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Credit Suisse Energy Summit – Marathon Petroleum Corporation

Marathon Petroleum Corporation · Feb 24, 2015 · 68 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 Presenter: Gary Heminger, President and CEO February 24, 2015
  2. Credit Suisse Energy Summit – Marathon Petroleum Corporation – slide 2
    2014 Highlights Generated 2.5 B of earnings Speedway achieved record earnings Speedway is nations second largest convenience store chain with Hess acquisition Executed first step in accelerated growth plan for MPLX Returned 2.7…
  3. Credit Suisse Energy Summit – Marathon Petroleum Corporation – slide 3
    Current Trends Positive domestic outlook Sustainable U.S. refining advantages U.S. product exports growth MPC performs well in volatile market conditions Significant infrastructure investments in U.S. 4
  4. Credit Suisse Energy Summit – Marathon Petroleum Corporation – slide 4
    U.S. Refined Product Demand Compounded Annual 10 Growth Rates 9 Actual Forecast 2020 vs. 2014 Distillate demand -0.3% 8 Gasoline growth outpaces other -0.4% 7 Gasoline ex ethanol products 6 Gasoline will be MMBD 5…
  5. Credit Suisse Energy Summit – Marathon Petroleum Corporation – slide 5
    Crude Oil Inventory Impacting Differentials PADD 3 Crude Stocks Cushing Crude Stocks 220 57 210 47 200 190 MMB MMB 37 180 170 27 160 150 17 Source: EIA 6
  6. Credit Suisse Energy Summit – Marathon Petroleum Corporation – slide 6
    Sustaining U.S. Refining Advantage International Fuel Cost Comparison 20 15 /MMBtu 10 5 0 Henry Hub (NYMEX prompt price) European Natural Gas (Avg Import Border Price)* Japanese Liquefied Natural Gas (Import Price)*…
  7. Credit Suisse Energy Summit – Marathon Petroleum Corporation – slide 7
    U.S. Refined Product Exports Increasing 4.0 3.5 Gasolines 3.0 Kero-Jet Diesels 2.5 MMBD Product Exports* 2.0 1.5 1.0 0.5 0.0 Source: U.S. Energy Information Administration *Through November 2014 8
  8. Credit Suisse Energy Summit – Marathon Petroleum Corporation – slide 8
    MPCs Value of Integration Crude RIN 2,800 Price Distortion Decline 2,600 2,400 2,200 Flexible refining 2,000 system MM 1,800 Large retail 1,600 presence 1,400 Extensive logistics 1,200 1,000 1Q12 2Q12 3Q12 4Q12…
  9. Credit Suisse Energy Summit – Marathon Petroleum Corporation – slide 9
    Our Priorities for Our Investors Maintain top-tier safety and Share Price 110 environmental performance 100 Sustain our focus on 90 shareholder returns 80 70 Balance capital returns with 60 value-enhancing Spin- off investments…
  10. Credit Suisse Energy Summit – Marathon Petroleum Corporation – slide 10
    Delivering Peer Leading Return of Capital Twelve months ended September 30, 2014 12.0% 10.0 10.0% 8.3 8.3 8.0% 7.9 1.4 6.0% 8.0 5.9 4.3 6.4 5.6 4.0% 3.9 2.0% 2.0 2.6 1.9 2.3 2.0 0.0% MPC HFC TSO PSX VLO Dividend Yield…
  11. Credit Suisse Energy Summit – Marathon Petroleum Corporation – slide 11
    2015 Capital Investment Plan 2.5 B Corporate and Other Speedway 18% 5% Refining Refining & Marketing 1,276 MM Sustaining Capital Includes 234 MM for 27% midstream investments Speedway 452 MM 35% Pipeline Transportation 659 MM…
  12. Credit Suisse Energy Summit – Marathon Petroleum Corporation – slide 12
    Substantial Acceleration of MPLX Growth Adjusted EBITDA Attributable to MPLX 500 450 Evolve MPLX into large-cap, diversified 400 logistics MLP 2x 4Q 2014 450 MM of run-rate Adjusted EBITDA by 300 EBITDA end of 2015 MM…
  13. Credit Suisse Energy Summit – Marathon Petroleum Corporation – slide 13
