Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

Index

			Page
MANAGEMENT’S RESPONSIBLITIES FOR FINANCIAL STATEMENTS			90
MANAGEMENT’S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING			90
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM			91
AUDITED CONSOLIDATED FINANCIAL STATEMENTS:
CONSOLIDATED STATEMENTS OF INCOME			95
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME			96
CONSOLIDATED BALANCE SHEETS			97
CONSOLIDATED STATEMENTS OF CASH FLOWS			98
CONSOLIDATED STATEMENTS OF EQUITY AND REDEEMABLE NONCONTROLLING INTEREST			100
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS			101
SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED)			161

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MANAGEMENT’S RESPONSIBILITIES FOR FINANCIAL STATEMENTS

The accompanying consolidated financial statements of Marathon Petroleum Corporation and its subsidiaries (“MPC”) are the responsibility of management and have been prepared in conformity with accounting principles generally accepted in the United States of America. They necessarily include some amounts that are based on best judgments and estimates. The financial information displayed in other sections of this Annual Report on Form 10-K is consistent with these consolidated financial statements.

MPC seeks to assure the objectivity and integrity of its financial records by careful selection of its managers, by organizational arrangements that provide an appropriate division of responsibility and by communications programs aimed at assuring that its policies and methods are understood throughout the organization.

The board of directors pursues its oversight role in the area of financial reporting and internal control over financial reporting through its Audit Committee. This committee, composed solely of independent directors, regularly meets (jointly and separately) with the independent registered public accounting firm, management and internal auditors to monitor the proper discharge by each of their responsibilities relative to internal accounting controls and the consolidated financial statements.

/s/ Michael J. Hennigan						/s/ Maryann T. Mannen						/s/ John J. Quaid
Michael J. Hennigan President and Chief Executive Officer						Maryann T. Mannen Executive Vice President and Chief Financial Officer						John J. Quaid Senior Vice President and Controller

MANAGEMENT’S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING

MPC’s management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rule 13a-15(f) under the Securities Exchange Act of 1934, as amended). An evaluation of the design and effectiveness of our internal control over financial reporting, based on the framework in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission, was conducted under the supervision and with the participation of management, including our chief executive officer and chief financial officer. Based on the results of this evaluation, MPC’s management concluded that its internal control over financial reporting was effective as of December 31, 2020.

The effectiveness of MPC’s internal control over financial reporting as of December 31, 2020 has been audited by PricewaterhouseCoopers LLP, an independent registered public accounting firm, as stated in their report which is included herein.

/s/ Michael J. Hennigan						/s/ Maryann T. Mannen
Michael J. Hennigan President and Chief Executive Officer						Maryann T. Mannen Executive Vice President and Chief Financial Officer

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Report of Independent Registered Public Accounting Firm

To the Board of Directors and Stockholders of Marathon Petroleum Corporation

Opinions on the Financial Statements and Internal Control over Financial Reporting

We have audited the accompanying consolidated balance sheets of Marathon Petroleum Corporation and its subsidiaries (the “Company”) as of December 31, 2020 and 2019, and the related consolidated statements of income, of comprehensive income, of equity and redeemable noncontrolling interest and of cash flows for each of the three years in the period ended December 31, 2020, including the related notes (collectively referred to as the “consolidated financial statements”). We also have audited the Company's internal control over financial reporting as of December 31, 2020, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2020 and 2019, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2020 in conformity with accounting principles generally accepted in the United States of America. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2020, based on criteria established in Internal Control - Integrated Framework (2013) issued by the COSO.

Basis for Opinions

The Company's management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Report on Internal Control Over Financial Reporting. Our responsibility is to express opinions on the Company’s consolidated financial statements and on the Company's internal control over financial reporting based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects.

Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.

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Definition and Limitations of Internal Control over Financial Reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Critical Audit Matters

The critical audit matters communicated below are matters arising from the current period audit of the consolidated financial statements that were communicated or required to be communicated to the audit committee and that (i) relate to accounts or disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

Long-Lived Asset Recoverability Tests – Refinery Asset Groups

As described in Notes 2 and 7 to the consolidated financial statements and as disclosed by management, the Company’s consolidated long-lived asset balance was $43 billion as of December 31, 2020, which includes the refinery asset groups within the Refining & Marketing segment. Management reviews long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset group may not be recoverable. If the sum of the undiscounted estimated pretax cash flows is less than the carrying value of an asset group, fair value is determined, and the carrying value is written down to the determined fair value. During the first and second quarters of 2020, management identified long-lived asset triggers relating to all of their refinery asset groups, except the Gallup refinery in the second quarter as it had been impaired to its estimated salvage value in the first quarter, as a result of decreases to the Refining & Marketing segment expected future cash flows. The cash flows associated with these assets were significantly impacted by the effects of COVID-19 and commodity price declines in the first quarter and continued unfavorable macroeconomic conditions in the second quarter. Management performed recoverability tests for each refinery asset group by comparing the undiscounted estimated pretax cash flows to the carrying value of each asset group. The determination of undiscounted estimated pretax cash flows for the first and second quarter refinery asset group recoverability tests utilized significant assumptions including management’s best estimates of the expected future cash flows, allocation of Refining & Marketing segment cash flows to the individual refinery asset groups, the estimated useful life of certain refinery asset groups, and the estimated salvage value of certain refinery asset groups.

The principal considerations for our determination that performing procedures relating to the long-lived asset recoverability tests of the refinery asset groups performed by management in the first and second quarters of 2020 is a critical audit matter are (i) the significant judgment by management when developing the undiscounted estimated pretax cash flows of the refinery asset groups; and (ii) the high degree of auditor judgment, subjectivity, and effort in performing procedures and evaluating management’s recoverability tests and the significant assumption related to allocation of Refining & Marketing segment cash flows to individual refinery asset groups.

Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. These procedures included testing the effectiveness of controls relating to management’s long-lived asset recoverability tests, including controls over the allocation of the undiscounted estimates of pretax cash flows to individual refinery asset groups.

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These procedures also included, among others (i) testing management’s process for developing the undiscounted estimated pretax cash flows utilized for the recoverability tests; (ii) evaluating the appropriateness of the undiscounted estimated pretax cash flow model used; (iii) testing the completeness and accuracy of underlying data used by management in the model; and (iv) evaluating the reasonableness of the significant assumption related to the allocation of Refining & Marketing segment cash flows to individual refineries. Evaluating the reasonableness of this significant assumption involved (i) evaluating the appropriateness of management’s allocation of Refining & Marketing segment cash flows to individual refinery asset groups; (ii) evaluating the appropriateness, completeness, and accuracy of underlying data used to allocate Refining & Marketing segment cash flows to individual refinery asset groups; and (iii) considering whether the data used in the allocation was consistent with evidence obtained in other areas of the audit. Professionals with specialized skill and knowledge were utilized to assist in evaluating the appropriateness of the Company’s undiscounted estimated pretax cash flow model.

Goodwill Impairment Tests – Certain Midstream Reporting Units

As described in Notes 7 and 19 to the consolidated financial statements and as disclosed by management, the Company’s consolidated goodwill balance was $8,256 million as of December 31, 2020, which includes, within the Midstream segment, the goodwill associated with MPLX’s Crude Gathering reporting unit of $1.1 billion. As described by management, within the Midstream segment, the Company recorded an impairment charge of $1.81 billion in the first quarter of 2020 related to MPLX’s Eastern Gathering & Processing reporting unit, which fully impaired the reporting unit’s historical goodwill balance. Management annually evaluates goodwill for impairment as of November 30, as well as whenever events or changes in circumstances indicate it is more likely than not that the fair value of a reporting unit with goodwill is less than its carrying amount. The overall deterioration in the economy and the environment in which MPLX and its customers operate, as well as a sustained decrease in the MPLX unit price, were considered triggering events requiring an impairment test during the first quarter of 2020. The fair values of the reporting units were determined based on applying both a discounted cash flow method, or income approach, as well as a market approach. Significant assumptions that were used to estimate the MPLX Eastern Gathering and Processing and MPLX Crude Gathering reporting units’ fair values under the discounted cash flow method included management’s best estimates of the discount rate, as well as estimates of future cash flows, which are impacted primarily by producer customers’ development plans, which impact future volumes and capital requirements.

The principal considerations for our determination that performing procedures relating to the goodwill impairment tests of the Company’s Crude Gathering and Eastern Gathering and Processing reporting units of the Midstream segment is a critical audit matter are (i) the significant judgment by management when estimating the fair value of the reporting units; and (ii) the high degree of auditor judgment, subjectivity, and effort in performing procedures and evaluating management’s significant assumption related to future volumes.

Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. These procedures included testing the effectiveness of controls relating to management’s goodwill impairment tests, including controls over the estimation of the fair value of the Crude Gathering and Eastern Gathering and Processing reporting units. These procedures also included, among others (i) testing management’s process for developing the fair value estimates; (ii) evaluating the appropriateness of the income and market approaches used; (iii) testing the completeness and accuracy of underlying data used by management in the approaches; and (iv) evaluating the reasonableness of the significant assumption related to future volumes. Professionals with specialized skill and knowledge were utilized to assist in evaluating the appropriateness of the Company’s income and market approaches. Evaluating the assumption related to future volumes involved (i) considering whether the assumption used was reasonable considering past performance of each reporting unit, producer customers’ historical and future production volumes, and industry outlook reports; and (ii) considering whether the assumption was consistent with evidence obtained in other areas of the audit.

Equity Method Investment Impairment Test - MarkWest Utica EMG, L.L.C.

As described in Notes 7 and 17 to the consolidated financial statements, the Company’s consolidated equity method investment balance was $5,422 million as of December 31, 2020, which included a balance of $698 million related to MarkWest Utica EMG, L.L.C. During the first quarter of 2020, the Company recorded an impairment charge of $1.25 billion related to MarkWest Utica EMG, L.L.C. As disclosed by management, equity method investments are assessed for impairment whenever factors indicate an other than temporary

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loss in value. As a result of the overall deterioration in the economy and the environment in which MPLX and its customers operate, there was a reduction in forecasted volumes processed by the systems operated by MarkWest Utica EMG, L.L.C. These were considered events requiring an impairment test during the first quarter of 2020. The fair value of the investment was determined based on applying a discounted cash flow method, an income approach. Significant assumptions that were used to develop the estimate of the fair value under the discounted cash flow method include management’s best estimates of the expected future cash flows, including prices and volumes, the weighted average cost of capital and the long-term growth rate.

The principal considerations for our determination that performing procedures relating to the impairment test of the Company’s equity method investment in MarkWest Utica EMG, L.L.C. is a critical audit matter are (i) the significant judgment by management when estimating the fair value of the investment; and (ii) the high degree of auditor judgment, subjectivity, and effort in performing procedures and evaluating management’s significant assumption related to future volumes.

Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. These procedures included testing the effectiveness of controls relating to management’s equity method investment impairment test, including controls over the estimation of the fair value of the investment in MarkWest Utica EMG, L.L.C. These procedures also included, among others (i) testing management’s process for developing the fair value estimate; (ii) evaluating the appropriateness of the discounted cash flow method used; (iii) testing the completeness and accuracy of underlying data used by management in the method; and (iv) evaluating the reasonableness of the significant assumption related to future volumes. Evaluating the assumption related to future volumes involved (i) considering whether the assumption used was reasonable considering past performance of MarkWest Utica EMG, L.L.C., producer customers’ historical and future production volumes, and industry outlook reports; and (ii) considering whether the assumption was consistent with evidence obtained in other areas of the audit.

/s/ PricewaterhouseCoopers LLP

Toledo, Ohio

February 26, 2021

We have served as the Company’s auditor since 2010.

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MARATHON PETROLEUM CORPORATION

CONSOLIDATED STATEMENTS OF INCOME

(In millions, except per share data)			2020						2019						2018
Revenues and other income:
Sales and other operating revenues			$	69,779					$	111,148					$	86,086
Income (loss) from equity method investments(a)			(935)						312						299
Net gain on disposal of assets			70						278						6
Other income			118						127						198
Total revenues and other income			69,032						111,865						86,589
Costs and expenses:
Cost of revenues (excludes items below)			65,733						99,228						77,047
Impairment expense			8,426						1,197						—
Depreciation and amortization			3,375						3,225						2,170
Selling, general and administrative expenses			2,710						3,192						2,276
Restructuring expenses			367						—						—
Other taxes			668						561						406
Total costs and expenses			81,279						107,403						81,899
Income (loss) from continuing operations			(12,247)						4,462						4,690
Net interest and other financial costs			1,365						1,229						993
Income (loss) from continuing operations before income taxes			(13,612)						3,233						3,697
Provision (benefit) for income taxes on continuing operations			(2,430)						784						764
Income (loss) from continuing operations, net of tax			(11,182)						2,449						2,933
Income from discontinued operations, net of tax			1,205						806						673
Net income (loss)			(9,977)						3,255						3,606
Less net income (loss) attributable to:
Redeemable noncontrolling interest			81						81						75
Noncontrolling interests			(232)						537						751
Net income (loss) attributable to MPC			$	(9,826)					$	2,637					$	2,780
Per share data (See Note 11)
Basic:
Continuing operations			$	(16.99)					$	2.78					$	4.06
Discontinued operations			1.86						1.22						1.30
Net income (loss) per share			$	(15.13)					$	4.00					$	5.36
Weighted average shares outstanding			649						659						518
Diluted:
Continuing operations			$	(16.99)					$	2.76					$	4.00
Discontinued operations			1.86						1.21						1.28
Net income (loss) per share			$	(15.13)					$	3.97					$	5.28
Weighted average shares outstanding			649						664						526

(a) 2020 includes impairment expense. See Note 7 for further information.

The accompanying notes are an integral part of these consolidated financial statements.

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MARATHON PETROLEUM CORPORATION

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Millions of dollars)			2020						2019						2018
Net income (loss)			$	(9,977)					$	3,255					$	3,606
Other comprehensive income (loss):
Defined benefit plans:
Actuarial changes, net of tax of $(51), $(40) and $14, respectively			(157)						(147)						75
Prior service, net of tax of $(11), $(17) and $12, respectively			(34)						(27)						8
Other, net of tax of $—, $(1) and $1, respectively			(1)						(2)						4
Other comprehensive income (loss)			(192)						(176)						87
Comprehensive income (loss)			(10,169)						3,079						3,693
Less comprehensive income (loss) attributable to:
Redeemable noncontrolling interest			81						81						75
Noncontrolling interests			(232)						537						751
Comprehensive income (loss) attributable to MPC			$	(10,018)					$	2,461					$	2,867

The accompanying notes are an integral part of these consolidated financial statements.

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MARATHON PETROLEUM CORPORATION

CONSOLIDATED BALANCE SHEETS

			December 31,
(Millions of dollars, except share data)			2020						2019
Assets
Current assets:
Cash and cash equivalents			$	415					$	1,393
Receivables, less allowance for doubtful accounts of $18 and $17, respectively			5,760						7,233
Inventories			7,999						9,804
Other current assets			2,724						893
Assets held for sale			11,389						11,135
Total current assets			28,287						30,458
Equity method investments			5,422						6,568
Property, plant and equipment, net			39,035						40,870
Goodwill			8,256						15,650
Right of use assets			1,521						1,806
Other noncurrent assets			2,637						3,204
Total assets			$	85,158					$	98,556
Liabilities
Current liabilities:
Accounts payable			$	7,803					$	11,222
Payroll and benefits payable			732						987
Accrued taxes			1,105						1,015
Debt due within one year			2,854						704
Operating lease liabilities			497						514
Other current liabilities			822						758
Liabilities held for sale			1,850						1,748
Total current liabilities			15,663						16,948
Long-term debt			28,730						28,020
Deferred income taxes			6,203						6,392
Defined benefit postretirement plan obligations			2,121						1,617
Long-term operating lease liabilities			1,014						1,300
Deferred credits and other liabilities			1,207						1,172
Total liabilities			54,938						55,449
Commitments and contingencies (see Note 29)
Redeemable noncontrolling interest			968						968
Equity
MPC stockholders’ equity:
Preferred stock, no shares issued and outstanding (par value $0.01 per share, 30 million shares authorized)			—						—
Common stock:
Issued – 980 million and 978 million shares (par value $0.01 per share, 2 billion shares authorized)			10						10
Held in treasury, at cost – 329 million and 329 million shares			(15,157)						(15,143)
Additional paid-in capital			33,208						33,157
Retained earnings			4,650						15,990
Accumulated other comprehensive loss			(512)						(320)
Total MPC stockholders’ equity			22,199						33,694
Noncontrolling interests			7,053						8,445
Total equity			29,252						42,139
Total liabilities, redeemable noncontrolling interest and equity			$	85,158					$	98,556

The accompanying notes are an integral part of these consolidated financial statements.

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MARATHON PETROLEUM CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Millions of dollars)			2020						2019						2018
Operating activities:
Net income (loss)			$	(9,977)					$	3,255					$	3,606
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Amortization of deferred financing costs and debt discount			69						33						70
Impairment expense			8,426						1,197						—
Depreciation and amortization			3,375						3,225						2,170
Pension and other postretirement benefits, net			220						(68)						93
Deferred income taxes			(241)						807						14
Net gain on disposal of assets			(70)						(278)						(6)
(Income) loss from equity method investments			935						(312)						(299)
Distributions from equity method investments			577						569						458
Income from discontinued operations			(1,205)						(806)						(673)
Changes in income tax receivable			(1,807)						(358)						238
Changes in the fair value of derivative instruments			45						(8)						(62)
Changes in operating assets and liabilities, net of effects of businesses acquired:
Current receivables			1,465						(1,717)						1,277
Inventories			1,750						(362)						965
Current accounts payable and accrued liabilities			(2,927)						2,453						(2,801)
Right of use assets and operating lease liabilities, net			(19)						(9)						—
All other, net			191						355						49
Cash provided by operating activities - continuing operations			807						7,976						5,099
Cash provided by operating activities - discontinued operations			1,612						1,465						1,059
Net cash provided by operating activities			2,419						9,441						6,158
Investing activities:
Additions to property, plant and equipment			(2,787)						(4,810)						(3,179)
Acquisitions, net of cash acquired			—						(129)						(3,822)
Disposal of assets			150						47						22
Investments – acquisitions, loans and contributions			(485)						(1,064)						(409)
– redemptions, repayments and return of capital			137						98						16
All other, net			63						81						69
Cash used in investing activities - continuing operations			(2,922)						(5,777)						(7,303)
Cash used in investing activities - discontinued operations			(335)						(484)						(367)
Net cash used in investing activities			(3,257)						(6,261)						(7,670)
Financing activities:
Commercial paper – issued			2,055						—						—
– repayments			(1,031)						—						—
Long-term debt – borrowings			17,082						14,274						13,476
– repayments			(15,380)						(13,073)						(8,032)
Debt issuance costs			(50)						(22)						(86)
Issuance of common stock			11						10						24
Common stock repurchased			—						(1,950)						(3,287)
Dividends paid			(1,510)						(1,398)						(954)
Distributions to noncontrolling interests			(1,244)						(1,245)						(903)
Contributions from noncontrolling interests			—						97						12
Repurchases of noncontrolling interests			(33)						—						—
All other, net			(35)						(69)						(28)
Net cash provided by (used in) financing activities			(135)						(3,376)						222
Net change in cash, cash equivalents and restricted cash			$	(973)					$	(196)					$	(1,290)

The accompanying notes are an integral part of these consolidated financial statements.

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MARATHON PETROLEUM CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Millions of dollars)			2020						2019						2018
Cash, cash equivalents and restricted cash balances from:
Continuing operations - beginning of year			1,395						1,519						2,849
Discontinued operations - beginning of year(a)			134						206						166
Less: Discontinued operations - end of year(a)			140						134						206
Continuing operations - end of year			$	416					$	1,395					$	1,519

(a)Reported as assets held for sale on our consolidated balance sheets.

The accompanying notes are an integral part of these consolidated financial statements.

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MARATHON PETROLEUM CORPORATION

CONSOLIDATED STATEMENTS OF EQUITY AND REDEEMABLE NONCONTROLLING INTEREST

			MPC Stockholders’ Equity
			Common Stock												Treasury Stock												Additional Paid-in Capital						Retained Earnings						Accumulated Other Comprehensive Income (Loss)						Non-controlling Interests						Total Equity						Redeemable Non-controlling Interest
(Shares in millions; amounts in millions of dollars)			Shares						Amount						Shares						Amount
Balance as of December 31, 2017			734						$	7					(248)						$	(9,869)					$	11,262					$	12,864					$	(231)					$	6,795					$	20,828					$	1,000
Cumulative effect of adopting new accounting standards			—						—						—						—						—						66						—						2						68						—
Net income			—						—						—						—						—						2,780						—						751						3,531						75
Dividends declared on common stock ($1.84 per share)			—						—						—						—						—						(955)						—						—						(955)						—
Distributions to noncontrolling interests			—						—						—						—						—						—						—						(832)						(832)						(71)
Contributions from noncontrolling interests			—						—						—						—						—						—						—						12						12						—
Other comprehensive income			—						—						—						—						—						—						87						—						87						—
Shares repurchased			—						—						(47)						(3,287)						—						—						—						—						(3,287)						—
Stock based compensation			1						1						—						(18)						345						—						—						14						342						—
Equity transactions of MPLX & ANDX			—						—						—						—						2,357						—						—						(2,927)						(570)						—
Issuance of shares for Andeavor acquisition			240						2						—						(1)						19,765						—						—						—						19,766						—
Noncontrolling interest acquired from Andeavor			—						—						—						—						—						—						—						5,059						5,059						—
Balance as of December 31, 2018			975						$	10					(295)						$	(13,175)					$	33,729					$	14,755					$	(144)					$	8,874					$	44,049					$	1,004
Net income			—						—						—						—						—						2,637						—						537						3,174						81
Dividends declared on common stock ($2.12 per share)			—						—						—						—						—						(1,402)						—						—						(1,402)						—
Distributions to noncontrolling interests			—						—						—						—						—						—						—						(1,164)						(1,164)						(81)
Contributions from noncontrolling interests			—						—						—						—						—						—						—						97						97						—
Other comprehensive loss			—						—						—						—						—						—						(176)						—						(176)						—
Shares repurchased			—						—						(34)						(1,950)						—						—						—						—						(1,950)						—
Stock based compensation			3						—						—						(18)						112						—						—						7						101						—
Equity transactions of MPLX & ANDX			—						—						—						—						(684)						—						—						94						(590)						(36)
Balance as of December 31, 2019			978						$	10					(329)						$	(15,143)					$	33,157					$	15,990					$	(320)					$	8,445					$	42,139					$	968
Net income (loss)			—						—						—						—						—						(9,826)						—						(232)						(10,058)						81
Dividends declared on common stock ($2.32 per share)			—						—						—						—						—						(1,514)						—						—						(1,514)						—
Distributions to noncontrolling interests			—						—						—						—						—						—						—						(1,163)						(1,163)						(81)
Other comprehensive loss			—						—						—						—						—						—						(192)						—						(192)						—
Stock based compensation			2						—						—						(14)						92						—						—						8						86						—
Equity transactions of MPLX			—						—						—						—						(41)						—						—						(5)						(46)						—
Balance as of December 31, 2020			980						$	10					(329)						$	(15,157)					$	33,208					$	4,650					$	(512)					$	7,053					$	29,252					$	968

The accompanying notes are an integral part of these consolidated financial statements.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. DESCRIPTION OF THE BUSINESS AND BASIS OF PRESENTATION

Description of the Business

We are a leading, integrated, downstream energy company headquartered in Findlay, Ohio. We operate the nation's largest refining system. We sell refined products to wholesale marketing customers domestically and internationally, to buyers on the spot market and to independent entrepreneurs who operate approximately 7,100 branded outlets. We also sell transportation fuel to consumers through approximately 1,090 direct dealer locations under long-term supply contracts. MPC’s midstream operations are primarily conducted through MPLX LP (“MPLX”), which owns and operates crude oil and light product transportation and logistics infrastructure as well as gathering, processing, and fractionation assets. We own the general partner and a majority limited partner interest in MPLX.

