filings.toolsItem 1. Financial Statements
107K characters. Original on sec.gov · Markdown
Item 1. Financial Statements
Marathon Petroleum Corporation
Consolidated Statements of Income (Unaudited)
| Three Months Ended March 31, | |||||||||||||||||||||||
| (In millions, except per share data) | 2024 | 2023 | |||||||||||||||||||||
| Revenues and other income: | |||||||||||||||||||||||
| Sales and other operating revenues | $ | 32,706 | $ | 34,864 | |||||||||||||||||||
| Income from equity method investments | 204 | 133 | |||||||||||||||||||||
| Net gain on disposal of assets | 20 | 3 | |||||||||||||||||||||
| Other income | 281 | 77 | |||||||||||||||||||||
| Total revenues and other income | 33,211 | 35,077 | |||||||||||||||||||||
| Costs and expenses: | |||||||||||||||||||||||
| Cost of revenues (excludes items below) | 29,593 | 29,294 | |||||||||||||||||||||
| Depreciation and amortization | 827 | 800 | |||||||||||||||||||||
| Selling, general and administrative expenses | 779 | 691 | |||||||||||||||||||||
| Other taxes | 228 | 231 | |||||||||||||||||||||
| Total costs and expenses | 31,427 | 31,016 | |||||||||||||||||||||
| Income from operations | 1,784 | 4,061 | |||||||||||||||||||||
| Net interest and other financial costs | 179 | 154 | |||||||||||||||||||||
| Income before income taxes | 1,605 | 3,907 | |||||||||||||||||||||
| Provision for income taxes | 293 | 823 | |||||||||||||||||||||
| Net income | 1,312 | 3,084 | |||||||||||||||||||||
| Less net income attributable to: | |||||||||||||||||||||||
| Redeemable noncontrolling interest | 10 | 23 | |||||||||||||||||||||
| Noncontrolling interests | 365 | 337 | |||||||||||||||||||||
| Net income attributable to MPC | $ | 937 | $ | 2,724 | |||||||||||||||||||
| Per share data (See Note 7) | |||||||||||||||||||||||
| Basic: | |||||||||||||||||||||||
| Net income attributable to MPC per share | $ | 2.59 | $ | 6.13 | |||||||||||||||||||
| Weighted average shares outstanding | 361 | 444 | |||||||||||||||||||||
| Diluted: | |||||||||||||||||||||||
| Net income attributable to MPC per share | $ | 2.58 | $ | 6.09 | |||||||||||||||||||
| Weighted average shares outstanding | 362 | 447 |
The accompanying notes are an integral part of these consolidated financial statements.
Marathon Petroleum Corporation
Consolidated Statements of Comprehensive Income (Unaudited)
| Three Months Ended March 31, | |||||||||||||||||||||||
| (Millions of dollars) | 2024 | 2023 | |||||||||||||||||||||
| Net income | $ | 1,312 | $ | 3,084 | |||||||||||||||||||
| Defined benefit plans: | |||||||||||||||||||||||
| Actuarial changes, net of tax of $1 and $1, respectively | 2 | 2 | |||||||||||||||||||||
| Prior service, net of tax of $(3) and $(4), respectively | (11) | (13) | |||||||||||||||||||||
| Other, net of tax of $(1) and $0, respectively | (3) | — | |||||||||||||||||||||
| Other comprehensive loss | (12) | (11) | |||||||||||||||||||||
| Comprehensive income | 1,300 | 3,073 | |||||||||||||||||||||
| Less comprehensive income attributable to: | |||||||||||||||||||||||
| Redeemable noncontrolling interest | 10 | 23 | |||||||||||||||||||||
| Noncontrolling interests | 365 | 337 | |||||||||||||||||||||
| Comprehensive income attributable to MPC | $ | 925 | $ | 2,713 |
The accompanying notes are an integral part of these consolidated financial statements.
Marathon Petroleum Corporation
Consolidated Balance Sheets (Unaudited)
| (Millions of dollars, except share data) | March 31, 2024 | December 31, 2023 | |||||||||
| Assets | |||||||||||
| Cash and cash equivalents | $ | 3,175 | $ | 5,443 | |||||||
| Short-term investments | 4,399 | 4,781 | |||||||||
| Receivables, less allowance for doubtful accounts of $50 and $44, respectively | 13,171 | 12,187 | |||||||||
| Inventories | 9,781 | 9,317 | |||||||||
| Other current assets | 734 | 403 | |||||||||
| Total current assets | 31,260 | 32,131 | |||||||||
| Equity method investments | 6,831 | 6,260 | |||||||||
| Property, plant and equipment, net | 34,963 | 35,112 | |||||||||
| Goodwill | 8,244 | 8,244 | |||||||||
| Right of use assets | 1,255 | 1,233 | |||||||||
| Other noncurrent assets | 2,975 | 3,007 | |||||||||
| Total assets | $ | 85,528 | $ | 85,987 | |||||||
| Liabilities | |||||||||||
| Accounts payable | $ | 15,471 | $ | 13,761 | |||||||
| Payroll and benefits payable | 1,180 | 1,115 | |||||||||
| Accrued taxes | 1,243 | 1,221 | |||||||||
| Debt due within one year | 2,457 | 1,954 | |||||||||
| Operating lease liabilities | 472 | 454 | |||||||||
| Other current liabilities | 964 | 1,645 | |||||||||
| Total current liabilities | 21,787 | 20,150 | |||||||||
| Long-term debt | 24,832 | 25,329 | |||||||||
| Deferred income taxes | 5,831 | 5,834 | |||||||||
| Defined benefit postretirement plan obligations | 1,182 | 1,102 | |||||||||
| Long-term operating lease liabilities | 770 | 764 | |||||||||
| Deferred credits and other liabilities | 1,355 | 1,409 | |||||||||
| Total liabilities | 55,757 | 54,588 | |||||||||
| Commitments and contingencies (see Note 23) | |||||||||||
| Redeemable noncontrolling interest | 561 | 895 | |||||||||
| Equity | |||||||||||
| Preferred stock, no shares issued and outstanding (par value $0.01 per share, 30 million shares authorized) | — | — | |||||||||
| Common stock: | |||||||||||
| Issued – 993 million and 993 million shares (par value $0.01 per share, 2 billion shares authorized) | 10 | 10 | |||||||||
| Held in treasury, at cost – 638 million and 625 million shares | (45,674) | (43,502) | |||||||||
| Additional paid-in capital | 33,530 | 33,465 | |||||||||
| Retained earnings | 35,199 | 34,562 | |||||||||
| Accumulated other comprehensive loss | (143) | (131) | |||||||||
| Total MPC stockholders’ equity | 22,922 | 24,404 | |||||||||
| Noncontrolling interests | 6,288 | 6,100 | |||||||||
| Total equity | 29,210 | 30,504 | |||||||||
| Total liabilities, redeemable noncontrolling interest and equity | $ | 85,528 | $ | 85,987 |
The accompanying notes are an integral part of these consolidated financial statements.
