Barclays CEO Energy - Power Conference September 2, 2014
Macro Outlook 3
Current Market Trends Positive domestic outlook Re-rating of refiners U.S. refining advantages Product exports growth Nationwide significant infrastructure investments 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 Sustain our focus on shareholder returns Balance capital returns with value-enhancing investments Grow higher valued and stable cash flow…
Delivering Peer Leading Return of Capital Last twelve months* 16.0% 14.0% 13.5% 12.0% 10.0% 8.8% 8.0% 7.8% 11.4% 7.4% 0.5% 6.0% 6.5% 4.9% 5.9% 4.3% 4.0% 2.8% 2.0% 2.1% 2.3% 1.9% 2.6% 2.1% 0.0% MPC PSX TSO HFC VLO…
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 4 5 7 2 3 3 1 3 3 2 0 -5…
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…
Allocating Capital in the Future Drive growth in more stable cash flow and higher valued businesses Sandpiper Pipeline Midstream/MPLX Southern Access Extension Aggressive growth Pipeline Utica Speedway Organic growth Growth in…
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…
Growth Opportunities 12
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…
Investing in Significant Growth Projects Sandpiper Youngstown Canton Pa. MPC Investment: 1.0 B - 1.2 B Canadian Midland MPC Equity: 27% - 30% Wellsville Southern Access Extension (SAX) Bakken M3, Leesville Steubenville M3,…
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…
Pending Acquisition of Hess Retail - Transaction Overview Hess Retail includes: 1,256 company operated locations Transport fleet with capacity to transport 1 billion gal/yr Pipeline shipper history in various pipelines, including 40…
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…
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 70MM Expedited…
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 pretax earnings Light Product Break Even (cpg)…
Enhance Refining Margins 22
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 Galveston Bay +9 MBD ULSD in 2015 300 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 Capital return to shareholders Strong and growing dividend Share repurchase program 2014 2.4 B capital investments* Growth of Midstream/MPLX Speedway growth…
Appendix 28
Focused Return of Capital to Shareholders 1.8x free cash flow LTM LTM Ended 6/30/14 6,000 5,000 Dividends and share repurchases* 4,000 3,128 1.8x of Cash capital expenditures, MM Free Cash 3,000 Free Cash Flow**…
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 7,000 6.6 B 6,000 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…
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 be phased out due Fuel Oil…
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 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 36
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 Regina Cromer Clearbrook Montreal Superior Portland Estimated Sarnia MBPD Pipeline Completion 540 Keystone…
Key Strengths Balanced Operations Crude Oil Refining Capacity Crude Slate 62% PADD II Sour Crude 52% 48% PADD III Sweet Crude 38% As of June 30, 2014 June 30, 2014 YTD Assured Sales of Gasoline Production (Speedway + Brand…
Compelling Advantage for Pipeline and Marine Canadian 10-12 Bakken 4 14-16 15-16 2 6 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…
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…
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 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…
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 70 Maintain Safe and Reliable 65 Operations Unit Price 60 Sustain Long-term 55 Distribution Growth 50 45 Focus on Fee-Based Businesses 40 35 Pursue Organic Growth Opportunities 30 IPO 25…
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…
Retained Midstream EBITDA of 800 MM as of December 31, 2013 Additional Midstream Assets Retained by MPC 5,400 miles of additional crude and products pipelines Pipelines Owns, leases or has an ownership interest in these pipelines 44%…
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 2016 1,200 Condensate Splitters 2013-2015 250 Southern Access…
Leveraging Existing MPC Assets Utica Shale Strategy Expand refinery processing capacity to leverage geographic advantage Condensate splitters at Canton and Catlettsburg Increases total condensate processing capacity to 60 MBD from 25…
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…
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 Marginal Percentage Total Quarterly Distribution Interest in Distributions Per Unit Target Amount Unitholders General Partner Minimum Quarterly Distribution 0.2625 98.0% 2.0% First Target Distribution…
EBITDA Reconciliation to Net Income Attributable to MPC (MM) 2007 2008 2009 2010 2011 2012 2013 2014 1Q 2Q 3Q 4Q 1Q 2Q Net income attributable to MPC 2,262 1,215 449 623 2,389 3,389 725 593 168 626 199 855 Less: Net interest and…
Reconciliation Free Cash Flow to Net Cash Provided by Operations (MM) 2013 2014 (For the Quarter) 3Q 4Q 1Q 2Q Net cash provided by operating activities 407 1,355 766 878 Additions to property, plant and equipment (309) (473) (267)…
3Q 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…
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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