Marathon Petroleum Corporation · NYSE:MPC
Marathon Petroleum — Investor Day (December 2015)
116 slides from Marathon Petroleum's investor day presentation, Dec 3, 2015
Slide 1: 2015 Analyst & Investor Day
2015 Analyst & Investor Day December 3, 2015
Slide 2: Meeting Agenda
Meeting Agenda Welcome and Introductions Tom Kaczynski Strategic Overview Gary Heminger Macro Outlook Don Templin Refining Rich Bedell Speedway Tony Kenney Midstream/MPLX Pam Beall, Frank Semple & Nancy Buese Financial Overview Tim Griffith Summary and Q&A Gary Heminger 2
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 MarkWest Energy Partners, L.P. ("MWE"). These forward-looking statements relate to, among other thing
Slide 4: Strategic Overview
Strategic Overview Gary Heminger President and Chief Executive Officer
Slide 5: Transformed MPC Since Spinoff
Transformed MPC Since Spinoff Strategic Objective Achievements Detroit Heavy Oil Upgrade Condensate splitters and light crude capacity expansion Enhance refining margins Increased distillate capacity Expanded export capacity Grow Speedway and Increased Speedway light product sales volumes 114% Brand
Slide 6: Delivering Shareholder Value through Transformation
Delivering Shareholder Value through Transformation $70 Strategic $60 combination Hess Retail $50 GBR acquisition acquisition $/Share $40 IPO of MPLX LP $30 MPC spinoff DHOUP $20 $10 2011 2012 2013 2014 2015 Source: Thomson Reuters Dividend Increases Note: All values adjusted for stock split in 2Q 2
Slide 7: Our Priorities for Continued Value Creation
Our Priorities for Continued Value Creation Strategic Objective How We Get There Maintain top tier safety and Continued focus on safety and environmental environmental performance stewardship – license to operate Return free cash flow to shareholders through strong Balance capital returns with and g
Slide 8: Continued Focus on Improving Safety and Environmental Performance
Continued Focus on Improving Safety and Environmental Performance Safety OSHA Recordable Incident Rate and Days Away Rate 0.80 (Employee and Contractor History) 0.61 ORIR 0.60 0.50 0.45 0.45 0.41 0.39 DAR 0.40 0.32 0.24 0.20 0.1 0.08 0.12 0.03 Industry 0.03 0.03 0.06 0.04 Avg. ORIR 0.00 Industry 200
Slide 9: Returning Capital to Shareholders
Returning Capital to Shareholders Consistently Growing Base Dividend 0.35 +28% 350 $0.32 0.30 300 +19% $0.25 0.25 250 +20% $0.21 $/Share 0.20 +40% 200 $MM $0.175 $171 $171 0.15 +25% $141 $138 $136 $136 150 $129 $126 $123 $0.125 $119 $116 $116 $113 $122 $0.10 $89 0.10 $87 $85 100 $71 0.05 50 0.00 0 Q
Slide 10: Returning Capital to Shareholders: Share Repurchases
Returning Capital to Shareholders Continuing share repurchases Cumulative Share Repurchases 8,000 Since July 2011 6,000 $10 B share repurchases authorized $7.05 B returned to shareholders through $MM 4,000 repurchases 27 percent of 2,000 June 30, 2011 shares outstanding repurchased 0 Strategic
Slide 11: Growing More Stable Cash-Flow Business Segments
Growing More Stable Cash-Flow Business Segments Speedway Corporate 2016 Capital Budget – $4.2 B & Other 3% MPC – $2.5 B 9% Refining Refining & Marketing, excluding MPLX Sustaining Midstream – $1,145 MM Capital 16% Midstream* – $828 MM 41% Speedway – $361 MM 11% Refining Corporate & Other – $
Slide 12: Creating a More Diversified Portfolio
Creating a More Diversified Portfolio 2020E EBITDA Midstream R&M 2015E EBITDA(1) Midstream Speedway Speedway R&M Source: MPC estimates (1) Includes one month of MarkWest EBITDA Strategic Macro Midstream/ Financial Summary Refining Speedway 12 12/1/2015 Overview Overview MPLX Overview Q&A
Slide 13: MPLX/MWE Combination is Highly Strategic and Valuable to MPC
MPLX/MWE Combination is Highly Strategic and Valuable to MPC MarkWest adds a world-class natural gas/NGL business – Adds scale and diversity to MPC – Platform to capitalize on massive infrastructure build-out – Significant combined commercial opportunities across value chain – Synergies and natura
Slide 14: Driving Top Tier Financial Performance Through Sustainable Competitive Advantages
Driving Top Tier Financial Performance Through Sustainable Competitive Advantages Fully integrated system provides optionality and flexibility Strategically located assets Value of MPLX Consistent and reliable operator Sustained performance through all cycles Capital discipline Positiv
Slide 15: Macro Outlook
Macro Outlook Don Templin Executive Vice President, Supply, Transportation and Marketing
Slide 16: Positive Macro Environment
Positive Macro Environment Lower crude price environment over the short to medium term due to strong global production – Downstream expected to perform well regardless of crude price environment U.S. shale production proving resilient in low price environment – Reducing costs and improving produ