Marathon Petroleum Corporation
Consolidated Statements of Cash Flows (Unaudited)
| Three Months Ended March 31, | |||||||||||
| (Millions of dollars) | 2024 | 2023 | |||||||||
| Operating activities: | |||||||||||
| Net income | $ | 1,312 | $ | 3,084 | |||||||
| Adjustments to reconcile net income to net cash provided by operating activities: | |||||||||||
| Amortization of deferred financing costs and debt discount | (24) | (10) | |||||||||
| Depreciation and amortization | 827 | 800 | |||||||||
| Pension and other postretirement benefits, net | 33 | 14 | |||||||||
| Deferred income taxes | (35) | (5) | |||||||||
| Net gain on disposal of assets | (20) | (3) | |||||||||
| Income from equity method investments | (204) | (133) | |||||||||
| Distributions from equity method investments | 262 | 183 | |||||||||
| Changes in the fair value of derivative instruments | 37 | 95 | |||||||||
| Changes in: | |||||||||||
| Current receivables | (964) | 3,828 | |||||||||
| Inventories | (462) | (1,441) | |||||||||
| Current liabilities and other current assets | 999 | (2,105) | |||||||||
| Right of use assets and operating lease liabilities, net | 1 | (2) | |||||||||
| All other, net | (230) | (248) | |||||||||
| Net cash provided by operating activities | 1,532 | 4,057 | |||||||||
| Investing activities: | |||||||||||
| Additions to property, plant and equipment | (585) | (457) | |||||||||
| Acquisitions, net of cash acquired | (622) | — | |||||||||
| Disposal of assets | 1 | 3 | |||||||||
| Investments – acquisitions and contributions | (125) | (207) | |||||||||
| Purchases of short-term investments | (1,661) | (2,112) | |||||||||
| Sales of short-term investments | 193 | 631 | |||||||||
| Maturities of short-term investments | 1,885 | 1,162 | |||||||||
| All other, net | 90 | 164 | |||||||||
| Net cash used in investing activities | (824) | (816) | |||||||||
| Financing activities: | |||||||||||
| Long-term debt – borrowings | — | 1,589 | |||||||||
| – repayments | (17) | (1,021) | |||||||||
| Debt issuance costs | — | (15) | |||||||||
| Issuance of common stock | 11 | 17 | |||||||||
| Common stock repurchased | (2,218) | (3,180) | |||||||||
| Dividends paid | (299) | (337) | |||||||||
| Distributions to noncontrolling interests | (337) | (329) | |||||||||
| Repurchases of noncontrolling interests | (75) | — | |||||||||
| Redemption of noncontrolling interests - preferred units | — | (600) | |||||||||
| All other, net | (42) | (31) | |||||||||
| Net cash used in financing activities | (2,977) | (3,907) | |||||||||
| Net change in cash, cash equivalents and restricted cash | (2,269) | (666) | |||||||||
| Cash, cash equivalents and restricted cash at beginning of period(a) | 5,446 | 8,631 | |||||||||
| Cash, cash equivalents and restricted cash at end of period(a) | $ | 3,177 | $ | 7,965 | |||||||
(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.
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, 2023 | 993 | $ | 10 | (625) | $ | (43,502) | $ | 33,465 | $ | 34,562 | $ | (131) | $ | 6,100 | $ | 30,504 | $ | 895 | ||||||||||||||||||||||||||||||||||||||||||||
| Net income | — | — | — | — | — | 937 | — | 365 | 1,302 | 10 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Dividends declared on common stock ($0.825 per share) | — | — | — | — | — | (299) | — | — | (299) | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Distributions to noncontrolling interests | — | — | — | — | — | — | — | (314) | (314) | (23) | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Other comprehensive loss | — | — | — | — | — | — | (12) | — | (12) | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Shares repurchased | — | — | (13) | (2,172) | — | — | — | — | (2,172) | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Share-based compensation | — | — | — | — | (7) | (1) | — | (1) | (9) | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Equity transactions of MPLX | — | — | — | — | 72 | — | — | 138 | 210 | (321) | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Balance as of March 31, 2024 | 993 | $ | 10 | (638) | $ | (45,674) | $ | 33,530 | $ | 35,199 | $ | (143) | $ | 6,288 | $ | 29,210 | $ | 561 | ||||||||||||||||||||||||||||||||||||||||||||
| 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, 2022 | 990 | $ | 10 | (536) | $ | (31,841) | $ | 33,402 | $ | 26,142 | $ | 2 | $ | 6,404 | $ | 34,119 | $ | 968 | ||||||||||||||||||||||||||||||||||||||||||||
| Net income | — | — | — | — | — | 2,724 | — | 337 | 3,061 | 23 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Dividends declared on common stock ($0.75 per share) | — | — | — | — | — | (336) | — | — | (336) | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Distributions to noncontrolling interests | — | — | — | — | — | — | — | (306) | (306) | (23) | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Other comprehensive loss | — | — | — | — | — | — | (11) | — | (11) | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Shares repurchased | — | — | (25) | (3,238) | — | — | — | — | (3,238) | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Share-based compensation | 1 | — | — | — | 3 | — | — | — | 3 | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Equity transactions of MPLX | — | — | — | — | 3 | (2) | — | (598) | (597) | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Balance as of March 31, 2023 | 991 | $ | 10 | (561) | $ | (35,079) | $ | 33,408 | $ | 28,528 | $ | (9) | $ | 5,837 | $ | 32,695 | $ | 968 | ||||||||||||||||||||||||||||||||||||||||||||
The accompanying notes are an integral part of these consolidated financial statements.
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 4.
Basis of Presentation
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, 2023. The results of operations for the three months ended March 31, 2024 are not necessarily indicative of the results to be expected for the full year.
