Item 1. FINANCIAL STATEMENTS

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Item 1. FINANCIAL STATEMENTS

MARATHON PETROLEUM CORPORATION

CONSOLIDATED STATEMENTS OF INCOME (Unaudited)


	Three Months Ended September 30,				Nine Months Ended September 30,
(In millions, except per share data)	2021		2020		2021		2020
Revenues and other income:
Sales and other operating revenues	$	32,321	$	17,408	$	84,647	$	51,807
Income (loss) from equity method investments(a)	122		117		306		(1,037)
Net gain on disposal of assets	—		1		3		6
Other income	170		22		366		69
Total revenues and other income	32,613		17,548		85,322		50,845
Costs and expenses:
Cost of revenues (excludes items below)	29,563		16,673		77,824		48,517
LCM inventory valuation adjustment	—		(530)		—		1,185
Impairment expense	—		433		—		8,280
Depreciation and amortization	836		830		2,551		2,526
Selling, general and administrative expenses	681		673		1,881		2,080
Restructuring expenses	—		348		—		348
Other taxes	193		178		544		546
Total costs and expenses	31,273		18,605		82,800		63,482
Income (loss) from continuing operations	1,340		(1,057)		2,522		(12,637)
Net interest and other financial costs	328		359		1,053		1,032
Income (loss) from continuing operations before income taxes	1,012		(1,416)		1,469		(13,669)
Provision (benefit) for income taxes on continuing operations	(18)		(436)		21		(2,237)
Income (loss) from continuing operations, net of tax	1,030		(980)		1,448		(11,432)
Income from discontinued operations, net of tax	—		371		8,448		881
Net income (loss)	1,030		(609)		9,896		(10,551)
Less net income (loss) attributable to:
Redeemable noncontrolling interest	38		20		79		61
Noncontrolling interests	298		257		853		(501)
Net income (loss) attributable to MPC	$	694	$	(886)	$	8,964	$	(10,111)

Per share data (See Note 9)
Basic:
Continuing operations	$	1.10	$	(1.93)	$	0.80	$	(16.93)
Discontinued operations	—		0.57		13.10		1.35
Net income (loss) per share	$	1.10	$	(1.36)	$	13.90	$	(15.58)

Weighted average shares outstanding	633		650		645		649
Diluted:
Continuing operations	$	1.09	$	(1.93)	$	0.79	$	(16.93)
Discontinued operations	—		0.57		13.02		1.35
Net income (loss) per share	$	1.09	$	(1.36)	$	13.81	$	(15.58)

Weighted average shares outstanding	637		650		649		649

(a) The nine months ended September 30, 2021 and September 30, 2020 include impairment expense. See Note 6 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 (Unaudited)


	Three Months Ended September 30,				Nine Months Ended September 30,
(Millions of dollars)	2021		2020		2021		2020
Net income (loss)	$	1,030	$	(609)	$	9,896	$	(10,551)
Other comprehensive income (loss):
Defined benefit plans:
Actuarial changes, net of tax of $1, $5, $65 and $6, respectively	4		13		196		16
Prior service, net of tax of $(3), $(2), $(8) and $(8), respectively	(8)		(9)		(24)		(26)
Other, net of tax of $—, $—, $(2) and $(1), respectively	—		(2)		(4)		(4)
Other comprehensive income (loss)	(4)		2		168		(14)
Comprehensive income (loss)	1,026		(607)		10,064		(10,565)
Less comprehensive income (loss) attributable to:
Redeemable noncontrolling interest	38		20		79		61
Noncontrolling interests	298		257		853		(501)
Comprehensive income (loss) attributable to MPC	$	690	$	(884)	$	9,132	$	(10,125)

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

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MARATHON PETROLEUM CORPORATION

CONSOLIDATED BALANCE SHEETS (Unaudited)


(Millions of dollars, except share data)	September 30, 2021		December 31, 2020
Assets
Current assets:
Cash and cash equivalents	$	5,874	$	415
Short-term investments	7,352		—
Receivables, less allowance for doubtful accounts of $43 and $18, respectively	9,511		5,760
Inventories	9,211		7,999
Other current assets	2,175		2,724
Assets held for sale	20		11,389
Total current assets	34,143		28,287
Equity method investments	5,384		5,422
Property, plant and equipment, net	37,630		39,035
Goodwill	8,256		8,256
Right of use assets	1,424		1,521
Other noncurrent assets	2,463		2,637
Total assets	$	89,300	$	85,158
Liabilities
Current liabilities:
Accounts payable	$	12,196	$	7,803
Payroll and benefits payable	808		732
Accrued taxes	2,114		1,105
Debt due within one year	73		2,854
Operating lease liabilities	444		497
Other current liabilities	1,263		822
Liabilities held for sale	—		1,850
Total current liabilities	16,898		15,663
Long-term debt	27,270		28,730
Deferred income taxes	5,545		6,203
Defined benefit postretirement plan obligations	1,354		2,121
Long-term operating lease liabilities	975		1,014
Deferred credits and other liabilities	1,294		1,207
Total liabilities	53,336		54,938
Commitments and contingencies (see Note 24)
Redeemable noncontrolling interest	986		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 – 983 million and 980 million shares (par value $0.01 per share, 2 billion shares authorized)	10		10
Held in treasury, at cost – 361 million and 329 million shares	(17,126)		(15,157)
Additional paid-in capital	33,256		33,208
Retained earnings	12,484		4,650
Accumulated other comprehensive loss	(344)		(512)
Total MPC stockholders’ equity	28,280		22,199
Noncontrolling interests	6,698		7,053
Total equity	34,978		29,252
Total liabilities, redeemable noncontrolling interest and equity	$	89,300	$	85,158

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

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MARATHON PETROLEUM CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)


