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)	2022		2021		2022		2021
Revenues and other income:
Sales and other operating revenues	$	45,787	$	32,321	$	137,640	$	84,647
Income from equity method investments	180		122		469		306
Net gain on disposal of assets	1,051		—		1,072		3
Other income	219		170		678		366
Total revenues and other income	47,237		32,613		139,859		85,322

Costs and expenses:
Cost of revenues (excludes items below)	38,821		29,563		118,096		77,824
Depreciation and amortization	794		836		2,418		2,551
Selling, general and administrative expenses	712		681		2,009		1,881
Other taxes	224		193		606		544
Total costs and expenses	40,551		31,273		123,129		82,800

Income from continuing operations	6,686		1,340		16,730		2,522
Net interest and other financial costs	240		328		814		1,053
Income from continuing operations before income taxes	6,446		1,012		15,916		1,469
Provision (benefit) for income taxes on continuing operations	1,426		(18)		3,507		21
Income from continuing operations, net of tax	5,020		1,030		12,409		1,448
Income from discontinued operations, net of tax	—		—		—		8,448
Net income	5,020		1,030		12,409		9,896
Less net income attributable to:
Redeemable noncontrolling interest	23		38		65		79
Noncontrolling interests	520		298		1,149		853
Net income attributable to MPC	$	4,477	$	694	$	11,195	$	8,964

Per share data (See Note 8)
Basic:
Continuing operations	$	9.12	$	1.10	$	21.18	$	0.80
Discontinued operations	—		—		—		13.10
Net income per share	$	9.12	$	1.10	$	21.18	$	13.90

Weighted average shares outstanding	491		633		528		645

Diluted:
Continuing operations	$	9.06	$	1.09	$	21.04	$	0.79
Discontinued operations	—		—		—		13.02
Net income per share	$	9.06	$	1.09	$	21.04	$	13.81

Weighted average shares outstanding	494		637		532		649

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)	2022		2021		2022		2021
Net income	$	5,020	$	1,030	$	12,409	$	9,896
Defined benefit plans:
Actuarial changes, net of tax of $(34), $1, $(23) and $65, respectively	(104)		4		(71)		196
Prior service, net of tax of $(5), $(3), $(13) and $(8), respectively	(13)		(8)		(38)		(24)
Other, net of tax of $1, $—, $(1) and $(2), respectively	3		—		(3)		(4)
Other comprehensive income (loss)	(114)		(4)		(112)		168
Comprehensive income	4,906		1,026		12,297		10,064
Less comprehensive income attributable to:
Redeemable noncontrolling interest	23		38		65		79
Noncontrolling interests	520		298		1,149		853
Comprehensive income attributable to MPC	$	4,363	$	690	$	11,083	$	9,132

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, 2022		December 31, 2021
Assets
Cash and cash equivalents	$	7,376	$	5,291
Short-term investments	3,759		5,548
Receivables, less allowance for doubtful accounts of $39 and $40, respectively	13,458		11,034
Inventories	9,834		8,055
Other current assets	858		568

Total current assets	35,285		30,496
Equity method investments	6,493		5,409
Property, plant and equipment, net	35,384		37,440
Goodwill	8,244		8,256
Right of use assets	1,200		1,372
Other noncurrent assets	3,088		2,400
Total assets	$	89,694	$	85,373

Liabilities
Accounts payable	$	16,682	$	13,700
Payroll and benefits payable	773		911
Accrued taxes	1,042		1,231
Debt due within one year	1,064		571
Operating lease liabilities	355		438
Other current liabilities	1,398		1,047

Total current liabilities	21,314		17,898
Long-term debt	25,638		24,968
Deferred income taxes	5,610		5,638
Defined benefit postretirement plan obligations	1,305		1,015
Long-term operating lease liabilities	839		927
Deferred credits and other liabilities	1,213		1,346
Total liabilities	55,919		51,792

Commitments and contingencies (see Note 24)
Redeemable noncontrolling interest	967		965

Equity
Preferred stock, no shares issued and outstanding (par value $0.01 per share, 30 million shares authorized)	—		—
Common stock:
Issued – 989 million and 984 million shares (par value $0.01 per share, 2 billion shares authorized)	10		10
Held in treasury, at cost – 520 million and 405 million shares	(30,065)		(19,904)
Additional paid-in capital	33,363		33,262
Retained earnings	23,175		12,905
Accumulated other comprehensive loss	(179)		(67)
Total MPC stockholders’ equity	26,304		26,206
Noncontrolling interests	6,504		6,410
Total equity	32,808		32,616
Total liabilities, redeemable noncontrolling interest and equity	$	89,694	$	85,373

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)	2022		2021
Operating activities:
Net income	$	12,409	$	9,896
Adjustments to reconcile net income to net cash provided by operating activities:
Amortization of deferred financing costs and debt discount	45		59
Depreciation and amortization	2,418		2,551
Pension and other postretirement benefits, net	135		(535)
Deferred income taxes	38		(175)
Net gain on disposal of assets	(1,072)		(3)
Income from equity method investments	(469)		(306)
Distributions from equity method investments	544		466
Income from discontinued operations	—		(8,448)
Changes in income tax receivable	(142)		535
Changes in the fair value of derivative instruments	(148)		(11)
Changes in:
Current receivables	(2,371)		(3,765)
Inventories	(1,795)		(1,206)
Current accounts payable and accrued liabilities	3,045		4,670
Right of use assets and operating lease liabilities, net	1		5
All other, net	(615)		(187)
Cash provided by operating activities - continuing operations	12,023		3,546
Cash used in operating activities - discontinued operations	(44)		(2,860)
Net cash provided by operating activities	11,979		686