These consolidated financial statements include the accounts of our majority-owned, controlled subsidiaries, including MPLX. All significant intercompany transactions and accounts have been eliminated. Due to our ownership of the general partner interest of MPLX, we have determined that we control MPLX and therefore we consolidate MPLX and record a noncontrolling interest for the interest owned by the public. Changes in ownership interest in consolidated subsidiaries that do not result in a change in control are recorded as equity transactions. Investments in entities over which we have significant influence, but not control, are accounted for using the equity method of accounting. This includes entities in which we hold majority ownership but the minority shareholders have substantive participating rights.
Certain prior period financial statement amounts have been reclassified to conform to current period presentation.
2. Accounting Standards and Disclosure Rules
Recently Adopted
During the first quarter of 2024, we adopted ASU 2023-01, Leases (Topic 842): Common Control Arrangements. The adoption of this ASU did not have a material impact on our financial statements or disclosures.
Not Yet Adopted
SEC Release No. 33-11275, The Enhancement and Standardization of Climate-Related Disclosures for Investors
In March 2024, the SEC adopted rules under SEC Release No. 33-11275, The Enhancement and Standardization of Climate-Related Disclosures for Investors, which requires registrants to provide certain climate-related information in their annual reports. As part of the disclosures, material impacts from severe weather events and other natural conditions will be required in the audited financial statements. In April 2024, the SEC voluntarily stayed the rules pending judicial review. Pending the results of the judicial review, the disclosure requirements are effective for the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2025. We are evaluating the impact these rules will have on our disclosures and monitoring the status of the judicial review.
ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures
In December 2023, the FASB issued an ASU to update income tax disclosure requirements to provide consistent categories and greater disaggregation of information in the rate reconciliation and to disaggregate income taxes paid by jurisdiction. This ASU is effective for fiscal years beginning after December 15, 2024. Early adoption is permitted. The amendments should be applied on a prospective basis, but retrospective application is permitted. We are currently evaluating the impact this ASU will have on our disclosures.
ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures
In November 2023, the FASB issued an ASU to update reportable segment disclosure requirements primarily by requiring enhanced disclosures about significant segment expenses. This ASU is effective for fiscal years beginning after December 15, 2023, and for interim periods within fiscal years beginning after December 15, 2024. Early adoption is permitted. The amendments should be applied retrospectively to all prior periods presented in the financial statements. We are currently evaluating the impact this ASU will have on our disclosures.
3. Short-Term Investments
Investments Components
The components of investments were as follows:
| March 31, 2024 | ||||||||||||||||||||||||||||||||||||||||||||
| (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 | $ | 2,774 | $ | — | $ | (1) | $ | 2,773 | $ | 210 | $ | 2,563 | |||||||||||||||||||||||||||||||
| Certificates of deposit and time deposits | Level 2 | 1,256 | — | (1) | 1,255 | 224 | 1,031 | |||||||||||||||||||||||||||||||||||||
| U.S. government securities | Level 1 | 637 | — | (1) | 636 | — | 636 | |||||||||||||||||||||||||||||||||||||
| Corporate notes and bonds | Level 2 | 169 | — | — | 169 | — | 169 | |||||||||||||||||||||||||||||||||||||
| Total available-for-sale debt securities | $ | 4,836 | $ | — | $ | (3) | $ | 4,833 | $ | 434 | $ | 4,399 | ||||||||||||||||||||||||||||||||
| Cash | 2,741 | 2,741 | — | |||||||||||||||||||||||||||||||||||||||||
| Total | $ | 7,574 | $ | 3,175 | $ | 4,399 |
| December 31, 2023 | ||||||||||||||||||||||||||||||||||||||||||||
| (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 | $ | 3,154 | $ | 2 | $ | — | $ | 3,156 | $ | 281 | $ | 2,875 | |||||||||||||||||||||||||||||||
| Certificates of deposit and time deposits | Level 2 | 1,836 | 1 | — | 1,837 | 800 | 1,037 | |||||||||||||||||||||||||||||||||||||
| U.S. government securities | Level 1 | 785 | — | (1) | 784 | — | 784 | |||||||||||||||||||||||||||||||||||||
| Corporate notes and bonds | Level 2 | 85 | — | — | 85 | — | 85 | |||||||||||||||||||||||||||||||||||||
| Total available-for-sale debt securities | $ | 5,860 | $ | 3 | $ | (1) | $ | 5,862 | $ | 1,081 | $ | 4,781 | ||||||||||||||||||||||||||||||||
| Cash | 4,362 | 4,362 | — | |||||||||||||||||||||||||||||||||||||||||
| Total | $ | 10,224 | $ | 5,443 | $ | 4,781 |
Our investment policy includes concentration limits and credit rating requirements which limit our investments to high quality, short term and highly liquid securities.
Realized gains/losses were not material. All of our available-for-sale debt securities held as of March 31, 2024 mature within one year or less or are readily available for use.
4**.** Master Limited Partnership
We own the general partner and a majority limited partner interest in MPLX, which owns and operates crude oil and light product transportation and logistics infrastructure as well as gathering, processing and fractionation assets. We control MPLX through our ownership of the general partner interest and, as of March 31, 2024, we owned approximately 64 percent of the outstanding MPLX common units compared to 65 percent as of December 31, 2023. Our ownership was impacted by changes in the redeemable non-controlling interest.
Unit Repurchase Program
On August 2, 2022, MPLX announced its board of directors approved a $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, accelerated unit repurchases, tender offers or open market solicitations for units, 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, discontinued or restarted at any time.
Total unit repurchases were as follows for the respective periods:
| Three Months Ended March 31, | |||||||||||||||||||||||
| (In millions, except per unit data) | 2024 | 2023 | |||||||||||||||||||||
| Number of common units repurchased | 2 | — | |||||||||||||||||||||
| Cash paid for common units repurchased | $ | 75 | $ | — | |||||||||||||||||||
| Average cost per unit | $ | 40.04 | $ | — |
As of March 31, 2024, MPLX had approximately $771 million remaining under its unit repurchase authorization.
Redemption of the Series B Preferred Units
On February 15, 2023, MPLX exercised its right to redeem all of its 600,000 outstanding preferred units (the “Series B preferred units”). MPLX paid unitholders the Series B preferred unit redemption price of $1,000 per unit. The final semi-annual distribution on the Series B preferred units was paid on February 15, 2023 in the usual manner.
