-
Reported second-quarter
earnings of $515 million, or $1.00 per diluted share, including a
net charge of $0.03 per diluted share related to estimated losses
for litigation matters partially offset by Sandpiper asset
liquidation gains
-
Achieved record second-quarter
segment income at Speedway
-
Continuing execution of
strategic actions, including next dropdown
targeted in third quarter of 2017
-
Increased quarterly dividend by
11 percent, to $0.40 per share
-
Returned $936 million of
capital to shareholders, including $750 million in share
repurchases
FINDLAY, Ohio, July 27, 2017 - Marathon Petroleum
Corporation (NYSE: MPC) today reported 2017 second-quarter earnings
of $515 million, or $1.00 per diluted share. Second-quarter 2017
earnings include a charge of $0.05 per diluted share related to
estimated losses for ongoing litigation matters and a benefit of
$0.02 per diluted share related to the company's share of a gain on
asset liquidations related to its investment in the canceled
Sandpiper Pipeline project.
This compares with $801 million, or $1.51 per
diluted share, in the second quarter of 2016. Second-quarter 2016
earnings included a benefit of $0.47 per diluted share related to
the reversal of the company's lower of cost or market (LCM)
inventory valuation reserve. The 2016 earnings also included a
charge of $0.03 per diluted share related to an impairment of an
equity method investment held by MPC's sponsored master limited
partnership, MPLX LP (NYSE: MPLX).
"We delivered strong operational and financial
performance for our shareholders in the second quarter," said Gary
R. Heminger, chairman and chief executive officer. "MPC continues
to focus on driving results while delivering on the strategic
actions designed to further enhance shareholder value."
MPC completed the first of several planned
strategic dropdowns in the first quarter and utilized a substantial
portion of after-tax cash proceeds from the transaction to
repurchase shares. In the third quarter, MPC is targeting the
dropdown of its joint-interest ownership in certain pipelines and
storage facilities to MPLX. These assets are projected to generate
approximately $135 million of annual adjusted earnings before
interest, taxes, depreciation and amortization (EBITDA).(1) Work
remains on schedule to prepare the remaining assets, with annual
EBITDA of approximately $1 billion, for dropdown to MPLX no later
than the end of the first quarter of 2018. MPC also expects to
complete the ongoing review of Speedway by the end of the third
quarter.
Speedway reported record second-quarter segment
income from operations of $239 million, $46 million higher than the
previous record set in the second quarter of 2016, and $71 million
higher when excluding the LCM benefit. Record results were driven
by higher light-product and merchandise gross margins in the
quarter.
"Speedway delivered another exceptional quarter,"
Heminger said. "We expect to continue driving marketing enhancement
opportunities as we build new stores, remodel stores and rebuild
existing locations across our network."
The Midstream segment, including MPLX, contributed
$332 million in income from operations. The increase over the
second quarter of last year was primarily due to an increase in
processing and fractionation activity in the Marcellus shale. Total
processed and fractionated volumes increased 14 percent and 20
percent, respectively, in the second quarter versus prior year,
setting new volume records for the partnership.
In early July, the partnership's Utica build-out
projects, including the newly constructed Harpster-to-Lima
pipeline, became fully operational. In combination with the
Cornerstone Pipeline, these projects create additional fee-based
revenue for the partnership and new access for Utica and Marcellus
shale producers by moving condensate and natural gasoline to
refineries throughout the Midwest. MPLX is currently constructing
additional connectivity and expanding pipelines to provide more
optionality for Midwest refiners.
In addition to expansion in the Marcellus and
Utica, where the partnership is the largest processor and
fractionator by volume, MPLX continues construction of the Argo gas
processing plant in the Delaware basin. In July, the partnership
began construction of an additional gas processing plant to support
growth in the STACK shale play of Oklahoma. The new facility, named
the Omega plant, is expected to enter service in mid-2018.
"We are very pleased with MPLX's financial and
operational results, which demonstrate the substantial and growing
value the partnership represents to the total enterprise," Heminger
said. "MPLX is well-positioned with a robust portfolio of organic
projects in some of the most prolific and economic shale plays in
the United States. We remain confident in MPLX's compelling value
proposition to investors."
The Refining & Marketing segment reported
second-quarter segment income from operations of $562 million,
driven by higher LLS-based blended crack spreads and record
throughput at MPC's Garyville and Galveston Bay refineries, enabled
by the significant turnaround work in the first quarter. These
benefits were more than offset by higher crude oil and feedstock
acquisition costs, primarily due to lower sweet/sour crude oil
price differentials.
"Looking forward, we believe the U.S. and global
macroeconomic picture remains favorable and we expect good
underlying economic growth will continue to support strong demand
for our products," Heminger said. "With top-tier, strategically
located assets with export access, MPC is well-positioned to meet
the energy needs of the markets and to continue to drive long-term
value for shareholders."
During the second quarter, the company returned
$936 million to shareholders through dividends and share
repurchases. As part of the strategic actions, after-tax cash
proceeds from the first-quarter dropdown supported substantial
share repurchase activity, including $750 million in the second
quarter and $1.2 billion year-to-date.
On July 26, the MPC board of directors announced
an 11 percent increase in the quarterly dividend, to $0.40 per
share. This represents a 26 percent compound annual growth rate in
the dividend since becoming an independent company six years ago,
demonstrating continued confidence in the cash-flow generation of
the business.
(1)
Adjusted EBITDA with respect to
anticipated joint-interest acquisitions is calculated as cash
distributions adjusted for maintenance capital, growth capital and
financing activities.
