Marathon Petroleum Corporation · NYSE:MPC
Marathon Petroleum — Macquarie Fall 2011 Refining and E&P Forum
54 slides from Marathon Petroleum's conference presentation, Sep 13, 2011
Slide 1: Macquarie Fall 2011 Refining and E&P Forum
Macquarie Fall 2011 Refining and E&P Forum September 13, 2011 1
Slide 2: Forward-Looking Statement
Forward-Looking Statement This presentation contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements relate to, among other things, Marathon Petroleum Corporation’s (MPC) current expectations, estimates and proje
Slide 3: Spin-off Details
Spin-off Details On January 13, 2011, Marathon’s Board of Directors announced they had approved plans for moving forward with the spin-off of the Downstream business Results in two strong, highly focused energy companies Marathon Oil Corporation (MRO) Marathon Petroleum Corporation (MPC) T
Slide 4: MPC's Focused and Integrated Asset Base
MPC’s Focused and Integrated Asset Base Flexibility to Achieve Peer-Leading Results Refineries Terminals Pipelines Coastal Water Terminals Inland Water Terminals Refineries Connecting Pipelines Terminals Speedway Brand Marketing Inland Water Coastal Water Terminals Terminals Marketing Area 4
Slide 5: MPC Key Highlights
MPC Key Highlights Strong credit profile and liquidity Fully integrated downstream system Strong competitive positioning versus peer group Impressive safety and environmental record Strategically located in Midwest/PADD II and USGC/PADD III regions Extensive midstream network and retail
Slide 6: MPC Strong Credit Profile and Liquidity
MPC Strong Credit Profile and Liquidity Historical Financial Summary Financial Policies $MM Year Ended 6 Mo. Ended June 30 Committed to Investment Grade profile 2010 2009 2008 2011 2010 Rating Current Total Revenues and Other Income 62,605 45,639 65,258 38,665 29,216 Agency MPC Rating S&P BBB/A-2
Slide 7: Fully Integrated Downstream System
Fully Integrated Downstream System Refining and Marketing Six-plant refining network with 1,142,000 barrels per day of crude oil refining capacity One of the largest wholesale suppliers of gasoline and distillate within our market areas One of the largest producers of asphalt in the U.S. ~5,
Slide 8: 2010 Refinery Throughput and Sales
2010 Refinery Throughput and Sales Crude Saleable Throughput Product Sales 1,173 MBD 1,589 MBD 24.3 B GAL/YR Foreign Term Gasoline Speedway 21% 920 13% Distillate Marathon Brand U.S./Canadian 445 17% Term 51% Asphalt Wholesale/Spot 77 56% Spot 28% Other Asphalt & Other 147 14% Other + 233 MBD Feedst
Slide 9: MPC Relative Refining Position
MPC Relative Refining Position (MBD) U.S. Crude Refining Capacity (1) (#) # of U.S. Refineries (1) 3,000 15 13 2,000 11 1,962 1,951 2,000 10 1,401 7 7 1,142 1,114 6 6 6 6 941 823 5 1,000 755 675 665 5 3 3 0 0 Exxon Valero BP MPC MPC Chevron Citgo Tesoro Conoco Sunoco Shell Valero BP Exxon Tesoro MPC
Slide 10: Impressive Safety and Environmental Record
Impressive Safety and Environmental Record Safety OSHA Recordable Incident Rate Days Away Rate (Employee and Contractor History) (Employee and Contractor History) 2.00 1.00 1.37 0.97 0.9 1.00 0.73 0.8 0.50 0.5 0.61 0.53 0.45 0.12 0.13 0.12 0.09 0.09 0.10 0.08 0.03 0.00 0.00 2003 2004 2005 2006 2007
Slide 11: Garyville Major Expansion (GME) Project
Garyville Major Expansion (GME) Project Garyville, LA refinery is last grassroots refinery built in the U.S. (1976) Base Garyville refinery, 2008 Solomon survey Best U.S. cash cost operating expense Second-best U.S. Energy Intensity Index $3.9 billion, excluding capitalized interest, GME P
Slide 12: Garyville: World-class Refinery – Worldwide Options
Garyville: World-class Refinery – Worldwide Options Blue Water Logistics New dock increased capacity by 40% Europe Supply Florida while increasing exports In addition to products, supports opportunity crudes, feedstocks and blendstocks Brown Water Logistics Import heavy Canadian Crudes All
Slide 13: Midwest/PADD II Net Short Supply Position
Midwest/PADD II Net Short Supply Position Enhances Margin Opportunities 2015 The incremental barrel in PADD II is shipped from PADD III, so product prices in PADD II should retain a premium to the USGC/PADD III Refinery utilization rates in PADD II have traditionally been higher than in other 0.
