Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

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Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

This section should also be read in conjunction with the unaudited consolidated financial statements and accompanying footnotes included under Item 1. Financial Statements and in conjunction with our Annual Report on Form 10-K for the year ended December 31, 2021.

DISCLOSURES REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q, particularly Management’s Discussion and Analysis of Financial Condition and Results of Operations and Quantitative and Qualitative Disclosures about Market Risk, includes forward-looking statements that are subject to risks, contingencies or uncertainties. You can identify forward-looking statements by words such as “anticipate,” “believe,” “commitment,” “could,” “design,” “estimate,” “expect,” “forecast,” “goal,” “guidance,” “intend,” “may,” “objective,” “opportunity,” “outlook,” “plan,” “policy,” “position,” “potential,” “predict,” “priority,” “project,” “prospective,” “pursue,” “seek,” “should,” “strategy,” “target,” “will,” “would” or other similar expressions that convey the uncertainty of future events or outcomes.

Forward-looking statements include, among other things, statements regarding:

future financial and operating results;
environmental, social and governance (“ESG”) goals and targets, including those related to greenhouse gas emissions, diversity and inclusion and ESG reporting;
future levels of capital, environmental or maintenance expenditures, general and administrative and other expenses;
the success or timing of completion of ongoing or anticipated capital or maintenance projects;
business strategies, growth opportunities and expected investments;
consumer demand for refined products, natural gas and NGLs;
the timing, amount and form of any future capital return transactions at MPC or MPLX; and
the anticipated effects of actions of third parties such as competitors, activist investors, federal, foreign, state or local regulatory authorities, or plaintiffs in litigation.

Our forward-looking statements are not guarantees of future performance, and you should not rely unduly on them, as they involve risks, uncertainties and assumptions. Material differences between actual results and any future performance suggested in our forward-looking statements could result from a variety of factors, including the following:

the continuance or escalation of the military conflict between Russia and Ukraine, and related sanctions and market disruptions;
general economic, political or regulatory developments, including inflation, changes in governmental policies relating to refined petroleum products, crude oil, natural gas or NGLs, or taxation;
the magnitude, duration and extent of future resurgences of the COVID-19 pandemic and its effects, including travel restrictions, business and school closures, increased remote work, stay-at-home orders and other actions taken by individuals, governments and the private sector to stem the spread of the virus;
changes in estimates or projections used to assess fair value of intangible assets, goodwill and property and equipment and/or strategic decisions or other developments with respect to our asset portfolio that cause impairment charges;
the regional, national and worldwide availability and pricing of refined products, crude oil, natural gas, NGLs and other feedstocks;
disruptions in credit markets or changes to credit ratings;
the adequacy of capital resources and liquidity, including availability, timing and amounts of free cash flow necessary to execute business plans and to effect any share repurchases or to maintain or increase the dividend;
the potential effects of judicial or other proceedings on the business, financial condition, results of operations and cash flows;
continued or further volatility in and degradation of general economic, market, industry or business conditions as a result of the COVID-19 pandemic, other infectious disease outbreaks, natural hazards, extreme weather events or otherwise;
compliance with federal and state environmental, economic, health and safety, energy and other policies and regulations and enforcement actions initiated thereunder;
adverse market conditions or other risks affecting MPLX;
refining industry overcapacity or under capacity;
changes in producer customers’ drilling plans or in volumes of throughput of crude oil, natural gas, NGLs, refined products or other hydrocarbon-based products;
non-payment or non-performance by our customers;

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changes in the cost or availability of third-party vessels, pipelines, railcars and other means of transportation for crude oil, natural gas, NGLs, feedstocks and refined products;
the price, availability and acceptance of alternative fuels and alternative-fuel vehicles and laws mandating such fuels or vehicles;
political and economic conditions in nations that consume refined products, natural gas and NGLs, including the United States and Mexico, and in crude oil producing regions, including the Middle East, Russia, Africa, Canada and South America;
actions taken by our competitors, including pricing adjustments, the expansion and retirement of refining capacity and the expansion and retirement of pipeline capacity, processing, fractionation and treating facilities in response to market conditions;
completion of pipeline projects within the United States;
changes in fuel and utility costs for our facilities;
accidents or other unscheduled shutdowns affecting our refineries, machinery, pipelines, processing, fractionation and treating facilities or equipment, means of transportation, or those of our suppliers or customers;
acts of war, terrorism or civil unrest that could impair our ability to produce refined products, receive feedstocks or to gather, process, fractionate or transport crude oil, natural gas, NGLs or refined products;
political pressure and influence of environmental groups and other stakeholders upon policies and decisions related to the production, gathering, refining, processing, fractionation, transportation and marketing of crude oil or other feedstocks, refined products, natural gas, NGLs or other hydrocarbon-based products;
labor and material shortages;
the costs, disruption and diversion of management’s attention associated with campaigns commenced by activist investors; and
personnel changes.

For additional risk factors affecting our business, see the risk factors described in our Annual Report on Form 10-K for the year ended December 31, 2021. We undertake no obligation to update any forward-looking statements except to the extent required by applicable law.

EXECUTIVE SUMMARY

Business Update

Through the first six months of 2022, we continue to see recovery in the environment in which our business operates. The increase in global demand for refined products and global commodity supply constraints have contributed to increased Refining & Marketing margins and Midstream throughputs. We are unable to predict the potential effects that resurgences of COVID-19 or the continuance or escalation of the military conflict between Russia and Ukraine, and related sanctions, may have on our financial position and results. It remains uncertain how long these conditions may last or how severe they may become.

In 2022, data indicates a sharp rise in inflation in the U.S. and globally. Current and future inflationary effects may be driven by, among other things, supply chain disruptions, governmental stimulus or fiscal policies and increasing demand for certain goods and services as recovery from the COVID-19 pandemic continues. We have observed higher costs for feedstocks, labor and materials used in our business. We cannot predict the effect of higher inflation and fuel prices on demand for our products and services.

In response to this business environment, we continue to focus on the following priorities for our businesses:

Strengthen Competitive Position of Assets

We are committed to positioning our assets so that we are a leader in operational, financial, and sustainability performance and are evaluating the strength and fit of assets in our portfolio. Our goal is that each individual asset generates free-cash-flow back to the business and contributes to shareholder returns. With our investments we are focused on high returning projects that we believe will enhance the competitiveness of our portfolio, including our investments in sustainable fuels and technologies that lower our carbon intensity as the global energy mix evolves.

Improve Commercial Performance

We are focused on leveraging advantaged raw material selection, new approaches in the commercial space to be more dynamic amidst changing market conditions, and achieving technology improvements to advance our commercial performance. A near-term focus has been securing advantaged renewable feedstocks as we continue to advance our renewable fuels production capabilities. This includes exploring joint venture opportunities and strategic alliances within the renewable fuels value chain.

Continued Capital Discipline and Focus on Low-Cost Culture

We are committed to achieving operational excellence by reducing costs, improving efficiency, driving operational improvements and being disciplined in capital allocation. This means lowering our costs in all aspects of our business and challenging

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ourselves to be disciplined in every dollar we spend across our organization. We look to optimize our portfolio of investment opportunities to ensure efficient deployment of capital focusing on projects with the highest returns.