Slide 17: Global Supply and Demand Will Continue to Find Equilibrium
Global Supply and Demand Will Continue to Find Equilibrium Most rebalancing will occur on supply side Lower prices support demand growth – Despite slowed global economic growth Lower prices reduce supply – Significant capital budget cuts – U.S. production peaked in April – Drilling rigs down o
Slide 18: Crude and Natural Gas Prices Support Domestic Refiners and Midstream Companies
Crude and Natural Gas Prices Support Domestic Refiners and Midstream Companies MPC Outlook WTI $40-$60/BBL Brent/WTI Spread $2-$5/BBL, wider at times LLS/WTI Spread $2-$5/BBL, transportation/quality based Brent/LLS Spread $0-$4/BBL Attractive, but narrowing as new pipelines Canadian Heavy Differenti
Slide 19: Opportunity Exists Amidst Crude Price Volatility
Opportunity Exists Amidst Crude Price Volatility WTI Daily Prices 100 Crude prices have been volatile 90 80 Price implications vary across industry 70 segments $/BBL 60 • Upstream: 50 − Greatest business impact 40 − Significant spending cuts 30 • Midstream: − Crude investments may slow, dependin
Slide 20: North American Production is Resilient
North American Production is Resilient 16 14 Actual Forecast Shale production growth has slowed 12 Canada Continued drilling 10 with improved efficiency has offset MMBD 8 U.S. Shale steep initial shale 6 declines 4 Long-term growth 2 U.S. Non-Shale is still expected 0 2010 2012 2014 2016 2018
Slide 21: Shale Producers Improving Efficiency
Shale Producers Improving Efficiency 700 Shale producers 600 becoming more efficient in low price environment 500 Producers are benefiting 400 from: − Reduced services costs BOED 300 (20-30%) − High grading acreage 200 − Improved drilling and completion efficiency 100 − Improved production per w
Slide 22: Distillate Leading World Liquids Demand
Distillate Leading World Liquids Demand Compounded 120 Annual Growth Rates Average product Actual Forecast 2014 vs. 2025 demand growth 100 +1.3% of 1.1 MMBD in 2016-2017 80 Other Distillate remains -1.0% the growth leader MMBD 60 Resid through 2025 40 +1.4% Heavy fuel oil Middle Distillate con
Slide 23: Distillate Also Leads U.S. Domestic Petroleum Fuels Demand
Distillate Also Leads U.S. Domestic Petroleum Fuels Demand Compounded 10 Actual Forecast Annual Growth Rates Gasoline demand 9 Gasoline 2014 vs. 2030 declines due to 8 -0.4% corporate average fuel Gasoline ex ethanol economy (CAFE) 7 -0.5% standards despite 6 increased travel Assuming 2014 vehic
Slide 24: Shale Crudes Strengthen Octane Market
Shale Crudes Strengthen Octane Market U.S. summer octane values were strong Lighter crude runs produce more light naphtha, increasing demand for octane Shale crudes yield a lower quality reformer feed Octane generation capacity has been relatively steady, incremental capacity required in the
Slide 25: U.S. Refiners have a Sustained Export Advantage
U.S. Refiners have a Sustained Export Advantage Access to lower cost feedstocks Low cost natural gas 2014 Region Utilization Large, complex refineries Rate High utilization rates North America 88% Sophisticated workforce MPC 95% Former Soviet Natural Gas Price Comparison 80% Union 20 Japan
Slide 26: Capitalizing on Growing U.S. Finished Product Exports
Capitalizing on Growing U.S. Finished Product Exports Gross U.S. Finished Product Exports MPC Finished Product Exports 1,800 350 1,600 300 1,400 250 1,200 1,000 200 MBD MBD 800 150 600 100 400 50 200 0 0 2010 2011 2012 2013 2014 2015 2010 2011 2012 2013 2014 2015 August August Other U.S. MPC YTD YTD
Slide 27: U.S. Natural Gas Production Growth Largely from Shale
U.S. Natural Gas Production Growth Largely from Shale 18 Actual Forecast U.S. natural gas supply 16 to grow by 3.3 MMBOED 14 (18 BCFD) by 2030 2015 EIA forecast lower 12 due to less LNG exports MMBOED Shale Gas 10 Lower global LNG prices a challenge for new U.S. 8 LNG projects 6 Tight Gas De
Slide 28: U.S. NGL Volume Growth Creates a Need for Incremental Infrastructure
U.S. NGL Volume Growth Creates a Need for Incremental Infrastructure 7 Supply growth will not be Actual Forecast derailed by lower prices 6 Rejected Total NGL production Ethane growth: 5 – 4.9% annually through 2020 4 – 2.2% from MMBD Purity Ethane 2020-2030 3 Ethane is rejected (retained in n
Slide 29: U.S. Natural Gas and NGL Trade Flows Changing
U.S. Natural Gas and NGL Trade Flows Changing 2000 2020 Paradigm shift from U.S. Northeast being a significant importer to a significant exporter Driven by Marcellus and Utica production growth Infrastructure continuing to build out to reflect changes in trade flows Strategic Macro Midstream/
Slide 30: MPC and MPLX have a Competitive Advantage
