Marathon Petroleum Corporation · NYSE:MPC
Marathon Petroleum — Investor Day (December 2013)
99 slides from Marathon Petroleum's investor day presentation, Dec 4, 2013
Slide 1: Analyst & Investor Day
ae Analyst & Investor Day December 4, 2013 Marathon Cy), Petroleum Corporation
Slide 2: Meeting Agenda
Meeting Agenda Welcome and Introductions Pam Beall Strategic Overview Gary Heminger Macro Outlook Mike Palmer Midstream/MPLX Garry Peiffer Speedway Tony Kenney Refining Rich Bedell Financial Overview Don Templin Summary and Q&A Gary Heminger 2
Slide 3: Other MPC Attendees
Other MPC Attendees George Shaffner Tom Kelley Tim Griffith Senior Vice President Senior Vice President Vice President Transportation and Marketing Finance and Treasurer Logistics Beth Hunter Geri Ewing Manager Manager Investor Relations Investor Relations 3
Slide 4: Forward-Looking Statements
Forward-Looking Statements This presentation contains forward-looking statements within the meaning of federal securities laws regarding both MPC and MPLX. These forward-looking statements relate to, among other things, expectations, estimates and projections concerning the business and operations o
Slide 5: Gary Heminger
Gary Heminger President and Chief Executive Officer
Slide 6: Our Priorities
Our Priorities Maintain top tier safety and environmental performance Sustain our focus on shareholder returns Balance capital returns with value-enhancing investments Grow higher valued and stable cash flow businesses – Midstream/MPLX – Speedway Enhance the margins in our refining operati
Slide 7: Demonstrating Our Corporate Values
Demonstrating Our Corporate Values The foundation for all that we do Health and Safety Environmental Stewardship Product Stewardship Honesty and Integrity Corporate Citizenship Diversity and Inclusion Strategic Macro Midstream/ Speedway Refining Financial Summary 7 Overview Outlook MPLX
Slide 8: Maintaining Top Tier Performance: Safety and Environmental
Maintaining Top Tier Performance Safety and Environmental OSHA Recordable Rate Days Away Rate 0.70 Per 200,000 hours 0.58 MPC Industry MPC Industry 0.50 Per 200,000 hours 0.44 0.44 0.16 0.13 0.12 0.61 0.08 0.09 0.50 0.45 0.45 0.24 0.29 0.12 0.03 0.10 0.08 0.03 0.03 2008 2009 2010 2011 2012 2013* 200
Slide 9: Building on our Reputation
Building on our Reputation Sustained capital returns and value-enhancing investments 100 Third $2 B share MPC Price Performance repurchase authorized 90 Second $2 B share Completed Detroit repurchase authorized 80 Heavy Oil Upgrade 25% increase in dividend Completed MPLX IPO Acquired Galveston 70 Ba
Slide 10: Delivering Peer Leading Return of Capital
Delivering Peer Leading Return of Capital Last twelve months 16 14.7 14 12 10 9.1 8.7 Percent 12.3 7.7 8 2.2 6.4 6 6.7 5.2 4.3 3.8 4 2 2.4 2.6 2.0 2.7 2.6 0 MPC HFC TSO PSX VLO Dividend Yield Special Dividend Yield LTM Share Repurchase/Share Yield Total Capital Return Yield: Annualized Dividend/shar
Slide 11: Performing Consistently in the Top Tier
Performing Consistently in the Top Tier Engine behind MPC’s focus on capital returns Operating Income Per Barrel of Crude Throughput** 20 MPC’s Rank 15 Competitor Range 1 2 10 $/BBL 2 5 1 1 3 4 5 2 7 3 3 1 3 3 2 0 -5 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Sep
Slide 12: Allocating Capital in the Past
Allocating Capital in the Past Predominately focused on refining Segment Capital Expenditures* Segment EBITDA** 7,000 7,000 6,000 6,000 5,000 5,000 4,000 4,000 $MM $MM 3,000 3,000 2,000 2,000 1,000 1,000 0 0 2007 2008 2009 2010 2011 2012 2013E 2007 2008 2009 2010 2011 2012 2013 LTM Pipeline Transpor
Slide 13: Allocating Capital in the Future
Allocating Capital in the Future Drive growth in more stable cash flow and higher value businesses Sandpiper Pipeline Midstream/MPLX Southern Access Extension Aggressive growth Pipeline Utica Speedway Organic growth Growth in existing and contiguous markets Selective acquisitions Light c
