10-KPeriod: FY2013

Marathon Petroleum Corp Annual Report, Year Ended Dec 31, 2013

Filed February 28, 2014For Securities:MPC

Summary

Marathon Petroleum Corporation (MPC) in its 2013 10-K filing demonstrates a diversified business model encompassing refining, marketing, retail operations (Speedway), and pipeline transportation. The company experienced a notable year of strategic acquisitions, most significantly the Galveston Bay Refinery and Related Assets from BP, which expanded its refining capacity and market presence. MPC also continued to grow its midstream segment through its master limited partnership, MPLX LP, and its retail segment, Speedway, through strategic acquisitions and organic growth initiatives. Financially, 2013 saw a decrease in net income compared to 2012, primarily driven by narrower crude oil differentials and lower product price realizations in the Refining & Marketing segment. However, the Speedway segment showed robust growth in operating income due to higher margins and increased store acquisitions. The company maintained a strong financial position with substantial liquidity and manageable leverage, supporting its aggressive capital allocation strategy, which included significant investments in midstream assets and ongoing share repurchases, underscoring a commitment to shareholder returns.

Financial Highlights

50 data points
Beta

Revenue

$100.16B

Net Income

$2.11B

2.1% Net Margin

EPS (Diluted)

$3.32

Total Assets

$28.39B

Cash & Equivalents

$2.29B

Free Cash Flow

$2.20B

Financial Statements
Beta
Revenue$100.16B
SG&A Expenses$1.25B
Operating Expenses$96.83B
Operating Income$3.42B
Interest Expense$195.00M
Net Income$2.11B
EPS (Basic)$3.34
EPS (Diluted)$3.32
Shares Outstanding (Basic)630.00M
Shares Outstanding (Diluted)634.00M

Key Highlights

  • 1Acquired the Galveston Bay Refinery and Related Assets from BP for $1.49 billion, significantly expanding refining capacity and market reach.
  • 2Strategic growth in the midstream segment through the continued development and IPO of MPLX LP.
  • 3Speedway segment demonstrated strong performance with increased operating income, supported by higher margins and convenience store acquisitions.
  • 4Net income attributable to MPC decreased in 2013 primarily due to narrowed crude oil differentials and lower product price realizations in the Refining & Marketing segment.
  • 5The company maintained a strong liquidity position with $2.29 billion in cash and cash equivalents and $3.8 billion in unused committed borrowing facilities.
  • 6Continued commitment to shareholder returns through a significant share repurchase program, with $4.14 billion repurchased by year-end 2013 against a $6.0 billion authorization.

Frequently Asked Questions

MPC's main strategic initiatives in 2013 focused on expanding its refining capacity through significant acquisitions like the Galveston Bay Refinery, growing its midstream logistics business via MPLX LP, and strengthening its retail presence through Speedway's expansion and store acquisitions. The company also emphasized operational efficiency and pursuing growth opportunities in North American crude oil production.

The acquisition of the Galveston Bay Refinery in February 2013 significantly increased MPC's refining capacity and sales volumes. However, it also contributed to higher operating expenses and depreciation. While the acquisition added substantial assets, the overall financial performance in 2013 was impacted by a decrease in refining margins, which offset some of the benefits from increased throughput.

MPC's strategy for its midstream assets is to leverage MPLX LP as a platform for growth. This includes owning, operating, developing, and acquiring pipelines and other midstream assets. The formation of MPLX LP and its subsequent IPO in 2012, along with MPC's continued majority ownership, allows for efficient investment in organic projects and acquisitions, strengthening the logistics network and providing a stable cash flow stream.

MPC intends to allocate significantly more capital to its midstream (Pipeline Transportation) and retail (Speedway) businesses, which are perceived to have more predictable and stable income compared to the more cyclical Refining & Marketing segment. The planned investments for the next three years reflect this shift, with substantial capital directed towards pipeline infrastructure and Speedway's growth.