Segment Results
Total income from operations was $1.03 billion in
the second quarter of 2017, compared with $1.32 billion in the
second quarter of 2016.
|
Three Months Ended
June 30 |
(In millions) |
|
2017 |
|
|
2016 |
Income from Operations by Segment |
|
|
|
|
|
Refining & Marketing(a) |
$ |
562 |
|
|
$ |
1,025 |
|
Speedway |
|
239 |
|
|
|
193 |
|
Midstream(a) |
|
332 |
|
|
|
253 |
|
Items
not allocated to segments: |
|
|
|
|
|
Corporate and other unallocated items(a) |
|
(83 |
) |
|
|
(64 |
) |
Pension settlement expenses |
|
(1 |
) |
|
|
(2 |
) |
Litigation |
|
(40 |
) |
|
|
- |
|
Impairments |
|
19 |
|
|
|
(90 |
) |
Income from operations |
$ |
1,028 |
|
|
$ |
1,315 |
|
(a)
In the first quarter of
2017, segment reporting was revised in connection with the
contribution of certain terminal, pipeline and storage assets to
MPLX. The results related to these assets are now presented in the
Midstream segment. Previously, these results were reported in the
Refining & Marketing segment. The results for the pipeline and
storage assets were recast effective Jan. 1, 2015, and the results
for the terminal assets were recast effective April 1, 2016. Prior
to these dates these assets were not considered businesses and
therefore there are no financial results from which to recast
segment results.
Refining & Marketing
Refining & Marketing (R&M) segment income
from operations was $562 million in the second quarter of 2017,
compared with $1.03 billion in the same quarter of 2016. The second
quarter of 2016 includes a $360 million non-cash benefit related to
the reversal of the company's lower of cost or market (LCM)
inventory valuation reserve. Excluding the LCM benefit, the
decrease in quarter-over-quarter segment results was primarily due
to a $1.41 per barrel decrease in the R&M gross margin. The
favorable effect of higher blended LLS-based crack spreads was more
than offset by unfavorable crude oil and feedstock acquisition
costs, primarily due to lower sweet/sour crude oil price
differentials and less favorable product price realizations as
compared to spot market reference prices.
The U.S. Gulf Coast (USGC) and Chicago LLS blended
6-3-2-1 crack spread increased from $7.66 per barrel in the second
quarter of 2016 to $9.18 per barrel in the second quarter of 2017,
primarily due to increases in USGC crack spreads.
Speedway
Speedway segment income from operations was $239
million in the second quarter of 2017, compared with $193 million
in the second quarter of 2016. The second quarter of 2016 includes
a $25 million non-cash benefit related to the reversal of the
company's lower of cost or market (LCM) inventory valuation
reserve. Excluding the LCM benefit, the increase in
quarter-over-quarter segment results was primarily due to higher
light product margin, reduced operating expenses and higher
merchandise gross margin. Segment results also benefited from
Speedway's new joint venture with Pilot Flying J, which commenced
in the fourth quarter of 2016. Speedway's light product margin
increased to 18.35 cents per gallon in the second quarter of 2017
from 15.49 cents per gallon in the second quarter of 2016.
Midstream
Midstream segment income from operations, which
includes MPLX as well as other related operations, was $332 million
in the second quarter of 2017, compared with $253 million for the
second quarter of 2016. The increase was primarily due to increased
earnings from natural gas and NGL processing and fractionation,
primarily driven by higher volumes and changes in natural gas and
NGL prices; earnings from the recently acquired Ozark pipeline
system; and increased earnings from pipeline equity method
investments.
Items Not Allocated to
Segments
Corporate and other unallocated expenses of $83
million in the second quarter of 2017 were $19 million higher than
the second quarter of 2016, largely due to an increase in certain
employee benefit expenses along with lower allocation of corporate
costs to the segments.
In the second quarter of 2017, the company
recognized estimated losses of $40 million related to ongoing
litigation matters. Our assessment is subject to change based on
the current stage of these matters. Impairments in the second
quarter of 2017 included a benefit of $19 million related to MPC's
share of a gain on asset liquidations related to its investment in
the canceled Sandpiper Pipeline project.
Strong Financial Position and
Liquidity
On June 30, 2017, the company had $1.2 billion of
cash and cash equivalents, excluding MPLX's cash and cash
equivalents of $293 million, $2.5 billion available under a
revolving credit agreement expiring in July 2020, $1 billion
available under a 364-day bank revolving credit facility expiring
in July 2017, and full availability under its $750 million trade
receivables securitization facility. On July 21, 2017, the company
replaced its existing bank revolving credit facilities with a new
five-year $2.5 billion bank revolving credit facility expiring in
July 2022 and a new 364-day $1 billion bank revolving credit
facility expiring in July 2018. The company's liquidity should
provide it with sufficient flexibility to meet its day-to-day
operational needs and continue its balanced approach to investing
in the business and returning capital to shareholders.
Conference Call
At 9 a.m. EDT today, MPC will hold a conference
call and webcast to discuss the reported results and provide an
update on company operations. Interested parties may listen to the
conference call by dialing 1-888-282-1746 (confirmation number
8778419) or by visiting MPC's website at
http://www.marathonpetroleum.com and clicking on the "2017
Second-Quarter Financial Results" link. Replays of the conference
call will be available on the company's website through Thursday,
Aug. 10. Financial information, including the earnings release and
other investor-related material, will also be available online
prior to the conference call and webcast at
http://ir.marathonpetroleum.com in the Quarterly Investor Packet
and Earnings Capsule.