Slide 14: Providing More Stable Cash Flow
Providing More Stable Cash Flow Future Mid-Cycle EBITDA Midstream Speedway Historical Mid-Cycle EBITDA* Other Pipeline Transportation Speedway R&M R&M *2007-2012 average. Non-GAAP disclosure, see appendix for reconciliation to net income attributable to MPC Strategic Macro Midstream/ Speedway Refini
Slide 15: Mike Palmer
Mike Palmer Senior Vice President, Supply, Distribution and Planning
Slide 16: Favorable Market Backdrop
Favorable Market Backdrop Global and domestic product demand – Global product demand still growing – U.S. distillate demand outpaces other products Global and domestic refining – U.S. refining advantage will continue – Product exports continue to be key for U.S. refiners Global and domestic cr
Slide 17: Growing Global Product Demand
Growing Global Product Demand Distillate and 120 2012 Actual Forecast gasoline demand Compounded Annual continues to rise 100 Growth Rates 2025 vs. 2012 Fuel oil continues +1.4% to be phased out 80 Other -2.4% due to tightening MMBD 60 Fuel Oil sulfur specs +1.2% 40 Distillate 20 +1.1% Gasol
Slide 18: Growing U.S. Distillate Demand
Growing U.S. Distillate Demand Overall U.S. demand remains flat Distillate demand 12 2012 Actual Forecast growth outpaces Compounded Annual other products 10 Growth Rates 2025 vs. 2012 Gasoline Gasoline will be -0.3% 8 constrained by CAFE Gasoline -0.7% Ex Ethanol standards and MMBD 6 biofue
Slide 19: Shuttering Vulnerable Refining Capacity
Shuttering Vulnerable Refining Capacity Offsets a portion of capacity expansion Net Change Expansions Vulnerable Capacity 7 6 5 4 3 MMBD 2 +4.10 +4.10 +2.85 +2.85 1 +0.78 +0.78 +0.92 +0.92 +1.04 +1.04 +0.61 0 +0.61 -1.14 -1.14 -1 -2 -3 North Latin Europe Former Asia Middle East Africa America Americ
Slide 20: Sustaining U.S. Export Advantage
Sustaining U.S. Export Advantage Access to lower cost feedstocks Low cost natural gas Complex refineries 2012 Sophisticated workforce Utilization Region Rate Atlantic Basin Fuel Prices Henry Hub USGC #6 1% UK NBP Index Netherlands Avg. Border Gas North America 87% 20 Former Soviet Union 80%
Slide 21: Growing Total U.S. Light Product Exports
Growing Total U.S. Light Product Exports 2,000 1,800 1,600 1,400 1,200 MMBD 1,000 800 600 400 200 0 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 Total Gasoline Total Distillate Sources: MPC, EIA Note: Gross exports shown Strategic Macro Mid
Slide 22: Rising MPC Finished Product Exports
Rising MPC Finished Product Exports 250 200 150 MBD 100 50 0 2010 2011 2012 2013 2013 Sept 3Q YTD Strategic Macro Midstream/ Speedway Refining Financial Summary 22 Overview Outlook MPLX Overview Q&A
Slide 23: Growing N.A. and Middle East Crude Production
Growing N.A. and Middle East Crude Production 30 Former Soviet Union 30 Europe 20 20 10 10 0 2005 2013 2025 0 2005 2013 2025 30 North America 20 10 30 Middle East 30 Asia 0 20 20 2005 2013 2025 10 10 0 0 2005 2013 2025 2005 2013 2025 30 Africa 20 30 Latin America 10 20 0 10 2005 2013 2025 0 2005 201
Slide 24: Ongoing Disruptions Temper Global Crude Supply
Ongoing Disruptions Temper Global Crude Supply Crude Oil Production Global Supply Disruptions (OPEC) 45 3.5 3.0 40 2.5 Increased 35 Disruptions Near-term Flat OPEC Production 2.0 MMBD MMBD 30 1.5 1.0 25 0.5 20 0 OPEC NON-OPEC Source: International Energy Agency (IEA) Sources: PIRA Energy Group Novem
Slide 25: Rising North American Production
Rising North American Production 2012 16 ← Actual Forecast → 14 12 10 MMBD 8 Canada 6 4 United States 2 0 1970 1975 1980 1985 1990 1995 2000 2005 2010 2015 2020 2025 Sources: EIA, CAPP, MPC Strategic Macro Midstream/ Speedway Refining Financial Summary 25 Overview Outlook MPLX Overview Q&A
Slide 26: Growing Crude Oil/Condensate Supply
Growing Crude Oil/Condensate Supply North Dakota 2012 1,600 1,400 1,200 1,000 MBD 800 600 400 Canada 200 Total Growth 0 Actual Forecast +3,575 MBD 2012 – 2025 1980 1985 1990 1995 2000 2005 2010 2015 2020 2025 +5,860 MBD Bakken Texas 4,000 2012 +840 MBD 3,500 Utica 3,000 +135 MBD 2,500 MBD 2,000
