10-KPeriod: FY2012

Marathon Petroleum Corp Annual Report, Year Ended Dec 31, 2012

Filed February 28, 2013For Securities:MPC

Summary

Marathon Petroleum Corporation (MPC) demonstrated significant growth and operational improvement in 2012, following its spinoff from Marathon Oil in mid-2011. The company reported a substantial increase in net income attributable to MPC, reaching $3.39 billion, up from $2.39 billion in 2011. This growth was primarily driven by strong performance in the Refining & Marketing segment, which benefited from wider crack spreads and favorable crude oil differentials. MPC also strategically expanded its refining capacity and retail footprint. Key financial and operational highlights for 2012 include a near 42% increase in net income, a significant improvement in refining and marketing gross margins, and strategic acquisitions in the Speedway convenience store segment. The company also made strides in its midstream operations by forming MPLX, a master limited partnership, and completing its initial public offering, which provided a new avenue for growth and capital generation. MPC also returned capital to shareholders through a robust share repurchase program, underscoring its commitment to enhancing shareholder value.

Financial Highlights

50 data points
Beta

Revenue

$82.24B

Net Income

$3.39B

4.1% Net Margin

EPS (Diluted)

$4.95

Total Assets

$27.22B

Cash & Equivalents

$4.86B

Free Cash Flow

$3.12B

Financial Statements
Beta
Revenue$82.24B
SG&A Expenses$1.22B
Operating Expenses$77.14B
Operating Income$5.35B
Interest Expense$191.00M
Net Income$3.39B
EPS (Basic)$4.97
EPS (Diluted)$4.95
Shares Outstanding (Basic)680.00M
Shares Outstanding (Diluted)684.00M

Key Highlights

  • 1Net income attributable to MPC increased by $1.00 billion, or 41.8%, to $3.39 billion in 2012 compared to $2.39 billion in 2011.
  • 2Refining & Marketing segment income from operations saw a substantial increase of $1.51 billion, rising to $5.10 billion in 2012 from $3.59 billion in 2011, driven by improved refining and marketing gross margins.
  • 3Speedway segment income from operations increased by $39 million to $310 million in 2012, supported by higher merchandise and gasoline gross margins and store acquisitions.
  • 4The company completed a $2.2 billion heavy oil upgrading and expansion project at its Detroit refinery, increasing its capacity to process heavy, sour crude oils.
  • 5MPC formed MPLX, a master limited partnership for midstream assets, and completed its initial public offering, selling a 26.4% interest.
  • 6A significant share repurchase program was active, with $1.35 billion repurchased in 2012, and an additional $2.0 billion authorization announced in January 2013.
  • 7MPC acquired the Galveston Bay refinery and related assets from BP for approximately $598 million plus inventories in February 2013, increasing its refining capacity.

Frequently Asked Questions

The primary drivers of Marathon Petroleum's strong financial performance in 2012 were significant improvements in the Refining & Marketing segment, largely due to wider light sweet crude oil crack spreads and wider sweet/sour crude oil differentials. These factors led to a substantial increase in refining and marketing gross margins. Additionally, the Speedway segment saw growth driven by increased merchandise and gasoline sales, supported by strategic convenience store acquisitions.

Following its spinoff from Marathon Oil in June 2011, MPC began operating as an independent entity. In 2012, MPC continued to optimize its operations, including completing a significant upgrading and expansion project at its Detroit refinery to process heavier crude oils. The company also strategically expanded its Speedway retail network by acquiring convenience stores. Furthermore, MPC formed MPLX, a master limited partnership for its midstream assets, and completed its IPO, marking a significant step in its midstream strategy. The company also announced the acquisition of the Galveston Bay refinery in February 2013, further expanding its refining capacity.

Marathon Petroleum is committed to returning capital to shareholders. In 2012, the company actively repurchased its common stock under a share repurchase program, having bought back $1.35 billion worth of shares. Following the end of 2012, the company announced an additional $2.0 billion share repurchase authorization and extended its existing authorization, signaling continued confidence and a commitment to enhancing shareholder value through capital returns.

MPLX, Marathon Petroleum's master limited partnership for midstream assets, was formed in 2012 to own, operate, develop, and acquire pipelines and other midstream infrastructure. Its initial public offering in October 2012 allowed MPC to monetize a portion of its midstream assets while retaining a controlling interest. This structure provides MPLX with dedicated capital for growth in gathering, processing, and transportation of crude oil and refined products, and creates a separate platform to enhance value and potentially provide a new funding source for MPC's future strategic initiatives.