Slide 14: CAPP Western Canada Crude Supply Forecast
CAPP Western Canada Crude Supply Forecast Annual Growth from 2010 - 2025 MBD Light Supply 16 Heavy Supply 154 Source: Canadian Association of Petroleum Producers 14
Slide 15: MPC Well Positioned to Capture Oil Sands Economics
MPC Well Positioned to Capture Oil Sands Economics Advantaged Location Should Lead to Higher Relative Profitability Hardisty ~ $5.50/BBL Hardisty to ~ $7.35/BBL Detroit Hardisty to USGC Detroit Value vs. USGC Refineries Chicago for Canadian Heavy Processing Wood Patoka $BBL River Laid-In Crude Cost
Slide 16: Detroit Heavy Oil Upgrade Project
Detroit Heavy Oil Upgrade Project Positioned to capitalize on Canadian oil sands production Increases heavy oil capacity an additional 80,000 BD, including “difficult to process” Canadian crudes Crude capacity increases ~15,000 BD 28,000 BD delayed coker and 36,000 BD distillate hydrotreater
Slide 17: WCS vs. LLS and WCS vs. WTI & Syncrude Average
WCS vs. LLS and WCS vs. WTI & Syncrude Average 1,000 Annual Pre-tax Feedstock Savings* 800 871 600 $MM 630 575 400 411 200 260 0 2008 2009 2010 2011** WCS vs. LLS Price WCS vs. WTI ($22.94) ($12.20) ($17.37) ($33.14) ($23.76) & Syncrude Avg. Differential Differential*** WCS vs. LLS Tariff WCS vs. WT
Slide 18: Lower 48 States Shale Plays
Lower 48 States Shale Plays Patoka Cushing MPC Refineries 18
Slide 19: Unparalleled Terminal and Pipeline System
Unparalleled Terminal and Pipeline System Pipeline and barge logistics Enables refineries to operate as single system Destination choice in product markets Efficiency, flexibility, speed Terminal network Critical mass in key markets Key to E-10 expansion Refineries Connecting Pipelines
Slide 20: MPC's Logistical Assets vs. Peers
MPC's Logistical Assets vs. Peers MPC's Midwest Refined Products Logistics System Sunoco/ MPC Valero Tesoro Sun Logistics(a) Pipeline Volume 2,172 259 132 1,449 (MBD) * Pipeline Miles * 3,532 676 868 5,336 Terminals 83 N.R. 18 42 Transports 122 N.R. Operate None for proprietary products trucks Marin
Slide 21: Pipeline Transportation Segment Revenue Generated from Third Parties
Pipeline Transportation Segment Revenue Generated from Third Parties 100% 80% 60% 40% 20% 12% 12% 12% 15% 10% 0% 2007 2008 2009 2010 YTD 2011* *2011 through June 21
Slide 22: MPC's Extensive Retail Network
MPC's Extensive Retail Network Industry-Leading Retail Operation Speedway 86 4th largest U.S. owned/operated 63 c-store chain 86 301 Over 1,375 stores 787 ~2.0 million customers/day 24 470 Located in 7 states Speedway 114 240 1 879 60 Brand 449 655 104 133 130 604 308 Marathon branded ga
Slide 23: Speedway Results
Speedway Light Product Volume Light Product Gross Margin 4 600 3.22 3.23 3.30 434 3 398 400 333 B Gallons $ Millions 2 1.42 183 200 1 (4.7) 1.0 3.7 (1.6) 13.50 10.30 12.07 12.88 0 0 2008 2009 2010 2011* 2008 2009 2010 2011* (Same Store % inside bars) (Cents per gallon inside bars) Merchandise Sales
Slide 24: Speedway vs. Public C-Stores - 2010
Speedway vs. Public C-Stores - 2010 Light Product Sales Merchandise Sales 200 176.2 200 170.6 M Gal/Store/Month $M/Store/Month 150 150 134.9 116.9 120.0 105.5 102.0 100 100 85.5 91.1 74.1 50 50 0 0 Speedway Casey's Couche- Pantry Susser Speedway Casey's Couche- Pantry Susser Tard Tard 25 EBITDA(1) O