	Nine Months Ended September 30,
(Millions of dollars)	2021		2020
Operating activities:
Net income (loss)	$	9,896	$	(10,551)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Amortization of deferred financing costs and debt discount	59		49
Impairment expense	—		8,280
Depreciation and amortization	2,551		2,526
LCM inventory valuation adjustment	—		1,185
Pension and other postretirement benefits, net	(535)		172
Deferred income taxes	(175)		(763)
Net gain on disposal of assets	(3)		(6)
(Income) loss from equity method investments	(306)		1,037
Distributions from equity method investments	466		428
Income from discontinued operations	(8,448)		(881)
Changes in income tax receivable	535		(1,172)
Net recognized (gains) losses on investments and derivatives	(11)		37
Changes in operating assets and liabilities, net of effects of businesses acquired:
Current receivables	(3,765)		2,328
Inventories	(1,206)		1,165
Current accounts payable and accrued liabilities	4,670		(4,018)
Right of use assets and operating lease liabilities, net	5		(2)
All other, net	(187)		45
Cash provided by (used in) operating activities - continuing operations	3,546		(141)
Cash provided by (used in) operating activities - discontinued operations	(2,860)		1,232
Net cash provided by operating activities	686		1,091
Investing activities:
Additions to property, plant and equipment	(983)		(2,330)

Disposal of assets	98		73
Investments – acquisitions and contributions	(150)		(436)
– redemptions, repayments and return of capital	39		122
Purchases of short-term investments	(9,457)		—
Sales of short-term investments	455		—
Maturities of short-term investments	1,652		—
All other, net	381		19
Cash used in investing activities - continuing operations	(7,965)		(2,552)
Cash provided by (used in) investing activities - discontinued operations	21,314		(272)
Net cash provided by (used in) investing activities	13,349		(2,824)
Financing activities:
Commercial paper – issued	7,414		—
– repayments	(8,437)		—
Long-term debt – borrowings	10,975		13,212
– repayments	(14,274)		(10,144)
Debt issuance costs	—		(48)
Issuance of common stock	71		6
Common stock repurchased	(1,912)		—
Dividends paid	(1,130)		(1,133)
Distributions to noncontrolling interests	(923)		(941)

Repurchases of noncontrolling interests	(465)		—
All other, net	(35)		(30)
Net cash provided by (used in) financing activities	(8,716)		922

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	Nine Months Ended September 30,
(Millions of dollars)	2021		2020
Net change in cash, cash equivalents and restricted cash	$	5,319	$	(811)
Cash, cash equivalents and restricted cash balances:(a)
Continuing operations - beginning of period	$	416	$	1,395
Discontinued operations - beginning of period(b)	140		134
Less: Discontinued operations - end of period(b)	—		98
Continuing operations - end of period	$	5,875	$	620

(a)Restricted cash is included in other current assets on our consolidated balance sheets.

(b)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 REDEEMBALE NONCONTROLLING INTEREST

(Unaudited)


	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, 2020	980	$	10	(329)	$	(15,157)	$	33,208	$	4,650	$	(512)	$	7,053	$	29,252	$	968
Net income (loss)	—	—		—	—		—		(242)		—		286		44		20
Dividends declared on common stock ($0.58 per share)	—	—		—	—		—		(379)		—		—		(379)		—
Distributions to noncontrolling interests	—	—		—	—		—		—		—		(300)		(300)		(20)
Other comprehensive income	—	—		—	—		—		—		1		—		1		—
Stock-based compensation	1	—		—	(1)		18		—		—		—		17		—
Equity transactions of MPLX	—	—		—	—		(4)		—		—		(120)		(124)		—

Balance as of March 31, 2021	981	$	10	(329)	$	(15,158)	$	33,222	$	4,029	$	(511)	$	6,919	$	28,511	$	968
Net income	—	—		—	—		—		8,512		—		269		8,781		21
Dividends declared on common stock ($0.58 per share)	—	—		—	—		—		(381)		—		—		(381)		—
Distributions to noncontrolling interests	—	—		—	—		—		—		—		(272)		(272)		(21)
Other comprehensive income	—	—		—	—		—		—		171		—		171		—
Shares repurchased	—	—		(16)	(984)		—		—		—		—		(984)		—
Stock-based compensation	2	—		—	(5)		50		—		—		2		47		—
Equity transactions of MPLX	—	—		—	—		(34)		—		—		(114)		(148)		—

Balance as of June 30, 2021	983	$	10	(345)	$	(16,147)	$	33,238	$	12,160	$	(340)	$	6,804	$	35,725	$	968
Net income	—	—		—	—		—		694		—		298		992		38
Dividends declared on common stock ($0.58 per share)	—	—		—	—		—		(370)		—		—		(370)		—
Distributions to noncontrolling interests	—	—		—	—		—		—		—		(290)		(290)		(20)

Other comprehensive loss	—	—		—	—		—		—		(4)		—		(4)		—
Shares repurchased	—	—		(16)	(978)		—		—		—		—		(978)		—
Stock-based compensation	—	—		—	(1)		32		—		—		2		33		—
Equity transactions of MPLX	—	—		—	—		(14)		—		—		(116)		(130)		—

Balance as of September 30, 2021	983	$	10	(361)	$	(17,126)	$	33,256	$	12,484	$	(344)	$	6,698	$	34,978	$	986

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

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MARATHON PETROLEUM CORPORATION

CONSOLIDATED STATEMENTS OF EQUITY AND REDEEMBALE NONCONTROLLING INTEREST

(Unaudited)


	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, 2019	978	$	10	(329)	$	(15,143)	$	33,157	$	15,990	$	(320)	$	8,445	$	42,139	$	968
Net income (loss)	—	—		—	—		—		(9,234)		—		(1,004)		(10,238)		20
Dividends declared on common stock ($0.58 per share)	—	—		—	—		—		(377)		—		—		(377)		—
Distributions to noncontrolling interests	—	—		—	—		—		—		—		(300)		(300)		(20)

Other comprehensive loss	—	—		—	—		—		—		(6)		—		(6)		—

Stock-based compensation	1	—		—	(2)		17		—		—		1		16		—
Equity transactions of MPLX	—	—		—	—		(5)		—		—		(2)		(7)		—
Other	—	—		—	—		—		1		—		—		1		—
Balance as of March 31, 2020	979	$	10	(329)	$	(15,145)	$	33,169	$	6,380	$	(326)	$	7,140	$	31,228	$	968
Net income	—	—		—	—		—		9		—		246		255		21
Dividends declared on common stock ($0.58 per share)	—	—		—	—		—		(380)		—		—		(380)		—
Distributions to noncontrolling interests	—	—		—	—		—		—		—		(279)		(279)		(21)
Other comprehensive loss	—	—		—	—		—		—		(10)		—		(10)		—