Investing activities:
Additions to property, plant and equipment	(1,694)		(983)
Acquisitions, net of cash acquired	(74)		—
Disposal of assets	79		98
Investments – acquisitions and contributions	(215)		(150)
– redemptions, repayments and return of capital	511		39
Purchases of short-term investments	(3,735)		(9,457)
Sales of short-term investments	1,140		455
Maturities of short-term investments	4,396		1,652
All other, net	713		381
Cash provided by (used in) investing activities - continuing operations	1,121		(7,965)
Cash provided by investing activities - discontinued operations	—		21,314
Net cash provided by investing activities	1,121		13,349

Financing activities:
Commercial paper – issued	—		7,414
– repayments	—		(8,437)
Long-term debt – borrowings	3,379		10,975
– repayments	(2,258)		(14,274)
Debt issuance costs	(39)		—
Issuance of common stock	184		71
Common stock repurchased	(10,085)		(1,912)

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	Nine Months Ended September 30,
(Millions of dollars)	2022		2021
Dividends paid	(928)		(1,130)
Distributions to noncontrolling interests	(908)		(923)

Repurchases of noncontrolling interests	(315)		(465)
All other, net	(41)		(35)
Net cash used in financing activities	(11,011)		(8,716)

Net change in cash, cash equivalents and restricted cash	$	2,089	$	5,319

Cash, cash equivalents and restricted cash balances:(a)
Continuing operations - beginning of period	$	5,294	$	416
Discontinued operations - beginning of period	—		140
Less: Discontinued operations - end of period	—		—
Continuing operations - end of period	$	7,383	$	5,875

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

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

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Marathon Petroleum Corporation

Consolidated Statements of Equity and Redeemable Noncontrolling Interest (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, 2021	984	$	10	(405)	$	(19,904)	$	33,262	$	12,905	$	(67)	$	6,410	$	32,616	$	965
Net income	—	—		—	—		—		845		—		306		1,151		21
Dividends declared on common stock ($0.58 per share)	—	—		—	—		—		(330)		—		—		(330)		—
Distributions to noncontrolling interests	—	—		—	—		—		—		—		(290)		(290)		(21)
Other comprehensive loss	—	—		—	—		—		—		(7)		—		(7)		—
Shares repurchased	—	—		(37)	(2,807)		—		—		—		—		(2,807)		—
Stock-based compensation	3	—		—	—		90		—		—		(1)		89		—
Equity transactions of MPLX	—	—		—	—		(25)		—		—		(63)		(88)		—

Balance as of March 31, 2022	987	$	10	(442)	$	(22,711)	$	33,327	$	13,420	$	(74)	$	6,362	$	30,334	$	965
Net income	—	—		—	—		—		5,873		—		323		6,196		21
Dividends declared on common stock ($0.58 per share)	—	—		—	—		—		(310)		—		—		(310)		—
Distributions to noncontrolling interests	—	—		—	—		—		—		—		(267)		(267)		(21)
Other comprehensive income	—	—		—	—		—		—		9		—		9		—
Shares repurchased	—	—		(34)	(3,285)		—		—		—		—		(3,285)		—
Stock-based compensation	2	—		—	(4)		71		—		—		2		69		—
Equity transactions of MPLX	—	—		—	—		(20)		—		—		(22)		(42)		—

Balance as of June 30, 2022	989	$	10	(476)	$	(26,000)	$	33,378	$	18,983	$	(65)	$	6,398	$	32,704	$	965
Net income	—	—		—	—		—		4,477		—		520		4,997		23
Dividends declared on common stock ($0.58 per share)	—	—		—	—		—		(285)		—		—		(285)		—
Distributions to noncontrolling interests	—	—		—	—		—		—		—		(288)		(288)		(21)

Other comprehensive loss	—	—		—	—		—		—		(114)		—		(114)		—
Shares repurchased	—	—		(44)	(4,065)		—		—		—		—		(4,065)		—
Stock-based compensation	—	—		—	—		29		—		—		3		32		—
Equity transactions of MPLX	—	—		—	—		(44)		—		—		(129)		(173)		—

Balance as of September 30, 2022	989	$	10	(520)	$	(30,065)	$	33,363	$	23,175	$	(179)	$	6,504	$	32,808	$	967

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Marathon Petroleum Corporation

Consolidated Statements of Equity and Redeemable 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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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. See Note 5.

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. Certain information and disclosures derived from our audited annual financial statements, prepared in accordance with GAAP, have been condensed or omitted from these interim 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, 2021. The results of operations for the three and nine months ended September 30, 2022 are not necessarily indicative of the results to be expected for the full year.