###
About Marathon Petroleum
Corporation
MPC is the nation's third-largest refiner, with a
crude oil refining capacity of approximately 1.8 million barrels
per calendar day in its seven-refinery system. Marathon brand
gasoline is sold through approximately 5,600 independently owned
retail outlets across 19 states. In addition, Speedway LLC, an MPC
subsidiary, owns and operates the nation's second-largest
convenience store chain, with approximately 2,730 convenience
stores in 21 states. MPC owns, leases or has ownership interests in
approximately 10,800 miles of crude and light product pipelines.
Through subsidiaries, MPC owns the general partner of MPLX LP, a
midstream master limited partnership. Through MPLX, MPC has
ownership interests in gathering and processing facilities with
approximately 5.6 billion cubic feet per day of gathering capacity,
7.8 billion cubic feet per day of natural gas processing capacity
and 570,000 barrels per day of fractionation capacity. MPC's fully
integrated system provides operational flexibility to move crude
oil, NGLs, feedstocks and petroleum-related products efficiently
through the company's distribution network and midstream service
businesses in the Midwest, Northeast, East Coast, Southeast and
Gulf Coast regions.
Investor Relations
Contacts:
Lisa Wilson (419) 421-2071
Denice Myers (419) 421-2965
Doug Wendt (419) 421-2423
Media Contacts:
Chuck Rice (419) 421-2521
Katie Merx (419) 672-5159
References to
Earnings
References to earnings mean net income
attributable to MPC from the statements of income. Unless otherwise
indicated, references to earnings and earnings per share are MPC's
share after excluding amounts attributable to noncontrolling
interests.
Forward-looking
Statements
This press release contains forward-looking
statements within the meaning of federal securities laws regarding
Marathon Petroleum Corporation ("MPC") and MPLX LP ("MPLX"). These
forward-looking statements relate to, among other things,
expectations, estimates and projections concerning the business and
operations of MPC and MPLX, including proposed strategic
initiatives. You can identify forward-looking statements by words
such as "anticipate,"" "believe," "design," "estimate," "expect,"
"forecast," "goal," "guidance," "imply," "intend," "objective,"
"opportunity," "outlook," "plan," "position," "pursue,"
"prospective," "predict," "project," "potential," "seek,"
"strategy," "target," "could," "may," "should," "would," "will" or
other similar expressions that convey the uncertainty of future
events or outcomes. Such forward-looking statements are not
guarantees of future performance and are subject to risks,
uncertainties and other factors, some of which are beyond the
companies' control and are difficult to predict. Factors that could
cause MPC's actual results to differ materially from those implied
in the forward-looking statements include: the time, costs and
ability to obtain regulatory or other approvals and consents and
otherwise consummate the strategic initiatives discussed herein;
the satisfaction or waiver of conditions in the agreements
governing the strategic initiatives discussed herein; our ability
to achieve the strategic and other objectives related to the
strategic initiatives discussed herein; adverse changes in laws
including with respect to tax and regulatory matters; inability to
agree with the MPLX conflicts committee with respect to the timing
of and value attributed to assets identified for dropdown; changes
to the expected construction costs and timing of projects;
continued/further volatility in and/or degradation of market and
industry conditions; the availability and pricing of crude oil and
other feedstocks; slower growth in domestic and Canadian crude
supply; the effects of the lifting of the U.S. crude oil export
ban; completion of pipeline capacity to areas outside the U.S.
Midwest; consumer demand for refined products; transportation
logistics; the reliability of processing units and other equipment;
MPC's ability to successfully implement growth opportunities;
modifications to MPLX earnings and distribution growth objectives,
and other risks described below with respect to MPLX; compliance
with federal and state environmental, economic, health and safety,
energy and other policies and regulations, including the cost of
compliance with the Renewable Fuel Standard, and/or enforcement
actions initiated thereunder; adverse results in litigation;
changes to MPC's capital budget; other risk factors inherent to
MPC's industry; and the factors set forth under the heading "Risk
Factors" in MPC's Annual Report on Form 10-K for the year ended
Dec. 31, 2016, filed with Securities and Exchange Commission (SEC).
Factors that could cause MPLX's actual results to differ materially
from those implied in the forward-looking statements include:
negative capital market conditions, including an increase of the
current yield on common units, adversely affecting MPLX's ability
to meet its distribution growth guidance; the time, costs and
ability to obtain regulatory or other approvals and consents and
otherwise consummate the strategic initiatives discussed herein and
other proposed transactions; the satisfaction or waiver of
conditions in the agreements governing the strategic initiatives
discussed herein and other proposed transactions; our ability to
achieve the strategic and other objectives related to the strategic
initiatives discussed herein and other proposed transactions;
adverse changes in laws including with respect to tax and
regulatory matters; inability to agree with respect to the timing
of and value attributed to assets identified for dropdown; the
adequacy of MPLX's capital resources and liquidity, including, but
not limited to, availability of sufficient cash flow to pay
distributions, and the ability to successfully execute its business
plans and growth strategy; the timing and extent of changes in
commodity prices and demand for crude oil, refined products,
feedstocks or other hydrocarbon-based products; continued/further
volatility in and/or degradation of market and industry conditions;
changes to the expected construction costs and timing of projects;
completion of midstream infrastructure by competitors; disruptions
due to equipment interruption or failure, including electrical
shortages and power grid failures; the suspension, reduction or
termination of MPC's obligations under MPLX's commercial
agreements; modifications to earnings and distribution growth
objectives; the level of support from MPC, including dropdowns,
alternative financing arrangements, taking equity units, and other
methods of sponsor support, as a result of the capital allocation
needs of the enterprise as a whole and its ability to provide
support on commercially reasonable terms; compliance with federal
and state environmental, economic, health and safety, energy and
other policies and regulations and/or enforcement actions initiated
thereunder; adverse results in litigation; changes to MPLX's
capital budget; other risk factors inherent to MPLX's industry; and
the factors set forth under the heading "Risk Factors" in MPLX's
Annual Report on Form 10-K for the year ended Dec. 31, 2016, filed
with the SEC. In addition, the forward-looking statements included
herein could be affected by general domestic and international
economic and political conditions. Unpredictable or unknown factors
not discussed here, in MPC's Form 10-K or in MPLX's Form 10-K could
also have material adverse effects on forward-looking statements.