MPC and MPLX have a Competitive Advantage Positioned to perform well in both high and low price environments Fully integrated refining, midstream, and marketing network helps capture incremental value Efficient and flexible pipeline and marine crude connectivity Well connected to all major g
Slide 31: Refining
Refining Rich Bedell Senior Vice President, Refining
Slide 32: Increasing EBITDA and Driving Value
Increasing EBITDA and Driving Value Increasing EBITDA through process improvements Optimizing Galveston Bay and Texas City operations Investing in Galveston Bay Increasing distillate yield and conversion capacity Growing refined product export capacity Strategic Macro Midstream/ Financial
Slide 33: Investments Growing EBITDA
Investments Growing EBITDA Investments of $900 MM contributing approximately $600 MM EBITDA Growth Investment Incremental EBITDA 600 600 400 400 $MM $MM 200 200 0 0 2013 2014 2015E 2013 2014 2015E Strategic Macro Midstream/ Financial Summary Refining Speedway 33 12/1/2015 Overview Overview MPLX Over
Slide 34: Increasing EBITDA Through Continuous Process Improvements
Increasing EBITDA Through Continuous Process Improvements Process Improvements* Low or no investment 1,000 projects 800 Focus on technical Margin Improvement excellence 600 $MM Improvements in process unit performance 400 EBITDA improvement 200 of approximately $0.8 B since 2012 0 2013 2014
Slide 35: Improving Galveston Bay's Performance
Improving Galveston Bay’s Performance Reliability Crude Throughput % lost capacity for unplanned downtime 460 0% 440 2% 420 MBPD 400 4% 380 360 6% 2013 2014 3Q15 YTD 2013 2014 3Q15 YTD Environmental Safety 30 0.5 Recordable Rate 0.4 Incidents 20 0.3 0.2 10 0.1 0 0 2013 2014 3Q15 YTD 2013 2014 3Q15 Y
Slide 36: Galveston Bay Process Improvements and Synergies
Galveston Bay Process Improvements and Synergies* 700 EBITDA Improvement • Process improvements − Unit optimization 600 − Improved unit yields 500 − Bottlenecks removed − Catalyst changes • Synergy capture 400 $MM 300 − Crude optimization 200 − Process unit utilization • Future improvements 100 − Sh
Slide 37: South Texas Asset Repositioning (STAR) Program
South Texas Asset Repositioning (STAR) Program Creating a World-Class Refining Complex ~$2.0 B of total investment Increase residual oil (resid) processing – Expand resid hydrocracker – Improve gas oil recovery Revamp crude unit – Increase distillate and gas oil recovery – Improve reliability
Slide 38: South Texas Asset Repositioning (STAR) Program: Investment and EBITDA
South Texas Asset Repositioning (STAR) Program Creating a World-Class Refining Complex Investment 2,000 265 Improve EBITDA 1,500 680 $MM 1,000 Staged incremental investment 550 500 330 – 2016-2020 163 0 2016E & 2017E 2018E 2019E 2020E prior Rapid payback on investment EBITDA 800 Total invest
Slide 39: Galveston Bay-Texas City World-Class Refining Complex
Galveston Bay-Texas City World-Class Refining Complex Integrated Galveston Bay-Texas City Refinery Post-STAR Galveston BPCD Unless Noted Bay* Crude 585,000 Vacuum Distillation 225,200 Residual Hydrocracking 94,300 Coking 29,800 Catalytic Cracking 184,800 Catalytic Reforming 124,300 Catalytic Hydrocr
Slide 40: Capturing Value in ULSD Demand Growth
Capturing Value in ULSD Demand Growth Industry-Leading Position by 2020 40 Distillate Hydrotreating Capacity as a % of Crude 35 30 25 20 15 10 5 0 MPC PSX XOM MPC BP HFC VLO CVX TSO 2020E 2014 Sources: 2014 O&G Journal and internal MPC data Strategic Macro Midstream/ Financial Summary Refining Speed
Slide 41: Reaching Higher-Value Markets
Reaching Higher-Value Markets Increasing Finished Product Export Capacity Export Capacity 600 510 500 115 395 400 345 30 320 20 MBD 300 200 100 0 2013 2014 2015E 2018E Base Garyville Galveston Bay Strategic Macro Midstream/ Financial Summary Refining Speedway 41 12/1/2015 Overview Overview MPLX Over
Slide 42: Producing Higher-Value Products
Producing Higher-Value Products Investments of ~$360 MM contribute ~$130 MM EBITDA Fluid Catalytic Cracking (FCC) projects Increase alkylate and light products Garyville FCC/Alky – 2016 Investment: ~$220 MM IRR 27% Detroit FCC – 2018 Investment: ~$140 MM IRR 26% Strategic Macro Midstream/ Financial
Slide 43: Investments Growing EBITDA
Investments Growing EBITDA Investments of $2.9 B contributing approximately $1 B EBITDA Growth Investment Incremental EBITDA 1,000 1,200 1,000 800 800 600 $MM $MM 600 400 400 200 200 0 0 Prior to 2016E 2017E 2018E 2019E 2020E 2016E 2017E 2018E 2019E 2020E 2016 South Texas Asset Repositioning (STAR)
Slide 44: Speedway
Speedway Tony Kenney President, Speedway LLC
Slide 45: Speedway Growing Stable Cash Flow
Speedway Growing Stable Cash Flow Top tier performer in convenience store industry Accelerating organic growth strategy – Convenience stores – Commercial fueling locations Pursuing high quality acquisition growth Realizing benefits from Speedway’s acquired locations well ahead of schedule
