Marathon Petroleum Corporation · NYSE:MPC
Marathon Petroleum — Investor Day (December 2018)
94 slides from Marathon Petroleum's investor day presentation, Dec 4, 2018
Slide 1: Investor Day
Investor Day December 4, 2018
Slide 2: Agenda
Agenda Welcome & Introductions Midstream 01 Kristina Kazarian 05 Mike Hennigan, President, MPLX VP, Investor Relations Don Sorensen, President, ANDX Strategic Overview Marketing & Retail 02 Gary Heminger 06 Tony Kenney, President, Speedway LLC Chairman and Chief Executive Officer Brian Partee, SVP,
Slide 3: Forward-Looking Statements
Forward‐Looking Statements This presentation contains forward-looking statements within the meaning of federal securities laws regarding Marathon Petroleum Corporation (MPC), MPLX LP (MPLX) and Andeavor Logistics LP (ANDX). These forward-looking statements relate to, among other things, MPC’s acquis
Slide 4: Forward-Looking Statements (continued)
Forward‐Looking Statements (continued) Factors that could cause ANDX's actual results to differ materially from those implied in the forward-looking statements include: the amount and timing of future distributions; our ability to achieve expected coverage improvement and distributable cash growth;
Slide 5: Strategic Overview
Strategic Overview Strategic Overview
Slide 6: Creating a Leading Energy Company
Creating a Leading Energy Company Two great Enhanced scale Broader Expanded platform A premier legacies and integration commercial for growth energy company opportunities 6
Slide 7: Two Great Legacies: Combine For Competitive Strength
Two Great Legacies: Combine For Competitive Strength $100 Combines Similar histories of $80 with ANDV strategic development Complete drop-downs MarkWest and IDR buy-in Galveston Bay combination $60 Refinery Hess retail Formed MLP acquisition acquisition Comparable focus on $40 integration to enh
Slide 8: Top Investor Questions
Top Investor Questions Strategic vision for the combined company Benefits of scale and integration across platform Synergy update Capital allocation: investment & return policies New segment and reporting information IMO: outlook & sensitivities 8
Slide 9: Built For Change: Our Strategic Vision
Built For Change: Our Strategic Vision Core Values and Integrated Strategic & Financial Operational Business Model Disciplined Strength Excellence Investments Core values underpin Enhances value Creates competitive Provides through-cycle our commitment to capture and ability to advantages protection
Slide 10: Core Values: Underpin What We Do Every Day
Core Values: Underpin What We Do Every Day Attracting, developing, and retaining Health & Environmental exceptional people Safety Stewardship Company-wide Corporate alignment on Integrity Citizenship strategic direction Diversity & Powerful Inclusion collaboration Operational excellence 10
Slide 11: Responsible Corporate Leadership
Responsible Corporate Leadership MPC has earned 13 18 MPC 21 75% Environmental manages achievement certified wildlife awards habitats consisting of of the EPA’s Energy Star earned from state 1,352 environmental agencies Facilities earned recognitions awarded to OSHA’s highest status acres refineries
Slide 12: Leveraging a Larger System: Unprecedented Opportunities
Leveraging a Larger System: Unprecedented Opportunities Feedstock Acquisition Inbound Logistics Refining & Processing Outbound Logistics Marketing & Retail Additional access to advantaged feedstocks Expanded logistics system lowers crude acquisition costs + increases speed to market Broader ma
Slide 13: Integration: Further Opportunities for Value Chain Capture