Stock-based compensation	—	—		—	(4)		31		—		—		3		30		—
Equity transactions of MPLX	—	—		—	—		8		—		—		(2)		6		—
Other	—	—		—	—		—		(1)		—		—		(1)		—
Balance as of June 30, 2020	979	$	10	(329)	$	(15,149)	$	33,208	$	6,008	$	(336)	$	7,108	$	30,849	$	968
Net income (loss)	—	—		—	—		$	—	(886)		—		257		(629)		20
Dividends declared on common stock ($0.58 per share)	—	—		—	—		—		(379)		—		—		(379)		—
Distributions to noncontrolling interests	—	—		—	—		—		—		—		(301)		(301)		(20)
Other comprehensive income	—	—		—	—		—		—		2		—		2		—

Stock-based compensation	1	—		—	(1)		18		—		—		2		19		—
Equity transactions of MPLX	—	—		—	—		(43)		—		—		27		(16)		—
Other	—	—		—	—		—		1		—		—		1		—
Balance as of September 30, 2020	980	$	10	(329)	$	(15,150)	$	33,183	$	4,744	$	(334)	$	7,093	$	29,546	$	968

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

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

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 branded outlets. We also sell transportation fuel to consumers through 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 May 14, 2021, we completed the sale of Speedway, our company-owned and operated retail transportation fuel and convenience store business, to 7-Eleven, Inc. (“7-Eleven”). Speedway’s 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 are presented in our consolidated balance sheets as assets and liabilities held for sale as of December 31, 2020. In addition, we separately disclose the operating and investing cash flows of Speedway as discontinued operations within our consolidated statements of cash flow. See Note 4 for discontinued operations disclosures.

Basis of Presentation

All significant intercompany transactions and accounts have been eliminated.

These interim consolidated financial statements are unaudited; however, in the opinion of our management, these statements reflect all adjustments necessary for a fair statement of the results for the periods reported. All such adjustments are of a normal, recurring nature unless otherwise disclosed. These interim consolidated financial statements, including the notes, have been prepared in accordance with the rules of the SEC applicable to interim period financial statements and do not include all of the information and disclosures required by GAAP for complete financial statements.

These interim consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2020. The results of operations for the three and nine months ended September 30, 2021 are not necessarily indicative of the results to be expected for the full year.

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 continue to supply fuel to Speedway subsequent to ts sale to 7-Eleven. All periods presented have been retrospectively adjusted through the sale date of May 14, 2021 to reflect this change. Additionally, beginning August 2, 2020, in accordance with ASC 360, Property, Plant, and Equipment, we ceased recording depreciation and amortization for Speedway’s PP&E, finite-lived intangible assets and right of use lease assets.

We invested a significant portion of the Speedway sale proceeds in investment grade debt, commercial paper and certificates of deposit with maturities greater than three months. As a result, we have updated our accounting policies for short-term investments and fair value as disclosed below:

Short-Term Investments

Investments with a maturity date greater than three months that we intend to convert to cash or cash equivalents within a year or less are classified as short-term investments in our consolidated balance sheets. Additionally, in accordance with ASC 320, Investments - Debt Securities, we have classified all short-term investments as available-for-sale securities and changes in fair market value are reported in other comprehensive income.

Fair Value

We account for certain assets and liabilities at fair value. The hierarchy below lists three levels of fair value based on the extent to which inputs used in measuring fair value are observable in the market. We categorize each of our fair value measurements in one of these three levels based on the lowest level input that is significant to the fair value measurement in its entirety. These levels are:

Level 1 – inputs are based upon unadjusted quoted prices for identical instruments in active markets. Our Level 1 derivative assets and liabilities include 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.
Level 2 – inputs are based upon quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-based valuation techniques for which all significant inputs

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are observable in the market or can be corroborated by observable market data for substantially the full term of the assets or liabilities. Where applicable, these models project future cash flows and discount the future amounts to a present value using market-based observable inputs including interest rate curves, credit spreads, and forward and spot prices for currencies. Our Level 2 investments include commercial paper, certificates of deposit, time deposits and corporate notes and bonds. Our Level 2 derivative assets and liabilities primarily include certain OTC contracts.

Level 3 – inputs are generally unobservable and typically reflect management’s estimates of assumptions that market participants would use in pricing the asset or liability. The fair values are therefore determined using model-based techniques, including option pricing models and discounted cash flow models. Our Level 3 assets and liabilities include goodwill, long-lived assets and intangible assets, when they are recorded at fair value due to an impairment charge and an 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 September 30, 2021 used significant unobservable inputs including: (1) NGL prices interpolated and extrapolated due to inactive markets ranging from $0.68 to $1.80 per gallon with a weighted average of $0.88 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. Unobservable inputs used in the models are significant to the fair values of the assets and liabilities.

2**.** ACCOUNTING STANDARDS

Recently Adopted

We adopted the following ASU during the first nine months of 2021, which did not have a material impact to our financial statements or financial statement disclosures:


ASU		Effective Date
2019-12	Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes	January 1, 2021

3. SHORT-TERM INVESTMENTS

Investments Components

The components of investments were as follows:


	September 30, 2021
(In millions)	Fair Value Level	Amortized Cost		Unrealized Gains		Unrealized Losses		Fair Value		Cash and Cash Equivalents		Short-term Investments
Available-for-sale debt securities
Commercial paper	Level 2	$	7,747	$	1	$	—	$	7,748	$	1,369	$	6,379
Certificates of deposit and time deposits	Level 2	1,903		—		—		1,903		1,200		703
U.S. government securities	Level 1	128		—		—		128		100		28



Corporate notes and bonds	Level 2	397		—		—		397		155		242

Total available-for-sale debt securities		$	10,175	$	1	$	—	$	10,176	$	2,824	$	7,352

Cash								3,050		3,050		—
Total								$	13,226	$	5,874	$	7,352

Our investment policy includes concentration limits and credit rating requirements which limits our investments to high quality, short term and highly liquid securities.

Unrealized losses on debt investments held from May 14, 2021 to September 30, 2021 were not material. Realized gains/losses were not material. All of our available-for-sale debt securities held as of September 30, 2021 mature within one year or less or are readily available for use.

4**.** DISCONTINUED OPERATIONS

On May 14, 2021, we completed the sale of Speedway, our company-owned and operated retail transportation fuel and convenience store business, to 7-Eleven for cash proceeds of approximately $21.38 billion. After-tax proceeds were approximately $17.22 billion. This transaction resulted in a pretax gain of $11.68 billion ($8.02 billion after income taxes) after deducting the book value of the net assets and certain other adjustments.

The Speedway sale gain is accounted for as a discrete item within the discontinued operations income tax provision and includes a current tax provision of $4.16 billion and a deferred income tax benefit of $497 million due to the reversal of MPC’s deferred tax liabilities related to Speedway.

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The proceeds and related Speedway sale gain may be adjusted in future periods based on provisions of the purchase and sale agreement that allow for adjustments of working capital amounts and other miscellaneous items subsequent to the transaction closing date of May 14, 2021.

Results of operations for Speedway are reflected through the close of the sale. The following table presents Speedway results and the gain on sale as reported in income from discontinued operations, net of tax, within our consolidated statements of income.


	Three Months Ended September 30,				Nine Months Ended September 30,
(In millions)	2021		2020		2021		2020
Revenues, other income and net gain on disposal of assets:
Revenues and other income	$	—	$	5,291	$	8,420	$	14,997
Net gain (loss) on disposal of assets	—		(1)		11,682		—
Total revenues, other income and net gain on disposal of assets	—		5,290		20,102		14,997
Costs and expenses:
Cost of revenues (excludes items below)	—		4,696		7,654		13,176
LCM inventory valuation adjustment	—		—		—		25
Depreciation and amortization	—		36		3		237
Selling, general and administrative expenses	—		71		121		231
Other taxes	—		49		75		146
Total costs and expenses	—		4,852		7,853		13,815
Income from operations	—		438		12,249		1,182
Net interest and other financial costs	—		5		6		15
Income before income taxes	—		433		12,243		1,167
Provision for income taxes	—		62		3,795		286
Income from discontinued operations, net of tax	$	—	$	371	$	8,448	$	881

Fuel Supply Agreements

During the second quarter of 2021, we entered into various 15-year fuel supply agreements through which we continue to supply fuel to Speedway.

5**.** 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. As of September 30, 2021, we owned approximately 63 percent of the outstanding MPLX common units.

Unit Repurchase Program

On November 2, 2020, MPLX announced its board authorized a unit repurchase program for the repurchase of up to $1 billion of MPLX’s outstanding common units held by the public.

During the nine months ended September 30, 2021, MPLX repurchased 17,563,855 common units at an average cost per unit of $26.79 and paid $465 million of cash, with an additional $5 million of cash paid in early October in connection with the settlement of certain late September repurchases. As of September 30, 2021, MPLX has $497 million remaining under its unit repurchase authorization.

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.

Cash Distributions

On November 2, 2021, MPLX declared a cash distribution for the third quarter of 2021, totaling $1.31 billion, or $1.28 per common unit, consisting of a base distribution amount of $0.7050 per common unit and a special distribution amount of $0.5750

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per common unit. This distribution will be paid on November 19, 2021 to common unitholders of record on November 12, 2021. MPC’s portion of this distribution is approximately $829 million.

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, 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 interests in MPLX were as follows:


	Nine Months Ended September 30,
(In millions)	2021		2020
Decrease due to change in ownership	$	(120)	$	(23)
Tax impact	68		(17)
Decrease in MPC's additional paid-in capital, net of tax	$	(52)	$	(40)

6**.** IMPAIRMENTS

During the first nine months of 2021, we recognized impairment expense within our Midstream segment related to the divestiture, abandonment or closure of certain assets as detailed in the table below.

During the first quarter of 2020, the outbreak of COVID-19 caused 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 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.

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


		Three Months Ended September 30,				Nine Months Ended September 30,
(In millions)	Income Statement Line	2021		2020		2021		2020
Goodwill	Impairment expense	$	—	$	64	$	—	$	7,394
Equity method investments	Income (loss) from equity method investments	—		—		13		1,315
Long-lived assets	Impairment expense	—		369		—		886
Long-lived assets	Depreciation and amortization	13		—		56		—
Total impairments		$	13	$	433	$	69	$	9,595

Goodwill

During the first quarter of 2020, we recorded an impairment of goodwill of $7.33 billion. The $5.516 billion goodwill impairment within the Refining & Marketing segment was primarily driven by the effects of COVID-19 and the decline in commodity prices. The $1.814 billion impairment within the Midstream segment was primarily driven by additional information related to the slowing of drilling activity, which had reduced production growth forecasts from MPLX’s producer customers. 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.

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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. 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.

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 was determined based upon applying the discounted cash flow method, an income approach.

Long-lived Assets

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.

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.

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 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.

Fair values of property, plant and equipment were determined using a combination of income and cost approaches. 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 groups. 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 on applying the multi-period excess earnings method, which is an income approach.

7**.** 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

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MPLX holds an interest. See Note 24 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.

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


(In millions)	September 30, 2021		December 31, 2020
Assets
Cash and cash equivalents	$	39	$	15
Receivables, less allowance for doubtful accounts	624		478
Inventories	141		118
Other current assets	54		67
Assets held for sale	20		188
Equity method investments	4,001		4,036
Property, plant and equipment, net	20,158		21,418
Goodwill	7,657		7,657
Right of use assets	282		309
Other noncurrent assets	925		1,006
Liabilities
Accounts payable	$	605	$	468
Payroll and benefits payable	6		4
Accrued taxes	95		76
Debt due within one year	1		764
Operating lease liabilities	61		63
Liabilities held for sale	—		101
Other current liabilities	284		297
Long-term debt	18,253		19,375
Deferred income taxes	11		12
Long-term operating lease liabilities	220		244
Deferred credits and other liabilities	527		437

8**.** RELATED PARTY TRANSACTIONS

Transactions with related parties were as follows:


	Three Months Ended September 30,				Nine Months Ended September 30,
(In millions)	2021		2020		2021		2020
Sales to related parties	$	13	$	35	$	67	$	85
Purchases from related parties	251		187		673		540

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.

9**.** EARNINGS (LOSS) 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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	Three Months Ended September 30,				Nine Months Ended September 30,
(In millions, except per share data)	2021		2020		2021		2020
Income (loss) from continuing operations, net of tax	$	1,030	$	(980)	$	1,448	$	(11,432)
Less: Net income (loss) attributable to noncontrolling interest	336		277		932		(440)
Net income allocated to participating securities	—		—		1		—
Income (loss) from continuing operations available to common stockholders	694		(1,257)		515		(10,992)
Income from discontinued operations, net of tax	—		371		8,448		881
Income (loss) available to common stockholders	$	694	$	(886)	$	8,963	$	(10,111)

Weighted average common shares outstanding:
Basic	633		650		645		649
Effect of dilutive securities	4		—		4		—
Diluted	637		650		649		649

Income (loss) available to common stockholders per share:
Basic:
Continuing operations	$	1.10	$	(1.93)	$	0.80	$	(16.93)
Discontinued operations	—		0.57		13.10		1.35
Net income (loss) per share	$	1.10	$	(1.36)	$	13.90	$	(15.58)
Diluted:
Continuing operations	$	1.09	$	(1.93)	$	0.79	$	(16.93)
Discontinued operations	—		0.57		13.02		1.35
Net income (loss) per share	$	1.09	$	(1.36)	$	13.81	$	(15.58)

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


	Three Months Ended September 30,		Nine Months Ended September 30,
(In millions)	2021	2020	2021	2020
Shares issuable under stock-based compensation plans	3	12	3	11

10. EQUITY

In connection with the Speedway sale, our board of directors approved an additional $7.1 billion share repurchase authorization bringing total share repurchase authorizations to $10.0 billion prior to the June 2021 tender offer discussed below. The authorization has no expiration date.

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, if any, will depend upon several factors, including market and business conditions, and such repurchases may be suspended or discontinued at any time.

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Total share repurchases were as follows for the respective periods:


	Three Months Ended September 30,				Nine Months Ended September 30,
(In millions, except per share data)	2021		2020		2021		2020
Number of shares repurchased	16		—		32		—
Cash paid for shares repurchased	$	928	$	—	$	1,912	$	—
Average cost per share	$	58.78	$	—	$	60.91	$	—

As of September 30, 2021, MPC has $8.04 billion remaining under its share repurchase authorizations, which reflects the repurchase of 804,147 common shares for $50 million that settled in the fourth quarter.

During the second quarter of 2021, MPC completed a modified Dutch auction tender offer, purchasing 15,573,365 shares of its common stock at a purchase price of $63.00 per share, for an aggregate purchase price of approximately $981 million, excluding fees and expenses related to the tender offer.

11**.** SEGMENT INFORMATION

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 and through long-term fuel supply contracts with direct dealers who operate locations mainly under the ARCO® brand.
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.

Segment income represents income (loss) from operations attributable to the reportable segments. 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. 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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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:


	Three Months Ended September 30,				Nine Months Ended September 30,
(In millions)	2021		2020		2021		2020
Refining & Marketing	$	509	$	(1,569)	$	135	$	(3,610)
Midstream	1,042		960		2,991		2,734
Segment income (loss) from operations	1,551		(609)		3,126		(876)
Corporate	(186)		(197)		(523)		(625)
Items not allocated to segments:
LCM inventory valuation adjustment	—		530		—		(1,185)
Impairments(a)	(13)		(433)		(69)		(9,595)
Idling expenses	(12)		—		(12)		—
Restructuring expenses(b)	—		(348)		—		(348)

Transaction-related costs(c)	—		—		—		(8)
Income (loss) from continuing operations	1,340		(1,057)		2,522		(12,637)
Net interest and other financial costs	328		359		1,053		1,032
Income (loss) from continuing operations before income taxes	$	1,012	$	(1,416)	$	1,469	$	(13,669)

(a)Includes impairment of goodwill, equity method investments and long lived assets. See Note 6 for additional information.

(b)See Note 16.

(c)Includes costs incurred in connection with the Midstream strategic review. Costs incurred in connection with the Speedway separation are included in discontinued operations. See Note 4.

The following reconciles segment depreciation and amortization to total depreciation and amortization as reported in the consolidated statements of income:


	Three Months Ended September 30,				Nine Months Ended September 30,
(In millions)	2021		2020		2021		2020
Refining & Marketing	$	462	$	456	$	1,406	$	1,392
Midstream	329		335		994		1,010
Segment depreciation and amortization	791		791		2,400		2,402
Corporate	45		39		151		124
Total depreciation and amortization	$	836	$	830	$	2,551	$	2,526

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The following reconciles segment revenues to sales and other operating revenues as reported in the consolidated statements of income:


	Three Months Ended September 30,				Nine Months Ended September 30,
(In millions)	2021		2020		2021		2020
Refining & Marketing
Revenues from external customers(a)	$	31,109	$	16,493	$	81,324	$	49,164
Intersegment revenues	37		23		95		52
Refining & Marketing segment revenues	31,146		16,516		81,419		49,216
Midstream
Revenues from external customers(a)	1,212		915		3,323		2,643
Intersegment revenues	1,242		1,232		3,689		3,638
Midstream segment revenues	2,454		2,147		7,012		6,281
Total segment revenues	33,600		18,663		88,431		55,497
Less: intersegment revenues	1,279		1,255		3,784		3,690
Sales and other operating revenues	$	32,321	$	17,408	$	84,647	$	51,807

(a)Includes Refining & Marketing intercompany sales to Speedway prior to May 14, 2021 and related party sales. See Notes 4 and 8 for additional information.

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


	Three Months Ended September 30,				Nine Months Ended September 30,
(In millions)	2021		2020		2021		2020
Refining & Marketing	$	228	$	254	$	538	$	995
Midstream	190		300		506		1,199
Segment capital expenditures and investments	418		554		1,044		2,194
Less investments in equity method investees	37		53		150		436
Plus:
Corporate	28		16		72		61
Capitalized interest	18		29		48		85
Total capital expenditures(a)	$	427	$	546	$	1,014	$	1,904

(a)Includes changes in capital expenditure accruals. See Note 21 for a reconciliation of total capital expenditures to additions to property, plant and equipment for the nine months ended September 30, 2021 and 2020 as reported in the consolidated statements of cash flows.

12**.** NET INTEREST AND OTHER FINANCIAL COSTS

Net interest and other financial costs were as follows:


	Three Months Ended September 30,				Nine Months Ended September 30,
(In millions)	2021		2020		2021		2020
Interest income	$	(5)	$	(1)	$	(8)	$	(9)
Interest expense	331		376		1,019		1,102
Interest capitalized	(18)		(32)		(54)		(103)
Pension and other postretirement non-service costs(a)	10		6		66		2
Other financial costs	10		10		30		40
Net interest and other financial costs	$	328	$	359	$	1,053	$	1,032

(a)See Note 23.

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13. INCOME TAXES

We recorded a combined federal, state and foreign income tax benefit of $18 million for the three months ended September 30, 2021, which was lower than the tax computed at the U.S. statutory rate primarily due to certain permanent tax benefits related to net income attributable to noncontrolling interests, state taxes, and an increase in benefit related to the net operating loss (“NOL”) carryback provided under the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”). We recorded a combined federal, state and foreign income tax expense of $21 million for the nine months ended September 30, 2021, which was lower than the tax computed at the U.S. statutory rate primarily due to certain permanent tax benefits related to net income attributable to noncontrolling interests and a change in benefit related to the NOL carryback provided under the CARES Act offset by state taxes.

We recorded a combined federal, state and foreign income tax benefit of $436 million for the three months ended September 30, 2020, which was higher than the tax computed at the U.S. statutory rate primarily due to certain permanent tax benefits related to net income attributable to noncontrolling interests, state taxes and a change in estimate related to the expected NOL carryback provided under the CARES Act, partially offset by non-tax deductible goodwill impairment. We recorded a combined federal, state and foreign income tax benefit of $2,237 million for the nine months ended September 30, 2020, which was lower than the tax computed at the U.S. statutory rate due to a significant amount of our pre-tax loss consisting of non-tax deductible goodwill impairment charges, partially offset by the tax rate differential resulting from the expected NOL carryback provided under the CARES Act. Additionally, our non-controlling interest in MPLX generally provides an effective tax rate benefit since the tax associated with these ownership interests is paid by those interests, but this benefit was lower for the nine months ended September 30, 2020 due to impairment charges recorded by MPLX.

A reconciliation of the continuing operations tax provision (benefit) in dollars as determined using the federal statutory income tax rate applied to income (loss) before income taxes to the provision (benefit) for income taxes is shown in the table below.


	Three Months Ended September 30,				Nine Months Ended September 30,
(In millions)	2021		2020		2021		2020
Tax computed at statutory rate	$	213	$	(297)	$	309	$	(2,870)
State and local income taxes, net of federal income tax effects	(10)		(59)		12		(275)
Goodwill impairment	—		13		—		1,170
Noncontrolling interests	(127)		(63)		(196)		81
Legislation(a)	(55)		(29)		(72)		(354)
Tax credits	(15)		(4)		(19)		(12)
Other	(24)		3		(13)		23
Provision (benefit) for income taxes on continuing operations	$	(18)	$	(436)	$	21	$	(2,237)

(a)2021 and 2020 primarily reflect the impact of the CARES Act.

On March 27, 2020, the CARES Act was enacted by Congress and signed into law by President Trump in response to the COVID-19 pandemic. The CARES Act contained an NOL carryback provision, which allowed us 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 when tax was previously paid in the carryback years. As provided by the NOL carryback provision in the CARES Act, as of September 30, 2021, we have realized a total income tax benefit of $2.30 billion. As of September 30, 2021, $1.61 billion is recorded as an income tax receivable in other current assets, $388 million was utilized to offset our third quarter cash tax payment obligation to the Internal Revenue Service (“IRS”), and $302 million has been recorded as an offset to our accrued taxes due in the fourth quarter of 2021. Additionally, on October 8, 2021, MPC received $1.55 billion of the refund from the IRS and expects to receive the remaining income tax receivable of $59 million in the first half of 2022.

14. INVENTORIES


(In millions)	September 30, 2021		December 31, 2020
Crude oil	$	2,959	$	2,588
Refined products	5,303		4,478
Materials and supplies	949		933
Total	$	9,211	$	7,999

Inventories are carried at the lower of cost or market value. Costs of crude oil and refined products are aggregated on a consolidated basis for purposes of assessing whether the LIFO cost basis of these inventories may have to be written down to market values.

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15**.** PROPERTY, PLANT AND EQUIPMENT


	September 30, 2021						December 31, 2020
(In millions)	Gross PP&E		Accumulated Depreciation		Net PP&E		Gross PP&E		Accumulated Depreciation		Net PP&E
Refining & Marketing	$	30,794	$	14,490	$	16,304	$	30,306	$	13,257	$	17,049
Midstream	27,948		7,114		20,834		27,677		6,217		21,460
Corporate	1,415		923		492		1,356		830		526
Total	$	60,157	$	22,527	$	37,630	$	59,339	$	20,304	$	39,035

16**.** 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 have settled 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 remaining exit and disposal costs reserve to occur through 2024.


(In millions)	Employee separation costs		Exit and disposal costs		Total
Restructuring reserve balance at December 31, 2020	$	38	$	103	$	141
Cash payments	(37)		(41)		(78)
Restructuring reserve balance at September 30, 2021	$	1	$	62	$	63

17**.** FAIR VALUE MEASUREMENTS

Fair Values—Recurring

The following tables present assets and liabilities accounted for at fair value on a recurring basis as of September 30, 2021 and December 31, 2020 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.


	September 30, 2021
	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	$	543	$	4	$	—	$	(542)	$	5	$	86
Liabilities:
Commodity contracts	$	615	$	12	$	—	$	(627)	$	—	$	—
Embedded derivatives in commodity contracts	—		—		104		—		104		—

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	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		—

(a)Represents the impact of netting assets, liabilities and cash collateral when a legal right of offset exists. As of September 30, 2021, cash collateral of $85 million was netted with the mark-to-market derivative liabilities. As of December 31, 2020, cash collateral of $11 million was netted with mark-to-market derivative liabilities.

(b)We have no derivative contracts that are covered by master netting arrangements reflected gross on the balance sheet.

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


	Three Months Ended September 30,				Nine Months Ended September 30,
(In millions)	2021		2020		2021		2020
Beginning balance	$	102	$	51	$	63	$	60
Unrealized and realized losses included in net income	7		12		52		5
Settlements of derivative instruments	(5)		(2)		(11)		(4)
Ending balance	$	104	$	61	$	104	$	61

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:	$	6	$	11	$	44	$	2

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, 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 $26.9 billion and $30.2 billion at September 30, 2021, respectively, and approximately $31.1 billion and $34.9 billion at December 31, 2020, respectively. These carrying and fair values of our debt exclude the unamortized issuance costs which are netted against our total debt.

18**.** DERIVATIVES

For further information regarding the fair value measurement of derivative instruments, including any effect of master netting agreements or collateral, see Note 17. We do not designate any of our commodity derivative instruments as hedges for accounting purposes.

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.

The following table presents the fair value of derivative instruments as of September 30, 2021 and December 31, 2020 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.

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(In millions)	September 30, 2021				December 31, 2020
Balance Sheet Location	Asset		Liability		Asset		Liability
Commodity derivatives
Other current assets	$	547	$	627	$	88	$	91
Other current liabilities(a)	—		15		—		7
Deferred credits and other liabilities(a)	—		89		—		56

(a) Includes embedded derivatives.

The table below summarizes open commodity derivative contracts for crude oil, refined products, blending products and soybean oil as of September 30, 2021.


	Percentage of contracts that expire next quarter		Position
(Units in thousands of barrels)		Long		Short
Exchange-traded(a)
Crude oil	88.8%		48,240		56,089
Refined products	93.0%		18,571		21,459
Blending products	61.3%		3,258		8,345
Soybean oil	92.6%		1,210		1,837

(a) Included in exchange-traded are spread contracts in thousands of barrels: Crude oil - 1,900 long and 1,700 short; Refined products - 629 long and 500 short; Blending products - 75 short. There are no spread contracts for soybean oil.

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


	Gain (Loss)
(In millions)	Three Months Ended September 30,				Nine Months Ended September 30,
Income Statement Location	2021		2020		2021		2020
Sales and other operating revenues	$	(19)	$	—	$	(34)	$	77
Cost of revenues	(121)		(23)		(354)		3
Total	$	(140)	$	(23)	$	(388)	$	80

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19**.** DEBT

Our outstanding borrowings at September 30, 2021 and December 31, 2020 consisted of the following:


(In millions)	September 30, 2021		December 31, 2020
Marathon Petroleum Corporation:
Commercial paper	$	—	$	1,024

Senior notes	8,549		9,849
Notes payable	1		1
Finance lease obligations	606		634
Total	$	9,156	$	11,508
MPLX LP:
Bank revolving credit facility	—		175
Senior notes	18,600		20,350
Finance lease obligations	9		11
Total	$	18,609	$	20,536

Total debt	$	27,765	$	32,044
Unamortized debt issuance costs	(138)		(154)
Unamortized (discount) premium, net	(284)		(306)
Amounts due within one year	(73)		(2,854)
Total long-term debt due after one year	$	27,270	$	28,730

Available Capacity under our Credit Facilities as of September 30, 2021


(Dollars in millions)	Total Capacity		Outstanding Borrowings		Outstanding Letters of Credit		Available Capacity		Weighted Average Interest Rate		Expiration
MPC, excluding MPLX
MPC bank revolving credit facility	$	5,000	$	—	$	1	$	4,999	—	%	October 2023
MPC trade receivables securitization facility	100		—		—		100		—		September 2022

MPLX
MPLX bank revolving credit facility	3,500		—		—		3,500		—	%	July 2024

MPC 364-Day Bank Revolving Credit Facilities

In February 2021, we elected to terminate our $1 billion unsecured 364-day revolving credit facility due in April 2021. 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.

Effective June 18, 2021, we terminated our $1 billion unsecured 364-day revolving credit facility due in September 2021. There were no borrowings under this credit facility, and we determined that the incremental borrowing capacity of the facility was no longer necessary. We incurred no early termination fees as a result of the early termination of this credit agreement.

Trade Receivables Securitization Facility

On September 30, 2021, we entered into a new trade receivables securitization facility with a group of lenders, which provides for $100 million of borrowing capacity. This facility replaces our previous trade receivables securitization facility that expired on July 16, 2021.

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MPC Senior Notes

On March 1, 2021, we repaid the $1 billion outstanding aggregate principal amount of 5.125% senior notes due March 2021.

In June 2021, all of the $300 million outstanding aggregate principal amount of 5.125% senior notes due April 2024, including the portion of such notes for which Andeavor was the obligor, were redeemed at a price equal to 100.854% of the principal amount.

MPC intends to redeem all of the $1.25 billion outstanding aggregate principal amount of MPC's 4.5% senior notes due May 1, 2023 and the $850 million outstanding aggregate principal amount of MPC’s 4.75% senior notes due December 15, 2023, including the portion of such notes for which Andeavor LLC, a wholly-owned subsidiary of MPC, is the obligor. The notes are expected to be redeemed on December 2, 2021, at a price equal to par, plus a make-whole premium calculated in accordance with the terms of the senior notes and accrued and unpaid interest to, but not including, the redemption date. MPC expects to fund the redemption amount with cash on hand.

MPLX Senior Notes

On January 15, 2021, MPLX redeemed all the $750 million outstanding aggregate principal amount of 5.250% senior notes due January 2025, including the portion of such notes issued by Andeavor Logistics LP, at a price equal to 102.625% of the principal amount.

On September 3, 2021 MPLX redeemed, at par value, all of the $1 billion aggregate principal amount of floating rate senior notes due September 2022. MPLX primarily funded the redemption with borrowings under the MPC intercompany loan agreement.

20**.** REVENUE

The following table presents our revenues from external customers disaggregated by segment and product line.


	Three Months Ended September 30,				Nine Months Ended September 30,
(In millions)	2021		2020		2021		2020
Refining & Marketing:
Refined products	$	29,257	$	15,356	$	75,594	$	45,893
Crude oil	1,687		990		4,999		2,868
Services and other	165		147		731		403
Total revenues from external customers	31,109		16,493		81,324		49,164
Midstream:
Refined products	441		166		1,027		460
Services and other	771		749		2,296		2,183
Total revenues from external customers	1,212		915		3,323		2,643
Sales and other operating revenues	$	32,321	$	17,408	$	84,647	$	51,807

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 September 30, 2021, 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 September 30, 2021 include matching buy/sell receivables of $3.85 billion.

21**.** SUPPLEMENTAL CASH FLOW INFORMATION


	Nine Months Ended September 30,
(In millions)	2021		2020
Net cash provided by operating activities included:
Interest paid (net of amounts capitalized)	$	935	$	901
Net income taxes paid to (received from) taxing authorities(a)	2,896		(130)

(a)Includes income tax payments related to continuing and discontinued operations.