Slide 46: Top Tier Performance
Top Tier Performance EBITDA 35 30 $M/Store/Month 25 20 15 10 5 0 Speedway Murphy USA CST Casey's Couche-Tard ETP Alon USA Delek Western Refining 100 Total Margin $M/Store/Month 80 60 40 20 0 ETP Speedway CST Casey's Couche-Tard Murphy Western Delek Alon USA USA Refining Light Product Merchandise Spe
Slide 47: Top Tier Performance: Volume and Merchandise
Top Tier Performance Light Product Volume 300 M Gal/Store/Month 250 200 150 100 50 0 Murphy USA Speedway ETP CST Couche-Tard Western Delek Casey's Alon USA Refining 200 Merchandise Sales $M/Store/Month 150 100 50 0 Murphy USA Speedway ETP Couche-Tard Casey's CST Western Delek Alon USA Refining Sourc
Slide 48: Emphasizing Organic Growth Strategy
Emphasizing Organic Growth Strategy Capex* 500 500 400 400 400 361 318 292 75 150 300 29 155 $MM 100 135 200 63 95 250 100 189 190 145 111 0 2014 2015E 2016E 2017E 2018E Legacy Speedway Construction All Other Capital Acquired Locations 40 Project Rate of Return 30 ROR % 20 ~21% ~23% 10 ~18% ~18% 0 R
Slide 49: Organic Growth in Existing Markets
Organic Growth in Existing Markets Fill in voids in existing markets Continue focus in Pennsylvania and Tennessee Growth opportunities in Georgia, South Carolina and Florida panhandle As of Oct. 31, 2015 Strategic Macro Midstream/ Financial Summary Refining Speedway 49 12/1/2015 Overview Overv
Slide 50: Capitalizing on Diesel Demand Growth
Capitalizing on Diesel Demand Growth Trucking remains a dominant mode of transportation U.S. freight volumes expected to increase by 29% Diesel demand growth expected to outpace gasoline Build out commercial fueling lane network – ~150 CFL locations Source: American Trucking Association Stra
Slide 51: Convenience Store Industry Ripe for Consolidation
Convenience Store Industry Ripe for Consolidation Highly fragmented industry 16% Small operators under pressure 5% 5% – Limited economies of scale 63% – Competitive environment 11% Store performance – top vs. bottom – Gap continues to widen Industry Ownership - Store Count 1 96,318 2 - 50 17,2
Slide 52: Pursuing Attractive and Accretive Acquisitions
Pursuing Attractive and Accretive Acquisitions Primary objectives – Leverage MPC’s supply and logistical network Increase assured sales Optimize terminal utilization – Fill market voids in Speedway footprint High quality assets Speedway Marketing Area Growth platform Speedway Location – Ca
Slide 53: Following Through on Goals for Acquired Locations
Following Through on Goals for Acquired Locations Invest ~$570 MM in conversions, remodels and maintenance Convert 1,245 stores to Speedway brand and technology platforms Remodel approximately 700 locations to drive marketing enhancements Achieve $190 MM in annual synergies in 2017 Generat
Slide 54: Accelerating Store Conversions and Remodels
Accelerating Store Conversions and Remodels Expect to complete ahead of schedule Projected to be under budget Acceleration of synergy capture and best practices Implementation of key Speedway marketing platforms Foundation for sales uplift and merchandise margin Unconverted Locations enhan
Slide 55: Exceeding Expected Synergies
Exceeding Expected Synergies 250 Synergies and Marketing Enhancements 225 200 190 149 155 150 $MM 120 100 75 47 50 20 0 2014E 2014 2015E 2015E 2016E 2016E 2017E 2017E Guidance* Speedway Synergies R&M Synergies *Based on original announcement guidance in May 2014 Strategic Macro Midstream/ Financial
Slide 56: Exceeding Expected EBITDA
Exceeding Expected EBITDA Speedway Acquired Locations EBITDA 400 365 348 350 300 250 250 $MM 200 150 100 50 0 1st Twelve 1st Twelve 2017E Months Months EBITDA** Estimate* Actual* Source: MPC internal estimates *Sept. 30, 2014 though Sept. 30, 2015 **Based on original announcement guidance in May 201
Slide 57: Speedway Summary – Driving EBITDA Growth
Speedway Summary – Driving EBITDA Growth Top tier performer in convenience store industry – #1 in EBITDA/store/month vs. public peers Accelerating growth through organic projects – Filling in existing markets – Commercial fueling lane network Continue to accelerate benefits from Speedway’s acq
Slide 58: Midstream/MPLX
Midstream/MPLX Pam Beall - President, MPLX Frank Semple - Chairman, President and CEO, MarkWest Nancy Buese - Executive Vice President and CFO, MarkWest
Slide 59: Leveraging Strengths Across the Hydrocarbon Value Chain
Leveraging Strengths Across the Hydrocarbon Value Chain Crude Oil and Refined Products Natural Gas and NGLs Refining Gathering Logistics Processing Fuels Distribution Fractionation Large and growing The right assets, in the drop-down portfolio right place Strong sponsor committed Large organ