    Substantial Acceleration of MPLX Growth Total Distributions to MPC Rapidly changing midstream 600 557 business environment creates 500 multiple opportunities where size 400 389 GP matters Distributions* Hess retail…
  14. Credit Suisse Energy Summit – Marathon Petroleum Corporation – slide 14
    Investing in Significant Midstream Growth Projects Youngstown Sandpiper Canton Pa. Canadian MPC Investment: 1.0 B - 1.2 B Midland MPC Equity: 27% - 30% Wellsville 2017 completion Bakken M3, Leesville Steubenville M3, Scio Ohio…
  15. Credit Suisse Energy Summit – Marathon Petroleum Corporation – slide 15
    Conversion Plans for Former Hess Stores 2014-2017 Conversion to Speedway: 181 MM 500 Stores Remodel Capital: 240 MM by Dec. 2015 495 Stores by Dec. 2016 250 Stores by March 2015 16
  16. Credit Suisse Energy Summit – Marathon Petroleum Corporation – slide 16
    Growing Speedway Segment EBITDA* 800 696 700 600 143 500 MM 400 300 553 487 200 404 381 424 100 0 2010 2011 2012 2013 2014 Legacy Speedway Hess *Non-GAAP disclosure, see appendix for reconciliation to Speedway…
  17. Credit Suisse Energy Summit – Marathon Petroleum Corporation – slide 17
    Increasing Light Sweet Crude and Condensate Capacity Condensate splitters Condensate Processing Opportunity Canton: 25 MBD Light Naphtha to Gasoline Blending Completed 4Q 2014 Ultra-Sweet New Heavy Naphtha to Reforming…
  18. Credit Suisse Energy Summit – Marathon Petroleum Corporation – slide 18
    Growing Gulf Coast Export Capabilities Export investments totaling 120 MM Added new 500,000 barrel export tank Export Capacity 600 at Garyville in 2013 510 500 Galveston Bay in 2015 395 +30 MBD ULSD 400 345 320 MBD 40% ROI…
  19. Credit Suisse Energy Summit – Marathon Petroleum Corporation – slide 19
    Capitalizing on Global Growth in Diesel Demand Distillate Production 700 600 Garyville +49 MBD ULSD in 2014-16 MBD 500 232 MM investment 400 300 45% ROI 2012 2013 2014 2015E 2016E 2017E Galveston Bay +9 MBD ULSD in 2015…
  20. Credit Suisse Energy Summit – Marathon Petroleum Corporation – slide 20
    Galveston Bay Driving Value Integration with Texas City refinery Revamp crude and vacuum units Optimize for future crude availability Improve distillate recovery Add hydrotreating capacity Move to 100% ULSD Idle the smallest and…
  21. Credit Suisse Energy Summit – Marathon Petroleum Corporation – slide 21
    2015 Value Drivers Top-tier safety and environmental performance Accelerate growth of Midstream/MPLX Capital return to shareholders Strong and growing dividend Share repurchase program Speedway Hess integration Increasing light…
  22. Credit Suisse Energy Summit – Marathon Petroleum Corporation – slide 22
    Appendix 23
  23. Credit Suisse Energy Summit – Marathon Petroleum Corporation – slide 23
    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…
  24. Credit Suisse Energy Summit – Marathon Petroleum Corporation – slide 24
    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 3 1 2 5 2 7 3 3 3 3 3 1 2 0…
  25. Credit Suisse Energy Summit – Marathon Petroleum Corporation – slide 25
    Grow Higher Valued and Stable Cash Flow Businesses Historical Mid-Cycle EBITDA* Future Mid-Cycle EBITDA Midstream Pipeline Transportation Speedway Speedway A More Diversified Portfolio R&M R&M *2007-2014 average. Non-GAAP…
  26. Credit Suisse Energy Summit – Marathon Petroleum Corporation – slide 26
    Increasing Midstream Growth Investments 1,000 Southern Access Extension 800 Sandpiper Condensate Splitters 600 Midstream Infrastructure* MM 400 200 0 2007 2008 2009 2010 2011 2012 2013 2014 2015E *Includes Pipeline…