On August 2, 2020, we entered into a definitive agreement to sell Speedway, our company-owned and operated retail transportation fuel and convenience store business, to 7-Eleven, Inc. (“7-Eleven”) for $21 billion in cash, subject to certain adjustments based on the levels of cash, debt and working capital at closing and certain other items. The taxable transaction is targeted to close by the end of the first quarter of 2021, subject to customary closing conditions and the receipt of regulatory approvals. We will retain our direct dealer business.

As a result of the agreement to sell Speedway, its results are reported separately as discontinued operations in our consolidated statements of income for all periods presented and its assets and liabilities have been presented in our consolidated balance sheets as assets and liabilities held for sale. In addition, we separately disclosed the operating and investing cash flows of Speedway as discontinued operations within our consolidated statements of cash flow. See Note 5 for discontinued operations disclosures.

Prior to presentation of Speedway as discontinued operations, Speedway and our retained direct dealer business were the two reporting units within our Retail segment. Beginning with the third quarter of 2020, the direct dealer business is managed as part of the Refining & Marketing segment. The results of the Refining & Marketing segment have been retrospectively adjusted to include the results of the direct dealer business in all periods presented. See Note 13 for our segment reporting disclosures.

Refer to Note 8 for further information on the Andeavor acquisition, which closed on October 1, 2018, and to Notes 6 and 13 for additional information about our operations.

Basis of Presentation

All significant intercompany transactions and accounts have been eliminated.

As a result of our agreement to sell Speedway, the following changes in our basis of presentation have occurred:

• In accordance with ASC 205, Discontinued Operations, intersegment sales from our Refining & Marketing segment to Speedway are no longer eliminated as intercompany transactions and are now presented within sales and other operating revenue, since we will continue to supply fuel to Speedway subsequent to the sale to 7-Eleven. All periods presented have been retrospectively adjusted to reflect this change.

• Beginning August 2, 2020, in accordance with ASC 360, Property, Plant, and Equipment, we ceased recording depreciation and amortization for Speedway’s property, plant and equipment, finite-lived intangible assets and right of use lease assets.

Certain prior period financial statement amounts have been reclassified to conform to current period presentation.

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2. SUMMARY OF PRINCIPAL ACCOUNTING POLICIES

Principles Applied in Consolidation

These consolidated financial statements include the accounts of our majority-owned, controlled subsidiaries and MPLX. As of December 31, 2020, we owned the general partner and 62 percent of the outstanding MPLX common units. Due to our ownership of the general partner interest, we have determined that we control MPLX and therefore we consolidate MPLX and record a noncontrolling interest for the interest owned by the public. Changes in ownership interest in consolidated subsidiaries that do not result in a change in control are recorded as equity transactions.

Investments in entities over which we have significant influence, but not control, are accounted for using the equity method of accounting. This includes entities in which we hold majority ownership but the minority shareholders have substantive participating rights. Income from equity method investments represents our proportionate share of net income generated by the equity method investees.

Differences in the basis of the investments and the separate net asset values of the investees, if any, are amortized into net income over the remaining useful lives of the underlying assets and liabilities, except for any excess related to goodwill. Equity method investments are evaluated for impairment whenever changes in the facts and circumstances indicate an other than temporary loss in value has occurred. When the loss is deemed to be other than temporary, the carrying value of the equity method investment is written down to fair value.

Use of Estimates

The preparation of financial statements in accordance with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities as of the date of the consolidated financial statements and the reported amounts of revenues and expenses during the respective reporting periods.

Revenue Recognition

We recognize revenue based on consideration specified in contracts or agreements with customers when we satisfy our performance obligations by transferring control over products or services to a customer. Concurrent with our adoption of ASU 2014-09, Revenue from Contracts with Customers (“ASC 606”), as of January 1, 2018, we made an accounting policy election that all taxes assessed by a governmental authority that are both imposed on and concurrent with a revenue-producing transaction and collected from our customers will be recognized on a net basis within sales and other operating revenues.

Our revenue recognition patterns are described below by reportable segment:

• Refining & Marketing - The vast majority of our Refining & Marketing contracts contain pricing that is based on the market price for the product at the time of delivery. Our obligations to deliver product volumes are typically satisfied and revenue is recognized when control of the product transfers to our customers. Concurrent with the transfer of control, we typically receive the right to payment for the delivered product, the customer accepts the product and the customer has significant risks and rewards of ownership of the product. Payment terms require customers to pay shortly after delivery and do not contain significant financing components.

• Midstream - Midstream revenue transactions typically are defined by contracts under which we sell a product or provide a service. Revenues from sales of product are recognized when control of the product transfers to the customer. Revenues from sales of services are recognized over time when the performance obligation is satisfied as services are provided in a series. We have elected to use the output measure of progress to recognize revenue based on the units delivered, processed or transported. The transaction prices in our Midstream contracts often have both fixed components, related to minimum volume commitments, and variable components, which are primarily dependent on volumes. Variable consideration will generally not be estimated at contract inception as the transaction price is specifically allocable to the services provided at each period end.

Refer to Note 23 for disclosure of our revenue disaggregated by segment and product line and to Note 13 for a description of our reportable segment operations.

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Crude Oil and Refined Product Exchanges and Matching Buy/Sell Transactions

We enter into exchange contracts and matching buy/sell arrangements whereby we agree to deliver a particular quantity and quality of crude oil or refined products at a specified location and date to a particular counterparty and to receive from the same counterparty the same commodity at a specified location on the same or another specified date. The exchange receipts and deliveries are nonmonetary transactions, with the exception of associated grade or location differentials that are settled in cash. The matching buy/sell purchase and sale transactions are settled in cash. No revenues are recorded for exchange and matching buy/sell transactions as they are accounted for as exchanges of inventory. The exchange transactions are recognized at the carrying amount of the inventory transferred.

Cash and Cash Equivalents

Cash and cash equivalents include cash on hand and on deposit and investments in highly liquid debt instruments with maturities of three months or less.

Restricted Cash

Restricted cash consists of cash and investments that must be maintained as collateral for letters of credit issued to certain third-party producer customers. The balances will be outstanding until certain capital projects are completed and the third party releases the restriction.

Accounts Receivable and Allowance for Doubtful Accounts

Our receivables primarily consist of customer accounts receivable. Customer receivables are recorded at the invoiced amounts and generally do not bear interest. Allowances for doubtful accounts are generally recorded when it becomes probable the receivable will not be collected and are booked to bad debt expense. The allowance for doubtful accounts is the best estimate of the amount of probable credit losses in customer accounts receivable. We review the allowance quarterly and past-due balances over 180 days are reviewed individually for collectability.

We mitigate credit risk with master netting agreements with companies engaged in the crude oil or refinery feedstock trading and supply business or the petroleum refining industry. A master netting agreement generally provides for a once per month net cash settlement of the accounts receivable from and the accounts payable to a particular counterparty.

Leases

Contracts with a term greater than one year that convey the right to direct the use of and obtain substantially all of the economic benefit of an asset are accounted for as right of use assets.

Right of use asset and lease liability balances are recorded at the commencement date at present value of the fixed lease payments using a secured incremental borrowing rate with a maturity similar to the lease term because our leases do not provide implicit rates. We have elected to include both lease and non-lease components in the present value of the lease payments for all lessee asset classes with the exception of our marine and third-party contractor service equipment leases. The lease component of the payment for the marine and equipment asset classes is determined using a relative standalone selling price. See Note 28 for additional disclosures about our lease contracts.

Inventories

Inventories are carried at the lower of cost or market value. Cost of inventories is determined primarily under the LIFO method. Costs for crude oil and refined product inventories are aggregated on a consolidated basis for purposes of assessing if the LIFO cost basis of these inventories may have to be written down to market value.

Derivative Instruments

We use derivatives to economically hedge a portion of our exposure to commodity price risk and, historically, to interest rate risk. Our use of selective derivative instruments that assume market risk is limited. All derivative instruments (including derivative instruments embedded in other contracts) are recorded at fair value. Certain commodity derivatives are reflected on the consolidated balance sheets on a net basis by counterparty as they are governed by master netting agreements. Cash flows related to derivatives used to hedge commodity price risk and interest rate risk are classified in operating activities with the underlying transactions.

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Derivatives not designated as accounting hedges

Derivatives that are not designated as accounting hedges may include commodity derivatives used to hedge price risk on (1) inventories, (2) fixed price sales of refined products, (3) the acquisition of foreign-sourced crude oil, (4) the acquisition of ethanol for blending with refined products, (5) the sale of NGLs, (6) the purchase of natural gas and (7) the purchase of soybean oil. Changes in the fair value of derivatives not designated as accounting hedges are recognized immediately in net income.

Concentrations of credit risk

All of our financial instruments, including derivatives, involve elements of credit and market risk. The most significant portion of our credit risk relates to nonperformance by counterparties. The counterparties to our financial instruments consist primarily of major financial institutions and companies within the energy industry. To manage counterparty risk associated with financial instruments, we select and monitor counterparties based on an assessment of their financial strength and on credit ratings, if available. Additionally, we limit the level of exposure with any single counterparty.

Property, Plant and Equipment

Property, plant and equipment are recorded at cost and depreciated on a straight-line basis over the estimated useful lives of the assets, which range from one year to 61 years. Such assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset group may not be recoverable. If the sum of the expected undiscounted future cash flows from the use of the asset group and its eventual disposition is less than the carrying amount of the asset group, an impairment assessment is performed and the excess of the book value over the fair value of the asset group is recorded as an impairment loss.

When items of property, plant and equipment are sold or otherwise disposed of, any gains or losses are reported in net income. Gains on the disposal of property, plant and equipment are recognized when earned, which is generally at the time of closing. If a loss on disposal is expected, such losses are recognized when the assets are classified as held for sale.

Interest expense is capitalized for qualifying assets under construction. Capitalized interest costs are included in property, plant and equipment and are depreciated over the useful life of the related asset.

Goodwill and Intangible Assets

Goodwill represents the excess of the purchase price over the estimated fair value of the net assets acquired in the acquisition of a business. Goodwill is not amortized, but rather is tested for impairment at the reporting unit level annually and when events or changes in circumstances indicate that the fair value of a reporting unit with goodwill has been reduced below carrying value. If we determine, based on a qualitative assessment, that it is not more likely than not that a reporting unit’s fair value is less than its carrying amount, no further impairment testing is required. If we do not perform a qualitative assessment or if that assessment indicates that further impairment testing is required, the fair value of each reporting unit is determined using an income and/or market approach which is compared to the carrying value of the reporting unit. If the carrying amount of the reporting unit exceeds its fair value, an impairment loss would be recognized in an amount equal to that excess, limited to the total amount of goodwill allocated to that reporting unit. The fair value under the income approach is calculated using the expected present value of future cash flows method. Significant assumptions used in the cash flow forecasts include future net operating margins, future volumes, discount rates, and future capital requirements.

Amortization of intangibles with definite lives is calculated using the straight-line method, which is reflective of the benefit pattern in which the estimated economic benefit is expected to be received over the estimated useful life of the intangible asset. Intangibles subject to amortization are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of the intangible may not be recoverable. If the sum of the expected undiscounted future cash flows related to the asset is less than the carrying amount of the asset, an impairment loss is recognized based on the fair value of the asset. Intangibles not subject to amortization are tested for impairment annually and when circumstances indicate that the fair value is less than the carrying amount of the intangible. If the fair value is less than the carrying value, an impairment is recorded for the difference.

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Major Maintenance Activities

Costs for planned turnaround and other major maintenance activities are expensed in the period incurred. These types of costs include contractor repair services, materials and supplies, equipment rentals and our labor costs.

Environmental Costs

Environmental expenditures for additional equipment that mitigates or prevents future contamination or improves environmental safety or efficiency of the existing assets are capitalized. We recognize remediation costs and penalties when the responsibility to remediate is probable and the amount of associated costs can be reasonably estimated. The timing of remediation accruals coincides with completion of a feasibility study or the commitment to a formal plan of action. Remediation liabilities are accrued based on estimates of known environmental exposure and are discounted when the estimated amounts are reasonably fixed and determinable. If recoveries of remediation costs from third parties are probable, a receivable is recorded and is discounted when the estimated amount is reasonably fixed and determinable.

Asset Retirement Obligations

The fair value of asset retirement obligations is recognized in the period in which the obligations are incurred if a reasonable estimate of fair value can be made. The majority of our recognized asset retirement liability relates to conditional asset retirement obligations for removal and disposal of fire-retardant material from certain refining facilities. The remaining recognized asset retirement liability relates to other refining assets, certain pipelines and processing facilities and other related pipeline assets. The fair values recorded for such obligations are based on the most probable current cost projections.

Asset retirement obligations have not been recognized for some assets because the fair value cannot be reasonably estimated since the settlement dates of the obligations are indeterminate. Such obligations will be recognized in the period when sufficient information becomes available to estimate a range of potential settlement dates. The asset retirement obligations principally include the hazardous material disposal and removal or dismantlement requirements associated with the closure of certain refining, terminal, pipeline and processing assets.

Our practice is to keep our assets in good operating condition through routine repair and maintenance of component parts in the ordinary course of business and by continuing to make improvements based on technological advances. As a result, we believe that generally these assets have no expected settlement date for purposes of estimating asset retirement obligations since the dates or ranges of dates upon which we would retire these assets cannot be reasonably estimated at this time.

Income Taxes

Deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial statement carrying amounts of assets and liabilities and their tax bases. Deferred tax assets are recorded when it is more likely than not that they will be realized. The realization of deferred tax assets is assessed periodically based on several factors, primarily our expectation to generate sufficient future taxable income.

Stock-Based Compensation Arrangements

The fair value of stock options granted to our employees is estimated on the date of grant using the Black-Scholes option pricing model. The model employs various assumptions based on management’s estimates at the time of grant, which impact the calculation of fair value and ultimately, the amount of expense that is recognized over the vesting period of the stock option award. Of the required assumptions, the expected life of the stock option award and the expected volatility of our stock price have the most significant impact on the fair value calculation. The average expected life is based on our historical employee exercise behavior. The assumption for expected volatility of our stock price reflects a weighting of 50 percent of our common stock implied volatility and 50 percent of our common stock historical volatility.

The fair value of restricted stock awards granted to our employees is determined based on the fair market value of our common stock on the date of grant. The fair value of performance unit awards granted to our employees is estimated on the date of grant using a Monte Carlo valuation model.

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Our stock-based compensation expense is recognized based on management’s estimate of the awards that are expected to vest, using the straight-line attribution method for all service-based awards with a graded vesting feature. If actual forfeiture results are different than expected, adjustments to recognized compensation expense may be required in future periods. Unearned stock-based compensation is charged to equity when restricted stock awards are granted. Compensation expense is recognized over the vesting period and is adjusted if conditions of the restricted stock award are not met.

Business Combinations

We recognize and measure the assets acquired and liabilities assumed in a business combination based on their estimated fair values at the acquisition date. Any excess or surplus of the purchase consideration when compared to the fair value of the net tangible assets acquired, if any, is recorded as goodwill or gain from a bargain purchase. For material acquisitions, management engages an independent valuation specialist to assist with the determination of fair value of the assets acquired, liabilities assumed, noncontrolling interest, if any, and goodwill, based on recognized business valuation methodologies. An income, market or cost valuation method may be utilized to estimate the fair value of the assets acquired, liabilities assumed, and noncontrolling interest, if any, in a business combination. The income valuation method represents the present value of future cash flows over the life of the asset using: (i) discrete financial forecasts, which rely on management’s estimates of revenue and operating expenses; (ii) long-term growth rates; and (iii) appropriate discount rates. The market valuation method uses prices paid for a reasonably similar asset by other purchasers in the market, with adjustments relating to any differences between the assets. The cost valuation method is based on the replacement cost of a comparable asset at prices at the time of the acquisition reduced for depreciation of the asset. If the initial accounting for the business combination is incomplete by the end of the reporting period in which the acquisition occurs, an estimate will be recorded. Subsequent to the acquisition date, and not later than one year from the acquisition date, we will record any material adjustments to the initial estimate based on new information obtained that would have existed as of the date of the acquisition. Any adjustment that arises from information obtained that did not exist as of the date of the acquisition will be recorded in the period of the adjustment. Acquisition-related costs are expensed as incurred in connection with each business combination.

Environmental Credits and Obligations

In order to comply with certain regulations, specifically the RFS2 requirements implemented by the EPA and the cap-and-trade emission reduction program and low carbon fuel standard implemented by the state of California, we are required to reduce our emissions, blend certain levels of biofuels or obtain allowances or credits to offset the obligations created by our operations. In regard to each program, we record an asset, included in other current or other noncurrent assets on the balance sheet, for allowances or credits owned in excess of our anticipated current period compliance requirements. The asset value is based on the product of the excess allowances or credits as of the balance sheet date, if any, and the weighted average cost of those allowances or credits. We record a liability, included in other current or other noncurrent liabilities on the balance sheet, when we are deficient allowances or credits based on the product of the deficient amount as of the balance sheet date, if any, and the market price of the allowances or credits at the balance sheet date. The cost of allowances or credits used for compliance is reflected in cost of revenues on the income statement. Any gains or losses on the sale or expiration of allowances or credits are classified as other income on the income statement. Proceeds from the sale of allowances or credits are reported in investing activities - all other, net on the cash flow statement.

3. ACCOUNTING STANDARDS

Recently Adopted

Effective January 1, 2020, we adopted ASU 2016-13, “Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments,” using the modified retrospective transition method. The amendment requires entities to consider a broader range of information to estimate expected credit losses, which may result in earlier recognition of losses. The ASU requires the company to utilize an expected loss methodology in place of the incurred loss methodology for financial instruments, including trade receivables, and off-balance sheet credit exposures. Adoption of the standard did not have a material impact on our financial statements.

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We are exposed to credit losses primarily through our sales of refined petroleum products, crude oil and midstream services. We assess each customer’s ability to pay through our credit review process. The credit review process considers various factors such as external credit ratings, a review of financial statements to determine liquidity, leverage, trends and business specific risks, market information, pay history and our business strategy. Customers that do not qualify for payment terms are required to prepay or provide a letter of credit. We monitor our ongoing credit exposure through timely review of customer payment activity. At December 31, 2020, we reported $5,760 million of accounts and notes receivable, net of allowances of $18 million.

We are also exposed to credit losses from off-balance sheet exposures, such as guarantees of joint venture debt. See Note 29 for more information on these off-balance sheet exposures.

We also adopted the following ASUs during 2020, none of which had a material impact to our financial statements or financial statement disclosures:

ASU									Effective Date
2018-13			Fair Value Measurement (Topic 820): Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement						January 1, 2020
2020-04			Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting						April 1, 2020

Not Yet Adopted

ASU 2019-12, Income Taxes (Topic 740) - Simplifying the Accounting for Income Taxes

In December 2019, the FASB issued new guidance to simplify the accounting for income taxes. Amendments include removal of certain exceptions to the general principles of ASC 740 and simplification in several other areas such as accounting for a franchise tax or similar tax that is partially based on income. The change is effective for fiscal years beginning after December 15, 2020, and interim periods within those fiscal years. Early adoption is permitted in any interim or annual period, with any adjustments reflected as of the beginning of the fiscal year of adoption. We do not expect the application of this ASU to have a material impact on our consolidated financial statements.

4. RESTRUCTURING

During the third quarter of 2020, we indefinitely idled our refinery located in Gallup, New Mexico and initiated actions to strategically reposition our Martinez, California refinery to a renewable diesel facility. We also approved an involuntary workforce reduction plan. In connection with these strategic actions, we recorded restructuring expenses of $367 million in 2020.

The indefinite idling of the Gallup refinery and actions to strategically reposition the Martinez refinery to a renewable diesel facility resulted in $195 million of restructuring expenses. Of the $195 million of restructuring expenses, we expect $130 million to settle in cash for costs related to decommissioning refinery processing units and storage tanks and fulfilling environmental remediation obligations. Additionally, we recorded a non-cash reserve against our materials and supplies inventory at these facilities of $51 million.

The involuntary workforce reduction plan, together with employee reductions resulting from our actions affecting the Gallup and Martinez refineries, affected approximately 2,050 employees. We recorded $172 million of restructuring expenses for separation benefits payable under our employee separation plan and certain collective bargaining agreements that we expect to settle in cash. Certain of the affected MPC employees provided services to MPLX. MPLX has various employee services agreements and secondment agreements with MPC pursuant to which MPLX reimburses MPC for employee costs, along with the provision of operational and management services in support of MPLX’s operations. Pursuant to such agreements, MPC was reimbursed by MPLX for $37 million of the $172 million of restructuring expenses recorded for these actions.

