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Credit Suisse Energy Summit – Marathon Petroleum Corporation

Marathon Petroleum Corporation · Feb 11, 2019 · 67 slides

Investor presentation from the Shale Experts oil & gas presentation and slide database. Every page is imaged and its text indexed for search across operators, plays, basins and time.

Slides

  1. Credit Suisse Energy Summit – Marathon Petroleum Corporation – slide 1
    Credit Suisse Energy Summit February 11, 2019
  2. Credit Suisse Energy Summit – Marathon Petroleum Corporation – slide 2
    MPC A Leading Energy Company Refining Midstream Marketing & Retail Superior Operations Expanding Platform Across: Retail, Significant Growth Opportunities Wholesale, and Brand Strategic Investment to Capture Value Strategic…
  3. Credit Suisse Energy Summit – Marathon Petroleum Corporation – slide 3
    Built For Change: Our Strategic Vision Core Values and Integrated Strategic & Financial Operational Business Model Disciplined Strength Excellence Investments Core values underpin Enhances value Creates competitive Provides…
  4. Credit Suisse Energy Summit – Marathon Petroleum Corporation – slide 4
    Responsible Corporate Leadership MPC has earned 13 Environmental 18 MPC 21 75% of the EPAs Energy Star achievement awards earned from state manages certified wildlife habitats consisting of 1,352 environmental…
  5. Credit Suisse Energy Summit – Marathon Petroleum Corporation – slide 5
    Leveraging a Larger System: Unprecedented Opportunities Feedstock Acquisition Inbound Logistics Refining & Processing Outbound Logistics Marketing & Retail Additional access to advantaged feedstocks Expanded logistics system lowers…
  6. Credit Suisse Energy Summit – Marathon Petroleum Corporation – slide 6
    Integration: Further Opportunities for Value Chain Capture Kenai Nationwide footprint enables connectivity to key supply Anacortes sources and demand hubs Mandan Portland Dickinson Broader, integrated system St. Paul Detroit Park…
  7. Credit Suisse Energy Summit – Marathon Petroleum Corporation – slide 7
    Increasing Synergy Potential 1 Synergy Outlook Estimated Annual Run-Rate ( millions) ( millions) 380 1,400 1,400 110 270 400 450 300 55 1,000 90 290 665 210 600 200 120 1,000 950 710 465 480 Refining & Retail Midstream…
  8. Credit Suisse Energy Summit – Marathon Petroleum Corporation – slide 8
    Growing Profitability: Attractive Profile for Investors MPC has significantly diversified, and non-refining segments now contribute 50% of EBITDA. Our strategic and disciplined investments have grown our business, creating an…
  9. Credit Suisse Energy Summit – Marathon Petroleum Corporation – slide 9
    Financial Strength Underpins Total Shareholder Returns Robust Balance Sheet Capital Spend 1 1 Capital Return 1 Investment grade rating 2.8 billion plan in 2019 50% of discretionary free 2 Flat with 2018E (combined) cash flow…
  10. Credit Suisse Energy Summit – Marathon Petroleum Corporation – slide 10
    MPC: Formula for Creating Exceptional Value Leading assets & Strategic vision to Exceptional opportunity capabilities grow value for investors Core values and operational Through-cycle excellence resilience Premier asset base…
  11. Credit Suisse Energy Summit – Marathon Petroleum Corporation – slide 11
    Appendix 13
  12. Credit Suisse Energy Summit – Marathon Petroleum Corporation – slide 12
    Roadmap to Creating Superior Value Refining Operational Product Supply Investments to Excellence & Placement Optionality Enhance Margin Optimization Flexibility Leverage broader Enhance reliability + Focus on upgrading Enhance…
  13. Credit Suisse Energy Summit – Marathon Petroleum Corporation – slide 13
    MPC Refining Footprint and Regions Refining Locations 1 4 refineries: 711 MBPD West Coast Anacortes Mandan Dickinson St. Paul Park Pricing indicator: WC ANS 321 Detroit Salt Lake City Canton Robinson 1 10 refineries:…
  14. Credit Suisse Energy Summit – Marathon Petroleum Corporation – slide 14