The excess of the total redemption price of $600 million paid to Series B preferred unitholders over the carrying value of the Series B preferred units on the redemption date resulted in a $2 million net reduction to retained earnings.
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 corporate and our Midstream segment.
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 March 31, | |||||||||||||||||||||||
| (Millions of dollars) | 2024 | 2023 | |||||||||||||||||||||
| Increase due to change in ownership | $ | 108 | $ | 1 | |||||||||||||||||||
| Tax impact | (36) | 2 | |||||||||||||||||||||
| Increase in MPC's additional paid-in capital, net of tax | $ | 72 | $ | 3 |
5**.** Variable Interest Entities
Consolidated VIE
We control MPLX through our ownership of its general partner. MPLX is a VIE because the limited partners do not have substantive kick-out or participating rights over the general partner. We are the primary beneficiary of MPLX because in addition to our significant economic interest, we also have the ability, through our ownership of the general partner, to control the decisions that most significantly impact MPLX. We therefore consolidate MPLX and record a noncontrolling interest for the interest owned by the public. We also record a redeemable noncontrolling interest related to MPLX’s Series A preferred units.
The creditors of MPLX do not have recourse to MPC’s general credit through guarantees or other financial arrangements, except as noted. MPC has effectively guaranteed certain indebtedness of LOOP LLC (“LOOP”) and LOCAP LLC (“LOCAP”), in which MPLX holds an interest. See Note 23 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 consolidated balance sheets.
| (Millions of dollars) | March 31, 2024 | December 31, 2023 | |||||||||
| Assets | |||||||||||
| Cash and cash equivalents | $ | 385 | $ | 1,048 | |||||||
| Receivables, less allowance for doubtful accounts | 766 | 836 | |||||||||
| Inventories | 163 | 159 | |||||||||
| Other current assets | 36 | 33 | |||||||||
| Equity method investments | 4,343 | 3,743 | |||||||||
| Property, plant and equipment, net | 19,299 | 19,264 | |||||||||
| Goodwill | 7,645 | 7,645 | |||||||||
| Right of use assets | 290 | 264 | |||||||||
| Other noncurrent assets | 1,594 | 1,644 | |||||||||
| Liabilities | |||||||||||
| Accounts payable | $ | 601 | $ | 723 | |||||||
| Accrued taxes | 71 | 79 | |||||||||
| Debt due within one year | 1,639 | 1,135 | |||||||||
| Operating lease liabilities | 50 | 45 | |||||||||
| Other current liabilities | 304 | 336 | |||||||||
| Long-term debt | 18,805 | 19,296 | |||||||||
| Deferred income taxes | 16 | 16 | |||||||||
| Long-term operating lease liabilities | 231 | 211 | |||||||||
| Deferred credits and other liabilities | 485 | 476 |
6**.** Related Party Transactions
Transactions with related parties were as follows:
| Three Months Ended March 31, | |||||||||||||||||||||||
| (Millions of dollars) | 2024 | 2023 | |||||||||||||||||||||
| Sales to related parties | $ | 271 | $ | 189 | |||||||||||||||||||
| Purchases from related parties | 580 | 311 |
Sales to related parties, which are included in sales and other operating revenues, consist primarily of refined product sales and renewable feedstock 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 and renewable fuels from certain of our equity affiliates.
7**.** 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 share-based compensation awards, provided the effect is not anti-dilutive.
| Three Months Ended March 31, | |||||||||||||||||||||||
| (In millions, except per share data) | 2024 | 2023 | |||||||||||||||||||||
| Net income | $ | 1,312 | $ | 3,084 | |||||||||||||||||||
| Net income attributable to noncontrolling interest | (375) | (360) | |||||||||||||||||||||
| Net income allocated to participating securities | (1) | (2) | |||||||||||||||||||||
| Redemption of preferred units | — | (2) | |||||||||||||||||||||
| Income available to common stockholders | $ | 936 | $ | 2,720 | |||||||||||||||||||
| Weighted average common shares outstanding: | |||||||||||||||||||||||
| Basic | 361 | 444 | |||||||||||||||||||||
| Effect of dilutive securities | 1 | 3 | |||||||||||||||||||||
| Diluted | 362 | 447 | |||||||||||||||||||||
| Income available to common stockholders per share: | |||||||||||||||||||||||
| Basic: | |||||||||||||||||||||||
| Net income attributable to MPC per share | $ | 2.59 | $ | 6.13 | |||||||||||||||||||
| Diluted: | |||||||||||||||||||||||
| Net income attributable to MPC per share | $ | 2.58 | $ | 6.09 |
The following table summarizes the shares that were anti-dilutive and, therefore, were excluded from the diluted share calculation.
| Three Months Ended March 31, | |||||||||||||||||||||||
| (In millions) | 2024 | 2023 | |||||||||||||||||||||
| Shares issuable under share-based compensation plans | — | — |
8. Equity
On October 25, 2023, MPC announced that our board of directors approved a $5.0 billion share repurchase authorization in addition to the $5.0 billion share repurchase authorizations announced on January 31, 2023 and May 2, 2023. As of March 31, 2024, $4.63 billion remained available for repurchase under these share repurchase authorizations. These share repurchase authorizations have no expiration date.
We may utilize various methods to effect the repurchases, which could include open market repurchases, negotiated block transactions, accelerated share repurchases, tender offers 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, discontinued or restarted at any time.
Total share repurchases were as follows for the respective periods:
| Three Months Ended March 31, | |||||||||||||||||||||||
| (In millions, except per share data) | 2024 | 2023 | |||||||||||||||||||||
| Number of shares repurchased | 13 | 25 | |||||||||||||||||||||
| Cash paid for shares repurchased | $ | 2,218 | $ | 3,180 | |||||||||||||||||||
| Average cost per share(a) | $ | 168.05 | $ | 126.56 |
(a) The average cost per share includes excise tax on share repurchases resulting from the Inflation Reduction Act of 2022, but does not reduce the share repurchase authorization.
9**.** 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 – gathers, transports, stores and distributes crude oil, refined products, including renewable diesel, and other hydrocarbon-based products principally for the Refining & Marketing segment via refining logistics assets, pipelines, terminals, towboats and barges; gathers, processes and transports natural gas; and transports, fractionates, stores and markets NGLs. The Midstream segment primarily reflects the results of MPLX.
