Wolfe Research Oil and Gas Conference January 6, 2015
Macro Outlook 3
Current Market Trends Positive domestic outlook Sustainable U.S. refining advantages Product exports growth Significant infrastructure investments in U.S. 4
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,…
Our Priorities for Our Investors Maintain top-tier safety and environmental performance Substantially accelerate the growth of MPLX Sustain our focus on shareholder returns Balance capital returns with value-enhancing investments…
Substantial Acceleration of MPLX Growth Grow MPLX to 450 MM of run-rate EBITDA (December 2015 annualized), Adjusted EBITDA attributable to MPLX 500 from current 160 MM run-rate 450 (3Q 2014 annualized) 400 Accelerate MPLXs annual…
Substantial Acceleration of MPLX Growth Rapidly changing midstream business environment creates multiple opportunities where size matters Hess retail acquisition has expanded MPCs opportunity set and strategic options Identified…
Illustrative Value of MPC Ownership in MPLX* Illustrative Value of MPC Ownership Total Distributions to MPC based on 2019E Distributions** 25 24.8 600 557 500 20.4 20 389 GP Distributions 16.0 400 GP 15 MM 55x GP…
MPCs Currently Identified Eligible MLP EBITDA Sources of 1.6 B Retained by MPC 5,400 miles of additional crude and products pipelines Owns, leases or has an ownership interest in these pipelines Pipelines 0.5% of MPLX Pipe Line…
Delivering Peer Leading Return of Capital Last twelve months* 12.0% 10.0% 10.0% 8.3% 8.3% 8.0% 7.9% 1.4% 6.0% 8.0% 5.9% 6.4% 5.6% 4.3% 4.0% 3.9% 2.0% 2.6% 2.3% 2.0% 1.9% 2.0% 0.0% MPC HFC TSO PSX VLO Dividend…
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 2 5 5 3 2 7 3 3 3 3 1 2 0 -5…
Investing in Significant Growth Projects Youngstown Sandpiper Canton Pa. MPC Investment: 1.0 B - 1.2 B Canadian Midland MPC Equity: 27% - 30% Wellsville 2017 completion Bakken M3, Leesville Steubenville M3, Scio Southern Access…
MPLX/MPC Utica Build-Out Connectivity 17
MPLX Developing a Comprehensive Utica System Cornerstone Pipeline and Additional Opportunities Non-binding open season supports 12 inch pipeline, 16 inch option Capital estimates vary subject to binding open season results East and…
Acquisition of Hess Retail - Transaction Overview Hess Retail acquisition included: 1,245 company operated locations Transport fleet with capacity to transport 1 B gal/yr. Pipeline shipper history in various pipelines, including 40…
Conversion Plans for Former Hess Stores 2014-2017 Conversion to Speedway: 181 MM 500 Stores by Dec. 2015 505 Stores by Dec. 2016 Remodel Capital: 240 MM Maintenance Capital: 150 MM Largest conversion in companys history…
Transformative Transaction for MPC and Speedway Accelerates strategy to grow higher valued and stable cash flow businesses Provides larger integrated platform for growth in new markets Meaningfully expands scale and provides multiple…
Enhances Strategic Value for Integrated System Refined Product Placement Opportunities Incremental 200 MBPD of refined products placement capacity, increases assured gasoline sales to 75% of production Incremental supply of MPC Gulf…
Speedway Earnings growth through Margin Capture Top-tier performance in the convenience store industry Scalable technology and organizational infrastructure Disciplined expense control Industry leading consumer loyalty program…
Synergies and Marketing Enhancements Will Drive Value Operating and G&A expense synergies of 75 MM Integrated light product supply savings of 45 MM Additional sales uplift and merchandise margin enhancement of 70 MM Expedited…
Speedway and Hess Side-by-Side Comparison Speedway generates an incremental 17,300 of merchandise margin per store per month 250 MM of additional annual merchandise margin potential across Hess retail Hess1 Speedway2 Company…
Focus on Improving Light Product Breakeven 13 12.39 11 Each 1.00 cent per Total Expenses Merchandise Margin gallon improvement LPBE = 9 Light Product Volume = 30 MM annual Light Product Break Even (cpg) pretax earnings…
Enhance Refining Margins 27
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…
Growing Gulf Coast Export Capabilities Added new 500,000 barrel export 550 Export Capacity 510 tank at Garyville in 2013 500 450 Galveston Bay in 2015 395 400 +30 MBD ULSD 350 320 40% ROI 300 MBD Garyville in 2015 250 200…
Capitalizing on Global Growth in Diesel Demand Hydrocracker expansions/revamps Distillate Production 700 Garyville +25 MBD ULSD in 2014-15 600 225 MM MBD 500 45% ROI 400 300 Galveston Bay +9 MBD ULSD in 2015 2012 2013 2014E…
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…
2014 Value Drivers Top-tier safety and environmental performance Accelerate growth of Midstream/MPLX Capital return to shareholders Strong and growing dividend Share repurchase program 2014 2.4 B capital investments* Speedway…
Appendix 33
MPLX LP and GP Illustrative Valuation MPC Distributions & Asset Sales Proceeds from MPLX (MM) 3Q 2013 YTD 3Q 2014 YTD GP Distributions, including IDRs 1 3 LP Distributions 40 53 Total Cash Distribution Received from MPLX 41 56 Asset…
Focused Return of Capital to Shareholders LTM Ended 9/30/14 8,000 7,000 6,000 2,785 Hess Retail Acquisition 5,000 Dividends and share MM repurchases* 4,000 1.2x of 2,413 2,055 Free Investments, excluding Hess Free Cash…
Fully Integrated Downstream System Refining and Marketing Seven-plant refining system with 1.7 MMBPCD capacity One biodiesel facility and interest in three ethanol facilities One of the largest wholesale suppliers in our market area…
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 2009 2010 2011 2012 2013 2009 thru 2013 Mid…
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…
Sustaining Capital Returns Since Spin Cumulative Return of Capital Since July 1, 2011 8,000 7.0 B 7,000 6,000 5,000 MM 4,000 3,000 2,000 1,000 0 Dividends Share repurchases 39
Growing Global Product Demand Compounded Annual Growth Rates 2030 vs. 2013 2013 Distillate and gasoline 120 Actual Forecast demand continues to 100 rise +1.2% Other Fuel oil continues 80 -1.6% to decline on Fuel Oil MMBD…
Growing U.S. Distillate Demand Overall U.S. demand remains flat 2013 Compounded 10 Annual Distillate demand Actual Forecast Growth Rates 2030 vs. 2013 growth outpaces other 9 Gasoline -0.3% products 8 Gasoline ex ethanol -0.4%…
Rising North American Crude & NGLs Production 2013 25 Actual Forecast 20 Canada 15 MMBD 10 U.S. 5 0 1985 1990 1995 2000 2005 2010 2015 2020 2025 2030 Sources: EIA, CAPP, MPC 42
U.S. Shale Oil Production Under Different Price Scenarios U.S. Shale Crude and Condensate Production (MMBD) 9.5 9.0 120 8.5 8.0 7.5 100 7.0 6.5 6.0 90 MMBD 5.5 5.0 4.5 80 4.0 3.5 3.0 70 2.5 2.0 60 1.5 1.0 0.5…
Much of OPEC Depends on High Crude Prices OPEC Fiscal Breakevens (/BBL) 160 140 120 100 80 2010 2012 60 2014 40 20 0 Source: Apicorp 45
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…
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…
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…
U.S./Canada Key Existing and Planned Pipelines Northern Edmonton Gateway Hardisty Trans Mountain Burnaby Anacortes Estimated MBPD Pipeline Completion Clearbrook Superior Montreal Portland 540 Keystone Current 190 Spearhead…
Key Strengths Balanced Operations Crude Oil Refining Capacity Crude Slate 62% PADD II Sour Crude 52% 48% PADD III Sweet Crude 38% As of September 30, 2014 September 30, 2014 YTD Assured Sales of Gasoline Production…
Compelling Advantage for Pipeline and Marine Canadian 10-12 Bakken 4 14-16 15-16 2 6 12-14 Chicago, IL Utica 5-6 Patoka, IL 6-7 13-15 5 5-6 WTI Cushing, OK Legend Rail 10 Pipeline Marine 2 St. James, LA Houston,…
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…
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 Idle the smallest and oldest FCC Expand export…
Leveraging Existing Capacity to Run Light Sweet Crude 48% sweet crude oil throughput Reforming Capacity 30 September 2014 YTD versus 65% 25 Percent of Crude Capacity sweet crude oil capacity 20 Industry Average Reformer…
Renewable Fuels Corn Ethanol Plants 67% equity interest* in Greenville, Ohio 110 MM gallon/year capacity 60% equity interest in Clymers, Indiana 110 MM gallon/year capacity 43% equity interest in Albion, Michigan 55 MM…
MPLXs Priorities for Investors 80 Maintain Safe and Reliable Operations Unit Price 70 Sustain Long-term Distribution Growth; Mid 20% for 60 the Next Five Years 50 Focus on Fee-Based Businesses 40 Pursue Organic Growth…
MPLX and MPC are Aligned MPLX Organizational Structure MPC views MPLX as integral to Marathon Petroleum Corporation and Affiliates its operations and is aligned (NYSE: MPC) with its success and 100.0% incentivized to grow MPLX…
Investing in Significant Growth Projects 2.3 B investment with potential annual EBITDA of up to 300 MM MPC Projects Timing Investment MM North Dakota System Equity 2017 1,200 Condensate Splitters 2013-2015 250 Southern Access…
MPLX Deficiency Payment Effect Example for illustrative purposes only Quarter Quarter Quarter Quarter Quarter Quarter Quarter (MM) 1 2 3 4 5 6 7 Quarterly deficiency payment 2 5 3 5 - - - Use or expiration of credit (on or before) -…
Incentive Distribution Rights 3Q 2014 distribution of 0.3575/unit is in Third Target Distribution tier 66
4Q 2014 Outlook Other Total Corporate Percent of Turnaround Depreciation Other Crude Charge/ Total Direct and Other WTI-priced and Major and Manufacturing Throughput* Feedstocks Throughput* Operating Unallocated Crude Maintenance…
MPLX Adjusted EBITDA Reconciliation from Net Income 3Q 2014 Dec. 2015 (MM) 2013 Annualized Annualized Net income 146 172 305 Less: Net income attributable to MPC- 68 56 1 retained interest Net income attributable to MPLX LP 78…
EBITDA Reconciliation to Net Income Attributable to MPC (MM) 2007 2008 2009 2010 2011 2012 2013 2014 1Q 2Q 3Q 4Q 1Q 2Q 3Q Net income attributable to MPC 2,262 1,215 449 623 2,389 3,389 725 593 168 626 199 855 672 Less: Net…
Reconciliation Free Cash Flow to Net Cash Provided by Operations (MM) 2013 2014 (For the Quarter) 4Q 1Q 2Q 3Q Net cash provided by operating activities 1,355 766 878 1,078 Additions to property, plant and equipment (473) (267)…
EBITDA Reconciliation to Net Income for Hess (MM) 2013* 2017E Net Income 47 138 Less: Net interest and other financial income (costs) (12) - Add: Provision for income taxes 22 78 Add: Depreciation and amortization 94 149…
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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