    Broader Scale Expands Supply Optionality ANS Canadian Larger footprint expands access to advantaged supply: 1 Bakken 2 1. 1 Canadian 2. 2 Bakken 3 Permian 3. New logistics assets lower crude acquisition costs WTI Other…
  15. Credit Suisse Energy Summit – Marathon Petroleum Corporation – slide 15
    1 Canadian Crude Flexibility Broader system Clearbrook increases access to Anacortes Canadian crudes enhancing margin Portland St. Paul capture Park Detroit SAX/ Mustang Over 500 MBPD of Canton Canadian crude Martinez…
  16. Credit Suisse Energy Summit – Marathon Petroleum Corporation – slide 16
    2 Bakken Strategy Optimization New logistics assets increase Bakken crude Johnsons Corner Clearbrook access, providing more Anacortes Mandan options to capture margin Connectivity and secured St. Paul Park space on…
  17. Credit Suisse Energy Summit – Marathon Petroleum Corporation – slide 17
    3 Permian Strategy Optimization Increasing integrated footprint in the AR Permian creates multiple benefits NM TX across our platform El Paso Midland LA MS Wink LA Gathering systems create direct Orla Crane crude sourcing of…
  18. Credit Suisse Energy Summit – Marathon Petroleum Corporation – slide 18
    Key Strategic Investments: Grow EBITDA 1 Expected Annualized Average EBITDA ( in millions) Investments focused on +530 1,130 upgrading capabilities, yield GVL Coker 3 flexibility, and conversion capacity GBR STAR1 Track record…
  19. Credit Suisse Energy Summit – Marathon Petroleum Corporation – slide 19
    Garyville Coker 3 Project Increases Garyville coking capacity by 50% to 150 MBPD to increase capability to upgrade resid Enhances distillate yields Coker 3 Leverages existing infrastructure Location Increases ability to capture…
  20. Credit Suisse Energy Summit – Marathon Petroleum Corporation – slide 20
    Galveston Bay STAR Program Creates a world-class refining complex with 40 MBPD increased crude unit capacity Increases resid processing and improves gasoil recovery Optimizes operations and reduces costs Project details and…
  21. Credit Suisse Energy Summit – Marathon Petroleum Corporation – slide 21
    Dickinson Renewable Diesel Produce renewable diesel to capture economic opportunity created by California Low Carbon Fuel Standard and Federal Renewable Fuel Standard Convert refinery to process soybean and corn oil to make 12 MBPD of…
  22. Credit Suisse Energy Summit – Marathon Petroleum Corporation – slide 22
    Los Angeles LARIC Project Increases the flexibility to produce distillates and significantly lowers emissions 3040 MBPD of gasoline and distillate yield flexibility Physical integration of the Los Angeles refinery complex enhances…
  23. Credit Suisse Energy Summit – Marathon Petroleum Corporation – slide 23
    IMO: Global Opportunities for Complex Refineries Refiners shift to maximum distillate production Coker Upgrading (ULSD - 3% Resid Fuel Oil) and resid upgrading 60 Forecast 50 Ship owners accelerate installation of scrubbers to…
  24. Credit Suisse Energy Summit – Marathon Petroleum Corporation – slide 24
    MPC Well-Positioned Among U.S. Refiners MPC well-positioned to produce high value fuels and capture benefits from the adoption of low sulfur fuels regulations given investments over past decade to enhance upgrading capabilities.…
  25. Credit Suisse Energy Summit – Marathon Petroleum Corporation – slide 25
    Sensitivities to Potential IMO Factors EBITDA Impact Key Metric Potential Impacts from 1/BBL change Higher crack required to support increased refinery Blended 321 Crack production and meet elevated demand for low sulfur fuels…
  26. Credit Suisse Energy Summit – Marathon Petroleum Corporation – slide 26
    Unprecedented Opportunities for Light Product Optimization Kenai Nationwide footprint Anacortes enables connectivity to all Mandan US markets Portland Dickinson St. Paul Detroit Park Canton Salt Lake City Chicago Pittsburgh…
  27. Credit Suisse Energy Summit – Marathon Petroleum Corporation – slide 27
    Mexico Strategy Optimization 1. 1 Utilizing ARCO brand at 105 stations in MPC Refineries Western Mexico, expanding ARCO to Martinez ARCO Operations Chihuahua and Baja Sur in early 2019 Rail Facility Terminal 2. 2 Developing Mexico…