Integration: Further Opportunities for Value Chain Capture Kenai Nationwide footprint enables connectivity to key supply Anacortes sources and demand hubs Mandan Portland Dickinson Broader, integrated system St. Paul Detroit Park Canton Salt Lake City increases capability to Martinez Chicago Pit
Slide 14: Increasing Synergy Potential
Increasing Synergy Potential Synergy Outlook 1 Estimated Annual Run-Rate ($ millions) ($ millions) 380 1,400 1,400 110 270 400 450 300 55 1,000 90 290 665 210 600 200 120 1,000 950 710 465 480 Refining & Retail Midstream Corporate Total YE2019 YE2020 YE2021 Marketing 2 Initial Synergy Estimates Upda
Slide 15: Growing Profitability: Attractive Profile for Investors
Growing Profitability: Attractive Profile for Investors MPC has significantly diversified, and non-refining segments now contribute ~50% of EBITDA. Our strategic and disciplined investments have grown our business, creating an attractive opportunity for investors especially relative to energy and th
Slide 16: Financial Strength Underpins Total Shareholder Returns
Financial Strength Underpins Total Shareholder Returns Robust Balance Sheet Capital Spend 1 1 Capital Return 1 Investment grade rating $2.8 billion plan in 2019 ≥50% of discretionary free 2 – Flat with 2018E (combined) cash flow targeted to be ~20% debt to market cap returned to shareholders
Slide 17: MPC: Formula for Creating Exceptional Value
MPC: Formula for Creating Exceptional Value Leading assets & Strategic vision to Exceptional opportunity capabilities grow value for investors Core values and operational Through-cycle excellence resilience Premier asset base Integrated Competitive business model advantages Experienced management te
Slide 18: Business Environment
Business Environment Business Environment
Slide 19: Global & U.S. Economic Outlook Positive
Global & U.S. Economic Outlook Positive Global gasoline demand grows with rising consumer incomes and higher vehicle miles travelled, partially offset by fuel efficiency trends. Distillate demand growth outpaces gasoline, driven by transportation and industrial sectors and impact from IMO 2020. Glob
Slide 20: Global Refining Capacity Relatively Balanced
Global Refining Capacity Relatively Balanced Net worldwide refining capacity growth appears relatively balanced with new capacity in Asia and the Middle East, primarily to support domestic demand. Global Crude Distillation Capacity U.S. Refinery Utilization 2.5 and Demand Growth 100% 2.0 Refinery Ut
Slide 21: Global and U.S. Inventories Support Refining Margins
Global and U.S. Inventories Support Refining Margins Global Gasoline Inventories Global Distillate Inventories 425 650 MMB MMB 375 550 325 450 U.S. Gasoline Days of Supply U.S. Distillate Days of Supply 28 35 26 30 Days Days 24 25 22 20 20 J F M A M J J A S O N D J F M A M J J A S O N D 5-year Range
Slide 22: Near-Term Gasoline Weakness, Offset by Long-Term Distillate Strength
Near-Term Gasoline Weakness, Offset by Long-Term Distillate Strength Rise in oil prices this year slowed global gasoline demand growth and strong margins have incentivized high refinery utilization pressuring gasoline margins; expect this to normalize in later part of 2019. Gulf Coast Gasoline & Die
Slide 23: U.S. Refineries Among Most Cost Efficient in World
U.S. Refineries Among Most Cost Efficient in World The U.S. refining system is among the most cost efficient in the world given its access to low-cost natural gas and price-advantaged crudes – making it well-positioned to supply transportation fuels across the world. Transportation Fuel Production C
Slide 24: Commodity Price Assumptions and Long-Term Outlook