2**.** Accounting Standards

Recently Adopted

ASU 2021-10, Government Assistance (Topic 832): Disclosures by Business Entities about Government Assistance

In November 2021, the FASB issued guidance requiring disclosures for certain types of government assistance that have been accounted for by analogy to grant or contribution models. Disclosures will include information about the type of transactions, accounting and the impact on financial statements. We prospectively adopted this standard in the first quarter of 2022. The adoption of this standard did not have a material impact on our financial statements or disclosures.

3. Short-Term Investments

Investments Components

The components of investments were as follows:


	September 30, 2022
(Millions of dollars)	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	$	2,860	$	—	$	(3)	$	2,857	$	604	$	2,253
Certificates of deposit and time deposits	Level 2	3,542		—		(2)		3,540		2,200		1,340
U.S. government securities	Level 1	566		—		—		566		416		150
Corporate notes and bonds	Level 2	16		—		—		16		—		16
Total available-for-sale debt securities		$	6,984	$	—	$	(5)	$	6,979	$	3,220	$	3,759
Cash								4,156		4,156		—
Total								$	11,135	$	7,376	$	3,759

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	December 31, 2021
(Millions of dollars)	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	$	4,905	$	—	$	(1)	$	4,904	$	868	$	4,036
Certificates of deposit and time deposits	Level 2	2,024		—		—		2,024		750		1,274
U.S. government securities	Level 1	28		—		—		28		—		28
Corporate notes and bonds	Level 2	271		—		—		271		61		210
Total available-for-sale debt securities		$	7,228	$	—	$	(1)	$	7,227	$	1,679	$	5,548
Cash								3,612		3,612		—
Total								$	10,839	$	5,291	$	5,548

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, which coincides with the sale of Speedway, to September 30, 2022 were not material. Realized gains/losses were not material. All of our available-for-sale debt securities held as of September 30, 2022 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 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		Nine Months Ended
(Millions of dollars)	September 30, 2021
Revenues, other income and net gain on disposal of assets:
Revenues and other income	$	—	$	8,420
Net gain on disposal of assets	—		11,682
Total revenues, other income and net gain on disposal of assets	—		20,102

Costs and expenses:
Cost of revenues (excludes items below)	—		7,654
Depreciation and amortization	—		3
Selling, general and administrative expenses	—		121
Other taxes	—		75
Total costs and expenses	—		7,853

Income from operations	—		12,249
Net interest and other financial costs	—		6
Income before income taxes	—		12,243
Provision for income taxes	—		3,795
Income from discontinued operations, net of tax	$	—	$	8,448

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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, 2022, we owned approximately 64 percent of the outstanding MPLX common units.

Unit Repurchase Program

On November 2, 2020, MPLX announced the board authorization of a unit repurchase program for the repurchase of up to $1.0 billion of MPLX’s outstanding common units held by the public. On August 2, 2022, MPLX announced its board of directors approved an incremental $1.0 billion unit repurchase authorization. The unit repurchase authorizations have no expiration date. MPLX may utilize various methods to effect the repurchases, which could include open market repurchases, negotiated block transactions, accelerated unit repurchases, tender offers or open market solicitations for units, some of which may be effected through Rule 10b5-1 plans. The timing of repurchases will depend upon several factors, including market and business conditions, and repurchases may be discontinued at any time.

Total unit repurchases were as follows for the respective periods:


	Three Months Ended September 30,				Nine Months Ended September 30,
(In millions, except per share data)	2022		2021		2022		2021
Number of common units repurchased	6		6		10		18
Cash paid for common units repurchased	$	180	$	155	$	315	$	465
Average cost per unit	$	31.65	$	28.41	$	31.98	$	26.79

As of September 30, 2022, MPLX had approximately $1.0 billion remaining under its unit repurchase authorizations, which reflects the repurchase of 532,326 common units for $16 million that were transacted in the third quarter of 2022 and settled in the fourth quarter of 2022.

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:


	Three Months Ended September 30,				Nine Months Ended September 30,
(Millions of dollars)	2022		2021		2022		2021
Decrease due to change in ownership	$	(67)	$	(44)	$	(117)	$	(120)
Tax impact	23		30		28		68
Decrease in MPC's additional paid-in capital, net of tax	$	(44)	$	(14)	$	(89)	$	(52)

6**.** 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

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decisions that most significantly impact MPLX. We therefore consolidate MPLX and record a noncontrolling interest for the interest owned by the public. We also record a redeemable noncontrolling interest related to MPLX’s Series A preferred units.

The creditors of MPLX do not have recourse to MPC’s general credit through guarantees or other financial arrangements, except as noted. MPC has effectively guaranteed certain indebtedness of LOOP LLC (“LOOP”) and LOCAP LLC (“LOCAP”), in which MPLX holds an interest. See Note 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.


(Millions of dollars)	September 30, 2022		December 31, 2021
Assets
Cash and cash equivalents	$	121	$	13
Receivables, less allowance for doubtful accounts	950		660
Inventories	151		142
Other current assets	43		55
Equity method investments	4,108		3,981
Property, plant and equipment, net	18,910		20,042
Goodwill	7,645		7,657
Right of use assets	288		268
Other noncurrent assets	1,689		891

Liabilities
Accounts payable	$	744	$	671
Payroll and benefits payable	4		6
Accrued taxes	102		75
Debt due within one year	982		499
Operating lease liabilities	44		59
Other current liabilities	308		304
Long-term debt	18,797		18,072
Deferred income taxes	14		10
Long-term operating lease liabilities	241		205
Deferred credits and other liabilities	306		559

7**.** Related Party Transactions

Transactions with related parties were as follows:


	Three Months Ended September 30,				Nine Months Ended September 30,
(Millions of dollars)	2022		2021		2022		2021
Sales to related parties	$	16	$	13	$	56	$	67
Purchases from related parties	315		251		894		673

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.