Commitment to Sustainability

Our approach to sustainability spans the environmental, social and governance dimensions of our business. That means strengthening resiliency by lowering the carbon intensity and conserving natural resources; innovating for the future by investing in renewables and emerging technologies; and embedding sustainability in decision-making and in how we engage our people and many stakeholders. Specifically, we established a 2030 target to reduce our absolute Scope 3 - Category 11 GHG emissions by 15% below 2019 levels. Additionally, MPLX established a new 2030 target to reduce methane emissions intensity by 75% below 2016 levels. The reduction target applies to MPLX’s natural gas gathering and processing operations and represents an expansion of the existing 2025 target, established in 2020, to reduce methane emissions intensity by 50% below 2016 levels.

Strategic Updates

Martinez Renewable Fuels Project Joint Venture

On March 1, 2022, MPC announced it entered into definitive agreements to form a joint venture with Neste for its Martinez renewable fuels project. The partnership will be structured as a 50/50 joint venture with Neste expected to contribute a total of $1 billion, inclusive of half of the total project development costs projected through the completion of the project. MPC will continue to manage project execution and operate the facility once construction is complete. The closing of the joint venture is subject to customary closing conditions and regulatory approvals, including obtaining the necessary permits.

This strategic partnership is expected to advance the current project objectives of delivering low carbon intensity fuels to support California's climate goals. MPC and Neste will leverage their complementary core competencies in the joint venture. MPC brings experience in renewable diesel facility conversion, large capital project execution, and operating expertise in the California market. Neste brings knowledge in sustainable feedstock sourcing and in renewable liquid fuels production. The joint venture reflects both partners' commitment to obtain low carbon intensity feedstocks to achieve the project objectives of providing fuels that meet the demand driven by the Low Carbon Fuel Standard.

MPC received the certification of the Final Environmental Impact Report for the Martinez Renewable Fuels Project on May 3, 2022. In addition, on July 22, 2022, the Bay Area Air Quality Management District air quality permit for Martinez was posted, commencing a 30-day public comment period. The first phase of the facility is currently targeted to be mechanically complete late in the fourth quarter of 2022. Initial production capacity is expected to be 260 million gallons per day of renewable fuels. Pretreatment capabilities are expected to come online in the second half of 2023 and the facility is expected to be capable of producing 730 million gallons per year by the end of 2023. The expected and targeted timelines for achieving the production capacities outlined above are dependent upon the timing of obtaining the air quality permit to operate the facility.

Share Repurchase Authorization

On August 2, 2022, we announced our board of directors approved an incremental $5 billion share repurchase authorization in addition to the incremental $5.0 billion share repurchase authorization announced on February 2, 2022. The authorizations have no expiration date. As of June 30, 2022, MPC had $4.17 billion remaining under its share repurchase authorizations.

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Results

During the first quarter of 2022, our CODM began to evaluate the performance of our segments using segment adjusted EBITDA. We have modified our presentation of segment performance to be consistent with this change, including prior periods presented for consistent and comparable presentation. Amounts included in net income and excluded from segment adjusted EBITDA include: (i) depreciation and amortization; (ii) provision for income taxes; (iii) net interest and other financial costs; (iv) noncontrolling interests; (v) turnaround expenses and (vi) other adjustments as deemed necessary. These items are either: (i) believed to be non-recurring in nature; (ii) not believed to be allocable or controlled by the segment; or (iii) are not tied to the operational performance of the segment.

Select results for continuing operations are reflected in the following table.


	Three Months Ended June 30,				Six Months Ended June 30,
(In millions)	2022		2021		2022		2021
Segment adjusted EBITDA for reportable segments
Refining & Marketing	$	7,760	$	751	$	9,134	$	774
Midstream	1,456		1,308		2,859		2,630
Total reportable segments	$	9,216	$	2,059	$	11,993	$	3,404

Reconciliation of segment adjusted EBITDA for reportable segments to income from continuing operations before income taxes
Total reportable segments	$	9,216	$	2,059	$	11,993	$	3,404
Corporate	(156)		(149)		(294)		(274)
Refining planned turnaround costs	(151)		(61)		(296)		(173)
Storm impacts	—		—		—		(47)
Renewable volume obligation requirements	238		—		238		—
Litigation	—		—		27		—
Impairments	—		(13)		—		(13)

Depreciation and amortization	(819)		(871)		(1,624)		(1,715)
Net interest and other financial costs	(312)		(372)		(574)		(725)
Income from continuing operations before income taxes	$	8,016	$	593	$	9,470	$	457

The following table includes net income (loss) per diluted share data.


	Three Months Ended June 30,				Six Months Ended June 30,
	2022		2021		2022		2021
Net income (loss) per diluted share
Continuing operations	$	10.95	$	0.45	$	12.15	$	(0.27)
Discontinued operations	—		12.55		—		12.98
Net income attributable to MPC	$	10.95	$	13.00	$	12.15	$	12.71

Net income attributable to MPC was $5.87 billion, or $10.95 per diluted share, in the second quarter of 2022 compared to $8.51 billion, or $13.00 per diluted share, for the second quarter of 2021 and $6.72 billion, or $12.15 per diluted share, in the first six months of 2022 compared to $8.27 billion, or $12.71 per diluted share, in the first six months of 2021.

For the second quarter of 2022 and first six months of 2022, the changes were largely due to income from discontinued operations in 2021, due to the sale of the Speedway business on May 14, 2021, and increased operating costs, partially offset increases in average refined product sales prices and volumes in 2022.

See Note 4 to the unaudited consolidated financial statements for additional information on discontinued operations.

Refer to the Results of Operations section for a discussion of consolidated financial results and segment results for the second quarter of 2022 as compared to the second quarter of 2021 and the first six months of 2022 compared to the first six months of 2021.

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MPLX

We owned approximately 647 million MPLX common units as of June 30, 2022, with a market value of $18.87 billion based on the June 30, 2022 closing price of $29.15 per common unit. On July 26, 2022, MPLX declared a quarterly cash distribution of $0.7050 per common unit payable on August 12, 2022. As a result, MPC’s portion of this distribution is approximately $457 million.

We received limited partner distributions of $913 million from MPLX in the six months ended June 30, 2022 and $890 million in the six months ended June 30, 2021.

During the six months ended June 30, 2022, MPLX repurchased approximately 4 million MPLX common units at an average cost per unit of $32.48 and paid $135 million of cash. As of June 30, 2022, $202 million remained available under the authorization for future unit repurchases.

See Note 5 to the unaudited consolidated financial statements for additional information on MPLX.

OVERVIEW OF SEGMENTS

Refining & Marketing

Refining & Marketing segment adjusted EBITDA depends largely on our refinery throughputs, Refining & Marketing margin, refining operating costs and distribution costs.

Refining & Marketing margin is the difference between the prices of refined products sold and the costs of crude oil and other charge and blendstocks refined, including the costs to transport these inputs to our refineries and the costs of products purchased for resale. The crack spread is a measure of the difference between market prices for refined products and crude oil, commonly used by the industry as a proxy for the refining margin. Crack spreads can fluctuate significantly, particularly when prices of refined products do not move in the same direction as the cost of crude oil. As a performance benchmark and a comparison with other industry participants, we calculate Gulf Coast, Mid-Continent and West Coast crack spreads that we believe most closely track our operations and slate of products. The following are used for these crack spread calculations:

The Gulf Coast crack spread uses three barrels of MEH crude producing two barrels of USGC CBOB gasoline and one barrel of USGC ULSD;
The Mid-Continent crack spread uses three barrels of WTI crude producing two barrels of Chicago CBOB gasoline and one barrel of Chicago ULSD; and
The West Coast crack spread uses three barrels of ANS crude producing two barrels of LA CARBOB and one barrel of LA CARB Diesel.