Commodity Price Assumptions and Long-Term Outlook Commodity / Spread 2018 2019 Long-Term ($/BBL, unless noted) Average 1 Business Plan 2 Outlook 2 WTI $66.25 $64 $50 - $80 Brent-WTI $6.50 $3.60 $3 - $12 Brent-ANS $(0.25) $0.10 $(1) - $2 Brent-ASCI $5.00 $6.50 $3 - $9 LLS-WTI $5.00 $3.25 $4 - $9 WTI-
Slide 25: Regional Crack Spread Outlook
Regional Crack Spread Outlook USGC LLS 321 Chicago WTI 321 $14.75 $14 – $16 $8.50 $8.25 $9.25 – $9.75 $12.75 $/BBL $/BBL $6.00 $9.00 2016 2017 2018 YTD 2019E-2021E 2016 2017 2018 YTD 2019E-2021E Average Average WC ANS 321 ULSD - 3% Resid Fuel Oil $30 – $40 $15 – $17 $/BBL $14.00 $14.50 $/BBL $12.50
Slide 26: IMO: Global Opportunities for Complex Refineries
IMO: Global Opportunities for Complex Refineries Refiners shift to maximum distillate production Coker Upgrading (ULSD - 3% Resid Fuel Oil) and resid upgrading $60 Forecast $50 Ship owners accelerate installation of scrubbers to enable HSFO consumption $40 Low complexity refineries lighten cru
Slide 27: Sensitivities to Potential IMO Factors
Sensitivities to Potential IMO Factors EBITDA Impact Key Metric Potential Impacts from $1/BBL change Higher crack required to support increased refinery Blended 321 Crack production and meet elevated demand for low sulfur fuels ~ $1,150 MM - Refining yield shift to max distillate production and - Ga
Slide 28: MPC Well-Positioned Among U.S. Refiners
MPC Well-Positioned Among U.S. Refiners MPC well-positioned to produce high value fuels and capture benefits from the adoption of low sulfur fuels regulations – given investments over past decade to enhance upgrading capabilities. Resid Upgrading & Residual Fuel Oil Production Distillate Hydrotreati
Slide 29: Refining
Refining Refining
Slide 30: Roadmap to Creating Superior Value – Refining
Roadmap to Creating Superior Value – Refining Operational Product Supply Investments to Excellence & Placement Optionality Enhance Margin Optimization Flexibility Leverage broader Enhance reliability + Focus on upgrading Enhance domestic scale + logistics availability of assets capabilities (yield p
Slide 31: Diversified Large-Scale U.S. Refining Portfolio
Diversified Large-Scale U.S. Refining Portfolio 2 At 2011 listing 1 Acquired 2013 Acquired 2018 North America Refining Capacity 3,021 (MBPD) 2,409 1,866 1,700 1,096 919 MPC VLO P66 XOM Shell Chevron PADD 1 PADD 2 PADD 3 PADD 4 PADD 5 Canada Over 3 million BPD of crude throughput capacity 1 Texas Cit
Slide 32: Broader Scale Expands Supply Optionality
Broader Scale Expands Supply Optionality ANS Canadian Larger footprint expands access to advantaged supply: 1 Bakken 2 1. 1 Canadian 2. 2 Bakken 3. 3 Permian New logistics assets lower crude acquisition costs WTI Other Crudes (Global Heavy, Arab, Crude processing flexibility California, other)
Slide 33: Canadian Crude Flexibility
1 Canadian Crude Flexibility Broader system Clearbrook increases access to Anacortes Canadian crudes enhancing margin Portland St. Paul capture Park Detroit SAX/ Mustang Over 500 MBPD of Canton Canadian crude Martinez Robinson purchases Catlettsburg Cushing, OK Approximately 67% heavy Los Ange
Slide 34: Bakken Strategy Optimization
2 Bakken Strategy Optimization New logistics assets increase Bakken crude Johnson’s Corner Clearbrook access, providing more Anacortes Mandan options to capture margin Connectivity and secured St. Paul Park space on long-haul pipelines Detroit provide flexibility to our Flanagan Chicago Canton M
Slide 35: Permian Strategy Optimization
3 Permian Strategy Optimization Increasing integrated footprint in the TX AR Permian creates multiple benefits NM across our platform El Paso Midland LA MS Wink LA Gathering systems create direct Orla Crane crude sourcing of advantaged TX Nederland crude for our refineries (est. 300 MBPD total) Fr
