10-KPeriod: FY2011

Marathon Petroleum Corp Annual Report, Year Ended Dec 31, 2011

Filed February 29, 2012For Securities:MPC

Summary

Marathon Petroleum Corporation (MPC) reported a substantial increase in net income for 2011, reaching $2.39 billion ($6.67 per diluted share), a significant jump from $623 million ($1.74 per diluted share) in 2010. This strong performance was primarily driven by its Refining & Marketing segment, which saw its operating income surge to $3.59 billion from $800 million in the prior year. The company completed its spin-off from Marathon Oil on June 30, 2011, establishing itself as an independent, publicly traded entity. The financial statements reflect this change, with post-spinoff operations consolidated under MPC. Significant capital investments are underway, including the Detroit refinery heavy oil upgrading and expansion project, which was approximately 85% complete as of December 31, 2011, and is expected to significantly enhance its refining capabilities.

Financial Highlights

52 data points
Beta

Revenue

$78.64B

Net Income

$2.39B

3.0% Net Margin

EPS (Diluted)

$3.33

Total Assets

$25.75B

Cash & Equivalents

$3.08B

Free Cash Flow

$2.12B

Financial Statements
Beta
Revenue$78.64B
SG&A Expenses$1.06B
Operating Expenses$75.01B
Operating Income$3.75B
Interest Expense$164.00M
Net Income$2.39B
EPS (Basic)$3.35
EPS (Diluted)$3.33
Shares Outstanding (Basic)712.00M
Shares Outstanding (Diluted)714.00M

Key Highlights

  • 1Net income dramatically increased to $2.39 billion in 2011 from $623 million in 2010, driven by a strong Refining & Marketing segment performance.
  • 2The company completed its spin-off from Marathon Oil on June 30, 2011, becoming an independent, publicly traded entity (MPC).
  • 3Refining & Marketing segment income from operations rose significantly to $3.59 billion in 2011, benefiting from wider crude oil differentials and improved crack spreads.
  • 4The Detroit refinery heavy oil upgrading and expansion project was 85% complete as of year-end 2011, with an expected completion in Q3 2012.
  • 5MPC maintained strong liquidity, with $3.08 billion in cash and cash equivalents and no borrowings outstanding under its revolving credit agreement or trade receivables securitization facility as of December 31, 2011.
  • 6The company's debt-to-total capital ratio remained conservative at 26% at year-end 2011.
  • 7Speedway segment saw a decrease in income from operations due to the sale of 166 convenience stores in December 2010, but plans for growth through new construction and acquisitions.

Frequently Asked Questions

The primary driver of the substantial increase in net income was the strong performance of the Refining & Marketing segment. This segment benefited significantly from wider differentials between West Texas Intermediate (WTI) crude oil and other light sweet crudes like Light Louisiana Sweet (LLS), larger LLS 6-3-2-1 crack spreads, and wider sweet/sour differentials.

Marathon Petroleum Corporation (MPC) became an independent, publicly traded company on June 30, 2011, following its spin-off from Marathon Oil. The financial statements for periods prior to this date reflect the historical Refining, Marketing & Transportation (RM&T) Business as a combined reporting entity, with expense allocations from Marathon Oil. Post-spinoff, the financial statements consolidate MPC's activities as a stand-alone company.

MPC's primary capital project is the heavy oil upgrading and expansion project at its Detroit refinery, which was approximately 85% complete as of December 31, 2011. The company also plans capital expenditures for new construction and acquisitions within its Speedway segment and for upgrades to its Pipeline Transportation infrastructure.

As of December 31, 2011, MPC had strong liquidity, with $3.08 billion in cash and cash equivalents. The company also had a $2.0 billion revolving credit facility and a $1.0 billion trade receivables securitization facility available, with no outstanding borrowings under either. Its debt-to-total capital ratio was a conservative 26%, indicating a well-managed debt structure.