Marathon Petroleum Corporation · NYSE:MPC
Marathon Petroleum — J.P. Morgan 2018 Energy Conference
34 slides from Marathon Petroleum's conference presentation, Jun 19, 2018
Slide 1: J.P. Morgan 2018 Energy Conference
J.P. Morgan 2018 Energy Conference June 19, 2018
Slide 2: Forward-Looking Statements
Forward‐Looking Statements This presentation contains forward-looking statements within the meaning of federal securities laws regarding Marathon Petroleum Corporation (“MPC“). These forward-looking statements relate to, among other things, the proposed transaction between MPC and Andeavor (“ANDV”)
Slide 3: Additional Information
Additional Information Additional Information and Where to Find It In connection with the proposed transaction, MPC filed a registration statement on Form S-4 with the SEC on May 29, 2018, which includes a preliminary proxy statement of Marathon Petroleum Corporation (“MPC”) and Andeavor (“ANDV”). I
Slide 4: Combination Creates a Leading Energy Company
Combination Creates a Leading Energy Company Aligned Strategy, Focus and Culture Large-scale, geographically-diversified and highly-integrated refining, marketing, and midstream company with an initial enterprise value >$90 billion1 High-quality, Feedstock- Two strong nationwide retail and advantage
Slide 5: Complementary Footprints Spanning the U.S.
Complementary Footprints Spanning the U.S. Strong Presence Across Key Supply and Demand Centers MPC MPC Refinery Light Product Terminals MPC-Owned and Part-Owned Third Party Asphalt/Heavy Oil Terminal MPC-Owned Third Party Water Supplied Terminals Inland Coastal Renewable Fuels Ethanol Facility Biod
Slide 6: Transaction Highlights
Transaction Highlights ● MPC to acquire all outstanding ANDV shares using a mix of stock and cash ● Represents an equity value of $23.3 billion and an enterprise value of $35.6 billion, assuming MPC April 27, 2018 closing price of $81.43 Consideration and ● ANDV shareholders have the option to elect
Slide 7: Financial Highlights
Financial Highlights Opportunity for Significant Shareholder Value Creation Accretion and Cash Generation Growth and Value Creation Immediately >$5 billion Substantially enhanced ≥$1 billion growth platform across of expected synergies of incremental cash accretive all segments, with to earnings and
Slide 8: Compelling Value for All Shareholders
Compelling Value for All Shareholders Substantial increase in scale and geographic diversity – combined EV of Further optimization of crude >$90 billion1 and refining capacity of >3 MMBPD Delivers meaningful upfront supply premium of 24% to April 27, Capital return further enhanced with addi
Slide 9: Committed to Delivering Substantial Synergies
Committed to Delivering Substantial Synergies Well-defined, Achievable, Highly Accretive Clearly identified and developed plan to achieve ≥$1 billion of expected synergies By Function By Impact Area ($ millions) ($ millions) ≥$1,000 $950 ≥$1,000 $195 $710 $150 $95 $480 $210 $55 $295 Refining & Retai
Slide 10: Synergy Delivery Plan
Synergy Delivery Plan Expected Synergies of at Least $1 Billion Already Identified Expected Synergy Impact Area Business Context ($ millions) Cost Elimination ~$255 ● Clearly identified cost efficiencies – allows for rapid achievement ● Over $10 billion of combined purchases per year Procurement ~$1
Slide 11: MPC and Andeavor Strategic Evolutions
MPC and Andeavor Strategic Evolutions Track Record of Integrating Businesses and Driving Shareholder Value $80 Acquired Galveston Bay refinery and $60 integrated midstream and Acquired former Hess marketing assets retail assets Formed MLP $40 Acquired MarkWest MPC completes $20 Energy Partners Strat
Slide 12: MPC Track Record of Executing and Integrating Large Transactions
MPC Track Record of Executing and Integrating Large Transactions Galveston Bay Achievements (since acquisition) Improved Environmental and Advanced Operational Excellence Lowered Operating Costs Safety Performance 33 monthly process-unit rate records in Reduced total cash operating expenses 80
Slide 13: Diversified Large-Scale U.S. Refining Portfolio
Diversified Large-Scale U.S. Refining Portfolio Sixteen Refineries with Over 3 Million BPD of Throughput Capacity Diversification across attractive PADDs U.S. Refining Capacity1 (MBPD) Incremental access to advantaged feedstock supply 3,038 Scale to deliver best-in-class operating capability P
Slide 14: Geographic Diversification Increases Exposure to Attractive Margins
Geographic Diversification Increases Exposure to Attractive Margins Annual Refining Margins by Region ($/BBL) Andeavor’s California, Pacific $30 Northwest, and Mid-Con refineries add geographic $25 diversity to MPC’s existing $20 refining earnings $15 Attractive West Coast market dynamics $10 $5
Slide 15: Well-positioned for IMO
Well-positioned for IMO Pro forma MPC is positioned to benefit from the Coking + Hydrocracking Capacity (MBPD) adoption of the International Maritime 800 Organization’s (IMO) low-sulfur-fuels 700 requirements, scheduled to take effect in 2020 Hydrocracking 600 Coking Further investments to upgra
Slide 16: Two High-quality MLPs
Two High-quality MLPs Pro forma MPC will be the General Partner (GP) and own the majority of Limited Partner (LP) units in two high-quality MLPs 100% GP Interest + 100% GP Interest + MPLX and ANDX remain separate MLPs and 59% LP Interest 61% LP Interest3 will continue to execute their growth pla
Slide 17: Significant Midstream Opportunities
Significant Midstream Opportunities Diversified customer offering across key energy producing regions – Pipelines: ~50% increase in pipeline mileage to >15,000 miles – Terminals: ~30% increase to ~130 terminals – Processing capacity: ~20% increase to >10 BCFD Expanded Permian footprint increases
