLS crude;
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)
$
800
375
375
250
(a)
(b)
(c)
(d)
Crack spread based on 40 percent MEH, 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 assume
approximately 50 percent of the crude processed at our refineries in 2022 will be sour crude.
Sweet crude oil basket consists of the following crudes: Bakken, Brent, MEH, WTI-Cushing and WTI-Midland. We assume approximately 50
percent of the crude processed at our refineries in 2022 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.
44
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, 2021, 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.
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.
Year
2021
2020
2019
Refinery
Catlettsburg, Galveston Bay, Mandan and Robinson
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
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. 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
45
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 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,
2021, 2020 and 2019. 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)
2021
2020
2021 vs.
2020
Variance
2019
2020 vs.
2019
Variance
Revenues and other income:
Sales and other operating revenues(a)
Income (loss) from equity method investments
Net gain on disposal of assets
Other income
$ 119,983
$ 69,779
$ 50,204
$ 111,148
$ (41,369)
458
21
468
(935)
70
118
1,393
(49)
350
312
278
127
(1,247)
(208)
(9)
Total revenues and other income
120,930
69,032
51,898
111,865
(42,833)
Costs and expenses:
Cost of revenues (excludes items below)
110,008
65,733
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
—
3,364
2,537
—
721
8,426
3,375
2,710
367
668
44,275
(8,426)
(11)
(173)
(367)
53
99,228
(33,495)
1,197
3,225
3,192
—
561
7,229
150
(482)
367
107
116,630
81,279
35,351
107,403
(26,124)
4,300
1,483
(12,247)
16,547
1,365
118
4,462
1,229
(16,709)
136
2,817
(13,612)
16,429
3,233
(16,845)
264
2,553
8,448
11,001
100
1,163
(2,430)
(11,182)
1,205
(9,977)
81
(232)
2,694
13,735
7,243
20,978
19
1,395
784
2,449
806
3,255
81
537
(3,214)
(13,631)
399
(13,232)
—
(769)
Net income (loss) attributable to MPC
$
9,738
$
(9,826)
$ 19,564
$
2,637
$ (12,463)
(a)
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 presented as third-party sales through
the close of the sale on May 14, 2021.
2021 Compared to 2020
Net income attributable to MPC increased $19.56 billion in 2021 compared to 2020, primarily due to the gain on the sale of
Speedway, the absence of impairment expenses and a LIFO liquidation charge and increases in average refined product sales
46
prices and volumes, partially offset by a partial period of income from discontinued operations due to the sale of the Speedway
business on May 14, 2021. See Segment Results for additional information.
Total revenues and other income increased $51.90 billion in 2021 compared to 2020 primarily due to:
•
•
•
increased sales and other operating revenues of $50.20 billion primarily due to increased average refined product sales
prices of $0.80 per gallon, or 65 percent, and refined product sales volumes of 203 mbpd, or 6 percent, largely due to
continuing economic recovery from the impact of the COVID-19 pandemic in 2020;
increased income from equity method investments of $1.39 billion largely due to impairments of equity method
investments of $1.32 billion in 2020 primarily driven by the effects of COVID-19 and the decline in commodity prices;
and
increased other income of $350 million primarily due to higher income on RIN sales.
Total costs and expenses increased $35.35 billion in 2021 compared to 2020 primarily due to:
•
•
•
•
increased cost of revenues of $44.28 billion primarily due to higher refined product sales volumes in addition to higher
crude oil and refined product raw material costs, partially offset by the absence of a LIFO liquidation charge in 2020 of
$561 million;
decreased impairment expense of $8.43 billion due to impairments recorded for goodwill and long-lived assets in 2020
primarily driven by the effects of COVID-19 and the decline in commodity prices in the prior year;
decreased selling, general and administrative expenses of $173 million mainly due to cost reductions realized from our
2020 workforce reduction and other cost control efforts; and
decreased restructuring expenses of $367 million related to the idling of the Martinez and Gallup refineries and costs
related to our announced workforce reduction in 2020. See Item 8. Financial Statements and Supplementary Data –
Note 19 for additional information.
Net interest and other financial costs increased $118 million largely due to debt retirement expenses related to the redemption of
MPC senior notes and pension settlement losses of $75 million, partially offset by decreased interest expense due to lower
MPLX and MPC borrowings. We capitalized interest of $73 million in 2021 and $129 million in 2020. See Item 8. Financial
Statements and Supplementary Data – Note 13 for further details.
We recorded a combined federal, state and foreign income tax expense of $264 million for the year ended December 31, 2021,
which was lower than the tax computed at the U.S. statutory rate primarily due to certain permanent tax benefits related to net
income attributable to noncontrolling interests and a change in benefit related to the net operating loss (“NOL”) carryback
provided under the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”), partially offset by state taxes. We
recorded a combined federal, state and foreign income tax benefit of $2.43 billion for the year ended December 31, 2020, which
is lower than the tax computed at the U.S. statutory rate 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 NOL carryback
provided under the CARES 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. See Item 8. Financial Statements and Supplementary Data – Note 14 for further details.
Net income attributable to noncontrolling interests increased $1.40 billion mainly due to an increase in MPLX’s net income largely
due to impairment expense recognized during 2020.
2020 Compared to 2019
Net income 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 the Speedway business. 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 the COVID-19 pandemic and the decline in commodity
prices; and
47
•
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 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 business operations and travel 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 Item 8. Financial Statements and Supplementary Data – Note 19 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 13 for further details.
Provision for income taxes on continuing operations 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 NOL carryback provided under the CARES 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 14 for further details.
Noncontrolling interests decreased $769 million mainly due to MPLX’s net loss primarily resulting from impairment expense
recognized during 2020.
48
Segment Results
Our Refining & Marketing and Midstream segment income (loss) from continuing operations was approximately $5.08 billion,
$(1.48) billion and $6.45 billion for the years ended December 31, 2021, 2020 and 2019, respectively.
Refining & Marketing
The following includes key financial and operating data for 2021, 2020 and 2019.
(a)
Includes intersegment sales to Midstream and sales destined for export.
49
In millionsRefining & MarketingRevenues$115,494$66,247$107,408202120202019In millionsRefining & MarketingIncome (Loss) fromOperations$1,016$(5,189)$2,856202120202019mbpdRefined Product SalesVolumes (a)3,4253,2223,735202120202019Dollars per gallonAverage Refined ProductSales Prices$2.04$1.24$1.79202120202019 Refining & Marketing Operating Statistics
2021
2020
2019
Net refinery throughput (mbpd)
Refining & Marketing margin, excluding LIFO liquidation charge(a)(b)
LIFO liquidation charge
Refining & Marketing margin per barrel(a)(b)
Less:
Refining operating costs per barrel(c)
Storm impacts on refining operating cost(d)
Distribution costs per barrel
Refining planned turnaround costs per barrel
Depreciation and amortization per barrel
Plus:
Biodiesel tax credit(e)
Other per barrel(f)
Refining & Marketing segment income (loss) per barrel
Fees paid to MPLX included in distribution costs above
$
$
2,799
2,583
$
13.36
$
8.96
$
—
13.36
5.02
0.05
5.04
0.57
1.83
—
0.14
0.99
3.40
(0.59)
8.37
5.68
—
5.37
0.88
1.96
—
0.03
$
$
(5.49)
3.66
$
$
3,112
14.77
—
14.77
5.66
—
4.52
0.65
1.58
0.08
0.08
2.52
2.84
(a)
(b)
(c)
(d)
(e)
(f)
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.
Storms in the first and third quarters of 2021 resulted in higher costs, including maintenance and repairs.
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.
50
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 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)
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)
WTI
MEH
LLS
ANS
Crack Spreads
Mid-Continent WTI 3-2-1
USGC MEH 3-2-1
USGC LLS 3-2-1
West Coast ANS 3-2-1
Blended 3-2-1(a)
Crude Oil Differentials
Sweet
Sour
2021
2020
2019
$
$
2.02
2.06
2.01
2.01
2.20
2.10
$
1.07
1.19
1.10
1.20
1.28
1.30
$
68.11
$
39.34
$
69.01
—
70.56
—
41.15
42.28
$
10.95
$
5.34
$
8.89
—
13.80
10.70
—
3.77
9.26
5.64
$
(0.47)
$
(1.07)
$
(4.05)
(3.45)
1.67
1.86
1.63
1.88
1.98
2.01
57.04
—
62.69
65.04
14.61
—
8.22
17.30
12.83
(2.35)
(3.15)
(a)
The blended crack spreads for 2021 and the fourth quarter of 2020 are 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
and all of 2019 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. These blends are based on MPC’s refining capacity by region in each period. Beginning in the first quarter of
2021, the prompt price for USGC was transitioned from LLS to MEH.
2021 Compared to 2020
Refining & Marketing segment revenues increased $49.25 billion primarily due to increased average refined product sales prices
of $0.80 per gallon and higher refined product sales volumes, which increased 203 mbpd.
Refinery crude oil capacity utilization was 91 percent during 2021 and net refinery throughputs increased 216 mbpd primarily due
to continuing economic recovery from the impact of the COVID-19 pandemic in 2020.
Refining & Marketing segment income from operations increased $6.21 billion primarily driven by higher blended crack spreads.
Refining & Marketing margin, excluding LIFO liquidation charge, was $13.36 per barrel for 2021 compared to $8.96 per barrel for
2020. 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 $5.0 billion on Refining & Marketing margin, primarily due to higher 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. These factors had an
estimated net positive impact on Refining & Marketing segment income from operations of approximately $700 million, including
the LIFO liquidation charge, in 2021 compared to 2020.
For the year ended December 31, 2021, refining operating costs, excluding depreciation and amortization and storm impacts,
were $5.13 billion. This was a decrease of $241 million, or $0.66 per barrel, compared to the year ended December 31, 2020 as
we took actions to reduce costs in response to the economic effects of the COVID-19 pandemic, including idling portions of our
refining capacity, partially offset by an increase in energy costs largely as a result of higher natural gas prices.
Distribution costs, excluding depreciation and amortization, were $5.15 billion and $5.08 billion for 2021 and 2020, respectively,
and include fees paid to MPLX of $3.47 billion and $3.46 billion for 2021 and 2020, respectively. On a per barrel basis,
distribution costs, excluding depreciation and amortization, decreased $0.33 due to increased throughput.
51
Refining planned turnaround costs decreased $250 million, or $0.31 per barrel, due to the timing of turnaround activity and an
increase in throughput.
Depreciation and amortization per barrel decreased by $0.13, primarily due to an increase in throughput partially offset by an
increase in costs.
We purchase RINs to satisfy a portion of our RFS2 compliance. Our expenses associated with purchased RINs were $1.49
billion in 2021 and $606 million in 2020 and are included in Refining & Marketing margin. The increase in 2021 was primarily due
to higher weighted average RIN costs.
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 approximately $800 million, including the LIFO liquidation charge, in 2020 compared to 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.
52
Supplemental Refining & Marketing Statistics
Refining & Marketing Operating Statistics
Crude oil capacity utilization percent(a)
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(b)
Feedstocks and petrochemicals(b)
Asphalt
Propane
Heavy fuel oil
Total
2021
2020
2019
91
82
96
2,621
178
2,799
47
53
2,418
165
2,583
49
51
1,446
1,314
965
250
91
52
31
905
244
81
51
28
2,902
210
3,112
48
52
1,560
1,087
315
87
55
49
2,835
2,623
3,153
Refined product export sales volumes (mbpd)(c)
371
340
397
(a)
(b)
(c)
Based on calendar-day capacity, which is an annual average that includes down time for planned maintenance and other normal operating
activities.
Product yields include renewable production.
Represents fully loaded export cargoes for each time period. These sales volumes are included in the total sales volumes amounts.
53
Midstream
(a) On owned common-carrier pipelines, excluding equity method investments.
(b)
Includes amounts related to MPLX operated unconsolidated equity method investments on a 100 percent basis.
54
In millionsMidstream Revenues$9,619$8,438$8,760$4,633$3,599$3,843$4,986$4,839$4,917Third PartyIntersegment - Refining & Marketing202120202019In millionsMidstream Incomefrom Operations$4,061$3,708$3,594202120202019mbpdPipeline Throughputs (a)5,5424,8055,245202120202019mbpdTerminal Throughput2,8862,6733,279202120202019MMcf/dGatheringSystemThroughput(b)5,2585,4756,094202120202019MMcf/dNatural GasProcessed(b)8,4018,6138,661202120202019mbpdC2 (Ethane) +NGLsFractionated(b)551562534202120202019 Benchmark Prices
Natural Gas NYMEX HH ($ per MMBtu)
C2 + NGL Pricing ($ per gallon)(a)
2021
2020
2019
$
$
3.72
0.87
$
$
2.13
0.43
$
$
2.53
0.52
(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.
2021 Compared to 2020
Midstream segment revenue and segment income from operations increased $1.18 billion and $353 million, respectively. Results
benefited from higher revenue, primarily due to higher natural gas prices, higher pipeline and terminal throughputs and lower
operating expenses, partially offset by a decrease in marine transportation fees.
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 macro-economic conditions in 2020 in addition to lower natural gas prices.
In 2020, Midstream segment income from operations increased $114 million mainly due to stable, fee-based earnings in the
2020 business environment, contributions from organic growth projects and reduced operating expenses.
Corporate
Key Financial Information (in millions)
Corporate(a)
2021
2020
2019
$
(696)
$
(800)
$
(833)
(a)
Corporate costs consist 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.
2021 Compared to 2020
Corporate expenses decreased $104 million in 2021 compared to 2020 largely due to cost reductions realized from our 2020
workforce reduction and other cost control efforts.
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.
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)
Items not allocated to segments:
Impairment and idling expenses
Restructuring expense
Litigation
Gain on sale of assets
Transaction-related costs(a)
Equity method investment restructuring gains
2021
2020
2019
$
(81)
$
(9,741)
$
(1,239)
—
—
—
—
—
(367)
84
66
(8)
—
—
(22)
—
(153)
259
(a)
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. Costs incurred in connection with the Speedway separation are
included in discontinued operations.
2021 Compared to 2020
Total items not allocated to segments included impairment expense of $81 million related to the divestiture, abandonment or
closure of certain assets within our Midstream segment.
55
Unallocated items in 2020 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 19 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.
2020 Compared to 2019
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.
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.