Restructuring expenses were accrued as restructuring reserves within accounts payable, payroll and benefits payable, other current liabilities and deferred credits and other liabilities within our consolidated balance sheets. We expect cash payments for the majority of these reserves to occur within the next nine months.

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(In millions)						Employee separation costs						Exit and disposal costs						Total
Restructuring reserve balance at September 30, 2020(a)						$	158					$	133					$	291
Adjustments						14						5						19
Cash payments						(134)						(35)						(169)
Restructuring reserve balance at December 31, 2020						$	38					$	103					$	141

(a)The restructuring reserve was zero until the third quarter of 2020.

5. DISCONTINUED OPERATIONS AND ASSETS HELD FOR SALE

On August 2, 2020, we entered into a definitive agreement to sell Speedway to 7-Eleven for $21 billion, subject to certain adjustments based on the levels of cash, debt and working capital at closing and certain other items. The taxable transaction is targeted to close in the first quarter of 2021, subject to customary closing conditions and the receipt of regulatory approvals.

As a result of the agreement to sell Speedway, its results are reported separately as discontinued operations, net of tax, in our consolidated statements of income for all periods presented and its assets and liabilities have been presented in our consolidated balance sheets as assets and liabilities held for sale. Additionally, beginning August 2, 2020, in accordance with ASC 360, Property, Plant, and Equipment, we ceased recording depreciation and amortization for Speedway’s property, plant and equipment, finite-lived intangible assets and right of use lease assets. In addition, we separately disclosed the operating and investing cash flows of Speedway as discontinued operations within our consolidated statements of cash flow.

The following tables present Speedway results as reported in income from discontinued operations, net of tax, within our consolidated statements of income and the carrying value of assets and liabilities as presented within assets and liabilities held for sale on our consolidated balance sheets.

(In millions)						2020						2019						2018
Total revenues and other income						$	19,920					$	26,793					$	22,051
Costs and expenses:
Cost of revenues (excludes items below)						17,573						24,860						20,557
Depreciation and amortization						244						413						320
Selling, general and administrative expenses						323						216						142
Other taxes						193						190						151
Total costs and expenses						18,333						25,679						21,170
Income from operations						1,587						1,114						881
Net interest and other financial costs						20						18						10
Income before income taxes						1,567						1,096						871
Provision for income taxes						362						290						198
Income from discontinued operations, net of tax						$	1,205					$	806					$	673

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			December 31,
(In millions)			2020						2019
Assets
Cash and cash equivalents			$	140					$	134
Receivables			217						246
Inventories			438						439
Other current assets			34						28
Equity method investments			311						330
Property, plant and equipment, net			4,784						4,745
Goodwill			4,390						4,390
Right of use assets			719						653
Other noncurrent assets			168						170
Total assets classified as held for sale			$	11,201					$	11,135
Liabilities
Accounts payable			$	300					$	401
Payroll and benefits payable			168						139
Accrued taxes			178						171
Debt due within one year			8						7
Operating lease liabilities			94						90
Other current liabilities			170						139
Long-term debt			122						107
Defined benefit postretirement plan obligations			25						26
Long-term operating lease liabilities			598						575
Deferred credits and other liabilities			86						93
Total liabilities classified as held for sale			$	1,749					$	1,748

Separation Agreements

In connection with the definitive agreement to sell Speedway, we have agreed to enter into a 15-year fuel supply agreement, at closing, through which we will continue to supply fuel to Speedway subsequent to the sale to 7-Eleven. Due to our expected continuing involvement with Speedway through a fuel supply agreement, intersegment sales from our Refining & Marketing segment to Speedway are no longer eliminated as intercompany transactions and are now presented within sales and other operating revenue.

Purchase of Speedway’s Interest in PFJ Southeast

During the fourth quarter of 2020, Pilot Travel Centers LLC exercised an option to purchase our 29 percent interest in PFJ Southeast LLC (“PFJ”), subject to customary closing conditions and the receipt of regulatory approvals. PFJ has been accounted for as an asset held for sale as of September 30, 2020 and is reported as the equity method investment balance in the above table.

6. MASTER LIMITED PARTNERSHIP

We own the general partner and a majority limited partner interest in MPLX, which owns and operates crude oil and light product transportation and logistics infrastructure as well as gathering, processing, and fractionation assets. We control MPLX through our ownership of the general partner interest and, as of December 31, 2020, we owned approximately 62 percent of the outstanding MPLX common units.

Javelina Assets Held-for-Sale

On December 23, 2020, MPLX entered into an agreement with a third party to sell all of its equity interests in MarkWest Javelina Company, L.L.C., MarkWest Javelina Pipeline Company, L.L.C. and MarkWest Gas Services, L.L.C. (collectively, “Javelina”). Javelina’s assets and liabilities have been presented within our consolidated balance sheets as assets and liabilities held for sale as of December 31, 2020. On February 12, 2021, MPLX completed the sale of Javelina.

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Unit Repurchase Program

On November 2, 2020, MPLX announced the board authorization of a unit repurchase program for the repurchase of up to $1 billion of MPLX’s outstanding common units held by the public. MPLX may utilize various methods to effect the repurchases, which could include open market repurchases, negotiated block transactions, tender offers, accelerated unit repurchases or open market solicitations for units, some of which may be effected through Rule 10b5-1 plans. The timing and amount of repurchases will depend upon several factors, including market and business conditions, and repurchases may be initiated, suspended or discontinued at any time. The repurchase authorization has no expiration date.

During the year ended December 31, 2020, 1,473,843 common units had been repurchased at an average cost per unit of $22.29. Total cash paid for units repurchased during the year was $33 million and $967 million remained outstanding on the program for future repurchases as of December 31, 2020. As of December 31, 2020, MPLX had agreements to acquire 99,406 additional common units for $2 million, which settled in early January 2021.

Redemption of Business from MPLX

On July 31, 2020, Western Refining Southwest, Inc. (now known as Western Refining Southwest LLC) (“WRSW”), a wholly owned subsidiary of MPC, entered into a Redemption Agreement (the “Redemption Agreement”) with MPLX, pursuant to which MPLX transferred to WRSW all of the outstanding membership interests in Western Refining Wholesale, LLC, (“WRW”) in exchange for the redemption of MPLX common units held by WRSW. The transaction effects the transfer to MPC of the Western wholesale distribution business that MPLX acquired as a result of its acquisition of Andeavor Logistics LP (“ANDX”). Beginning in the third quarter of 2020, the results of these operations are presented in MPC’s Refining & Marketing segment.

At the closing, per the terms of Redemption Agreement, MPLX redeemed 18,582,088 MPLX common units (the “Redeemed Units”) held by WRSW. The number of Redeemed Units was calculated by dividing WRW’s aggregate valuation of $340 million by the simple average of the volume weighted average NYSE prices of an MPLX common unit for the ten trading days ending at market close on July 27, 2020. The transaction resulted in a minor decrease in MPC’s ownership interest in MPLX.

MPLX’s Acquisition of ANDX

On July 30, 2019, MPLX completed its acquisition of ANDX, and ANDX survived as a wholly owned subsidiary of MPLX. At the effective time of the ANDX acquisition, each common unit held by ANDX’s public unitholders was converted into the right to receive 1.135 MPLX common units. ANDX common units held by MPC were converted into the right to receive 1.0328 MPLX common units. Additionally, as a result of MPLX’s acquisition of MPLX, 600,000 ANDX preferred units were converted into 600,000 preferred units of MPLX (“Series B preferred units”). Series B preferred unitholders are entitled to receive, when and if declared by the board of directors of MPLX’s general partner, a fixed distribution of $68.75 per unit, per annum, payable semi-annually in arrears on February 15 and August 15, or the first business day thereafter, up to and including February 15, 2023. After February 15, 2023, the holders of Series B preferred units are entitled to receive cumulative, quarterly distributions payable in arrears on the 15th day of February, May, August and November of each year, or the first business day thereafter, based on a floating annual rate equal to the three month LIBOR plus 4.652 percent.

MPC accounted for this transaction as a common control transaction, as defined by ASC 805, which resulted in an increase to noncontrolling interest and a decrease to additional paid-in capital of approximately $55 million, net of tax. During the third quarter of 2019, we pushed down to MPLX the portion of the goodwill attributable to ANDX as of October 1, 2018, the date of our acquisition of Andeavor. Due to this push down of goodwill, we also recorded an incremental $642 million deferred tax liability associated with the portion of the non-deductible goodwill attributable to the noncontrolling interest in MPLX with an offsetting reduction of our additional paid-in capital balance. We have consolidated ANDX since we acquired Andeavor on October 1, 2018 in accordance with ASC 810.

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Dropdowns to MPLX and GP/IDR Exchange

On February 1, 2018, we contributed our refining logistics assets and fuels distribution services to MPLX in exchange for $4.1 billion in cash and approximately 112 million common units and 2 million general partner units from MPLX. MPLX financed the cash portion of the transaction with a $4.1 billion 364-day term loan facility, which was entered into on January 2, 2018. We agreed to waive approximately one-third of the first quarter 2018 distributions on the common units issued in connection with this transaction. The contributions of these assets were accounted for as transactions between entities under common control and we did not record a gain or loss.

Immediately following the February 1, 2018 dropdown to MPLX, our IDRs were cancelled and our economic general partner interest was converted into a non-economic general partner interest, all in exchange for 275 million newly issued MPLX common units (“GP/IDR Exchange”). As a result of this transaction, the general partner units and IDRs were eliminated, are no longer outstanding and no longer participate in distributions of cash from MPLX.

Agreements

We have various long-term, fee-based commercial agreements with MPLX. Under these agreements, MPLX provides transportation, storage, distribution and marketing services to us. With certain exceptions, these agreements generally contain minimum volume commitments. These transactions are eliminated in consolidation but are reflected as intersegment transactions between our Refining & Marketing and Midstream segments. We also have agreements with MPLX that establish fees for operational and management services provided between us and MPLX and for executive management services and certain general and administrative services provided by us to MPLX. These transactions are eliminated in consolidation but are reflected as intersegment transactions between our Corporate and Midstream segments.

Noncontrolling Interest

As a result of equity transactions of MPLX and ANDX, we are required to adjust non-controlling interest and additional paid-in capital. Changes in MPC’s additional paid-in capital resulting from changes in its ownership interest in MPLX and ANDX were as follows:

(In millions)			2020						2019						2018
Increase due to the issuance of MPLX common units and general partner units to MPC			$	—					$	—					$	1,114
Increase due to GP/IDR Exchange			—						—						1,808
Increase (decrease) due to the issuance of MPLX & ANDX common units			(27)						(51)						6
Tax impact			(14)						(633)						(571)
Increase (decrease) in MPC's additional paid-in capital, net of tax			$	(41)					$	(684)					$	2,357

7. IMPAIRMENTS

The outbreak of COVID-19 and its development into a pandemic in March 2020 have resulted in significant economic disruption globally. Actions taken by various governmental authorities, individuals and companies around the world to prevent the spread of COVID-19 through social distancing have restricted travel, many business operations, public gatherings and the overall level of individual movement and in-person interaction across the globe. These actions have, in turn significantly reduced global economic activity and resulted in a decrease in motor vehicle usage and demand for gasoline and a dramatic reduction in airline flights. These macroeconomic conditions and certain global geopolitical events in the first quarter of 2020 contributed to a significant decline in crude oil prices as well as an increase in crude oil price volatility. The decrease in demand for refined petroleum products has resulted in a significant decrease in the price and volume of the refined petroleum products we produce and sell as compared to 2019.

During the first quarter of 2020, the overall deterioration in the economy and the environment in which we operate, the related changes to our expected future cash flows, as well as a sustained decrease in share price were considered triggering events requiring the performance of various tests of the carrying values of our assets. Triggering events requiring the performance of various tests of the carrying value of our Midstream

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assets were also identified by MPLX as a result of the overall deterioration in the economy and the environment in which MPLX and its customers operate, which led to a reduction in forecasted volumes processed by the systems operated by MarkWest Utica EMG, L.L.C., MPLX’s equity method investee, as well as a sustained decrease in the MPLX unit price. These tests resulted in the majority of the impairment charges in 2020, as discussed below.

The table below provides information related to the impairments recognized during 2020 and 2019, along with the location of these impairments within the consolidated statements of income.

(In millions)			Income Statement Line			2020						2019
Goodwill			Impairment expense			$	7,394					$	1,197
Equity method investments			Income (loss) from equity method investments			1,315						42
Long-lived assets			Impairment expense(a)			1,032						—
Total impairments						$	9,741					$	1,239

(a)The remaining difference not described in the narrative below is related to certain immaterial Midstream assets.

Goodwill

During the first quarter of 2020, we recorded an impairment of goodwill of $7.33 billion. See Note 19 for detail by segment. The goodwill impairment within the Refining & Marketing segment was primarily driven by the effects of COVID-19 and the decline in commodity prices. The impairment within the Midstream segment was primarily driven by additional information related to the slowing of drilling activity, which has reduced production growth forecasts from MPLX’s producer customers.

During the third quarter of 2020, we recorded an impairment of goodwill of $64 million. The $64 million of goodwill was transferred from our Midstream segment to our Refining & Marketing segment during the third quarter of 2020 in connection with the transfer to MPC of the MPLX wholesale distribution business as described in Note 6. The transfer required goodwill impairment tests for the transferor and transferee reporting units. Our Refining & Marketing reporting unit that recorded the $64 million impairment expense has no remaining goodwill.

The fair values of the reporting units for the first quarter of 2020 goodwill impairment analysis were determined based on applying both a discounted cash flow method, or income approach, as well as a market approach. The discounted cash flow fair value estimate is based on known or knowable information at the measurement date. The significant assumptions that were used to develop the estimates of the fair values under the discounted cash flow method included management’s best estimates of the expected future results and discount rates, which range from 9.0 percent to 13.5 percent across all reporting units. Significant assumptions that were used to estimate the MPLX Eastern Gathering and Processing and MPLX Crude Gathering reporting units’ fair values under the discounted cash flow method included management’s best estimates of the discount rate, as well as estimates of future cash flows, which are impacted primarily by producer customer’s development plans, which impact future volumes and capital requirements. Fair value determinations require considerable judgment and are sensitive to changes in underlying assumptions and factors. As a result, there can be no assurance that the estimates and assumptions made for purposes of the interim goodwill impairment test will prove to be an accurate prediction of the future. The fair value measurements for the individual reporting units’ overall fair values represent Level 3 measurements.

During the fourth quarter of 2019, we recorded an impairment of goodwill in our Midstream segment. As a result of the merger of MPLX and ANDX in 2019 and subsequent changes to MPLX’s internal organization structure, the number of reporting units within our Midstream segment was reduced from 16 to 7 in conjunction with the annual impairment test, however, this change in structure did not have any impact on MPC’s operating segments. Reporting units are determined based on the way in which segment management operates and reviews each operating segment. MPLX performed a goodwill impairment assessment prior to the change in reporting units in addition to performing an impairment assessment immediately following the change in their reporting units. Significant assumptions used to estimate the reporting units’ fair value include the discount rate as well as estimates of future cash flows, which are impacted primarily by producer customers’ development plans, which impact future volumes and capital requirements. After MPLX performed its evaluations related to the impairment of goodwill, we recorded an impairment of $1,156 million prior to the change in reporting units and additional impairment of $41 million subsequent to the change in reporting units. The remainder of the reporting units fair values were in

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excess of their carrying values. The impairment was primarily driven by the updated guidance related to the slowing of drilling activity which has reduced production growth forecasts from MPLX’s producer customers.

The fair value of the reporting units for the fourth quarter of 2019 goodwill impairment analysis was determined based on applying both a discounted cash flow or income approach as well as a market approach. The discounted cash flow fair value estimate is based on known or knowable information at the measurement date. The significant assumptions that were used to develop the estimates of the fair values under the discounted cash flow method included management’s best estimates of the expected future results and discount rates, which range from 9.0 percent to 10.0 percent. Fair value determinations require considerable judgment and are sensitive to changes in underlying assumptions and factors. As a result, there can be no assurance that the estimates and assumptions made for purposes of the annual goodwill impairment test will prove to be an accurate prediction of the future. The fair value measurements for the individual reporting units’ overall fair values, and the fair values of the goodwill assigned thereto, represent Level 3 measurements.

Equity Method Investments

During the first quarter of 2020, we recorded equity method investment impairment charges totaling $1.315 billion, of which $1.25 billion related to MarkWest Utica EMG, L.L.C. and its investment in Ohio Gathering Company, L.L.C. The impairments were largely due to a reduction in forecasted volumes gathered and processed by the systems operated by the equity method investments. The fair value of the investments were determined based upon applying a discounted cash flow method, an income approach. The discounted cash flow fair value estimate is based on known or knowable information at the interim measurement date. The significant assumptions that were used to develop the estimate of the fair value under the discounted cash flow method include management’s best estimates of the expected future cash flows, including prices and volumes, the weighted average cost of capital and the long-term growth rate. Fair value determinations require considerable judgment and are sensitive to changes in underlying assumptions and factors. As a result, there can be no assurance that the estimates and assumptions made for purposes of the impairment test will prove to be an accurate prediction of the future. The fair value of these equity method investments represents a Level 3 measurement.

During the fourth quarter of 2019, two joint ventures in which MPLX has an interest recorded impairments, which impacted the amount of income from equity method investments during the period by approximately $28 million. For one of the joint ventures, MPLX also had a basis difference which was being amortized over the life of the underlying assets. As a result of the impairment recorded by the joint venture, MPLX also assessed this basis difference for impairment and recorded approximately $14 million of impairment expense during the fourth quarter related to this investment.

Long-lived Assets

Long-lived assets (primarily consisting of property, plant and equipment, intangible assets other than goodwill, and right of use assets) used in operations are assessed for impairment whenever changes in facts and circumstances indicate that the carrying value of the assets may not be recoverable based on the expected undiscounted future cash flow of an asset group. For purposes of impairment evaluation, long-lived assets must be grouped at the lowest level for which independent cash flows can be identified, which generally is the refinery and associated distribution system level for Refining & Marketing segment assets and the plant level or pipeline system level for Midstream segment assets. If the sum of the undiscounted estimated pretax cash flows is less than the carrying value of an asset group, fair value is determined, and the carrying value is written down to the determined fair value.

During the first quarter of 2020, we identified long-lived asset impairment triggers relating to all of our refinery asset groups within the Refining & Marketing segment as a result of decreases to the Refining & Marketing segment expected future cash flows. The cash flows associated with these assets were significantly impacted by the effects of COVID-19 and commodity price declines. We performed recoverability tests for each refinery asset group by comparing the undiscounted estimated pretax cash flows to the carrying value of each asset group. Only the Gallup refinery’s carrying value exceeded its undiscounted estimated pretax cash flows. It was determined that the fair value of the Gallup refinery’s property, plant and equipment was less than the carrying value. As a result, we recorded a charge of $142 million in the first quarter of 2020 to impairment expense on the consolidated statements of income. The fair value measurements for the Gallup refinery assets represent Level 3 measurements.

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During the second quarter of 2020, we identified long-lived asset impairment triggers relating to all of our refinery asset groups within the Refining & Marketing segment, except the Gallup refinery as it had been impaired to its estimated salvage value in the first quarter, as a result of continued unfavorable macroeconomic conditions impacting the Refining & Marketing segment expected future cash flows. We performed recoverability tests for each refinery asset group by comparing the undiscounted estimated pretax cash flows to the carrying value of each asset group. All of these refinery asset groups’ undiscounted estimated pretax cash flows exceeded their carrying value by at least 17 percent.

The determination of undiscounted estimated pretax cash flows for the first and second quarter refinery asset group recoverability tests utilized significant assumptions including management’s best estimates of the expected future cash flows, allocation of certain Refining & Marketing segment cash flows to the individual refinery asset groups, the estimated useful life of certain refinery asset groups, and the estimated salvage value of certain refinery asset groups.

On August 3, 2020, we announced our plans to evaluate possibilities to strategically reposition our Martinez refinery, including the potential conversion of the refinery into a renewable diesel facility. Subsequent to August 3, 2020, we progressed activities associated with the conversion of the Martinez refinery to a renewable diesel facility, including applying for permits, advancing discussions with feedstock suppliers, and beginning detailed engineering activities. As envisioned, the Martinez facility would start producing approximately 260 million gallons per year of renewable diesel by the second half of 2022, with a potential to build to full capacity of approximately 730 million gallons per year by the end of 2023. As a result of the progression of these activities, we identified assets that would be repurposed and utilized in a renewable diesel facility configuration and assets that would be abandoned since they had no function in a renewable diesel facility configuration. This change in our intended use for the Martinez refinery is a long-lived asset impairment trigger for the assets that would be repurposed and remain as part of the Martinez asset group. We assessed the asset group for impairment by comparing the undiscounted estimated pretax cash flows to the carrying value of the asset group and the undiscounted estimated pretax cash flows exceeded the Martinez asset group carrying value. We recorded impairment expense of $342 million for the abandoned assets as we are no longer using these assets and have no expectation to use these assets in the future. Additionally, as a result of our efforts to progress the conversion of Martinez refinery into a renewable diesel facility, MPLX cancelled in-process capital projects related to its Martinez refinery logistics operations resulting in impairments of $27 million in the third quarter of 2020.

In the fourth quarter of 2020, we concluded the evaluation of our intended use of MPLX terminal assets near the Gallup refinery and determined that the assets were abandoned, resulting in an impairment charge of $67 million. Following this conclusion, we revised the estimate of the salvage value for the Gallup refinery asset group resulting in an additional $44 million impairment charge. These charges are included in impairment expense on our consolidated statements of income.

The determinations of expected future cash flows and the salvage values of refineries, as described earlier, require considerable judgment and are sensitive to changes in underlying assumptions and factors. As a result, there can be no assurance that the estimates and assumptions made for purposes of our impairment analysis will prove to be an accurate prediction of the future. Should our assumptions significantly change in future periods, it is possible we may determine the carrying values of certain of our refinery asset groups exceed the undiscounted estimated pretax cash flows of their refinery asset groups, which would result in future impairment charges.