Copies of MPC's Form 10-K are available on the SEC website, MPC's
website at http://ir.marathonpetroleum.com or by contacting MPC's
Investor Relations office. Copies of MPLX's Form 10-K are available
on the SEC website, MPLX's website at http://ir.mplx.com or by
contacting MPLX's Investor Relations office.
Consolidated Statements of Income
(Unaudited)
|
Three Months Ended
June 30 |
|
Six Months Ended
June 30 |
(In millions, except per-share data) |
|
2017 |
|
|
2016 |
|
|
2017 |
|
|
2016 |
Revenues and other income: |
|
|
|
|
|
|
|
|
|
|
|
Sales and other operating revenues (including
consumer excise taxes) |
$ |
18,033 |
|
|
$ |
16,809 |
|
|
$ |
34,167 |
|
|
$ |
29,563 |
|
Sales to related parties |
|
147 |
|
|
|
2 |
|
|
|
301 |
|
|
|
3 |
|
Income (loss) from equity method investments |
|
83 |
|
|
|
(50 |
) |
|
|
140 |
|
|
|
(28 |
) |
Net gain on disposal of assets |
|
7 |
|
|
|
- |
|
|
|
12 |
|
|
|
25 |
|
Other income |
|
84 |
|
|
|
29 |
|
|
|
127 |
|
|
|
57 |
|
Total revenues and other income |
|
18,354 |
|
|
|
16,790 |
|
|
|
34,747 |
|
|
|
29,620 |
|
Costs and expenses: |
|
|
|
|
|
|
|
|
|
|
|
Cost of revenues (excludes items below) |
|
14,175 |
|
|
|
12,830 |
|
|
|
27,308 |
|
|
|
22,531 |
|
Purchases from related parties |
|
150 |
|
|
|
124 |
|
|
|
272 |
|
|
|
231 |
|
Inventory market valuation adjustment |
|
- |
|
|
|
(385 |
) |
|
|
- |
|
|
|
(370 |
) |
Consumer excise taxes |
|
1,926 |
|
|
|
1,893 |
|
|
|
3,739 |
|
|
|
3,719 |
|
Impairment expense |
|
- |
|
|
|
1 |
|
|
|
- |
|
|
|
130 |
|
Depreciation and amortization |
|
521 |
|
|
|
500 |
|
|
|
1,057 |
|
|
|
990 |
|
Selling, general and administrative expenses |
|
439 |
|
|
|
401 |
|
|
|
828 |
|
|
|
779 |
|
Other taxes |
|
115 |
|
|
|
111 |
|
|
|
223 |
|
|
|
220 |
|
Total costs and expenses |
|
17,326 |
|
|
|
15,475 |
|
|
|
33,427 |
|
|
|
28,230 |
|
Income from operations |
|
1,028 |
|
|
|
1,315 |
|
|
|
1,320 |
|
|
|
1,390 |
|
Net interest and other financial income (costs) |
|
(158 |
) |
|
|
(137 |
) |
|
|
(308 |
) |
|
|
(279 |
) |
Income before income taxes |
|
870 |
|
|
|
1,178 |
|
|
|
1,012 |
|
|
|
1,111 |
|
Provision for income taxes |
|
264 |
|
|
|
395 |
|
|
|
305 |
|
|
|
406 |
|
Net income |
|
606 |
|
|
|
783 |
|
|
|
707 |
|
|
|
705 |
|
Less
net income (loss) attributable to: |
|
|
|
|
|
|
|
|
|
|
|
Redeemable noncontrolling interest |
|
17 |
|
|
|
9 |
|
|
|
33 |
|
|
|
9 |
|
Noncontrolling interests |
|
74 |
|
|
|
(27 |
) |
|
|
129 |
|
|
|
(106 |
) |
Net income attributable to MPC |
$ |
515 |
|
|
$ |
801 |
|
|
$ |
545 |
|
|
$ |
802 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Per-share data |
|
|
|
|
|
|
|
|
|
|
|
Basic: |
|
|
|
|
|
|
|
|
|
|
|
Net income attributable to MPC per share |
$ |
1.00 |
|
|
$ |
1.51 |
|
|
$ |
1.05 |
|
|
$ |
1.52 |
|
Weighted average shares: |
|
513 |
|
|
|
528 |
|
|
|
519 |
|
|
|
528 |
|
Diluted: |
|
|
|
|
|
|
|
|
|
|
|
Net income attributable to MPC per share |
$ |
1.00 |
|
|
$ |
1.51 |
|
|
$ |
1.04 |
|
|
$ |
1.51 |
|
Weighted average shares: |
|
517 |
|
|
|
531 |
|
|
|
523 |
|
|
|
531 |
|
Dividends paid |
$ |
0.36 |
|
|
$ |
0.32 |
|
|
$ |
0.72 |
|
|
$ |
0.64 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Supplemental Statistics
(Unaudited)
|
Three Months Ended
June 30 |
|
Six Months Ended
June 30 |
(In millions) |
|
2017 |
|
|
2016 |
|
|
2017 |
|
|
2016 |
Income from Operations by segment |