Non-GAAP Financial Measure
Management uses a financial measure to evaluate our operating performance that is calculated and presented on the basis of
methodologies other than in accordance with GAAP. We believe this non-GAAP financial measure is useful to investors and
analysts to assess our ongoing financial performance because, when reconciled to its most comparable GAAP financial
measure, it provides improved comparability between periods through the exclusion of certain items that we believe are not
indicative of our core operating performance and that may obscure our underlying business results and trends. This measure
should not be considered a substitute for, or superior to, measures of financial performance prepared in accordance with GAAP,
and our calculation thereof may not be comparable to similarly titled measures reported by other companies. The non-GAAP
financial measure we use is 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 (loss) from operations to Refining & Marketing gross margin and
Refining & Marketing margin
(In millions)
2021
2020
2019
Refining & Marketing income (loss) from operations
$
1,016
$
(5,189)
$
2,856
Plus (Less):
Selling, general and administrative expenses
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 and other income excluded from Refining &
Marketing margin(a)
Other taxes included in Refining & Marketing margin
Biodiesel tax credit
Refining & Marketing margin
2,021
(59)
(6)
(369)
2,603
9,806
1,870
(485)
(142)
—
2,030
2,211
(2)
(1)
(35)
(11)
(8)
(43)
(3,197)
5,005
9,694
1,857
(365)
(79)
—
10,710
1,780
(621)
(11)
(93)
$
13,652
$
7,910
$
16,770
(a)
Reflects the gross margin, excluding depreciation and amortization, of other related operations included in the Refining & Marketing
segment and processing of credit card transactions on behalf of certain of our marketing customers, net of other income.
56
LIQUIDITY AND CAPITAL RESOURCES
Cash Flows
Our cash and cash equivalents balance for continuing operations was $5.29 billion at December 31, 2021 compared to $415
million at December 31, 2020. Cash and cash equivalents for discontinued operations was $140 million at December 31, 2020.
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):
2021
2020
2019
Operating activities - continuing operations
$
8,384
$
807
$
Operating activities - discontinued operations
Total operating activities
Investing activities - continuing operations
Investing activities - discontinued operations
Total investing activities
Financing activities
(4,024)
4,360
(6,517)
21,314
14,797
(14,419)
1,612
2,419
(2,922)
(335)
(3,257)
(135)
Total increase (decrease) in cash
$
4,738
$
(973)
$
7,976
1,465
9,441
(5,777)
(484)
(6,261)
(3,376)
(196)
Operating Activities
Continuing Operations
Net cash provided by operating activities from continuing operations increased $7.58 billion in 2021 compared to 2020, primarily
due to an increase in operating results and a favorable change in working capital of $633 million. Net cash provided by operating
activities decreased $7.17 billion in 2020 compared to 2019, primarily due to a decrease in operating results and an unfavorable
change in working capital of $43 million. The above changes in working capital exclude changes in short-term debt.
For 2021, changes in working capital were a net $947 million source of cash, primarily due to the effect of increases in energy
commodity prices and volumes at the end of the year on working capital. Accounts payable increased primarily due to increases
in crude prices and volumes. Current receivables increased primarily due to higher crude and refined product prices and
volumes.
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, 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 and 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 prices
and volumes. Current receivables increased primarily due to increases in crude and refined product receivable volumes and
prices. Inventories increased primarily due to increases in refined product and materials and supplies inventories partially offset
by a decrease in crude inventory.
Discontinued Operations
Net cash used in operating activities from discontinued operations was $4.02 billion in 2021 primarily due to tax payments related
to the sale of Speedway, partially offset by a partial year of business income due to the sale of Speedway on May 14, 2021. Net
cash provided by operating activities from discontinued operations in 2020 and 2019 include Speedway business income.
Investing Activities
Continuing Operations
Net cash used in investing activities from continuing operations were $6.52 billion, $2.92 billion and $5.78 billion in 2021, 2020
and 2019, respectively.
•
In 2021, proceeds from the sale of Speedway were used to purchase $12.50 billion of short-term investments and cash
of $5.41 billion and $1.54 billion was provided by the maturities and sales, respectively, of short-term investments. The
cash provided by maturities and sales of short-term investments was primarily used to fund our return of capital
initiatives announced as part of the Speedway sale.
57
•
•
•
Cash used for additions to property, plant and equipment was $1.46 billion in 2021, compared to $2.79 billion in 2020
and $4.81 billion in 2019, primarily due to spending in our Refining & Marketing and Midstream segments in 2021. See
discussion of capital expenditures and investments under the “Capital Spending” section.
Net investments were a use of cash of $171 million in 2021 compared to $348 million in 2020 and $966 million in 2019.
Investments in 2021 primarily include midstream projects and our joint venture with ADM. The decrease from 2020 is
due to the completion of the South Texas Gateway Terminal, the Gray Oak Pipeline and the Whistler Pipeline projects
which were included in 2020 net investments. Investments in 2019 are largely due to investments in connection with the
Gray Oak Pipeline, which began initial start-up in the fourth quarter of 2019, the Wink to Webster Pipeline, the Whistler
Pipeline and other Midstream projects.
Cash provided by disposal of assets totaled $153 million, $150 million and $47 million in 2021, 2020 and 2019,
respectively. In 2021, we primarily sold Midstream assets and in 2020, we sold three asphalt terminals and other
Refining & Marketing assets.
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
Total capital expenditures and investments
Discontinued Operations
2021
2020
2019
$
1,464
$
2,787
$
—
141
1,605
210
—
(518)
2,269
485
$
1,815
$
2,754
$
4,810
1
(303)
4,508
1,064
5,572
Net cash provided by investing activities from discontinued operations in 2021 primarily includes the $21.38 billion proceeds from
the sale of Speedway, partially offset primarily by cash used for Speedway capital expenditures of $177 million. Net cash used in
investing activities for discontinued operations for 2020 and 2019 primarily includes Speedway capital expenditures.
Financing Activities
Financing activities were a use of cash of $14.42 billion in 2021, $135 million in 2020 and $3.38 billion in 2019.
•
During 2021,we reduced debt through the following actions:
•
•
•
•
On December 2, 2021, all of the $1.25 billion outstanding aggregate principal amount of MPC's 4.5% senior
notes due May 2023 and the $850 million outstanding aggregate principal amount of MPC’s 4.75% senior
notes due December 2023, including the portion of such notes for which Andeavor LLC was the obligor, were
redeemed at a price equal to par, plus a make-whole premium calculated in accordance with the terms of the
senior notes and accrued and unpaid interest to, but not including, the redemption date. MPC funded the
redemption amount with cash on hand.
In June 2021,we redeemed all of the $300 million outstanding aggregate principal amount of MPC’s 5.125%
senior notes due April 2024 at a price equal to 100.854% of the principal amount, plus accrued and unpaid
interest to, but not including, the redemption date.
In May 2021, we repaid all outstanding commercial paper borrowings, which, along with cash had been used
to finance the fourth quarter 2020 repayments of two series of MPC’s senior notes in the aggregate total
principal amount of $1.13 billion.
On March 1, 2021, we repaid the $1 billion outstanding aggregate principal amount of MPC’s 5.125% senior
notes due March 2021.
•
•
In 2021, MPLX redeemed $1.75 billion of senior notes and had net borrowings of $300 million under its revolving credit
facility.
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 and borrowed and repaid $3.55 billion under its trade receivables facility.
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.
58
•
•
•
•
•
During 2019, MPLX issued $2.0 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 $1.0 billion under its term
loan agreement. In addition, MPLX repaid $500 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 $4.65 billion in 2021 and $1.95 billion in 2019. See the “Capital
Requirements” section for further discussion of our stock repurchases.
Cash used in dividend payments totaled $1.48 billion in 2021, $1.51 billion in 2020 and $1.40 billion in 2019. 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. Dividends per share were $2.32 in 2021, $2.32 in 2020 and $2.12 in 2019.
Cash used in distributions to noncontrolling interests totaled $1.45 billion in 2021, $1.24 billion in 2020 and $1.25 billion
in 2019. The increase in 2021 is primarily due to an increase in MPLX’s distribution per common unit, mainly due to a
special distribution amount of $0.5750 per common unit in the third quarter of 2021, partially offset by a reduction of
MPLX common units resulting from common unit repurchases in 2021 and 2020.
Cash used in repurchases of noncontrolling interests increased $597 million in 2021 compared to 2020 due to MPLX’s
repurchases of its common units. See Item 8. Financial Statements and Supplementary Data – Note 6 for additional
information on MPLX.
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 $15.83 billion at December 31, 2021 consisting of:
(In millions)
Bank revolving credit facility(a)
Trade receivables facility(b)
Total
Cash and cash equivalents and short-term investments(c)
Total liquidity
Total Capacity
December 31, 2021
Outstanding
Borrowings
Available
Capacity
$
$
5,000
$
250
5,250
$
1
$
250
251
$
4,999
—
4,999
10,826
15,825
(a) Outstanding borrowings include $1 million in letters of credit outstanding under this facility.
(b)
The committed capacity of the trade receivables securitization facility is $100 million. The facility allows the banks to make loans and issue
letters of credit of up to $400 million in excess of the committed capacity at their discretion if there is available borrowing capacity.
Outstanding borrowings include $250 million in letters of credit outstanding under this facility.
(c)
Excludes $13 million of MPLX cash and cash equivalents.
Because of the alternatives available to us, including internally generated cash flow and access to capital markets and 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 (less than twelve months) and long-term funding requirements, including capital spending
programs, the repurchase of shares of our common stock, dividend payments, defined benefit plan contributions, repayment of
debt maturities and other amounts that may ultimately be paid in connection with contingencies.
On May 14, 2021, we completed the sale of Speedway, our company-owned and operated retail transportation fuel and
convenience store business, to 7-Eleven for cash proceeds of $21.38 billion. This transaction resulted in a pretax gain of
$11.68 billion ($8.02 billion after income taxes) after deducting the book value of the net assets and certain other adjustments.
We utilized a portion of the Speedway sale net proceeds to structurally reduce debt and return capital to shareholders through
share repurchases. The remaining proceeds are included in our liquidity as cash and cash equivalents and short-term
investments.
During 2021, we reduced debt through the following actions:
•
On December 2, 2021, all of the $1.25 billion outstanding aggregate principal amount of MPC's 4.5% senior notes due
May 2023 and the $850 million outstanding aggregate principal amount of MPC’s 4.75% senior notes due December
59
2023, including the portion of such notes for which Andeavor LLC was the obligor, were redeemed at a price equal to
par, plus a make-whole premium calculated in accordance with the terms of the senior notes and accrued and unpaid
interest to, but not including, the redemption date. MPC funded the redemption amount with cash on hand.
In June 2021, we redeemed all of the $300 million outstanding aggregate principal amount of MPC’s 5.125% senior
notes due April 2024 at a price equal to 100.854% of the principal amount, plus accrued and unpaid interest to, but not
including, the redemption date.
In May 2021, we repaid all outstanding commercial paper borrowings, which, along with cash had been, used to finance
the fourth quarter 2020 repayments of two series of MPC’s senior notes in the aggregate total principal amount of $1.13
billion.
On March 1, 2021, we repaid the $1 billion outstanding aggregate principal amount of MPC’s 5.125% senior notes due
March 2021.
•
•
•
Effective June 18, 2021, we terminated our $1.0 billion unsecured 364-day revolving credit facility due in September 2021 and on
June 23, 2021, we reduced the capacity under our trade receivables securitization facility from $750 million to $100 million. On
September 30, 2021, we entered into a new trade receivables securitization facility, which provides for committed borrowing and
letter of credit issuing capacity of up to $100 million and uncommitted capacity up to $400 million. This facility replaces our
previous trade receivables securitization facility that expired on July 16, 2021.
We have a commercial paper program that allows us to have a maximum of $2.0 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, 2021, we had no borrowings outstanding
under the commercial paper program.
The MPC credit agreement and 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
included in the MPC credit agreement 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 agreement) 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, 2021, we were in compliance with the covenants contained in the MPC credit agreement and our
trade receivables facility, including the financial covenant with a ratio of Consolidated Net Debt to Total Capitalization of 0.08 to
1.00.
Our intention is to maintain an investment-grade credit profile. As of February 1, 2022, the credit ratings on our senior unsecured
debt are as follows.
Company
MPC
Rating Agency
Rating
Moody’s
Baa2 (stable outlook)
Standard & Poor’s
BBB (stable outlook)
Fitch
BBB (stable 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 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.
The MPC credit agreement does not contain 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, 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.
60
MPLX
MPLX’s liquidity totaled $3.26 billion at December 31, 2021 consisting of:
(In millions)
MPLX bank revolving credit facility
MPC intercompany loan agreement
Total
Cash and cash equivalents
Total liquidity
December 31, 2021
Total Capacity
Outstanding
Borrowings
Available
Capacity
$
$
3,500
$
300
$
1,500
1,450
5,000
$
1,750
$
$
3,200
50
3,250
13
3,263
On September 3, 2021 MPLX redeemed, at par value, all of the $1.0 billion aggregate principal amount of floating rate senior
notes due September 2022. MPLX primarily funded the redemption with borrowings under the MPC intercompany loan
agreement.
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, 2021, MPLX was in compliance
with the covenants, including the financial covenant with a ratio of Consolidated Total Debt to Consolidated EBITDA of 3.7 to 1.0.
Our intention is to maintain an investment-grade credit profile for MPLX. As of February 1, 2022, the credit ratings on MPLX’s
senior unsecured debt are as follows.
Company
MPLX
Rating Agency
Rating
Moody’s
Baa2 (stable outlook)
Standard & Poor’s
BBB (stable outlook)
Fitch
BBB (stable 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 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.
The agreements governing MPLX’s debt obligations do not contain 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 2022 totals approximately $1.7 billion for capital projects and investments, excluding
capitalized interest, potential acquisitions and MPLX’s capital investment plan. MPC’s 2022 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 for
Midstream. 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 2022 capital investment plan for MPC and
MPLX and capital expenditures and investments for each of the last three years are summarized by segment below.
61
(In millions)
Capital expenditures and investments:(a)
MPC, excluding MPLX
Refining & Marketing
Midstream - Other
Corporate and Other(b)
Total MPC, excluding MPLX
MPC discontinued operations - Speedway
Midstream - MPLX
2022 Plan
2021
2020
2019
$
$
$
$
1,625
$
911
$
1,170
$
2,045
10
100
50
105
221
80
360
100
1,735
$
1,066
$
1,471
$
2,505
—
$
177
$
277
$
561
900
$
681
$
1,177
$
2,930
(a)
(b)
Capital expenditures include changes in capital accruals.
Excludes capitalized interest of $68 million, $106 million and $137 million for 2021, 2020 and 2019, respectively. The 2022 capital
investment plan excludes capitalized interest.
Refining & Marketing
The Refining & Marketing segment’s forecasted 2022 capital spending and investments is approximately $1.63 billion. This
amount includes approximately $800 million of growth capital for renewables projects, primarily the Martinez facility conversion,
and $525 million of growth capital focused on on-going projects such as the STAR project and projects that we expect will help
us reduce future operating costs. Maintenance capital is expected to be approximately $300 million which is essential to maintain
the safety, integrity and reliability of our assets.
Major capital projects completed over the last three years have focused on refinery optimization, production of higher value
products, increased capacity to upgrade residual fuel oil and expanded export capacity. We also focused on projects such as the
Martinez facility conversion, the STAR project at our Galveston Bay refinery, which is scheduled to complete in 2022, and
projects expected to reduce future operating costs.