Slide 27: MPC Refining Capacity in Advantaged Regions
MPC Refining Capacity in Advantaged Regions 100% in PADDs II and III Canadian Bakken 100% Utica 80% PADD IV PADD II 60% PADD V 40% PADD I 20% PADD III 0% Permian Basin Eagle Ford MPC VLO HFC PSX TSO Gulf of Mexico PADD PADDI II PADD II PADD III PADDI III PADD PADD PADD IV IVPADD PADD V V Canadian So
Slide 28: Ongoing Volatile Crude Spreads vs. WTI
Ongoing Volatile Crude Spreads vs. WTI 25 20 15 10 5 Mars 0 Maya $/BBL -5 WCS -10 LLS -15 NDL -20 Brent -25 -30 -35 Nov-12 Mar-13 May-13 Sep-13 Mar-12 May-12 Sep-12 Feb-13 Jul-13 Oct-13 Dec-12 Apr-13 Aug-13 Jun-13 Feb-12 Jul-12 Oct-12 Apr-12 Aug-12 Jun-12 Jan-13 Jan-12 Sources: MPC, Argus Strategic
Slide 29: Expecting Attractive Crude Spreads
Expecting Attractive Crude Spreads MPC Outlook Brent/WTI Spread $7-$12/BBL, wider at times LLS/WTI Spread $5-$10/BBL, transportation/quality based $3-$5/BBL, domestic light sweet crude Brent/LLS surplus Competes with WTI and LLS, North Dakota Light prices accordingly Attractive, but narrowing with C
Slide 30: Ongoing High Marginal Rail Cost
Ongoing High Marginal Rail Cost $10-12 Bakken $14-16 $15-16 $12-14 $13-15 WTI Cushing, OK Legend Rail St. James, LA LLS All costs shown as $/BBL Sources: MPC, publicly available Information Strategic Macro Midstream/ Speedway Refining Financial Summary 30 Overview Outlook MPLX Overview Q&A
Slide 31: Compelling Advantage for Pipeline and Marine
Compelling Advantage for Pipeline and Marine Canadian $10-12 Bakken $4 $14-16 $15-16 $2 $5 $12-14 Chicago, IL $5-6 Patoka, IL $6-7 $5 $13-15 WTI Cushing, OK Legend Rail $10 Pipeline Marine $2 St. James, LA Houston, TX LLS All costs shown as $/BBL Pipeline costs exclude any storage or transfer fees a
Slide 32: Creating Crude/Condensate Advantage
Creating Crude/Condensate Advantage Canada +3,575 MBD Bakken +840 MBD Sandpiper Southern Access Extension Patoka, IL Robinson Light Crude Enhancements MPC Refinery Production volumes are 2025 estimates vs. 2012 actual Sources: MPC, EIA, CAPP Strategic Macro Midstream/ Speedway Refining Financial Sum
Slide 33: Creating Crude/Condensate Advantage
Creating Crude/Condensate Advantage Canada +3,575 MBD Bakken +840 MBD Sandpiper Southern Access Extension Patoka, IL Robinson Light Crude Enhancements Permian +620 MBD MPC Refinery Eagle Ford +690 MBD Connectivity Enhancements Additional Barging Production volumes are 2025 estimates vs. 2012 actual
Slide 34: Creating Crude/Condensate Advantage
Creating Crude/Condensate Advantage Canada +3,575 MBD Cornerstone Pipeline Bakken Condensate Splitter +840 MBD Truck Unload Expansion Sandpiper Utica +135 MBD Southern Access Extension Patoka, IL Wellsville Barge Condensate Splitter Robinson Light Crude Enhancements Permian +620 MBD MPC Refinery Eag
Slide 35: Garry Peiffer
Garry Peiffer MPC Executive Vice President and MPLX President
Slide 36: MPLX – Larger and More Valuable Part of MPC's Business
MPLX – Larger and More Valuable Part of MPC’s Business Sustain long-term growth Significant midstream/MPLX logistics growth underway Unlock value of MPC existing logistics assets via MPLX Strategic Macro Midstream/ Speedway Refining Financial Summary 36 Overview Outlook MPLX Overview Q&A
Slide 37: Industry Leading MLP and Ready to Run
Industry Leading MLP and Ready to Run $45 Focus on Fee-Based Businesses $40 Unit Price Pursue Organic Growth $35 Opportunities $30 Grow Through Acquisitions and Drop-downs $25 IPO Maintain Safe and Reliable $20 Operations 10/25/12 11/25/12 12/25/12 01/25/13 02/25/13 03/25/13 04/25/13 05/25/13 06/25/
Slide 38: Increasing Midstream Growth Investments
Increasing Midstream Growth Investments 1,200 Midstream Infrastructure* 1,000 Condensate Splitters 800 $MM 600 400 200 0 2007 2008 2009 2010 2011 2012 2013E 2014E 2015E 2016E *Includes MPLX spend, midstream investments included in the R&M segment, Southern Access Extension Pipeline and Sandpiper Pip