Our chief operating decision maker (“CODM”) evaluates the performance of our segments using segment adjusted EBITDA. Our CODM is the chief executive officer. Amounts included in income 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) 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.
| Three Months Ended March 31, | |||||||||||||||||||||||
| (Millions of dollars) | 2024 | 2023 | |||||||||||||||||||||
| Segment adjusted EBITDA for reportable segments | |||||||||||||||||||||||
| Refining & Marketing | $ | 1,874 | $ | 3,853 | |||||||||||||||||||
| Midstream | 1,589 | 1,530 | |||||||||||||||||||||
| Total reportable segments | $ | 3,463 | $ | 5,383 | |||||||||||||||||||
| Reconciliation of segment adjusted EBITDA for reportable segments to income before income taxes | |||||||||||||||||||||||
| Total reportable segments | $ | 3,463 | $ | 5,383 | |||||||||||||||||||
| Corporate | (204) | (165) | |||||||||||||||||||||
| Refining planned turnaround costs | (648) | (357) | |||||||||||||||||||||
| Depreciation and amortization | (827) | (800) | |||||||||||||||||||||
| Net interest and other financial costs | (179) | (154) | |||||||||||||||||||||
| Income before income taxes | $ | 1,605 | $ | 3,907 |
| Three Months Ended March 31, | |||||||||||||||||||||||
| (Millions of dollars) | 2024 | 2023 | |||||||||||||||||||||
| Sales and other operating revenues | |||||||||||||||||||||||
| Refining & Marketing | |||||||||||||||||||||||
| Revenues from external customers(a) | $ | 31,485 | $ | 33,663 | |||||||||||||||||||
| Intersegment revenues | 37 | 27 | |||||||||||||||||||||
| Refining & Marketing segment revenues | 31,522 | 33,690 | |||||||||||||||||||||
| Midstream | |||||||||||||||||||||||
| Revenues from external customers(a) | 1,221 | 1,201 | |||||||||||||||||||||
| Intersegment revenues | 1,403 | 1,362 | |||||||||||||||||||||
| Midstream segment revenues | 2,624 | 2,563 | |||||||||||||||||||||
| Total segment revenues | 34,146 | 36,253 | |||||||||||||||||||||
| Less: intersegment revenues | 1,440 | 1,389 | |||||||||||||||||||||
| Consolidated sales and other operating revenues(a) | $ | 32,706 | $ | 34,864 |
(a) Includes related party sales. See Note 6 for additional information.
| Three Months Ended March 31, | |||||||||||||||||||||||
| (Millions of dollars) | 2024 | 2023 | |||||||||||||||||||||
| Income (loss) from equity method investments | |||||||||||||||||||||||
| Refining & Marketing | $ | 23 | $ | (36) | |||||||||||||||||||
| Midstream | 181 | 169 | |||||||||||||||||||||
| Consolidated income from equity method investments | $ | 204 | $ | 133 | |||||||||||||||||||
| Depreciation and amortization | |||||||||||||||||||||||
| Refining & Marketing | $ | 460 | $ | 464 | |||||||||||||||||||
| Midstream | 343 | 317 | |||||||||||||||||||||
| Corporate | 24 | 19 | |||||||||||||||||||||
| Consolidated depreciation and amortization | $ | 827 | $ | 800 | |||||||||||||||||||
| Capital expenditures | |||||||||||||||||||||||
| Refining & Marketing | $ | 291 | $ | 421 | |||||||||||||||||||
| Midstream | 327 | 241 | |||||||||||||||||||||
| Segment capital expenditures and investments | 618 | 662 | |||||||||||||||||||||
| Less investments in equity method investees | 125 | 207 | |||||||||||||||||||||
| Plus: | |||||||||||||||||||||||
| Corporate | 6 | 7 | |||||||||||||||||||||
| Capitalized interest | 12 | 21 | |||||||||||||||||||||
| Consolidated capital expenditures(a) | $ | 511 | $ | 483 |
(a)Includes changes in capital expenditure accruals. See Note 19 for a reconciliation of total capital expenditures to additions to property, plant and equipment for the three months ended March 31, 2024 and 2023 as reported in the consolidated statements of cash flows.
10**.** Net Interest and Other Financial Costs
Net interest and other financial costs were as follows:
| Three Months Ended March 31, | |||||||||||||||||||||||
| (Millions of dollars) | 2024 | 2023 | |||||||||||||||||||||
| Interest income | $ | (101) | $ | (121) | |||||||||||||||||||
| Interest expense | 341 | 334 | |||||||||||||||||||||
| Interest capitalized | (12) | (23) | |||||||||||||||||||||
| Pension and other postretirement non-service costs(a) | (11) | (23) | |||||||||||||||||||||
| Loss on extinguishment of debt | — | 9 | |||||||||||||||||||||
| Investments - net premium (discount) amortization | (39) | (28) | |||||||||||||||||||||
| Other financial costs | 1 | 6 | |||||||||||||||||||||
| Net interest and other financial costs | $ | 179 | $ | 154 |
(a)See Note 22.
11. Income Taxes
We recorded a combined federal, state and foreign income tax provision of $293 million for the three months ended March 31, 2024, which was lower than the U.S. statutory rate primarily due to permanent tax benefits related to net income attributable to noncontrolling interests offset by state taxes.
We recorded a combined federal, state and foreign income tax provision of $823 million for the three months ended March 31, 2023, which was higher than the U.S. statutory rate primarily due to state taxes offset by permanent tax benefits related to net income attributable to noncontrolling interests.
12. Inventories
| (Millions of dollars) | March 31, 2024 | December 31, 2023 | |||||||||
| Crude oil | $ | 3,434 | $ | 3,211 | |||||||
| Refined products | 5,273 | 4,940 | |||||||||
| Materials and supplies | 1,074 | 1,166 | |||||||||
| Total | $ | 9,781 | $ | 9,317 |
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.