During the first quarter of 2020, we identified an impairment trigger relating to asset groups within MPLX’s Western Gathering and Processing (“G&P”) reporting unit as a result of significant changes to expected future cash flows for these asset groups resulting from the effects of COVID-19. The cash flows associated with these assets were significantly impacted by volume declines reflecting decreased forecasted producer customer production as a result of lower commodity prices. We assessed each asset group within the Western G&P reporting unit for impairment. It was determined that the fair value of the East Texas G&P asset group’s underlying assets were less than the carrying value. As a result, MPLX recorded impairment charges totaling $350 million related to its property, plant and equipment and intangibles, which are included in impairment expense on our consolidated statements of income. Fair value of property, plant and equipment was determined using a combination of an income and cost approach. The income approach utilized significant assumptions including management’s best estimates of the expected future cash flows and the estimated useful life of the asset group. The cost approach utilized assumptions for the current replacement costs of similar assets adjusted for estimated depreciation and deterioration of the existing equipment and economic obsolescence. The fair value of the intangibles was determined based

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on applying the multi-period excess earnings method, which is an income approach. Key assumptions included management’s best estimates of the expected future cash flows from existing customers, customer attrition rates and the discount rate. Fair value determinations require considerable judgment and are sensitive to changes in underlying assumptions and factors. As a result, there can be no assurance that the estimates and assumptions made for purposes of the impairment analysis will prove to be an accurate prediction of the future. The fair value measurements for the asset group fair values represent Level 3 measurements.

8. ACQUISITIONS

Acquisition of Andeavor

On October 1, 2018, we acquired Andeavor. Under the terms of the merger agreement, Andeavor stockholders had the option to choose 1.87 shares of MPC common stock or $152.27 in cash per share of Andeavor common stock. The merger agreement included election proration provisions that resulted in approximately 22.9 million shares of Andeavor common stock being converted into cash consideration and the remaining 128.2 million shares of Andeavor common stock being converted into stock consideration. Andeavor stockholders received in the aggregate approximately 239.8 million shares of MPC common stock and approximately $3.5 billion in cash in connection with the Andeavor acquisition. The fair value of the MPC shares issued was determined on the basis of the closing market price of MPC’s common shares on the acquisition date. The cash portion of the purchase price was funded using cash on hand.

At the time of the acquisition, all Andeavor equity awards, with the exception of non-employee director units, were converted to MPC equity awards. The converted equity awards continue to be governed by the same terms and conditions as were applicable to such Andeavor equity awards immediately prior to the acquisition. We recognized $203 million of purchase consideration to reflect the portion of the fair value of the time-based converted equity awards attributable to pre-combination service completed by the award holders. The non-employee director units were accelerated in full and cancelled and the holders of such units received an amount of cash equal to the number of shares of Andeavor common stock subject to such non-employee director units multiplied by the cash consideration per share.

Our financial results reflect the results of Andeavor from October 1, 2018, the date of the acquisition.

The components of the fair value of consideration transferred are as follows:

(In millions)
Fair value of MPC shares issued						$	19,766
Cash payment to Andeavor stockholders						3,486
Cash settlement of non-employee director units						7
Fair value of converted equity awards						203
Total fair value of consideration transferred						$	23,462

The purchase consideration allocation resulted in the recognition of $17.3 billion in goodwill, of which $1.0 billion is tax deductible due to a carryover basis from Andeavor. Our Refining & Marketing, Midstream and former Retail segment recognized $5.2 billion, $8.1 billion and $3.9 billion of goodwill, respectively. The recognized goodwill represents the value expected to be created by further optimization of crude supply, a nationwide retail and marketing platform, diversification of our refining and midstream footprints and optimization of information systems and business processes. See Note 7 for information regarding impairments recorded in 2020 and 2019.

We recognized $47 million in acquisition costs. Additionally, we recognized various other transaction-related costs, including employee-related costs associated with the Andeavor acquisition. All of these costs are reflected in selling, general and administrative expenses. The employee-related costs are primarily due to pre-existing Andeavor change in control and equity award agreements that create obligations and accelerated equity vesting upon MPC notifying employees of significant changes to or elimination of their responsibilities.

Andeavor’s results have been included in MPC’s financial statements for the period subsequent to the date of the acquisition on October 1, 2018. Andeavor contributed revenues of approximately $11.3 billion including Speedway for the period from October 1 through December 31, 2018. We do not believe it is

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practical to disclose Andeavor’s contribution to earnings for the period from October 1, 2018 through December 31, 2018 as our integration efforts have resulted in the elimination of Andeavor stand-alone discrete financial information due mainly to our inclusion of Andeavor inventory in our consolidated LIFO inventory pools, which does not allow us to objectively distinguish the cost of sales between the two historical reporting entities.

Pro Forma Financial Information

The following unaudited pro forma financial information presents consolidated results assuming the Andeavor acquisition occurred on January 1, 2017.

(In millions)						2018
Sales and other operating revenues						$	131,921
Net income attributable to MPC						4,218

The pro forma information includes adjustments to align accounting policies, an adjustment to depreciation expense to reflect the increased fair value of property, plant and equipment, increased amortization expense related to identifiable intangible assets and the related income tax effects. The pro forma information does not reflect the following

• A $727 million effect on net income attributable to MPC related to purchase accounting related inventory effects and transaction-related costs as these charges do not have a continuing impact on the consolidated results.

• The application of discontinued operations accounting for Speedway as the information required to apply discontinued operations accounting for periods prior to our ownership is not readily available.

Acquisition of Terminal and Retail Locations in New York

During the third quarter of 2019, we acquired a 900,000-barrel capacity light product and asphalt terminal and 33 NOCO Express retail stores in Buffalo, Syracuse and Rochester, New York, from NOCO Incorporated for total consideration of $135 million.

Based on the final fair value estimates of assets acquired and liabilities assumed at the acquisition date, $38 million of the purchase price was allocated to property, plant and equipment, $3 million to inventory and $94 million to goodwill. Goodwill is tax deductible and represents the value expected to be created by geographically expanding our retail platform and the assembled workforce. The terminal is accounted for within the Refining & Marketing segment and the retail stores were accounted for within our former Retail segment.

The amount of revenue and income from operations associated with the acquisition from the acquisition date to December 31, 2019 did not have a material impact on the consolidated financial statements. In addition, assuming the acquisition had occurred on January 1, 2018, the consolidated pro forma results would not have been materially different from the reported results.

Acquisition of Express Mart

During the fourth quarter of 2018, Speedway acquired 78 transportation fuel and convenience store locations from Petr-All Petroleum Consulting Corporation for total consideration of $266 million. These stores are located primarily in the Syracuse, Rochester and Buffalo markets in New York and operate under the Express Mart brand.

Based on the final fair value estimates of assets acquired and liabilities assumed at the acquisition date, $97 million of the purchase price was allocated to property, plant and equipment, $9 million to inventory, $2 million to intangibles and $158 million to goodwill. Goodwill is tax deductible and represents the value expected to be created by geographically expanding our retail platform and the assembled workforce.

The amount of revenue and income from operations associated with the acquisition from the acquisition date to December 31, 2018 did not have a material impact on the consolidated financial statements. In addition, assuming the acquisition had occurred on January 1, 2017, the consolidated pro forma results would not have been materially different from the reported results.

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Acquisition of Mt. Airy Terminal

On September 26, 2018, MPLX acquired an eastern U.S. Gulf Coast export terminal (“Mt. Airy Terminal”) from Pin Oak Holdings, LLC for total consideration of $451 million. At the time of the acquisition, the terminal included tanks with 4 million barrels of third-party leased storage capacity and a dock with 120 mbpd of capacity. The Mt. Airy Terminal is located on the Mississippi River between New Orleans and Baton Rouge, near several Gulf Coast refineries, including our Garyville Refinery, and numerous rail lines and pipelines. The Mt. Airy Terminal is accounted for within the Midstream segment. In the first quarter of 2019, an adjustment to the initial purchase price was made for approximately $5 million related to the final settlement of the acquisition. This reduced the total purchase price to $446 million and resulted in $336 million of property, plant and equipment, $121 million of goodwill and the remainder being attributable to net liabilities assumed.

Goodwill represents the significant growth potential of the terminal due to the multiple pipelines and rail lines which cross the property, the terminal’s position as an aggregation point for liquids growth in the region for both ocean-going vessels and inland barges, the proximity of the terminal to our Garyville refinery and other refineries in the region as well as the opportunity to construct an additional dock at the site. All of the goodwill recognized related to this transaction is tax deductible.

The amount of revenue and income from operations associated with the acquisition from the terminal acquisition date to December 31, 2018 did not have a material impact on the consolidated financial statements. In addition, assuming the terminal acquisition had occurred on January 1, 2017, the consolidated pro forma results would not have been materially different from the reported results.

9. VARIABLE INTEREST ENTITIES

Consolidated VIE

We control MPLX through our ownership of its general partner. MPLX is a VIE because the limited partners do not have substantive kick-out or participating rights over the general partner. We are the primary beneficiary of MPLX because in addition to our significant economic interest, we also have the ability, through our ownership of the general partner, to control the decisions that most significantly impact MPLX. We therefore consolidate MPLX and record a noncontrolling interest for the interest owned by the public. We also record a redeemable noncontrolling interest related to MPLX’s Series A preferred units.

The creditors of MPLX do not have recourse to MPC’s general credit through guarantees or other financial arrangements, except as noted. MPC has effectively guaranteed certain indebtedness of LOOP LLC (“LOOP”) and LOCAP LLC (“LOCAP”), in which MPLX holds an interest. See Note 29 for more information. The assets of MPLX can only be used to settle its own obligations and its creditors have no recourse to our assets, except as noted earlier.

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The following table presents balance sheet information for the assets and liabilities of MPLX, which are included in our balance sheets.

(In millions)			December 31, 2020						December 31, 2019
Assets
Cash and cash equivalents			$	15					$	15
Receivables, less allowance for doubtful accounts			478						615
Inventories			118						110
Other current assets			67						110
Assets held for sale			188						—
Equity method investments			4,036						5,275
Property, plant and equipment, net			21,418						22,174
Goodwill			7,657						9,536
Right of use assets			309						365
Other noncurrent assets			1,006						1,323
Liabilities
Accounts payable			$	468					$	744
Payroll and benefits payable			4						5
Accrued taxes			76						80
Debt due within one year			764						9
Operating lease liabilities			63						66
Liabilities held for sale			101						—
Other current liabilities			297						259
Long-term debt			19,375						19,704
Deferred income taxes			12						12
Long-term operating lease liabilities			244						302
Deferred credits and other liabilities			437						409

Non-Consolidated VIEs

Crowley Coastal Partners

In May 2016, Crowley Coastal Partners LLC (“Crowley Coastal Partners”) was formed to own an interest in both Crowley Ocean Partners LLC (“Crowley Ocean Partners”) and Crowley Blue Water Partners LLC (“Crowley Blue Water Partners”). We have determined that Crowley Coastal Partners is a VIE based on the terms of the existing financing arrangements for Crowley Blue Water Partners and Crowley Ocean Partners and the associated debt guarantees by MPC and Crowley. Our maximum exposure to loss at December 31, 2020 was $424 million, which includes our equity method investment in Crowley Coastal Partners and the debt guarantees provided to each of the lenders to Crowley Blue Water Partners and Crowley Ocean Partners. We are not the primary beneficiary of this VIE because we do not have the ability to control the activities that significantly influence the economic outcomes of the entity and, therefore, do not consolidate the entity.

MPLX VIEs

For those entities that have been deemed to be VIEs, neither MPLX nor any of its subsidiaries have been deemed to be the primary beneficiary due to voting rights on significant matters. While we have the ability to exercise influence through participation in the management committees which make all significant decisions, we have equal influence over each committee as a joint interest partner and all significant decisions require the consent of the other investors without regard to economic interest and as such we have determined that these entities should not be consolidated and apply the equity method of accounting with respect to our investments in each entity.

Sherwood Midstream has been deemed the primary beneficiary of Sherwood Midstream Holdings due to its controlling financial interest through its authority to manage the joint venture. As a result, Sherwood Midstream consolidates Sherwood Midstream Holdings.

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MPLX’s maximum exposure to loss as a result of its involvement with equity method investments includes its equity investment, any additional capital contribution commitments and any operating expenses incurred by the subsidiary operator in excess of its compensation received for the performance of the operating services.

We account for our ownership interest in each of these investments as an equity method investment. See Note 17 for ownership percentages and investment balances related to our non-consolidated VIEs.

10. RELATED PARTY TRANSACTIONS

Transactions with related parties were as follows:

(In millions)			2020						2019						2018
Sales to related parties			$	123					$	91					$	14
Purchases from related parties			738						763						610

Sales to related parties, which are included in sales and other operating revenues, consist primarily of refined product sales to certain of our equity affiliates.

Purchases from related parties are included in cost of revenues. We obtain utilities, transportation services and purchase ethanol from certain of our equity affiliates.

11. EARNINGS PER SHARE

We compute basic earnings (loss) per share by dividing net income (loss) attributable to MPC less income allocated to participating securities by the weighted average number of shares of common stock outstanding. Since MPC grants certain incentive compensation awards to employees and non-employee directors that are considered to be participating securities, we have calculated our earnings (loss) per share using the two-class method. Diluted income (loss) per share assumes exercise of certain stock-based compensation awards, provided the effect is not anti-dilutive.

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(In millions, except per share data)			2020						2019						2018
Income (loss) from continuing operations, net of tax			$	(11,182)					$	2,449					$	2,933
Less: Net income (loss) attributable to noncontrolling interest			(151)						618						826
Net income allocated to participating securities			1						1						1
Income (loss) from continuing operations available to common stockholders			(11,032)						1,830						2,106
Income from discontinued operations, net of tax			1,205						806						673
Income (loss) available to common stockholders			$	(9,827)					$	2,636					$	2,779
Weighted average common shares outstanding:
Basic			649						659						518
Effect of dilutive securities			—						5						8
Diluted			649						664						526
Income (loss) available to common stockholders per share:
Basic:
Continuing operations			$	(16.99)					$	2.78					$	4.06
Discontinued operations			1.86						1.22						1.30
Net income (loss) per share			$	(15.13)					$	4.00					$	5.36
Diluted:
Continuing operations			$	(16.99)					$	2.76					$	4.00
Discontinued operations			1.86						1.21						1.28
Net income (loss) per share			$	(15.13)					$	3.97					$	5.28

The following table summarizes the shares that were anti-dilutive, and therefore, were excluded from the diluted share calculation.

(In millions)			2020						2019						2018
Shares issuable under stock-based compensation plans			11						3						—

12. EQUITY

As of December 31, 2020, we had $2.96 billion of remaining share repurchase authorizations from our board of directors. We may utilize various methods to effect the repurchases, which could include open market repurchases, negotiated block transactions, tender offers, accelerated share repurchases or open market solicitations for shares, some of which may be effected through Rule 10b5-1 plans. The timing and amount of future repurchases will depend upon several factors, including market and business conditions, and such repurchases may be initiated, suspended or discontinued at any time.

Total share repurchases were as follows for the respective periods:

(In millions, except per share data)			2020						2019						2018
Number of shares repurchased			—						34						47
Cash paid for shares repurchased			$	—					$	1,950					$	3,287
Average cost per share			$	—					$	58.87					$	69.46

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13. SEGMENT INFORMATION

On August 2, 2020, we entered into a definitive agreement to sell Speedway to 7-Eleven for $21 billion in cash, subject to certain adjustments based on the levels of cash, debt and working capital at closing and certain other items. In connection with the announced sale, we reassessed our organizational structure and management of segments. As a result of this assessment, we have made the following changes for all periods presented:

• Speedway’s results are presented separately as discontinued operations. See Note 5 for related disclosures.

• Refining & Marketing intersegment sales to Speedway that were previously eliminated in consolidation are reported as third party sales as we will continue to supply fuel to Speedway following its disposition.

• The retained direct dealer business results, previously included in the Retail segment, are reported within the Refining & Marketing segment.

• As a result of the above, we no longer present a separate Retail segment, which had included these two businesses.

• Corporate costs are no longer allocated to Speedway under discontinued operations accounting.

We have two reportable segments: Refining & Marketing and Midstream. Each of these segments is organized and managed based upon the nature of the products and services it offers.

• Refining & Marketing – refines crude oil and other feedstocks at our refineries in the Gulf Coast, Mid-Continent and West Coast regions of the United States, purchases refined products and ethanol for resale and distributes refined products through transportation, storage, distribution and marketing services provided largely by our Midstream segment. We sell refined products to wholesale marketing customers domestically and internationally, to buyers on the spot market, to independent entrepreneurs who operate primarily Marathon® branded outlets, through long-term supply contracts with direct dealers who operate locations mainly under the ARCO® brand and to approximately 3,800 Speedway locations.

• Midstream – transports, stores, distributes and markets crude oil and refined products principally for the Refining & Marketing segment via refining logistics assets, pipelines, terminals, towboats and barges; gathers, processes and transports natural gas; and gathers, transports, fractionates, stores and markets NGLs. The Midstream segment primarily reflects the results of MPLX.

On October 1, 2018, we acquired Andeavor and its results are included in each of our segments from the date of the acquisition. Also, on February 1, 2018, we contributed certain refining logistics assets and fuels distribution services to MPLX. The results of these new businesses are reported in the Midstream segment prospectively from February 1, 2018, resulting in a net reduction to Refining & Marketing segment results and a net increase to Midstream segment results of the same amount. No effect was given to prior periods as these entities were not considered businesses prior to February 1, 2018.

Segment income from operations represents income (loss) from operations attributable to the reportable segments. Corporate administrative expenses, except for those attributable to MPLX, and costs related to certain non-operating assets are not allocated to the Refining & Marketing segment. In addition, certain items that affect comparability (as determined by the chief operating decision maker (“CODM”)) are not allocated to the reportable segments. Assets by segment are not a measure used to assess the performance of the company by the CODM and thus are not reported in our disclosures.

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(In millions)			Refining & Marketing						Midstream						Total
Year Ended December 31, 2020
Revenues:
Third party(a)			$	66,180					$	3,599					$	69,779
Intersegment			67						4,839						4,906
Segment revenues			$	66,247					$	8,438					$	74,685
Segment income from operations			$	(5,189)					$	3,708					$	(1,481)
Supplemental Data
Depreciation and amortization(b)			1,857						1,353						3,210
Capital expenditures and investments(c)			1,170						1,398						2,568

(In millions)			Refining & Marketing						Midstream						Total
Year Ended December 31, 2019
Revenues:
Third party(a)			$	107,305					$	3,843					$	111,148
Intersegment			103						4,917						5,020
Segment revenues			$	107,408					$	8,760					$	116,168
Segment income from operation			$	2,856					$	3,594					$	6,450
Supplemental Data
Depreciation and amortization(b)			1,780						1,267						3,047
Capital expenditures and investments(c)			2,045						3,290						5,335

(In millions)			Refining & Marketing						Midstream						Total
Year Ended December 31, 2018
Revenues:
Third party(a)			$	82,755					$	3,331					$	86,086
Intersegment			66						3,329						3,395
Segment revenues			$	82,821					$	6,660					$	89,481
Segment income from operations			$	2,654					$	2,752					$	5,406
Supplemental Data
Depreciation and amortization(b)			1,207						885						2,092
Capital expenditures and investments(c)			1,077						2,630						3,707

(a)Includes Refining & Marketing sales to Speedway (as discussed above) and related party sales. See Note 10 for additional information.

(b)Differences between segment totals and MPC consolidated totals represent amounts related to corporate and other items not allocated to segments.

(c)Includes changes in capital expenditure accruals and investments in affiliates.

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The following reconciles segment income (loss) from operations to income (loss) from continuing operations before income taxes as reported in the consolidated statements of income:

(In millions)			2020						2019						2018
Segment income (loss) from operations			$	(1,481)					$	6,450					$	5,406
Corporate(a)			(800)						(833)						(528)
Items not allocated to segments:
Impairments(b)			(9,741)						(1,239)						9
Restructuring expenses(c)			(367)						—						—
Litigation			84						(22)						—
Gain on sale of assets			66						—						—
Transaction-related costs(d)			(8)						(153)						(197)
Equity method investment restructuring gains(e)			—						259						—
Income (loss) from continuing operations			(12,247)						4,462						4,690
Net interest and other financial costs			1,365						1,229						993
Income (loss) from continuing operations before income taxes			$	(13,612)					$	3,233					$	3,697

(a)Corporate consists primarily of MPC’s corporate administrative expenses and costs related to certain non-operating assets, except for corporate overhead expenses attributable to MPLX, which are included in the Midstream segment. Corporate includes corporate costs of $26 million, $28 million and $26 million for 2020, 2019 and 2018, respectively, that are no longer allocable to Speedway under discontinued operations accounting.

(b)2020 reflects impairments of goodwill, equity method investments and long lived assets. 2019 reflects impairments of goodwill and equity method investments. See Note 7. 2018 includes MPC’s share of gains from the sale of assets remaining from the Sandpiper pipeline project, which was cancelled and impaired in 2016.

(c)See Note 4.

(d)2020 and 2019 includes costs incurred in connection with the Midstream strategic review and other related efforts. Both 2019 and 2018 include employee severance, retention and other costs related to the acquisition of Andeavor. Effective October 1, 2019, we have discontinued reporting Andeavor transaction-related costs as one year has passed since the acquisition and these costs are immaterial. Costs incurred in connection with the Speedway separation are included in discontinued operations. See Note 5.

(e)Includes gains related to The Andersons Marathon Holdings LLC and Capline Pipeline Company LLC. See Note 17.

The following reconciles segment capital expenditures and investments to total capital expenditures:

(In millions)			2020						2019						2018
Segment capital expenditures and investments			$	2,568					$	5,335					$	3,707
Less investments in equity method investees			485						1,064						409
Plus items not allocated to segments:
Corporate			80						100						77
Capitalized interest			106						137						80
Total capital expenditures(a)			$	2,269					$	4,508					$	3,455

(a)Includes changes in capital expenditure accruals. See Note 24 for a reconciliation of total capital expenditures to additions to property, plant and equipment as reported in the consolidated statements of cash flows.

Since we will continue to supply fuel to Speedway following its disposition, we have reported intersegment sales to Speedway, that were previously eliminated in consolidation, as third party sales in all periods presented. Sales to Speedway from the Refining & Marketing segment represented 11 percent, 12 percent and 13 percent of our total annual revenues for the years ended December 31, 2020, 2019 and 2018, respectively. See Note 23 for the disaggregation of our revenue by segment and product line.