|
|
|
|
|
|
|
|
|
|
|
Refining & Marketing(a)(b) |
$ |
562 |
|
|
$ |
1,025 |
|
|
$ |
492 |
|
|
$ |
939 |
|
Speedway(b) |
|
239 |
|
|
|
193 |
|
|
|
374 |
|
|
|
360 |
|
Midstream(a) |
|
332 |
|
|
|
253 |
|
|
|
641 |
|
|
|
442 |
|
Items not allocated to segments: |
|
|
|
|
|
|
|
|
|
|
|
Corporate and other unallocated items(a) |
|
(83 |
) |
|
|
(64 |
) |
|
|
(165 |
) |
|
|
(129 |
) |
Pension settlement expenses |
|
(1 |
) |
|
|
(2 |
) |
|
|
(1 |
) |
|
|
(3 |
) |
Litigation |
|
(40 |
) |
|
|
- |
|
|
|
(40 |
) |
|
|
- |
|
Impairments(c) |
|
19 |
|
|
|
(90 |
) |
|
|
19 |
|
|
|
(219 |
) |
Income from operations |
|
1,028 |
|
|
|
1,315 |
|
|
|
1,320 |
|
|
|
1,390 |
|
Net
interest and other financial income (costs) |
|
(158 |
) |
|
|
(137 |
) |
|
|
(308 |
) |
|
|
(279 |
) |
Income before income taxes |
|
870 |
|
|
|
1,178 |
|
|
|
1,012 |
|
|
|
1,111 |
|
Provision for income taxes |
|
264 |
|
|
|
395 |
|
|
|
305 |
|
|
|
406 |
|
Net income |
|
606 |
|
|
|
783 |
|
|
|
707 |
|
|
|
705 |
|
Less
net income (loss) attributable to: |
|
|
|
|
|
|
|
|
|
|
|
Redeemable noncontrolling interest |
|
17 |
|
|
|
9 |
|
|
|
33 |
|
|
|
9 |
|
Noncontrolling interests |
|
74 |
|
|
|
(27 |
) |
|
|
129 |
|
|
|
(106 |
) |
Net income attributable to MPC |
$ |
515 |
|
|
$ |
801 |
|
|
$ |
545 |
|
|
$ |
802 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital Expenditures and Investments |
|
|
|
|
|
|
|
|
|
|
|
Refining & Marketing |
$ |
180 |
|
|
$ |
262 |
|
|
$ |
372 |
|
|
$ |
505 |
|
Speedway |
|
78 |
|
|
|
70 |
|
|
|
113 |
|
|
|
120 |
|
Midstream(d) |
|
494 |
|
|
|
419 |
|
|
|
1,564 |
|
|
|
769 |
|
Corporate and Other(e) |
|
32 |
|
|
|
36 |
|
|
|
60 |
|
|
|
77 |
|
Total |
$ |
784 |
|
|
$ |
787 |
|
|
$ |
2,109 |
|
|
$ |
1,471 |
|
|
|
|
|
|
|
|
|
|
|
|
|
(a)
In the first quarter of 2017, segment reporting was revised in
connection with the contribution of certain terminal, pipeline and
storage assets to MPLX. The results related to these assets are now
presented in the Midstream segment. Previously, these results were
reported in the Refining & Marketing segment. The results for
the pipeline and storage assets were recast effective January 1,
2015, and the results for the terminal assets were recast effective
April 1, 2016. Prior to these dates these assets were not
considered businesses and therefore there are no financial results
from which to recast segment results.
(b)
Includes non-cash LCM inventory valuation benefit of $385 million
for the second quarter 2016 and $370 million for the six months
ended June 30, 2016. The benefit increased Refining &
Marketing and Speedway segment income by $360 million and $25
million, respectively, for the second quarter 2016 and $345 million
and $25 million, respectively, for the six months ended
June 30, 2016.
(c)
Includes MPC's share of a gain related to its investment in the
canceled Sandpiper pipeline project in the three and six months
ended June 30, 2017, and impairments of an equity method
investment and goodwill in the three and six months ended
June 30, 2016.
(d)
Includes $220 million for the acquisition of the Ozark pipeline and
an investment of $500 million in MarEn Bakken related to the Bakken
Pipeline system in the six months ended June 30, 2017.
(e)
Includes capitalized interest of $14 million, $15 million, $26
million and $32 million respectively.