Slide 39: Investing in Significant Growth Projects: North Dakota System (Sandpiper)
Investing in Significant Growth Projects North Dakota System (Sandpiper) Logistics equity opportunity – MPC – Length, size: 610 Mile, 24”/30” + North Dakota Classic System and Bakken Pipeline U.S. Canadian – Capacity: 580 MBD – In-Service: 1Q 2016 Bakken – MPC Investment: $1.0 B - $1.2 B – MPC Equ
Slide 40: Investing in Significant Growth Projects: Southern Access Extension
Investing in Significant Growth Projects Southern Access Extension (SAX) Logistics equity opportunity – MPC – Length, size: 165 Mile, 24” – Capacity: 300 MBD Canadian – In-Service: 2Q 2015 – MPC Investment: ~$250 MM – MPC Equity: 35% Bakken – Future potential drop to MPLX Superior, WI Flanagan, IL
Slide 41: Leveraging Existing MPC Assets
Leveraging Existing MPC Assets Utica shale strategy Expand refinery processing capacity to leverage geographic advantage – Condensate splitters at Canton and Catlettsburg Increases total crude plus condensate processing capacity to 60 MBD from ~25 MBD Phased infrastructure investment – Truck 2
Slide 42: Developing a Comprehensive Utica System
Developing a Comprehensive Utica System To Toledo, Detroit, Chicago and Canada Proposed Cornerstone Pipeline investment Pa. – $140 MM Youngstown Capacity Canton Midland – 25+ MBD Wellsville Lima Steubenville Timing M3, Leesville M3, Scio MarkWest, Cadiz – late 2016 Ohio $20 MM EBITDA MPC Ref
Slide 43: Investing in Significant Growth Projects
Investing in Significant Growth Projects ~$2.2 B investment with potential annual EBITDA of up to $300 MM MPC Projects Timing Investment $MM North Dakota Pipelines Equity Option 2016 $1,200 Condensate Splitters 2013-2015 $250 SAX Equity Option 2015 $250 Wellsville Truck to Barge Operation 2013 $30 O
Slide 44: Current Retained Midstream EBITDA of ~$800 MM
Current Retained Midstream EBITDA of ~$800 MM Additional Midstream Assets Retained by MPC Over 5,000 miles of additional crude and products pipelines Pipelines –Owns, leases or has an ownership interest in these pipelines –44% of MPLX Pipe Line Holdings LP 191 inland barges; 4.6 MMBBL capacity M
Slide 45: Drop-down Strategy Considerations
Drop-down Strategy Considerations MPC created MPLX to grow midstream business and create a funding mechanism for strategic opportunities MPLX investors highly value a consistent, long-term growth strategy Ratable drops maximize value creation and retain flexibility for MPC – Committed to 15-20
Slide 46: Outlook for Continued Organic Growth
Outlook for Continued Organic Growth MPLX 2014 Adjusted EBITDA* 160 140 $MM ($MM, except 120 where noted) 2013E 2014E Min Max Min Max 100 Adjusted 80 102 108 130 145 EBITDA* 2013E 2014E DCF* 100 106 100 115 Distributable Cash Flow* (DCF) Note: 2014E outlook excludes likely drop-down transaction 120
Slide 47: MPLX Summary
MPLX Summary MPLX will be MPC’s primary midstream growth vehicle Large portfolio of fee-based growth projects that will be immediately accretive to distributable cash flow Clear line of sight to MPC midstream asset portfolio to support growth Pursuing numerous projects to continue to grow po
Slide 48: Tony Kenney
Tony Kenney President, Speedway LLC
Slide 49: Speedway – Larger and More Valuable Part of MPC's Business
Speedway – Larger and More Valuable Part of MPC’s Business Sustain top tier performance in convenience store industry Accelerate organic growth strategy Leverage integration value within MPC’s Midwest infrastructure Grow very stable cash flow Strategic Macro Midstream/ Speedway Refining Fina
Slide 50: Top Tier Light Product Volume per Store
Top Tier Light Product Volume per Store Light Product Volume Public C-Store Independent Refiners w/COOP* 300 M Gal/Store/Month 250 200 177.1 150 AVG: 134.8 100 50 0 Casey's Couche-Tard Pantry Susser CST MUSA Tesoro Delek Western Speedway Refining Light Product Margin 40 Public C-Store Independent Re