Slide 60: Extraordinary Backlog of Organic Growth and Drop-down Opportunities
Extraordinary Backlog of Organic Growth and Drop-down Investment Opportunities of $27 - 33 B to Support High Distribution Growth MPC Drop-down Capital (Assumes 8-10x EBITDA multiple) $ 13 - 16 B MPLX Organic Capital through 2018* $0.8 B MarkWest Organic Capital 2016 to 2020 ($1.5 B annual run-rate)
Slide 61: Growing MPC's Drop-down Inventory
Growing MPC’s Drop-down Inventory Provides Visibility to Significant Growth MPC Drop-down Capital (Assumes 8-10x EBITDA multiple) $ 13 - 16 B $0 $2 $4 $6 $8 $10 $12 $14 $16 $18 $20 $22 $24 $26 $28 $30 $32 $34 ● ~ 5,400 miles of additional pipelines (owns, leases or has an ownership interest) Pipelin
Slide 62: Legacy MPLX Organic Growth Backlog
Legacy MPLX has Attractive Organic Growth Backlog Estimated to Generate ~$125 MM of EBITDA MPLX Organic Capital through 2018(1) $ 0.8 B $0 $2 $4 $6 $8 $10 $12 $14 $16 $18 $20 $22 $24 $26 $28 $30 $32 $34 Cornerstone and Utica Build-out Pipeline and Tank Farm Expansions Industry solution for Utica l
Slide 63: Connecting Production from Resource Plays to Downstream Markets
Connecting Production from High Performance Resource Plays to Global and U.S. Downstream Markets Significant Commercial Synergies and Opportunities are Created Across the Global Value Chain Markets Downstream • Feedstock supply from Midstream midstream assets • Growing blendstock • Gathering, proces
Slide 64: MarkWest is One of the Largest NGL and Natural Gas Midstream Service Providers
MarkWest is One of the Largest NGL and Natural Gas Midstream Service Providers Processing ~75% of Total Rich-Gas Production from the Marcellus and Utica Interstate and Pipeline Quality Intrastate Gas Natural Gas to Transmission Utilities, Homeowners Pipelines and Factories • Ethane Raw Gathering • P
Slide 65: MarkWest is Focused in High IRR Resource Plays
MarkWest is Focused in High IRR Resource Plays IRR by Resource Play 20% 17% 15% 15% 14% ~75% 2015 Operating Income Forecasted 15% 13% 13% from Marcellus & Utica 12% 12% 11% 10% 10% 10% 10% 10% 9% 9% 9% 10% 8% 8% 7% 7% 7% 6% 6% 6% 6% 6% 5% 4% 4% 4% 3% 3% 3% 5% 3% 3% 2% 2% 1% 1% 0% Year: 2015E 2016E 2
Slide 66: Marcellus/Utica is the Leading U.S. Natural Gas Growth Play
The Marcellus/Utica Resource Play is the Leading U.S. Natural Gas Growth Play 65 23 Marcellus & Utica account for Marcellus & Utica – Billion Cubic Feet per Day (BCF/D) 64 over 20% of total U.S. Gas Supply 21 Rest of U.S. – Billion Cubic Feet per Day (BCF/D) Marcellus & Utica 63 19 62 17 61 15 60 13
Slide 67: MarkWest's Best-in-Class Service Creates Value for Producer Customers
MarkWest’s Best-in-Class Service Creates Significant Value for Producer Customers Consistent Approach Leads to Superior Execution Commercial Strategy – Develop a deep understanding of our customer’s business – Create unique solutions and competitive advantages – Build trust and long-term relations
Slide 68: MarkWest Robust Portfolio of Growth Projects
MarkWest has Robust Portfolio of Growth Projects Expected to Deliver ~$1 B of EBITDA Southwest Northeast MarkWest Organic Capital 2016 to 2020 ($1.5 B annual run-rate) $ 7.5 B $0 $2 $4 $6 $8 $10 $12 $14 $16 $18 $20 $22 $24 $26 $28 $30 $32 $34 Organic Growth Opportunities in the Northeast: Antrim E
Slide 69: Leveraging Premier Positions Across the Value Chain
Leveraging Premier Positions Across the Value Chain with Substantial Incremental Combined Opportunities MarkWest/MPLX/MPC Synergistic Capital $ 6-9B $0 $2 $4 $6 $8 $10 $12 $14 $16 $18 $20 $22 $24 $26 $28 $30 $32 $34 Opportunity Investment 1 Northeast (N.E.) alkylation facility $1.5 - 2.0 B 4 2 N.E.
Slide 70: Butane to Alkylate (BTA) Opportunity
Butane to Alkylate (BTA) – Developing Mt. Belvieu Capabilities in the Northeast: $1.5 - 2 B of Opportunity Alkylate is an ideal gasoline blending Enhancing the gasoline component that will become increasingly blendstock value chain valuable with pending fuel regulations (Tier 3, NAAQS, CAFÉ) Midwe
Slide 71: Northeast and Long-Haul NGL Pipeline Development
Northeast and Long-Haul NGL Pipeline and Related Infrastructure Development with $1 – 1.5 B in Opportunities EAST COAST NGL/Light Products 1 BLENDING 1 TERMINALS to East Coast - Large-scale East Coast LPG export terminal MarkWest - Rail/pipeline to East Coast export terminal Northeast - Optionality
Slide 72: Rogersville Shale Infrastructure Opportunity
Develop Infrastructure to Support the Emerging Rogersville Shale and Other Unconventional Northeast Reservoirs with up to $1 B of Opportunity Highly prospective play in West Virginia West Virginia and Kentucky Siloam Cobb MarkWest strategically positioned to Catlettsburg Kenova support developme
Slide 73: Expanding Dry Gas Gathering in Ohio, Pa., and WVa.