Midstream
MPLX’s capital investment plan includes approximately $700 million of organic growth capital, $140 million of maintenance
capital and a $60 million investment in unconsolidated affiliates for the repayment of MPLX’s 9.19 percent indirect share of the
Bakken Pipeline joint venture’s debt due in 2022. The growth capital plan is directed towards logistics projects in support of
MPC’s Martinez Renewable Fuels project, projects in the Permian and Bakken basins and investments in the Permian basin
supporting the BANGL and Whistler pipelines. These long-haul NGL and natural gas logistics systems transport product to the
U.S. Gulf Coast. Other growth projects include the addition of approximately 200 MMcf/d of processing capacity in the Delaware
basin in the Permian to meet increasing producer customer demand and 68 mbpd of de-ethanization capacity in the Marcellus,
both of which are 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 2022 capital spend, excluding MPLX, is approximately $10 million which
primarily relates to investments in equity affiliates.
Corporate and Other
The 2022 capital forecast includes approximately $100 million to support corporate activities. Major projects over the last three
years included upgrades to information technology systems.
62
Share Repurchases
Since January 1, 2012, our board of directors has approved $25.05 billion in total share repurchase authorizations and we have
repurchased a total of $19.78 billion of our common stock, leaving approximately $5.27 billion available for repurchases as of
December 31, 2021. On February 2, 2022, we announced our board of directors approved an incremental $5.0 billion share
repurchase authorization. The authorization has no expiration date. The table below summarizes our total share repurchases.
See Item 8. Financial Statements and Supplementary Data – Note 11 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
2021
2020
2019
76
4,654
62.65
$
$
$
$
—
—
—
$
$
34
1,950
58.87
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, if any, will depend upon several factors,
including market and business conditions, and such repurchases may be suspended or discontinued at any time.
MPLX Unit Repurchases
During the year ended December 31, 2021, MPLX repurchased 23 million common units at an average cost per unit of $27.52
and paid $630 million of cash. As of December 31, 2021, $337 million remained under the authorization for future repurchases.
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.
See Item 8. Financial Statements and Supplementary Data – Note 6 for further discussion of the MPLX unit repurchase program.
Cash Commitments
Contractual Obligations
We have purchase commitments primarily consisting of obligations to purchase and transport crude oil used in our refining
operations. As of December 31, 2021, we had purchase obligations for crude oil of $15.13 billion, with $14.66 billion payable
within 12 months, and crude oil transportation obligations of $7.28 billion, with $451 million payable within 12 months. 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. Our contractual obligations do not include our contractual
obligations to MPLX under various fee-based commercial agreements as these transactions are eliminated in the consolidated
financial statements.
At December 31, 2021, we have non-cancelable obligations to acquire property, plant and equipment of $565 million, with $543
million payable within 12 months.
At December 31, 2021, we have aggregate principal amount of outstanding debt of $25.35 billion, with $500 million payable
within 12 months. See Item 8. Financial Statements and Supplementary Data – Note 22 for additional information on our debt.
Our other contractual obligations primarily consist of finance and operating leases and pension and post-retirement obligations,
for which additional information is included in Item 8. Financial Statements and Supplementary Data – Notes 28 and 26,
respectively.
Other Cash Commitments
On January 27, 2022, we announced our board of directors approved a $0.58 per share dividend, payable March 10, 2022 to
shareholders of record at the close of business on February 16, 2022.
We may, from time to time, repurchase our senior notes and preferred units 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.
TRANSACTIONS WITH RELATED PARTIES
See Item 8. Financial Statements and Supplementary Data – Note 9 for discussion of activity with related parties.
63
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
2021
2020
2019
118
$
121
$
819
54
469
40
528
547
56
991
$
630
$
1,131
$
$
(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 8 percent, 6 percent and 12 percent of capital expenditures, for 2021,
2020 and 2019, respectively, excluding acquisitions. Our environmental capital expenditures are expected to be approximately
$32 million, or 1 percent, of total planned capital expenditures in 2022. 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.
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
64
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.
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 the COVID-19 pandemic 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 the COVID-19 pandemic 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
65
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.
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.
At December 31, 2021, MPC had four reporting units with goodwill totaling approximately $8.26 billion. The majority of this
balance is comprised of the Midstream reporting units, including $1.1 billion for the MPLX Crude Gathering reporting unit and
$6.6 billion for the MPLX Transportation & Storage reporting unit. For the annual impairment assessment as of November 30,
2021, management performed only a qualitative assessment for two reporting units as we determined it was more likely than not
that the fair value of the reporting units exceeded the carrying value. A quantitative assessment was last performed on these
reporting units at March 31, 2020, which indicated fair value exceeded carrying value by approximately 52 and 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 23 percent and 51 percent. 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. An increase of one
percentage point to the discount rate used to estimate the fair value of the reporting units would not have resulted in a goodwill
impairment charge as of November 30, 2021. For Refining & Marketing reporting units, significant assumptions used to estimate
the reporting units’ fair value included estimates of future cash flows and market information for comparable assets. For
Midstream reporting units, which comprise the majority of the goodwill balance, significant assumptions that were used to
estimate the 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. 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 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. At
December 31, 2021, we had $5.41 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 16 for additional information on our equity method
investments. See Item 8. Financial Statements and Supplementary Data – Note 18 for additional information on our goodwill and
intangibles, including a table summarizing our recorded goodwill by segment.
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
66
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 8.
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 indexes 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 from 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 $300 million par value outstanding.
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 2.90 percent
for our pension plans and 2.75 percent for our other postretirement benefit plans by 0.25 percent would increase pension
obligations and other postretirement benefit plan obligations by $104 million and $23 million, respectively, and would increase
defined benefit pension expense and other postretirement benefit plan expense by $13 million and $1 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 5.75 percent long-term rate of return to determine our 2021 defined benefit pension expense. After
evaluating activity in the capital markets, along with the current and projected plan investments, we increased the asset rate of
return for our primary plan to 6.00 percent effective for 2022. Decreasing the 6.00 percent asset rate of return assumption by
0.25 percentage points would increase our defined benefit pension expense by $7 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 2021 mortality tables from the U.S. Society of Actuaries.
67
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.
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, 2021, 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, swaps 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 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 derivative swap contracts, taking into account the partial offset of
its long and short natural gas positions resulting from normal operating activities.
68
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, 2021 and 2020, respectively.
(In millions)
Realized gain (loss) on settled derivative positions
Unrealized gain (loss) on open net derivative positions
Net gain (loss)
2021
2020
$
$
(359)
$
(21)
(380)
$
69
38
107
See Item 8. Financial Statements and Supplementary Data – Note 21 for additional information on our open derivative positions
at December 31, 2021.
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, 2021 is provided in
the following table.
(In millions)
As of December 31, 2021
Crude
Refined products
Blending products
Soybean oil
Change in IFO from a
Hypothetical Price
Increase of
Change in IFO from a
Hypothetical Price
Decrease of
10%
25%
10%
25%
$
7
$
17
$
(7)
$
(17)
(7)
(13)
(42)
(17)
(31)
17
7
13
(17)
42
17
31
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, 2021 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. A portion of our borrowing capacity and outstanding indebtedness bears interest
at a variable rate based on LIBOR. On July 27, 2017, the Financial Conduct Authority (the authority that regulates LIBOR), or
FCA, announced that it intends to stop compelling banks to submit rates for the calculation of LIBOR after 2021. Subsequently,
on March 5, 2021, ICE Benchmark Administration Limited (the entity that calculates and publishes LIBOR), or IBA, and FCA
made public statements regarding the future cessation of LIBOR. According to the FCA, IBA will permanently cease to publish
each of the LIBOR settings on either December 31, 2021 or June 30, 2023. IBA did not identify any successor administrator in its
announcement. The announced final publication date for 1-week and 2-month LIBOR settings and all settings for non-USD
LIBOR was December 31, 2021. The announced final publication date for overnight, 1-month, 3-month, 6-month and 12-month
LIBOR settings is June 30, 2023. It is unclear whether new methods of calculating LIBOR will be established such that it
continues to exist after such end dates, and there is considerable uncertainty regarding the publication or representativeness of
LIBOR beyond such end dates. The U.S. Federal Reserve, in conjunction with the Alternative Reference Rates Committee, is
seeking to replace U.S. dollar LIBOR with a newly created index (the secured overnight financing rate or SOFR), calculated
based on repurchase agreements backed by treasury securities. The agreements that govern our variable rate indebtedness
contain customary transition and fallback provisions in contemplation of the cessation of LIBOR. We continue to monitor
developments regarding the cessation of LIBOR and transition to an alternate benchmark rate, but do not expect it to have a
material impact on our financial position, results of operation or cash flows. 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
69
the establishment of alternative reference rates in the United Kingdom, the United States or elsewhere may have on LIBOR,
other benchmarks or floating rate indebtedness. See Item 8. Financial Statements and Supplementary Data – Note 22 for
additional information on our debt.
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, 2021 is provided in the following table. The fair value of
cash and cash equivalents, receivables, accounts payable and accrued interest approximate carrying value and, in addition to
short-term investments which are recorded at fair value, 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,
2021(c)
$
$
28,054
300
$
2,610
— $
n/a
16
(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, 2021.
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, 2021.
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 and some of our sales of finished products denominated in Mexican pesos. Derivatives utilized to hedge our market risk
exposure to these foreign exchange rate fluctuations were not material in 2021.
Counterparty Risk
MPLX is subject to risk of loss resulting from nonpayment by its customers to whom it provides services, leases assets, or sells
natural gas or NGLs. MPLX believes that certain contracts where it sells NGLs and acts as its producer customers’ agent would
allow it to pass those losses through to its customers, thus reducing its risk, when it is selling NGLs and acting as its producer
customers’ agent. Its credit exposure related to these customers is represented by the value of its trade receivables or lease
receivables. Where exposed to credit risk, MPLX analyzes the customer’s financial condition prior to entering into a transaction
or agreement, establishes credit terms and monitors the appropriateness of these terms on an ongoing basis. In the event of a
customer default, MPLX may sustain a loss and its 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.
70
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Index
MANAGEMENT’S RESPONSIBILITIES FOR FINANCIAL STATEMENTS
MANAGEMENT’S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM (PCAOB ID 238)
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
Page
72
72
73
75
76
77
78
80
81
71
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/ C. Kristopher Hagedorn
C. Kristopher Hagedorn
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,
2021.
The effectiveness of MPC’s internal control over financial reporting as of December 31, 2021 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
72
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, 2021 and 2020, 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,
2021, 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, 2021, 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, 2021 and 2020, and the results of its operations and its cash flows for each of the three
years in the period ended December 31, 2021 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, 2021, 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.
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.
73
Critical Audit Matters
The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial
statements that was communicated or required to be communicated to the audit committee and that (i) relates 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 matter below, providing a separate
opinion on the critical audit matter or on the accounts or disclosures to which it relates.
Goodwill Impairment Test – Crude Gathering Reporting Unit
As described in Note 18 to the consolidated financial statements and as disclosed by management, the Company’s consolidated
goodwill balance was $8.3 billion as of December 31, 2021, which includes, within the Midstream segment, the goodwill
associated with MPLX’s Crude Gathering reporting unit of $1.1 billion. 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 fair value of the MPLX Crude Gathering reporting unit was
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 reporting unit’s fair value 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 test of the
Crude Gathering reporting unit of the Midstream segment is a critical audit matter are (i) the significant judgment by management
when determining the fair value of the reporting unit; and (ii) the high degree of auditor judgment, subjectivity, and effort in
performing procedures and evaluating audit evidence relating to 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 test, including controls over the determination of the fair value of the Crude Gathering
reporting unit. These procedures also included, among others (i) testing management’s process for determining the fair value of
the reporting unit; (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. Evaluating the assumption related to future volumes involved (i) considering
whether the assumption used was reasonable considering past performance of the 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.
/s/ PricewaterhouseCoopers LLP
Toledo, Ohio
February 24, 2022
We have served as the Company’s auditor since 2010.
74
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:
2021
2020
2019
$
119,983
$
69,779
$
111,148
458
21
468
(935)
70
118
312
278
127
120,930
69,032
111,865
Cost of revenues (excludes items below)
110,008
65,733
99,228
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
—
3,364
2,537
—
721
8,426
3,375
2,710
367
668
1,197
3,225
3,192
—
561
116,630
81,279
107,403
4,300
1,483
2,817
264
2,553
8,448
11,001
100
1,163
(12,247)
1,365
(13,612)
(2,430)
(11,182)
1,205
(9,977)
81
(232)
4,462
1,229
3,233
784
2,449
806
3,255
81
537
Net income (loss) attributable to MPC
$
9,738
$
(9,826)
$
2,637
Per share data (See Note 10)
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
$
$
$
$
2.03
$
(16.99)
$
13.31
1.86
15.34
$
(15.13)
$
634
649
2.02
$
(16.99)
$
13.22
1.86
15.24
$
(15.13)
$
638
649
2.78
1.22
4.00
659
2.76
1.21
3.97
664
(a)
2020 includes impairment expense. See Note 7 for further information.
The accompanying notes are an integral part of these consolidated financial statements.
75
MARATHON PETROLEUM CORPORATION
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Millions of dollars)
Net income (loss)
Defined benefit plans:
2021
2020
2019
$
11,001
$
(9,977)
$
3,255
Actuarial changes, net of tax of $91, $(51) and $(40), respectively
Prior service, net of tax of $58, $(11) and $(17), respectively
Other, net of tax of $(2), $— and $(1), respectively
Other comprehensive income (loss)
Comprehensive income (loss)
Less comprehensive income (loss) attributable to:
Redeemable noncontrolling interest
Noncontrolling interests
276
175
(6)
445
(157)
(34)
(1)
(192)
11,446
(10,169)
100
1,163
81
(232)
(147)
(27)
(2)
(176)
3,079
81
537
Comprehensive income (loss) attributable to MPC
$
10,183
$
(10,018)
$
2,461
The accompanying notes are an integral part of these consolidated financial statements.
76
MARATHON PETROLEUM CORPORATION
CONSOLIDATED BALANCE SHEETS
(Millions of dollars, except share data)
Assets
Cash and cash equivalents
Short-term investments
Receivables, less allowance for doubtful accounts of $40 and $18, 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
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
Preferred stock, no shares issued and outstanding (par value $0.01 per share, 30 million
shares authorized)
Common stock:
Issued – 984 million and 980 million shares (par value $0.01 per share, 2 billion shares
authorized)
Held in treasury, at cost – 405 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
The accompanying notes are an integral part of these consolidated financial statements.