Slide 36: Safety & Environmental Excellence: Underpins Our Operations
Safety & Environmental Excellence: Underpins Our Operations Personal Safety 2 Our goal is best-in-class personal safety, process 0.8 safety, and environmental performance 0.6 0.4 0.2 0.31 0.32 0.31 0.29 0.27 0.0 Environmental Incidents 1 2012-2014 2015 2016 2017 2018 YTD 60 Average Process Safety 2
Slide 37: Operational Excellence: Delivers Significant Value
Operational Excellence: Delivers Significant Value Cash Operating Expense1 Improve operating costs Galveston Bay '14 2016 U.S. Average Best-in-class energy efficiency and turnaround Cash Operating Expense Index 4th Quartile performance ANDV '16 Galveston Bay '16 3rd Quartile MPC '16 Supply cha
Slide 38: Delivering Technical Excellence
Delivering Technical Excellence MPC Refining 5-year Low Cost / No Cost Incremental Production Yield Volume Increases + 134 Gasoline 3% + 110 + 88 All Other MBPD 33% Distillate 64% Crude Conversion Hydrotreating Capacity Capacity Capacity 1 Optimization has provided ability to capture >$300 million o
Slide 39: Key Strategic Investments: Grow EBITDA
Key Strategic Investments: Grow EBITDA 1 Expected Annualized Average EBITDA ($ in millions) Investments focused on +$530 $1,130 upgrading capabilities, yield GVL Coker 3 flexibility, and conversion capacity GBR STAR1 Track record of executing on- +$270 DKR Renewable schedule and exceeding return
Slide 40: Garyville Coker 3 Project
Garyville Coker 3 Project Increases Garyville coking capacity by 50% to 150 MBPD to increase capability to upgrade resid Enhances distillate yields Coker 3 Leverages existing infrastructure Location Increases ability to capture upside from light- heavy crude spreads Project details and estimat
Slide 41: Galveston Bay STAR Program
Galveston Bay STAR Program Creates a world-class refining complex with 40 MBPD increased crude unit capacity Increases resid processing and improves gasoil recovery Optimizes operations and reduces costs Project details and estimates: – Staged investment - on schedule and on budget – Planned com
Slide 42: Dickinson Renewable Diesel
Dickinson Renewable Diesel Produce renewable diesel to capture economic opportunity created by California Low Carbon Fuel Standard and Federal Renewable Fuel Standard Convert refinery to process soybean and corn oil to make 12 MBPD of renewable diesel Local feedstock supply advantage Leverages
Slide 43: Los Angeles LARIC Project
Los Angeles LARIC Project Increases the flexibility to produce distillates and significantly lowers emissions 30–40 MBPD of gasoline and distillate yield flexibility Physical integration of the Los Angeles refinery complex enhances optimization Reduces NOx, SOx and CO2 emissions Project detail
Slide 44: Unprecedented Opportunities for Light Product Optimization
Unprecedented Opportunities for Light Product Optimization Kenai Nationwide footprint Anacortes enables connectivity to all Mandan US markets Portland Dickinson St. Paul Detroit Park Canton Salt Lake City Chicago Pittsburgh Multiple pathways cost- Martinez Robinson effectively balance Catlettsbu
Slide 45: Recent Investments Increase Midwest & Gulf Coast Placements Options
Recent Investments Increase Midwest & Gulf Coast Placements Options and Increase Refining Utilization 1 Improved access to Eastern markets via rail and pipeline Detroit 1 2 Expanded barge/dock systems allow cost effective Robinson Canton access to Tennessee and USGC from the Midwest Catlettsburg 2
Slide 46: Mexico Strategy Optimization
Mexico Strategy Optimization 1. 1 Utilizing ARCO brand at 105 stations in MPC Refineries Western Mexico, expanding ARCO to Martinez ARCO Operations Chihuahua and Baja Sur in early 2019 Rail Facility Terminal 2. 2 Developing Mexico supply capabilities and Los Angeles efficiency with new Rosarito ligh