Expanding Dry Gas Gathering in Ohio, Pa., and WVa. with $500 MM - 1.0 B of Opportunity The Utica Shale is potentially the most economically viable dry gas play in the U.S. Existing Ohio gathering system is critical for development of the highly productive and economic dry gas Utica acreage New
Slide 74: Overall Midstream Growth Investments Contributing Approximately $1.3 B EBITDA
Overall Midstream Growth Investments of over $9 B Contributing Approximately $1.3 B EBITDA(1) MarkWest Growth Investments - Cash Flow Return Profile 24 to 36 months $7.5 B of forecasted ~$1 B of Mid-2022 ~7.0x Cash Flow growth capital to be Incremental Run-Rate Multiple invested from 2016-2020 Cash
Slide 75: Peer-Leading Distribution Growth at MPLX
Consistent History of Peer-Leading Distribution Growth at MPLX to Continue 0.50 24% CAGR Since IPO 0.45 0.40 $/Unit 0.35 0.4700 0.4400 0.4100 0.30 0.3825 0.3575 0.3425 0.3275 0.3125 0.25 0.2975 0.2850 0.2625* 0.2725 0.20 4Q12 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 Coverage 1.25x 1.36
Slide 76: Strong Sponsor has Many Options to Support Distribution Growth
Strong Sponsor has Many Options to Support Distribution Growth MPC is a Fortune 25 Company with ~$30 B market cap that has a large, investment grade balance sheet and significant liquidity/free cash flow Incubate growth projects at the parent Incentive distribution right give-backs, caps or othe
Slide 77: MPLX has Strong Financial Flexibility
MPLX has Strong Financial Flexibility to Manage and Grow Asset Base Committed to maintaining investment grade credit profile and financial flexibility Expected pro forma debt of ~$5,474 MM(1) at close Anticipated leverage of 4.3x(2) at close Manage to 4.0x debt to EBITDA(2) Limited refinan
Slide 78: Combined Entity Presents a Compelling Value Proposition for Investors
Combined Entity Presents a Compelling Value Proposition for Investors 1 Bloomberg Consensus estimates as of Nov. 16, 2015 (Regression line excludes MPLX (Current)) Strategic Macro Midstream/ Financial Summary Refining Speedway 78 12/1/2015 Overview Overview MPLX Overview Q&A
Slide 79: Financial Overview
Financial Overview Tim Griffith Senior Vice President and Chief Financial Officer
Slide 80: Value Creation and Disciplined Capital Management
Value Creation and Disciplined Capital Management Strong earnings and cash-flow base Attractive investment opportunities across the enterprise Balanced and shareholder-oriented approach to investments in the business and capital return Through-cycle dividend growth and consistent return of c
Slide 81: Consistently Delivering Strong Results
Consistently Delivering Strong Results ($MM, except where Thru noted) 2011 2012 2013 2014 3Q 2015* Earnings** 2,389 3,389 2,112 2,524 2,665 Cash from Operations 3,309 4,492 3,405 3,110 3,253 ROCE 19% 25% 15% 16% 20% Capital Spending*** 1,323 1,460 1,427 2,023 1,482 Debt-to-Capital 26% 22% 23% 37% 34
Slide 82: Strong Liquidity and Capitalization
Strong Liquidity and Capitalization Committed to maintaining investment grade credit profile and financial flexibility Operate with prudent leverage and strong liquidity throughout the refining cycle Liquidity and Capitalization As of Immediately Available Liquidity ($MM except ratio data) 9/30/
Slide 83: Generating Significant Cash Flow Through All Cycles
Generating Significant Cash Flow Through All Cycles Pro forma EBITDA Adjusted for Current Configuration Pro Forma EBITDA 10,000 8,000 6,000 $MM 4,000 2,000 0 2008 2009 2010 2011 2012 2013 2014 2015 (LTM) 2008 thru As of 9/30 3Q15 Mid- Refining and Marketing Speedway Cycle Pipeline Transportation Dep
Slide 84: Investments Drive Significant EBITDA Growth
Investments Drive Significant EBITDA Growth Growth Investments Incremental EBITDA 3,500 3,500 3,000 3,000 2,500 2,500 2,000 2,000 $MM $MM 1,500 1,500 1,000 1,000 500 500 0 0 2016E 2017E 2018E 2019E 2020E 2016E 2017E 2018E 2019E 2020E Refining & Marketing, Excl. Midstream Speedway MPC Midstream MPLX
Slide 85: Philosophy of Ongoing Capital Returns
Philosophy of Ongoing Capital Returns Support core liquidity requirements Target capital return of 100% of free cash flow through-cycle* Preferred forms of capital return: – Regular quarterly dividend with through-cycle growth profile – Share repurchases – Special dividend consideration View
Slide 86: Sustaining Core Liquidity Under All Environments
Sustaining Core Liquidity Under All Environments $50 - 75 Crude Price Environment 6,000 4.4 - 5.6 B Crude Price Sensitivity $75/BBL Crude Cash target changes by ~$40 MM 5,000 1,200 1,000 Operating for each $1 change in crude price Requirements primarily due to working capital impact (Maintenance