  28. Credit Suisse Energy Summit – Marathon Petroleum Corporation – slide 28
    Operational Excellence: Delivers Significant Value Cash Operating Expense 1 Improve operating costs Galveston Bay '14 2016 U.S. Average Best-in-class energy efficiency and turnaround Cash Operating Expense Index 4th Quartile…
  29. Credit Suisse Energy Summit – Marathon Petroleum Corporation – slide 29
    R&M Segment Synergies Estimated Annual Run-Rate 1 Synergy Projections by Sub-Category ( millions) ( millions) 665 665 95 200 140 420 100 160 250 70 465 100 100 260 150 160 YE2019 YE2020 YE2021 Refining Refining…
  30. Credit Suisse Energy Summit – Marathon Petroleum Corporation – slide 30
    Roadmap to Creating Superior Value Midstream Capture Full Enhance Grow in Leverage Financial Midstream Cash Flow Premier MPC Priorities Value Chain Stability Basins Relationship Participate across Long-haul pipelines Permian: Fosters…
  31. Credit Suisse Energy Summit – Marathon Petroleum Corporation – slide 31
    U.S. Production Growth Creates Midstream Opportunities Strong production growth in crude, natural gas, and natural gas liquids will require additional infrastructure to link supply to global demand markets. Pipelines, processing,…
  32. Credit Suisse Energy Summit – Marathon Petroleum Corporation – slide 32
    Capturing Permian Opportunities: Follow the Molecule Creating an integrated footprint from Legend Crude the Permian to the Gulf Coast NGL Natural Gas 1 Gathering and processing Delaware & Midland Basins TEXAS 2 Long-haul…
  33. Credit Suisse Energy Summit – Marathon Petroleum Corporation – slide 33
    Permian G&P Feeds Downstream Opportunities Gathering systems create significant growth opportunities in the Permian TexNew Conan Mex Gathering Preakness Torado System System Argo Apollo 1 Legend Crude pipeline To Texas City…
  34. Credit Suisse Energy Summit – Marathon Petroleum Corporation – slide 34
    Permian Crude Long-Haul Pipelines Investments in long-haul pipelines generate stable, fee-based midstream income and also help lower feedstock costs tor MPC refineries Gray Oak Pipeline MPC, Diamondback Energy, PSXP Midland TEXAS…
  35. Credit Suisse Energy Summit – Marathon Petroleum Corporation – slide 35
    Permian Natural Gas Long-Haul Pipeline Expand our value chain by connecting growing natural gas production to demand from MPC refineries and global export markets Whistler Pipeline MPLX, Targa, White Water Midstream, and potentially…
  36. Credit Suisse Energy Summit – Marathon Petroleum Corporation – slide 36
    Permian NGL Long-Haul Pipeline and Fractionation Expand our value chain by connecting growing NGL production and developing new fractionation infrastructure in the Gulf Coast BANGL Pipeline (Belvieu Alternative NGL) MPLX, White Water…
  37. Credit Suisse Energy Summit – Marathon Petroleum Corporation – slide 37
    Expanding Export Assets at Five Gulf Coast Locations Export facilities create ability to generate third party revenue and meet global demand for crude, refined products, and NGLs Currently in service Mt. Airy, LA: acquired in 3Q18…
  38. Credit Suisse Energy Summit – Marathon Petroleum Corporation – slide 38
    Bakken: Third-Party Growth Opportunities Full-service midstream offering for both third parties and MPC starting at the well-head with crude oil and natural gas gathering through processing and fractionation with multiple takeaway…
  39. Credit Suisse Energy Summit – Marathon Petroleum Corporation – slide 39
    Marcellus/Utica: Footprint Continues to Deliver Marcellus/Utica continues to be the largest natural OH PA gas basin in the U.S. Current producer demand Bluestone supports our buildout of incremental infrastructure: Hopedale Harmon…
  40. Credit Suisse Energy Summit – Marathon Petroleum Corporation – slide 40
    Outlook Assumes MPLX and ANDX operate as standalone companies 2019E 2020E 2019E 2020E Growth Capital Expenditures (B)1 2.2 2.0 Growth Capital Expenditures (B)1 0.6 0.6 Adjusted EBITDA (B) 3.9 4.4 EBITDA (B) 1.4 1.6 DCF (B)2 3.1…
  41. Credit Suisse Energy Summit – Marathon Petroleum Corporation – slide 41