Slide 47: Synergies – Early Successes
Synergies – Early Successes Crude Supply Refining Product Placement Canadian and Bakken Martinez and St. Paul East coast marine light crude optimization turnaround staffing and product optimization ~$40 MM to date contractor utilization ~$0.3 MM to date decreased costs ~$22 MM Foreign spot o
Slide 48: R&M Segment Synergies
R&M Segment Synergies Estimated Annual Run-Rate 1 Synergy Projections by Sub-Category ($ millions) ($ millions) 665 665 95 200 140 420 100 160 250 70 465 100 100 260 150 160 YE2019 YE2020 YE2021 Refining Refining Turnaround / Marketing Supply and Procurement Total Optimization Business Maintenance T
Slide 49: Midstream
Midstream Midstream
Slide 50: Roadmap to Creating Superior Value – Midstream
Roadmap to Creating Superior Value – Midstream Capture Full Enhance Grow in Leverage Financial Midstream Cash Flow Premier MPC Priorities Value Chain Stability Basins Relationship Participate across Long-haul pipelines Permian: Fosters growth Self-funding value chain to add stable cash flow signific
Slide 51: U.S. Production Growth Creates Midstream Opportunities
U.S. Production Growth Creates Midstream Opportunities Strong production growth in crude, natural gas, and natural gas liquids will require additional infrastructure to link supply to global demand markets. Pipelines, processing, fractionation and export facilities will be needed to allow producers
Slide 52: Capturing The Full Midstream Value Chain
Capturing The Full Midstream Value Chain Feedstock Acquisition Inbound Logistics Refining & Processing Outbound Logistics Marketing & Retail Diversification enhances opportunities for revenue capture Integration enables capture of stable fee-based revenue across the value chain Developing asse
Slide 53: Capturing Permian Opportunities: Follow the Molecule
Capturing Permian Opportunities: Follow the Molecule Creating an integrated footprint from Legend Crude the Permian to the Gulf Coast NGL Natural Gas 1 Gathering and processing Delaware & Midland Basins TEXAS 2 Long-haul pipelines 1 3 Fractionation 2 3 4 4 Export terminals 53
Slide 54: Permian G&P Feeds Downstream Opportunities
1 Permian G&P Feeds Downstream Opportunities Gathering systems create significant growth opportunities in the Permian TexNew Conan Mex Gathering Preakness Torñado System System Argo Apollo 1 Legend Crude pipeline To Texas City area Hidalgo Natural gas pipeline NGL pipeline To Houston To Agua Dulce C
Slide 55: Permian Crude Long-Haul Pipelines
2 Permian Crude Long-Haul Pipelines Investments in long-haul pipelines generate stable, fee-based midstream income and also help lower feedstock costs tor MPC refineries Gray Oak Pipeline – MPC, Diamondback Energy, PSXP Midland TEXAS – ~850 mile, 30-inch diameter Wink – Anticipate in-service 4Q19
Slide 56: Permian Natural Gas Long-Haul Pipeline
2 Permian Natural Gas Long-Haul Pipeline Expand our value chain by connecting growing natural gas production to demand from MPC refineries and global export markets Whistler Pipeline – MPLX, Targa, White Water Midstream, and potentially others Waha TEXAS – ~450 miles, 42-inch diameter – Capacity 2
Slide 57: Permian NGL Long-Haul Pipeline and Fractionation
2 Permian NGL Long-Haul Pipeline and 3 Fractionation Expand our value chain by connecting growing NGL production and developing new fractionation infrastructure in the Gulf Coast BANGL Pipeline (Belvieu Alternative NGL) – MPLX, White Water Midstream, and other partners TEXAS – ~400 mile, 24-inch d
Slide 58: Expanding Export Assets at Five Gulf Coast Locations