Slide 87: Opportunity Set for Investment is Expanded
Opportunity Set for Investment is Expanded Multiple Funding Options - Extensive Financial Flexibility MPC Sponsor Support for MPLX Capital Sources Capital Sources Earnings Equity Earnings MLP Distribution Incubate Projects Equity (Units) MLP Proceeds Growth Management Debt Capital Markets • Capacity
Slide 88: Disciplined Approach to Capital Allocation
Disciplined Approach to Capital Allocation Prioritization and discipline around capital spending opportunities across the enterprise Investments must achieve or exceed risk-adjusted hurdle rates Target Business Hurdle Rate Midstream ~10% Speedway ~15% Refining ~20% Favor projects that create g
Slide 89: Expanding Cash Flow Adds Value to MPC
Expanding Cash Flow Adds Value to MPC Illustrative Current Value to MPC Shareholders(1) Range of illustrative values based on potential total distributions to MPC in 2019 $43 B $33 B 40x GP Multiple $23 B 30x GP Multiple Value from GP Distributions 20x GP Multiple and IDRs Value from LP Distribution
Slide 90: Peer Leading Return on Capital
Peer Leading Return on Capital 20% Return on Capital Employed 16% Execution on highest 15% return projects 15% 15% 13% Disciplined approach 11% to capital spend 10% 10% Peer leading asset efficiency and utilization 5% Consistent focus of optimizing capital structure 0% MPC PSX VLO TSO PBF HF
Slide 91: Accounting Treatment of Turnaround Costs
Accounting Treatment of Turnaround Costs MPC expenses turnaround costs and select investments – Supports immediate use of tax deduction and cash tax benefit – Represent 60%-70% of turnaround and major maintenance costs Incremental EBITDA $500 MM $1,000 MM Annual EBITDA impact $500 MM to $1,000 M
Slide 92: Key Valuation Considerations
Key Valuation Considerations Value of integrated management for MPC and MPLX Disciplined, balanced approach to capital allocation and capital return Growth potential for midstream assets and MPLX Premier refining system balanced in PADD II and PADD III – Optimized seven-plant system allows f
Slide 93: Gary Heminger
Gary Heminger President and Chief Executive Officer
Slide 94: Driving Top Tier Financial Performance Through Sustainable Competitive Advantages
Driving Top Tier Financial Performance Through Sustainable Competitive Advantages Fully integrated system provides optionality and flexibility Strategically located assets Value of MPLX Consistent and reliable operator Sustained performance through all cycles Capital discipline Positiv
Slide 95: Strategic Overview Macro
Strategic Macro Midstream/ Financial Summary Refining Speedway 95 12/1/2015 Overview Overview MPLX Overview Q&A
Slide 96: Appendix
Appendix 96
Slide 97: Attending Officers
Attending Officers Gary R. Heminger Donald C. Templin Timothy T. Griffith MPC President and Chief MPC Executive Vice President, MPC Senior Vice President and Executive Officer Supply, Transportation and Chief Financial Officer Marketing Frank M. Semple Nancy K. Buese Pamela K.M. Beall MarkWest Chair
Slide 98: Attending Officers (cont.)
Attending Officers (cont.) Anthony R. Kenney Richard D. Bedell C. Michael Palmer Speedway President MPC Senior Vice President, Refining MPC Senior Vice President, Supply, Distribution and Planning Tom Kaczynski John J. Quaid MPC Vice President, MPC Vice President and Finance and Treasurer Controller
Slide 99: Fully Integrated Downstream System
Fully Integrated Downstream System Refining and Marketing Seven-plant refining system with ~1.8 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. ~5,6
Slide 100: MPC vs. Peer Companies' Operating Income per Barrel
MPC vs. Peer Companies’ Operating Income per Barrel Operating Income Per Barrel of Crude Throughput** 20 MPC’s Rank 15 Competitor Range 1 2 10 2 $/BBL 5 1 6 3 1 3 2 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 2014 2015 September YTD Prelimin
Slide 101: Annual Price and Margin Sensitivities
Annual Price and Margin Sensitivities $MM (After Tax) LLS 6-3-2-1 Crack Spread* Sensitivity ~$450 (per $1.00/barrel change) Sweet/Sour Differential** Sensitivity ~$220 (per $1.00/barrel change) LLS-WTI Spread*** Sensitivity ~$90 (per $1.00/barrel change) Natural Gas Price Sensitivity ~$140 (per $1.0
Slide 102: Reconciliations
Reconciliations Speedway Segment EBITDA to Segment Income from Operations ($MM) 2011 2012 2013 2014 2015E Speedway Segment Income from Operations 271 310 375 544 686 Plus: Depreciations and Amortization 110 114 112 152 254 Speedway Segment EBITDA 381 424 487 696 940 EBITDA to Net Income for Acquired
Slide 103: Segment EBITDA Reconciliation to Net Income Attributable to MPC