13**.** Equity Method Investments
Midstream Acquisition
On March 22, 2024, MPLX used $625 million of cash on hand to purchase additional ownership interest in existing joint ventures and gathering assets which will enhance our position in the Utica basin. Prior to the acquisition, MPLX owned an indirect interest in Ohio Gathering Company, L.L.C. (“OGC”) and a direct interest in Ohio Condensate Company, L.L.C. (“OCC”) and now owns a combined 73 percent interest in OGC and a 100 percent interest in OCC, and a dry gas gathering system in the Utica basin. OGC continues to be accounted for as an equity method investment as MPLX did not obtain control of OGC as a result of the transaction. OGC is considered a VIE as MPLX is not deemed to be the primary beneficiary due to voting rights on significant matters. The acquisition date fair value of our investment in OGC exceeded our portion of the underlying net assets of the joint venture by approximately $86 million. OCC was previously accounted for as an equity method investment, and it is now consolidated and included in our consolidated financial results.
The acquisition was accounted for as a business combination requiring all the acquired assets and liabilities to be remeasured to fair value resulting in a consolidated fair value of net assets and liabilities of $625 million. The preliminary determination of the fair value includes $518 million related to acquired interests in the joint ventures and the remaining balance related to other acquired assets and liabilities. The revaluation of MPLX’s existing 62 percent equity method investment in OCC resulted in a
$20 million gain, which is included in the net gain on disposal of assets line of the accompanying consolidated statements of income. The fair value of equity method investments was based on a discounted cash flow model.
LF Bioenergy Acquisition
On March 8, 2023, MPC announced the acquisition of a 49.9 percent interest in LF Bioenergy, an emerging producer of renewable natural gas (“RNG”) in the U.S., for approximately $56 million, which included funding for on-going operations and project development. LF Bioenergy has been focused on developing and growing a portfolio of dairy farm-based, low carbon intensity RNG projects.
LF Bioenergy is a VIE since it is unable to fund its operations without financial support from its equity 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, do not consolidate the entity. MPC accounts for our ownership interest in LF Bioenergy as an equity method investment.
14**.** Property, Plant and Equipment (PP&E)
| March 31, 2024 | December 31, 2023 | |||||||||||||||||||||||||||||||||||||
| (Millions of dollars) | Gross PP&E | Accumulated Depreciation | Net PP&E | Gross PP&E | Accumulated Depreciation | Net PP&E | ||||||||||||||||||||||||||||||||
| Refining & Marketing | $ | 32,441 | $ | 18,099 | $ | 14,342 | $ | 32,496 | $ | 17,992 | $ | 14,504 | ||||||||||||||||||||||||||
| Midstream | 29,950 | 9,889 | 20,061 | 29,620 | 9,589 | 20,031 | ||||||||||||||||||||||||||||||||
| Corporate | 1,638 | 1,078 | 560 | 1,632 | 1,055 | 577 | ||||||||||||||||||||||||||||||||
| Total | $ | 64,029 | $ | 29,066 | $ | 34,963 | $ | 63,748 | $ | 28,636 | $ | 35,112 |
15**.** Fair Value Measurements
Fair Values—Recurring
The following tables present assets and liabilities accounted for at fair value on a recurring basis as of March 31, 2024 and December 31, 2023 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.
| March 31, 2024 | |||||||||||||||||||||||||||||||||||
| 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 | $ | 197 | $ | — | $ | — | $ | (197) | $ | — | $ | 67 | |||||||||||||||||||||||
| Liabilities: | |||||||||||||||||||||||||||||||||||
| Commodity contracts | $ | 231 | $ | — | $ | — | $ | (231) | $ | — | $ | — | |||||||||||||||||||||||
| Embedded derivatives in commodity contracts | — | — | 69 | — | 69 | — |
| December 31, 2023 | |||||||||||||||||||||||||||||||||||
| 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 | $ | 244 | $ | — | $ | — | $ | (220) | $ | 24 | $ | 73 | |||||||||||||||||||||||
| Liabilities: | |||||||||||||||||||||||||||||||||||
| Commodity contracts | $ | 249 | $ | — | $ | — | $ | (249) | $ | — | $ | — | |||||||||||||||||||||||
| Embedded derivatives in commodity contracts | — | — | 61 | — | 61 | — |
(a)Represents the impact of netting assets, liabilities and cash collateral when a legal right of offset exists. As of March 31, 2024, cash collateral of $34 million was netted with mark-to-market derivative liabilities. As of December 31, 2023, cash collateral of $29 million was netted with mark-to-market derivative liabilities.
(b)We have no derivative contracts which are subject to master netting arrangements reflected gross on the balance sheet.
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 March 31, 2024 used significant unobservable inputs including: (1) NGL prices interpolated and extrapolated due to inactive markets ranging from $0.66 to $1.61 per gallon with a weighted average of $0.83 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 March 31, | |||||||||||||||||||||||
| (Millions of dollars) | 2024 | 2023 | |||||||||||||||||||||
| Beginning balance | $ | 61 | $ | 61 | |||||||||||||||||||
| Unrealized and realized loss included in net income(a) | 12 | — | |||||||||||||||||||||
| Settlements of derivative instruments | (4) | (3) | |||||||||||||||||||||
| Ending balance | $ | 69 | $ | 58 | |||||||||||||||||||
| The amount of total loss for the period included in earnings attributable to the change in unrealized loss relating to liabilities still held at the end of period(a): | $ | 11 | $ | — |
(a) The loss is included in cost of revenues on the consolidated statements of income.
Fair Values – Non-recurring
Non-recurring fair value measurements and disclosures in 2024 relate to the purchase of additional ownership interest in existing joint ventures and gathering assets as discussed in Note 13.
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 $27.0 billion and $25.3 billion at March 31, 2024, respectively, and approximately $27.0 billion and $25.5 billion at December 31, 2023, respectively. These carrying and fair values of our debt exclude the unamortized issuance costs which are netted against our total debt.
16**.** Derivatives
For further information regarding the fair value measurement of derivative instruments, including any effect of master netting agreements or collateral, see Note 15. 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 March 31, 2024 and December 31, 2023 and the line items in the consolidated 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) | March 31, 2024 | December 31, 2023 | |||||||||||||||||||||
| Balance Sheet Location | Asset | Liability | Asset | Liability | |||||||||||||||||||
| Commodity derivatives | |||||||||||||||||||||||
| Other current assets | $ | 197 | $ | 231 | $ | 244 | $ | 249 | |||||||||||||||
| Other current liabilities(a) | — | 13 | — | 11 | |||||||||||||||||||
| Deferred credits and other liabilities(a) | — | 56 | — | 50 |
(a) Includes embedded derivatives.