Our refineries can process significant amounts of sweet and sour crude oil, which typically can be purchased at a discount to crude oil referenced in our Gulf Coast, Mid-Continent and West Coast crack spreads. The amount of these discounts, which we refer to as the sweet differential and sour differential, can vary significantly, causing our Refining & Marketing margin to differ from blended crack spreads. In general, larger sweet and sour differentials will enhance our Refining & Marketing margin.

Future crude oil differentials will be dependent on a variety of market and economic factors, as well as U.S. energy policy.

The following table provides sensitivities showing an estimated change in annual net income due to potential changes in market conditions.


(In millions, after-tax)
Blended crack spread sensitivity(a) (per $1.00/barrel change)	$	800
Sour differential sensitivity(b) (per $1.00/barrel change)	375
Sweet differential sensitivity(c) (per $1.00/barrel change)	375
Natural gas price sensitivity(d) (per $1.00/MMBtu)	250

(a)Crack spread based on 40 percent MEH, 40 percent WTI and 20 percent ANS with Gulf Coast, Mid-Continent and West Coast product pricing, respectively, and assumes all other differentials and pricing relationships remain unchanged.

(b)Sour crude oil basket consists of the following crudes: ANS, Argus Sour Crude Index, Maya and Western Canadian Select. We assume approximately 50 percent of the crude processed at our refineries in 2022 will be sour crude.

(c)Sweet crude oil basket consists of the following crudes: Bakken, Brent, MEH, WTI-Cushing and WTI-Midland. We assume approximately 50 percent of the crude processed at our refineries in 2022 will be sweet crude.

(d)This is consumption-based exposure for our Refining & Marketing segment and does not include the sales exposure for our Midstream segment.

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In addition to the market changes indicated by the crack spreads, the sour differential and the sweet differential, our Refining & Marketing margin is impacted by factors such as:

the selling prices realized for refined products;
the types of crude oil and other charge and blendstocks processed;
our refinery yields;
the cost of products purchased for resale;
the impact of commodity derivative instruments used to hedge price risk;
the potential impact of LCM adjustments to inventories in periods of declining prices; and
the potential impact of LIFO liquidation charges due to draw-downs from historic inventory levels.

Refining & Marketing segment adjusted EBITDA is also affected by changes in refinery operating costs in addition to committed distribution costs. Changes in operating costs are primarily driven by the cost of energy used by our refineries, including purchased natural gas, and the level of maintenance costs. Distribution costs primarily include long-term agreements with MPLX, which as discussed below include minimum commitments to MPLX, and will negatively impact income from operations in periods when throughput or sales are lower or refineries are idled.

We have various long-term, fee-based commercial agreements with MPLX. Under these agreements, MPLX, which is reported in our Midstream segment, provides transportation, storage, distribution and marketing services to our Refining & Marketing segment. Certain of these agreements include commitments for minimum quarterly throughput and distribution volumes of crude oil and refined products and minimum storage volumes of crude oil, refined products and other products. Certain other agreements include commitments to pay for 100 percent of available capacity for certain marine transportation and refining logistics assets.

Midstream

Our Midstream segment transports, stores, distributes and markets crude oil and refined products, principally for our Refining & Marketing segment. The profitability of our pipeline transportation operations primarily depends on tariff rates and the volumes shipped through the pipelines. The profitability of our marine operations primarily depends on the quantity and availability of our vessels and barges. The profitability of our light product terminal operations primarily depends on the throughput volumes at these terminals. The profitability of our fuels distribution services primarily depends on the sales volumes of certain refined products. The profitability of our refining logistics operations depends on the quantity and availability of our refining logistics assets. A majority of the crude oil and refined product shipments on our pipelines and marine vessels and the refined product throughput at our terminals serve our Refining & Marketing segment and our refining logistics assets and fuels distribution services are used solely by our Refining & Marketing segment. As discussed above in the Refining & Marketing section, MPLX, which is reported in our Midstream segment, has various long-term, fee-based commercial agreements related to services provided to our Refining & Marketing segment. Under these agreements, MPLX has received various commitments of minimum throughput, storage and distribution volumes as well as commitments to pay for all available capacity of certain assets. The volume of crude oil that we transport is directly affected by the supply of, and refiner demand for, crude oil in the markets served directly by our crude oil pipelines, terminals and marine operations. Key factors in this supply and demand balance are the production levels of crude oil by producers in various regions or fields, the availability and cost of alternative modes of transportation, the volumes of crude oil processed at refineries and refinery and transportation system maintenance levels. The volume of refined products that we transport, store, distribute and market is directly affected by the production levels of, and user demand for, refined products in the markets served by our refined product pipelines and marine operations. In most of our markets, demand for gasoline and distillate peaks during the summer driving season, which extends from May through September of each year, and declines during the fall and winter months. As with crude oil, other transportation alternatives and system maintenance levels influence refined product movements.

Our Midstream segment also gathers and processes natural gas and NGLs. NGL and natural gas prices are volatile and are impacted by changes in fundamental supply and demand, as well as market uncertainty, availability of NGL transportation and fractionation capacity and a variety of additional factors that are beyond our control. Our Midstream segment profitability is affected by prevailing commodity prices primarily as a result of processing or conditioning at our own or third‑party processing plants, purchasing and selling or gathering and transporting volumes of natural gas at index‑related prices and the cost of third‑party transportation and fractionation services. To the extent that commodity prices influence the level of natural gas drilling by our producer customers, such prices also affect profitability.

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RESULTS OF OPERATIONS

The following discussion includes comments and analysis relating to our results of operations. This discussion should be read in conjunction with Item 1. Financial Statements and is intended to provide investors with a reasonable basis for assessing our historical operations, but should not serve as the only criteria for predicting our future performance.

Consolidated Results of Operations


	Three Months Ended June 30,						Six Months Ended June 30,
(In millions)	2022		2021		Variance		2022		2021		Variance
Revenues and other income:
Sales and other operating revenues(a)	$	53,795	$	29,615	$	24,180	$	91,853	$	52,326	$	39,527
Income from equity method investments	147		93		54		289		184		105
Net gain (loss) on disposal of assets	39		—		39		21		3		18
Other income	257		119		138		459		196		263
Total revenues and other income	54,238		29,827		24,411		92,622		52,709		39,913
Costs and expenses:
Cost of revenues (excludes items below)	44,207		27,177		17,030		79,275		48,261		31,014
Depreciation and amortization	819		871		(52)		1,624		1,715		(91)
Selling, general and administrative expenses	694		625		69		1,297		1,200		97
Other taxes	190		189		1		382		351		31
Total costs and expenses	45,910		28,862		17,048		82,578		51,527		31,051
Income from continuing operations	8,328		965		7,363		10,044		1,182		8,862
Net interest and other financial costs	312		372		(60)		574		725		(151)
Income from continuing operations before income taxes	8,016		593		7,423		9,470		457		9,013
Provision for income taxes on continuing operations	1,799		5		1,794		2,081		39		2,042
Income from continuing operations, net of tax	6,217		588		5,629		7,389		418		6,971
Income from discontinued operations, net of tax	—		8,214		(8,214)		—		8,448		(8,448)
Net income	6,217		8,802		(2,585)		7,389		8,866		(1,477)
Less net income attributable to:
Redeemable noncontrolling interest	21		21		—		42		41		1
Noncontrolling interests	323		269		54		629		555		74
Net income attributable to MPC	$	5,873	$	8,512	$	(2,639)	$	6,718	$	8,270	$	(1,552)

(a)In accordance with discontinued operations accounting, Speedway sales to retail customers and net results are reflected in Income from discontinued operations, net of tax and Refining & Marketing intercompany sales to Speedway are presented as third party sales through the close of the sale on May 14, 2021.