We do not have significant operations in foreign countries. Therefore, revenues in foreign countries and long-lived assets located in foreign countries, including property, plant and equipment and investments, are not material to our operations.

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14. NET INTEREST AND OTHER FINANCIAL COSTS

Net interest and other financial costs were as follows:

(In millions)			2020						2019						2018
Interest income			$	(9)					$	(40)					$	(87)
Interest expense			1,462						1,389						1,025
Interest capitalized			(129)						(158)						(80)
Pension and other postretirement non-service costs(a)			11						4						53
(Gain) loss on extinguishment of debt			(9)						—						64
Other financial costs			39						34						18
Net interest and other financial costs			$	1,365					$	1,229					$	993

(a)See Note 26.

15. INCOME TAXES

On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) was enacted by Congress and signed into law by President Trump in response to the COVID-19 pandemic. The CARES Act contained a net operating loss (“NOL”) carryback provision, which allowed MPC to carryback our 2020 taxable loss to 2015 and later years. The five-year NOL carryback is available for all businesses producing taxable losses in 2018 through 2020. Based on the NOL carryback, as provided by the CARES Act, we recorded an income tax receivable of $2.1 billion in other current assets to reflect our estimate of the tax refund we expect to receive from our 2020 federal tax return. The refund is expected to be received during the second half of 2021.

In the absence of the CARES Act NOL legislation, businesses would account for taxable losses as deferred tax assets and could realize the deferred tax asset by offsetting the losses against taxable income earned in future periods. Due to the corporate tax rate change from 35 percent to the current 21 percent under the Tax Cut and Jobs Act of 2017, taxpayers may recover taxes paid in tax years before 2018 at a 35 percent federal income tax rate. The limitation on the percentage of taxable income that may be offset by the NOL, formerly 80 percent of income, was eliminated for years beginning before 2021.

The provision (benefit) for income taxes from continuing operations consisted of:

(In millions)			2020						2019						2018
Current:
Federal			$	(2,267)					$	(52)					$	674
State and local			69						28						54
Foreign			9						1						22
Total current			(2,189)						(23)						750
Deferred:
Federal			90						742						(119)
State and local			(347)						56						149
Foreign			16						9						(16)
Total deferred			(241)						807						14
Income tax provision (benefit)			$	(2,430)					$	784					$	764

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A reconciliation of the federal statutory income tax rate to the effective tax rate applied to income (loss) from continuing operations before income taxes follows:

			2020						2019						2018
Federal statutory rate			21		%				21		%				21		%
State and local income taxes, net of federal income tax effects			2						2						5
Goodwill impairment			(8)						5						—
Noncontrolling interests			—						(4)						(5)
Legislation			4						—						—
Other			(1)						—						—
Effective tax rate applied to income (loss) from continuing operations before income taxes			18		%				24		%				21		%

Deferred tax assets and liabilities resulted from the following:

			December 31,
(In millions)			2020						2019
Deferred tax assets:
Employee benefits			$	647					$	693
Environmental remediation			95						99
Finance lease obligations			103						105
Debt financing			6						17
Operating lease liabilities			453						498
Net operating loss carryforwards			232						18
Foreign currency			—						15
Tax credit carryforwards			19						14
Other			74						57
Total deferred tax assets			1,629						1,516
Deferred tax liabilities:
Property, plant and equipment			3,195						3,301
Inventories			800						652
Investments in subsidiaries and affiliates			3,331						3,114
Goodwill and other intangibles			34						304
Right of use assets			451						498
Other			18						19
Total deferred tax liabilities			7,829						7,888
Net deferred tax liabilities			$	6,200					$	6,372

The above table reflects reclassifications of December 31, 2019 balances from property, plant and equipment to finance lease obligations, operating lease liabilities, goodwill and other intangibles and right of use assets to correct the presentation of these deferred tax assets and liabilities that were previously presented as property, plant and equipment deferred tax liabilities.

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Net deferred tax liabilities were classified in the consolidated balance sheets as follows:

			December 31,
(In millions)			2020						2019
Assets:
Other noncurrent assets			$	3					$	20
Liabilities:
Deferred income taxes(a)			6,203						6,392
Net deferred tax liabilities			$	6,200					$	6,372

(a)The deferred income tax assets and liabilities associated with discontinued operations remain in our balance sheet rather than being included in the carrying amount of assets and liabilities that are held for sale, as the sale is structured as a sale of assets. These discontinued operations deferred income tax assets and liabilities will be realized upon the sale of Speedway.

At December 31, 2020 and 2019, federal operating loss carryforwards were $4 million and $7 million, respectively, which includes a mix of indefinite carryforward ability and expiration periods ranging from 2022 through 2037. As of December 31, 2020 and 2019, state and local operating loss carryforwards were $228 million and $11 million, respectively, which includes a mix of indefinite carryforward ability and expiration periods ranging from 2021 through 2042.

As of December 31, 2020 and 2019, $11 million of valuation allowances have been recorded related to income taxes. A federal valuation allowance was established for December 31, 2020 and 2019, of $2 million, primarily due to the expected realizability of foreign tax credits. A state and local valuation allowance was established as of December 31, 2020 and 2019, of $9 million, based on expected realizability of state and local tax operating losses.

MPC is continuously undergoing examination of its U.S. federal income tax returns by the Internal Revenue Service (“IRS”). Since 2012, we have continued to participate in the Compliance Assurance Process (“CAP”). CAP is a real-time audit of the U.S. Federal income tax return that allows the IRS, working in conjunction with MPC, to determine tax return compliance with the U.S. Federal tax law prior to filing the return. This program provides us with greater certainty about our tax liability for years under examination by the IRS. While Andeavor also underwent continual IRS examination, it did not participate in the CAP for tax periods prior to October 1, 2018.

Andeavor and its subsidiaries’ IRS audits have been completed through the 2015 tax year. We believe adequate provisions have been established for potential tax in periods not closed to examination. Further, we are routinely involved in U.S. state income tax audits. We believe all other audits will be resolved with the amounts provided for these liabilities. As of December 31, 2020, our federal income tax returns remain subject to examination for years 2016 through 2019. As of December 31, 2020, we have various state and local income tax returns subject to examination for years 2006 through 2019, depending on jurisdiction.

The following table summarizes the activity in unrecognized tax benefits:

(In millions)			2020						2019						2018
January 1 balance			$	32					$	211					$	19
Additions for tax positions of prior years			12						2						—
Reductions for tax positions of prior years			(18)						(2)						(5)
Settlements			(3)						(19)						—
Statute of limitations			—						(160)						(12)
Acquired from Andeavor			—						—						209
December 31 balance			$	23					$	32					$	211

If the unrecognized tax benefits as of December 31, 2020 were recognized, $14 million would affect our effective income tax rate. There were $9 million of uncertain tax positions as of December 31, 2020 for which it is reasonably possible that the amount of unrecognized tax benefits would significantly decrease during the next twelve months. For tax years 2009 and 2010, Andeavor had asserted a federal income tax claim for $159 million from the income tax effect of the receipt of the ethanol blender’s excise tax credit, for which the tax benefit was not recorded. The statute of limitations for the IRS appeal process expired during the fourth quarter 2019 since the ability to obtain a refund was remote.

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Pursuant to our tax sharing agreement with Marathon Oil, the unrecognized tax benefits related to pre-spinoff operations for which Marathon Oil was the taxpayer remain the responsibility of Marathon Oil and we have indemnified Marathon Oil accordingly. See Note 29 for indemnification information.

Interest and penalties related to income taxes are recorded as part of the provision for income taxes. Such interest and penalties were net expenses (benefits) of $(19) million, $(2) million and $1 million in 2020, 2019 and 2018, respectively. As of December 31, 2020 and 2019, $(5) million and $7 million of interest and penalties were accrued related to income taxes.

16. INVENTORIES

			December 31,
(In millions)			2020						2019
Crude oil			$	2,588					$	3,472
Refined products			4,478						5,359
Materials and supplies			933						973
Total			$	7,999					$	9,804

The LIFO method accounted for 88 percent and 90 percent of total inventory value at December 31, 2020 and 2019, respectively. There was no excess of replacement or current cost over our stated LIFO cost as of December 31, 2020. Current acquisition costs were estimated to exceed the LIFO inventory value by $787 million at December 31, 2019

The cost of inventories of crude oil and refined products is determined primarily under the LIFO method. During 2020, we recorded a $561 million charge to reflect LIFO liquidations for our crude oil and refined product inventories. The costs of inventories in the historical LIFO layers which were liquidated were higher than current costs, which resulted in the charge to cost of revenues. There were no liquidations of LIFO inventories in 2019 and 2018. .

17. EQUITY METHOD INVESTMENTS

The Andersons Marathon Holdings LLC

Effective October 1, 2019, The Andersons, Inc. and MPC contributed jointly owned equity interests in three ethanol entities into a new legal entity, The Andersons Marathon Holdings LLC (“TAMH”). Concurrently, The Andersons, Inc. contributed a wholly-owned ethanol facility to TAMH. In accordance with ASC 845, we derecognized the historical cost of our equity method investments in the legacy entities amounting to $123 million and recognized the new equity method investment in TAMH at fair value. We used a combination of market, income and cost approaches to determine the fair value of our ownership interest in TAMH with more reliance on the market and income approaches. The estimated cash flows used in the income approach were discounted using a weighted average cost of capital estimate and the market approach utilized EBITDA and capacity multiples for similar companies and transactions. This is a nonrecurring fair value measurement and is recognized in Level 3 of the fair value hierarchy. We estimated the fair value of our ownership interest to be $175 million. The excess of the estimated fair value of our ownership interest over the carrying value of the derecognized net assets resulted in a $52 million non-cash net gain recorded as a net gain on disposal of assets in the accompanying consolidated statements of income.

Capline LLC

During the three months ended March 31, 2019, we executed agreements with Capline Pipeline Company LLC (“Capline LLC”) to contribute our 33 percent undivided interest in the Capline pipeline system in exchange for a 33 percent ownership interest in Capline LLC. In connection with our execution of these agreements, Capline LLC initiated a binding open season for southbound service from Patoka, Illinois to St. James, Louisiana or Liberty, Mississippi with an additional origination point at Cushing, Oklahoma. Service from Cushing, Oklahoma is part of a joint tariff with Diamond pipeline.

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In accordance with ASC 810, we derecognized our undivided interest amounting to $143 million of net assets and recognized the Capline LLC ownership interest we received at fair value. We used an income approach to determine the fair value of our ownership interest under a Monte Carlo simulation method. We estimated the fair value of our ownership interest to be $350 million. This is a nonrecurring fair value measurement and is categorized in Level 3 of the fair value hierarchy. The Monte Carlo simulation inputs include ranges of tariff rates, operating volumes, operating cost and capital expenditure assumptions. The estimated cash flows were discounted using a Monte Carlo market participant weighted average cost of capital estimate. None of the inputs to the Monte Carlo simulation are individually significant. The excess of the estimated fair value of our ownership interest over the carrying value of the derecognized net assets resulted in a $207 million non-cash net gain recorded as a net gain on disposal of assets in the accompanying consolidated statements of income.

As the Capline system is currently idled, Capline LLC is unable to fund its operations without financial support from its equity owners and is a VIE. MPC is not deemed to be the primary beneficiary, due to our inability to unilaterally control significant decision-making rights. Our maximum exposure to loss as a result of our involvement with Capline LLC includes our equity investment, any additional capital contribution commitments and any operating expenses incurred by Capline LLC in excess of compensation received for performance of the operating services.

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Investments in Equity Method Affiliates

									Ownership as of						Carrying value at
									December 31,						December 31,
(Dollars in millions)			VIE						2020						2020						2019
Refining & Marketing
The Andersons Marathon Holdings LLC									50%						$	159					$	177
Watson Cogeneration Company									51%						25						26
Refining & Marketing Total															$	184					$	203
Midstream
MPLX
Andeavor Logistics Rio Pipeline LLC			X						67%						$	194					$	202
Centrahoma Processing LLC									40%						145						153
Explorer Pipeline Company									25%						72						83
Illinois Extension Pipeline Company, L.L.C									35%						254						265
LOOP LLC									41%						252						238
MarEn Bakken Company LLC									25%						465						481
MarkWest EMG Jefferson Dry Gas Gathering Company, L.L.C.			X						67%						307						302
MarkWest Utica EMG, L.L.C.			X						57%						698						1,984
Minnesota Pipe Line Company, LLC									17%						188						190
Rendezvous Gas Services, L.L.C.			X						78%						159						170
Sherwood Midstream Holdings LLC			X						51%						148						157
Sherwood Midstream LLC			X						50%						557						537
Whistler Pipeline LLC			X						38%						185						134
Wink to Webster Pipeline LLC(a)			X						—%						—						126
W2W Holdings LLC(a)			X						50%						72						—
Other(b)			X												340						253
MPLX Total															$	4,036					$	5,275
MPC-Retained
Capline Pipeline Company LLC			X						33%						$	390					$	374
Crowley Coastal Partners, LLC			X						50%						190						188
Gray Oak Pipeline, LLC									25%						342						298
LOOP LLC									10%						63						59
South Texas Gateway Terminal LLC									25%						168						85
Other(b)			X												49						86
MPC-Retained Total															$	1,202					$	1,090
Midstream Total															$	5,238					$	6,365
Total															$	5,422					$	6,568

(a)During 2020, MPLX contributed its ownership in Wink to Webster Pipeline LLC to W2W Holdings LLC.

(b)Some investments included within “Other” have been deemed to be VIEs.

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Summarized financial information for all equity method investments in affiliated companies, combined, was as follows:

(In millions)			2020						2019						2018
Income statement data:
Revenues and other income			$	3,013					$	3,282					$	3,092
Income from operations			599						1,176						1,105
Net income			454						987						972
Balance sheet data – December 31:
Current assets			$	1,298					$	1,195
Noncurrent assets			17,697						16,362
Current liabilities			754						997
Noncurrent liabilities			4,736						2,769

As of December 31, 2020, the carrying value of our equity method investments was $361 million higher than the underlying net assets of investees. This basis difference is being amortized into net income over the remaining estimated useful lives of the underlying net assets, except for $199 million of excess related to goodwill and other non-depreciable assets.

Dividends and partnership distributions received from equity method investees (excluding distributions that represented a return of capital previously contributed) were $577 million, $569 million and $458 million in 2020, 2019 and 2018.

See Note 7 for information regarding impairments of equity method investments.

18. PROPERTY, PLANT AND EQUIPMENT

(In millions)			Estimated Useful Lives						December 31,
2020						2019
Refining & Marketing(a)			4 -30 years						$	30,306					$	29,101
Midstream			1 -61 years						27,677						27,193
Corporate			4 - 40 years						1,356						1,292
Total									59,339						57,586
Less accumulated depreciation(b)									20,304						16,716
Property, plant and equipment, net									$	39,035					$	40,870

(a)Recast to include the direct dealer business. See Note 13 for additional information.

(b)The December 31, 2020 balance includes property, plant and equipment impairment charges recorded during 2020. See Note 7 for additional information.

Property, plant and equipment includes gross assets acquired under finance leases of $819 million and $740 million at December 31, 2020 and 2019, respectively, with related amounts in accumulated depreciation of $272 million and $215 million at December 31, 2020 and 2019. Property, plant and equipment includes construction in progress of $1.83 billion and $3.12 billion at December 31, 2020 and 2019, respectively, which primarily relates to capital projects at our refineries and midstream facilities.

19. GOODWILL AND INTANGIBLES

Goodwill

Management annually evaluates goodwill for impairment as of November 30, as well as whenever events or changes in circumstances indicate it is more likely than not that the fair value of a reporting unit with goodwill is less than its carrying amount. In 2020 and 2019, we recorded impairments of goodwill as

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outlined in Note 7. There were no other impairments of goodwill required based on our annual test of goodwill in 2020 and 2019.

The changes in the carrying amount of goodwill for 2019 and 2020 were as follows:

(In millions)			Refining & Marketing(a)						Midstream						Total
Balance at January 1, 2019			$	5,511					$	10,323					$	15,834
Acquisitions			38						—						38
Purchase price allocation adjustments			584						408						992
Impairments(b)			—						(1,197)						(1,197)
Dispositions			—						(17)						(17)
Balance at December 31, 2019			$	6,133					$	9,517					$	15,650
Transfers			8						(8)						—
Impairments(b)			(5,580)						(1,814)						(7,394)
Balance at December 31, 2020			$	561					$	7,695					$	8,256

(a)Recast to include the direct dealer business. See Note 13 for additional information.

(b)See Note 7.

Intangible Assets

Our definite lived intangible assets as of December 31, 2020 and 2019 are as shown below.

			December 31, 2020																		December 31, 2019
(In millions)			Gross						Accumulated Amortization						Net						Gross						Accumulated Amortization						Net
Customer contracts and relationships			$	3,359					$	1,119					$	2,240					$	3,271					$	612					$	2,659
Brand rights and tradenames			100						35						65						100						20						80
Royalty agreements			133						87						46						133						78						55
Other			36						27						9						36						24						12
Total			$	3,628					$	1,268					$	2,360					$	3,540					$	734					$	2,806

At both December 31, 2020 and 2019, we had indefinite lived intangible assets $71 million, which are emission allowance credits.

Amortization expense for 2020 and 2019 was $336 million and $357 million, respectively. Estimated future amortization expense for the next five years related to the intangible assets at December 31, 2020 is as follows:

(In millions)
2021						$	347
2022						346
2023						330
2024						277
2025						257

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20. FAIR VALUE MEASUREMENTS

Fair Values – Recurring

The following tables present assets and liabilities accounted for at fair value on a recurring basis as of December 31, 2020 and 2019 by fair value hierarchy level. We have elected to offset the fair value amounts recognized for multiple derivative contracts executed with the same counterparty, including any related cash collateral as shown below; however, fair value amounts by hierarchy level are presented on a gross basis in the following tables.

			December 31, 2020
			Fair Value Hierarchy
(In millions)			Level 1						Level 2						Level 3						Netting and Collateral(a)						Net Carrying Value on Balance Sheet(b)						Collateral Pledged Not Offset
Assets:
Commodity contracts			$	82					$	6					$	—					$	(80)					$	8					$	31
Liabilities:
Commodity contracts			$	81					$	10					$	—					$	(91)					$	—					$	—
Embedded derivatives in commodity contracts			—						—						63						—						63						—

			December 31, 2019
			Fair Value Hierarchy
(In millions)			Level 1						Level 2						Level 3						Netting and Collateral(a)						Net Carrying Value on Balance Sheet(b)						Collateral Pledged Not Offset
Assets:
Commodity contracts			$	57					$	6					$	—					$	(55)					$	8					$	73
Liabilities:
Commodity contracts			$	95					$	11					$	—					$	(106)					$	—					$	—
Embedded derivatives in commodity contracts			—						—						60						—						60						—

(a)Represents the impact of netting assets, liabilities and cash collateral when a legal right of offset exists. As of December 31, 2020, cash collateral of $11 million was netted with mark-to-market liabilities. As of December 31, 2019, cash collateral of $51 million was netted with mark-to-market derivative liabilities.

(b)We have no derivative contracts which are subject to master netting arrangements reflected gross on the balance sheet.

Commodity derivatives in Level 1 are exchange-traded contracts for crude oil and refined products measured at fair value with a market approach using the close-of-day settlement prices for the market. Commodity derivatives are covered under master netting agreements with an unconditional right to offset. Collateral deposits in futures commission merchant accounts covered by master netting agreements related to Level 1 commodity derivatives are classified as Level 1 in the fair value hierarchy.

Level 2 instruments are valued based on quoted prices for similar assets and liabilities in active markets, and inputs other than quoted prices, such as liquidity, that are observable for the asset or liability. Commodity derivatives in Level 2 are OTC contracts, which are valued using market quotations from independent price reporting agencies, third-party brokers and commodity exchange price curves that are corroborated with market data.

Level 3 instruments include embedded derivatives in commodity contracts. The embedded derivative liability relates to a natural gas purchase agreement embedded in a keep‑whole processing agreement. The fair value calculation for these Level 3 instruments at December 31, 2020 used significant unobservable inputs including: (1) NGL prices interpolated and extrapolated due to inactive markets ranging from $0.47 to $1.09 per gallon with a weighted average of $0.59 per gallon and (2) the probability of renewal of 100 percent for the first and second five-year term of the natural gas purchase agreement and the related keep-whole processing agreement. Increases or decreases in the fractionation spread result in an increase or decrease in the fair value of the embedded derivative liability.

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The following is a reconciliation of the beginning and ending balances recorded for net liabilities classified as Level 3 in the fair value hierarchy.

(In millions)			2020						2019
Beginning balance			$	60					$	61
Unrealized and realized losses included in net income			9						5
Settlements of derivative instruments			(6)						(6)
Ending balance			$	63					$	60
The amount of total losses for the period included in earnings attributable to the change in unrealized losses relating to assets still held at the end of period:			$	4					$	5

See Note 21 for the income statement impacts of our derivative instruments.

Fair Values – Reported

We believe the carrying value of our other financial instruments, including cash and cash equivalents, receivables, accounts payable and certain accrued liabilities approximate fair value. Our fair value assessment incorporates a variety of considerations, including the short-term duration of the instruments and the expected insignificance of bad debt expense, which includes an evaluation of counterparty credit risk. The borrowings under our revolving credit facilities and term loan facility, which include variable interest rates, approximate fair value. The fair value of our fixed and floating rate long-term debt is based on prices from recent trade activity and is categorized in Level 3 of the fair value hierarchy. The carrying and fair values of our debt were approximately $31.1 billion and $34.9 billion at December 31, 2020, respectively, and approximately $28.3 billion and $30.1 billion at December 31, 2019, respectively. These carrying and fair values of our debt exclude the unamortized issuance costs which are netted against our total debt.

21. DERIVATIVES

For further information regarding the fair value measurement of derivative instruments, including any effect of master netting agreements or collateral, see Note 20. See Note 2 for a discussion of the types of derivatives we use and the reasons for them. We do not designate any of our commodity derivative instruments as hedges for accounting purposes.