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8**.** Earnings Per Share

We compute basic earnings per share by dividing net income 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 per share using the two-class method. Diluted income per share assumes exercise of certain stock-based compensation awards, provided the effect is not anti-dilutive.


	Three Months Ended September 30,				Nine Months Ended September 30,
(In millions, except per share data)	2022		2021		2022		2021
Income from continuing operations, net of tax	$	5,020	$	1,030	$	12,409	$	1,448
Less: Net income attributable to noncontrolling interest	543		336		1,214		932
Net income allocated to participating securities	2		—		6		1
Income from continuing operations available to common stockholders	4,475		694		11,189		515
Income from discontinued operations, net of tax	—		—		—		8,448
Income available to common stockholders	$	4,475	$	694	$	11,189	$	8,963

Weighted average common shares outstanding:
Basic	491		633		528		645
Effect of dilutive securities	3		4		4		4
Diluted	494		637		532		649

Income available to common stockholders per share:
Basic:
Continuing operations	$	9.12	$	1.10	$	21.18	$	0.80
Discontinued operations	—		—		—		13.10
Net income per share	$	9.12	$	1.10	$	21.18	$	13.90

Diluted:
Continuing operations	$	9.06	$	1.09	$	21.04	$	0.79
Discontinued operations	—		—		—		13.02
Net income per share	$	9.06	$	1.09	$	21.04	$	13.81

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)	2022	2021	2022	2021
Shares issuable under stock-based compensation plans	—	3	—	3

9. Equity

On August 2, 2022, we announced our board of directors approved an incremental $5.0 billion share repurchase authorization bringing total share repurchase authorizations announced in 2022 to $10.0 billion. The authorizations have 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)	2022		2021		2022		2021
Number of shares repurchased	44		16		115		32
Cash paid for shares repurchased	$	3,908	$	928	$	10,085	$	1,912
Average cost per share	$	92.54	$	58.78	$	88.07	$	60.91

As of September 30, 2022, MPC had $5.11 billion remaining under its share repurchase authorizations, which reflects the repurchase of 1,577,829 common shares for $157 million that were transacted in the third quarter of 2022 and settled in the fourth quarter of 2022.

10**.** 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, including renewable 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, including renewable diesel, 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.

During the first quarter of 2022, our chief operating decision maker (“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 income from continuing operations before income taxes and excluded from segment adjusted EBITDA include: (i) depreciation and amortization; (ii) net interest and other financial costs; (iii) turnaround expenses and (iv) 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. 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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	Three Months Ended September 30,				Nine Months Ended September 30,
(Millions of dollars)	2022		2021		2022		2021
Segment adjusted EBITDA for reportable segments
Refining & Marketing	$	5,496	$	1,195	$	14,630	$	1,969
Midstream	1,498		1,375		4,357		4,005
Total reportable segments	$	6,994	$	2,570	$	18,987	$	5,974

Reconciliation of segment adjusted EBITDA for reportable segments to income from continuing operations before income taxes
Total reportable segments	$	6,994	$	2,570	$	18,987	$	5,974
Corporate	(160)		(154)		(454)		(428)
Refining planned turnaround costs	(384)		(205)		(680)		(378)
Storm impacts	—		(23)		—		(70)
LIFO inventory charge	(28)		—		(28)		—
Gain on sale of assets(a)	1,058		—		1,058		—
Renewable volume obligation requirements	—		—		238		—
Litigation	—		—		27		—
Impairments(b)	—		—		—		(13)
Idling expenses	—		(12)		—		(12)
Depreciation and amortization(c)	(794)		(836)		(2,418)		(2,551)
Net interest and other financial costs	(240)		(328)		(814)		(1,053)
Income from continuing operations before income taxes	$	6,446	$	1,012	$	15,916	$	1,469

(a) Includes the non-cash gain related to the contribution of assets by MPC on the formation of the Martinez Renewable joint venture and the non-cash gain on lease reclassification. See Note 14 and 23 for additional information.

(b) Impairment of equity method investments.

(c) The three and nine months ended September 30, 2021 includes $13 million and $56 million, respectively, of impairments of long lived assets.


	Three Months Ended September 30,				Nine Months Ended September 30,
(Millions of dollars)	2022		2021		2022		2021
Sales and other operating revenues
Refining & Marketing
Revenues from external customers(a)	$	44,355	$	31,109	$	133,447	$	81,324
Intersegment revenues	13		37		96		95
Refining & Marketing segment revenues	44,368		31,146		133,543		81,419

Midstream
Revenues from external customers(a)	1,432		1,212		4,193		3,323
Intersegment revenues	1,326		1,242		3,881		3,689
Midstream segment revenues	2,758		2,454		8,074		7,012

Total segment revenues	47,126		33,600		141,617		88,431
Less: intersegment revenues	1,339		1,279		3,977		3,784
Consolidated sales and other operating revenues(a)	$	45,787	$	32,321	$	137,640	$	84,647

(a)Includes related party sales. See Note 7 for additional information.

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	Three Months Ended September 30,				Nine Months Ended September 30,
(Millions of dollars)	2022		2021		2022		2021
Income (loss) from equity method investments
Refining & Marketing	$	21	$	8	$	39	$	27
Midstream	159		114		430		292
Corporate(a)	—		—		—		(13)
Consolidated income from equity method investments	$	180	$	122	$	469	$	306

Depreciation and amortization
Refining & Marketing	$	459	$	462	$	1,395	$	1,406
Midstream	322		329		983		994
Corporate	13		45		40		151
Consolidated depreciation and amortization	$	794	$	836	$	2,418	$	2,551

Capital expenditures
Refining & Marketing	$	445	$	228	$	1,004	$	538
Midstream	267		190		772		506
Segment capital expenditures and investments	712		418		1,776		1,044
Less investments in equity method investees	55		37		215		150
Plus:
Corporate	49		28		87		72
Capitalized interest	28		18		76		48
Consolidated capital expenditures(b)	$	734	$	427	$	1,724	$	1,014

(a)Impairment of equity method investment.

(b)Includes changes in capital expenditure accruals. See Note 20 for a reconciliation of total capital expenditures to additions to property, plant and equipment for the nine months ended September 30, 2022 and 2021 as reported in the consolidated statements of cash flows.

11**.** 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,
(Millions of dollars)	2022		2021		2022		2021
Interest income	$	(59)	$	(5)	$	(82)	$	(8)
Interest expense	332		331		966		1,019
Interest capitalized	(29)		(18)		(77)		(54)
Pension and other postretirement non-service costs(a)	(7)		10		4		66
Other financial costs	3		10		3		30
Net interest and other financial costs	$	240	$	328	$	814	$	1,053

(a)See Note 22.

12. Income Taxes

We recorded a combined federal, state and foreign income tax provision of $1.426 billion and $3.507 billion for the three and nine months ended September 30, 2022, respectively, which was higher than the tax computed at the U.S. statutory rate primarily due to state taxes offset by permanent tax benefits related to net income attributable to noncontrolling interests.

We recorded a combined federal, state and foreign income tax (benefit) provision of $(18) million and $21 million for the three and nine months ended September 30, 2021, respectively, 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.

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13. Inventories


(Millions of dollars)	September 30, 2022		December 31, 2021
Crude oil	$	3,565	$	2,639
Refined products	5,188		4,460
Materials and supplies	1,081		956
Total	$	9,834	$	8,055

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.

The cost of inventories of crude oil and refined products is determined primarily under the LIFO method. During the three and nine month periods ended September 30, 2022, we recorded a $28 million charge to reflect a LIFO increment of our crude oil and refined products inventories. The cost of inventory in these LIFO layers was valued based on the purchase price determined in the first quarter of 2022, which is lower than current crude cost, resulting in the charge to cost of revenues.

14. Equity Method Investments

Martinez Renewables LLC

On September 21, 2022, MPC closed on the formation of the Martinez Renewable joint venture. MPC contributed property, plant and equipment, inventory, and working capital with an estimated fair value of $1.471 billion and Neste contributed $728 million in cash. MPC recorded a gain of $549 million resulting from the difference between the carrying value and fair value of the contributed property, plant and equipment and inventory. Subsequent to the closing, the joint venture paid a special distribution to MPC of $500 million, which is reflected as a return of capital in MPC’s consolidated statements of cash flows. After the special distribution, MPC’s investment value in the entity is approximately $971 million.

MPC determined that, as of the closing date, Martinez Renewables LLC is a VIE because the entity does not have sufficient equity to complete the modification of the plant to produce renewable fuels without additional financial support from its owners. We are not the primary beneficiary of this VIE because we do not have the ability to control the activities that significantly influence the economic outcomes of the entity and, therefore, apply the equity method of accounting with the respect to our investment in the entity.

Watson Cogeneration Company

On June 1, 2022, MPC purchased the remaining 49 percent interest in Watson Cogeneration Company from NRG Energy, Inc. for approximately $59 million. This entity is now consolidated and included in our consolidated results. It was previously accounted for as an equity method investment.

The excess of the $62 million fair value over the $25 million book value of our 51 percent ownership interest in Watson Cogeneration Company resulted in a $37 million non-cash gain, which is included in the net gain on disposal of assets line of the accompanying consolidated statements of income.

15**.** Property, Plant and Equipment


	September 30, 2022						December 31, 2021
(Millions of dollars)	Gross PP&E		Accumulated Depreciation		Net PP&E		Gross PP&E		Accumulated Depreciation		Net PP&E
Refining & Marketing	$	31,571	$	16,345	$	15,226	$	31,089	$	14,876	$	16,213
Midstream	27,464		7,868		19,596		28,098		7,384		20,714
Corporate	1,539		977		562		1,446		933		513
Total	$	60,574	$	25,190	$	35,384	$	60,633	$	23,193	$	37,440

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16**.** 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, 2022 and December 31, 2021 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, 2022
	Fair Value Hierarchy
(Millions of dollars)	Level 1		Level 2		Level 3		Netting and Collateral(a)		Net Carrying Value on Balance Sheet(b)		Collateral Pledged Not Offset
Assets:
Commodity contracts	$	1,044	$	—	$	—	$	(931)	$	113	$	41
Liabilities:
Commodity contracts	$	931	$	—	$	—	$	(931)	$	—	$	—
Embedded derivatives in commodity contracts	—		—		46		—		46		—


	December 31, 2021
	Fair Value Hierarchy
(Millions of dollars)	Level 1		Level 2		Level 3		Netting and Collateral(a)		Net Carrying Value on Balance Sheet(b)		Collateral Pledged Not Offset
Assets:
Commodity contracts	$	270	$	1	$	—	$	(235)	$	36	$	34
Liabilities:
Commodity contracts	$	248	$	1	$	—	$	(249)	$	—	$	—
Embedded derivatives in commodity contracts	—		—		108		—		108		—

(a)Represents the impact of netting assets, liabilities and cash collateral when a legal right of offset exists. As of September 30, 2022, no cash collateral was netted with mark-to-market derivative liabilities. As of December 31, 2021, cash collateral of $14 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.

Level 3 instruments relate to an embedded derivative liability for a natural gas purchase commitment embedded in a keep‑whole processing agreement. The fair value calculation for these Level 3 instruments at September 30, 2022 used significant unobservable inputs including: (1) NGL prices interpolated and extrapolated due to inactive markets ranging from $0.51 to $1.56 per gallon with a weighted average of $0.75 per gallon and (2) the probability of renewal of 100 percent for the five-year term of the natural gas purchase commitment and 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.

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,
(Millions of dollars)	2022		2021		2022		2021
Beginning balance	$	92	$	102	$	108	$	63
Unrealized and realized (gain)/loss included in net income	(44)		7		(52)		52
Settlements of derivative instruments	(2)		(5)		(10)		(11)
Ending balance	$	46	$	104	$	46	$	104

The amount of total (gain)/loss for the period included in earnings attributable to the change in unrealized losses relating to liabilities still held at the end of period:	$	(42)	$	6	$	(50)	$	44

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Fair Values – Non-recurring

Non-recurring fair value measurements and disclosures relate primarily to sales-type leases discussed in Note 23 and the Martinez Renewables LLC equity method investment discussed in Note 14. The net investment in sales-type leases was recorded at the estimated fair value of the underlying leased assets at contract modification date. The leased assets were valued using a cost method valuation approach which utilizes Level 3 inputs. The fair value of the Martinez Renewables LLC equity method investment was primarily based on the cash consideration received from Neste for their 50 percent ownership.

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 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 $26.3 billion and $23.3 billion at September 30, 2022, respectively, and approximately $25.1 billion and $28.1 billion at December 31, 2021, respectively. These carrying and fair values of our debt exclude the unamortized issuance costs which are netted against our total debt.

17**.** Derivatives

For further information regarding the fair value measurement of derivative instruments, including any effect of master netting agreements or collateral, see Note 16. 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, 2022 and December 31, 2021 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.


(Millions of dollars)	September 30, 2022				December 31, 2021
Balance Sheet Location	Asset		Liability		Asset		Liability
Commodity derivatives
Other current assets	$	1,044	$	931	$	271	$	249
Other current liabilities(a)	—		7		—		15
Deferred credits and other liabilities(a)	—		39		—		93

(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, 2022.


	Percentage of contracts that expire next quarter		Position
(Units in thousands of barrels)		Long		Short
Exchange-traded(a)
Crude oil	77.6%		121,558		124,469
Refined products	87.0%		13,316		14,280
Blending products	80.9%		3,694		8,883
Soybean oil	92.8%		2,957		3,479

(a) Included in exchange-traded are spread contracts in thousands of barrels: Crude oil - 35,170 long and 31,175 short; Refined products - 778 long and 836 short. There are no spread contracts for blending products or soybean oil.

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


	Gain (Loss)
(Millions of dollars)	Three Months Ended September 30,				Nine Months Ended September 30,
Income Statement Location	2022		2021		2022		2021
Sales and other operating revenues	$	—	$	(19)	$	—	$	(34)
Cost of revenues	260		(121)		(65)		(354)
Other income	—		—		1		—
Total	$	260	$	(140)	$	(64)	$	(388)

18**.** Debt

Our outstanding borrowings at September 30, 2022 and December 31, 2021 consisted of the following:


(Millions of dollars)	September 30, 2022		December 31, 2021
Marathon Petroleum Corporation:

Senior notes	$	6,449	$	6,449
Notes payable	1		1
Finance lease obligations	543		589
Total	$	6,993	$	7,039

MPLX LP:
Bank revolving credit facility	—		300
Senior notes	20,100		18,600
Finance lease obligations	8		9
Total	$	20,108	$	18,909

Total debt	$	27,101	$	25,948
Unamortized debt issuance costs	(145)		(129)
Unamortized (discount) premium, net	(254)		(280)
Amounts due within one year	(1,064)		(571)
Total long-term debt due after one year	$	25,638	$	24,968

MPLX Senior Notes

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 under the previous MPLX credit agreement.