Slide 18: Significant Retail and Marketing Opportunities
Significant Retail and Marketing Opportunities Multiple Growth Platforms with a Strong Footprint in Attractive Regions Retail Marketing (Company owned/operated) (Branded and wholesale distribution networks) Speedway platform for company owned/operated Strong, recognized regional brands provide
Slide 19: Pro Forma Capital Structure
Pro Forma Capital Structure Increased size, scale and diversity supports >$5 billion incremental cash flow expected in first five years commitment to investment grade credit profile Implicit leverage reduction via earnings growth even Equity-weighted acquisition funding mix (85/15) and prior
Slide 20: Total MPC Capital Return – Spin Through 1Q 2018
Total MPC Capital Return – Spin Through 1Q 2018 Over $15 billion returned to shareholders since spin 1Shares adjusted for 2:1 stock split in June 2015 2Cumulative repurchase represents percentage of the ~712 MM shares outstanding as of June 30, 2011 3Accelerated Share Repurchase program (ASR); cash
Slide 21: MPC and ANDV Mexico Opportunities
MPC and ANDV Mexico Opportunities Desirable Supply Position into Mexico with Direct Supply from the East and West MPC Bulk supplier via waterborne cargoes from Garyville and Galveston Bay Rail supply potential from Houston area Andeavor Winner of PEMEX open season in northwest Mexico – physica
Slide 22: Pro Forma MPC Permian – Expanded Opportunities
Pro Forma MPC Permian – Expanded Opportunities Accelerates MPC’s entry into Permian To Cushing/Ozark with attractive assets (MPC Midwest refining) Andeavor crude oil gathering and marketing aligns naturally with MPC’s crude needs at Galveston Bay Allows for full crude oil integration – wellhea
Slide 23: Integrates Bakken Crude System with MPC Refining Demand
Integrates Bakken Crude System with MPC Refining Demand MT ND Crude gathering and marketing aligns with MPC demand in Midwest Minot DAPL & Enbridge Robinson Lake Gain ability to aggregate DAPL supply on Connections Gathering & Processing gathering and related assets DAPL Williston Basin – Bakken
Slide 24: A Powerful Combination for Long-term Value Creation
A Powerful Combination for Long-term Value Creation Scale and Continued Robust Diversity Substantial Nationwide Focus on Earnings and Enhances Cost and Integrated Balanced Cash Investment Operating Footprint Capital Generation Grade Synergies Allocation Credit Profile 24
Slide 25: Appendix
Appendix 25
Slide 26: First-Quarter Highlights
First-Quarter Highlights Earnings* of $37 million or $0.08 per diluted share, income from operations of $440 million – Record Midstream segment income from operations of $567 million, largely driven by MPLX Returned $1.55 billion of capital to shareholders, including $1.33 billion of share repur
Slide 27: MPLX - Key Investment Highlights
MPLX - Key Investment Highlights Diversified large-cap MLP positioned to deliver attractive returns over the long term Forecast distribution growth of ~10% for 2018 • Largest processor and fractionator in the Marcellus/Utica basins Gathering & • Strong footprint in STACK play and growing presence in
Slide 28: About MPLX
About MPLX Growth-oriented, diversified MLP with high-quality, strategically- located assets with leading midstream position Two primary businesses – Logistics & Storage includes transportation, storage and distribution of crude oil, refined petroleum products and other hydrocarbon-based product
Slide 29: MPLX - Logistics & Storage
MPLX - Logistics & Storage Segment Overview High-quality, well-maintained assets that are integral to MPC – Owns, leases, operates, or has interest in ~4,500 miles of crude oil pipelines and ~5,500 miles of Headquarters product pipelines and supporting assets MPLX Pipelines: Owned & Operated – 62
Slide 30: MPLX - Gathering & Processing
MPLX - Gathering & Processing Segment Overview • Ethane Raw Gathering • Propane Processing Mixed Fractionation NGL Natural Gas and • Normal Butane Plants NGLs Facilities Products • Isobutane Production Compression • Natural Gasoline Gathering Capacity C2 + Fractionation Capacity We are well-positi
Slide 31: Extensive Retail and Brand Network
Extensive Retail and Brand Network Speedway 39 Largest company-owned and -operated 64 39 305 234 12 c-store chain east of the Mississippi 811 30 ~2,740 locations in 21 states 116 123 311 489 69 Approximately 5.8 billion gallons of 282 646 861 60 21 transportation fuel sold in 2017 112 62 147 S
Slide 32: Speedy Rewards Loyalty Program
Speedy Rewards Loyalty Program ® Highly successful loyalty program Customers earn points on every purchase Customers redeem points for free merchandise and fuel discounts Averaged ~6 million active Speedy Rewards members in 2017, and continues to grow as we attract new members in the markets
Slide 33: Strong Operational Performance and Responsible Corporate Leadership
Strong Operational Performance and Responsible Corporate Leadership MPC facilities received from the American Chemistry Council 76% 56 3 7 MPC has earned Certificates of Certificates of Certificates of Excellence Honor Achievement of the Environmental Protection Agency’s Energy Star 16 recognitions
Slide 34: MPC's Fully Integrated Downstream System
MPC’s Fully Integrated Downstream System Refining & Marketing Six-plant refining system with ~1.9 MMBPCD capacity One biodiesel facility and interest in three ethanol facilities One of the largest wholesale suppliers in our market area One of the largest producers of asphalt in the U.S. ~5
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