The following table presents the fair value of derivative instruments as of December 31, 2020 and 2019 and the line items in the balance sheets in which the fair values are reflected. The fair value amounts below are presented on a gross basis and do not reflect the netting of asset and liability positions permitted under the terms of our master netting arrangements including cash collateral on deposit with, or received from, brokers. We offset the recognized fair value amounts for multiple derivative instruments executed with the same counterparty in our financial statements when a legal right of offset exists. As a result, the asset and liability amounts below will not agree with the amounts presented in our consolidated balance sheets.

(In millions)			December 31, 2020
Balance Sheet Location			Asset						Liability
Commodity derivatives
Other current assets			$	88					$	91
Other current liabilities(a)			—						7
Deferred credits and other liabilities(a)			—						56

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(In millions)			December 31, 2019
Balance Sheet Location			Asset						Liability
Commodity derivatives
Other current assets			$	63					$	106
Other current liabilities(a)			—						5
Deferred credits and other liabilities(a)			—						55

(a)Includes embedded derivatives.

The table below summarizes open commodity derivative contracts for crude oil, refined products and blending products as of December 31, 2020.

			Percentage of contracts that expire next quarter						Position
(Units in thousands of barrels)						Long						Short
Exchange-traded(a)
Crude oil			81.9%						17,474						11,197
Refined products			89.0%						13,923						9,354
Blending products			100.0%						3,206						3,987
Soybean oil			100.0%						558						1,117

(a)Included in exchange-traded are spread contracts in thousands of barrels: Refined products - 935 long and 455 short

The following table summarizes the effect of all commodity derivative instruments in our consolidated statements of income:

(In millions)			Gain (Loss)
Income Statement Location			2020						2019						2018
Sales and other operating revenues			$	72					$	(19)					$	13
Cost of revenues			34						(77)						(59)
Other income			1						—						—
Total			$	107					$	(96)					$	(46)

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22. DEBT

Our outstanding borrowings at December 31, 2020 and 2019 consisted of the following:

(In millions)			December 31, 2020						December 31, 2019
Marathon Petroleum Corporation:
Commercial paper			$	1,024					$	—
Senior notes			9,849						8,474
Notes payable			1						1
Finance lease obligations			634						574
MPLX LP:
Bank revolving credit facility			175						—
Term loan facility			—						1,000
Senior notes			20,350						19,100
Finance lease obligations			11						19
Total debt			$	32,044					$	29,168
Unamortized debt issuance costs			(154)						(134)
Unamortized (discount) premium, net			(306)						(310)
Amounts due within one year			(2,854)						(704)
Total long-term debt due after one year			$	28,730					$	28,020

Commercial Paper

On February 26, 2016, we established a commercial paper program that allows us to have a maximum of $2 billion in commercial paper outstanding, with maturities up to 397 days from the date of issuance. We do not intend to have outstanding commercial paper borrowings in excess of available capacity under our bank revolving credit facilities.

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MPC Senior Notes

			December 31,
(In millions)			2020						2019
Marathon Petroleum Corporation:
Senior notes, 3.400% due December 2020			$	—					$	650
Senior notes, 5.125% due March 2021			1,000						1,000
Senior notes, 5.375% due October 2022			—						337
Senior notes, 4.500% due May 2023			1,250						—
Senior notes, 4.750% due December 2023			614						614
Senior notes, 5.125% due April 2024			241						241
Senior notes, 3.625% due September 2024			750						750
Senior notes, 4.700% due May 2025			1,250						—
Senior notes, 5.125% due December 2026			719						719
Senior notes, 3.800% due April 2028			496						496
Senior notes, 6.500% due March 2041			1,250						1,250
Senior notes, 4.750% due September 2044			800						800
Senior notes, 5.850% due December 2045			250						250
Senior notes, 4.500% due April 2048			498						498
Andeavor senior notes, 3.800% - 5.375% due 2022 - 2048			331						469
Senior notes, 5.000%, due September 2054			400						400
Total			$	9,849					$	8,474

On April 27, 2020, we issued $2.5 billion aggregate principal amount of senior notes in a public offering, consisting of $1.25 billion aggregate principal amount of 4.500% unsecured senior notes due May 2023 and $1.25 billion aggregate principal amount of 4.700% unsecured senior notes due May 2025. MPC used the net proceeds from this offering to repay amounts outstanding under its five-year revolving credit facility.

On October 1, 2020, all of the $475 million outstanding aggregate principal amount of 5.375% senior notes due October 2022, including the portion of such notes for which Andeavor was the obligor, were redeemed at a price equal to par.

On November 15, 2020, all of the $650 million outstanding aggregate principal amount of 3.400% senior notes due December 2020 were redeemed at a price equal to par.

Interest on each series of senior notes is payable semi-annually in arrears. The MPC senior notes are unsecured and unsubordinated obligations of MPC and rank equally with all of MPC’s other existing and future unsecured and unsubordinated indebtedness. The MPC senior notes are non-recourse and structurally subordinated to the indebtedness of our subsidiaries, including the outstanding indebtedness of Andeavor, MPLX and ANDX. The Andeavor senior notes are unsecured, unsubordinated obligations of Andeavor and are non-recourse to MPC and any of MPC’s subsidiaries other than Andeavor.

MPLX Term Loan Facility

The $1.0 billion of outstanding borrowings under the MPLX term loan facility was repaid during 2020 with net proceeds from the issuance of MPLX senior notes discussed below.

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MPLX Senior Notes

			December 31,
(In millions)			2020						2019
MPLX LP:
Floating rate notes due September 2021			$	—					$	1,000
Floating rate notes due September 2022			1,000						1,000
Senior notes, 6.250% due October 2022			—						266
Senior notes, 3.500% due December 2022			486						486
Senior notes, 3.375% due March 2023			500						500
Senior notes, 4.500% due July 2023			989						989
Senior notes, 6.375% due May 2024			—						381
Senior notes, 4.875% due December 2024			1,149						1,149
Senior notes, 5.250% due January 2025			708						708
Senior notes, 4.000% due February 2025			500						500
Senior notes, 4.875% due June 2025			1,189						1,189
MarkWest senior notes, 4.500% - 4.875% due 2023 - 2025			23						23
Senior notes, 1.750% due March 2026			1,500						—
Senior notes, 4.125% due March 2027			1,250						1,250
Senior notes, 4.250% due December 2027			732						732
Senior notes, 4.000% due March 2028			1,250						1,250
Senior notes, 4.800% due February 2029			750						750
Senior notes, 2.650% due August 2030			1,500						—
Senior notes, 4.500% due April 2038			1,750						1,750
Senior notes, 5.200% due March 2047			1,000						1,000
Senior notes, 5.200% due December 2047			487						487
ANDX senior notes, 3.500% - 5.250% due 2022 - 2047			87						190
Senior notes, 4.700% due April 2048			1,500						1,500
Senior notes, 5.500% due February 2049			1,500						1,500
Senior notes, 4.900% due April 2058			500						500
Total			$	20,350					$	19,100

2020 Activity

On August 18, 2020, MPLX issued $3.0 billion aggregate principal amount of senior notes in a public offering, consisting of $1.5 billion aggregate principal amount of 1.750% senior notes due March 2026 and $1.5 billion aggregate principal amount of 2.650% senior notes due August 2030. The net proceeds were used to repay $1.0 billion of outstanding borrowings under the MPLX term loan agreement, to repay the $1.0 billion aggregate principal amount of floating rate senior notes due September 2021, to redeem all of the $300 million aggregate principal amount of MPLX’s 6.250% senior notes due October 2022 and to redeem the $450 million aggregate principal amount of 6.375% senior notes due May 2024, including the portion of such notes issued by ANDX. The remaining net proceeds were used for general business purposes.

On December 29, 2020, MPLX announced the redemption of all the $750 million outstanding aggregate principal amount of 5.250% senior notes due January 2025, including the portion of such notes issued by ANDX. The notes were redeemed on January 15, 2021 at a price equal to 102.625% of the principal amount. These notes are included in long-term debt due within one year in our consolidated balance sheet as of December 31, 2020.

2019 Activity

On September 9, 2019, MPLX issued $2.0 billion aggregate principal amount of floating rate senior notes in a public offering, consisting of $1.0 billion aggregate principal amount of notes due September 2021 and $1.0 billion aggregate principal amount of notes due September 2022. Net proceeds from the issuance of

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the floating rate senior notes were used to repay MPLX’s existing indebtedness and/or for general business purposes. The interest rate applicable to the floating rate senior notes due September 2021 is LIBOR plus 0.9% per annum while the interest rate applicable to the floating rate senior notes due September 2022 is LIBOR plus 1.1% per annum. Interest is payable in March, June, September and December, commencing on December 9, 2019. Both series of floating rate notes are callable, in whole or in part, at par plus accrued and unpaid interest at any time on or after September 10, 2020.

In connection with MPLX’s acquisition of ANDX on July 30, 2019, MPLX assumed ANDX’s outstanding senior notes, which had an aggregate principal amount of $3.75 billion, with interest rates ranging from 3.500% to 6.375% and maturity dates ranging from 2019 to 2047. On September 23, 2019, approximately $3.06 billion aggregate principal amount of ANDX’s outstanding senior notes were exchanged for new unsecured senior notes issued by MPLX having the same maturity and interest rates as the ANDX senior notes in an exchange offer and consent solicitation undertaken by MPLX, leaving approximately $690 million aggregate principal of outstanding senior notes issued by ANDX. Of this, $500 million was related to the 5.500% unsecured senior notes due 2019. The principal amount of $500 million and accrued interest of $14 million was paid on October 15, 2019, which included interest through the payoff date.

Interest on each series of MPLX fixed rate senior notes is payable semi-annually in arrears. The MPLX senior notes are unsecured, unsubordinated obligations of MPLX and are non-recourse to MPC and its subsidiaries other than MPLX and MPLX GP LLC, as the general partner of MPLX except as otherwise noted.

Schedule of Maturities

Principal maturities of long-term debt, excluding finance lease obligations, as of December 31, 2020 for the next five years are as follows:

(In millions)
2021			$	1,750
2022			1,500
2023			3,600
2024			2,376
2025			2,950

Available Capacity under our Facilities as of December 31, 2020

(Dollars in millions)						Total Capacity						Outstanding Borrowings						Outstanding Letters of Credit						Available Capacity						Weighted Average Interest Rate						Expiration
MPC, excluding MPLX
MPC 364-day bank revolving credit facility						$	1,000					$	—					$	—					$	1,000					—						September 2021
MPC 364-day bank revolving credit facility						1,000						—						—						1,000						—						April 2021
MPC bank revolving credit facility(a)						5,000						—						1						4,999						—						October 2023
MPC trade receivables securitization facility(b)						750						—						—						750						—						July 2021
MPLX
MPLX bank revolving credit facility(c)						3,500						175						—						3,325						1.36						July 2024

(a)Borrowed $4.225 billion and repaid $4.225 billion during the year ended December 31, 2020.

(b)Borrowed $3.550 billion and repaid $3.550 billion during the year ended December 31, 2020. Availability under our $750 million trade receivables facility is a function of eligible trade receivables, which will be lower in a sustained lower price environment for refined products.

(c)Borrowed $3.815 billion and repaid $3.640 billion during the year ended December 31, 2020.

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MPC Revolving Credit Agreements

On August 28, 2018, in connection with the Andeavor acquisition, MPC entered into a credit agreement with a syndicate of lenders providing for a $5.0 billion five-year revolving credit facility that expires in 2023. The five-year credit agreement became effective on October 1, 2018.

On September 23, 2020, MPC entered into a 364-day credit agreement with a syndicate of lenders. This revolving credit agreement provides for a $1.0 billion unsecured revolving credit facility that matures in September 2021, and replaces a similar 364-day revolving credit agreement that expired on September 28, 2020.

On April 27, 2020, MPC entered into an additional 364-day revolving credit agreement that provides for a $1.0 billion unsecured revolving credit facility that matures in April 2021. In February 2021, we elected to terminate this credit agreement. This facility provided us with additional liquidity and financial flexibility during the then ongoing commodity price and demand downturn. There were no borrowings under this credit facility, and we determined that the incremental borrowing capacity of the facility was no longer necessary. We do not intend to replace this facility. We incurred no early termination fees as a result of the early termination of this credit agreement.

MPC has an option under its $5.0 billion five-year credit agreement to increase the aggregate commitments by up to an additional $1.0 billion, subject to, among other conditions, the consent of the lenders whose commitments would be increased. In addition, MPC may request up to two one-year extensions of the maturity date of the five-year credit agreement subject to, among other conditions, the consent of lenders holding a majority of the commitments, provided that the commitments of any non-consenting lenders will terminate on the then-effective maturity date. The five-year credit agreement includes sub-facilities for swing-line loans of up to $250 million and letters of credit of up to $2.2 billion (which may be increased to up to $3.0 billion upon receipt of additional letter of credit issuing commitments).

Borrowings under the MPC credit agreements bear interest, at our election, at either the Adjusted LIBO Rate or the Alternate Base Rate (both as defined in the MPC credit agreements), plus an applicable margin. We are charged various fees and expenses under the MPC credit agreements, including administrative agent fees, commitment fees on the unused portion of the commitments and fees related to issued and outstanding letters of credit. The applicable margins to the benchmark interest rates and the commitment fees payable under the MPC credit agreements fluctuate based on changes, if any, to our credit ratings.

The MPC credit agreements contain certain representations and warranties, affirmative and restrictive covenants and events of default that we consider to be usual and customary for arrangements of this type, including a financial covenant that requires us to maintain a ratio of Consolidated Net Debt to Total Capitalization (each as defined in the MPC credit agreements) of no greater than 0.65 to 1.00 as of the last day of each fiscal quarter. The covenants also restrict, among other things, our ability and/or the ability of certain of our subsidiaries to incur debt, create liens on assets or enter into transactions with affiliates. As of December 31, 2020, we were in compliance with the covenants contained in the MPC credit agreements.

Trade Receivables Securitization Facility

The trade receivables facility consists of our wholly-owned subsidiaries selling or contributing on an on-going basis all of their trade receivables, together with all related security and interests in the proceeds thereof, without recourse, to another wholly-owned, bankruptcy-remote special purpose subsidiary, MPC Trade Receivables Company LLC (“TRC”), in exchange for a combination of cash, equity and/or borrowings under a subordinated note issued by TRC. TRC, in turn, has the ability to sell undivided ownership interests in qualifying trade receivables, together with all related security and interests in the proceeds thereof, without recourse, to the purchasing group in exchange for cash proceeds. The trade receivables facility also provides for the issuance of letters of credit up to $750 million, provided that the aggregate credit exposure of the purchasing group, including outstanding letters of credit, may not exceed the lesser of $750 million or the balance of qualifying trade receivables at any one time.

To the extent that TRC retains an ownership interest in the receivables it has purchased or received under the facility, such interest will be included in our consolidated financial statements solely as a result of the consolidation of the financial statements of TRC with those of MPC. The receivables sold or contributed to TRC are available first and foremost to satisfy claims of the creditors of TRC and are not available to satisfy the claims of creditors of MPC. TRC has granted a security interest in all of its assets to the purchasing group to secure its obligations under the Receivables Purchase Agreement.

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Proceeds from the sale of undivided percentage ownership interests in qualifying receivables under the trade receivables facility are reflected as debt on our consolidated balance sheet. We remain responsible for servicing the receivables sold to the purchasing group. TRC pays floating-rate interest charges and usage fees on amounts outstanding under the trade receivables facility, if any, unused fees on the portion of unused commitments and certain other fees related to the administration of the facility and letters of credit that are issued and outstanding under the trade receivables facility.

The receivables purchase agreement and receivables sale agreement contain representations and covenants that we consider usual and customary for arrangements of this type. Trade receivables are subject to customary criteria, limits and reserves before being deemed to qualify for sale by TRC pursuant to the trade receivables facility. In addition, further purchases of qualified trade receivables under the trade receivables facility are subject to termination, and TRC may be subject to default fees, upon the occurrence of certain amortization events that are included in the receivables purchase agreement, all of which we consider to be usual and customary for arrangements of this type. As of December 31, 2020, we were in compliance with the covenants contained in the receivables purchase agreement and receivables sale agreement.

MPLX Credit Agreement

Upon the completion of the merger of MPLX and ANDX on July 30, 2019, the MPLX bank revolving credit facility was amended and restated to increase the borrowing capacity to $3.5 billion and to extend the maturity date to July 30, 2024. The ANDX revolving and dropdown credit facilities were terminated and all outstanding balances were repaid and funded with borrowings under the amended and restated MPLX $3.5 billion bank revolving credit facility.

The MPLX credit agreement includes letter of credit issuing capacity of up to approximately $300 million and swingline loan capacity of up to $150 million. The revolving borrowing capacity may be increased by up to an additional $1.0 billion, subject to certain conditions, including the consent of the lenders whose commitments would increase.

Borrowings under the MPLX credit agreement bear interest, at MPLX’s election, at the Adjusted LIBO Rate or the Alternate Base Rate (both as defined in the MPLX credit agreement) plus an applicable margin. MPLX is charged various fees and expenses in connection with the agreement, including administrative agent fees, commitment fees on the unused portion of the commitments and fees with respect to issued and outstanding letters of credit. The applicable margins to the benchmark interest rates and the commitment fees payable under the MPLX credit agreement fluctuate based on changes, if any, to MPLX’s credit ratings.

The MPLX credit agreement contains certain representations and warranties, affirmative and restrictive covenants and events of default that we consider to be usual and customary for an agreement of this type, including a financial covenant that requires MPLX to maintain a ratio of Consolidated Total Debt as of the end of each fiscal quarter to Consolidated EBITDA (both as defined in the MPLX credit agreement) for the prior four fiscal quarters of no greater than 5.0 to 1.0 (or 5.5 to 1.0 for up to two fiscal quarters following certain acquisitions). Consolidated EBITDA is subject to adjustments for certain acquisitions completed and capital projects undertaken during the relevant period. The covenants also restrict, among other things, MPLX’s ability and/or the ability of certain of its subsidiaries to incur debt, create liens on assets and enter into transactions with affiliates. As of December 31, 2020, MPLX was in compliance with the covenants contained in the MPLX credit agreement.

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23. REVENUE

As discussed in Notes 1 and 13, the presentation of Refining & Marketing segment revenues reflects changes associated with the expected sale of Speedway and our new reportable segments. The following table presents our revenues disaggregated by segment and product line:

(In millions)			Refining & Marketing						Midstream						Total
Year Ended December 31, 2020
Refined products			$	61,648					$	641					$	62,289
Crude oil			4,023						—						4,023
Midstream services and other			509						2,958						3,467
Sales and other operating revenues			$	66,180					$	3,599					$	69,779

(In millions)			Refining & Marketing						Midstream						Total
Year Ended December 31, 2019
Refined products			$	102,316					$	818					$	103,134
Crude oil			4,402						—						4,402
Midstream services and other			587						3,025						3,612
Sales and other operating revenues			$	107,305					$	3,843					$	111,148

(In millions)			Refining & Marketing						Midstream						Total
Year Ended December 31, 2018
Refined products			$	78,952					$	945					$	79,897
Crude oil			3,345						—						3,345
Midstream services and other			458						2,386						2,844
Sales and other operating revenues			$	82,755					$	3,331					$	86,086

We do not disclose information on the future performance obligations for any contract with expected duration of one year or less at inception. As of December 31, 2020, we do not have future performance obligations that are material to future periods.

Receivables

On the accompanying consolidated balance sheets, receivables, less allowance for doubtful accounts primarily consists of customer receivables. Significant, non-customer balances included in our receivables at December 31, 2020 include matching buy/sell receivables of $2.08 billion.

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24. SUPPLEMENTAL CASH FLOW INFORMATION

(In millions)			2020						2019						2018
Net cash provided by operating activities included:
Interest paid (net of amounts capitalized)			$	1,235					$	1,168					$	887
Net income taxes paid to (received from) taxing authorities			(179)						491						424
Cash paid for amounts included in the measurement of lease liabilities
Payments on operating leases(a)			651						642						—
Interest payments under finance lease obligations(a)			25						28						—
Net cash provided by financing activities included:
Principal payments under finance lease obligations(a)			66						48						—
Non-cash investing and financing activities:
Capital leases			—						—						172
Right of use assets obtained in exchange for new operating lease obligations(a)			343						329						—
Right of use assets obtained in exchange for new finance lease obligations(a)			110						80						—
Contribution of assets(b)			—						266						—
Fair value of assets acquired(c)			—						525						—
Acquisition:
Fair value of MPC shares issued			—						—						19,766
Fair value of converted equity awards			—						—						203

(a)Disclosure added in 2019 following the adoption of ASC 842.

(b)2019 includes the contribution of net assets to TAMH and Capline LLC. See Note 17.

(c)2019 includes the recognition of TAMH and Capline LLC equity method investments. See Note 17.

(In millions)			December 31, 2020						December 31, 2019
Cash and cash equivalents(a)			$	415					$	1,393
Restricted cash(b)			1						2
Cash, cash equivalents and restricted cash			$	416					$	1,395

(a)Excludes $140 million and $134 million of cash included in assets held for sale representing Speedway store cash.

(b)The restricted cash balance is included within other current assets on the consolidated balance sheets.

The consolidated statements of cash flows exclude changes to the consolidated balance sheets that did not affect cash. The following is a reconciliation of additions to property, plant and equipment to total capital expenditures:

(In millions)			2020						2019						2018
Additions to property, plant and equipment per the consolidated statements of cash flows			$	2,787					$	4,810					$	3,179
Asset retirement expenditures			—						1						8
Increase (decrease) in capital accruals			(518)						(303)						268
Total capital expenditures			$	2,269					$	4,508					$	3,455

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25. ACCUMULATED OTHER COMPREHENSIVE LOSS

The following table shows the changes in accumulated other comprehensive loss by component. Amounts in parentheses indicate debits.

(In millions)			Pension Benefits						Other Benefits						Gain on Cash Flow Hedge						Workers Compensation						Total
Balance as of December 31, 2018			$	(132)					$	(23)					$	2					$	9					$	(144)
Other comprehensive income (loss) before reclassifications, net of tax of $(52)			(71)						(92)						—						1						(162)
Amounts reclassified from accumulated other comprehensive loss:
Amortization – prior service credit(a)			(45)						—						—						—						(45)
– actuarial loss(a)			22						(1)						—						—						21
– settlement loss(a)			9						—						—						—						9
Other			—						—						(1)						(4)						(5)
Tax effect			5						—						—						1						6
Other comprehensive loss			(80)						(93)						(1)						(2)						(176)
Balance as of December 31, 2019			$	(212)					$	(116)					$	1					$	7					$	(320)

(In millions)			Pension Benefits						Other Benefits						Gain on Cash Flow Hedge						Workers Compensation						Total
Balance as of December 31, 2019			$	(212)					$	(116)					$	1					$	7					$	(320)
Other comprehensive income (loss) before reclassifications, net of tax of $(65)			(136)						(67)						—						4						(199)
Amounts reclassified from accumulated other comprehensive loss:
Amortization – prior service credit(a)			(45)						—						—						—						(45)
– actuarial loss(a)			36						3						—						—						39
– settlement loss(a)			22						—						—						—						22
Other			—						—						—						(6)						(6)
Tax effect			(3)						(1)						—						1						(3)
Other comprehensive loss			(126)						(65)						—						(1)						(192)
Balance as of December 31, 2020			$	(338)					$	(181)					$	1					$	6					$	(512)

(a)These accumulated other comprehensive loss components are included in the computation of net periodic benefit cost. See Note 26.

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26. PENSION AND OTHER POSTRETIREMENT BENEFITS

We have noncontributory defined benefit pension plans covering substantially all employees. Benefits under these plans have been based primarily on age, years of service and final average pensionable earnings. The years of service component of these formulae was frozen as of December 31, 2009. Certain of the pensionable earnings components were frozen as of December 31, 2012. Benefits for service beginning January 1, 2010 and beginning on January 1, 2016 are based on a cash balance formula with an annual percentage of eligible pay credited based upon age and years of service or at a flat rate of eligible pay, depending on covered employee group. Substantially all of our employees also accrue benefits under a defined contribution plan.

(In millions)			2020						2019						2018
Cash balance weighted average interest crediting rates			3.00		%				3.18		%				3.00		%

We also have other postretirement benefits covering most employees. Retiree health care benefits are provided through comprehensive hospital, surgical, major medical benefit, prescription drug and related health benefit provisions subject to various cost sharing features. Retiree life insurance benefits are provided to a closed group of retirees. Other postretirement benefits are not funded in advance.

In connection with the Andeavor acquisition, we assumed a number of additional qualified and nonqualified noncontributory benefit pension plans, covering substantially all former Andeavor employees. Benefits under these plans are determined based on final average compensation and years of service through December 31, 2010 and a cash balance formula for service beginning January 1, 2011. These plans were frozen as of December 31, 2018. Further, as of December 31, 2019, the qualified plans were merged with our existing qualified plans in which the actuarial assumptions were materially the same between the plans. We also assumed a number of additional postretirement benefits covering eligible employees. These benefits were merged with our existing benefits beginning January 1, 2019.

Obligations and Funded Status

The accumulated benefit obligation for all defined benefit pension plans was $3,369 million and $3,013 million as of December 31, 2020 and 2019.

The following summarizes our defined benefit pension plans that have accumulated benefit obligations in excess of plan assets.

			December 31,
(In millions)			2020						2019
Projected benefit obligations			$	3,671					$	3,220
Accumulated benefit obligations			3,369						3,013
Fair value of plan assets			2,621						2,531

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The following summarizes the projected benefit obligations and funded status for our defined benefit pension and other postretirement plans:

			Pension Benefits												Other Benefits
(In millions)			2020						2019						2020						2019
Change in benefit obligations:
Benefit obligations at January 1			$	3,220					$	2,761					$	1,020					$	874
Service cost			302						234						35						31
Interest cost			98						107						32						37
Actuarial loss(a)			373						400						83						123
Benefits paid			(322)						(282)						(39)						(43)
Plan amendments			—						—						—						(2)
Benefit obligations at December 31			3,671						3,220						1,131						1,020
Change in plan assets:
Fair value of plan assets at January 1			2,531						2,090						—						—
Actual return on plan assets			327						435						—						—
Employer contributions			85						288						39						43
Benefits paid from plan assets			(322)						(282)						(39)						(43)
Fair value of plan assets at December 31			2,621						2,531						—						—
Funded status of plans at December 31			$	(1,050)					$	(689)					$	(1,131)					$	(1,020)
Amounts recognized in the consolidated balance sheets:
Current liabilities			$	(9)					$	(47)					$	(51)					$	(46)
Noncurrent liabilities			(1,041)						(642)						(1,080)						(974)
Accrued benefit cost			$	(1,050)					$	(689)					$	(1,131)					$	(1,020)
Pretax amounts recognized in accumulated other comprehensive loss:(b)
Net actuarial loss			$	699					$	577					$	219					$	139
Prior service cost (credit)			(204)						(250)						32						32

(a)The primary driver of the actuarial loss for the pension plans in 2020 and 2019 was the decrease in interest rates. The plans also saw moderate losses related to demographic experience in each year.

(b)Amounts exclude those related to LOOP and Explorer, equity method investees with defined benefit pension and postretirement plans for which net losses of $16 million and less than $1 million were recorded in accumulated other comprehensive loss in 2020, reflecting our ownership share.

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Components of Net Periodic Benefit Cost and Other Comprehensive Loss

The following summarizes the net periodic benefit costs and the amounts recognized as other comprehensive loss for our defined benefit pension and other postretirement plans.

			Pension Benefits																		Other Benefits
(In millions)			2020						2019						2018						2020						2019						2018
Components of net periodic benefit cost:
Service cost			$	283					$	218					$	147					$	35					$	31					$	30
Interest cost			98						107						83						32						37						30
Expected return on plan assets			(133)						(127)						(109)						—						—						—
Amortization – prior service credit			(45)						(45)						(33)						—						—						(3)
– actuarial loss			36						22						31						3						—						1
– settlement loss			20						9						53						—						—						—
Net periodic benefit cost(a)			$	259					$	184					$	172					$	70					$	68					$	58
Other changes in plan assets and benefit obligations recognized in other comprehensive loss (pretax):
Actuarial (gain) loss			$	179					$	92					$	65					$	83					$	123					$	(72)
Prior service cost (credit)			—						—						(90)						—						(2)						34
Amortization of actuarial loss			(56)						(31)						(84)						(3)						—						(1)
Amortization of prior service credit			45						45						33						—						—						3
Total recognized in other comprehensive loss			$	168					$	106					$	(76)					$	80					$	121					$	(36)
Total recognized in net periodic benefit cost and other comprehensive loss			$	427					$	290					$	96					$	150					$	189					$	22

(a)Net periodic benefit cost reflects a calculated market-related value of plan assets which recognizes changes in fair value over three years.

For certain of our pension plans, lump sum payments to employees retiring in 2020, 2019 and 2018 exceeded the plan’s total service and interest costs expected for those years. Settlement losses are required to be recorded when lump sum payments exceed total service and interest costs. As a result, pension settlement expenses were recorded in 2020, 2019 and 2018.

Plan Assumptions

The following summarizes the assumptions used to determine the benefit obligations at December 31, and net periodic benefit cost for the defined benefit pension and other postretirement plans for 2020, 2019 and 2018.

			Pension Benefits																		Other Benefits
			2020						2019						2018						2020						2019						2018
Weighted-average assumptions used to determine benefit obligation:
Discount rate			2.44		%				3.08		%				4.21		%				2.55		%				3.00		%				4.26		%
Rate of compensation increase			5.70		%				4.90		%				5.00		%				5.70		%				4.90		%				5.00		%
Weighted-average assumptions used to determine net periodic benefit cost:
Discount rate			3.00		%				4.07		%				3.89		%				3.23		%				4.30		%				3.72		%
Expected long-term return on plan assets			5.75		%				6.00		%				6.15		%				—		%				—		%				—		%
Rate of compensation increase			5.70		%				4.90		%				4.80		%				5.70		%				4.90		%				5.00		%

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Expected Long-term Return on Plan Assets

The overall expected long-term return on plan assets assumption is determined based on an asset rate-of-return modeling tool developed by a third-party investment group. The tool utilizes underlying assumptions based on actual returns by asset category and inflation and takes into account our asset allocation to derive an expected long-term rate of return on those assets. Capital market assumptions reflect the long-term capital market outlook. The assumptions for equity and fixed income investments are developed using a building-block approach, reflecting observable inflation information and interest rate information available in the fixed income markets. Long-term assumptions for other asset categories are based on historical results, current market characteristics and the professional judgment of our internal and external investment teams.

Assumed Health Care Cost Trend

The following summarizes the assumed health care cost trend rates.

			December 31,
			2020						2019						2018
Health care cost trend rate assumed for the following year:
Medical: Pre-65			6.00		%				6.20		%				6.80		%
Prescription drugs			7.00		%				8.10		%				9.50		%
Rate to which the cost trend rate is assumed to decline (the ultimate trend rate):
Medical: Pre-65			4.50		%				4.50		%				4.50		%
Prescription drugs			4.50		%				4.50		%				4.50		%
Year that the rate reaches the ultimate trend rate:
Medical: Pre-65			2028						2027						2027
Prescription drugs			2028						2027						2027

Increases in the post-65 medical plan premium for the Marathon Petroleum Health Plan and the Marathon Petroleum Retiree Health Plan are the lower of the trend rate or four percent.

Plan Investment Policies and Strategies

The investment policies for our pension plan assets reflect the funded status of the plans and expectations regarding our future ability to make further contributions. Long-term investment goals are to: (1) manage the assets in accordance with the legal requirements of all applicable laws; (2) diversify plan investments across asset classes to achieve an optimal balance between risk and return and between income and growth of assets through capital appreciation; and (3) source benefit payments primarily through existing plan assets and anticipated future returns.

The investment goals are implemented to manage the plans’ funded status volatility and minimize future cash contributions. The asset allocation strategy will change over time in response to changes primarily in funded status, which is dictated by current and anticipated market conditions, the independent actions of our investment committee, required cash flows to and from the plans and other factors deemed appropriate. Such changes in asset allocation are intended to allocate additional assets to the fixed income asset class should the funded status improve. The fixed income asset class shall be invested in such a manner that its interest rate sensitivity correlates highly with that of the plans’ liabilities. Other asset classes are intended to provide additional return with associated higher levels of risk. Investment performance and risk is measured and monitored on an ongoing basis through quarterly investment meetings and periodic asset and liability studies. At December 31, 2020, the primary plan’s targeted asset allocation was 50 percent equity, private equity, real estate, and timber securities and 50 percent fixed income securities.

Fair Value Measurements

Plan assets are measured at fair value. The following provides a description of the valuation techniques employed for each major plan asset category at December 31, 2020 and 2019.

Cash and cash equivalents

Cash and cash equivalents include a collective fund serving as the investment vehicle for the cash reserves and cash held by third-party investment managers. The collective fund is valued at net asset value (“NAV”)

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on a scheduled basis using a cost approach, and is considered a Level 2 asset. Cash and cash equivalents held by third-party investment managers are valued using a cost approach and are considered Level 2.

Equity

Equity investments includes common stock, mutual and pooled funds. Common stock investments are valued using a market approach, which are priced daily in active markets and are considered Level 1. Mutual and pooled equity funds are well diversified portfolios, representing a mix of strategies in domestic, international and emerging market strategies. Mutual funds are publicly registered, valued at NAV on a daily basis using a market approach and are considered Level 1 assets. Pooled funds are valued at NAV using a market approach and are considered Level 2.

Fixed Income

Fixed income investments include corporate bonds, U.S. dollar treasury bonds and municipal bonds. These securities are priced on observable inputs using a combination of market, income and cost approaches. These securities are considered Level 2 assets. Fixed income also includes a well diversified bond portfolio structured as a pooled fund. This fund is valued at NAV on a daily basis using a market approach and is considered Level 2. Other investments classified as Level 1 include mutual funds that are publicly registered, valued at NAV on a daily basis using a market approach.

Private Equity

Private equity investments include interests in limited partnerships which are valued using information provided by external managers for each individual investment held in the fund. These holdings are considered Level 3.

Real Estate

Real estate investments consist of interests in limited partnerships. These holdings are either appraised or valued using the investment manager’s assessment of assets held. These holdings are considered Level 3.

Other

Other investments include two limited liability companies (“LLCs”) with no public market. The LLCs were formed to acquire timberland in the northwest U.S. These holdings are either appraised or valued using the investment manager’s assessment of assets held. These holdings are considered Level 3. Other investments classified as Level 1 include publicly traded depository receipts.

The following tables present the fair values of our defined benefit pension plans’ assets, by level within the fair value hierarchy, as of December 31, 2020 and 2019.

			December 31, 2020
(In millions)			Level 1						Level 2						Level 3						Total
Cash and cash equivalents			$	—					$	23					$	—					$	23
Equity:
Common stocks			51						3						—						54
Mutual funds			353						—						—						353
Pooled funds			—						794						—						794
Fixed income:
Corporate			—						746						—						746
Government			327						128						—						455
Pooled funds			—						131						—						131
Private equity			—						—						23						23
Real estate			—						—						20						20
Other			—						3						19						22
Total investments, at fair value			$	731					$	1,828					$	62					$	2,621

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			December 31, 2019
(In millions)			Level 1						Level 2						Level 3						Total
Cash and cash equivalents			$	—					$	22					$	—					$	22
Equity:
Common stocks			125						135						—						260
Mutual funds			188						—						—						188
Pooled funds			—						442						—						442
Fixed income:
Corporate			160						815						—						975
Government			113						217						—						330
Pooled funds			—						229						—						229
Private equity			—						—						30						30
Real estate			—						—						24						24
Other			58						(46)						19						31
Total investments, at fair value			$	644					$	1,814					$	73					$	2,531

The following is a reconciliation of the beginning and ending balances recorded for plan assets classified as Level 3 in the fair value hierarchy:

			2020
(In millions)			Private Equity						Real Estate						Other
Beginning balance			$	30					$	24					$	19
Actual return on plan assets:
Realized			6						1						—
Unrealized			(4)						(3)						—
Purchases			—						1						—
Sales			(9)						(3)						—
Ending balance			$	23					$	20					$	19

			2019
(In millions)			Private Equity						Real Estate						Other
Beginning balance			$	41					$	29					$	18
Actual return on plan assets:
Realized			5						2						—
Unrealized			(3)						(2)						1
Purchases			1						1						—
Sales			(14)						(6)						—
Ending balance			$	30					$	24					$	19

Cash Flows

Contributions to defined benefit plans

Our funding policy with respect to the funded pension plans is to contribute amounts necessary to satisfy minimum pension funding requirements, including requirements of the Pension Protection Act of 2006, plus such additional, discretionary, amounts from time to time as determined appropriate by management. In 2020, we made contributions totaling $3 million to our funded pension plans. For 2021, we have $65 million of required funding, but we may also make voluntary contributions to our funded pension plans

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at our discretion. Cash contributions to be paid from our general assets for the unfunded pension and postretirement plans are estimated to be approximately $82 million and $52 million, respectively, in 2021.

Estimated future benefit payments

The following gross benefit payments, which reflect expected future service, as appropriate, are expected to be paid in the years indicated.

(In millions)			Pension Benefits						Other Benefits
2021			$	185					$	52
2022			189						52
2023			194						52
2024			206						52
2025			212						53
2026 through 2030			1,172						280

Contributions to defined contribution plan

We also contribute to a defined contribution plan for eligible employees. Contributions to this plan totaled $180 million, $181 million and $118 million in 2020, 2019 and 2018, respectively.

Multiemployer Pension Plan

We contribute to one multiemployer defined benefit pension plan under the terms of a collective-bargaining agreement that covers some of our union-represented employees. The risks of participating in this multiemployer plan are different from single-employer plans in the following aspects:

• Assets contributed to the multiemployer plan by one employer may be used to provide benefits to employees of other participating employers.

• If a participating employer stops contributing to the plan, the unfunded obligations of the plan may be borne by the remaining participating employers.

• If we choose to stop participating in the multiemployer plan, we may be required to pay that plan an amount based on the underfunded status of the plan, referred to as a withdrawal liability.

Our participation in this plan for 2020, 2019 and 2018 is outlined in the table below. The “EIN” column provides the Employee Identification Number for the plan. The most recent Pension Protection Act zone status available in 2020 and 2019 is for the plan’s year ended December 31, 2019 and December 31, 2018, respectively. The zone status is based on information that we received from the plan and is certified by the plan’s actuary. Among other factors, plans in the red zone are generally less than 65 percent funded. The “FIP/RP Status Pending/Implemented” column indicates a financial improvement plan or a rehabilitation plan has been implemented. The last column lists the expiration date of the collective-bargaining agreement to which the plan is subject. There have been no significant changes that affect the comparability of 2020, 2019 and 2018 contributions. Our portion of the contributions does not make up more than five percent of total contributions to the plan.

												Pension Protection Act Zone Status												FIP/RP Status Pending/Implemented						MPC Contributions (In millions)																		Surcharge Imposed						Expiration Date of Collective – Bargaining Agreement
Pension Fund						EIN						2020						2019									2020						2019						2018
Central States, Southeast and Southwest Areas Pension Plan(a)						366044243						Red						Red						Implemented						$	5					$	4					$	4					No						January 31, 2024

(a)This agreement has a minimum contribution requirement of $338 per week per employee for 2021. A total of 275 employees participated in the plan as of December 31, 2020.

Multiemployer Health and Welfare Plan

We contribute to one multiemployer health and welfare plan that covers both active employees and retirees. Through the health and welfare plan employees receive medical, dental, vision, prescription and disability coverage. Our contributions to this plan totaled $7 million, $6 million and $6 million for 2020, 2019 and 2018, respectively.

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27. STOCK-BASED COMPENSATION

Description of the Plans

Effective April 26, 2012, our employees and non-employee directors became eligible to receive equity awards under the Amended and Restated Marathon Petroleum Corporation 2012 Incentive Compensation Plan (“MPC 2012 Plan”). The MPC 2012 Plan authorizes the Compensation and Organization Development Committee of our board of directors (“Committee”) to grant non-qualified or incentive stock options, stock appreciation rights, stock awards (including restricted stock and restricted stock unit awards), cash awards and performance awards to our employees and non-employee directors. Under the MPC 2012 Plan, no more than 50 million shares of our common stock may be delivered and no more than 20 million shares of our common stock may be the subject of awards that are not stock options or stock appreciation rights. In the sole discretion of the Committee, 20 million shares of our common stock may be granted as incentive stock options. Shares issued as a result of awards granted under these plans are funded through the issuance of new MPC common shares.

Prior to April 26, 2012, our employees and non-employee directors were eligible to receive equity awards under the Marathon Petroleum Corporation 2011 Second Amended and Restated Incentive Compensation Plan (“MPC 2011 Plan”).

In connection with the Andeavor acquisition in October of 2018, we converted the outstanding option and equity incentive awards (other than awards held by non-employee directors of Andeavor, which awards were paid out in connection with the acquisition) under the Andeavor plans to awards that provide for rights to acquire (in the case of options) or be settled in or otherwise determined in reference to shares of MPC common stock in place of shares of Andeavor common stock (in the case of equity incentive awards). As part of that conversion, we used an exchange ratio for the respective share prices of Andeavor common stock and MPC common stock to ensure that the award holders’ economic opportunity remained constant, and for converted awards, which included a performance component, performance was determined at the time of the conversion and the awards became subject to a time-based vesting only design. The converted awards otherwise continue to be subject to the terms and conditions of their award agreements and the applicable Andeavor plan under which such awards were granted.

Stock-Based Awards under the Plans

We expense all share-based payments to employees and non-employee directors based on the grant date fair value of the awards over the requisite service period, adjusted for estimated forfeitures.

Stock Options

We grant stock options to certain officer and non-officer employees. All of the stock options granted in 2020 were granted under the MPC 2012 Plan. Stock options awarded under the MPC 2011 Plan and the MPC 2012 Plan represent the right to purchase shares of our common stock at its fair market value, which is the closing price of MPC’s common stock on the date of grant. Stock options have a maximum term of ten years from the date they are granted, and vest over a requisite service period of three years. We use the Black Scholes option-pricing model to estimate the fair value of stock options granted, which requires the input of subjective assumptions.

Restricted Stock and Restricted Stock Units

We grant restricted stock and restricted stock units to employees and non-employee directors. In general, restricted stock and restricted stock units granted to employees vest over a requisite service period of three years. Restricted stock and restricted stock unit awards granted to officers are subject to an additional one year holding period after the three-year vesting period. Restricted stock recipients have the right to vote such stock; however, dividends are accrued and when vested are payable at the dates specified in the awards. The non-vested shares are not transferable and are held by our transfer agent. The fair values of restricted stock are equal to the market price of our common stock on the grant date. Restricted stock units granted to non-employee directors are considered to vest immediately at the time of the grant for accounting purposes, as they are non-forfeitable, but are not issued until the director’s departure from the board of directors. Restricted stock unit recipients do not have the right to vote any shares of stock and accrue dividend equivalents which when vested are payable at the dates specified in the awards.

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Performance Units

We grant performance unit awards to certain officer employees. Performance units are dollar denominated. The target value of all performance units is $1.00, with actual payout up to $2.00 per unit (up to 200 percent of target). Performance units issued under the MPC 2012 Plan have a 36-month requisite service period. The payout value of these awards will be determined by the relative ranking of the total shareholder return (“TSR”) of MPC common stock compared to the TSR of a select group of peer companies, as well as the Standard & Poor’s 500 Energy Index fund over an average of four measurement periods. These awards will be settled 25 percent in MPC common stock and 75 percent in cash. The number of shares actually distributed will be determined by dividing 25 percent of the final payout by the closing price of MPC common stock on the day the Committee certifies the final TSR rankings, or the next trading day if the certification is made outside of normal trading hours. The performance units paying out in cash are accounted for as liability awards and recorded at fair value with a mark-to-market adjustment made each quarter. The performance units that settle in shares are accounted for as equity awards and do not receive dividend equivalents.