The table below summarizes open commodity derivative contracts for crude oil, refined products, blending products and soybean oil as of March 31, 2024.
| Percentage of contracts that expire next quarter | Position | ||||||||||||||||
| (Units in thousands of barrels) | Long | Short | |||||||||||||||
| Exchange-traded(a) | |||||||||||||||||
| Crude oil | 68.1% | 44,665 | 52,077 | ||||||||||||||
| Refined products | 94.8% | 19,575 | 20,404 | ||||||||||||||
| Blending products | 80.1% | 7,186 | 3,983 | ||||||||||||||
| Soybean oil | 67.3% | 4,282 | 4,806 | ||||||||||||||
(a) Included in exchange-traded are spread contracts in thousands of barrels: Crude oil - 12,308 long and 12,188 short; Refined products - 445 long and 614 short. There are no spread contracts for blending products or soybean oil.
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 March 31, | ||||||||||||||||||||||
| Income Statement Location | 2024 | 2023 | |||||||||||||||||||||
| Sales and other operating revenues | $ | — | $ | 2 | |||||||||||||||||||
| Cost of revenues | (74) | 61 | |||||||||||||||||||||
| Other income | — | 1 | |||||||||||||||||||||
| Total | $ | (74) | $ | 64 |
17**.** Debt
Our outstanding borrowings at March 31, 2024 and December 31, 2023 consisted of the following:
| (Millions of dollars) | March 31, 2024 | December 31, 2023 | |||||||||
| Marathon Petroleum Corporation: | |||||||||||
| Senior notes | $ | 6,449 | $ | 6,449 | |||||||
| Notes payable | 1 | 1 | |||||||||
| Finance lease obligations | 457 | 464 | |||||||||
| Total | 6,907 | 6,914 | |||||||||
| MPLX LP: | |||||||||||
| Senior notes | 20,700 | 20,700 | |||||||||
| Finance lease obligations | 6 | 6 | |||||||||
| Total | 20,706 | 20,706 | |||||||||
| Total debt | 27,613 | 27,620 | |||||||||
| Unamortized debt issuance costs | (138) | (141) | |||||||||
| Unamortized discount, net of unamortized premium | (186) | (196) | |||||||||
| Amounts due within one year | (2,457) | (1,954) | |||||||||
| Total long-term debt due after one year | $ | 24,832 | $ | 25,329 |
Available Capacity under our Credit Facilities as of March 31, 2024
| (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 2024 | ||||||||||||||||||||||||||||||||
| MPLX | ||||||||||||||||||||||||||||||||||||||
| MPLX bank revolving credit facility | 2,000 | — | — | 2,000 | — | % | July 2027 |
(a) The committed borrowing and letter of credit issuance capacity under 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.
18**.** Revenue
The following table presents our revenues from external customers disaggregated by segment and product line.
| Three Months Ended March 31, | |||||||||||||||||||||||
| (Millions of dollars) | 2024 | 2023 | |||||||||||||||||||||
| Refining & Marketing | |||||||||||||||||||||||
| Refined products | $ | 29,247 | $ | 31,923 | |||||||||||||||||||
| Crude oil | 1,788 | 1,330 | |||||||||||||||||||||
| Services and other | 450 | 410 | |||||||||||||||||||||
| Total revenues from external customers | 31,485 | 33,663 | |||||||||||||||||||||
| Midstream | |||||||||||||||||||||||
| Refined products | 373 | 420 | |||||||||||||||||||||
| Services and other | 848 | 781 | |||||||||||||||||||||
| Total revenues from external customers | 1,221 | 1,201 | |||||||||||||||||||||
| Sales and other operating revenues | $ | 32,706 | $ | 34,864 |
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 March 31, 2024, 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 March 31, 2024 include matching buy/sell receivables of $5.43 billion.
19**.** Supplemental Cash Flow Information
| Three Months Ended March 31, | |||||||||||
| (Millions of dollars) | 2024 | 2023 | |||||||||
| Net cash provided by operating activities included: | |||||||||||
| Interest paid (net of amounts capitalized) | $ | 359 | $ | 342 | |||||||
| Net income taxes paid to (received from) taxing authorities | (22) | (18) |
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:
| Three Months Ended March 31, | |||||||||||
| (Millions of dollars) | 2024 | 2023 | |||||||||
| Additions to property, plant and equipment per the consolidated statements of cash flows | $ | 585 | $ | 457 | |||||||
| Increase (decrease) in capital accruals | (74) | 26 | |||||||||
| Total capital expenditures | $ | 511 | $ | 483 |
20. Other Current Liabilities
The following summarizes the components of other current liabilities:
| (Millions of dollars) | March 31, 2024 | December 31, 2023 | |||||||||
| Environmental credits liability | $ | 331 | $ | 778 | |||||||
| Accrued interest payable | 258 | 316 | |||||||||
| Other current liabilities | 375 | 551 | |||||||||
| Total other current liabilities | $ | 964 | $ | 1,645 |
21**.** Accumulated Other Comprehensive Income (Loss)
The following table shows the changes in accumulated other comprehensive income (loss) by component. Amounts in parentheses indicate debits.