On August 11, 2022, MPLX issued $1.0 billion aggregate principal amount of 4.950% senior notes due September 2032 in an underwritten public offering. The net proceeds were used to redeem all of the $500 million aggregate principal amount of 3.500% senior notes due December 2022, $14 million of which was issued by Andeavor Logistics LP, and to redeem all of the $500 million aggregate principal amount of 3.375% senior notes due March 2023.

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Available Capacity under our Credit Facilities as of September 30, 2022


(Millions of dollars)	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	—	%	July 2027
MPC trade receivables securitization facility(a)	100		—		100		—		—		September 2023

MPLX
MPLX bank revolving credit facility	2,000		—		—		2,000		—	%	July 2027

(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 September 30, 2022, letters of credit in the total amount of $1.153 billion 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.

MPC Bank Revolving Credit Facility

On July 7, 2022, MPC entered into a new five-year revolving credit agreement (the “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 and letter of credit issuing capacity under the facility of up to $2.2 billion. Letters of credit issuing capacity is included in, not in addition to, the $5.0 billion borrowing capacity. The financial covenants of the MPC Credit Agreement are substantially the same as those contained in the previous credit agreement. Borrowings under the new MPC Credit Agreement bear interest, at MPC’s election, at either the Adjusted Term SOFR or the Alternate Base Rate, both as defined in the MPC Credit Agreement, plus an applicable margin.

MPLX Bank Revolving Credit Facility

On July 7, 2022, MPLX entered into a new five-year revolving credit agreement (the “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 and letter of credit issuing capacity under the facility of up to $150 million. Letters of credit issuing capacity is included in, not in addition to, the $2.0 billion borrowing capacity. The financial covenants of the MPLX Credit Agreement are substantially the same as those contained in the previous credit agreement. Borrowings under the new MPLX Credit Agreement bear interest, at MPLX’s election, at either the Adjusted Term SOFR or the Alternate Base Rate, both as defined in the MPLX Credit Agreement, plus an applicable margin.

19**.** 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,
(Millions of dollars)	2022		2021		2022		2021
Refining & Marketing:
Refined products	$	42,090	$	29,257	$	124,547	$	75,594
Crude oil	1,783		1,687		7,648		4,999
Services and other	482		165		1,252		731
Total revenues from external customers	44,355		31,109		133,447		81,324

Midstream:
Refined products	617		441		1,812		1,027
Services and other	815		771		2,381		2,296
Total revenues from external customers	1,432		1,212		4,193		3,323

Sales and other operating revenues	$	45,787	$	32,321	$	137,640	$	84,647

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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, 2022, 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, 2022 include matching buy/sell receivables of $5.92 billion.

20**.** Supplemental Cash Flow Information


	Nine Months Ended September 30,
(Millions of dollars)	2022		2021
Net cash provided by operating activities included:
Interest paid (net of amounts capitalized)	$	837	$	935
Net income taxes paid to (received from) taxing authorities	3,741		2,896
Non-cash investing and financing activities:
Contribution of assets(a)	818		—
Book value of equity method investment(b)	25		—

(a) Represents the book value of property, plant and equipment, inventory and working capital contributed by MPC to Martinez Renewables LLC. See Note 14 for additional information.

(b) Represents the book value of MPC’s equity method investment in Watson Cogeneration Company at June 1, 2022 prior to MPC buying out the remaining interest in Watson Cogeneration Company. See Note 14 for additional information.

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,
(Millions of dollars)	2022		2021
Additions to property, plant and equipment per the consolidated statements of cash flows	$	1,694	$	983
Increase in capital accruals	30		31
Total capital expenditures	$	1,724	$	1,014

21**.** Accumulated Other Comprehensive Loss

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


(Millions of dollars)	Pension Benefits		Other Benefits		Other		Total
Balance as of December 31, 2020	$	(338)	$	(181)	$	7	$	(512)
Other comprehensive gain (loss) before reclassifications, net of tax of $38	115		1		(4)		112
Amounts reclassified from accumulated other comprehensive loss:
Amortization of prior service cost (credit)(a)	(34)		2		—		(32)
Amortization of actuarial loss(a)	35		7		—		42
Settlement loss(a)	64		—		—		64
Other	—		—		(1)		(1)
Tax effect	(15)		(2)		—		(17)
Other comprehensive income (loss)	165		8		(5)		168
Balance as of September 30, 2021	$	(173)	$	(173)	$	2	$	(344)

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(Millions of dollars)	Pension Benefits		Other Benefits		Other		Total
Balance as of December 31, 2021	$	(117)	$	49	$	1	$	(67)
Other comprehensive gain (loss) before reclassifications, net of tax of $(44)	(131)		2		(3)		(132)
Amounts reclassified from accumulated other comprehensive loss:
Amortization of prior service credit(a)	(34)		(16)		—		(50)
Amortization of actuarial loss(a)	4		4		—		8
Settlement loss(a)	69		—		—		69

Tax effect	(10)		3		—		(7)
Other comprehensive loss	(102)		(7)		(3)		(112)
Balance as of September 30, 2022	$	(219)	$	42	$	(2)	$	(179)

(a)These accumulated other comprehensive loss components are included in the computation of net periodic benefit cost. See Note 22.