Second Quarter 2022 Compared to Second Quarter 2021

Net income attributable to MPC decreased $2.64 billion in the second quarter of 2022 compared to the second quarter of 2021 primarily due to income from discontinued operations in the second quarter of 2021, due to the sale of the Speedway business on May 14, 2021, and increased operating costs, partially offset by increases in refined product sales prices and volumes in the second quarter of 2022.

Revenues and other income increased $24.41 billion primarily due to:

increased sales and other operating revenues of $24.18 billion primarily due to increased Refining & Marketing segment average refined product sales prices of $1.55 per gallon and increased refined product sales volumes of 126 mbpd;
increased income from equity method investments of $54 million mainly due to increased income from midstream equity affiliates; and
increased other income of $138 million primarily due to higher income on RIN sales.

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Costs and expenses increased $17.05 billion primarily due to

increased cost of revenues of $17.03 billion mainly due to higher crude oil costs and finished product purchases;
decreased depreciation and amortization of $52 million primarily due to asset impairments and assets that completed their depreciation life cycle in 2021; and
increased selling, general and administrative expenses of $69 million primarily due to increased expenses for credit card processing fees, insurance and contract services during the quarter.

Net interest and other financial costs decreased $60 million largely due to pension and other postretirement non-service costs, decreased interest expense due to lower MPC borrowings and increased interest income, partially offset by increased interest expense due to higher MPLX borrowings.

We recorded a combined federal, state and foreign income tax provision of $1.80 billion for the three months ended June 30, 2022, which was higher than the tax computed at the U.S. statutory rate primarily due to state taxes offset by net income attributable to noncontrolling interests. We recorded a combined federal, state and foreign income tax provision of $5 million for the three months ended June 30, 2021, which was lower than the tax computed at the U.S. statutory rate primarily due to income attributable to noncontrolling interests.

Net income attributable to noncontrolling interests increased $54 million primarily due to an increase in MPLX’s net income in the second quarter of 2022.

Six Months Ended June 30, 2022 Compared to Six Months Ended June 30, 2021

Net income attributable to MPC decreased $1.55 billion in the first six months of 2022 compared to the first six months of 2021 primarily due to income from discontinued operations in the first six months of 2021, due to the sale of the Speedway business on May 14, 2021, and increased operating costs, partially offset by increases in average refined product sales prices and volumes in the first six months of 2022.

Revenues and other income increased $39.91 billion primarily due to:

increased sales and other operating revenues of $39.53 billion primarily due to increased average refined product sales prices of $1.28 per gallon and increased refined product sales volumes of 176 mbpd;
increased income from equity method investments of $105 million mainly due to increased income from midstream equity affiliates; and
increased other income of $263 million primarily due to higher income on RIN sales.

Costs and expenses increased $31.05 billion primarily due to:

increased cost of revenues of $31.01 billion primarily due to higher crude oil costs and finished product purchases;
decreased depreciation and amortization of $91 million mainly due to asset impairments and assets that completed their depreciation life cycle in 2021; and
increased selling, general and administrative expenses of $97 million primarily due to increased expenses for credit card processing fees, contract services and insurance in the first six months of 2022.

Net interest and other financial costs decreased $151 million largely due to pension and other postretirement non-service costs, decreased interest expense due to lower MPC borrowings and increased interest income, partially offset by increased interest expense due to higher MPLX borrowings.

We recorded a combined federal, state and foreign income tax expense of $2.08 billion for the six months ended June 30, 2022, which was higher than the tax computed at the U.S. statutory rate primarily due to state taxes offset by net income attributable to noncontrolling interests. We recorded a combined federal, state and foreign income tax provision of $39 million for the six months ended June 30, 2021, which was lower than the tax computed at the U.S. statutory rate primarily due to income attributable to noncontrolling interests.

Net income attributable to noncontrolling interests increased $74 million primarily due to an increase in MPLX’s net income in the first six months of 2022.

Segment Results

We classify our business in the following reportable segments: Refining & Marketing and Midstream. Segment adjusted EBITDA represents adjusted EBITDA attributable to the reportable segments. Amounts included in net income and excluded from segment adjusted EBITDA include: (i) depreciation and amortization; (ii) provision for income taxes; (iii) net interest and other financial costs; (iv) noncontrolling interests; (v) turnaround expenses and (vi) other adjustments as deemed necessary. These items are either: (i) believed to be non-recurring in nature; (ii) not believed to be allocable or controlled by the segment; or (iii) are not tied to the operational performance of the segment.

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Refining & Marketing

The following includes key financial and operating data for the second quarter of 2022 compared to the second quarter of 2021 and the six months ended June 30, 2022 compared to the six months ended June 30, 2021.

(a)Includes intersegment sales to Midstream and sales destined for export.

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	Three Months Ended June 30,				Six Months Ended June 30,
	2022		2021		2022		2021
Refining & Marketing Operating Statistics
Net refinery throughput (mbpd)	3,069		2,854		2,952		2,710
Refining & Marketing margin per barrel(a)(b)	$	37.54	$	12.45	26.93		11.37
Less:
Refining operating costs per barrel, excluding storm impacts(c)	5.19		4.59		5.20		4.86
Distribution costs per barrel	4.76		5.04		4.77		5.11
Other income per barrel(d)	(0.20)		(0.08)		(0.14)		(0.18)
Refining & Marketing adjusted EBITDA per barrel	$	27.79	$	2.90	$	17.10	$	1.58
Less:
Storm impacts on refining operating cost per barrel(e)	—		—		—		0.06
Refining planned turnaround costs per barrel	0.54		0.24		0.56		0.35
Depreciation and amortization per barrel	1.70		1.80		1.75		1.93
Refining & Marketing segment income (loss) per barrel	$	25.55	$	0.86	$	14.79	$	(0.76)
Fees paid to MPLX per barrel included in distribution costs above	$	3.30	$	3.33	$	3.38	$	3.49

(a)Sales revenue less cost of refinery inputs and purchased products, divided by net refinery throughput.

(b)See “Non-GAAP Measures” section for reconciliation and further information regarding this non-GAAP measure.

(c)Includes refining operating costs and major maintenance costs. Excludes planned turnaround and depreciation and amortization expense.

(d)Includes income (loss) from equity method investments, net gain (loss) on disposal of assets and other income.

(e)Storms in the first quarter of 2021 resulted in higher costs, including maintenance and repairs.

The following information presents certain benchmark prices in our marketing areas and market indicators that we believe are helpful in understanding the results of our Refining & Marketing segment. The benchmark crack spreads below do not reflect the market cost of RINs necessary to meet EPA renewable volume obligations for attributable products under the Renewable Fuel Standard.


	Three Months Ended June 30,				Six Months Ended June 30,
	2022		2021		2022		2021
Benchmark Spot Prices (dollars per gallon)
Chicago CBOB unleaded regular gasoline	$	3.55	$	2.07	$	3.07	$	1.86
Chicago ULSD	3.97		2.04		3.41		1.89
USGC CBOB unleaded regular gasoline	3.41		1.99		3.05		1.84
USGC ULSD	3.99		1.95		3.49		1.82
LA CARBOB	3.91		2.22		3.47		2.03
LA CARB diesel	4.07		1.99		3.56		1.89

Market Indicators (dollars per barrel)
WTI	$	108.52	$	66.17	$	101.77	$	62.22
MEH	109.96		66.90		103.36		63.26
ANS	112.54		68.51		104.43		64.85
Crack Spreads:
Mid-Continent WTI 3-2-1	$	38.96	$	12.30	$	26.05	10.10
USGC MEH 3-2-1	33.67		7.96		24.31		7.32
West Coast ANS 3-2-1	46.30		13.42		36.38		12.05
Blended 3-2-1(a)	38.31		10.79		27.42		9.38

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	Three Months Ended June 30,				Six Months Ended June 30,
	2022		2021		2022		2021
Crude Oil Differentials:
Sweet	$	0.35	$	(0.27)	$	0.23	$	(0.64)
Sour	(5.03)		(3.09)		(4.95)		(3.10)

(a) Blended 3-2-1 Mid-Continent/USGC/West Coast crack spread is 40/40/20 percent in 2022 and 2021.

Second Quarter 2022 Compared to Second Quarter 2021

Refining & Marketing segment revenues increased $23.76 billion primarily due to increased average refined product sales prices of $1.55 per gallon and increased refined product sales volumes of 126 mbpd.

Net refinery throughputs increased 215 mbpd during the second quarter of 2022, primarily due to continuing recovery in demand for our products across all our regions.

Refining & Marketing segment adjusted EBITDA increased $7.01 billion primarily due to higher per barrel margins and higher throughput, partially offset by increased refining operating costs, excluding depreciation and amortization, and distribution costs.

Refining & Marketing margin was $37.54 per barrel for the second quarter of 2022 compared to $12.45 per barrel for the second quarter of 2021. Refining & Marketing margin is affected by our performance against the market indicators shown earlier, which use spot market values and an estimated mix of crude purchases and product sales. Based on the market indicators and our crude oil throughput, we estimate a net positive impact of approximately $8 billion on Refining & Marketing margin for the second quarter of 2022 compared to the second quarter of 2021, primarily due to wider crack spreads. Our reported Refining & Marketing margin differs from market indicators due to the mix of crudes purchased and their costs, the effect of market structure on our crude oil acquisition prices, the effect of RIN prices on the crack spread, and other items like refinery yields, other feedstock variances and fuel margin from sales to direct dealers. These factors had an estimated net negative effect of approximately $500 million on Refining & Marketing segment income in the second quarter of 2022 compared to the second quarter of 2021.

For the three months ended June 30, 2022, refining operating costs, excluding depreciation and amortization and storm impacts, increased $255 million, or $0.60 per barrel, compared to the three months ended June 30, 2021 primarily due to an increase in energy costs largely as a result of higher natural gas prices.

Distribution costs, excluding depreciation and amortization, increased $19 million and include fees paid to MPLX of $922 million and $866 million for the second quarter of 2022 and 2021, respectively. On a per barrel basis, distribution costs, excluding depreciation and amortization, decreased $0.28 per barrel due to higher throughput.

Refining planned turnaround costs increased $90 million, or $0.30 per barrel, due to the scope and timing of turnaround activity.

Depreciation and amortization decreased $0.10 per barrel primarily due to higher throughput.

Six Months Ended June 30, 2022 Compared to Six Months Ended June 30, 2021

Refining & Marketing segment revenues increased $38.90 billion primarily due to increased average refined product sales prices of $1.28 per gallon and higher refined product sales volumes, which increased 176 mbpd.

Net refinery throughputs increased 242 mbpd in the first six months of 2022, primarily due to continuing recovery in demand for our products across all our regions.

Refining & Marketing segment adjusted EBITDA increased $8.36 billion primarily driven by higher per barrel margins and higher throughput, partially offset by increased refining operating costs, excluding depreciation and amortization, and distribution costs.

Refining & Marketing margin was $26.93 per barrel for the first six months of 2022 compared to $11.37 per barrel for the first six months of 2021. Refining & Marketing margin is affected by the market indicators shown earlier, which use spot market values and an estimated mix of crude purchases and product sales. Based on the market indicators and our crude oil throughput, we estimate a net positive impact of approximately $10 billion on Refining & Marketing margin for the first six months of 2022 compared to the first six months of 2021, primarily due to wider crack spreads. Our reported Refining & Marketing margin differs from market indicators due to the mix of crudes purchased and their costs, market structure on our crude oil acquisition prices, RIN prices on the crack spread, and other items like refinery yields, other feedstock variances and fuel margin from sales to direct dealers. These factors had an estimated net negative effect of approximately $1 billion on Refining & Marketing segment income in the first six months of 2022 compared to the first six months of 2021.

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For the six months ended June 30, 2022, refining operating costs, excluding depreciation and amortization and storm impacts, increased $397 million, or $0.34 per barrel, compared to the six months ended June 30, 2021 primarily due to an increase in energy costs largely as a result of higher natural gas and electricity prices.

Distribution costs, excluding depreciation and amortization, increased $43 million for the first six months of 2022 and include fees paid to MPLX of $1.80 billion and $1.71 billion for the first six months of 2022 and 2021, respectively. On a per barrel basis, distribution costs, excluding depreciation and amortization, decreased $0.34 per barrel due to higher throughput.

Refining planned turnaround costs increased $123 million, or $0.21 per barrel, due to the scope and timing of turnaround activity.

Depreciation and amortization decreased $0.18 per barrel primarily due to higher throughput.

We purchase RINs to satisfy a portion of our RFS2 compliance. Our expenses associated with purchased RINs were $1.07 billion and $633 million in the first six months of 2022 and 2021, respectively, and are included in Refining & Marketing margin. The increase in the first six months of 2022, was primarily due to higher weighted average RIN costs and an increase in RIN obligations.

Supplemental Refining & Marketing Statistics


	Three Months Ended June 30,		Six Months Ended June 30,
	2022	2021	2022	2021
Refining & Marketing Operating Statistics
Crude oil capacity utilization percent(a)	100	94	96	89
Refinery throughputs (mbpd):
Crude oil refined	2,896	2,713	2,761	2,548
Other charge and blendstocks	173	141	191	162
Net refinery throughput	3,069	2,854	2,952	2,710
Sour crude oil throughput percent	48	48	47	48
Sweet crude oil throughput percent	52	52	53	52
Refined product yields (mbpd):
Gasoline	1,536	1,436	1,510	1,380
Distillates	1,123	984	1,051	933
Propane	74	54	71	50
NGLs and petrochemicals	224	301	193	262
Heavy fuel oil	54	27	70	31
Asphalt	91	91	89	94
Total	3,102	2,893	2,984	2,750
Refined product export sales volumes (mbpd)(b)	326	231	298	237

(a)Based on calendar-day capacity, which is an annual average that includes down time for planned maintenance and other normal operating activities.

(b)Represents fully loaded export cargoes for each time period. These sales volumes are included in the total sales volume amounts.

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Midstream

(a)On owned common-carrier pipelines, excluding equity method investments.

(b)Includes amounts related to MPLX operated unconsolidated equity method investments on a 100 percent basis.

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	Three Months Ended June 30,				Six Months Ended June 30,
Benchmark Prices	2022		2021		2022		2021
Natural Gas NYMEX HH ($ per MMBtu)	$	7.50	$	2.97	$	6.04	$	2.85
C2 + NGL Pricing ($ per gallon)(a)	$	1.18	$	0.75	$	1.16	$	0.74

(a)C2 + NGL pricing based on Mont Belvieu prices assuming an NGL barrel of approximately 35 percent ethane, 35 percent propane, 6 percent iso-butane, 12 percent normal butane and 12 percent natural gasoline.

Second Quarter 2022 Compared to Second Quarter 2021

Midstream segment revenue and segment adjusted EBITDA increased $494 million and $148 million, respectively. Results for the quarter benefited from higher revenue, primarily due to higher prices and volumes, increased revenue from terminal activities and higher income from equity affiliates, partially offset by higher operating expenses.

Six Months Ended June 30, 2022 Compared to Six Months Ended June 30, 2021

Midstream segment revenue and segment adjusted EBITDA increased $758 million and $229 million, respectively. Results benefited from higher revenue, primarily due to higher prices and volumes, increased pipeline throughputs, increased revenue from terminal activities and increased income from equity affiliates, partially offset by higher operating expenses in the first six months of 2022.

Corporate


Key Financial Information (in millions)	Three Months Ended June 30,				Six Months Ended June 30,
	2022		2021		2022	2021
Corporate(a)	$	(170)	$	(180)	(321)	(337)

(a)Corporate costs consist 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 costs include depreciation and amortization of $14 million and $74 million for the second quarter of 2022 and 2021, respectively, and $27 million and $106 million for the six months ended June 30, 2022 and 2021, respectively.

Items not Allocated to Segments


Key Financial Information (in millions)	Three Months Ended June 30,				Six Months Ended June 30,
	2022		2021		2022		2021
Items not allocated to segments:
Renewable volume obligation requirements	$	238	$	—	$	238	$	—
Litigation	—		—		27		—
Impairment and idling expenses	—		(13)		—		(13)
Total items not allocated to segments:	$	238	$	(13)	$	265	$	(13)

Second Quarter 2022 Compared to Second Quarter 2021

Items not allocated to segments included a $238 million benefit related to retroactive changes in renewable volume obligation requirements published by the EPA for 2020 and 2021 in the second quarter of 2022.

Six Months Ended June 30, 2022 Compared to Six Months Ended June 30, 2021

In the first six months of 2022, total items not allocated to segments primarily included a $238 million benefit related to retroactive changes in renewable volume obligation requirements published by the EPA for 2020 and 2021.

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Non-GAAP Financial Measure

Management uses a financial measure to evaluate our operating performance that is calculated and presented on the basis of a methodology other than in accordance with GAAP. We believe this non-GAAP financial measure is useful to investors and analysts to assess our ongoing financial performance because, when reconciled to its most comparable GAAP financial measure, it provides improved comparability between periods through the exclusion of certain items that we believe are not indicative of our core operating performance and that may obscure our underlying business results and trends. This measure should not be considered a substitute for, or superior to, measures of financial performance prepared in accordance with GAAP, and our calculation thereof may not be comparable to similarly titled measures reported by other companies. The non-GAAP financial measure we use is as follows:

Refining & Marketing Margin

Refining & Marketing margin is defined as sales revenue less the cost of refinery inputs and purchased products and excludes other items as reflected in the table below.

Reconciliation of Refining & Marketing income (loss) from operations to Refining & Marketing gross margin and Refining & Marketing margin


	Three Months Ended June 30,				Six Months Ended June 30,
(in millions)	2022		2021		2022		2021
Refining & Marketing income (loss) from operations	$	7,134	$	224	$	7,902	$	(374)
Plus (Less):
Selling, general and administrative expenses	574		499		1,082		955
Income from equity method investments	(6)		(14)		(18)		(19)
Net gain on disposal of assets	(37)		—		(37)		(3)
Other income	(234)		(89)		(415)		(143)
Refining & Marketing gross margin	7,431		620		8,514		416
Plus (Less):
Operating expenses (excluding depreciation and amortization)	2,554		2,305		4,943		4,580
Depreciation and amortization	475		466		936		944
Gross margin excluded from and other income included in Refining & Marketing margin(a)	71		(116)		85		(295)
Other taxes included in Refining & Marketing margin	(49)		(42)		(92)		(66)
Refining & Marketing margin	$	10,482	$	3,233	$	14,386	$	5,579

(a)Reflects the gross margin, excluding depreciation and amortization, of other related operations included in the Refining & Marketing segment and processing of credit card transactions on behalf of certain of our marketing customers, net of other income.

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LIQUIDITY AND CAPITAL RESOURCES

Cash Flows

Our consolidated cash and cash equivalents balance for continuing operations was approximately $9.08 billion at June 30, 2022 compared to $5.29 billion at December 31, 2021. Net cash provided by (used in) operating activities, investing activities and financing activities are presented in the following table.


	Six Months Ended June 30,
(In millions)	2022		2021
Net cash provided by (used in):
Operating activities - continuing operations	$	9,509	$	1,801
Operating activities - discontinued operations	(44)		33
Total operating activities	9,465		1,834
Investing activities - continuing operations	620		(5,832)
Investing activities - discontinued operations	—		21,235
Total investing activities	620		15,403
Financing activities	(6,296)		(5,954)
Total increase (decrease) in cash	$	3,789	$	11,283

Operating Activities

Continuing Operations

Net cash provided by continuing operations increased $7.71 billion in the first six months of 2022 compared to the first six months of 2021. The change in net cash provided by continuing operations is primarily due to an increase in operating results and a favorable change in working capital of $1.03 billion when comparing the change in working capital in both periods.

For the first six months of 2022, changes in working capital, excluding changes in short-term debt, were a net $678 million source of cash primarily due to the effects of increasing energy commodity prices and volumes at the end of the period on working capital. Accounts payable increased primarily due to increases in crude prices and volumes. Current receivables increased primarily due to increases in refined product and crude volumes and prices. Inventories increased primarily due to increases in crude and refined product inventories.

For the first six months of 2021, changes in working capital, excluding changes in short-term debt, were a net $347 million use of cash primarily due to the effects of increasing energy commodity prices at the end of the period on working capital. Accounts payable increased primarily due to increases in crude prices and volumes. Current receivables increased primarily due to higher crude and refined product prices and volumes. Inventories increased due to increases in refined product and crude inventories.

Discontinued Operations

Net cash used in discontinued operations reflects the results of the Speedway business. The change from 2021 is due to the sale of Speedway on May 14, 2021. The $44 million use of cash in the first six months of 2022 represents payment of state income tax liabilities.

Investing Activities

Continuing Operations

Net cash provided by continuing operations was $620 million in the first six months of 2022 compared to net cash used by continuing operations of $5.83 billion in the first six months of 2021.

The change in net cash provided by continuing operations is primarily due to maturities and sales of short-term investments of $2.81 billion and $1.08 billion, respectively, partially offset by purchases of short-term investments of $2.58 billion. The cash provided by maturities and sales of short-term investments was primarily used to fund our return of capital initiatives announced as part of the Speedway sale.
Additions to property, plant and equipment increased $387 million primarily due to increased capital expenditures in our Refining & Marketing and Midstream segments. See the “Capital Requirements” section for additional information on our capital investment plan.
Cash used for acquisitions of $74 million include acquisitions in our Refining & Marketing and Midstream segments.
Cash used for net investments increased $50 million mainly due to increased MPLX contributions to equity method investments, which included the $60 million contribution to its Bakken Pipeline joint venture to fund its share of a debt repayment by the joint venture.

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The consolidated statements of cash flows exclude changes to the consolidated balance sheets that did not affect cash. A reconciliation of additions to property, plant and equipment per the consolidated statements of cash flows to reported total capital expenditures and investments follows.


	Six Months Ended June 30,
(In millions)	2022		2021
Additions to property, plant and equipment per the consolidated statements of cash flows	$	993	$	606


Decrease in capital accruals	(3)		(19)
Total capital expenditures	990		587
Investments in equity method investees (excludes acquisitions)	160		113
Total capital expenditures and investments	$	1,150	$	700

Discontinued Operations

The change in net cash used in discontinued operations is primarily due to the sale of Speedway on May 14, 2021.

Financing Activities

Financing activities were a net $6.30 billion use of cash in the first six months of 2022 compared to a net $5.95 billion use of cash in the first six months of 2021.

MPC had net borrowings of $1.02 billion under its commercial paper program in the first six months of 2021.
Long-term debt borrowings and repayments were a net $1.13 billion source of cash in the first six months of 2022 compared to a net $2.28 billion use of cash in the first six months of 2021. During the first six months of 2022, MPLX issued $1.5 billion of senior notes and had net payments of $300 million under its revolving credit facility.

During the first six months of 2021, MPC repaid $1.3 billion of senior notes, borrowed and repaid $3.65 billion under its revolving credit facility and borrowed and repaid $4.65 billion under its trade receivables facility. MPLX redeemed $750 million of senior notes and had net payments of $175 million under its revolving credit facility.

Cash used in common stock repurchases, including fees and expenses, totaled $6.18 billion in the first six months of 2022 compared to $984 million in the first six months of 2021. See the “Capital Requirements” section for further discussion of our stock repurchases.
Cash used in dividend payments decreased $117 million primarily due to a reduction of shares resulting from share repurchases in 2022 and 2021.
Cash used in repurchases of noncontrolling interests was $135 million in the first six months of 2022 compared to $310 million in the first six months of 2021 related to the repurchase of MPLX common units. See Note 5 to the unaudited consolidated financial statements for further discussion of MPLX.

Derivative Instruments

See Item 3. Quantitative and Qualitative Disclosures about Market Risk for a discussion of derivative instruments and associated market risk.

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Capital Resources

MPC, Excluding MPLX

We control MPLX through our ownership of the general partner, however, 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 and LOCAP, in which MPLX holds an interest. Therefore, in the following table, we present the liquidity of MPC, excluding MPLX. MPLX liquidity is discussed in the following section.

Our liquidity, excluding MPLX, totaled $18.02 billion at June 30, 2022 consisting of:


	June 30, 2022
(In millions)	Total Capacity		Outstanding Borrowings		Outstanding Letters of Credit		Available Capacity
Bank revolving credit facility	$	5,000	$	—	$	1	$	4,999
Trade receivables facility(a)	100		—		100		—
Total	$	5,100	$	—	$	101	$	4,999
Cash and cash equivalents and short-term investments(b)							13,021
Total liquidity							$	18,020

(a)The committed borrowing and letter of credit issuance capacity of the trade receivables securitization facility is $100 million. In addition, the facility allows for the issuance of letters of credit in excess of the committed capacity at the discretion of the issuing banks. As of June 30, 2022, letters of credit in the total amount of $358 million were issued and outstanding under the facility to secure contracts awarded by the Department of Energy to purchase crude oil from the Strategic Petroleum Reserve. In July 2022, the trade receivables securitization facility was amended to, among other things, extend its term until September 29, 2023.

(b)Excludes cash and cash equivalents of MPLX of $298 million.

Because of the alternatives available to us, including internally generated cash flow and access to capital markets and a commercial paper program, we believe that our short-term and long-term liquidity is adequate to fund not only our current operations, but also our near-term and long-term funding requirements, including capital spending programs, the repurchase of shares of our common stock, dividend payments, defined benefit plan contributions, repayment of debt maturities and other amounts that may ultimately be paid in connection with contingencies.

We have a commercial paper program that allows us to have a maximum of $2.0 billion in commercial paper outstanding. We do not intend to have outstanding commercial paper borrowings in excess of available capacity under our bank revolving credit facility. At June 30, 2022, we had no borrowings outstanding under the commercial paper program.

On July 7, 2022, MPC entered into a new five-year revolving credit agreement (the “New MPC Credit Agreement”) to replace its previous $5.0 billion credit facility that was scheduled to expire in October 2023. The New MPC Credit Agreement, among other things, provides for a $5.0 billion unsecured revolving credit facility that matures in July 2027. The financial covenants of the New MPC Credit Agreement are substantially the same as those contained in the previous credit agreement.

The New MPC Credit Agreement and trade receivables facility contain representations and warranties, affirmative and negative covenants and events of default that we consider usual and customary for agreements of these types. The financial covenant included in the New MPC Credit Agreement requires us to maintain, as of the last day of each fiscal quarter, a ratio of Consolidated Net Debt to Total Capitalization (as defined in the New MPC Credit Agreement) of no greater than 0.65 to 1.00.

As of June 30, 2022, we were in compliance with the covenants required by the agreements governing MPC’s previous revolving credit facility and MPC’s trade receivables facility, including the financial covenant with a ratio of Consolidated Net Debt to Total Capitalization of approximately 0.00 to 1.00.

Our intention is to maintain an investment-grade credit profile. As of June 30, 2022, the credit ratings on our senior unsecured debt are as follows.


Company	Rating Agency	Rating
MPC	Moody’s	Baa2 (stable outlook)
	Standard & Poor’s	BBB (stable outlook)
	Fitch	BBB (stable outlook)

The ratings reflect the respective views of the rating agencies. Although it is our intention to maintain a credit profile that supports an investment grade rating, there is no assurance that these ratings will continue for any given period of time. The ratings may be revised or withdrawn entirely by the rating agencies if, in their respective judgments, circumstances so warrant.

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The New MPC Credit Agreement does not contain credit rating triggers that would result in the acceleration of interest, principal or other payments in the event that our credit ratings are downgraded. However, any downgrades of our senior unsecured debt could increase the applicable interest rates, yields and other fees payable thereunder and may limit our flexibility to obtain financing in the future, including to refinance existing indebtedness. In addition, a downgrade of our senior unsecured debt rating to below investment-grade levels could, under certain circumstances, impact our ability to purchase crude oil on an unsecured basis and could result in us having to post letters of credit under existing transportation services or other agreements.

See Note 18 to the unaudited consolidated financial statements for further discussion of our debt.

MPLX

MPLX’s liquidity totaled $5.30 billion at June 30, 2022 consisting of:


	June 30, 2022
(In millions)	Total Capacity		Outstanding Borrowings		Outstanding Letters of Credit		Available Capacity
MPLX LP - bank revolving credit facility(a)	$	3,500	$	—	$	—	$	3,500
MPC intercompany loan agreement	1,500		—		—		1,500
Total	$	5,000	$	—	$	—	$	5,000
Cash and cash equivalents							298
Total liquidity							$	5,298

(a) The total capacity under this facility decreased to $2.0 billion upon the execution of the New MPLX Credit Agreement on July 7, 2022, as described below.

On March 14, 2022, MPLX issued $1.5 billion aggregate principal amount of 4.950% senior notes due March 2052 in an underwritten public offering. The net proceeds were used to repay amounts outstanding under the MPC intercompany loan agreement and the MPLX credit agreement.

On July 7, 2022, MPLX entered into a new five-year revolving credit agreement (the “New MPLX Credit Agreement”) to replace its previous $3.5 billion credit facility that was scheduled to expire in July 2024. The New MPLX Credit Agreement, among other things, provides for a $2.0 billion unsecured revolving credit facility that matures in July 2027. The New MPLX Credit Agreement also provides for letter of credit issuing capacity under the facility of $150 million. Letters of credit issuing capacity is included in, not in addition to, the $2.0 billion borrowing capacity of the New MPLX Credit Agreement. The financial covenants of the New MPLX Credit Agreement are substantially the same as those contained in the previous credit agreement.

The New 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. The financial covenant 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 during the six-month period following certain acquisitions). Consolidated EBITDA is subject to adjustments for certain acquisitions completed and capital projects undertaken during the relevant period. Other covenants restrict MPLX and/or certain of its subsidiaries from incurring debt, creating liens on assets and entering into transactions with affiliates.

As of June 30, 2022, MPLX was in compliance with the covenants required by the agreement governing MPLX’s previous revolving credit facility, including the financial covenant with a ratio of Consolidated Total Debt to Consolidated EBITDA of 3.54 to 1.0.

Our intention is to maintain an investment-grade credit profile for MPLX. As of June 30, 2022, the credit ratings on MPLX’s senior unsecured debt are as follows.


Company	Rating Agency	Rating
MPLX	Moody’s	Baa2 (stable outlook)
	Standard & Poor’s	BBB (stable outlook)
	Fitch	BBB (stable outlook)

The ratings reflect the respective views of the rating agencies. Although it is our intention to maintain a credit profile that supports an investment grade rating for MPLX, there is no assurance that these ratings will continue for any given period of time. The ratings may be revised or withdrawn entirely by the rating agencies if, in their respective judgments, circumstances so warrant.

The agreements governing MPLX’s debt obligations do not contain credit rating triggers that would result in the acceleration of interest, principal or other payments in the event that MPLX credit ratings are downgraded. However, any downgrades of MPLX senior unsecured debt to below investment grade ratings could increase the applicable interest rates, yields and other fees

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payable under such agreements. In addition, a downgrade of MPLX senior unsecured debt ratings to below investment-grade levels may limit MPLX’s ability to obtain future financing, including to refinance existing indebtedness.

See Note 18 to the unaudited consolidated financial statements for further discussion of MPLX’s debt.

Capital Requirements

Capital Investment Plan

MPC's capital investment plan for 2022 totals approximately $1.7 billion for capital projects and investments, excluding capitalized interest, potential acquisitions and MPLX’s capital investment plan. MPC’s capital investment plan includes all of the planned capital spending for Refining & Marketing and Corporate, as well as a portion of the planned capital investments for Midstream. The remainder of the planned capital spending for Midstream reflects the capital investment plan for MPLX, which totals $900 million. We continuously evaluate our capital investment plan and make changes as conditions warrant.

Capital expenditures and investments for MPC and MPLX are summarized below.


	Six Months Ended June 30,
(In millions)	2022		2021
Capital expenditures and investments:(a)
MPC continuing operations, excluding MPLX
Refining & Marketing	$	559	$	310
Midstream - Other	5		36
Corporate and Other(b)	38		44
Total MPC continuing operations, excluding MPLX	$	602	$	390

MPC discontinued operations - Speedway	$	—	$	177

Midstream - MPLX	$	500	$	280

(a) Capital expenditures include changes in capital accruals.

(b) Excludes capitalized interest of $48 million and $30 million for the six months ended June 30, 2022 and 2021, respectively.

Capital expenditures and investments in affiliates during the six months ended June 30, 2022, were primarily for Refining & Marketing and Midstream projects. Major Refining & Marketing projects include renewables projects, primarily the Martinez facility conversion, the South Texas Asset Repositioning project and projects that we expect will help us reduce future operating costs.

Major Midstream projects were primarily for MPLX gas gathering, processing and de-ethanization projects in the Bakken, Marcellus, and Southwest regions and the expansion of MPLX crude gathering systems in the Permian and Bakken regions. Spending also included the $60 million contribution to MPLX’s Bakken Pipeline joint venture to fund MPLX’s share of a debt repayment by the joint venture.

Share Repurchases

During the six months ended June 30, 2022, MPC repurchased approximately 71 million shares of its common stock at an average cost per share of $85.31 and paid $6.18 billion of cash.

From January 1, 2012 through June 30, 2022, our board of directors has approved $30.05 billion in total share repurchase authorizations and we have repurchased a total of $25.88 billion of our common stock. As of June 30, 2022, MPC has $4.17 billion remaining under its share repurchase authorizations.

On August 2, 2022, we announced our board of directors approved an incremental $5.0 billion share repurchase authorization. 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 discontinued at any time.

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MPLX Unit Repurchases

On August 2, 2022, MPLX announced its board of directors approved an incremental $1.0 billion unit repurchase authorization. This unit repurchase authorization has no expiration date.

MPLX 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 discontinued at any time.

Cash Commitments

Contractual Obligations

As of June 30, 2022, our purchase commitments primarily consist of obligations to purchase and transport crude oil used in our refining operations. During the first six months of 2022, there were no material changes to our contractual obligations outside the ordinary course of business since December 31, 2021.

Our other contractual obligations primarily consist of long-term debt and pension and post-retirement obligations, for which additional information is included in Notes 18 and 22, respectively, to the unaudited consolidated financial statements, and financing and operating leases.

Other Cash Commitments

On July 27, 2022, our board of directors approved a dividend of $0.58 per share on common stock. The dividend is payable September 12, 2022, to shareholders of record as of the close of business on August 17, 2022.

We may, from time to time, repurchase our senior notes in the open market, in tender offers, in privately-negotiated transactions or otherwise in such volumes, at such prices and upon such other terms as we deem appropriate.

ENVIRONMENTAL MATTERS AND COMPLIANCE COST****S

We have incurred and may continue to incur substantial capital, operating and maintenance, and remediation expenditures as a result of environmental laws and regulations. If these expenditures, as with all costs, are not ultimately reflected in the prices of our products and services, our operating results will be adversely affected. We believe that substantially all of our competitors must comply with similar environmental laws and regulations. However, the specific impact on each competitor may vary depending on a number of factors, including the age and location of its operating facilities, marketing areas, production processes and whether it is also engaged in the petrochemical business or the marine transportation of crude oil and refined products.

As previously disclosed in our Annual Report on Form 10-K for the year ended December 31, 2021, actual expenditures may vary as the number and scope of environmental projects are revised as a result of improved technology or changes in regulatory requirements. During the first quarter the Company identified an additional project to be included in 2022 environmental capital expenditures, bringing the total expenditures anticipated for 2022 to $85 million. This amount is reflected in the Company’s 2022 capital plan.

There have been no additional significant changes to our environmental matters and compliance costs during the six months ended June 30, 2022.

CRITICAL ACCOUNTING ESTIMATES

As of June 30, 2022, there have been no significant changes to our critical accounting estimates since our Annual Report on Form 10-K for the year ended December 31, 2021.

ACCOUNTING STANDARDS NOT YET ADOPTED

We have not identified any recent accounting pronouncements that are expected to have a material impact on our financial condition, results of operations or cash flows upon adoption.

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