Slide 25: Speedy Rewards Loyalty Program Increasing Membership
Speedy Rewards Loyalty Program 4 Increasing Membership Active Members (MM) 3 2 1 2005 2006 2007 2008 2009 2010 2011* Industry leading loyalty program Customers earn points on every purchase Customers redeem points for free merchandise and fuel discounts 3.8 MM active Speedy Rewards members
Slide 26: Diversified Income Stream
Diversified Income Stream Pipeline and Speedway Contributed 46%, 37% and 10% of Segment Income in 2009, 2010 and 2011* 2009 Segment Income 2010 Segment Income from Operations from Operations Pipeline Transportation Pipeline Transportation $172 MM Refining & $183 MM 21% Marketing 14% $452 MM 54% Refi
Slide 27: MPC vs. Competitors
MPC vs. Competitors (Pre-Tax Adjusted Domestic Operating Income per Barrel of Crude Oil Throughput) 15 MPC Group Range 10 $/BBL 5 0 -5 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 June YTD Preliminary MPC’s Rank 3 3 2 1 2 3 7 2 1 5 3 1 3 1 Companies Ranked* 12 11 11 9 10 10
Slide 28: MPC – Best in Class Refiner
MPC – Best in Class Refiner Well positioned versus peers Strong balance sheet Experienced and focused management team Enhanced flexibility to pursue tailored strategies Expanded growth opportunities Improved investor focus Focused on Shareholder Value 28
Slide 29: Appendix
Appendix 29
Slide 30: EBITDA Reconciliation to Net Income
EBITDA Reconciliation to Net Income Year Ended 6 Mo. Ended June 30 $MM LTM* 2010 2009 2008 2011 2010 Net Income 1,838 623 449 1,215 1,331 116 Less: Related party net interest and other 50 24 45 26 35 9 financial income Less: Net interest and other financial (33) (12) (14) 4 (24) (3) income (costs) A
Slide 31: Financial Overview: Segment EBITDA
Financial Overview: Segment EBITDA ($MM) YTD 2011 2010 2009 2008 Refining and Marketing 2,417 1,539 950 1,819 Speedway 167 404 343 408 Pipeline Transportation 127 245 213 221 Total Segment EBITDA 2,711 2,188 1,506 2,448 Items not allocated to segments (133) (236) (182) 13 Total EBITDA 2,578 1,952 1,
Slide 32: Financial Overview: Capital Expenditures & Investments
Financial Overview: Capital Expenditures & Investments (1) ($MM) YTD 2011 2010 2009 2008 Refining and Marketing 376 961 2,241 2,665 Speedway* 102 84 49 61 Pipeline Transportation 38 24 55 167 Corporate** 73 104 240 124 Total 589 1,173 2,585 3,017 (1) Includes changes in accruals. *Includes $74 milli
Slide 33: Refining and Marketing Segment Income
Refining and Marketing Segment Income 2Q 2011 vs. 2Q 2010 Variance Analysis $1,600 $1,400 733 (63) 1,260 $1,200 $1,000 Millions $800 590 $600 $400 $200 $0 2Q 2010 R&M Gross Margin Other 2Q 2011 33
Slide 34: Speedway Segment Income
Speedway Segment Income 2Q 2011 vs. 2Q 2010 Variance Analysis $100 (29) 10 83* 16 80 $80 $60 Millions $40 $20 $0 2Q 2010 Gas and Distillate Merchandise Gross Other 2Q 2011 Gross Margin Margin * Includes 166 convenience stores and 67 franchise stores sold as part of the Minnesota refinery and related
Slide 35: Pipeline Transportation Segment Income
Pipeline Transportation Segment Income 2Q 2011 vs. 2Q 2010 Variance Analysis $80 $60 6 54 48 Millions $40 $20 $0 2Q 2010 Other 2Q 2011 35
Slide 36: Annual Price and Margin Sensitivities