Slide 51: Top Tier Merchandise Sales per Store
Top Tier Merchandise Sales per Store Merchandise Sales Public C-Store Independent Refiners w/COOP* 200 174.7 $M/Store/Month 150 AVG: 106.6 100 50 0 Casey's Couche-Tard Pantry Susser CST MUSA Tesoro Delek Western Speedway Refining Merchandise Margin 60 Public C-Store Independent Refiners w/COOP* 50 4
Slide 52: Top Tier Total Gross Margin per Store
Top Tier Total Gross Margin per Store Total Gross Margin Public C-Store Independent Refiners w/COOP* 80 76.7 $M/Store/Month AVG: 55.1 60 40 20 0 Casey's Couche-Tard Pantry Susser CST MUSA Tesoro Delek Western Speedway Refining Source: 2012 Company Reports *Company Owned and Operated Strategic Macro
Slide 53: Growing More Predictable Merchandise Margin
Growing More Predictable Merchandise Margin Total Light Product Volume and Margin Total Merchandise Sales and Margin 3,200 600 3,200 1,000 3,000 3,000 900 MM Gallons $MM Margin $MM Margin 500 $MM Sales 2,800 2,800 800 400 2,600 2,600 700 2,400 300 2,400 600 2011 2012 2013E 2011 2012 2013E Volume Mar
Slide 54: Executing Significant Organic Growth Opportunities
Executing Significant Organic Growth Opportunities Capex 350 340 326 305 300 300 300 250 $MM 200 150 103 100 50 0 2007-2011 2012 2013E 2014E 2015E 2016E Average Store Construction Acquisitions All Other # of Stores 150 100 9 99 50 5 57 60 65 65 0 18 18 2007-2011 2012 2013E 2014E 2015E 2016E Average
Slide 55: Consolidating Fragmented Industry
Consolidating Fragmented Industry Convenience retail industry 15% viable and growing 5% – 2012 sales: $700 B (2.7% increase) 5% – 2012 profitability: $7 B (2.9% increase) 63% 12% Merchandise and food service driver of growth Highly fragmented Industry Ownership - Store Count Small operators unde
Slide 56: Capturing Full Integration Value
Capturing Full Integration Value With MPC’s Midwest infrastructure New Markets Key Growth Markets Organic # Store Count* – New – 280 locations identified 63 – Rebuild – 230 existing candidates 302 Acquisitions Chicago 4 307 – Single stores Pittsburgh 484 – Small to large chains 107 Indianapolis
Slide 57: Growing Cash Flow Through All Cycles
Growing Cash Flow Through All Cycles Segment EBITDA* 650 630 550 560 450 500 $MM 482 404 424 350 381 250 2010 2011 2012 2013E 2014E 2015E 2016E *Non-GAAP disclosure, see appendix for reconciliation to Speedway segment income from operations Strategic Macro Midstream/ Speedway Refining Financial Summ
Slide 58: Growing Stable Cash Flow
Growing Stable Cash Flow Foundation set for growth Top tier industry performer Scalable technology and organizational infrastructure Industry consolidation and rationalization of assets Disciplined expense control – Same store expense growth of only 1% over last two years Industry leading
Slide 59: Rich Bedell
Rich Bedell Senior Vice President, Refining
Slide 60: Increasing Margins and Adding Value in Refining
Increasing Margins and Adding Value in Refining Light crude and condensate processing Distillate growth Product export growth Galveston Bay update Garyville resid hydrocracker Strategic Macro Midstream/ Speedway Refining Financial Summary 60 Overview Outlook MPLX Overview Q&A
Slide 61: Increasing Light Sweet Crude and Condensate Capacity
Increasing Light Sweet Crude and Condensate Capacity Condensate splitters – Canton: 25 MBD – Catlettsburg: 35 MBD Condensate Processing Opportunity – $250 MM Ultra- New Light Naphtha to Gasoline Blending Sweet Fractionator Heavy Naphtha to Reforming – >30% ROI for each project Condensate Distillat
Slide 62: Leveraging Existing Capacity to Run Light Sweet Crude
Leveraging Existing Capacity to Run Light Sweet Crude Reforming Capacity Reformer capacity captures full 30 value of light crude processing 25 Percent of Crude Capacity 20 Industry Average 15 Additional value added through 10 aromatics production 5 0 MPC MPC Midwest USGC Source: 2013 Oil & Gas J
