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SIMMONS ENERGY CONFERENCE – Marathon Petroleum Corporation

Marathon Petroleum Corporation · Feb 27, 2014 · 65 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. SIMMONS ENERGY CONFERENCE – Marathon Petroleum Corporation – slide 1
    Simmons Energy Conference February 27, 2014
  2. SIMMONS ENERGY CONFERENCE – Marathon Petroleum Corporation – slide 2
    Our Priorities for Our Investors Maintain top tier safety and environmental performance Sustain our focus on shareholder returns Balance capital returns with value-enhancing investments Grow higher valued and stable cash flow…
  3. SIMMONS ENERGY CONFERENCE – Marathon Petroleum Corporation – slide 3
    Demonstrating Our Corporate Values The foundation for all that we do Health and Safety Environmental Stewardship Product Stewardship Honesty and Integrity Corporate Citizenship Diversity and Inclusion 4
  4. SIMMONS ENERGY CONFERENCE – Marathon Petroleum Corporation – slide 4
    Focused Return of Capital to Shareholders 5.9x free cash flow LTM LTM Ended 12/31/13 7,000 6,000 Dividends and share 5,000 repurchases* 5.9x of 3,277 Free Cash Flow** 4,000 Cash capital expenditures, MM acquisitions and…
  5. SIMMONS ENERGY CONFERENCE – Marathon Petroleum Corporation – slide 5
    Delivering Peer Leading Return of Capital Last twelve months 16 14.7 14 12 10 9.1 8.7 Percent 12.3 7.9 8 2.2 6.4 6 6.7 5.2 4.3 3.8 4 2 2.4 2.6 2.0 2.7 2.6 0 MPC HFC TSO PSX VLO Dividend Yield Special Dividend Yield…
  6. SIMMONS ENERGY CONFERENCE – Marathon Petroleum Corporation – slide 6
    Performing Consistently in the Top Tier Engine behind MPCs focus on capital returns Operating Income Per Barrel of Crude Throughput** 20 MPCs Rank 15 Competitor Range 1 2 10 /BBL 2 5 1 1 3 2 5 2 7 3 3 1 3 3 2 0 -5…
  7. SIMMONS ENERGY CONFERENCE – Marathon Petroleum Corporation – slide 7
    Allocating Capital in the Past Predominately focused on refining Segment Capital Expenditures* Segment EBITDA** 7,000 7,000 6,000 6,000 5,000 5,000 4,000 4,000 MM MM 3,000 3,000 2,000 2,000 1,000 1,000 0 0 2007 2008 2009…
  8. SIMMONS ENERGY CONFERENCE – Marathon Petroleum Corporation – slide 8
    Allocating Capital in the Future Drive growth in more stable cash flow and higher value businesses Sandpiper Pipeline Midstream/MPLX Southern Access Extension Aggressive growth Pipeline Utica Speedway Organic growth Growth in…
  9. SIMMONS ENERGY CONFERENCE – Marathon Petroleum Corporation – slide 9
    Allocating Capital to Higher Valued Businesses 2012 2016 Capital Investment Profile 4,000 3,500 3,000 2,500 MM 2,000 1,500 1,000 500 0 2012 2013 2014E 2015E 2016E Refining and Marketing, excluding Midstream…
  10. SIMMONS ENERGY CONFERENCE – Marathon Petroleum Corporation – slide 10
    Macro Outlook 11
  11. SIMMONS ENERGY CONFERENCE – Marathon Petroleum Corporation – slide 11
    Growing Gulf Coast Export Capabilities Added new 500,000 barrel export Export Capacity 500 475 tank at Garyville in 2013 450 400 350 Low cost, high return dock 350 320 expansions at Garyville and 300 Galveston Bay in design…
  12. SIMMONS ENERGY CONFERENCE – Marathon Petroleum Corporation – slide 12
    Expecting Attractive Crude Spreads MPC Outlook Brent/WTI Spread 7-12/BBL, wider at times LLS/WTI Spread 5-10/BBL, transportation/quality based 3-5/BBL, domestic light sweet crude Brent/LLS surplus Competes with WTI and LLS,…
  13. SIMMONS ENERGY CONFERENCE – Marathon Petroleum Corporation – slide 13
    Growth Opportunities 14
  14. SIMMONS ENERGY CONFERENCE – Marathon Petroleum Corporation – slide 14
    Increasing Midstream Growth Investments 1,200 Midstream Infrastructure* 1,000 Condensate Splitters 800 MM 600 400 200 0 2007 2008 2009 2010 2011 2012 2013 2014E 2015E 2016E *Includes MPLX spend, midstream investments…