4 Expanding Export Assets at Five Gulf Coast Locations Export facilities create ability to generate third party revenue and meet global demand for crude, refined products, and NGLs Currently in service – Mt. Airy, LA: acquired in 3Q18 – LOOP: expansion with potential Capline reversal and Swordfish
Slide 59: Bakken: Third-Party Growth Opportunities
Bakken: Third-Party Growth Opportunities Full-service midstream offering for both third parties and MPC starting at the well-head with crude oil and natural gas gathering through processing and fractionation with multiple takeaway options Legend Crude pipeline New NGL pipeline Converted NGL pipeline
Slide 60: Marcellus/Utica: Footprint Continues to Deliver
Marcellus/Utica: Footprint Continues to Deliver Marcellus/Utica continues to be the largest natural OH PA gas basin in the U.S. Current producer demand Bluestone supports our buildout of incremental infrastructure: Hopedale Harmon Creek Forecasted Volumes 2018E 2020E Cadiz Houston Ohio Condensate Ga
Slide 61: Outlook
Outlook Assumes MPLX and ANDX operate as standalone companies 2019E 2020E 2019E 2020E Growth Capital Expenditures ($B)1 $2.2 $2.0 Growth Capital Expenditures ($B)1 $0.6 $0.6 Adjusted EBITDA ($B) $3.9 $4.4 EBITDA ($B) $1.4 $1.6 DCF ($B)2 $3.1 $3.5 DCF ($B)2, 3 $1.1 $1.2 Outstanding LP Units (MM) 794
Slide 62: Marketing & Retail
Marketing & Retail Retail & Marketing
Slide 63: Roadmap to Creating Superior Value – Marketing & Retail
Roadmap to Creating Superior Value – Marketing & Retail Leverage Scale Capture Enhance High-Value to Drive Value Integration Customer Growth Creation Opportunities Experience Strong brand portfolio Optimize channel Focus on key markets Embrace changing and loyalty program participation and real cons
Slide 64: Unparalleled Nationwide Marketing & Retail Footprint
Unparalleled Nationwide Marketing & Retail Footprint Terminal Sales Location Note: Based on combined estimates for 2018 1 Across Retail segment and Brand Marketing 64
Slide 65: Multi-Channel Platform Creates Unrivaled Flexibility
Multi-Channel Platform Creates Unrivaled Flexibility Retail Segment R&M Segment Retail 1 Direct Dealer Brand Wholesale Channel diversity 7.8 billion GPY 2.6 billion GPY 5.3 billion GPY 16.9 billion GPY maximizes value capture Terminal Terminal Integrated platform provides assured product placeme
Slide 66: Wholesale Strategy: Underpins Channel Optimization
Wholesale Strategy: Underpins Channel Optimization 16.9 billion gallons of annual fuel sales across Wholesale channel Scale elevates partnering opportunities given new coast-to-coast platform Geographic diversity provides unrivaled market insights 1 Total Wholesale Volume Jet 15% Diesel 38% Ga
Slide 67: Strong and Diversified Fuel Branding Platform
Strong and Diversified Fuel Branding Platform Enhanced dual proprietary Brand marketing platform (Marathon + ARCO) 1 Leverage regional brand strengths and 275 related consumer preferences 75 22 Tremendous growth opportunities in Other 476 Western states 1,120 Multi branded platform enhances
Slide 68: Focus on Technology
Platform for Creating Superior Value Growth in existing and new markets High Value Growth Commercial Fueling/Diesel expansion Remodels with food service focus High-quality M&A Focus on Technology Enhanced customer interaction Mobile platforms Secure pump technology Speedy Rewards wit
Slide 69: Retail Segment: MPC’s Unique Competitive Advantage
Retail Segment: MPC’s Unique Competitive Advantage Two complimentary retail platforms that Speedway #1 in Peer Group Performance generate stable and growing cash flow with $30 ($M EBITDA/Store/Month) unparalleled integration value. Retail EBITDA Illustration $20 ($ millions) > 2,000 ANDV Retail $10
