10-KPeriod: FY2015

Marathon Petroleum Corp Annual Report, Year Ended Dec 31, 2015

Filed February 26, 2016For Securities:MPC

Summary

Marathon Petroleum Corporation (MPC) reported strong performance in 2015, with net income attributable to MPC increasing by 13% to $2.85 billion, or $5.26 per diluted share. This growth was primarily driven by its Refining & Marketing segment, which saw a significant improvement in operating income due to higher crack spreads and favorable market structure impacts, partially offset by an inventory valuation charge. The Speedway segment also contributed positively, benefiting from the full-year inclusion of recently acquired East Coast and Southeast locations and improved light product margins. The company also made substantial strategic moves during the year, most notably the significant merger of its midstream master limited partnership, MPLX LP, with MarkWest Energy Partners, L.P. This merger created one of the largest natural gas processors in the U.S., expanding MPC's midstream footprint and enhancing its vertically integrated capabilities. MPC maintained a strong financial position with ample liquidity and manageable leverage, supporting its growth initiatives and shareholder returns. Investors should note MPC's ongoing commitment to growing its higher-valued, stable cash flow businesses like Speedway and its midstream segment. The company continues to focus on operational efficiency, strategic investments in refining capacity and product enhancement, and robust shareholder return programs, including dividends and share repurchases.

Financial Statements
Beta
Revenue$72.05B
SG&A Expenses$1.58B
Operating Expenses$67.57B
Operating Income$4.69B
Interest Expense$325.00M
Net Income$2.85B
EPS (Basic)$5.29
EPS (Diluted)$5.26
Shares Outstanding (Basic)538.00M
Shares Outstanding (Diluted)542.00M

Key Highlights

  • 1Marathon Petroleum Corporation (MPC) reported a 13% year-over-year increase in net income attributable to MPC, reaching $2.85 billion ($5.26 per diluted share) in 2015.
  • 2The Refining & Marketing segment was the primary driver of growth, with operating income increasing significantly due to higher crack spreads and favorable market dynamics.
  • 3MPC completed a major strategic transaction with the merger of MPLX LP and MarkWest Energy Partners, L.P., significantly expanding its midstream segment and creating a larger, integrated natural gas processing business.
  • 4The Speedway segment demonstrated robust performance, benefiting from the full-year impact of the Hess retail acquisition and improved product margins.
  • 5The company maintained a strong liquidity position, with $1.13 billion in cash and cash equivalents and $3.17 billion in unused committed borrowing facilities as of December 31, 2015.
  • 6MPC continues its strategy to grow stable cash flow businesses, with significant capital planned for Speedway expansion and midstream projects.
  • 7Shareholder returns remain a priority, with $7.24 billion in common stock repurchased since mid-2011 and a consistent dividend payment history.

Frequently Asked Questions

The primary driver of MPC's financial performance in 2015 was the strong results from its Refining & Marketing segment, which benefited from higher crack spreads and favorable market structure impacts. The Speedway segment also contributed significantly due to the full-year impact of acquisitions and improved margins.

The merger of MPLX LP with MarkWest Energy Partners, L.P. significantly expanded MPC's midstream segment, creating one of the largest natural gas processors in the United States. This strategic move enhances MPC's vertically integrated capabilities and positions it for further growth in the midstream sector.

MPC maintained a strong financial position in 2015. As of December 31, 2015, the company had $1.13 billion in cash and cash equivalents and $3.17 billion in unused committed borrowing facilities. Its debt-to-total capitalization ratio was 38%, indicating manageable leverage and providing financial flexibility for growth initiatives.

MPC's strategy focuses on growing its higher-valued, stable cash flow businesses, specifically the Speedway retail segment and its Midstream segment. This includes ongoing investments in store remodels and new builds for Speedway, and expansion of natural gas gathering, processing, and NGL infrastructure through MPLX.