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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:


	Nine Months Ended September 30,
(In millions)	2021		2020
Additions to property, plant and equipment per the consolidated statements of cash flows	$	983	$	2,330
Increase (decrease) in capital accruals	31		(426)
Total capital expenditures	$	1,014	$	1,904

22**.** 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, 2019	$	(212)	$	(116)	$	1	$	7	$	(320)
Other comprehensive loss before reclassifications, net of tax of $(4)	(12)		(2)		—		—		(14)
Amounts reclassified from accumulated other comprehensive loss:
Amortization – prior service credit(a)	(34)		—		—		—		(34)
– actuarial loss(a)	27		2		—		—		29
– settlement loss(a)	10		—		—		—		10
Other	—		—		—		(5)		(5)
Tax effect	(1)		—		—		1		—
Other comprehensive loss	(10)		—		—		(4)		(14)
Balance as of September 30, 2020	$	(222)	$	(116)	$	1	$	3	$	(334)


(In millions)	Pension Benefits		Other Benefits		Gain on Cash Flow Hedge		Workers Compensation		Total
Balance as of December 31, 2020	$	(338)	$	(181)	$	1	$	6	$	(512)
Other comprehensive gain (loss) before reclassifications, net of tax of $38	115		1		—		(4)		112
Amounts reclassified from accumulated other comprehensive loss:
Amortization – prior service credit(a)	(34)		2		—		—		(32)
– actuarial loss(a)	35		7		—		—		42
– settlement loss(a)	64		—		—		—		64
Other	—		—		—		(1)		(1)
Tax effect	(15)		(2)		—		—		(17)
Other comprehensive gain (loss)	165		8		—		(5)		168
Balance as of September 30, 2021	$	(173)	$	(173)	$	1	$	1	$	(344)

(a)These accumulated other comprehensive loss components are included in the computation of net periodic benefit cost. See Note 23.

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23**.** PENSION AND OTHER POSTRETIREMENT BENEFITS

The following summarizes the components of net periodic benefit costs:


	Three Months Ended September 30,				Nine Months Ended September 30,
(In millions)	2021		2020		2021		2020
Pension Benefits
Service cost	$	73	$	70	$	221	$	210
Interest cost	23		25		69		73
Expected return on plan assets	(37)		(33)		(99)		(98)
Amortization – prior service credit	(11)		(12)		(34)		(34)
– actuarial loss	10		9		35		26
– settlement loss	15		8		64		9
Net periodic pension benefit cost	$	73	$	67	$	256	$	186

Other Benefits
Service cost	$	9	$	9	$	26	$	27
Interest cost	7		8		22		24
Amortization – prior service cost	1		—		2		—
– actuarial loss	2		1		7		2
Net periodic other benefit cost	$	19	$	18	$	57	$	53

The components of net periodic benefit cost other than the service cost component are included in net interest and other financial costs on the consolidated statements of income.

During the nine months ended September 30, 2021, we made contributions of $801 million to our funded pension plans. Benefit payments related to unfunded pension and other postretirement benefit plans were $19 million and $36 million, respectively, during the nine months ended September 30, 2021.

24**.** 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 September 30, 2021 and December 31, 2020, accrued liabilities for remediation totaled $389 million and $397 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 $6 million and $7 million at September 30, 2021 and December 31, 2020, 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.

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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.

Other Legal Proceedings

In early July 2020, Tesoro High Plains Pipeline Company, LLC (“THPP”), a subsidiary of MPLX, received a Notification of Trespass Determination from the Bureau of Indian Affairs (“BIA”) relating to a portion of the Tesoro High Plains Pipeline that 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. THPP appealed this determination, which triggered an automatic stay of the requested pipeline shutdown and payment. On October 29, 2020, 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, 2020 covering all 34 tracts at issue. On December 15, 2020, the Regional Director of the BIA issued a new trespass notice to THPP consistent with the Assistant Secretary - 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 (the “District of North Dakota”) against THPP, the Department of the Interior, the Assistant Secretary - Indian Affairs, the Interior Board of Indian Appeals and the BIA, 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. In March 2021, THPP received a copy of an order purporting to vacate all orders related to THPP’s alleged trespass issued by the BIA between July 2, 2020 and January 14, 2021. The order directs the Regional Director of the BIA to reconsider the issue of THPP’s alleged trespass and issue a new order, if necessary, after all interested parties have had an opportunity to be heard. Subsequently, landowners voluntarily dismissed the suit filed in the District of North Dakota. On April 23, 2021, THPP filed a lawsuit in the District of North Dakota against the United States of America, the U.S. Department of the Interior and the BIA challenging the March order purporting to vacate all previous orders related to THPP’s alleged trespass.

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 tends 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 September 30, 2021.

Dakota Access Pipeline

MPLX holds a 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. In 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 prepare an environmental impact statement (“EIS”) relating to an easement under Lake Oahe in North Dakota. The D.D.C. later ordered vacatur of the easement during the pendency of the EIS and further ordered a shut down of the pipeline by August 5, 2020. On August 5, 2020, the U.S. Court of Appeals for the District of Columbia (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. 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 May 2021, the D.D.C. denied a renewed request for an injunction to shut down the pipeline while the EIS is being prepared. In June 2021, the D.D.C. issued an order dismissing without prejudice the tribes’

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claims against the Dakota Access Pipeline. The judge noted that the plaintiffs may move to reopen the case in the event of a violation of the court’s prior orders. Dakota Access has petitioned the U.S. Supreme Court for review of the Court of Appeal’s decision upholding the D.D.C.’s order vacating the easement. The pipeline remains operational.

MPLX has entered into a Contingent Equity Contribution Agreement whereby MPLX LP, 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. If the pipeline were temporarily shut down, 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. MPLX also expects to 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 1% redemption premium required pursuant to the indenture governing the notes) and any accrued and unpaid interest. As of September 30, 2021, our maximum potential undiscounted payments under the Contingent Equity Contribution Agreement were approximately $230 million.

Crowley Ocean Partners LLC and Crowley Blue Water Partners LLC

In connection with our 50 percent indirect interest in Crowley Ocean Partners LLC, 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 September 30, 2021, our maximum potential undiscounted payments under this agreement for debt principal totaled $108 million.

In connection with our 50 percent indirect interest in Crowley Blue Water Partners LLC, 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 September 30, 2021, our maximum potential undiscounted payments under this arrangement was $108 million.

Other guarantees

We have entered into other guarantees with maximum potential undiscounted payments totaling $98 million as of September 30, 2021, 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.

Contractual Commitments and Contingencies

At September 30, 2021, our contractual commitments to acquire property, plant and equipment and advance funds to equity method investees totaled $615 million.

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 with us if there are significant delays that are not due to force majeure.

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