Supplementary Statistics (Unaudited) (continued) |
Three Months Ended
June 30 |
|
Six Months Ended
June 30 |
|
|
2017 |
|
|
2016 |
|
|
2017 |
|
|
2016 |
MPC Consolidated Refined Product Sales Volumes
(thousands of barrels per day (mbpd)(a) |
|
2,370 |
|
|
|
2,348 |
|
|
|
2,228 |
|
|
|
2,253 |
|
Refining & Marketing (R&M) Operating
Statistics |
|
|
|
|
|
|
|
|
|
|
|
R&M refined product sales volume (mbpd)(b) |
|
2,358 |
|
|
|
2,339 |
|
|
|
2,215 |
|
|
|
2,244 |
|
R&M gross margin (dollars per barrel)(c) |
$ |
11.32 |
|
|
$ |
12.73 |
|
|
$ |
11.47 |
|
|
$ |
11.35 |
|
Crude
oil capacity utilization (percent)(d) |
|
103 |
|
|
|
96 |
|
|
|
93 |
|
|
|
93 |
|
Refinery throughputs (mbpd):(e) |
|
|
|
|
|
|
|
|
|
|
|
Crude oil refined |
|
1,864 |
|
|
|
1,728 |
|
|
|
1,688 |
|
|
|
1,665 |
|
Other charge and blendstocks |
|
159 |
|
|
|
161 |
|
|
|
179 |
|
|
|
167 |
|
Total |
|
2,023 |
|
|
|
1,889 |
|
|
|
1,867 |
|
|
|
1,832 |
|
Sour
crude oil throughput (percent) |
|
62 |
|
|
|
61 |
|
|
|
64 |
|
|
|
61 |
|
WTI-priced crude oil throughput (percent) |
|
20 |
|
|
|
21 |
|
|
|
18 |
|
|
|
20 |
|
Refined product yields (mbpd):(e) |
|
|
|
|
|
|
|
|
|
|
|
Gasoline |
|
922 |
|
|
|
919 |
|
|
|
895 |
|
|
|
909 |
|
Distillates |
|
665 |
|
|
|
628 |
|
|
|
605 |
|
|
|
599 |
|
Propane |
|
38 |
|
|
|
36 |
|
|
|
33 |
|
|
|
34 |
|
Feedstocks and special products |
|
331 |
|
|
|
249 |
|
|
|
277 |
|
|
|
241 |
|
Heavy fuel oil |
|
34 |
|
|
|
34 |
|
|
|
32 |
|
|
|
32 |
|
Asphalt |
|
70 |
|
|
|
60 |
|
|
|
63 |
|
|
|
53 |
|
Total |
|
2,060 |
|
|
|
1,926 |
|
|
|
1,905 |
|
|
|
1,868 |
|
Refinery direct operating costs ($/barrel):(f) |
|
|
|
|
|
|
|
|
|
|
|
Planned turnaround and major maintenance |
$ |
1.01 |
|
|
$ |
1.16 |
|
|
$ |
1.96 |
|
|
$ |
1.77 |
|
Depreciation and amortization |
|
1.39 |
|
|
|
1.43 |
|
|
|
1.50 |
|
|
|
1.48 |
|
Other manufacturing(g) |
|
3.84 |
|
|
|
3.95 |
|
|
|
4.24 |
|
|
|
4.05 |
|
Total |
$ |
6.24 |
|
|
$ |
6.54 |
|
|
$ |
7.70 |
|
|
$ |
7.30 |
|
R&M Operating Statistics by Region - Gulf
Coast |
|
|
|
|
|
|
|
|
|
|
|
Refinery throughputs (mbpd):(h) |
|
|
|
|
|
|
|
|
|
|
|
Crude oil refined |
|
1,147 |
|
|
|
1,104 |
|
|
|
999 |
|
|
|
1,048 |
|
Other charge and blendstocks |
|
218 |
|
|
|
195 |
|
|
|
220 |
|
|
|
206 |
|
Total |
|
1,365 |
|
|
|
1,299 |
|
|
|
1,219 |
|
|
|
1,254 |
|
Sour
crude oil throughput (percent) |
|
74 |
|
|
|
74 |
|
|
|
78 |
|
|
|
74 |
|
WTI-priced crude oil throughput (percent) |
|
12 |
|
|
|
9 |
|
|
|
8 |
|
|
|
6 |
|
Refined product yields (mbpd):(h) |
|
|
|
|
|
|
|
|
|
|
|
Gasoline |
|
537 |
|
|
|
547 |
|
|
|
518 |
|
|
|
540 |
|
Distillates |
|
432 |
|
|
|
434 |
|
|
|
371 |
|
|
|
404 |
|
Propane |
|
27 |
|
|
|
28 |
|
|
|
24 |
|
|
|
26 |
|
Feedstocks and special products |
|
360 |
|
|
|
282 |
|
|
|
302 |
|
|
|
281 |
|
Heavy fuel oil |
|
23 |
|
|
|
23 |
|
|
|
20 |
|
|
|
21 |
|
Asphalt |
|
19 |
|
|
|
19 |
|
|
|
17 |
|
|
|
14 |
|
Total |
|
1,398 |
|
|
|
1,333 |
|
|
|
1,252 |
|
|
|
1,286 |
|
Refinery direct operating costs ($/barrel):(f) |
|
|
|
|
|
|
|
|
|
|
|
Planned turnaround and major maintenance |
$ |
0.91 |
|
|
$ |
0.98 |
|
|
$ |
2.40 |
|
|
$ |
1.77 |
|
Depreciation and amortization |
|
1.10 |
|
|
|
1.08 |
|
|
|
1.21 |
|
|
|
1.12 |
|
Other manufacturing(g) |
|
3.45 |
|
|
|
3.44 |
|
|
|
3.96 |
|
|
|
3.59 |
|
Total |
$ |
5.46 |
|
|
$ |
5.50 |
|
|
$ |
7.57 |
|
|
$ |
6.48 |
|
Supplementary Statistics (Unaudited) (continued) |
Three Months Ended
June 30 |
|
Six Months Ended
June 30 |
|
|
2017 |
|
|
2016 |
|
|
2017 |
|
|
2016 |
R&M Operating Statistics by Region -
Midwest |
|
|
|
|
|
|
|
|
|
|
|
Refinery throughputs (mbpd):(h) |
|
|
|
|
|
|
|
|
|
|
|
Crude oil refined |
|
717 |
|
|
|
624 |
|
|
|
689 |
|
|
|
617 |
|
Other charge and blendstocks |
|
28 |
|
|
|
36 |
|
|
|
30 |
|
|
|
37 |
|
Total |
|
745 |
|
|
|
660 |
|
|
|
719 |
|
|
|
654 |
|
Sour
crude oil throughput (percent) |
|
42 |
|
|
|
38 |
|
|
|
43 |
|
|
|