22**.** 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,
(Millions of dollars)	2022		2021		2022		2021
Pension Benefits
Service cost	$	48	$	73	$	181	$	221
Interest cost	25		23		72		69
Expected return on plan assets	(33)		(37)		(111)		(99)
Amortization of prior service credit	(11)		(11)		(34)		(34)
Amortization of actuarial (gain) loss	(3)		10		4		35
Settlement loss	13		15		69		64
Net periodic pension benefit cost	$	39	$	73	$	181	$	256

Other Benefits
Service cost	$	6	$	9	$	19	$	26
Interest cost	6		7		16		22
Amortization of prior service cost (credit)	(5)		1		(16)		2
Amortization of actuarial loss	1		2		4		7
Net periodic other benefit cost	$	8	$	19	$	23	$	57

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, 2022, we made contributions of $15 million to our funded pension plans. Benefit payments related to unfunded pension and other postretirement benefit plans were $12 million and $42 million, respectively, during the nine months ended September 30, 2022.

23**.** Leases

Lease revenues included in the consolidated statements of income were as follows:


	Three Months Ended September 30,				Nine Months Ended September 30,
(In millions)	2022		2021		2022		2021
Operating leases:
Rental income	$	75	$	88	$	268	$	286

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	Three Months Ended September 30,				Nine Months Ended September 30,
(In millions)	2022		2021		2022		2021
Sales-type leases:
Interest income (Sales-type rental revenue-fixed minimum)	19		—		19		—
Interest income (Revenue from variable lease payments)	9		—		9		—
Sales-type lease revenue	$	28	$	—	$	28	$	—

During the third quarter of 2022, the approved expansion of a gathering and compression system triggered the first assessment of a third party agreement under ASC 842. As a result of the assessment during the period, the lease was reclassified from an operating lease to a sales-type lease. Accordingly, the underlying property, plant and equipment of $745 million and associated deferred revenue of $277 million were derecognized. The present value of the future lease payments of $914 million and the unguaranteed residual value of $63 million were recorded as the net investment in the lease within receivables and other noncurrent assets. This resulted in a gain of approximately $509 million, which was recorded as a net gain on disposal of assets in the consolidated statements of income. These transactions were non-cash transactions.

Annual minimum undiscounted lease payment receipts under our sales-type leases were as follows as of September 30, 2022:


(In millions)
2022	$	53
2023	166
2024	156
2025	146
2026	136
2027 and thereafter	1,096
Total minimum future rentals	1,753
Less: present value discount	809
Lease receivables(a)	$	944

Current lease receivables(b)	$	106
Long-term lease receivables(c)	838
Unguaranteed residual asset	63
Total sales-type lease assets	$	1,007

(a) This amount does not include the unguaranteed residual assets.

(b) Presented in receivables, net on the consolidated balance sheets.

Capital expenditures related to assets subject to sales-type lease arrangements were $3 million for the nine months ended September 30, 2022. These amounts are reflected as additions to property, plant and equipment in the consolidated statements of cash flows.

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.

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At September 30, 2022 and December 31, 2021, accrued liabilities for remediation totaled $383 million and $401 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 at both September 30, 2022 and December 31, 2021.

Governmental and other entities in various states have filed climate-related lawsuits against numerous 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 remains uncertain, and neither the likelihood of an unfavorable outcome nor the ultimate liability, if any, can be determined.

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

Other Legal Proceedings

In 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 demanded the immediate cessation of pipeline operations and assessed trespass damages of approximately $187 million. On appeal, the Assistant Secretary - Indian Affairs vacated the BIA’s trespass order and remanded to the Regional Director for the BIA Great Plains Region to issue a new decision based on specified criteria. On December 15, 2020, the Regional Director of the BIA issued a new trespass notice to THPP, finding that THPP was in trespass and assessing trespass damages of approximately $4 million (including interest), which has been paid. The order also required that THPP 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. 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. 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 (together, the “U.S. Government Parties”) challenging the March order purporting to vacate all previous orders related to THPP’s alleged trespass. On February 8, 2022, the U.S. Government Parties filed their answer to THPP’s suit, asserting counterclaims for trespass and ejectment. The U.S. Government parties claim THPP is in continued trespass with respect to the pipeline and seek disgorgement of pipeline profits from June 1, 2013 to present, removal of the pipeline and remediation. We intend to vigorously defend ourselves against these counterclaims. Negotiations with the holders of the property rights at issue to settle this matter have been unsuccessful.

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, individually or collectively, 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, 2022.

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”),

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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 vacated the easement. The EIS has been delayed and the Army Corps currently expects to release a draft EIS in the first half of 2023.

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’ claims against the Dakota Access Pipeline. The litigation could be reopened or new litigation challenging the EIS, once completed, could be filed. The pipeline remains operational.

MPLX has entered into a Contingent Equity Contribution Agreement whereby it, 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, 2022, our maximum potential undiscounted payments under the Contingent Equity Contribution Agreement were approximately $170 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 used 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. During the first quarter of 2022, the guarantee for the debt associated with one of the four vessels became effective upon the expiration of the charter for the relevant vessel. As of September 30, 2022, our maximum potential undiscounted payments under this agreement for debt principal totaled $98 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, 2022, our maximum potential undiscounted payments under this arrangement was $101 million.

Other guarantees

We have entered into other guarantees with maximum potential undiscounted payments totaling $97 million as of September 30, 2022, 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

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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