    Roadmap to Creating Superior Value Marketing & Retail Leverage Scale Capture Enhance High-Value to Drive Value Integration Customer Growth Creation Opportunities Experience Strong brand portfolio Optimize channel Focus on key…
  42. Credit Suisse Energy Summit – Marathon Petroleum Corporation – slide 42
    Unparalleled Nationwide Marketing & Retail Footprint Terminal Sales Location Note: Based on combined estimates for 2018 1 Across Retail segment and Brand Marketing 44
  43. Credit Suisse Energy Summit – Marathon Petroleum Corporation – slide 43
    Multi-Channel Platform Creates Unrivaled Flexibility Retail Segment R&M Segment Retail 1 Direct Dealer Brand Wholesale Channel diversity 7.8 billion GPY 2.6 billion GPY 5.3 billion GPY 16.9 billion GPY maximizes value capture…
  44. Credit Suisse Energy Summit – Marathon Petroleum Corporation – slide 44
    Strong and Diversified Fuel Branding Platform Enhanced dual proprietary Brand marketing platform (Marathon + ARCO) 1 Leverage regional brand strengths and 267 related consumer preferences 85 69 Tremendous growth opportunities in…
  45. Credit Suisse Energy Summit – Marathon Petroleum Corporation – slide 45
    Retail Segment: MPCs Unique Competitive Advantage Two complimentary retail platforms that Speedway 1 in Peer Group Performance generate stable and growing cash flow with 30 (M EBITDA/Store/Month) unparalleled integration value.…
  46. Credit Suisse Energy Summit – Marathon Petroleum Corporation – slide 46
    Retail Segment Synergies 1 Estimated Annual Run-Rate Synergy Projections by Sub-Category ( millions) ( millions) 300 300 35 90 20 200 115 50 90 210 20 150 130 70 YE2019 YE2020 YE2021 Profit Reduce Operating Reduce G&A…
  47. Credit Suisse Energy Summit – Marathon Petroleum Corporation – slide 47
    Financial Principles and Policy Disciplined investment in growth opportunities Through-cycle dividend growth Support our investment grade credit rating Return cash to shareholders through repurchases Maintain the safety, integrity…
  48. Credit Suisse Energy Summit – Marathon Petroleum Corporation – slide 48
    Balance Sheet: Foundation for Strategy Execution MPC Liquidity Minimum cash balance 1 2 billion Revolving credit facilities 6 billion Trade receivables facility 750 million Target Leverage Debt to EBITDA MPC (excluding MLPs)…
  49. Credit Suisse Energy Summit – Marathon Petroleum Corporation – slide 49
    Disciplined Capital Allocation Policy 2019 Financial Targets (excluding MLPs): Capital expenditures: 2.8 billion Dividends Capital Expenditures Capital return target: 50% of discretionary free cash flow 1 Share Repurchases…
  50. Credit Suisse Energy Summit – Marathon Petroleum Corporation – slide 50
    Disciplined Capital Spend ( billions) Projected 2019 investments for MPC MPC 2019E 2020E Growth Capital 1.8 1.8 Focused on enhancing margin capture Maintenance Capital 1.0 1.0 system-wide Total MPC (excluding MLPs) 2.8 2.8…
  51. Credit Suisse Energy Summit – Marathon Petroleum Corporation – slide 51
    Stable and Growing Dividend 1 2.12 Secure throughout business cycles Annual Dividends ( per share) 1.84 Growth commensurate with the business 1.52 1.36 1.14 Targeting 10% long-term growth rate 0.92 0.77 0.60 2012…
  52. Credit Suisse Energy Summit – Marathon Petroleum Corporation – slide 52
    Consistent Return of Capital Through Share Buybacks Share Repurchases ( billions) 7.5 4th quarter of 2018: 675 million of repurchases 3.3 Capital return target: 50% of 2.4 discretionary free cash flow1 Existing authorization…
  53. Credit Suisse Energy Summit – Marathon Petroleum Corporation – slide 53
    Global & U.S. Economic Outlook Positive Global gasoline demand grows with rising consumer incomes and higher vehicle miles travelled, partially offset by fuel efficiency trends. Distillate demand growth outpaces gasoline, driven by…
  54. Credit Suisse Energy Summit – Marathon Petroleum Corporation – slide 54
    Global Refining Capacity Relatively Balanced Net worldwide refining capacity growth appears relatively balanced with new capacity in Asia and the Middle East, primarily to support domestic demand. Global Crude Distillation Capacity…