Slide 70: Retail Segment Synergies
Retail Segment Synergies 1 Estimated Annual Run-Rate Synergy Projections by Sub-Category ($ millions) ($ millions) 300 300 35 90 20 200 115 50 90 210 20 150 130 70 YE2019 YE2020 YE2021 Profit Reduce Operating Reduce G&A Economies of Total Enhancement Expenses Expenses Scale on Capital Initial Synerg
Slide 71: Financial Overview
Financial Overview
Slide 72: Financial Principles and Policy
Financial Principles and Policy Disciplined investment in growth opportunities Through-cycle dividend growth Support our investment grade credit rating Return cash to shareholders through repurchases Maintain the safety, integrity and reliability of our assets Balance Sheet Capital Investm
Slide 73: Balance Sheet: Foundation for Strategy Execution
Balance Sheet: Foundation for Strategy Execution MPC Liquidity Minimum cash balance $1 – 2 billion Revolving credit facilities $6 billion Trade receivables facility $750 million Target Leverage Debt to EBITDA MPC (excluding MLP’s) ≤ 2.0x MPLX ≤ 4.0x ANDX ≤ 4.0x Corporate Credit Rating Moody’s S&P Fi
Slide 74: Disciplined Capital Allocation Policy
Disciplined Capital Allocation Policy 2019 Financial Targets (excluding MLPs): Capital expenditures: ~$2.8 billion Dividends Capital Expenditures Capital return target: ≥ 50% of discretionary free cash flow 1 Share Repurchases – Annual dividend target: ≥ 10% growth – Share repurchase target: at
Slide 75: Disciplined Capital Spend
Disciplined Capital Spend ($ billions) Projected 2019 investments for MPC MPC 2019E 2020E Growth Capital 1.8 1.8 – Focused on enhancing margin capture Maintenance Capital 1.0 1.0 system-wide Total MPC (excluding MLPs) 2.8 2.8 – Disciplined allocation to projects with MPLX 2019E 2020E superior return
Slide 76: Stable and Growing Dividend
Stable and Growing Dividend Targeting Secure throughout business cycles Annual Dividends ≥ 10% growth ($ per share) $1.84 Growth commensurate with the business $1.52 $1.36 Targeting ≥ 10% long-term growth rate $1.14 $0.92 $0.77 $0.60 2012 2013 2014 2015 2016 2017 2018E 2019E 76
Slide 77: Consistent Return of Capital Through Share Buybacks
Consistent Return of Capital Through Share Buybacks Share Repurchases ($ billions) 4th quarter of 2018: ~$700 million of 7.5 targeted repurchases 3.3 2019 outlook: expect ≥ $2.5 billion of 2.4 ≥ 2.5 repurchases 1 Existing authorization 2: $5.6 billion, potentially completed by year end 2020 20
Slide 78: New MPC Segment Reporting Structure
New MPC Segment Reporting Structure Refining & Midstream Retail Marketing Refining MPLX Retail Marketing – Speedway ANDX – Other – Brand – Wholesale Direct Dealer – Asphalt & Legacy ANDV Petrochemicals Legacy MPC Refining Logistics Marketing Refining & Midstream Speedway Marketing Refi
Slide 79: New MPC Segment Reporting Structure
New MPC Segment Reporting Structure Refining & Marketing Midstream Retail Regions: MPLX Retail – Gulf Coast ANDX Direct dealers – Mid-Con Other midstream assets – West Coast Marketing: Key Statistics: Key Statistics: – Brand – Pipeline, terminal, and – Number of locations – Wholesale g
Slide 80: MPC Refining Footprint and Regions
MPC Refining Footprint and Regions Refining Locations 1 4 refineries: 711 MBPD West Coast Anacortes Mandan Dickinson St. Paul Park Pricing indicator: WC ANS 321 Detroit Salt Lake City Canton Robinson 1 10 refineries: 1,161 MBPD Mid- Con Catlettsburg Martinez Gallup Pricing indicator: Chicago
Slide 81: 2019 MPC Illustrative EBITDA
2019 MPC Illustrative EBITDA Commodity / Spread 2019 Business Plan 2019 EBITDA estimated at $12.9 billion WTI $64 based on our current business plan which Brent-WTI $3.60 includes a variety of market-based Brent-ANS $0.10 assumptions that will change Brent-ASCI $6.50 LLS-WTI $3.25 WTI-Bakken $1.50