  27. Credit Suisse Energy Summit – Marathon Petroleum Corporation – slide 27
    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…
  28. Credit Suisse Energy Summit – Marathon Petroleum Corporation – slide 28
    MPLX/MPC Utica Build-Out Connectivity 29
  29. Credit Suisse Energy Summit – Marathon Petroleum Corporation – slide 29
    MPLX Developing a Comprehensive Utica System Cornerstone Pipeline and Additional Opportunities Non-binding open season supports 12-inch pipeline, 16-inch option Binding open season underway Capital estimates vary subject to binding…
  30. Credit Suisse Energy Summit – Marathon Petroleum Corporation – slide 30
    MPLX Distributions and Sales Proceeds to MPC 25 19.7 20.7 20 17.5 18.5 15.8 16.6 15.1 MM 15 9.8 10 5 0 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 LP Distributions GP Distributions, including IDRs (MM) 2013 2014 1Q 2Q 3Q 4Q…
  31. Credit Suisse Energy Summit – Marathon Petroleum Corporation – slide 31
    Focused Return of Capital to Shareholders LTM Ended 12/31/14 8,000 7,000 6,000 2,775 Hess Retail Acquisition 5,000 MM 4,000 Dividends and share 2.7x of Free Cash Flow*** repurchases* 2,655 999 Free Cash 3,000 Flow,…
  32. Credit Suisse Energy Summit – Marathon Petroleum Corporation – slide 32
    Sustaining Capital Returns Since Spin Cumulative Return of Capital Since July 1, 2011 10,000 7.8 B 8,000 6,000 MM 4,000 2,000 0 Dividends Share repurchases 33
  33. Credit Suisse Energy Summit – Marathon Petroleum Corporation – slide 33
    Generating Significant Cash Flow Through All Pro forma EBITDA adjusted for current configuration Pro forma EBITDA 8,000 6,000 MM 4,000 2,000 0 2009 2010 2011 2012 2013 2014 2009 thru 2014 Mid- Pipeline Transportation…
  34. Credit Suisse Energy Summit – Marathon Petroleum Corporation – slide 34
    Sustaining Core Liquidity Needs Minimum cash balance of 500 MM - 1.0 B Requirements Ongoing Operating Cash Flow Requirements Maintenance/Sustaining Capital Interest Payments Dividend Payments Contingent Calls on Corporate Liquidity -…
  35. Credit Suisse Energy Summit – Marathon Petroleum Corporation – slide 35
    Growing Global Product Demand Compounded Annual 120 Growth Rates Actual Forecast 2030 vs. 2014 100 +1.2% Other Distillate and gasoline 80 Other -1.1% Fuel Oil demand continues to Fuel Oil rise MMBD 60 Distillate…
  36. Credit Suisse Energy Summit – Marathon Petroleum Corporation – slide 36
    Rising North American Crude & NGLs Production 25 2014 Actual Forecast 20 Canada 15 MMBD 10 5 U.S. 0 1985 1990 1995 2000 2005 2010 2015 2020 2025 2030 Sources: EIA, CAPP, MPC 37
  37. Credit Suisse Energy Summit – Marathon Petroleum Corporation – slide 37
    Growing Crude Oil Supply 1,800 2014 5,000 2014 150 2014 1,500 North Dakota Texas 125 Ohio 4,000 1,200 100 3,000 MBD MBD 900 75 MBD 2,000 600 50 300 1,000 25 Actual Forecast Actual Forecast Actual Forecast 0 0 0…
  38. Credit Suisse Energy Summit – Marathon Petroleum Corporation – slide 38
    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% 0% PADD III MPC VLO HFC PSX TSO PADD II PADD III PADD I PADD IV PADD V Permian Basin…
  39. Credit Suisse Energy Summit – Marathon Petroleum Corporation – slide 39
    Refinery Capacity BPCD NCI* Garyville 522,000 11.4 Galveston Bay 451,000 13.3 Catlettsburg 242,000 10.2 Robinson 212,000 10.1 Detroit 130,000 9.8 Canton 90,000 8.0 Texas City 84,000 8.0 Total 1,731,000 11.1** The Nelson…
  40. Credit Suisse Energy Summit – Marathon Petroleum Corporation – slide 40