  55. Credit Suisse Energy Summit – Marathon Petroleum Corporation – slide 55
    Global and U.S. Inventories Support Refining Margins Global Gasoline Inventories Global Distillate Inventories 425 650 MMB MMB 375 550 325 450 U.S. Gasoline Days of Supply U.S. Distillate Days of Supply 28 35 26…
  56. Credit Suisse Energy Summit – Marathon Petroleum Corporation – slide 56
    Near-Term Gasoline Weakness, Offset by Long-Term Distillate Strength Rise in oil prices this year slowed global gasoline demand growth and strong margins have incentivized high refinery utilization pressuring gasoline margins; expect…
  57. Credit Suisse Energy Summit – Marathon Petroleum Corporation – slide 57
    Commodity Price Assumptions and Long-Term Outlook Commodity / Spread 2018 2019 Long-Term (/BBL, unless noted) Average 1 Business Plan 2 Outlook2 WTI 65.00 64 50 - 80 Brent-WTI 6.75 3.60 3 - 12 Brent-ANS (0.25) 0.10 (1) - 2…
  58. Credit Suisse Energy Summit – Marathon Petroleum Corporation – slide 58
    Regional Crack Spread Outlook USGC LLS 321 Chicago WTI 321 14.25 14 16 8.50 9.25 9.75 12.75 8.00 /BBL /BBL 6.00 9.00 2016 2017 2018 2019E-2021E 2016 2017 2018 2019E-2021E Average Average WC ANS 321 ULSD - 3% Resid…
  59. Credit Suisse Energy Summit – Marathon Petroleum Corporation – slide 59
    Turnaround Accounting Impacts Peer Comparisons MPC will continue to expense turnarounds (TAR); ANDV had deferred and amortized these costs TAR-adjusted EBITDA will be provided quarterly to increase comparability with peers Pro-Forma…
  60. Credit Suisse Energy Summit – Marathon Petroleum Corporation – slide 60
    New MPC Segment Reporting Structure Refining & Midstream Retail Marketing Refining MPLX Retail Marketing Speedway ANDX Other Brand Wholesale Direct Dealer Asphalt & Legacy ANDV Petrochemicals Legacy MPC Refining Logistics…
  61. Credit Suisse Energy Summit – Marathon Petroleum Corporation – slide 61
    New MPC Segment Reporting Structure Refining & Marketing Midstream Retail Regions: MPLX Retail Gulf Coast ANDX Direct dealers Mid-Con Other midstream assets West Coast Marketing: Key Statistics: Key Statistics: Brand Pipeline,…
  62. Credit Suisse Energy Summit – Marathon Petroleum Corporation – slide 62
    First Quarter 2019 Outlook Other Corporate Turnaround Other Total Crude Charge/ Total Sweet Sour Depreciation and and Other and Major Manufacturing Direct Operating Throughput1 Feedstocks Throughput1 Crude Crude Amortization…
  63. Credit Suisse Energy Summit – Marathon Petroleum Corporation – slide 63
    Market Data Terminologies Metric Formula Mid-Con Crack Spread* ((2xChicago CBOB Gasoline + Chicago ULSD)/3) x 42 WTI Prompt West Coast Crack Spread* ((2xLA CARBOB + LA CARB Diesel)/3) x 42 ANS Prompt USGC Crack Spread* ((2xUSGC…
  64. Credit Suisse Energy Summit – Marathon Petroleum Corporation – slide 64
    MPLX 2019-2020 Outlook Reconciliation Adjusted EBITDA and Distributable Cash Flow from Net Income ( billion) 2019E 2020E Net income 2.2 2.5 Depreciation and amortization 0.9 1.0 Net interest and other financial costs 0.7 0.7…
  65. Credit Suisse Energy Summit – Marathon Petroleum Corporation – slide 65
    MPLX 2019-2020 Outlook Reconciliation Adjusted EBITDA and Distributable Cash Flow from Net Cash Provided by Operating Activities ( billion) 2019E 2020E Net cash provided by operating activities 3.2 3.8 Changes in working capital…
  66. Credit Suisse Energy Summit – Marathon Petroleum Corporation – slide 66
    ANDX 2019-2020 Outlook Reconciliation EBITDA and Distributable Cash Flow from Net Earnings ( billion) 2019E 2020E Net earnings 0.8 0.8 Depreciation and amortization 0.4 0.5 Net interest and other financial costs 0.2 0.3 EBITDA 1.4…
  67. Credit Suisse Energy Summit – Marathon Petroleum Corporation – slide 67
    Speedway EBITDA Reconciliation Segment EBITDA to Segment Income from Operations ( million) 2017 2018 Q3 Q4 Q1 Q2 LTM Speedway Segment Income from Operations 208 148 95 159 610 Plus: Depreciation and Amortization 68 78 79 73 298…

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