Slide 82: Turnaround Accounting Impacts Peer Comparisons
Turnaround Accounting Impacts Peer Comparisons MPC will continue to expense turnarounds (TAR); ANDV had deferred and amortized these costs TAR-adjusted EBITDA will be provided quarterly to increase comparability with peers Pro-Forma Turnaround Costs ($ billions) $13.8 $0.9 $1.0 $1.0 $0.9 $0.9 20
Slide 83: MPC: Creating Exceptional Value
MPC: Creating Exceptional Value 1 Balance Sheet Return of Capital Capital Investment ~20% debt to market cap Payout target ≥ 50% of ~$2.8 billion per year $8+ billion liquidity discretionary free cash flow 2 20% Return of Capital 3 15.4% 16.1% 15% 9.7% 10% 12.0% 7.9% 8.4% 12.5% 6.2% 4.0% 4.1% 5% 2.9
Slide 84: Closing Remarks
Closing Remarks
Slide 85: MPC – A Leading Energy Company
MPC – A Leading Energy Company Refining Midstream Marketing & Retail Superior Operations Expanding Platform Across: Retail, Significant Growth Opportunities Wholesale, and Brand Strategic Investment to Capture Value Strategic Alignment with Refining Invest in Technology to Improve New Technology to
Slide 86: MARATHON
MARATHON ®
Slide 87: Appendix
MARATHON Appendix 87
Slide 88: Market Data Terminologies
Market Data Terminologies Metric Formula Mid-Con Crack Spread* • ((2xChicago CBOB Gasoline + Chicago ULSD)/3) x 42 – WTI Prompt West Coast Crack Spread* • ((2xLA CARBOB + LA CARB Diesel)/3) x 42 – ANS Prompt USGC Crack Spread* • ((2xUSGC CBOB Gasoline +USGC ULSD)/3) x 42 – LLS Prompt • Weighted 40%/
Slide 89: Fourth Quarter 2018 Outlook
Fourth Quarter 2018 Outlook Other Corporate Turnaround Other Total Crude Charge/ Total Sweet Sour Depreciation and Other and Major Manufacturing Direct Operating Throughput 1 Feedstocks Throughput 1 Crude Crude and Amortization Unallocated Maintenance Cost 2 Costs Throughput 1 Items 3 in MBPD Percen
Slide 90: Committed to Delivering Substantial Synergies
Committed to Delivering Substantial Synergies Synergy Potential Impact Area Business Context (millions) Cost Elimination ~$315 ● Clearly identified cost efficiencies – allows for rapid achievement ● Over $10 billion of combined purchases per year Procurement ~$200 ● 1-2% improvement leads to $100-$2
Slide 91: MPLX 2019-2020 Outlook – Reconciliation
MPLX 2019-2020 Outlook – Reconciliation Adjusted EBITDA and Distributable Cash Flow from Net Income ($ billion) 2019E 2020E Net income 2.2 2.5 Depreciation and amortization 0.9 1.0 Net interest and other financial costs 0.7 0.7 Adjustment for equity investment earnings & distributions 0.2 0.2 Other
Slide 92: MPLX 2019-2020 Outlook – Reconciliation
MPLX 2019-2020 Outlook – Reconciliation Adjusted EBITDA and Distributable Cash Flow from Net Cash Provided by Operating Activities ($ billion) 2019E 2020E Net cash provided by operating activities 3.2 3.8 Changes in working capital items 0.0 (0.1) Net interest and other financial costs 0.7 0.7 Unrea
Slide 93: ANDX 2019-2020 Outlook – Reconciliation
ANDX 2019-2020 Outlook – Reconciliation EBITDA and Distributable Cash Flow from Net Earnings ($ billion) 2019E 2020E Net earnings 0.8 0.8 Depreciation and amortization 0.4 0.5 Net interest and other financial costs 0.2 0.3 EBITDA 1.4 1.6 Adjustment for equity investment earnings & distributions 0.0
Slide 94: Speedway EBITDA Reconciliation
Speedway EBITDA Reconciliation Segment EBITDA to Segment Income from Operations ($ million) 2017 2018 Q3 Q4 Q1 Q2 LTM Speedway Segment Income from Operations 208 148 95 159 610 Plus: Depreciation and Amortization 68 78 79 73 298 Speedway Segment EBITDA 276 226 174 232 908 94