Slide 63: Capitalizing on Global Growth in Diesel Demand
Capitalizing on Global Growth in Diesel Demand Hydrocracker expansions/revamps Distillate Production 700 Garyville +25 MBD ULSD in 2014-15 600 – $225 MM 500 MBD – ~45% ROI 400 300 Galveston Bay +9 MBD ULSD in 2015 2012 2013E 2014E 2015E 2016E – $18 MM – ~70% ROI Distillate Production Percent of
Slide 64: Growing Gulf Coast Export Capabilities
Growing Gulf Coast Export Capabilities Export Capacity Added new 500,000 barrel 450 export tank at Garyville in 2013 400 400 350 Low cost, high return dock expansions at Garyville and 300 275 245 Galveston Bay in design phase 250 MBD 200 150 Potential for 120 MBD 150 incremental gasoline expor
Slide 65: Increasing Throughputs and Lowering Costs
Increasing Throughputs and Lowering Costs Galveston Bay’s first 10 months Excellent HES record Higher refinery throughputs and lower operating costs Focused on reliability and yield improvements – >$38 MM margin improvements captured – Implementing MPC’s Refining Standards Strategic Macro Mids
Slide 66: Processing More Price Advantaged Crude Oil
Processing More Price Advantaged Crude Oil Galveston Bay’s first 10 months Canadian/ Bakken Eliminated foreign sweets and increased Canadian Heavy Permian Basin Seaway Keystone XL imports Longhorn BridgeTex Permian Express Galveston Foreign Kilgore North American crudes Bay Tanker increased from
Slide 67: Increasing Profitability
Increasing Profitability Galveston Bay: significant and low cost opportunities Expecting ~$100 MM of Annual Projected Synergies 160 synergies in 2013 120 Synergy projects $MM 80 – Building inter-refinery 40 connections to Texas City 0 refinery 2013E 2014E 2015E 2016E – Expanding dock capacity an
Slide 68: Galveston Bay: Sustaining expenditures trending lower
Galveston Bay Sustaining expenditures trending lower 1,000 800 600 $MM 400 200 0 2013E 2013E 2014E 2014E 2015E 2015E 2016E 2016E Original Capital Original Major Maintenance Current Capital Current Major Maintenance Note: Excludes synergy and other value accretive investments, excludes Tier 3 investm
Slide 69: Galveston Bay: Long-term opportunities
Galveston Bay Long-term opportunities Revamp crude and vacuum units – Optimize for future crude availability – Improve distillate recovery Add hydrotreating capacity – Move to 100% ULSD Evaluate gas oil hydrocracker options – Idle the smallest and oldest FCC – Increase ULSD yields Expand exp
Slide 70: Evaluating Garyville Resid Hydrocracker Project
Evaluating Garyville Resid Hydrocracker Project Conversion opportunity - leverages favorable market dynamics $130 MM sanctioned for front end engineering and design Increases ULSD production by 28 MBD and decreases gas oil purchases Converts low value resid to ULSD using hydrogen produced from
Slide 71: Don Templin
Don Templin Senior Vice President and Chief Financial Officer
Slide 72: Disciplined Capital Management
Disciplined Capital Management Strong earnings and cash flow base Attractive capital investment opportunities Shareholder-oriented approach to business investments and capital return Ongoing dividend growth and share repurchase strategy Continuing transparency initiatives Strategic Macro M
Slide 73: Delivering Results
Delivering Results ($MM, except where noted) Thru 2011 2012 Q3 2013* Earnings** 2,389 3,389 1,486 ROCE 19% 25% 14% Dividend Increase 25% 40% 20% Share Repurchases 0 1,350 2,341 Capital Spending*** 1,323 1,460 906 Debt-to-Capital 26% 22% 23% * Except ROCE, which is annualized ** Represents Net Income
Slide 74: Generating Significant Cash Flow Through All Cycles
Generating Significant Cash Flow Through All Cycles Pro forma EBITDA adjusted for current configuration Pro forma EBITDA 8,000 7,000 6,000 5,000 $MM 4,000 3,000 2,000 1,000 0 2008 2009 2010 2011 2012 2008 thru 2012 Mid Cycle Pipeline Transportation Speedway Depr. & Amort. less corporate expense Refi
Slide 75: Sustaining Core Liquidity Needs