77
December 31,
2021
2020
$
$
$
5,291
5,548
11,034
8,055
568
—
30,496
5,409
37,440
8,256
1,372
2,400
85,373
13,700
911
1,231
571
438
1,047
—
17,898
24,968
5,638
1,015
927
1,346
51,792
415
—
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
965
968
—
—
10
(19,904)
33,262
12,905
(67)
26,206
6,410
32,616
85,373
$
10
(15,157)
33,208
4,650
(512)
22,199
7,053
29,252
85,158
$
$
$
$
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:
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
Net recognized (gains) losses on investments and derivatives
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 (used in) 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 and contributions
– redemptions, repayments and return of capital
Purchases of short-term investments
Sales of short-term investments
Maturities of short-term investments
All other, net
Cash used in investing activities - continuing operations
Cash provided by (used in) investing activities - discontinued
operations
Net cash provided by (used in) investing activities
Financing activities:
Commercial paper – issued
– repayments
Long-term debt – borrowings
– repayments
78
2021
2020
2019
$
11,001
$
(9,977)
$
3,255
79
—
3,364
(499)
(169)
(21)
(458)
652
(8,448)
2,089
16
(5,299)
(33)
6,260
3
(153)
8,384
(4,024)
4,360
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
(1,464)
(2,787)
—
153
(210)
39
(12,498)
1,544
5,406
513
(6,517)
21,314
14,797
7,414
(8,437)
12,150
(17,400)
—
150
(485)
137
—
—
—
63
(2,922)
(335)
(3,257)
2,055
(1,031)
17,082
(15,380)
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)
—
—
14,274
(13,073)
(Millions of dollars)
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 used in financing activities
2021
2020
2019
—
106
(4,654)
(1,484)
(1,449)
—
(630)
(35)
(14,419)
(50)
11
—
(1,510)
(1,244)
—
(33)
(35)
(135)
(22)
10
(1,950)
(1,398)
(1,245)
97
—
(69)
(3,376)
Net change in cash, cash equivalents and restricted cash
$
4,738
$
(973)
$
(196)
Cash, cash equivalents and restricted cash balances:(a)
Continuing operations - beginning of year
Discontinued operations - beginning of year(b)
Less: Discontinued operations - end of year(b)
Continuing operations - end of year
416
140
—
$
5,294
$
1,395
134
140
416
1,519
206
134
$
1,395
(a)
(b)
Restricted cash is included in other current assets on our consolidated balance sheets.
Reported as assets held for sale on our consolidated balance sheets.
The accompanying notes are an integral part of these consolidated financial statements.
79
—
—
—
—
(36)
968
81
—
(81)
—
—
—
968
100
—
CONSOLIDATED STATEMENTS OF EQUITY AND REDEEMABLE NONCONTROLLING INTEREST
MARATHON PETROLEUM CORPORATION
(Shares in millions;
amounts in millions of dollars)
Shares
Amount
Shares
Amount
Common Stock
Treasury Stock
Additional
Paid-in
Capital
Retained
Earnings
Accumulated
Other
Comprehensive
Income (Loss)
Non-
controlling
Interests
Total
Equity
Redeemable
Non-
controlling
Interest
Balance as of December 31, 2018
975
$ 10
(295) $ (13,175) $ 33,729
$ 14,755
$
(144) $ 8,874
$ 44,049
$
1,004
MPC Stockholders’ Equity
Net income
—
—
—
Dividends declared on common
stock ($2.12 per share)
Distributions to noncontrolling
interests
Contributions from noncontrolling
interests
—
—
—
—
—
—
—
—
—
Other comprehensive loss
—
—
—
—
—
—
—
—
Shares repurchased
—
—
(34)
(1,950)
—
—
—
—
—
—
Stock-based compensation
3
—
—
Equity transactions of MPLX & ANDX —
—
—
(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)
Balance as of December 31, 2019
978
$ 10
(329) $ (15,143) $ 33,157
$ 15,990
$
(320) $ 8,445
$ 42,139
$
Net income (loss)
—
—
—
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
$
Net income
—
—
—
Dividends declared on common
stock ($2.32 per share)
Distributions to noncontrolling
interests
—
—
—
—
—
—
Other comprehensive income
—
—
—
—
—
—
—
Shares repurchased
—
—
(76)
(4,740)
—
—
—
—
—
Stock-based compensation
4
—
—
Equity transactions of MPLX
—
—
—
(7)
—
147
(93)
9,738
(1,483)
—
—
—
—
—
—
—
—
445
—
—
—
1,163
10,901
—
(1,483)
(1,349)
(1,349)
(100)
—
—
4
(461)
445
(4,740)
144
(554)
—
—
—
(3)
Balance as of December 31, 2021
984
$ 10
(405) $ (19,904) $ 33,262
$ 12,905
$
(67) $ 6,410
$ 32,616
$
965
The accompanying notes are an integral part of these consolidated financial statements.
80
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 branded outlets. We also sell transportation fuel to consumers
through 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 May 14, 2021, we completed the sale of Speedway, our company-owned and operated retail transportation fuel and
convenience store business, to 7-Eleven, Inc. (“7-Eleven”). Speedway’s 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 are
presented in our consolidated balance sheets as assets and liabilities held for sale as of December 31, 2020. 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.
Refer to Notes 6 and 12 for additional information about our operations.
Basis of Presentation
All significant intercompany transactions and accounts have been eliminated.
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 continue to supply fuel to Speedway subsequent to the sale to 7-Eleven. All periods presented have been retrospectively
adjusted through the sale date of May 14, 2021 to reflect this change. Additionally, from August 2, 2020 through May 14, 2021, in
accordance with ASC 360, Property, Plant, and Equipment, we ceased recording depreciation and amortization for Speedway’s
PP&E, finite-lived intangible assets and right of use lease assets.
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, 2021, we owned the general partner and approximately 64 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
81
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 12 for a description of our
reportable segment operations.
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.
Short-Term Investments
Investments with a maturity date greater than three months that we intend to convert to cash or cash equivalents within a year or
less are classified as short-term investments in our consolidated balance sheets. Additionally, in accordance with ASC 320,
Investments - Debt Securities, we have classified all short-term investments as available-for-sale securities and changes in fair
market value are reported in other comprehensive income.
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.
82
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.
Fair Value
We account for certain assets and liabilities at fair value. The hierarchy below lists three levels of fair value based on the extent
to which inputs used in measuring fair value are observable in the market. We categorize each of our fair value measurements in
one of these three levels based on the lowest level input that is significant to the fair value measurement in its entirety. These
levels are:
•
•
•
Level 1 – inputs are based upon unadjusted quoted prices for identical instruments in active markets. Our Level 1
derivative assets and liabilities include 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.
Level 2 – inputs are based upon quoted prices for similar instruments in active markets, quoted prices for identical or
similar instruments in markets that are not active, and model-based valuation techniques for which all significant inputs
are observable in the market or can be corroborated by observable market data for substantially the full term of the
assets or liabilities. Where applicable, these models project future cash flows and discount the future amounts to a
present value using market-based observable inputs including interest rate curves, credit spreads, and forward and spot
prices for currencies. Our Level 2 investments include commercial paper, certificates of deposit, time deposits and
corporate notes and bonds. Our Level 2 derivative assets and liabilities primarily include certain OTC contracts.
Level 3 – inputs are generally unobservable and typically reflect management’s estimates of assumptions that market
participants would use in pricing the asset or liability. The fair values are therefore determined using model-based
techniques, including option pricing models and discounted cash flow models. Our Level 3 assets and liabilities include
goodwill, long-lived assets and intangible assets, when they are recorded at fair value due to an impairment charge and
an embedded derivative liability relates to a natural gas purchase agreement embedded in a keep‑whole processing
agreement. Unobservable inputs used in the models are significant to the fair values of the assets and liabilities.
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.
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 their financial strength and on credit ratings, if
available. Additionally, we limit the level of exposure with any single counterparty.
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, generally ten to 40 years for refining and midstream assets, 25 years for office buildings and four to seven years for other
miscellaneous fixed assets. 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.
83
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.
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.
84
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.
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 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.
85
3. ACCOUNTING STANDARDS
Recently Adopted
We adopted the following ASU during 2021, which did not have a material impact to our financial statements or financial
statement disclosures:
ASU
2019-12
Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes
Effective Date
January 1, 2021
Not Yet Adopted
ASU 2021-10, Government Assistance (Topic 832): Disclosures by Business Entities about Government Assistance
In November 2021, the FASB issued guidance requiring disclosures for certain types of government assistance that have been
accounted for by analogy to grant or contribution models. Disclosures will include information about the type of transactions,
accounting and the impact on financial statements. Guidance must be applied to our annual financial statements for year ended
2022 either (1) prospectively for any transactions reflected in the financial statement at the date of initial application and to any
new transactions entered into after the date of initial application or (2) retrospectively to those transactions. Early application is
permitted.
4. SHORT-TERM INVESTMENTS
Investments Components
The components of investments were as follows:
(In millions)
Available-for-sale debt securities
Commercial paper
Certificates of deposit and time deposits
U.S. government securities
Corporate notes and bonds
Total available-for-sale debt securities
Cash
Total
Fair Value
Level
Amortized
Cost
Unrealized
Gains
Unrealized
Losses
Fair Value
Cash and
Cash
Equivalents
Short-term
Investments
December 31, 2021
Level 2
Level 2
Level 1
Level 2
$ 4,905 $
2,024
28
271
$ 7,228 $
— $
—
—
—
— $
2,024
28
271
868 $ 4,036
(1) $ 4,904 $
1,274
750
—
28
—
—
210
61
—
(1) $ 7,227 $ 1,679 $ 5,548
—
$ 10,839 $ 5,291 $ 5,548
3,612
3,612
Our investment policy includes concentration limits and credit rating requirements which limits our investments to high quality,
short term and highly liquid securities.
Unrealized losses on debt investments held from May 14, 2021 to December 31, 2021 were not material. Realized gains/losses
were not material. All of our available-for-sale debt securities held as of December 31, 2021 mature within one year or less or are
readily available for use.
5. DISCONTINUED OPERATIONS
On May 14, 2021, we completed the sale of Speedway, our company-owned and operated retail transportation fuel and
convenience store business, to 7-Eleven for cash proceeds of approximately $21.38 billion. After-tax proceeds were
approximately $17.22 billion. This transaction resulted in a pretax gain of $11.68 billion ($8.02 billion after income taxes) after
deducting the book value of the net assets and certain other adjustments.
The proceeds and related Speedway sale gain may be adjusted in future periods based on provisions of the purchase and sale
agreement that allow for adjustments of working capital amounts and other miscellaneous items subsequent to the transaction
closing date of May 14, 2021.
Results of operations for Speedway are reflected through the close of the sale. The following table presents Speedway results
and the gain on sale as reported in income from discontinued operations, net of tax, within our consolidated statements of
income.
86
(In millions)
2021
2020
2019
Revenues, other income and net gain on disposal of assets:
Revenues and other income
Net gain on disposal of assets
Total revenues, other income and net gain on disposal of assets
Costs and expenses:
Cost of revenues (excludes items below)
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
$
8,420
$
19,919
$
26,764
11,682
20,102
7,654
3
121
75
7,853
12,249
6
12,243
3,795
1
19,920
29
26,793
17,573
24,860
244
323
193
413
216
190
18,333
25,679
1,587
20
1,567
362
1,114
18
1,096
290
806
Income from discontinued operations, net of tax
$
8,448
$
1,205
$
Fuel Supply Agreements
During the second quarter of 2021, we entered into various 15-year fuel supply agreements through which we continue to supply
fuel to Speedway.
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, 2021, we owned approximately 64 percent of the
outstanding MPLX common units.
Javelina Assets Held-for-Sale
On February 12, 2021, MPLX sold 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”) to a third party. 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.
Unit Repurchase Program
On November 2, 2020, MPLX announced the board authorization of a unit repurchase program for the repurchase of up to
$1.0 billion of MPLX’s outstanding common units held by the public.
Total unit repurchases were as follows for the respective periods:
(In millions, except per share data)
Number of common units repurchased
Cash paid for common units repurchased
Average cost per unit
2021
2020
23
630
27.52
$
$
1
33
22.29
$
$
As of December 31, 2021, MPLX has $337 million remaining under its unit repurchase authorization. The repurchase
authorization has no expiration date.
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 effected the transfer to MPC of the
87
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.
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)
Decrease due to change in ownership
Tax impact
Decrease in MPC's additional paid-in capital, net of tax
2021
2020
2019
$
$
(166)
$
73
(93)
$
(27)
$
(14)
(41)
$
(51)
(633)
(684)
7.
IMPAIRMENTS
During 2021, we recognized $69 million of impairment expense within our Midstream segment related to the divestiture,
abandonment or closure of certain assets as detailed in the table below.
During the first quarter of 2020, the outbreak of COVID-19 caused 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 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.
88
The table below provides information related to the impairments recognized, along with the location of these impairments within
the consolidated statements of income.
(In millions)
Goodwill
Income Statement Line
Impairment expense
Equity method investments Income (loss) from equity method investments
Long-lived assets
Long-lived assets
Total impairments
Impairment expense(a)
Depreciation and amortization
2021
2020
2019
$
$
—
13
—
56
69
$
7,394
$
1,197
1,315
1,032
—
42
—
—
$
9,741
$
1,239
(a)
The amount of 2020 impairment expense 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 18 for detail by segment. The
goodwill impairment within the Refining & Marketing segment was primarily driven by the effects of the COVID-19 pandemic 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 seven 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 billion 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 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
89
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 the COVID-19 pandemic 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.
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
90
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, MPLX 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 the COVID-19 pandemic. 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 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 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. 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.
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
91
December 31,
2021
December 31,
2020
$
13
$
660
142
55
—
3,981
20,042
7,657
268
891
15
478
118
67
188
4,036
21,418
7,657
309
1,006
(In millions)
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,
2021
December 31,
2020
$
671
$
6
75
499
59
—
304
468
4
76
764
63
101
297
18,072
19,375
10
205
559
12
244
437
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, 2021 was $401 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 LLC (“Sherwood Midstream”) has been deemed the primary beneficiary of Sherwood Midstream Holdings
LLC (“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.
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 16 for ownership
percentages and investment balances and Note 29 for our exposure to guarantees related to our non-consolidated VIEs.
9. RELATED PARTY TRANSACTIONS
Transactions with related parties were as follows:
(In millions)
Sales to related parties
Purchases from related parties
2021
2020
2019
$
93
$
962
$
123
738
91
763
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.
92
10. 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.
(In millions, except per share data)
2021
2020
2019
Income (loss) from continuing operations, net of tax
$
2,553
$
(11,182)
$
2,449
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
1,263
2
1,288
8,448
(151)
1
(11,032)
1,205
Income (loss) available to common stockholders
$
9,736
$
(9,827)
$
Weighted average common shares outstanding:
Basic
Effect of dilutive securities
Diluted
Income (loss) available to common stockholders per share:
634
4
638
649
—
649
Basic:
Continuing operations
Discontinued operations
Net income (loss) per share
Diluted:
Continuing operations
Discontinued operations
Net income (loss) per share
$
$
$
$
2.03
$
(16.99)
$
13.31
1.86
15.34
$
(15.13)
$
2.02
$
(16.99)
$
13.22
1.86
15.24
$
(15.13)
$
618
1
1,830
806
2,636
659
5
664
2.78
1.22
4.00
2.76
1.21
3.97
The following table summarizes the shares that were anti-dilutive, and therefore, were excluded from the diluted share
calculation.