39 |
|
WTI-priced crude oil throughput (percent) |
|
34 |
|
|
|
43 |
|
|
|
32 |
|
|
|
43 |
|
Refined product yields (mbpd):(h) |
|
|
|
|
|
|
|
|
|
|
|
Gasoline |
|
385 |
|
|
|
372 |
|
|
|
377 |
|
|
|
369 |
|
Distillates |
|
233 |
|
|
|
194 |
|
|
|
234 |
|
|
|
195 |
|
Propane |
|
12 |
|
|
|
10 |
|
|
|
10 |
|
|
|
10 |
|
Feedstocks and special products |
|
56 |
|
|
|
35 |
|
|
|
45 |
|
|
|
34 |
|
Heavy fuel oil |
|
12 |
|
|
|
11 |
|
|
|
12 |
|
|
|
11 |
|
Asphalt |
|
51 |
|
|
|
41 |
|
|
|
46 |
|
|
|
39 |
|
Total |
|
749 |
|
|
|
663 |
|
|
|
724 |
|
|
|
658 |
|
Refinery direct operating costs ($/barrel):(f) |
|
|
|
|
|
|
|
|
|
|
|
Planned turnaround and major maintenance |
$ |
1.06 |
|
|
$ |
1.38 |
|
|
$ |
1.02 |
|
|
$ |
1.57 |
|
Depreciation and amortization |
|
1.76 |
|
|
|
1.98 |
|
|
|
1.84 |
|
|
|
2.01 |
|
Other manufacturing(g) |
|
4.13 |
|
|
|
4.53 |
|
|
|
4.31 |
|
|
|
4.44 |
|
Total |
$ |
6.95 |
|
|
$ |
7.89 |
|
|
$ |
7.17 |
|
|
$ |
8.02 |
|
Speedway Operating Statistics(i) |
|
|
|
|
|
|
|
|
|
|
|
Convenience stores at period-end |
|
2,729 |
|
|
|
2,773 |
|
|
|
|
|
|
|
Gasoline and distillate sales (millions of gallons) |
|
1,475 |
|
|
|
1,547 |
|
|
|
2,868 |
|
|
|
3,030 |
|
Gasoline and distillate gross margin (dollars per
gallon)(j) |
$ |
0.1835 |
|
|
$ |
0.1549 |
|
|
$ |
0.1704 |
|
|
$ |
0.1614 |
|
Merchandise sales (in millions) |
$ |
1,271 |
|
|
$ |
1,287 |
|
|
$ |
2,398 |
|
|
$ |
2,439 |
|
Merchandise gross margin (in millions) |
$ |
371 |
|
|
$ |
369 |
|
|
$ |
691 |
|
|
$ |
699 |
|
Merchandise gross margin percent |
|
29.2 |
% |
|
|
28.7 |
% |
|
|
28.8 |
% |
|
|
28.7 |
% |
Same
store gasoline sales volume (period over period) |
|
(0.5 |
)% |
|
|
0.3 |
% |
|
|
(0.8 |
)% |
|
|
0.7 |
% |
Same
store merchandise sales (period over period)(k) |
|
2.1 |
% |
|
|
2.0 |
% |
|
|
2.1 |
% |
|
|
2.5 |
% |
Midstream Operating Statistics |
|
|
|
|
|
|
|
|
|
|
|
Crude
oil and refined product pipeline throughputs (mbpd)(l) |
|
3,439 |
|
|
|
2,940 |
|
|
|
3,165 |
|
|
|
2,873 |
|
Terminal throughput (mbpd)(m) |
|
1,489 |
|
|
|
1,503 |
|
|
|
1,456 |
|
|
|
1,503 |
|
Gathering system throughput (million cubic feet per day)(n) |
|
3,326 |
|
|
|
3,288 |
|
|
|
3,255 |
|
|
|
3,316 |
|
Natural gas processed (million cubic feet per day)(n) |
|
6,292 |
|
|
|
5,529 |
|
|
|
6,212 |
|
|
|
5,582 |
|
C2
(ethane) + NGLs fractionated (mbpd)(n) |
|
387 |
|
|
|
322 |
|
|
|
377 |
|
|
|
321 |
|
|
|
|
|
|
|
|
|
|
|
|
|
(a)
Total average daily volumes of refined product sales to wholesale,
branded and retail customers.
(b)
Includes intersegment sales.
(c)
Excludes LCM inventory valuation adjustments. Sales revenue less
cost of refinery inputs and purchased products, divided by total
refinery throughputs. Comparable prior period information for gross
margin has been recast in connection with the contribution of
certain pipeline assets to MPLX on March 1, 2017.
(d)
Based on calendar day capacity, which is an annual average that
includes downtime for planned maintenance and other normal
operating activities.
(e)
Excludes inter-refinery volumes of 87 mbpd and 70 mbpd for second
quarter 2017 and 2016, respectively and 71 mbpd and 76 mbpd for the
six months ended June 30, 2017 and 2016, respectively.
(f)
Per barrel of total refinery throughputs.
(g)
Includes utilities, labor, routine maintenance and other operating
costs.
(h)
Includes inter-refinery transfer volumes.
(i)
Second quarter and year-to-date 2017 operating statistics do not
reflect any information for the 41 travel centers contributed to
PFJ Southeast, whereas they are reflected in the second quarter and
year-to-date 2016 operating statistics.
(j)
Excludes LCM inventory valuation adjustments. The price paid by
consumers less the cost of refined products, including
transportation, consumer excise taxes and bankcard processing fees,
divided by gasoline and distillate sales volumes.
(k)
Excludes cigarettes.