Sustaining Core Liquidity Needs Minimum cash balance of $500 MM - $1.5 B Requirements Ongoing Operating Cash Flow Requirements – Maintenance/Sustaining Capital – Interest Payments – Dividend Payments Contingent Calls on Corporate Liquidity - Probability Adjusted – Contingent and Uncommitted Lett
Slide 76: Allocating Capital to Higher Valued Businesses
Allocating Capital to Higher Valued Businesses 2012 – 2016 Capital Investment Profile 4,000 3,500 3,000 2,500 $MM 2,000 1,500 1,000 500 0 2012 2013E* 2014E 2015E 2016E Refining and Marketing, excluding Midstream Midstream Pipeline Transportation Speedway Other Garyville resid upgrade project committ
Slide 77: Ongoing Philosophy of Capital Returns
Ongoing Philosophy of Capital Returns Support core liquidity requirements Target capital return of 100% of free cash flow through cycle Operating Cash Flow $X Less: Maintenance Capital Expenditures $Y Less: Attractive Return Profile Investment $Z (Internal/External) Free Cash Flow $F Forms of
Slide 78: Sustaining Capital Returns Since Spin
Sustaining Capital Returns Since Spin Cumulative Return of Capital Since July 1, 2011 5,000 $4.6 B 4,500 4,000 3,500 3,000 $MM 2,500 2,000 1,500 1,000 500 0 Q3 2011 Q4 2011 Q1 2012 Q2 2012 Q3 2012 Q4 2012 Q1 2013 Q2 2013 Q3 2013 Dividends Share repurchases Strategic Macro Midstream/ Speedway Refinin
Slide 79: Returning Substantial Capital
Returning Substantial Capital 2.5x free cash flow LTM LTM Ended September 30, 2013 7,000 6,000 Dividends and share 5,000 repurchases* ~247% of 3,315 Free Cash 4,000 Flow** $MM Free Cash Cash capital expenditures, Flow** acquisitions and investments 1,340 3,000 Net cash provided by 2,000 4,093 operat
Slide 80: Preliminary 1Q 2014 Outlook
Preliminary 1Q 2014 Outlook Projected Q1 2014 Q1 2013 Crude throughput 1.55 MBD 1.43 MBD Total throughput 1.85 MBD 1.67 MBD Percent of WTI-priced crude 17% 22% Refinery direct operating costs in Refining and Marketing gross margin*: Turnaround and major maintenance $3.00 $1.15 Depreciation and amort
Slide 81: Further Enhancing Transparency
Further Enhancing Transparency Market data and key metrics, effective January 2014 Gross margin calculation change – Exclude direct operating costs – Calculate on per barrel of throughput basis Regional data for Midwest and Gulf Coast regions – Crude and feedstock throughput – WTI and sour crude
Slide 82: Gary Heminger
Gary Heminger President and Chief Executive Officer
Slide 83: Our Priorities
Our Priorities Maintain top tier safety and environmental performance Sustain our focus on shareholder returns Balance capital returns with value-enhancing investments Grow higher valued and stable cash flow businesses – Midstream/MPLX – Speedway Enhance the margins in our refining operati
Slide 84: Strategic Overview Macro
Strategic Macro Midstream/ Speedway Refining Financial Summary Overview Outlook MPLX Overview Q&A
Slide 85: Appendix
Appendix 85
Slide 86: MPC Presenters
MPC Presenters Gary Heminger Garry Peiffer Don Templin Tony Kenney President and MPC Executive Vice President, Senior Vice President President Chief Executive Officer Corporate Planning and Investor and Chief Financial Speedway LLC & Government Relations Officer MPLX President Rich Bedell Mike Palme
Slide 87: Capital Expenditures & Investments
Capital Expenditures & Investments ($MM) 2014 MPC Budget Refining & Marketing (R&M) 864 Midstream included in R&M 348 Speedway 327 Pipeline Transportation* 760 Corporate and Other 133 Total Capital Expenditures & Investments 2,432 * Including MPLX (100% basis) ($MM) 2014 MPLX Budget (100% basis) Gro
Slide 88: EBITDA Reconciliation to Net Income Attributable to MPC
EBITDA Reconciliation to Net Income Attributable to MPC ($MM) 2007 2008 2009 2010 2011 2012 2013 1Q 2Q 3Q 4Q 1Q 2Q 3Q Net income attributable to MPC 2,262 1,215 449 623 2,389 596 814 1,224 755 725 593 168 Less: Net interest and other financial income (costs) 165 30 31 12 (26) (22) (17) (25) (45) (48