Annual Price and Margin Sensitivities $ Millions (After Tax) LLS 6-3-2-1 Crack Spread* Sensitivity ~$300 (per $1.00/barrel change) Sweet / Sour Differential** Sensitivity ~$150 (per $1.00/barrel change) Refined Product Wholesale Margin Sensitivity ~$150 (per $0.01/gallon change) Speedway Refined Pro
Slide 37: MPC Financing Structure
MPC Financing Structure $2 billion new 4-year revolving credit facility Issued $3 billion in new long-term debt – $750 million 5-year notes, 3.5% – $1 billion 10-year notes, 5.125 % – $1.25 billion 30-year notes, 6.5% ~$1 billion 3-year Trade Receivables Securitization Facility $1.622 billio
Slide 38: Refinery Unit and Production Capacity: Garyville
Refining: Refinery Unit and Production Capacity (1) Garyville Garyville, BD Unless Noted Louisiana Crude 464,000 Vacuum Distillation 240,000 Coking 80,300 Catalytic Cracking 134,000 Catalytic Reforming 110,200 Catalytic Hydrocracking 83,600 Catalytic Hydrotreating 466,100 Alkylation 27,100 Polymeriz
Slide 39: Refinery Unit and Production Capacity: Catlettsburg
Refining: Refinery Unit and Production Capacity (1) Catlettsburg Catlettsburg, BD Unless Noted Kentucky Crude 212,000 Vacuum Distillation 111,000 Coking — Catalytic Cracking 98,800 Catalytic Reforming 49,900 Catalytic Hydrocracking — Catalytic Hydrotreating 257,600 Alkylation 20,000 Polymerization /
Slide 40: Refinery Unit and Production Capacity: Robinson
Refining: Refinery Unit and Production Capacity (1) Robinson Robinson, BD Unless Noted Illinois Crude 206,000 Vacuum Distillation 68,000 Coking 27,600 Catalytic Cracking 49,900 Catalytic Reforming 76,000 Catalytic Hydrocracking 26,600 Catalytic Hydrotreating 177,700 Alkylation 11,900 Polymerization
Slide 41: Refinery Unit and Production Capacity: Detroit
Refining: Refinery Unit and Production Capacity (1) Detroit Detroit, BD Unless Noted Michigan Crude 106,000 Vacuum Distillation 52,300 Coking — Catalytic Cracking 30,900 Catalytic Reforming 20,400 Catalytic Hydrocracking — Catalytic Hydrotreating 97,500 Alkylation 4,800 Polymerization / Dimerization
Slide 42: Refinery Unit and Production Capacity: Canton
Refining: Refinery Unit and Production Capacity (1) Canton Canton, BD Unless Noted Ohio Crude 78,000 Vacuum Distillation 33,300 Coking — Catalytic Cracking 24,700 Catalytic Reforming 20,400 Catalytic Hydrocracking — Catalytic Hydrotreating 80,800 Alkylation 7,100 Polymerization / Dimerization 1,000
Slide 43: Refinery Unit and Production Capacity: Texas City
Refining: Refinery Unit and Production Capacity (1) Texas City Texas City, BD Unless Noted Texas Crude 76,000 Vacuum Distillation — Coking — Catalytic Cracking 55,600 Catalytic Reforming 10,000 Catalytic Hydrocracking — Catalytic Hydrotreating — Alkylation 12,400 Polymerization / Dimerization — Arom
Slide 44: Dynamic Landscape: Canadian Crude – Present Supply
Dynamic Landscape: Canadian Crude Present Supply Edmonton Trans Hardisty Mountain Burnaby Anacortes Regina Enbridge Cromer Clearbrook Superior Montreal Portland Sarnia Chicap Salt Lake City Casper Flanagan Chicago Mustang Steele City Wood Patoka River Cushing MPC Refineries Enbridge Mainline New Con
Slide 45: Dynamic Landscape: Canadian Crude – Proposed Supply
Dynamic Landscape: Canadian Crude Proposed Supply Edmonton Trans Hardisty Mountain Burnaby Anacortes Regina Enbridge Cromer Clearbrook Superior Montreal Portland Sarnia Chicap Salt Lake City Casper Flanagan Chicago Mustang Steele City Wood Patoka River Cushing MPC Refineries Enbridge Mainline Planne
Slide 46: MPC Tactical Options: Keystone Pipeline
MPC Tactical Options Keystone Pipeline Key Facts Owner - TransCanada Origin - Hardisty Destination - Wood River, Patoka, Illinois and Cushing, Oklahoma Diameter - 30” to Patoka; 36” from Steele City to Cushing Distance - 2,148 Miles Capital - $5.2 Billion Approx. Line fill - 11 MMBBL
Slide 47: MPC Tactical Options: Keystone XL Pipeline
MPC Tactical Options Keystone XL Pipeline Key Facts Owner - TransCanada Origin - Hardisty Destination - Port Arthur / Houston Diameter - 36” Distance - 1,980 Miles Capital - $7.8 Billion Approx Line fill - 12.8 MMBBL Increased Capacity to Cushing 700 MBD, 500 MBD to the Gulf Status
Slide 48: Options…Cushing
Options…Cushing Cushing Pipelines/Refineries NCRA – McPherson, KS Frontier – El Dorado, KS Coffeyville - Coffeyville, KS ConocoPhillips – Ponca City, OK Holly – Tulsa, OK SUN WRB – Borger, TX Gary Williams - Current CUSHING Capacities Wynnewood, OK Pipelines Total IN 1,875 MBD Pipelines Total OUT
Slide 49: Hypothetical Calculation of Eagle Ford Laid-in Cost to PADD I
Hypothetical Calculation of Eagle Ford Laid-in Cost to PADD I* Cost to get Eagle Ford to pipeline hub $ 3.00 Pipeline cost to Houston 1.65 Barge loading fee 0.75 Barge transportation 6.00 Total hypothetical laid-in cost $11.40 * Assumes completion of pipeline connection to Houston and completion of
Slide 50: Options…Bakken Production – North Dakota Light (NDL)
Options…Bakken Production – North Dakota Light (NDL) NDL Production Recent forecasts show NDL 1,200 production increasing from 350 MBD in 2010 to anywhere 1,000 between 500-1200 MBD by 2015. PIRA Enbridge’s Bakken Expansion project will move an additional 800 145 MBD, expandable to 325 Raymond M
Slide 51: Options…Eagle Ford Shale
Options…Eagle Ford Shale Very light (40-50 API), sweet crude (0.2% sulfur) Currently being trucked to markets Pipelines are being built Dock facilities are being built as well to make it a “water borne” crude to capture Brent / LLS pricing as opposed to WTI basis Currently priced on WTI ba
Slide 52: Refined Product and Crude Spreads
Refined Product and Crude Spreads $14.00 $8.00 $12.00 ULSD-LLS $10.00 LLS-Mars $6.00 ULSD-LLS LLS-Mars $8.00 $6.00 $4.00 $4.00 $2.00 $2.00 $0.00 $0.00 Q1-2010 Q2-2010 Q3-2010 Q4-2010 Q1-2011 Q2-2011 Typical Gulf Coast Semi-Complex Refined Product Yield Values ($/BBL) Second Second Quarter Quarter 20
Slide 53: Experienced Board of Directors
Experienced Board of Directors Name Title Evan Bayh Former Senator from and Governor of Indiana David A. Daberko* Former Chairman and CEO – National City Corporation William L. Davis* Former Chairman and CEO – RR Donnelly & Co Gary R. Heminger President and CEO – MPC Donna A. James Corporate Directo
Slide 54: Experienced Management Team
Experienced Management Team Experienced Team with Extensive Industry Experience Name Title Gary R. Heminger President and Chief Executive Officer Pamela K. M. Beall Vice President – Investor Relations and Government & Public Affairs Richard D. Bedell Senior Vice President – Refining Michael G. Bradd
Marathon Petroleum — Macquarie Fall 2011 Refining and E&P Forum on 6ix