Total Stock-Based Compensation Expense

The following table reflects activity related to our stock-based compensation arrangements, including the converted awards related to the acquisition of Andeavor:

(In millions)			2020						2019						2018
Stock-based compensation expense			$	100					$	153					$	127
Tax benefit recognized on stock-based compensation expense			25						35						31
Cash received by MPC upon exercise of stock option awards			11						10						24
Tax (expense)/benefit received for tax deductions for stock awards exercised			16						(3)						14

Stock Option Awards

The Black Scholes option-pricing model values used to value stock option awards granted were determined based on the following weighted average assumptions:

			2020						2019						2018
Weighted average exercise price per share			$	28.78					$	61.92					$	67.71
Expected life in years			5.9						6.0						6.2
Expected volatility			39		%				32		%				34		%
Expected dividend yield			4.7		%				3.4		%				3.0		%
Risk-free interest rate			0.6		%				2.4		%				2.7		%
Weighted average grant date fair value of stock option awards granted			$	7.40					$	13.65					$	17.21

The expected life of stock options granted is based on historical data and represents the period of time that options granted are expected to be held prior to exercise. The 2020 assumption for expected volatility of our stock price reflects a weighting of 50 percent of our common stock implied volatility and 50 percent of our common stock historical volatility. The risk-free interest rate for periods within the expected life of the option is based on the U.S. Treasury yield curve in effect at the time of the grant.

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The following is a summary of our common stock option activity in 2020:

			Number of Shares						Weighted Average Exercise Price						Weighted Average Remaining Contractual Terms (in years)						Aggregate Intrinsic Value (in millions)
Outstanding at December 31, 2019			10,018,367						$	42.55
Granted			2,770,139						28.78
Exercised			(1,016,593)						14.15
Forfeited or expired			(472,132)						37.77
Outstanding at December 31, 2020			11,299,781						41.95
Vested and expected to vest at December 31, 2020			11,243,905						29.28						5.2						$	76
Exercisable at December 31, 2020			7,641,774						42.61						3.6						42

The intrinsic value of options exercised by MPC employees during 2020, 2019 and 2018 was $25 million, $23 million and $44 million, respectively.

As of December 31, 2020, unrecognized compensation cost related to stock option awards was $15 million, which is expected to be recognized over a weighted average period of 1.8 years.

Restricted Stock and Restricted Stock Unit Awards

The following is a summary of restricted stock award activity of our common stock in 2020:

			Restricted Stock												Restricted Stock Units
			Number of Shares						Weighted Average Grant Date Fair Value						Number of Units						Weighted Average Grant Date Fair Value
Unvested at December 31, 2019			1,349,798						$	62.20					1,481,746						$	82.39
Granted			2,463						56.49						3,076,347						22.82
Vested			(646,358)						61.58						(823,111)						77.01
Forfeited			(125,924)						62.11						(410,658)						27.76
Unvested at December 31, 2020			579,979						62.89						3,324,324						35.34

The following is a summary of the values related to restricted stock and restricted stock unit awards held by MPC employees and non-employee directors:

			Restricted Stock												Restricted Stock Units
			Intrinsic Value of Awards Vested During the Period (in millions)						Weighted Average Grant Date Fair Value of Awards Granted During the Period						Intrinsic Value of Awards Vested During the Period (in millions)						Weighted Average Grant Date Fair Value of Awards Granted During the Period
2020			$	18					$	56.49					$	59					$	22.82
2019			32						61.14						120						58.30
2018			49						71.19						39						72.43

As of December 31, 2020, unrecognized compensation cost related to restricted stock awards was $19 million, which is expected to be recognized over a weighted average period of 1.0 year. Unrecognized compensation cost related to restricted stock unit awards was $43 million, which is expected to be recognized over a weighted average period of 1.76 years.

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Performance Unit Awards

The following table presents a summary of the 2020 activity for performance unit awards to be settled in shares:

			Number of Units						Weighted Average Grant Date Fair Value
Unvested at December 31, 2019			11,199,500						$	0.80
Granted			3,360,000						0.89
Vested			(3,490,750)						0.89
Forfeited			(58,713)						0.75
Unvested at December 31, 2020			11,010,037						0.80

The number of shares that would be issued upon target vesting, using the closing price of our common stock on December 31, 2020 would be 320,661 shares.

As of December 31, 2020, unrecognized compensation cost related to equity-classified performance unit awards was $2 million, which is expected to be recognized over a weighted average period of 1.94 years.

Performance units to be settled in MPC shares have a grant date fair value calculated using a Monte Carlo valuation model, which requires the input of subjective assumptions. The following table provides a summary of these assumptions:

			2020						2019						2018
Risk-free interest rate			0.9		%				2.5		%				2.3		%
Look-back period (in years)			2.8						2.8						2.8
Expected volatility			30.4		%				29.7		%				34.0		%
Grant date fair value of performance units granted			$	0.89					$	0.72					$	0.83

The risk-free interest rate for the remaining performance period as of the grant date is based on the U.S. Treasury yield curve in effect at the time of the grant. The look-back period reflects the remaining performance period at the grant date. The assumption for the expected volatility of our stock price reflects the average MPC common stock historical volatility.

MPLX Awards

Compensation expense for awards of MPLX units are not material to our consolidated financial statements for 2020.

28. LEASES

Lessee

We lease a wide variety of facilities and equipment including land and building space, office and field equipment, storage facilities and transportation equipment. Our remaining lease terms range from less than one year to 58 years. Most long-term leases include renewal options ranging from less than one year to 49 years and, in certain leases, also include purchase options. The lease term included in the measurement of right of use assets and lease liabilities includes options to extend or terminate our leases that we are reasonably certain to exercise.

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Under ASC 842, the components of lease cost are shown below. Lease costs for operating leases are recognized on a straight line basis and are reflected in the income statement based on the leased asset’s use. Lease costs for finance leases are reflected in depreciation and amortization and in net interest and other financial costs.

(In millions)			2020						2019
Finance lease cost:
Amortization of right of use assets			$	72					$	59
Interest on lease liabilities			35						37
Operating lease cost			658						660
Variable lease cost			60						68
Short-term lease cost			631						735
Total lease cost			$	1,456					$	1,559

Supplemental balance sheet data related to leases were as follows:

			December 31,
(In millions)			2020						2019
Operating leases
Assets
Right of use assets			$	1,521					$	1,806
Liabilities
Operating lease liabilities			$	497					$	514
Long-term operating lease liabilities			1,014						1,300
Total operating lease liabilities			$	1,511					$	1,814
Weighted average remaining lease term (in years)			4.8						5.1
Weighted average discount rate			3.68		%				3.91		%
Finance leases
Assets
Property, plant and equipment, gross			$	819					$	740
Less accumulated depreciation			272						215
Property, plant and equipment, net			$	547					$	525
Liabilities
Debt due within one year			$	69					$	56
Long-term debt			576						537
Total finance lease liabilities			$	645					$	593
Weighted average remaining lease term (in years)			10.7						11.6
Weighted average discount rate			5.33		%				6.63		%

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As of December 31, 2020, maturities of lease liabilities for operating lease obligations and finance lease obligations having initial or remaining non-cancellable lease terms in excess of one year are as follows:

(In millions)			Operating						Finance
2021			$	544					$	91
2022			373						99
2023			243						101
2024			170						84
2025			111						76
2026 and thereafter			224						402
Gross lease payments			1,665						853
Less: imputed interest			154						208
Total lease liabilities			$	1,511					$	645

Lessor

MPLX has certain natural gas gathering, transportation and processing agreements in which it is considered to be the lessor under several operating lease arrangements in accordance with GAAP. MPLX’s primary natural gas lease operations relate to a natural gas gathering agreement in the Marcellus Shale for which it earns a fixed-fee for providing gathering services to a single producer using a dedicated gathering system. As the gathering system is expanded, the fixed-fee charged to the producer is adjusted to include the additional gathering assets in the lease. The primary term of the natural gas gathering arrangement expires in 2038 and will continue thereafter on a year-to-year basis until terminated by either party. Other significant natural gas implicit leases relate to a natural gas processing agreement in the Marcellus Shale and a natural gas processing agreement in the Southern Appalachia region for which MPLX earns minimum monthly fees for providing processing services to a single producer using a dedicated processing plant. The primary term of these natural gas processing agreements expires during 2027 and 2023, respectively, and will continue thereafter on a year-to-year basis until terminated by either party.

MPLX did not elect to use the practical expedient to combine lease and non-lease components for lessor arrangements. The tables below represent the portion of the contract allocated to the lease component based on relative standalone selling price. Lessor agreements are currently deemed operating, as MPLX elected the practical expedient to carry forward historical classification conclusions. If and when a modification of an existing agreement occurs and the agreement is required to assessed under ASC 842, MPLX assesses the amended agreement and makes a determination as to whether a reclassification of the lease is required.

Our revenue from implicit lease arrangements, excluding executory costs, totaled approximately $273 million and $254 million in 2020 and 2019, respectively. Under ASC 840, our revenue from implicit lease arrangements, excluding executory costs, totaled approximately $221 million in 2018. The following is a schedule of minimum future rentals on the non‑cancellable operating leases as of December 31, 2020:

(In millions)
2021			$	186
2022			181
2023			178
2024			174
2025			142
2026 and thereafter			999
Total minimum future rentals			$	1,860

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The following schedule summarizes our investment in assets held for operating lease by major classes as of December 31, 2020 and 2019:

			December 31,
(In millions)			2020						2019
Gathering and transportation			$	990					$	980
Processing and fractionation			867						855
Terminals			128						83
Land, building and other			15						17
Property, plant and equipment			2,000						1,935
Less accumulated depreciation			430						327
Total property, plant and equipment, net			$	1,570					$	1,608

29. COMMITMENTS AND CONTINGENCIES

We are the subject of, or a party to, a number of pending or threatened legal actions, contingencies and commitments involving a variety of matters, including laws and regulations relating to the environment. Some of these matters are discussed below. For matters for which we have not recorded a liability, we are unable to estimate a range of possible loss because the issues involved have not been fully developed through pleadings, discovery or court proceedings. However, the ultimate resolution of some of these contingencies could, individually or in the aggregate, be material.

Environmental Matters

We are subject to federal, state, local and foreign laws and regulations relating to the environment. These laws generally provide for control of pollutants released into the environment and require responsible parties to undertake remediation of hazardous waste disposal sites and certain other locations including presently or formerly owned or operated retail marketing sites. Penalties may be imposed for noncompliance.

At December 31, 2020 and 2019, accrued liabilities for remediation totaled $397 million and $396 million, respectively. It is not presently possible to estimate the ultimate amount of all remediation costs that might be incurred or the penalties, if any, that may be imposed. Receivables for recoverable costs from certain states, under programs to assist companies in clean-up efforts related to underground storage tanks at presently or formerly owned or operated retail marketing sites, were $7 million and $9 million at December 31, 2020 and 2019, respectively.

Governmental and other entities in various states have filed lawsuits against energy companies, including MPC. The lawsuits allege damages as a result of climate change and the plaintiffs are seeking unspecified damages and abatement under various tort theories. We are currently subject to such proceedings in federal or state courts in California, Delaware, Maryland, Hawaii, Rhode Island and South Carolina. Similar lawsuits may be filed in other jurisdictions. At this early stage, the ultimate outcome of these matters remain uncertain, and neither the likelihood of an unfavorable outcome nor the ultimate liability, if any, can be determined.

We are involved in a number of environmental enforcement matters arising in the ordinary course of business. While the outcome and impact on us cannot be predicted with certainty, management believes the resolution of these environmental matters will not, individually or collectively, have a material adverse effect on our consolidated results of operations, financial position or cash flows.

Asset Retirement Obligations

Our short-term asset retirement obligations were $14 million and $20 million at December 31, 2020 and 2019, respectively, which are included in other current liabilities in our consolidated balance sheets. Our long-term asset retirement obligations were $183 million and $184 million at December 31, 2020 and 2019, respectively, which are included in deferred credits and other liabilities in our consolidated balance sheets.

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Other Legal Proceedings

In early July 2020, MPLX received a Notification of Trespass Determination from the Bureau of Indian Affairs (“BIA”) relating to a portion of the Tesoro High Plains Pipeline (“THPP”), which crosses the Fort Berthold Reservation in North Dakota. The notification covered the rights of way for 23 tracts of land and demanded the immediate cessation of pipeline operations. The notification also assessed trespass damages of approximately $187 million. MPLX appealed this determination, which triggered an automatic stay of the requested pipeline shutdown and payment. On October 29, the Assistant Secretary - Indian Affairs issued an order vacating the BIA’s trespass order and requiring the Regional Director for the BIA Great Plains Region to issue a new decision on or before December 15 covering all 34 tracts at issue. On December 15, the Regional Director of the BIA issued a new trespass notice to THPP consistent with the Assistant Secretary of Indian Affairs order vacating the prior trespass order. The new order found that THPP was in trespass and assessed trespass damages of approximately $4 million (including interest), which has been paid. The order also required THPP to immediately cease and desist use of the portion of the pipeline that crosses the property at issue. THPP has complied with the Regional Director’s December 15, 2020 notice. On February 12, 2021, landowners filed suit in the U.S. District Court for the District of North Dakota, requesting, among other things, that decisions by the Assistant Secretary - Indian Affairs and the Interior Board of Indian Appeals be vacated as to the award of damages to plaintiffs.

MPLX continues to work towards a settlement of this matter with holders of the property rights at issue. Management does not believe the ultimate resolution of this matter will have a material adverse effect on our consolidated financial position, results of operations, or cash flows.

We are also a party to a number of other lawsuits and other proceedings arising in the ordinary course of business. While the ultimate outcome and impact to us cannot be predicted with certainty, we believe that the resolution of these other lawsuits and proceedings will not have a material adverse effect on our consolidated financial position, results of operations or cash flows.

Guarantees

We have provided certain guarantees, direct and indirect, of the indebtedness of other companies. Under the terms of most of these guarantee arrangements, we would be required to perform should the guaranteed party fail to fulfill its obligations under the specified arrangements. In addition to these financial guarantees, we also have various performance guarantees related to specific agreements.

Guarantees related to indebtedness of equity method investees

LOOP and LOCAP

MPC and MPLX hold interests in an offshore oil port, LOOP, and MPLX holds an interest in a crude oil pipeline system, LOCAP. Both LOOP and LOCAP have secured various project financings with throughput and deficiency agreements. Under the agreements, MPC, as a shipper, is required to advance funds if the investees are unable to service their debt. Any such advances are considered prepayments of future transportation charges. The duration of the agreements varies but tend to follow the terms of the underlying debt, which extend through 2037. Our maximum potential undiscounted payments under these agreements for the debt principal totaled $171 million as of December 31, 2020.

Dakota Access Pipeline

In connection with MPLX’s approximate 9.19 percent indirect interest in a joint venture (“Dakota Access”) that owns and operates the Dakota Access Pipeline and Energy Transfer Crude Oil Pipeline projects, collectively referred to as the Bakken Pipeline system or DAPL, MPLX entered into a Contingent Equity Contribution Agreement. MPLX, along with the other joint venture owners in the Bakken Pipeline system, has agreed to make equity contributions to the joint venture upon certain events occurring to allow the entities that own and operate the Bakken Pipeline system to satisfy their senior note payment obligations. The senior notes were issued to repay amounts owed by the pipeline companies to fund the cost of construction of the Bakken Pipeline system.

In March 2020, the U.S. District Court for the District of Columbia (the “D.D.C.”) ordered the U.S. Army Corps of Engineers (“Army Corps”), which granted permits and an easement for the Bakken Pipeline system, to conduct a full environmental impact statement (“EIS”), and further requested briefing on whether an easement necessary for the operation of the Bakken Pipeline system should be vacated while the EIS is being prepared.

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On July 6, 2020, the D.D.C. ordered vacatur of the easement to cross Lake Oahe during the pendency of an EIS and further ordered a shut down of the pipeline by August 5, 2020. The D.D.C. denied a motion to stay that order. Dakota Access and the Army Corps appealed the D.D.C.’s orders to the U.S. Court of Appeals for the District of Columbia Circuit (the “Court of Appeals”). On July 14, 2020, the Court of Appeals issued an administrative stay while the court considered Dakota Access and the Army Corps’ emergency motion for stay pending appeal. On August 5, 2020, the Court of Appeals stayed the D.D.C.’s injunction that required the pipeline be shutdown and emptied of oil by August 5, 2020. The Court of Appeals denied a stay of the D.D.C.’s March order, which required the EIS, and further denied a stay of the D.D.C.’s July order, which vacated the easement. On January 26, 2021, the Court of Appeals upheld the D.D.C.’s order vacating the easement while the Army Corps prepares the EIS. The Court of Appeals reversed the D.D.C.’s order to the extent it directed that the pipeline be shutdown and emptied of oil. In the D.D.C., briefing has been completed for a renewed request for an injunction. The pipeline remains operational.

If the pipeline is temporarily shut down pending completion of the EIS, MPLX would have to contribute its 9.19 percent pro rata share of funds required to pay interest accruing on the notes and any portion of the principal that matures while the pipeline is shutdown. It is expected that MPLX would contribute its 9.19 percent pro rata share of any costs to remediate any deficiencies to reinstate the permit and/or return the pipeline into operation. If the vacatur of the easement permit results in a permanent shutdown of the pipeline, MPLX would have to contribute its 9.19 percent pro rata share of the cost to redeem the bonds (including the one percent redemption premium required pursuant to the indenture governing the notes) and any accrued and unpaid interest. As of December 31, 2020, our maximum potential undiscounted payments under the Contingent Equity Contribution Agreement were approximately $230 million.

Crowley Ocean Partners and Crowley Blue Water Partners

In connection with our 50 percent ownership in Crowley Ocean Partners, we have agreed to conditionally guarantee our portion of the obligations of the joint venture and its subsidiaries under a senior secured term loan agreement. The term loan agreement provides for loans of up to $325 million to finance the acquisition of four product tankers. MPC’s liability under the guarantee for each vessel is conditioned upon the occurrence of certain events, including if we cease to maintain an investment grade credit rating or the charter for the relevant product tanker ceases to be in effect and is not replaced by a charter with an investment grade company on certain defined commercial terms. As of December 31, 2020, our maximum potential undiscounted payments under this agreement for debt principal totaled $119 million.

In connection with our 50 percent indirect interest in Crowley Blue Water Partners, we have agreed to provide a conditional guarantee of up to 50 percent of its outstanding debt balance in the event there is no charter agreement in place with an investment grade customer for the entity’s three vessels as well as other financial support in certain circumstances. As of December 31, 2020, our maximum potential undiscounted payments under this arrangement was $115 million.

Marathon Oil indemnifications

The separation and distribution agreement and other agreements with Marathon Oil to effect our spinoff provide for cross-indemnities between Marathon Oil and us. In general, Marathon Oil is required to indemnify us for any liabilities relating to Marathon Oil’s historical oil and gas exploration and production operations, oil sands mining operations and integrated gas operations, and we are required to indemnify Marathon Oil for any liabilities relating to Marathon Oil’s historical refining, marketing and transportation operations. The terms of these indemnifications are indefinite and the amounts are not capped.

Other guarantees

We have entered into other guarantees with maximum potential undiscounted payments totaling $99 million as of December 31, 2020, which primarily consist of a commitment to contribute cash to an equity method investee for certain catastrophic events, in lieu of procuring insurance coverage, a commitment to fund a share of the bonds issued by a government entity for construction of public utilities in the event that other industrial users of the facility default on their utility payments and leases of assets containing general lease indemnities and guaranteed residual values.

General guarantees associated with dispositions

Over the years, we have sold various assets in the normal course of our business. Certain of the related agreements contain performance and general guarantees, including guarantees regarding inaccuracies in representations, warranties, covenants and agreements, and environmental and general indemnifications that require us to perform upon the occurrence of a triggering event or condition. These guarantees and

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indemnifications are part of the normal course of selling assets. We are typically not able to calculate the maximum potential amount of future payments that could be made under such contractual provisions because of the variability inherent in the guarantees and indemnities. Most often, the nature of the guarantees and indemnities is such that there is no appropriate method for quantifying the exposure because the underlying triggering event has little or no past experience upon which a reasonable prediction of the outcome can be based.

Contractual Commitments and Contingencies

At December 31, 2020 and 2019, our contractual commitments to acquire property, plant and equipment and advance funds to equity method investees totaled $1.7 billion and $1.6 billion, respectively.

Certain natural gas processing and gathering arrangements require us to construct natural gas processing plants, natural gas gathering pipelines and NGL pipelines and contain certain fees and charges if specified construction milestones are not achieved for reasons other than force majeure. In certain cases, certain producer customers may have the right to cancel the processing arrangements if there are significant delays that are not due to force majeure.

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SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED)

As a result of the agreement to sell Speedway, Speedway’s results are reported separately as discontinued operations in our consolidated statements of income for all periods presented.

Prior to presentation of Speedway as discontinued operations, Speedway and our retained direct dealer business were the two reporting units within our Retail segment. Beginning with the third quarter of 2020, the direct dealer business is managed as part of the Refining & Marketing segment. The results of the Refining & Marketing segment have been retrospectively adjusted to include the results of the direct dealer business in all periods presented.

In accordance with ASC 205, Discontinued Operations, intersegment sales from our Refining & Marketing segment to Speedway are no longer eliminated as intercompany transactions and are now presented within sales and other operating revenue, since we will continue to supply fuel to Speedway subsequent to the sale to 7-Eleven. All periods presented have been retrospectively adjusted to reflect this change.

			2020
			Quarter Ended
(In millions, except per share data)			March 31						June 30						September 30						December 31
Sales and other operating revenues			$	22,204					$	12,195					$	17,408					$	17,972
Income (loss) from continuing operations			(12,155)						575						(1,057)						390
Income (loss) from continuing operations, net of tax			(10,536)						84						(980)						250
Net income (loss)			(10,218)						276						(609)						574
Net income (loss) attributable to MPC			(9,234)						9						(886)						285
Income (loss) from continuing operations per share(a):
Basic			$	(14.74)					$	(0.28)					$	(1.93)					$	(0.06)
Diluted			(14.74)						(0.28)						(1.93)						(0.06)

			2019
			Quarter Ended
(In millions, except per share data)			March 31						June 30						September 30						December 31
Sales and other operating revenues			$	25,349					$	30,239					$	27,552					$	28,008
Income from continuing operations			526						1,698						1,680						558
Income from continuing operations, net of tax			150						1,109						1,113						77
Net income			259						1,367						1,367						262
Net income (loss) attributable to MPC			(7)						1,106						1,095						443
Income (loss) from continuing operations per share(a):
Basic			$	(0.17)					$	1.28					$	1.28					$	0.40
Diluted			(0.17)						1.27						1.27						0.40

(a)The sum of the per-share amounts for the four quarters may not always equal the annual per-share amounts due to differences in the average number of shares outstanding during the respective periods.

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