(In millions)
2021
2020
2019
Shares issuable under stock-based compensation plans
3
11
3
11. EQUITY
In connection with the Speedway sale, our board of directors approved an additional $7.1 billion share repurchase authorization
bringing total share repurchase authorizations to $10.0 billion prior to the June 2021 tender offer discussed below. The
authorization has no expiration date.
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, if any, will depend upon several factors,
including market and business conditions, and such repurchases may be 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
2021
2020
2019
76
4,654
62.65
$
$
$
$
—
—
—
$
$
34
1,950
58.87
93
As of December 31, 2021, MPC has $5.27 billion remaining under its share repurchase authorizations, which reflects the
repurchase of 1,335,776 common shares for $85 million that settled in the first quarter of 2022.
During the second quarter of 2021, MPC completed a modified Dutch auction tender offer, purchasing 15,573,365 shares of its
common stock at a purchase price of $63.00 per share, for an aggregate purchase price of approximately $981 million, excluding
fees and expenses related to the tender offer. These amounts are included in the above table.
12. SEGMENT INFORMATION
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, including renewable 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, including renewable diesel, 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 and through long-term supply contracts with direct dealers who operate locations mainly under
the ARCO® brand.
• 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.
Segment income represents income (loss) from operations attributable to the reportable segments. 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. 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.
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)
Refining & Marketing
Midstream
Segment income (loss) from operations
Corporate
Items not allocated to segments:
Impairments(a)
Idling expenses
Restructuring expenses(b)
Litigation
Gain on sale of assets
Transaction-related costs(c)
Equity method investment restructuring gains(d)
Income (loss) from continuing operations
Net interest and other financial costs
2021
2020
2019
$
1,016
$
(5,189)
$
4,061
5,077
(696)
(69)
(12)
—
—
—
—
—
4,300
1,483
3,708
(1,481)
(800)
(9,741)
—
(367)
84
66
(8)
—
(12,247)
1,365
2,856
3,594
6,450
(833)
(1,239)
—
—
(22)
—
(153)
259
4,462
1,229
3,233
Income (loss) from continuing operations before income taxes
$
2,817
$
(13,612)
$
(a)
(b)
(c)
(d)
2021 reflects impairments of equity method investments and long lived assets. 2020 reflects impairments of goodwill, equity method
investments and long lived assets. 2019 reflects impairments of goodwill and equity method investments. See Note 7.
See Note 19.
2020 and 2019 includes 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. Costs incurred in connection with the Speedway separation are
included in discontinued operations. See Note 5.
Non-cash benefits related to restructurings of our investments in The Andersons Marathon Holdings LLC (“TAMH”) and Capline Pipeline
Company LLC (“Capline LLC’) in 2019.
94
The following reconciles segment depreciation and amortization to total depreciation and amortization as reported in the
consolidated statements of income:
(In millions)
Refining & Marketing
Midstream
Segment depreciation and amortization
Corporate
2021
2020
2019
$
1,870
$
1,857
$
1,329
3,199
165
1,353
3,210
165
1,780
1,267
3,047
178
3,225
Total depreciation and amortization
$
3,364
$
3,375
$
The following reconciles segment revenues to sales and other operating revenues as reported in the consolidated statements of
income:
(In millions)
Refining & Marketing
Revenues from external customers(a)
Intersegment revenues
Refining & Marketing segment revenues
Midstream
Revenues from external customers(a)
Intersegment revenues
Midstream segment revenues
Total segment revenues
Less: intersegment revenues
2021
2020
2019
$
115,350
$
66,180
$
107,305
144
115,494
4,633
4,986
9,619
125,113
5,130
67
66,247
3,599
4,839
8,438
74,685
4,906
103
107,408
3,843
4,917
8,760
116,168
5,020
Sales and other operating revenues
$
119,983
$
69,779
$
111,148
(a)
Includes Refining & Marketing intercompany sales to Speedway prior to May 14, 2021 and related party sales. See Notes 5 and 9 for
additional information.
The following reconciles segment capital expenditures and investments to total capital expenditures:
(In millions)
Refining & Marketing
Midstream
Segment capital expenditures and investments
Less investments in equity method investees
Plus:
Corporate
Capitalized interest
Total capital expenditures(a)
2021
2020
2019
$
911
731
1,642
210
105
68
$
1,170
$
1,398
2,568
485
80
106
2,045
3,290
5,335
1,064
100
137
$
1,605
$
2,269
$
4,508
(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 subsequent to the sale to 7-Eleven, we have reported intersegment sales to
Speedway, that were previously eliminated in consolidation, as third-party sales. All periods presented have been retrospectively
adjusted through the sale date of May 14, 2021 to reflect this change. Sales to Speedway/7-Eleven from the Refining &
Marketing segment represented 11 percent, 11 percent and 12 percent of our total annual revenues for the years ended
December 31, 2021, 2020 and 2019, 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.
95
13. 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
2021
2020
2019
$
(14)
$
(9)
$
1,340
(73)
64
133
33
1,462
(129)
11
(9)
39
(40)
1,389
(158)
4
—
34
Net interest and other financial costs
$
1,483
$
1,365
$
1,229
(a)
See Note 26.
14. INCOME TAXES
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
2021
2020
2019
$
380
$
(2,267)
$
48
5
433
(164)
(6)
1
(169)
69
9
(2,189)
90
(347)
16
(241)
Income tax provision (benefit)
$
264
$
(2,430)
$
(52)
28
1
(23)
742
56
9
807
784
Our effective tax rate for the year ended December 31, 2021 was lower than the tax computed at the U.S. statutory rate primarily
due to certain permanent tax benefits related to net income attributable to noncontrolling interests and an increase in benefit
related to the net operating loss (“NOL”) carryback provided under the Coronavirus Aid, Relief, and Economic Security Act
(“CARES Act”), partially offset by state taxes and local income taxes.
Our effective income tax benefit rate for the year ended December 31, 2020 was lower than the tax benefit computed at the U.S.
statutory rate due to a significant amount of our pre-tax loss consisting of non-deductible goodwill impairment charges, partially
offset by the tax rate differential resulting from the NOL carryback provided under the CARES Act. Additionally, our non-
controlling interest in MPLX generally provides an effective tax rate benefit since the tax associated with these ownership
interests is paid by those interests, but this benefit was lower for the year ended December 31, 2020 due to impairment charges
recorded by MPLX.
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
2021
2020
2019
21 %
21 %
21 %
2
—
(9)
(3)
(2)
2
(8)
—
4
(1)
2
5
(4)
—
—
Effective tax rate applied to income (loss) from continuing operations
before income taxes
9 %
18 %
24 %
96
On March 27, 2020, the 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 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 realized a cumulative income tax benefit of
$2.30 billion. We received $1.55 billion of the income tax benefit in cash during the fourth quarter of 2021, an additional
$690 million was realized as an offset to 2021 income tax liability payment obligations and we expect to receive the remaining
$59 million refund during the first half of 2022.
Deferred tax assets and liabilities resulted from the following:
(In millions)
Deferred tax assets:
Employee benefits
Environmental remediation
Finance lease obligations
Operating lease liabilities
Net operating loss carryforwards
Tax credit carryforwards
Goodwill and other intangibles
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
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,
2021
2020
$
495
$
91
339
263
113
19
35
67
1,422
2,716
717
3,350
—
257
18
7,058
$
5,636
$
647
95
103
453
232
19
—
80
1,629
3,195
800
3,331
34
451
18
7,829
6,200
December 31,
2021
2020
$
$
2
$
3
5,638
5,636
$
6,203
6,200
(a)
The deferred income tax assets and liabilities associated with discontinued operations as of December 31, 2020 were realized upon the
sale of Speedway.
At December 31, 2021 and 2020, federal operating loss carryforwards were $4 million and $4 million, respectively, which
includes a mix of indefinite carryforward ability and expiration periods ranging from 2022 through 2037. As of December 31, 2021
and 2020, state and local operating loss carryforwards were $109 million and $228 million, respectively, which includes a mix of
indefinite carryforward ability and expiration periods ranging from 2021 through 2042.
As of December 31, 2021 and 2020, $38 million of valuation allowances have been recorded related to income taxes. A state and
local valuation allowance was established as of December 31, 2021 and 2020, of $7 million, based on expected realizability of
state and local tax operating losses. A foreign valuation allowance was established as of December 31, 2021 of $31 million,
based on expected realizability of foreign tax operating losses and related deferred tax assets.
97
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. During the fourth quarter 2021, Andeavor and its subsidiaries’ IRS audits were completed
through the 2018 tax year. Furthermore during the fourth quarter of 2021, an IRS audit was initiated for MPLX and its
subsidiaries for the tax year 2019.
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, 2021, we have various state and local income tax returns subject to
examination for years 2006 through 2020, depending on jurisdiction.
The following table summarizes the activity in unrecognized tax benefits:
(In millions)
January 1 balance
Additions for tax positions of current year
Additions for tax positions of prior years
Reductions for tax positions of prior years
Settlements
Statute of limitations
December 31 balance
2021
2020
2019
$
$
23
6
19
(4)
(6)
(1)
$
37
$
32
—
12
(18)
(3)
—
23
$
$
211
—
2
(2)
(19)
(160)
32
If the unrecognized tax benefits as of December 31, 2021 were recognized, $33 million would affect our effective income tax rate.
There were $19 million of uncertain tax positions as of December 31, 2021 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.
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 $(2) million, $(19) million and $(2) million in 2021, 2020 and 2019, respectively. As of
December 31, 2021 and 2020, $6 million and $5 million of interest and penalties receivables (payables) were accrued related to
income taxes, respectively.
15. INVENTORIES
(In millions)
Crude oil
Refined products
Materials and supplies
Total
December 31,
2021
2020
$
$
2,639
$
4,460
956
8,055
$
2,588
4,478
933
7,999
The LIFO method accounted for 88 percent of total inventory value at both December 31, 2021 and 2020. Current acquisition
costs were estimated to exceed the LIFO inventory value by $2.84 billion as of December 31, 2021. There was no excess of
replacement or current cost over our stated LIFO cost at December 31, 2020.
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 in 2020 were higher than current costs, which resulted in the
charge to cost of revenues.
98
16. EQUITY METHOD INVESTMENTS
(Dollars in millions)
Refining & Marketing
The Andersons Marathon Holdings LLC
Watson Cogeneration Company
Other(a)
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 Torñado GP, 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
W2W Holdings LLC
Other(a)
MPLX Total
MPC-Retained
Capline Pipeline Company LLC
Crowley Coastal Partners, LLC
Gray Oak Pipeline, LLC
LOOP LLC
South Texas Gateway Terminal LLC
Other(a)
MPC-Retained Total
Midstream Total
Total
Ownership as of
December 31,
Carrying value at
December 31,
VIE
2021
2021
2020
$
194
$
50%
51%
67%
40%
25%
35%
41%
25%
67%
60%
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
X
$
$
$
28
19
241
183
133
66
243
265
449
332
246
680
183
147
136
544
155
58
161
159
25
—
184
194
145
72
254
252
465
307
188
698
188
159
148
557
185
72
152
3,981
4,036
$
399
185
318
66
173
46
1,187
5,168
390
190
342
63
168
49
1,202
5,238
$
5,409
$
5,422
(a)
Some investments included within “Other” have been deemed to be VIEs.
99
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
2021
2020
2019
3,282
1,176
987
$
4,343
$
3,013
$
1,389
1,230
$
1,233
$
18,071
801
5,141
599
454
1,298
17,697
754
4,736
As of December 31, 2021, the carrying value of our equity method investments was $319 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 $208 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 $652 million, $577 million and $569 million in 2021, 2020 and 2019, respectively.
See Note 7 for information regarding impairments of equity method investments.
17. PROPERTY, PLANT AND EQUIPMENT
December 31, 2021
December 31, 2020
(In millions)
Gross
PP&E
Accumulated
Depreciation
Net
PP&E
Gross
PP&E
Accumulated
Depreciation
Net
PP&E
Refining & Marketing
$
31,089 $
14,876 $
16,213
$
30,306 $
13,257 $
17,049
Midstream
Corporate
Total(a)
28,098
1,446
7,384
933
20,714
513
27,677
1,356
6,217
830
21,460
526
$
60,633 $
23,193 $
37,440
$
59,339 $
20,304 $
39,035
(a)
Includes finance leases. See Note 28.
Property, plant and equipment includes construction in progress of $2.27 billion and $1.83 billion at December 31, 2021 and
2020, respectively, which primarily relates to capital projects at our refineries and midstream facilities.
18. GOODWILL AND INTANGIBLES
Goodwill
MPC 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.
MPC had four reporting units with goodwill totaling approximately $8.26 billion. For the annual impairment assessment as of
November 30, 2021, management performed only a qualitative assessment for two reporting units as we determined it was more
likely than not that the fair value of the reporting units exceeded the carrying value. 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 23
percent and 51 percent. 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 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. The fair value
measurements for the individual reporting units represent Level 3 measurements.
100
The changes in the carrying amount of goodwill for 2021 and 2020 were as follows:
(In millions)
Balance at January 1, 2019
Transfers
Impairments(a)
Balance at December 31, 2021 and December 31, 2020
(a)
See Note 7.
Intangible Assets
Refining &
Marketing
Midstream
Total
$
$
6,133
$
9,517
$
15,650
8
(5,580)
(8)
(1,814)
561
$
7,695
$
—
(7,394)
8,256
Our definite lived intangible assets as of December 31, 2021 and 2020 are as shown below.
(In millions)
Customer contracts and
relationships
Brand rights and tradenames
Royalty agreements
Other
Total
December 31, 2021
December 31, 2020
Gross
Accumulated
Amortization
Net
Gross
Accumulated
Amortization
Net
$
3,495 $
1,457 $
2,038
$
3,359 $
1,119 $
2,240
100
135
36
50
96
28
50
39
8
100
133
36
35
87
27
65
46
9
$
3,766 $
1,631 $
2,135
$
3,628 $
1,268 $
2,360
At both December 31, 2021 and 2020, we had indefinite lived intangible assets $71 million, which are emission allowance
credits.
Amortization expense for 2021 and 2020 was $330 million and $336 million, respectively. Estimated future amortization expense
for the next five years related to the intangible assets at December 31, 2021 is as follows:
(In millions)
2022
2023
2024
2025
2026
19. RESTRUCTURING
$
328
312
261
243
225
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 remaining exit and disposal costs reserve to occur through 2024.
101
(In millions)
Restructuring reserve balance at September 30, 2020(a)
Adjustments
Cash payments
Restructuring reserve balance at December 31, 2020
Cash payments
Employee
separation
costs
Exit and
disposal costs
Total
$
158
$
133
$
14
(134)
38
(38)
5
(35)
103
(44)
Restructuring reserve balance at December 31, 2021
$
—
$
59
$
(a)
The restructuring reserve was zero until the third quarter of 2020.
291
19
(169)
141
(82)
59
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, 2021 and
2020 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.
Embedded derivatives in commodity contracts
—
—
108
—
108
$ 248
$
1
$ —
$
(249)
$
—
$
—
—
December 31, 2021
Fair Value Hierarchy
Level 1
Level 2
Level 3
Netting and
Collateral(a)
Net Carrying
Value on Balance
Sheet(b)
Collateral
Pledged Not
Offset
$ 270
$
1
$ —
$
(235)
$
36
$
34
December 31, 2020
Fair Value Hierarchy
Level 1
Level 2
Level 3
Netting and
Collateral(a)
Net Carrying
Value on Balance
Sheet(b)
Collateral
Pledged Not
Offset
$
82
$
6
$ —
$
(80)
$
8
$
31
(In millions)
Assets:
Commodity contracts
Liabilities:
Commodity contracts
(In millions)
Assets:
Commodity contracts
Liabilities:
Commodity contracts
Embedded derivatives in commodity contracts
—
—
63
—
$
81
$
10
$ —
$
(91)
$
$
—
63
—
—
(a)
Represents the impact of netting assets, liabilities and cash collateral when a legal right of offset exists. As of December 31, 2021, cash
collateral of $14 million was netted with mark-to-market liabilities. As of December 31, 2020, cash collateral of $11 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.
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, 2021 used significant unobservable inputs including: (1) NGL prices interpolated and extrapolated
due to inactive markets ranging from $0.72 to $1.79 per gallon with a weighted average of $0.92 per gallon and (2) the
probability of renewal of 100 percent for the 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.
102
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
2021
2020
$
63
59
(14)
108
$
60
9
(6)
63
47
$
4
$
$
$
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, 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 $25.1 billion
and $28.1 billion at December 31, 2021, respectively, and approximately $31.1 billion and $34.9 billion at December 31, 2020,
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, 2021 and 2020 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)
(a)
Includes embedded derivatives.
December 31, 2021
December 31, 2020
Asset
Liability
Asset
Liability
$
271
$
249
$
—
—
15
93
$
88
—
—
91
7
56
The table below summarizes open commodity derivative contracts for crude oil, refined products and blending products as of
December 31, 2021.
(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
68.3%
87.2%
99.7%
99.4%
45,680
11,262
4,963
1,141
44,532
12,678
6,050
1,825
(a)
Included in exchange-traded are spread contracts in thousands of barrels: Crude oil - 1,120 long and 1,140 short; Refined products - 869
long; Blending products - 26 long and 44 short. There are no spread contracts for soybean oil.
103
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
22. DEBT
2021
Gain (Loss)
2020
2019
$
$
(47)
$
(333)
—
$
72
34
1
(380)
$
107
$
(19)
(77)
—
(96)
Our outstanding borrowings at December 31, 2021 and 2020 consisted of the following:
(In millions)
Marathon Petroleum Corporation:
Commercial paper
Senior notes
Notes payable
Finance lease obligations
Total
MPLX LP:
Bank revolving credit facility
Senior notes
Finance lease obligations
Total
Total debt
Unamortized debt issuance costs
Unamortized discount, net of unamortized premium
Amounts due within one year
Total long-term debt due after one year
Commercial Paper
December 31,
2021
December 31,
2020
$
—
$
6,449
1
589
7,039
300
18,600
9
18,909
25,948
(129)
(280)
(571)
$
24,968
$
1,024
9,849
1
634
11,508
175
20,350
11
20,536
32,044
(154)
(306)
(2,854)
28,730
On February 26, 2016, we established a commercial paper program that allows us to have a maximum of $2.0 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.
104
MPC Senior Notes
(In millions)
Senior notes, 5.125% due March 2021
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 2023 – 2048
Senior notes, 5.000%, due September 2054
Total
2021 Activity
$
December 31,
2021
2020
$
—
—
—
—
750
1,250
719
496
1,250
800
250
498
36
400
1,000
1,250
614
241
750
1,250
719
496
1,250
800
250
498
331
400
$
6,449
$
9,849
On March 1, 2021, we repaid the $1.0 billion outstanding aggregate principal amount of 5.125% senior notes due March 2021.
In June 2021, all of the $300 million outstanding aggregate principal amount of 5.125% senior notes due April 2024, including the
portion of such notes for which Andeavor was the obligor, were redeemed at a price equal to 100.854% of the principal amount,
plus accrued and unpaid interest to, but not including, the redemption date.
On December 2, 2021, all of the $1.25 billion outstanding aggregate principal amount 4.5% senior notes due May 2023 and the
$850 million outstanding aggregate principal amount of 4.75% senior notes due December 2023, including the portion of such
notes for which Andeavor LLC was the obligor, were redeemed at a price equal to par, plus a make-whole premium and accrued
and unpaid interest to, but not including, the redemption date. The payment of $132 million related to the note premium, offset by
the immediate expense recognition of $6 million of unamortized debt premium and issuance costs, resulted in a loss on
extinguishment of debt of $126 million.
2020 Activity
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% senior notes due May 2023 and $1.25 billion aggregate principal amount of 4.700%
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, plus accrued and
unpaid interest to, but not including, the redemption date.
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, plus accrued and unpaid interest to, but not including, the redemption date.
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 and MPLX. 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.
105
MPLX Senior Notes
(In millions)
Floating rate notes due September 2022
Senior notes, 3.500% due December 2022
Senior notes, 3.375% due March 2023
Senior notes, 4.500% due July 2023
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
2021 Activity
December 31,
2021
2020
$
—
$
1,000
486
500
989
1,149
—
500
1,189
23
1,500
1,250
732
1,250
750
1,500
1,750
1,000
487
45
1,500
1,500
500
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
$
18,600
$
20,350
On January 15, 2021, MPLX redeemed 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, at a price equal to 102.625% of the principal amount, plus
accrued and unpaid interest to, but not including, the redemption date.
On September 3, 2021 MPLX redeemed, at par value, all of the $1.0 billion aggregate principal amount of floating rate senior
notes due September 2022, plus accrued and unpaid interest to, but not including, the redemption date. MPLX primarily funded
the redemption with borrowings under the MPC intercompany loan agreement.
2020 Activity
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.
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.
106
Schedule of Maturities
Principal maturities of long-term debt, excluding finance lease obligations, as of December 31, 2021 for the next five years are as
follows:
(In millions)
2022
2023
2024
2025
2026
$
500
1,500
2,201
2,950
2,249
Available Capacity under our Facilities as of December 31, 2021
(Dollars in millions)
MPC, excluding MPLX
Total
Capacity
Outstanding
Borrowings
Outstanding
Letters
of Credit
Available
Capacity
Weighted
Average
Interest
Rate
Expiration
MPC bank revolving credit facility
MPC trade receivables securitization facility(a)
$ 5,000 $
— $
1 $ 4,999
— October 2023
250
—
250
—
— September 2022
MPLX
MPLX bank revolving credit facility
3,500
300
—
3,200
1.33
July 2024
(a)
The committed capacity of the trade receivables securitization facility is $100 million. The facility allows the banks to make loans and issue
letters of credit of up to $400 million in excess of the committed capacity at their discretion if there is available borrowing capacity.
MPC Five-Year Bank Revolving Credit Facility
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.
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 five-year credit agreement bear interest, at our election, at either the Adjusted LIBO Rate or the
Alternate Base Rate (both as defined in the MPC five-year credit agreement), plus an applicable margin. We are charged various
fees and expenses under the MPC five-year credit agreement, 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 five-year credit agreement fluctuate based on
changes, if any, to our credit ratings.
The MPC five-year credit agreement contains 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 five-year credit
agreement) 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, 2021, we were in compliance with the covenants contained in the MPC five-year credit
agreement.
MPC 364-Day Bank Revolving Credit Facilities
On September 23, 2020, MPC entered into a 364-day credit agreement with a syndicate of lenders. This revolving credit
agreement provided for a $1.0 billion unsecured revolving credit facility that was scheduled to mature in September 2021. In
June 2021, we elected to terminate this credit agreement. There were no borrowings under this credit facility, and we determined
that the incremental borrowing capacity of the facility was no longer necessary. We incurred no early termination fees as a result
of the early termination of this credit agreement.
107
On April 27, 2020, MPC entered into an additional 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 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.
Trade Receivables Securitization Facility
On September 30, 2021, we entered into a Loan and Security Agreement and related documentation with a group of lenders
providing for a new trade receivables securitization facility having $100 million of committed borrowing and letter of credit
issuance capacity and up to an additional $400 million of uncommitted borrowing and letter of credit issuance capacity that can
be extended at the discretion of the lenders, provided that at no time may outstanding borrowings and letters of credit issued
under the facility exceed the balance of eligible trade receivables (as calculated in accordance with the Loan and Security
Agreement) that are pledged as collateral under the facility. The new facility is scheduled to expire on September 29, 2022,
unless extended, and replaces our previous trade receivables securitization facility that expired on July 16, 2021.
The trade receivables facility consists of certain of our wholly-owned subsidiaries (“Originators”) selling or contributing on an on-
going basis all of the trade receivables generated by them (the “Pool 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 I LLC (“TRC”), in exchange for a combination of cash, equity and/or borrowings under a
subordinated note issued by TRC. TRC may request borrowings and extensions of credit under the Loan and Security
Agreement for up to the lesser of the maximum capacity under the facility or the eligible trade receivables balance of the Pool
Receivables. TRC and each of the Originators have granted a security interest in all of their rights, title and interests in and to the
Pool Receivables, together will all related security and interests in the proceeds thereof, to the lenders to secure the performance
of TRC’s and the Originators’ payment and other obligations under the facility. In addition, MPC has issued a performance
guaranty in favor of the lenders guaranteeing the performance by TRC and the Originators of their obligations under the facility.
To the extent that TRC retains an ownership interest in the Pool Receivables, 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 lenders to secure its obligations
under the Loan and Security Agreement.
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 Loan and Security Agreement and other documents comprising the facility 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 be eligible receivables that count towards the borrowing base under the trade receivables
facility. In addition, the lender’s commitments to extend loans and credits under the facility are subject to termination, and TRC
may be subject to default fees, upon the occurrence of certain events of default that are included in the Loan and Security
Agreement and other facility documentation, all of which we consider to be usual and customary for arrangements of this type.
As of December 31, 2021, we were in compliance with the covenants contained in the Loan and Security Agreement and other
facility documentation.
MPLX Bank Revolving Credit Facility
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
108
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, 2021, MPLX was in compliance with the covenants contained in the MPLX credit agreement.
23. REVENUE
The following table presents our revenues from external customers disaggregated by segment and product line:
(In millions)
Refining & Marketing
Refined products
Crude oil
Services and other
Total revenues from external customers
Midstream
Refined products
Services and other
Total revenues from external customers
2021
2020
2019
$
107,345
$
61,648
$
102,316
7,132
873
115,350
1,590
3,043
4,633
4,023
509
66,180
641
2,958
3,599
4,402
587
107,305
818
3,025
3,843
Sales and other operating revenues
$
119,983
$
69,779
$
111,148
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, 2021, 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, 2021 include matching
buy/sell receivables of $5.23 billion.
24. SUPPLEMENTAL CASH FLOW INFORMATION
(In millions)
2021
2020
2019
Net cash provided by operating activities included:
Interest paid (net of amounts capitalized)
$
1,231
$
1,235
$
Net income taxes paid to (received from) taxing authorities
Cash paid for amounts included in the measurement of lease
liabilities
Payments on operating leases
Interest payments under finance lease obligations
Net cash provided by financing activities included:
Principal payments under finance lease obligations
Non-cash investing and financing activities:
Right of use assets obtained in exchange for new operating lease
obligations
Right of use assets obtained in exchange for new finance lease
obligations
Contribution of assets(a)
Fair value of assets acquired(b)
2,436
(179)
569
21
71
349
37
—
—
651
25
66
343
110
—
—
(a)
(b)
2019 includes the contribution of net assets to TAMH and Capline LLC.
2019 includes the recognition of TAMH and Capline LLC equity method investments.
1,168
491
642
28
48
329
80
266
525
109
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
2021
2020
2019
$
$
1,464
$
2,787
$
—
141
—
(518)
1,605
$
2,269
$
4,810
1
(303)
4,508
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)
Balance as of December 31, 2019
Other comprehensive income (loss) before reclassifications, net
of tax of $(65)
Amounts reclassified from accumulated other comprehensive
loss:
Pension
Benefits
Other
Benefits
$
(212)
$
(116)
$
(136)
(67)
Other
Total
$
(320)
8
4
—
—
—
(6)
1
(1)
(199)
(45)
39
22
(6)
(3)
(192)
(512)
(45)
36
22
—
(3)
(126)
—
3
—
—
(1)
(65)
$
(338)
$
(181)
$
7
$
Amortization – prior service credit(a)
– actuarial loss(a)
– settlement loss(a)
Other
Tax effect
Other comprehensive loss
Balance as of December 31, 2020
(In millions)
Balance as of December 31, 2020
Other comprehensive income (loss) before reclassifications, net
of tax of $127
Amounts reclassified from accumulated other comprehensive
loss:
Amortization – prior service cost (credit)(a)
– actuarial loss(a)
– settlement loss(a)
Other
Tax effect
Other comprehensive income (loss)
Balance as of December 31, 2021
Pension
Benefits
Other
Benefits
Other
Total
$
(338)
$
(181)
$
7
$
(512)
171
220
(5)
386
(45)
37
75
—
(17)
221
2
10
1
—
(3)
230
—
—
—
(1)
—
(6)
$
(117)
$
49
$
1
$
(43)
47
76
(1)
(20)
445
(67)
(a)
These accumulated other comprehensive loss components are included in the computation of net periodic benefit cost. See Note 26.
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.
110
(In millions)
2021
2020
2019
Cash balance weighted average interest crediting rates
3.00 %
3.00 %
3.18 %
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 $2,995 million and $3,369 million as of
December 31, 2021 and 2020.
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,
2021
2020
$
3,295
$
2,995
3,043
3,671
3,369
2,621
The following summarizes the projected benefit obligations and funded status for our defined benefit pension and other
postretirement plans:
(In millions)
2021
2020
2021
2020
Benefit obligations at January 1
$
3,671
$
3,220
$
1,131
$
1,020
Pension Benefits
Other Benefits
Service cost
Interest cost
Actuarial (gain) loss(a)
Benefits paid
Plan amendments
Other
297
93
(169)
(594)
—
(3)
302
98
373
(322)
—
—
Benefit obligations at December 31
3,295
3,671
Fair value of plan assets at January 1
Actual return on plan assets
Employer contributions(b)
Benefits paid from plan assets
Fair value of plan assets at December 31
2,621
194
822
(594)
3,043
2,531
327
85
(322)
2,621
34
30
(16)
(75)
(276)
—
828
—
—
75
(75)
—
35
32
83
(39)
—
—
1,131
—
—
39
(39)
—
Funded status at December 31
$
(252)
$
(1,050)
$
(828)
$
(1,131)
(a)
The primary driver of the actuarial gain for the pension and other postretirement benefits plans in 2021 was the increase in discount rate
compared to 2020.
(b) Of the $822 million in pension employer contributions, $763 million was voluntary contributions.
111
Amounts recognized in the consolidated balance sheet for our pension and other postretirement benefit plans at December 31
include:
(In millions)
Current liabilities
Noncurrent liabilities
Accrued benefit cost
Pension Benefits
Other Benefits
2021
2020
2021
2020
$
$
(11)
$
(241)
(9)
$
(54)
$
(1,041)
(774)
(252)
$
(1,050)
$
(828)
$
(51)
(1,080)
(1,131)
Included in accumulated other comprehensive loss at December 31 were the following before-tax amounts that had not been
recognized in net periodic benefit cost:
(In millions)
Net actuarial loss
Prior service cost (credit)
Pension Benefits
Other Benefits
2021
2020
2021
2020
$
360
$
699
$
192
$
(159)
(204)
(246)
219
32
Amounts exclude those related to LOOP and Explorer, equity method investees with defined benefit pension and postretirement
plans for which net losses of $19 million and $2 million were recorded in accumulated other comprehensive loss in 2021,
reflecting our ownership share.
Components of Net Periodic Benefit Cost and Other Comprehensive (Income) Loss
The following summarizes the net periodic benefit costs and the amounts recognized as other comprehensive loss (pretax) for
our defined benefit pension and other postretirement plans.
(In millions)
Service cost
Interest cost
Expected return on plan assets
Amortization – prior service cost (credit)
– actuarial loss
– settlement loss
Net periodic benefit cost(a)
Actuarial (gain) loss
Prior service credit
Amortization of actuarial loss
Amortization of prior service (cost) credit
Total recognized in other comprehensive
(income) loss
Total recognized in net periodic benefit
cost and other comprehensive (income)
loss
$
$
Pension Benefits
Other Benefits
2021
2020
2019
2021
2020
2019
$
287
$
283
$
93
(139)
(45)
37
75
98
(133)
(45)
36
20
$
218
107
(127)
(45)
22
9
308
$
259
$
184
$
34
30
—
2
10
1
77
$
$
(227)
$
179
$
—
(112)
45
—
(56)
45
92
—
(31)
45
$
(16)
$
(276)
(11)
(2)
$
$
$
35
32
—
—
3
—
70
83
—
(3)
—
31
37
—
—
—
—
68
123
(2)
—
—
$
(294)
$
168
$
106
$
(305)
$
80
$
121
$
14
$
427
$
290
$
(228)
$
150
$
189
(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 2021, 2020 and 2019 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 2021, 2020 and 2019.
112
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 2021, 2020 and 2019.
Benefit obligation:
Discount rate
Rate of compensation increase
Net periodic benefit cost:
Discount rate
Expected long-term return on plan
assets
Rate of compensation increase
Pension Benefits
Other Benefits
2021
2020
2019
2021
2020
2019
2.82 %
5.70 %
2.44 %
5.70 %
3.08 %
4.90 %
2.93 %
5.70 %
2.55 %
5.70 %
3.00 %
4.90 %
2.70 %
3.00 %
4.07 %
2.55 %
3.23 %
4.30 %
5.75 %
5.70 %
5.75 %
5.70 %
6.00 %
4.90 %
— %
5.70 %
— %
5.70 %
— %
4.90 %
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,
2021
2020
2019
5.80 %
6.40 %
6.00 %
7.00 %
6.20 %
8.10 %
4.50 %
4.50 %
4.50 %
4.50 %
4.50 %
4.50 %
2030
2030
2028
2028
2027
2027
Increases in the post-65 medical plan premium for the Marathon Petroleum Health Plan and the Marathon Petroleum Retiree
Health Plan have been permanently eliminated.
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
113
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, 2021, 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, 2021 and 2020.
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”) 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, while Level 2 include derivative transactions.
114
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, 2021 and 2020.
(In millions)
Level 1
Level 2
Level 3
Total
Cash and cash equivalents
$
—
$
47
$
—
$
47
December 31, 2021
Equity:
Common stocks
Mutual funds
Pooled funds
Fixed income:
Corporate
Government
Pooled funds
Private equity
Real estate
Other
61
170
—
—
415
—
—
—
1
—
—
1,192
800
108
192
—
—
3
Total investments, at fair value
$
647
$
2,342
$
—
—
—
—
—
—
19
17
18
54
61
170
1,192
800
523
192
19
17
22
$
3,043
(In millions)
Level 1
Level 2
Level 3
Total
Cash and cash equivalents
$
—
$
23
$
—
$
23
December 31, 2020
Equity:
Common stocks
Mutual funds
Pooled funds
Fixed income:
Corporate
Government
Pooled funds
Private equity
Real estate
Other
51
353
—
—
327
—
—
—
—
3
—
794
746
128
131
—
—
3
Total investments, at fair value
$
731
$
1,828
$
—
—
—
—
—
—
23
20
19
62
54
353
794
746
455
131
23
20
22
$
2,621
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
Private
Equity
2021
Real
Estate
Other
Private
Equity
2020
Real
Estate
Other
$
23
$
20
$
19
$
30
$
24
$
19
2
8
—
(14)
1
1
—
(5)
—
—
—
(1)
6
(4)
—
(9)
1
(3)
1
(3)
—
—
—
—
19
Ending balance
$
19
$
17
$
18
$
23
$
20
$
115
Cash Flows
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 2021, we made contributions totaling $801 million to our funded
pension plans. For 2022, we do not project any required funding, but we may make voluntary contributions to our funded pension
plans at our discretion. Cash contributions to be paid from our general assets for the unfunded pension and postretirement plans
are estimated to be approximately $21 million and $54 million, respectively, in 2022.
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)
2022
2023
2024
2025
2026
2027 through 2031
Pension Benefits
Other Benefits
$
$
178
180
192
197
201
1,117
54
53
52
51
51
257
Contributions to defined contribution plan
We also contribute to a defined contribution plan for eligible employees. Contributions to this plan totaled $165 million, $180
million and $181 million in 2021, 2020 and 2019, 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 2021, 2020 and 2019 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 2021 and 2020 is for the
plan’s year ended December 31, 2020 and December 31, 2019, 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 2021, 2020 and 2019 contributions. Our portion
of the contributions does not make up more than five percent of total contributions to the plan.
Pension Fund
EIN
2021
2020
Pension
Protection
Act Zone
Status
FIP/
RP Status
Pending/
Implemented
MPC Contributions
(In millions)
2021
2020
2019
Surcharge
Imposed
Central States, Southeast
and Southwest Areas
Pension Plan(a)
366044243
Red
Red
Implemented
$
5
$
5
$
4
No
Expiration
Date of
Collective –
Bargaining
Agreement
January 31,
2024
(a)
This agreement has a minimum contribution requirement of $338 per week per employee for 2022. A total of 255 employees participated in
the plan as of December 31, 2021.
116
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, $7 million and $6 million for 2021, 2020 and 2019, respectively.
27. STOCK-BASED COMPENSATION
Description of the Plans
Our employees and non-employee directors are eligible to receive equity awards under the Marathon Petroleum Corporation
2021 Incentive Compensation Plan (“MPC 2021 Plan”). The MPC 2021 Plan authorizes the Compensation and Organization
Development Committee of our board of directors (“Committee”) to grant nonqualified or incentive stock options, stock
appreciation rights, stock and stock-based awards (including restricted stock and restricted stock unit awards), cash awards and
performance awards to our employees and non-employee directors. The maximum number of shares of our common stock
available for awards under the MPC 2021 Plan is 20.5 million shares. The MPC 2021 Plan became effective upon shareholder
approval on April 28, 2021. Prior to that date, our employees and non-employee directors were eligible to receive equity awards
under the Amended and Restated Marathon Petroleum Corporation 2012 Incentive Compensation Plan (“MPC 2012 Plan”),
effective April 26, 2012, and prior to that date, the Marathon Petroleum Corporation 2011 Second Amended and Restated
Incentive Compensation Plan (“MPC 2011 Plan”). Shares issued as a result of awards granted under these plans are funded
through the issuance of new MPC common shares.
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
Prior to 2021, we granted stock options to certain officer and non-officer employees under the MPC 2011 Plan and the MPC
2012 Plan. Stock options 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 grant date. Stock options generally vest over a service period of three years and expire ten
years after the grant date. We used 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 units to employees and non-employee directors. Prior to 2021, we granted restricted stock 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. 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. The fair values of
restricted stock and restricted stock units are equal to the market price of our common stock on the grant date.
Performance Units
We granted performance unit awards to certain officer employees in 2018, 2019 and 2020 under the MPC 2012 Plan.
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 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 as 25 percent of the final payout divided 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.
We granted performance share unit awards to certain employees in 2021. Performance share units are share denominated, with
a target value equal to the MPC common stock average 30-day closing price prior to the grant date, with actual payout value
based on company performance (which can range from 0% to 200%) multiplied by MPC’s closing share price on the date the
Committee certifies performance. Performance share units have a 36-month service period. Company performance for purposes
of payout will be determined by the relative ranking of the TSR of MPC common stock over a 36-month performance period
117
compared to the TSR of a select group of peer companies, as well as the median of MPC’s compensation reference group, the
Standard & Poor’s 500 Index and the Alerian MPL Index. These awards will be settled 100 percent in cash and will be accounted
for as liability awards and recorded at fair value with a mark-to-market adjustment made each quarter.
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)
2021
2020
2019
Stock-based compensation expense
$
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
88
22
106
13
$
100
$
25
11
16
153
35
10
(3)
Stock Option Awards
The following is a summary of our common stock option activity in 2021:
Outstanding at December 31, 2020
Exercised
Forfeited or expired
Outstanding at December 31, 2021
Weighted
Average
Remaining
Contractual
Terms (in years)
Aggregate
Intrinsic
Value (in
millions)
Number of
Shares
11,299,781
(3,287,489)
(217,256)
7,795,036
Weighted
Average
Exercise Price
$
41.95
32.40
32.82
46.23
Vested and expected to vest at December 31, 2021
Exercisable at December 31, 2021
7,786,242
6,178,535
46.25
48.62
4.6
3.8
$
141
98
The intrinsic value of options exercised by MPC employees during 2021, 2020 and 2019 was $88 million, $25 million and $23
million, respectively.
As of December 31, 2021, unrecognized compensation cost related to stock option awards was $5 million, which is expected to
be recognized over a weighted average period of 1.1 years.
Restricted Stock and Restricted Stock Unit Awards
The following is a summary of restricted stock award activity of our common stock in 2021:
Restricted Stock
Restricted Stock Units
Number of
Shares
Weighted
Average
Grant Date
Fair Value
Unvested at December 31, 2020
579,979
$
Granted
Vested
Forfeited
Unvested at December 31, 2021
—
(354,362)
(30,988)
194,629
62.89
—
64.00
62.33
60.95
Number of
Units
3,324,324
$
1,067,409
(1,857,756)
(220,058)
2,313,919
Weighted
Average
Grant Date
Fair Value
35.34
55.27
46.47
32.88
35.84
118
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
$
$
20
18
32
$
—
56.49
61.14
$
90
59
120
55.27
22.82
58.30
2021
2020
2019
As of December 31, 2021, unrecognized compensation cost related to restricted stock awards was $3 million, which is expected
to be recognized over a weighted average period of 0.3 years. Unrecognized compensation cost related to restricted stock unit
awards was $57 million, which is expected to be recognized over a weighted average period of 1.63 years.
Performance Unit Awards
The following table presents a summary of the 2021 activity for performance unit awards to be settled in shares:
Unvested at December 31, 2020
Vested
Forfeited
Unvested at December 31, 2021
Number of
Units
Weighted
Average Grant
Date Fair Value
11,010,037
$
(4,534,663)
(220,091)
6,255,283
0.80
0.83
0.89
0.78
The number of shares that would be issued upon target vesting, using the closing price of our common stock on December 31,
2021 would be 145,394 shares.
As of December 31, 2021, unrecognized compensation cost related to equity-classified performance unit awards was $1 million,
which is expected to be recognized over a weighted average period of 0.98 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:
2020
2019
Risk-free interest rate
Look-back period (in years)
Expected volatility
0.9 %
2.8
30.4 %
Grant date fair value of performance units granted
$
0.89
$
2.5 %
2.8
29.7 %
0.72
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 2021.
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 57 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.
119
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
2021
2020
2019
$
$
78
31
581
69
446
$
72
35
658
60
649
59
37
660
68
780
$
1,205
$
1,474
$
1,604
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
December 31,
2021
2020
$
$
$
$
$
$
$
1,372
438
927
1,365
5.0
3.11 %
815
336
479
73
525
598
$
$
$
$
$
$
$
1,521
497
1,014
1,511
4.8
3.68 %
819
272
547
69
576
645
Weighted average remaining lease term (in years)
Weighted average discount rate
10.3
5.04 %
10.7
5.33 %
As of December 31, 2021, 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)
2022
2023
2024
2025
2026
2027 and thereafter
Gross lease payments
Less: imputed interest
Total lease liabilities
Operating
Finance
$
$
473
320
239
171
104
174
1,481
116
$
1,365
$
101
102
86
77
75
327
768
170
598
120
Lessor
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 2028, 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 be
assessed under ASC 842, MPLX assesses the amended agreement and makes a determination as to whether a reclassification
of the lease is required.
Our rental income from operating leases totaled approximately $376 million,$398 million and $388 million in 2021, 2020 and
2019, respectively. The following is a schedule of minimum future rentals on the non-cancelable operating leases as of
December 31, 2021:
(In millions)
2022
2023
2024
2025
2026
2027 and thereafter
Total minimum future rentals
$
$
213
207
204
171
142
1,299
2,236
The following schedule summarizes our investment in assets held under operating lease by major classes as of December 31,
2021 and 2020:
(In millions)
Gathering and transportation
Processing and fractionation
Terminals
Land, building and other
Property, plant and equipment
Less accumulated depreciation
December 31,
2021
2020
$
$
991
867
128
15
2,001
523
990
867
128
15
2,000
430
1,570
Total property, plant and equipment, net
$
1,478
$
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.
121
At December 31, 2021 and 2020, accrued liabilities for remediation totaled $401 million and $397 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 $6 million and $7
million at December 31, 2021 and 2020, respectively.
Governmental and other entities in various states have filed climate-related lawsuits against numerous 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 at both December 31, 2021 and 2020 and are included in other
current liabilities in our consolidated balance sheets. Our long-term asset retirement obligations were $187 million and $183
million at December 31, 2021 and 2020, respectively, which are included in deferred credits and other liabilities in our
consolidated balance sheets.
Other Legal Proceedings
In July 2020, Tesoro High Plains Pipeline Company, LLC (“THPP”), a subsidiary of 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 demanded the immediate cessation of pipeline operations and
assessed trespass damages of approximately $187 million. On appeal, the Assistant Secretary - Indian Affairs vacated the BIA’s
trespass order and remanded to the Regional Director for the BIA Great Plains Region to issue a new decision based on
specified criteria. On December 15, 2020, the Regional Director of the BIA issued a new trespass notice to THPP, finding that
THPP was in trespass and assessing trespass damages of approximately $4 million (including interest), which has been paid.
The order also required that THPP 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. In March 2021, THPP received a copy of an
order purporting to vacate all orders related to THPP’s alleged trespass issued by the BIA between July 2, 2020 and January 14,
2021. The order directs the Regional Director of the BIA to reconsider the issue of THPP’s alleged trespass and issue a new
order, if necessary, after all interested parties have had an opportunity to be heard. On April 23, 2021, THPP filed a lawsuit in the
District of North Dakota against the United States of America, the U.S. Department of the Interior and the BIA (together, the “U.S.
Government Parties”) challenging the March order purporting to vacate all previous orders related to THPP’s alleged trespass.
On February 8, 2022, the U.S. Government Parties filed their answer to THPP’s suit, asserting counterclaims for trespass and
ejectment. The U.S. Government Parties claim THPP is in continued trespass with respect to the pipeline and seek disgorgement
of pipeline profits from June 1, 2013 to present, removal of the pipeline and remediation. We intend to vigorously defend
ourselves against these counterclaims. We continue to work towards a settlement of this matter with holders of the property
rights at issue.
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, individually or collectively, 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
122
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, 2021.
Dakota Access Pipeline
MPLX holds a 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. In
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 prepare an environmental impact statement (“EIS”)
relating to an easement under Lake Oahe in North Dakota. The D.D.C. later vacated the easement. The EIS is currently
expected to be completed in the second half of 2022.
In May 2021, the D.D.C. denied a renewed request for an injunction to shut down the pipeline while the EIS is being prepared. In
June 2021, the D.D.C. issued an order dismissing without prejudice the tribes’ claims against the Dakota Access Pipeline. The
litigation could be reopened or new litigation challenging the EIS, once completed, could be filed. The pipeline remains
operational.
MPLX has entered into a Contingent Equity Contribution Agreement whereby it, 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. If the
pipeline were temporarily shut down, 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. MPLX also expects to
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 1% redemption premium required
pursuant to the indenture governing the notes) and any accrued and unpaid interest. As of December 31, 2021, 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, 2021, our maximum potential undiscounted payments
under this agreement for debt principal totaled $108 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, 2021, our maximum potential undiscounted payments under this arrangement was $108 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 $98 million as of December 31,
2021, 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 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
123
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, 2021, our contractual commitments to acquire property, plant and equipment totaled $565 million, primarily
consisting of refining projects which includes the conversion of the Martinez refinery to renewable diesel facility. Our contractual
commitments to acquire property, plant and equipment totaled $267 million at December 31, 2020.
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.
30. SUBSEQUENT EVENTS
Incremental $5 Billion Share Repurchase Authorization
On February 2, 2022, our board of directors approved an incremental $5.0 billion share repurchase authorization. The
authorization has no expiration date. We may utilize various methods to effect the repurchases, which could include open market
repurchases, negotiated block transactions, accelerated share repurchases, tender offers or open market solicitations for shares,
some of which may be effected through Rule 10b5-1 plans. The timing of repurchases will depend upon several factors, including
market and business conditions, and repurchases may be discontinued at any time.
124
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, 2021, 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, 2021, 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 9C. DISCLOSURES REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS
Not applicable.
125
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 2022 Annual Meeting of Shareholders, to be filed with the SEC within 120 days of December 31, 2021 (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, Senior 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.
126
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, 2021 with respect to shares of our common stock that may be
issued under the MPC 2021 Plan, the MPC 2012 Plan, the MPC 2011 Plan and the Andeavor Plans:
Plan category
Equity compensation plans approved by stockholders
Equity compensation plan not approved by stockholders
Total
(a)
Includes the following:
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)
10,846,727 $
—
10,846,727
46.23
—
N/A
19,763,502
—
19,763,502
1)
7,795,036 stock options granted pursuant to the MPC 2012 Plan and the MPC 2011 Plan and not forfeited, cancelled or expired as of
December 31, 2021.
2) 2,760,904 restricted stock units granted pursuant to the MPC 2021 Plan, the MPC 2012 Plan and the MPC 2011 Plan for shares
unissued and not forfeited, cancelled or expired as of December 31, 2021. The amounts in column (a) do not include 404 restricted
stock units granted under the Andeavor Plans and not forfeited, cancelled or expired as of December 31, 2021.
3) 290,787 shares as the maximum potential number of shares that could be issued in settlement of performance units outstanding as of
December 31, 2021 pursuant to the MPC 2012 Plan, based on the closing price of our common stock on December 31, 2021 of $63.99
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 2021 Plan. All granting authority under the MPC 2012 Plan was revoked
following the approval of the MPC 2021 Plan by shareholders on April 28, 2021, 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. Shares related to (i) grants made pursuant to the MPC 2012 Plan that are forfeited,
cancelled or expire unexercised become immediately available for issuance under the MPC 2021 Plan (ii) shares withheld for taxes related
to vestings under the MPC 2012 Plan become immediately available for issuance under the MPC 2021 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.
127
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 †
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
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
and among MPC, the MPC subsidiaries party
Agreement, dated as of October 16, 2020, by
thereto and 7-Eleven, Inc.
Amendment No. 2 to Purchase and Sale
Agreement, dated as of May 14, 2021, by and
among the Company, Sellers and Purchaser
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 October 27,
2021
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
8/3/2020
001-35054
10-K
2.7
2/26/2021
001-35054
8-K
2.3
5/14/2021
001-35054
8-K
3.2
10/1/2018
001-35054
10-Q
3.2
11/2/2021
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
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
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 Petroleum Corporation Policy for
Recoupment of Annual Cash Bonus Amounts
4.2
4.3
10
10.1
10.2 *
10.3 *
8-K
4.1
2/12/2015
001-35714
10-K
4.3
2/26/2021
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
128
Exhibit
Number
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 *
10.18 *
10.19 *
10.20 *
10.21 *
10.22 *
10.23 *
10.24 *
10.25 *
10.26 *
10.27 *
10.28 *
10.29 *
Exhibit Description
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
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
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
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
Incorporated by Reference
Form
10-K
Exhibit
10.13
Filing
Date
2/28/2013
SEC
File No.
001-35054
Filed
Herewith
Furnished
Herewith
10-K
10-K
10-K
8-K
10.14
2/24/2017
001-35054
10.13
2/29/2012
001-35054
10.14
2/29/2012
001-35054
10.6
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-Q
10.4
10.5
5/9/2012
001-35054
5/9/2012
001-35054
10-K
10.32
2/28/2013
001-35054
10-Q
10-Q
10-Q
10-Q
10-Q
10-Q
10.2
10.3
10.4
10.1
10.2
10.3
5/9/2013
001-35054
5/9/2013
001-35054
5/9/2013
001-35054
8/3/2015
001-35054
5/2/2016
001-35054
5/2/2016
001-35054
10-Q
10.5
5/2/2016
001-35054
10-Q
8-K
10-Q
10-Q
10.4
10/30/2017
001-35054
10.1
10.4
3/5/2018
001-35714
4/30/2018
001-35054
10.5
4/30/2018
001-35054
10-Q
10.6
4/30/2018
001-35054
10-Q
10-Q
10-Q
10.7
4/30/2018
001-35054
10.8
4/30/2018
001-35054
10.9
4/30/2018
001-35054
129
Exhibit
Number
10.30
10.31 *
10.32 *
10.33 *
10.34 *
10.35 *
10.36 *
10.37 *
10.38 *
10.39 *
10.40 *
10.41 *
10.42 *
10.43 *
10.44 *
10.45
10.46 *
10.47 *
10.48 *
10.49 *
Exhibit Description
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
Andeavor 2011 Long-Term Incentive Plan
(as amended and restated)
Form of Executive Officer Synergy
Incentive Award Agreement
Andeavor 2018 Performance Share Award
Grant Letter
Andeavor Performance Share Awards
Granted in 2018 Summary of Key Provisions
Andeavor 2018 Market Stock Unit Award
Grant Letter
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
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
Restricted Stock Award Agreement - Officer
Nonqualified Stock Option Award Agreement
- Officer
Performance Unit Award Agreement 2019 -
2021 Performance Cycle
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
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
Incorporated by Reference
Form
8-K
Exhibit
10.1
Filing
Date
8/31/2018
SEC
File No.
001-35054
Filed
Herewith
Furnished
Herewith
10-K
10.68
2/21/2018
001-03473
(Andeavor)
8-K
8-K
8-K
8-K
8-K
10.1
1/30/2019
001-35054
10.1
2/20/2018
10.2
2/20/2018
10.3
2/20/2018
10.4
2/20/2018
001-03473
(Andeavor)
001-03473
(Andeavor)
001-03473
(Andeavor)
001-03473
(Andeavor)
10-K
10.75
2/28/2019
001-35054
10-K
10-K
10.76
10.86
2/28/2019
001-35054
2/28/2019
001-35054
10-K
10.87
2/28/2019
001-35054
10-K
10.84
2/28/2020
001-35054
10-Q
10-Q
10-Q
8-K
10.1
10.2
10.3
10.2
5/9/2019
5/9/2019
001-35054
001-35054
5/9/2019
001-35054
8/1/2019
001-35054
10-Q
10-Q
10-Q
10.2
10.3
10.4
5/7/2020
5/7/2020
001-35054
001-35054
5/7/2020
001-35054
10-Q
10.5
5/7/2020
001-35054
130
Exhibit
Number
10.50 *
10.51 *
10.52 *
10.53
10.54 *
10.55 *
10.56 *
10.57 *
10.58 *
10.59 *
10.60 *
10.61 *
10.62 *
10.63 *
10.64 *
10.65 *
10.66 *
10.67 *
10.68 *
10.69 *
21.1
23.1
24.1
31.1
31.2
32.1
32.2
101.INS
Exhibit Description
Form of MPLX LP Performance Unit Award
Agreement 2020-2022 Performance Cycle -
MPC Officer
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
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
Marathon Petroleum Corporation 2021
Incentive Compensation Plan
Form of 2021 MPC Officer RSU Award
Agreement - 2021 Plan
Form of 2022 MPC Officer Performance Unit
Award Agreement – 2022-2024 Performance
Cycle
CEO Nonqualified Stock Option Award
Agreement, as Amended
CEO Restricted Stock Unit Award Agreement
CEO Performance Unit Award Agreement –
2020-2022 Performance Cycle, as Amended
CEO Restricted Stock Unit Award Agreement, as
Amended
2022 Marathon Petroleum Annual Cash Bonus
Program
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.
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.
131
Incorporated by Reference
Form
10-Q
Exhibit
10.6
Filing
Date
5/7/2020
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
10-K
10.67
2/26/2021
001-35054
10-K
10-K
10-K
10-K
10-K
10-K
10-K
10-K
8-K
10-Q
10.69
2/26/2021
001-35054
10.70
2/26/2021
001-35054
10.71
2/26/2021
001-35054
10.72
2/26/2021
001-35054
10.73
2/26/2021
001-35054
10.74
2/26/2021
001-35054
10.75
2/26/2021
001-35054
10.76
2/26/2021
001-35054
10.1
10.1
5/4/2021
001-35054
11/2/2021
001-35054
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
Exhibit
Number
101.PRE
101.CAL
101.DEF
101.LAB
104
Exhibit Description
Inline XBRL Taxonomy Extension
Presentation Linkbase Document.
Inline XBRL Taxonomy Extension Calculation
Linkbase Document.
Inline XBRL Taxonomy Extension Definition
Linkbase Document.
Inline XBRL Taxonomy Extension Label
Linkbase Document.
Cover Page Interactive Data File (formatted
as Inline XBRL and contained in Exhibit 101).
Incorporated by Reference
Form
Exhibit
Filing
Date
SEC
File No.
Filed
Herewith
X
Furnished
Herewith
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.
132
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 24, 2022
MARATHON PETROLEUM CORPORATION
By: /s/ C. Kristopher Hagedorn
C. Kristopher Hagedorn
Senior Vice President and Controller
133
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons
on February 24, 2022 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/ C. Kristopher Hagedorn
C. Kristopher Hagedorn
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
*
Kim K.W. Rucker
*
Frank M. Semple
*
J. Michael Stice
*
John P. Surma
*
Susan Tomasky
Director
Director
Director
Director
Director
Director
Director
Director
Director
Chairman of the Board
Director
134
* 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 24, 2022
Michael J. Hennigan
Attorney-in-Fact
135
[This page intentionally left blank]
CO RPOR ATE INFORMATION
Dividends on common stock, as may be declared by the Board of
Directors, are typically paid mid-month in March, June, September and
December.
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.
Corporate Headquarters
539 South Main St. Findlay, OH 45840
Marathon Petroleum Corporation
Website: www.marathonpetroleum.com
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.
Investor Relations Office
539 South Main St.
Findlay, OH 45840
ir@marathonpetroleum.com
Kristina Kazarian
Vice President, Investor Relations
(419) 421-2071
Notice of Annual Meeting
The 2022 Annual Meeting of Shareholders
will be held in a virtual-only format via live
webcast on April 27, 2022.
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
2021 Annual Report may be
obtained by contacting:
Corporate Communications
539 South Main St.
Findlay, OH 45840
(419) 421-3577
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 graph below matches the
cumulative 5-Year total return of holders of Marathon Petroleum
Corporation’s common stock with the cumulative total returns of the
S&P 500 index and a customized peer group of seven companies that
includes: Bp Plc, Chevron Corp, Exxon Mobil Corp, Hollyfrontier Corp,
PBF Energy Inc., Phillips 66, and Valero Energy Corp. The graph assumes
that the value of the investment in our common stock, in each index, and
in the peer group (including reinvestment of dividends) was $100 on
12/31/2016 and tracks it through 12/31/2021.
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
250
200
150
100
50
2016
2017
2018
2019
2020
2021
* $100 invested on 12/31/16 in stock or index, including reinvestment of
dividends. Fiscal year ending December 31, 2021.
MP C 2021 ANNUAL R EP ORT 15
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. While our management considers these assumptions to be reasonable, they
are inherently subject to significant business, economic, competitive, regulatory and other risks, contingencies and uncertainties, most
of which are difficult to predict and many of which are beyond our control. Accordingly, our actual results may differ materially from the
future performance that we have expressed or forecast in our forward-looking statements. We have included in our attached Form 10-K
for the year ended Dec. 31, 2021, 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. Such factors include the timing and ability
to obtain regulatory permits or other approvals and consents required for the completion of projects referenced herein, including the
conversion of the Martinez, California, refinery into a renewable fuels facility, within the expected timeframe if at all.
MPC’S REFINERY IN GARYVILLE, LOUISIANA