    Balance in Refining Network Canton (Ohio) 90,000 Catlettsburg (Ky.) 242,000 Midwest Capacity Detroit (Mich.) 130,000 674,000 BPCD Robinson (Ill.) 212,000 Galveston Bay 451,000 (Texas) Texas City (Texas) 84,000 Garyville (La.)…
  41. Credit Suisse Energy Summit – Marathon Petroleum Corporation – slide 41
    U.S./Canada Key Existing and Planned Pipelines In Service MBPD Pipeline Date 300 Line 9 Reversal 2015 300 SAX 2015 200 Diamond 2016 450 Dakota Access 2016 450 ETCO 2016 (Trunkline Conversion) 225-375 Sandpiper 2017 300…
  42. Credit Suisse Energy Summit – Marathon Petroleum Corporation – slide 42
    Key Strengths Balanced Operations Crude Oil Refining Capacity Crude Slate 61% PADD II Sour Crude 52% 48% 39% PADD III Sweet Crude As of December 31, 2014 December 31, 2014 YTD Assured Sales of Gasoline Production (Speedway…
  43. Credit Suisse Energy Summit – Marathon Petroleum Corporation – slide 43
    Forward Curves /BBL /BBL /BBL Forward curves show some price recovery, but not a return to 100/BBL Forward values for the Brent-WTI differential are favorable Sources: CME, ICE, futures as of Feb. 13, 2015 44
  44. Credit Suisse Energy Summit – Marathon Petroleum Corporation – slide 44
    Compelling Advantage for Pipeline and Marine All costs shown as /BBL Pipeline costs exclude any storage or transfer fees and line loss Sources: MPC, publicly available information 45
  45. Credit Suisse Energy Summit – Marathon Petroleum Corporation – slide 45
    Creating Crude/Condensate Advantage Source: MPC 46
  46. Credit Suisse Energy Summit – Marathon Petroleum Corporation – slide 46
    Speedway Value Total Gross Margin Mix 2011-2014 Average Top-tier performance in the convenience store industry Light Scalable technology and Product organizational infrastructure 37% Merchandise Disciplined expense control 63%…
  47. Credit Suisse Energy Summit – Marathon Petroleum Corporation – slide 47
    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…
  48. Credit Suisse Energy Summit – Marathon Petroleum Corporation – slide 48
    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…
  49. Credit Suisse Energy Summit – Marathon Petroleum Corporation – slide 49
    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…
  50. Credit Suisse Energy Summit – Marathon Petroleum Corporation – slide 50
    Synergies and Marketing Enhancements Will Drive Value 400 Earnings Opportunities 70 300 45 Operating and G&A expense MM 40 200 35 365 100 175 synergies of 75 MM 0 2013 Pro Forma Hess Form 10 WilcoHess Operating and G&A…
  51. Credit Suisse Energy Summit – Marathon Petroleum Corporation – slide 51
    Focus on Improving Light Product Breakeven 13 12.39 11 Each 1.00 cent per gallon improvement Light Product Breakeven (cpg) 9 = 30 MM annual pretax earnings Total Expenses 7 7.13 LPBE = Merchandise Margin Light Product…
  52. Credit Suisse Energy Summit – Marathon Petroleum Corporation – slide 52
    Speedway and Hess Side-by-Side Comparison Hess1 Speedway2 Company Operated Sites 1,255 1,478 Fuel Sales Speedway generates an incremental 198,500 177,400 (gallons/store/month) 17,300 of merchandise margin per Fuel Margin 0.137…
  53. Credit Suisse Energy Summit – Marathon Petroleum Corporation – slide 53
    Rising MPC Finished Product Exports 300 250 200 MBD 150 100 50 0 2010 2011 2012 2013 2014 54
  54. Credit Suisse Energy Summit – Marathon Petroleum Corporation – slide 54
    Leveraging Existing Capacity to Run Light Sweet Crude 30 Reforming Capacity % of Crude Capacity 25 48% sweet crude oil throughput 20 Industry 2014 versus 68% sweet crude oil capacity Average 15 Reformer capacity captures full…
  55. Credit Suisse Energy Summit – Marathon Petroleum Corporation – slide 55
    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 gallon/year…
  56. Credit Suisse Energy Summit – Marathon Petroleum Corporation – slide 56
    Allocating Capital to Higher Valued Businesses 2012 2015 Capital Investment Profile 4,000 3,500 3,000 2,500 MM 2,000 1,500 1,000 500 0 2012 2013 2014 2015E Refining & Marketing, excluding Midstream Midstream Pipeline…
  57. Credit Suisse Energy Summit – Marathon Petroleum Corporation – slide 57
    2015 Significant Capital Projects 2015 Capital Budget - 2.5B Refining & Marketing margin-enhancing projects Corporate Increase light crude capacity at Robinson Speedway and Other Distillate growth at Garyville, Galveston Bay and…
  58. Credit Suisse Energy Summit – Marathon Petroleum Corporation – slide 58
    Capital Expenditures & Investments (MM) 2015 MPC Plan Refining & Marketing (R&M) 1,042 Midstream included in R&M 234 Speedway 452 Pipeline Transportation* 659 Corporate and Other 140 Total Capital Expenditures & Investments 2,527…
  59. Credit Suisse Energy Summit – Marathon Petroleum Corporation – slide 59
    Annual Price and Margin Sensitivities MM (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 100 (per…
  60. Credit Suisse Energy Summit – Marathon Petroleum Corporation – slide 60
    MPLXs Priorities for Investors Maintain Safe and Reliable 90 Operations 80 Sustain Long-term Unit Price Distribution Growth; Mid 20% for 70 the Next Five Years 60 Focus on Fee-Based Businesses 50 40 Pursue Organic Growth 30…
  61. Credit Suisse Energy Summit – Marathon Petroleum Corporation – slide 61
    MPLX and MPC are Aligned MPLX Organizational Structure Marathon Petroleum Corporation and Affiliates MPC views MPLX as integral to its (NYSE: MPC) operations and is aligned with its 100.0% ownership 69.5% Public success and…
  62. Credit Suisse Energy Summit – Marathon Petroleum Corporation – slide 62
    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…
  63. Credit Suisse Energy Summit – Marathon Petroleum Corporation – slide 63
    Incentive Distribution Rights 4Q 2014 distribution of 0.3825/unit is in Third Target Distribution tier 64
  64. Credit Suisse Energy Summit – Marathon Petroleum Corporation – slide 64
    1Q 2015 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…
  65. Credit Suisse Energy Summit – Marathon Petroleum Corporation – slide 65
    MPLX Adjusted EBITDA Reconciliation from Net Income 4Q 2014 Dec. 2015 (MM) 2013 Annualized Annualized Net income 146 146 305 Less: Net income attributable to MPC- 68 29 1 retained interest Net income attributable to MPLX LP 78 117…
  66. Credit Suisse Energy Summit – Marathon Petroleum Corporation – slide 66
    EBITDA Reconciliation to Net Income Attributable to MPC 2007 2008 2009 2010 2011 2012 2013 2014 (MM) 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q Net income attributable to MPC 2,262 1,215 449 623 2,389 3,389 725 593 168 626 199 855 672 798 Less: Net…
  67. Credit Suisse Energy Summit – Marathon Petroleum Corporation – slide 67
    Reconciliation Free Cash Flow to Net Cash Provided by Operations (MM) 2014 (For the Quarter) 1Q 2Q 3Q 4Q Net cash provided by operating 766 878 1,078 388 activities Additions to property, plant and (267) (302) (383) (528)…
  68. Credit Suisse Energy Summit – Marathon Petroleum Corporation – slide 68
    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 EBITDA…

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