  15. SIMMONS ENERGY CONFERENCE – Marathon Petroleum Corporation – slide 15
    Investing in Significant Growth Projects North Dakota System (Sandpiper) Logistics equity opportunity MPC Length, size: 610 Mile, 24/30 + North Dakota Classic System and Bakken Pipeline U.S. Canadian Capacity: 580 MBD In-Service:…
  16. SIMMONS ENERGY CONFERENCE – Marathon Petroleum Corporation – slide 16
    Investing in Significant Growth Projects Southern Access Extension (SAX) Logistics equity opportunity MPC Length, size: 165 Mile, 24 Capacity: 300 MBD Canadian In-Service: 2Q 2015 MPC Investment: 250 MM MPC Equity: 35% Bakken…
  17. SIMMONS ENERGY CONFERENCE – Marathon Petroleum Corporation – slide 17
    Developing a Comprehensive Utica System Proposed MPLX To Toledo, Detroit, Chicago and Canada Cornerstone Pipeline Pa. investment Youngstown 140 MM Canton Capacity Midland 25+ MBD Lima Wellsville Steubenville M3, Leesville…
  18. SIMMONS ENERGY CONFERENCE – Marathon Petroleum Corporation – slide 18
    Current Retained Midstream EBITDA of 800 MM Additional Midstream Assets Retained by MPC More than 5,000 miles of additional crude and products pipelines Pipelines Owns, leases or has an ownership interest in these pipelines 44% of…
  19. SIMMONS ENERGY CONFERENCE – Marathon Petroleum Corporation – slide 19
    MPLX Summary MPLX will be MPCs primary midstream growth vehicle Large portfolio of fee-based growth projects that will be immediately accretive to distributable cash flow Clear line of sight to MPC midstream asset portfolio to support…
  20. SIMMONS ENERGY CONFERENCE – Marathon Petroleum Corporation – slide 20
    Growing More Predictable Merchandise Margin Speedway Total Light Product Volume and Margin Total Merchandise Sales and Margin 3,200 600 3,200 1,000 3,000 3,000 900 MM Gallons MM Margin MM Margin 500 MM Sales 2,800 2,800…
  21. SIMMONS ENERGY CONFERENCE – Marathon Petroleum Corporation – slide 21
    Executing Significant Organic Growth Opportunities Speedway Capex 350 340 327 296 300 300 300 250 MM 200 150 103 100 50 0 2007-2011 2012 2013 2014E 2015E 2016E Average Store Construction Acquisitions All Other of…
  22. SIMMONS ENERGY CONFERENCE – Marathon Petroleum Corporation – slide 22
    Growing Cash Flow Through All Cycles Speedway Segment EBITDA* 650 630 550 560 500 MM 450 487 404 424 350 381 250 2010 2011 2012 2013 2014E 2015E 2016E *Non-GAAP disclosure, see appendix for reconciliation to Speedway…
  23. SIMMONS ENERGY CONFERENCE – Marathon Petroleum Corporation – slide 23
    Enhance Refining Margins 24
  24. SIMMONS ENERGY CONFERENCE – Marathon Petroleum Corporation – slide 24
    Increasing Light Sweet Crude and Condensate Capacity Condensate splitters Canton: 25 MBD 4Q 2014 completion Condensate Processing Opportunity Catlettsburg: 35 MBD Ultra- New Light Naphtha to Gasoline Blending Sweet Fractionator…
  25. SIMMONS ENERGY CONFERENCE – Marathon Petroleum Corporation – slide 25
    Leveraging Existing Capacity to Run Light Sweet Crude Reforming Capacity Reformer capacity captures full 30 value of light crude processing 25 Percent of Crude Capacity 20 Industry Average 15 Additional value added through…
  26. SIMMONS ENERGY CONFERENCE – Marathon Petroleum Corporation – slide 26
    Capitalizing on Global Growth in Diesel Demand Hydrocracker expansions/revamps Distillate Production 700 Garyville +25 MBD ULSD in 2014-15 600 225 MM 500 MBD 45% ROI 400 Galveston Bay +9 MBD ULSD in 2015 300 18 MM 2012…
  27. SIMMONS ENERGY CONFERENCE – Marathon Petroleum Corporation – slide 27
    Evaluating Garyville Resid Hydrocracker Project Conversion opportunity - leverages favorable market dynamics 130 MM sanctioned for front end engineering and design Increases ULSD production by 28 MBD and decreases gas oil purchases…
  28. SIMMONS ENERGY CONFERENCE – Marathon Petroleum Corporation – slide 28
    2014 Value Drivers Top tier safety and environmental performance Capital return to shareholders Strong and growing dividend Share repurchase program 2014 2.4 B capital investments Growth of Midstream/MPLX Speedway growth…
  29. SIMMONS ENERGY CONFERENCE – Marathon Petroleum Corporation – slide 29
    Appendix 30
  30. SIMMONS ENERGY CONFERENCE – Marathon Petroleum Corporation – slide 30
    Fully Integrated Downstream System Refining and Marketing Seven-plant refining system with 1.7 MMBPCD capacity One of the largest wholesale suppliers in our market area One of the largest producers of asphalt in the U.S. 5,200…
  31. SIMMONS ENERGY CONFERENCE – Marathon Petroleum Corporation – slide 31
    Generating Significant Cash Flow Through All Cycles Pro forma EBITDA adjusted for current configuration Pro forma EBITDA 8,000 7,000 6,000 5,000 MM 4,000 3,000 2,000 1,000 0 2008 2009 2010 2011 2012 2008 thru 2012 Mid…
  32. SIMMONS ENERGY CONFERENCE – Marathon Petroleum Corporation – slide 32
    Sustaining Core Liquidity Needs Minimum cash balance of 500 MM - 1.5 B Requirements Ongoing Operating Cash Flow Requirements Maintenance/Sustaining Capital Interest Payments Dividend Payments Contingent Calls on Corporate Liquidity…
  33. SIMMONS ENERGY CONFERENCE – Marathon Petroleum Corporation – slide 33
    Sustaining Capital Returns Since Spin Cumulative Return of Capital Since July 1, 2011 6,000 5.2 B 5,000 4,000 MM 3,000 2,000 1,000 0 Q3 2011 Q4 2011 Q1 2012 Q2 2012 Q3 2012 Q4 2012 Q1 2013 Q2 2013 Q3 2013 Q4 2013…
  34. SIMMONS ENERGY CONFERENCE – Marathon Petroleum Corporation – slide 34
    Growing Global Product Demand Distillate and gasoline demand 2012 120 Actual Forecast continues to rise Compounded Annual Growth Rates 100 Fuel oil continues to 2025 vs. 2012 +1.4% be phased out due 80 to tightening sulfur…
  35. SIMMONS ENERGY CONFERENCE – Marathon Petroleum Corporation – slide 35
    Growing U.S. Distillate Demand Overall U.S. demand remains flat Distillate demand 12 2012 Actual Forecast growth outpaces other Compounded Annual Growth Rates products 10 2025 vs. 2012 Gasoline Gasoline will be 8 -0.3%…
  36. SIMMONS ENERGY CONFERENCE – Marathon Petroleum Corporation – slide 36
    Shuttering Vulnerable Refining Capacity Offsets a portion of capacity expansion Net Change Expansions Vulnerable Capacity 7 6 5 4 3 MMBD 2 +4.10 +4.10 +2.85 +2.85 1 +0.78 +0.78 +0.92 +0.92 +1.04 +1.04 +0.61 0 +0.61…
  37. SIMMONS ENERGY CONFERENCE – Marathon Petroleum Corporation – slide 37
    Rising North American Production 2012 16 Actual Forecast 14 12 10 MMBD 8 Canada 6 4 United States 2 0 1970 1975 1980 1985 1990 1995 2000 2005 2010 2015 2020 2025 Sources: EIA, CAPP, MPC 38
  38. SIMMONS ENERGY CONFERENCE – Marathon Petroleum Corporation – slide 38
    Growing Crude Oil/Condensate Supply North Dakota 2012 1,600 1,400 1,200 1,000 MBD 800 600 400 Canada 200 Total Growth 0 Actual Forecast +3,575 MBD 2012 2025 1980 1985 1990 1995 2000 2005 2010 2015 2020 2025 +5,860 MBD…
  39. SIMMONS ENERGY CONFERENCE – Marathon Petroleum Corporation – slide 39
    MPC Refining Capacity in Advantaged Regions 100% in PADDs II and III Canadian Bakken 100% Utica 80% PADD IV PADD II 60% PADD V 40% PADD I 20% PADD III 0% Permian Basin Eagle Ford MPC VLO HFC PSX TSO Gulf of Mexico PADD…
  40. SIMMONS ENERGY CONFERENCE – Marathon Petroleum Corporation – slide 40
    MPC Refinery Capacity BPCD NCI* Garyville 522,000 11.0 Galveston Bay 451,000 13.1 Catlettsburg 242,000 10.2 Robinson 212,000 10.0 Detroit 123,000 9.9 Texas City 84,000 8.0 Canton 80,000 8.8 Total 1,714,000 11.0** The Nelson…
  41. SIMMONS ENERGY CONFERENCE – Marathon Petroleum Corporation – slide 41
    Balance in Refining Network Canton (Ohio) 80,000 Catlettsburg (Ky.) 242,000 Detroit (Mich.) 123,000 Midwest Capacity 657,000 BPCD Robinson (Ill.) 212,000 Galveston Bay (Texas) 451,000 Texas City (Texas) 84,000 Garyville (La.) 522,000…
  42. SIMMONS ENERGY CONFERENCE – Marathon Petroleum Corporation – slide 42
    U.S./Canada Key Existing and Planned Pipelines Edmonton Trans Hardisty Mountain Burnaby Anacortes Regina Cromer Clearbrook Montreal Superior Estimated Portland MBPD Pipeline Completion Sarnia 540 Keystone Current 215 Ozark…
  43. SIMMONS ENERGY CONFERENCE – Marathon Petroleum Corporation – slide 43
    Compelling Advantage for Pipeline and Marine Canadian 10-12 Bakken 4 14-16 15-16 2 5 12-14 Chicago, IL 5-6 Patoka, IL 6-7 5 13-15 WTI Cushing, OK Legend Rail 10 Pipeline Marine 2 St. James, LA Houston, TX LLS…
  44. SIMMONS ENERGY CONFERENCE – Marathon Petroleum Corporation – slide 44
    MPC Creating Crude/Condensate Advantage Canada +3,575 MBD Cornerstone Pipeline Bakken Condensate Splitter +840 MBD Truck Unload Expansion Sandpiper Utica +135 MBD Southern Access Extension Patoka, IL Wellsville Barge…
  45. SIMMONS ENERGY CONFERENCE – Marathon Petroleum Corporation – slide 45
    Garyville Resid Hydrocracker Project Increase production of ULSD and refinery intermediates Feeds MBPD Vacuum Resid 63 FCC Slurry 7 Hydrogen LPG to Sales Hydrogen (mmscfd) 110 Naphtha to Reformer Slurry Resid Products MBPD…
  46. SIMMONS ENERGY CONFERENCE – Marathon Petroleum Corporation – slide 46
    Increasing Throughputs and Lowering Costs Galveston Bays first year Excellent HES record Higher refinery throughputs and lower operating costs Focused on reliability and yield improvements 38 MM margin improvements captured…
  47. SIMMONS ENERGY CONFERENCE – Marathon Petroleum Corporation – slide 47
    Processing More Price Advantaged Crude Oil Galveston Bays first year Canadian/ Bakken Eliminated foreign sweets and increased Canadian Heavy Permian Seaway Basin Keystone XL imports Longhorn BridgeTex Permian Express Galveston…
  48. SIMMONS ENERGY CONFERENCE – Marathon Petroleum Corporation – slide 48
    Increasing Profitability Galveston Bay: significant and low cost opportunities More than 110 MM of synergies 160 Annual Projected Synergies in 2013 120 Synergy projects MM 80 Building inter-refinery 40 connections to Texas…
  49. SIMMONS ENERGY CONFERENCE – Marathon Petroleum Corporation – slide 49
    Galveston Bay Sustaining expenditures trending lower 1,000 800 600 MM 400 200 0 2013 2013E 2014E 2014E 2015E 2015E 2016E 2016E Original Capital Original Major Maintenance Current Capital Current Major…
  50. SIMMONS ENERGY CONFERENCE – Marathon Petroleum Corporation – slide 50
    Galveston Bay Long-term opportunities Revamp crude and vacuum units Optimize for future crude availability Improve distillate recovery Add hydrotreating capacity Move to 100% ULSD Evaluate gas oil hydrocracker options Idle the…
  51. SIMMONS ENERGY CONFERENCE – Marathon Petroleum Corporation – slide 51
    2014 Significant Capital Projects Sandpiper investment Southern Access Extension investment Utica Shale projects Condensate splitters Utica system Speedway expansion Robinson hydrocracker revamp Garyville resid hydrotreater…
  52. SIMMONS ENERGY CONFERENCE – Marathon Petroleum Corporation – slide 52
    Capital Expenditures & Investments (MM) 2014 MPC Budget Refining & Marketing (R&M) 864 Midstream included in R&M 348 Speedway 327 Pipeline Transportation* 760 Corporate and Other 133 Total Capital Expenditures & Investments…
  53. SIMMONS ENERGY CONFERENCE – Marathon Petroleum Corporation – slide 53
    Annual Price and Margin Sensitivities Millions (After Tax) LLS 6-3-2-1 Crack Spread* Sensitivity 450 (per 1.00/barrel change) Sweet/Sour Differential** Sensitivity 200 (per 1.00/barrel change) LLS-WTI Spread*** Sensitivity 85…
  54. SIMMONS ENERGY CONFERENCE – Marathon Petroleum Corporation – slide 54
    MPLX Industry Leading MLP 50 Focus on Fee-Based Businesses 45 Unit Price 40 Pursue Organic Growth Opportunities 35 Grow Through Acquisitions 30 and Drop-downs 25 IPO Maintain Safe and Reliable 20 Operations 10/25/12…
  55. SIMMONS ENERGY CONFERENCE – Marathon Petroleum Corporation – slide 55
    MPLX and MPC are Aligned MPLX Organizational Structure Marathon Petroleum MPC views MPLX as integral to Corporation and Affiliates (NYSE: MPC) its operations and is aligned with its success and 100.0% 71.6% incentivized to grow…
  56. SIMMONS ENERGY CONFERENCE – Marathon Petroleum Corporation – slide 56
    MPLX Distribution Growth Annual distribution growth is targeted at 15-20% for the next Organic several years Growth Acquisitions MPLX could enter the 50% high IDR tier in 2015 2014-2016 700 million to Drop- 1.2 billion of…
  57. SIMMONS ENERGY CONFERENCE – Marathon Petroleum Corporation – slide 57
    Investing in Significant Growth Projects 2.2 B investment with potential annual EBITDA of up to 300 MM MPC Projects Timing Investment MM North Dakota Pipelines Equity Option 2016 1,200 Condensate Splitters 2013-2015 250 SAX Equity…
  58. SIMMONS ENERGY CONFERENCE – Marathon Petroleum Corporation – slide 58
    Leveraging Existing MPC Assets Utica Shale Strategy Expand refinery processing capacity to leverage geographic advantage Condensate splitters at Canton and Catlettsburg Increases total crude plus condensate processing capacity to 60…
  59. SIMMONS ENERGY CONFERENCE – Marathon Petroleum Corporation – slide 59
    Drop-down Strategy Considerations MPC created MPLX to grow midstream business and create a funding mechanism for strategic opportunities MPLX investors highly value a consistent, long-term growth strategy Ratable drops maximize value…
  60. SIMMONS ENERGY CONFERENCE – Marathon Petroleum Corporation – slide 60
    MPLX Pipeline Throughput Agreements Initial MPC Min. 2011 MPC Est. 12 Mo. Ended 12/31/132 Term Diameter Commitment3 Throughput4 Weighted Average MPC Min. Asset (Years) (Inches) (MBPD) (MBPD) Tariff ( / BBL) Revenue (MM) Crude Systems…
  61. SIMMONS ENERGY CONFERENCE – Marathon Petroleum Corporation – slide 61
    MPLX Deficiency Payment Effect Example to be used for illustration purposes only (MM) 4Q 2012 1Q 2013 2Q 2013 3Q 2013 4Q 2013 1Q 2014 2Q 2014 Quarterly Deficiency payment 2 5 3 5 - - - Use or expiration of credit (on or before) - - - -…
  62. SIMMONS ENERGY CONFERENCE – Marathon Petroleum Corporation – slide 62
    EBITDA Reconciliation to Net Income Attributable to MPC (MM) 2007 2008 2009 2010 2011 2012 2013 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q Net income attributable to MPC 2,262 1,215 449 623 2,389 596 814 1,224 755 725 593 168 626 Less: Net interest…
  63. SIMMONS ENERGY CONFERENCE – Marathon Petroleum Corporation – slide 63
    Reconciliation Free Cash Flow to Net Cash Provided by (Used in) Operations (MM) 2013 (Quarter to date) 1Q 2Q 3Q 4Q Net cash provided by (used in) operating activities 2,079 (436) 407 1,355 Additions to property, plant and…
  64. SIMMONS ENERGY CONFERENCE – Marathon Petroleum Corporation – slide 64
    Reconciliation Speedway Segment EBITDA to Speedway Segment Income from Operations (MM) 2010 2011 2012 2013 2014E 2015E 2016E Speedway Segment Income from Operations 293 271 310 375 380 431 493 Plus: Depreciation and Amortization 111…
  65. SIMMONS ENERGY CONFERENCE – Marathon Petroleum Corporation – slide 65
    Market Indicators Used in Project EBITDA Calculations 2012 2014-2020 ULSD (USGC; /BBL) 128.14 136.33 No. 6, 3.0% S Fuel Oil (USGC; /BBL) 99.32 94.48 LLS (St. James, LA; /BBL) 111.67 114.82 Natural Gas (Henry Hub, LA; /MMBTU) 2.79…

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