Slide 89: Estimated MPLX LP Adjusted EBITDA and Distributable Cash Flow Reconciliation
Estimated MPLX LP Adjusted EBITDA and Distributable Cash Flow Reconciliation from Net Income ($MM) 2013E 2014E Net income 137 183 Less: Net income attributable to MPC-retained interest 65 83 Net income attributable to MPLX LP 72 100 Plus: Net income attributable to MPC-retained interest 65 83 Deprec
Slide 90: Reconciliation: MPC Free Cash Flow
Reconciliation MPC Free Cash Flow to Net Cash Provided by (Used in) Operations ($MM) 2012 2013 (Quarter to date) 4Q 1Q 2Q 3Q Net cash provided by (used in) operating activities 2,043 2,079 (436) 407 Additions to property, plant and equipment (403) (195) (229) (309) Acquisitions* - (1,493) (22) - Inv
Slide 91: Reconciliation: Speedway Segment EBITDA
Reconciliation Speedway Segment EBITDA to Speedway Segment Income from Operations ($MM) 2010 2011 2012 2013E 2014E 2015E 2016E Speedway Segment Income from Operations 293 271 310 371 380 431 493 Plus: Depreciation and Amortization 111 110 114 111 120 129 137 Speedway Segment EBITDA 404 381 424 482 5
Slide 92: Market Indicators Used in Project EBITDA Calculations
Market Indicators Used in Project EBITDA Calculations 2012 2014 – 20 ULSD (USGC; $/BBL) $128.14 $136.33 No. 6, 3.0% S Fuel Oil (USGC; $/BBL) $99.32 $94.48 LLS (St. James, LA; $/BBL) $111.67 $114.82 Natural Gas (Henry Hub, LA; $/MMBTU) $2.79 $4.75 92
Slide 93: Refinery Unit and Production Capacity: Garyville
Refining: Refinery Unit and Production Capacity (1) Garyville, Louisiana BPCD Unless Noted Garyville Crude 522,000 Vacuum Distillation 265,100 Coking 86,000 Catalytic Cracking 131,100 Catalytic Reforming 121,200 Catalytic Hydrocracking 91,200 Catalytic Hydrotreating 520,200 Alkylation 30,900 Polymer
Slide 94: Refinery Unit and Production Capacity: Galveston Bay
Refining: Refinery Unit and Production Capacity (1) Galveston Bay, Texas BPCD Unless Noted Galveston Crude 451,000 Vacuum Distillation 225,200 Residual Hydrocracking 63,000 Coking 29,800 Catalytic Cracking 163,900 Catalytic Reforming 124,300 Catalytic Hydrocracking 65,600 Catalytic Hydrotreating 375
Slide 95: Refinery Unit and Production Capacity: Catlettsburg
Refining: Refinery Unit and Production Capacity (1) Catlettsburg, Kentucky BPCD Unless Noted Catlettsburg Crude 242,000 Vacuum Distillation 115,900 Coking — Catalytic Cracking 98,800 Catalytic Reforming 49,900 Catalytic Hydrocracking — Catalytic Hydrotreating 258,500 Alkylation 20,000 Polymerization
Slide 96: Refinery Unit and Production Capacity: Robinson
Refining: Refinery Unit and Production Capacity (1) Robinson, Illinois BPCD Unless Noted Robinson Crude 212,000 Vacuum Distillation 67,900 Coking 27,600 Catalytic Cracking 51,800 Catalytic Reforming 76,500 Catalytic Hydrocracking 27,100 Catalytic Hydrotreating 177,700 Alkylation 11,900 Polymerizatio
Slide 97: Refinery Unit and Production Capacity: Detroit
Refining: Refinery Unit and Production Capacity (1) Detroit, Michigan BPCD Unless Noted Detroit Crude 123,000 Vacuum Distillation 70,300 Coking 28,000 Catalytic Cracking 35,200 Catalytic Reforming 20,400 Catalytic Hydrocracking — Catalytic Hydrotreating 113,600 Alkylation 6,200 Polymerization / Dime
Slide 98: Refinery Unit and Production Capacity: Texas City
Refining: Refinery Unit and Production Capacity (1) Texas City, Texas BPCD Unless Noted Texas City Crude 84,000 Vacuum Distillation — Coking — Catalytic Cracking 55,600 Catalytic Reforming 10,500 Catalytic Hydrocracking — Catalytic Hydrotreating — Alkylation 13,800 Polymerization / Dimerization — Ar
Slide 99: Refinery Unit and Production Capacity: Canton
Refining: Refinery Unit and Production Capacity (1) Canton, Ohio BPCD Unless Noted Canton Crude 80,000 Vacuum Distillation 33,300 Coking — Catalytic Cracking 24,700 Catalytic Reforming 20,400 Catalytic Hydrocracking — Catalytic Hydrotreating 87,900 Alkylation 7,100 Polymerization / Dimerization — Ar