Segment EBITDA Reconciliation to Net Income Attributable to MPC ($MM) 2008 2009 2010 2011 2012 2013 2014 2015 1Q 2Q 3Q 4Q FY 1Q 2Q 3Q Net income attributable to MPC 1,215 449 623 2,389 3,389 2,112 199 855 672 798 2,524 891 826 948 Less: Net interest and other financial income (costs) 30 31 12 (26) (
Slide 104: EBITDA Reconciliation to Net Income Attributable to MPC
EBITDA Reconciliation to Net Income Attributable to MPC ($MM) 2014 2015 1Q 2Q 3Q 4Q 1Q 2Q 3Q Net income attributable to MPC 199 855 672 798 891 826 948 Less: Net interest and other financial income (costs) (46) (48) (50) (72) (81) (64) (70) Add: Net income attributable to noncontrolling interests 8
Slide 105: Refinery Unit and Production Capacity: Garyville
Refining: Refinery Unit and Production Capacity(1) Garyville, Louisiana BPCD Unless Noted Garyville Crude 539,000 Vacuum Distillation 282,200 Coking 88,800 Catalytic Cracking 131,100 Catalytic Reforming 121,600 Catalytic Hydrocracking 111,200 Catalytic Hydrotreating 538,700 Alkylation 31,400 ROSE –
Slide 106: Refinery Unit and Production Capacity: Galveston Bay
Refining: Refinery Unit and Production Capacity(1) Galveston Bay, Texas BPCD Unless Noted Galveston Crude 459,000 Vacuum Distillation 225,200 Residual Hydrocracking 71,300 Coking 29,800 Catalytic Cracking 190,500 Catalytic Reforming 124,300 Catalytic Hydrocracking 65,600 Catalytic Hydrotreating 387,
Slide 107: Refinery Unit and Production Capacity: Catlettsburg
Refining: Refinery Unit and Production Capacity(1) Catlettsburg, Kentucky BPCD Unless Noted Catlettsburg Crude 273,000 Vacuum Distillation 115,900 Coking — Catalytic Cracking 98,800 Catalytic Reforming 49,900 Catalytic Hydrocracking — Catalytic Hydrotreating 258,500 Alkylation 20,000 ROSE – Solvent
Slide 108: 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 28,500 Catalytic Cracking 51,800 Catalytic Reforming 76,500 Catalytic Hydrocracking 36,100 Catalytic Hydrotreating 179,500 Alkylation 12,400 ROSE – Solvent
Slide 109: Refinery Unit and Production Capacity: Detroit
Refining: Refinery Unit and Production Capacity(1) Detroit, Michigan BPCD Unless Noted Detroit Crude 132,000 Vacuum Distillation 73,600 Coking 28,500 Catalytic Cracking 38,000 Catalytic Reforming 20,400 Catalytic Hydrocracking — Catalytic Hydrotreating 123,500 Alkylation 6,700 ROSE – Solvent Deaspha
Slide 110: Refinery Unit and Production Capacity: Canton
Refining: Refinery Unit and Production Capacity(1) Canton, Ohio BPCD Unless Noted Canton Crude 93,000 Vacuum Distillation 33,300 Coking — Catalytic Cracking 24,700 Catalytic Reforming 20,400 Catalytic Hydrocracking — Catalytic Hydrotreating 89,800 Alkylation 7,100 ROSE – Solvent Deasphalter — Aromat
Slide 111: Refinery Unit and Production Capacity: Texas City
Refining: Refinery Unit and Production Capacity(1) Texas City, Texas BPCD Unless Noted Texas City Crude 86,000 Vacuum Distillation — Coking — Catalytic Cracking 55,600 Catalytic Reforming 10,500 Catalytic Hydrocracking — Catalytic Hydrotreating — Alkylation 13,800 ROSE – Solvent Deasphalter — Aromat
Slide 112: MarkWest Marcellus Operations
MarkWest Marcellus Operations Gathering Capacity 1.0 BCF/D Houston Complex Houston System 0.8 BCF/D Keystone System 0.2 BCF/D Processing Capacity 3.8 BCF/D Keystone Complex 0.2 BCF/D Houston Complex 0.6 BCF/D Majorsville Complex 1.1 BCF/D Mobley Complex 0.7 BCF/D Sherwood Complex 1.2 BCF/D Fractiona
Slide 113: MarkWest Utica Operations
MarkWest Utica Operations(1) Hopedale Complex Gathering Capacity 1.0 BCF/D Processing Capacity 1.3 BCF/D Cadiz Complex 0.5 BCF/D Seneca Complex 0.8 BCF/D Fractionation Capacity(2) 160 MBD Cadiz Complex 40 MBD Hopedale Complex(2) 120 MBD Under Construction Condensate Stabilization 23 MBD Processing 2
Slide 114: MarkWest Southwest Operations
MarkWest Southwest Operations Gathering Capacity 2.1 BCF/D Carthage Complex – East Texas East Texas System 0.6 BCF/D Western Oklahoma System 0.8 BCF/D Southeast Oklahoma System 0.6 BCF/D Eagle Ford & Other Systems 0.1 BCF/D Processing Capacity 1.2 BCF/D East Texas 0.6 BCF/D Western Oklahoma 0.4 BCF/
Slide 115: MarkWest Northeast Operations
MarkWest Northeast Operations Gas Processing Capacity 620 MMCF/D Siloam Complex Boldman Complex 70 MMCF/D Cobb Complex 65 MMCF/D Kenova Complex 160 MMCF/D Langley Complex 325 MMCF/D Fractionation Capacity 24 MBD Siloam Complex 24 MBD 115
Slide 116: Market Indicators Used in Project EBITDA Calculations
Market Indicators Used in Project EBITDA Calculations 2016-2020 2016-2020 Average Range REG UNL (USGC; $/GAL)* $2.03 $1.60 - $2.23 ULSD (USGC; $/GAL)* $2.32 $1.89 - $2.52 LLS (St. James, LA; $/BBL) $79.47 $61.80 - $87.43 Natural Gas (Henry Hub, LA; $/MMBTU) $4.27 $3.50 - $5.00 *Prices exclude RIN va