(l)
Includes common-carrier pipelines and private pipelines contributed
to MPLX, excluding equity method investments.
(m)
Includes the results of the terminal assets contributed to MPLX
from the date the assets became a business, April 1, 2016.
(n)
Includes amounts related to unconsolidated equity method
investments on a 100% basis.
Segment Earnings Before Interest,
Taxes, Depreciation & Amortization (Segment EBITDA)
(Unaudited)
|
Three Months Ended
June 30 |
|
Six Months Ended
June 30 |
(In millions) |
|
2017 |
|
|
2016 |
|
|
2017 |
|
|
2016 |
Segment EBITDA(a) |
|
|
|
|
|
|
|
|
|
|
|
Refining & Marketing(b)(c) |
$ |
834 |
|
|
$ |
1,286 |
|
|
$ |
1,031 |
|
|
$ |
1,473 |
|
Speedway(c) |
|
304 |
|
|
|
262 |
|
|
|
503 |
|
|
|
492 |
|
Midstream(b) |
|
500 |
|
|
|
406 |
|
|
|
1,000 |
|
|
|
735 |
|
Total Segment EBITDA(a) |
|
1,638 |
|
|
|
1,954 |
|
|
|
2,534 |
|
|
|
2,700 |
|
Total
segment depreciation & amortization |
|
(505 |
) |
|
|
(483 |
) |
|
|
(1,027 |
) |
|
|
(959 |
) |
Items
not allocated to segments(b)(d) |
|
(105 |
) |
|
|
(156 |
) |
|
|
(187 |
) |
|
|
(351 |
) |
Income from operations |
|
1,028 |
|
|
|
1,315 |
|
|
|
1,320 |
|
|
|
1,390 |
|
Net
interest and other financial income (costs) |
|
(158 |
) |
|
|
(137 |
) |
|
|
(308 |
) |
|
|
(279 |
) |
Income before income taxes |
|
870 |
|
|
|
1,178 |
|
|
|
1,012 |
|
|
|
1,111 |
|
Income
tax provision |
|
264 |
|
|
|
395 |
|
|
|
305 |
|
|
|
406 |
|
Net income |
|
606 |
|
|
|
783 |
|
|
|
707 |
|
|
|
705 |
|
Less
net income (loss) attributable to: |
|
|
|
|
|
|
|
|
|
|
|
Redeemable noncontrolling interest |
|
17 |
|
|
|
9 |
|
|
|
33 |
|
|
|
9 |
|
Noncontrolling interests |
|
74 |
|
|
|
(27 |
) |
|
|
129 |
|
|
|
(106 |
) |
Net income attributable to MPC |
$ |
515 |
|
|
$ |
801 |
|
|
$ |
545 |
|
|
$ |
802 |
|
|
|
|
|
|
|
|
|
|
|
|
|
(a)
Segment EBITDA represents segment earnings before interest and
financing costs, interest income, income taxes and depreciation and
amortization expense. Segment EBITDA is used by some investors and
analysts to analyze and compare companies on the basis of operating
performance. Segment EBITDA should not be considered as an
alternative to net income attributable to MPC, income before income
taxes, cash flows from operating activities or any other measure of
financial performance presented in accordance with accounting
principles generally accepted in the United States. Segment EBITDA
may not be comparable to similarly titled measures used by other
entities.
(b)
In the first quarter of 2017, segment reporting
was revised in connection with the contribution of certain
terminal, pipeline and storage assets to MPLX. The results related
to these assets are now presented in the Midstream segment.
Previously, these results were reported in the Refining &
Marketing segment. The results for the pipeline and storage assets
were recast effective January 1, 2015, and the results for the
terminal assets were recast effective April 1, 2016. Prior to these
dates these assets were not considered businesses and therefore
there are no financial results from which to recast segment
results.
(c)
Includes non-cash LCM inventory valuation benefit of $385 million
for the second quarter 2016 and $370 million for the six months
ended June 30, 2016. The benefit increased Refining &
Marketing and Speedway segment income by $360 million and $25
million, respectively, for the second quarter 2016 and $345 million
and $25 million, respectively, for the six months ended
June 30, 2016.
(d)
Includes charges for estimated losses of $40 million related to
litigation and MPC's share of a gain related to its investment in
the canceled Sandpiper pipeline project of $19 million in the three
and six months ended June 30, 2017 and impairment charges of $90
million and $219 million recorded by MPLX in the second quarter of
2016 and the first six months of 2016, respectively.
Select Financial Data
(Unaudited)
(In millions) |
June 30
2017 |
|
March 31
2017 |
Cash
and cash equivalents |
$ |
1,450 |
|
|
$ |
2,167 |
|
MPLX
debt |
|
6,667 |
|
|
|
6,655 |
|
Total
consolidated debt |
|
12,606 |
|
|
|
12,598 |
|
Redeemable noncontrolling interest |
|
1,000 |
|
|
|
1,000 |
|
Equity |
|
19,596 |
|
|
|
19,797 |
|
Debt-to-total-capital ratio (percent) |
|
38 |
|
|
|
38 |
|
Shares
outstanding |
|
506 |
|
|
|
519 |
|
|
|
|
|
|
|
Cash
provided from operations (quarter ended) |
$ |
849 |
|
|
$ |
1,113 |
|
|
|
|
|
|
|
MPC Q2 2017 Earnings
Release
This
announcement is distributed by Nasdaq Corporate Solutions on behalf
of Nasdaq Corporate Solutions clients.
The issuer of this announcement warrants that they are solely
responsible for the content, accuracy and originality of the
information contained therein.
Source: Marathon Petroleum Corporation via
Globenewswire
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