| (Millions of dollars) | Pension Benefits | Other Benefits | Other | Total | |||||||||||||||||||
| Balance as of December 31, 2022 | $ | (163) | $ | 165 | $ | — | $ | 2 | |||||||||||||||
| Other comprehensive gain before reclassifications, net of tax of $1 | — | 3 | — | 3 | |||||||||||||||||||
| Amounts reclassified from accumulated other comprehensive loss: | |||||||||||||||||||||||
| Amortization of prior service credit(a) | (11) | (5) | — | (16) | |||||||||||||||||||
| Amortization of actuarial gain(a) | (2) | — | — | (2) | |||||||||||||||||||
| Tax effect | 3 | 1 | — | 4 | |||||||||||||||||||
| Other comprehensive loss | (10) | (1) | — | (11) | |||||||||||||||||||
| Balance as of March 31, 2023 | $ | (173) | $ | 164 | $ | — | $ | (9) |
| (Millions of dollars) | Pension Benefits | Other Benefits | Other | Total | |||||||||||||||||||
| Balance as of December 31, 2023 | $ | (261) | $ | 129 | $ | 1 | $ | (131) | |||||||||||||||
| Other comprehensive gain (loss) before reclassifications, net of tax of $(1) | 2 | (1) | (3) | (2) | |||||||||||||||||||
| Amounts reclassified from accumulated other comprehensive loss: | |||||||||||||||||||||||
| Amortization of prior service credit(a) | (8) | (5) | — | (13) | |||||||||||||||||||
| Amortization of actuarial loss(a) | 1 | — | — | 1 | |||||||||||||||||||
| Tax effect | 1 | 1 | — | 2 | |||||||||||||||||||
| Other comprehensive loss | (4) | (5) | (3) | (12) | |||||||||||||||||||
| Balance as of March 31, 2024 | $ | (265) | $ | 124 | $ | (2) | $ | (143) |
(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 March 31, | |||||||||||||||||||||||
| (Millions of dollars) | 2024 | 2023 | |||||||||||||||||||||
| Pension Benefits | |||||||||||||||||||||||
| Service cost | $ | 54 | $ | 49 | |||||||||||||||||||
| Interest cost | 30 | 29 | |||||||||||||||||||||
| Expected return on plan assets | (37) | (42) | |||||||||||||||||||||
| Amortization of prior service credit | (8) | (11) | |||||||||||||||||||||
| Amortization of actuarial (gain) loss | 1 | (2) | |||||||||||||||||||||
| Net periodic pension benefit cost | $ | 40 | $ | 23 | |||||||||||||||||||
| Other Benefits | |||||||||||||||||||||||
| Service cost | $ | 5 | $ | 5 | |||||||||||||||||||
| Interest cost | 8 | 8 | |||||||||||||||||||||
| Amortization of prior service credit | (5) | (5) | |||||||||||||||||||||
| Net periodic other benefit cost | $ | 8 | $ | 8 |
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 three months ended March 31, 2024, we made no contributions to our funded pension plans. Benefit payments related to unfunded pension and other postretirement benefit plans were $3 million and $12 million, respectively, during the three months ended March 31, 2024.
23**.** Commitments and Contingencies
We are the subject of, or a party to, a number of pending or threatened legal actions, contingencies and commitments involving a variety of matters, including laws and regulations relating to the environment. Some of these matters are discussed below. For matters for which we have not recorded a liability, we are unable to estimate a range of possible loss because the issues involved have not been fully developed through pleadings, discovery or court proceedings. However, the ultimate resolution of some of these contingencies could, individually or in the aggregate, be material.
Environmental Matters
We are subject to federal, state, local and foreign laws and regulations relating to the environment. These laws generally provide for control of pollutants released into the environment and require responsible parties to undertake remediation of hazardous waste disposal sites and certain other locations including presently or formerly owned or operated retail marketing sites. Penalties may be imposed for noncompliance.
At March 31, 2024 and December 31, 2023, accrued liabilities for remediation totaled $375 million and $387 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 $5 million at both March 31, 2024 and December 31, 2023.
Governmental and other entities in various states have filed climate-related lawsuits against a number of energy companies, including MPC. Although each suit is separate and unique, the lawsuits generally allege defendants made knowing misrepresentations about knowingly concealing, or failing to warn of the impacts of their petroleum products which led to increased demand and worsened climate change. Plaintiffs are seeking unspecified damages and abatement under various tort theories, as well as breaches of consumer protection and unfair trade statutes. We are currently subject to such proceedings in federal or state courts in California, Delaware, Maryland, Hawaii, Rhode Island, South Carolina and Oregon. 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. After subsequent appeal proceedings and in compliance with a new order issued by the BIA, in December 2020, THPP paid approximately $4 million in assessed trespass damages and ceased use of the portion of the pipeline that crosses the property at issue. In March 2021, the BIA issued an order purporting to vacate the BIA’s prior orders related to THPP’s alleged trespass and direct the Regional Director of the BIA to reconsider the issue of THPP’s alleged trespass and issue a new order. In April 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 (collectively, the “U.S. Government Parties”) challenging the March 2021 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 and counterclaims to THPP’s suit claiming 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. On November 8, 2023, the District Court of North Dakota granted THPP’s motion to sever and stay the U.S. Government Parties’ counterclaims. The case will proceed on the merits of THPP’s challenge to the March 2021 order purporting to vacate all previous orders related to THPP’s alleged trespass. THPP continues not to operate that portion of the pipeline that crosses the property at issue.
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 tend to follow the terms of the underlying debt, which extend through 2040. Our maximum potential undiscounted payments under these agreements for the debt principal totaled $222 million as of March 31, 2024.
Dakota Access Pipeline
MPLX holds a 9.19 percent indirect interest in Dakota Access, which owns and operates the Bakken Pipeline system. In 2020, the U.S. District Court for the District of Columbia (the “D.D.C.”) ordered the U.S. Army Corps of Engineers (“Army Corps”), which granted permits and an easement for the Bakken Pipeline system, to prepare an environmental impact statement (“EIS”) relating to an easement under Lake Oahe in North Dakota. The D.D.C. later vacated the easement. The Army Corps issued a draft EIS in September 2023 detailing various options for the easement going forward, including denying the easement, approving the easement with additional measures, rerouting the easement, or approving the easement with no changes. The Army Corps has not selected a preferred alternative, but will make a decision in its final review, after considering input from the public and other agencies. The pipeline remains operational while the Army Corps finalizes its decision which is expected to be issued by the end of 2024.
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 vacatur of the easement results in a temporary shutdown of the pipeline, 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 easement and/or return the pipeline into operation. If the vacatur of the easement 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 percent redemption premium required pursuant to the indenture governing the notes) and any accrued and unpaid interest. As of March 31, 2024, our maximum potential undiscounted payments under the Contingent Equity Contribution Agreement were approximately $170 million.
Crowley Blue Water Partners LLC
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. The terms of the underlying debt extend through 2038. As of March 31, 2024, our maximum potential undiscounted payments under this arrangement were $91 million.
Other guarantees
We have entered into other guarantees with maximum potential undiscounted payments totaling $114 million as of March 31, 2024, 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, a commitment to pay a termination fee on a supply agreement if terminated during the initial term, 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.
24. Subsequent Events
Additional $5 Billion Share Repurchase Authorization
On April 30, 2024, we announced that our board of directors approved an additional $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, accelerated share repurchases, tender offers or open market solicitations for shares, 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 suspended, discontinued or restarted at any time.
Previous: Cover and table of contents · Next: Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations