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Second Quarter 2013 Earnings Conference Call and Webcast August 1, 2013
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Forward-Looking Statements This presentation contains forward-looking statements within the meaning of federal securities laws. These forward-looking statements relate to, among other things, MPC's expectations, estimates and projections concerning MPC business and operations. You can identify forward-looking statements by words such as "anticipate," "believe," "estimate," "expect," "forecast," "project," "could," "may," "should," "would," "will" or other similar expressions that convey the uncertainty of future events or outcomes. Such forward-looking statements are not guarantees of future performance and are subject to risks, uncertainties and other factors, some of which are beyond MPC’s control and are difficult to predict. Factors that could cause actual results to differ materially from those in the forward-looking statements include: volatility in and/or degradation of market and industry conditions; the availability and pricing of crude oil and other feedstocks; slower growth in domestic and Canadian crude supply; completion of pipeline capacity to areas outside the U.S. Midwest; consumer demand for refined products; transportation logistics; the reliability of processing units and other equipment; our ability to successfully implement growth opportunities; impacts from our repurchases of shares of MPC common stock under our share repurchase authorization, including the timing and amounts of any common stock repurchases; state and federal environmental, economic, health and safety, energy and other policies and regulations, including the cost of compliance with the Renewable Fuel Standard; other risk factors inherent to our industry; and the factors set forth under the heading "Risk Factors" in MPC's Annual Report on Form 10-K for the year ended December 31, 2012 filed with the Securities and Exchange Commission (the "SEC"). In addition, the forward-looking statements included herein could be affected by general domestic and international economic and political conditions. Unpredictable or unknown factors not discussed here or in MPC's Form 10-K could also have material adverse effects on forward-looking statements. Copies of MPC's Form 10-K are available on the SEC website, MPC’s website at http://ir.marathonpetroleum.com or by contacting MPC's Investor Relations Office.http://ir.marathonpetroleum.com Other Information EBITDA, cash provided from operations before changes in working capital, adjusted earnings and free cash flow are non-GAAP financial measures provided in this presentation. EBITDA, cash provided from operations before changes in working capital, adjusted earnings and free cash flow reconciliations to the nearest GAAP financial measures are included in the Appendix to this presentation. EBITDA, cash provided from operations before changes in working capital, adjusted earnings and free cash flow are not defined by GAAP and should not be considered in isolation or as an alternative to net income attributable to MPC, net cash provided by (used in) operating, investing and financing activities or other financial measures prepared in accordance with GAAP. 2
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Highlights 3 Achieved strong operating performance Delivered strong Speedway segment performance Impacted by changing market conditions Weaker USGC fundamentals Significant volatility in Chicago market Rapid escalation in price of RINs Returned nearly $1 billion to shareholders Announced a 20% increase in dividend to $0.42 per share
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2Q 2013 Earnings* Adjusted Earnings Adjusted Earnings per Diluted Share 4 2Q 20132Q 2012 Earnings$593 MM$814 MM Adjusted Earnings$632 MM$867 MM Earnings per Diluted Share$1.83$2.38 Adjusted Earnings per Diluted Share$1.95$2.53 1Q2Q3Q4Q *References to Earnings refer to Net Income attributable to MPC 3,352 9.79
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Adjusted Earnings* 2Q 2013 vs. 2Q 2012 Variance Analysis 5 *References to Earnings refer to Net Income attributable to MPC
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Refining & Marketing Segment Income 2Q 2013 vs. 2Q 2012 Variance Analysis 6 *Based on market indicators using actual volumes
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Speedway Segment Income 2Q 2013 vs. 2Q 2012 Variance Analysis 7
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Pipeline Transportation Segment Income 2Q 2013 vs. 2Q 2012 Variance Analysis 8
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Total Company Cash Flow 2Q 2013 9
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Select Balance Sheet/Cash Flow Data ($MM) 2013 2012 2Q1Q4Q3Q As of quarter ended: Cash and cash equivalents3,0694,7374,8603,387 Total debt3,4103,4163,3613,349 Equity12,19712,41212,10511,467 Debt-to-total-capital ratio22% 23% Last Twelve Months (LTM) EBITDA6,3186,5996,3424,942 Debt to LTM EBITDA0.5x 0.7x Quarter to date: Cash provided by (used in) operations(436)2,0792,0431,833 Cash provided by operations before changes in working capital 8591,0461,1241,320 10
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Focused Return of Capital to Shareholders 11 * $464 MM dividends plus $1,813 MM share repurchases ** Cash flow provided by operations less cash capital expenditures and acquisitions ~81% of Free Cash Flow** Free Cash Flow** $2,819 Net cash provided by operations $5,519
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3Q 2013 Outlook Projected 3Q 20133Q 2012 Crude throughput1.65 MMBD 1.19 MMBD Total throughput1.85 MMBD1.35 MMBD Percent of WTI-priced crude22%26% Refinery direct operating costs in Refining & Marketing gross margin*: Turnaround and major maintenance $1.15$1.18 Depreciation & amortization 1.301.44 Other manufacturing cost ** 4.15 3.16 Total$6.60$5.78 Corporate and other unallocated items$75 million$74 million 12 * Per barrel of total throughput **Includes utilities, labor, routine maintenance and other operating costs
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Appendix
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Reconciliation Earnings to Adjusted Earnings* 14 ($MM) 20122013 1Q2Q3Q4Q1Q2Q Earnings5968141,224755725593 Pension settlement expenses**5322539 MN asset sale settlement gain**(117) Adjusted Earnings5968671,129760725632 *References to Earnings refer to Net Income attributable to MPC **Net of tax
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Reconciliation 15 ($MM) 20122013 (Quarter to date) 3Q4Q1Q 2Q Net cash provided by (used in) operating activities 1,8332,0432,079(436) Additions to property, plant and equipment (331)(403)(195)(229) Acquisitions*(27)-(1,493)(22) Free cash flow1,4751,640391(687) Last twelve months free cash flow2,819 Free Cash Flow to Net Cash Provided from Operations *Represents cash paid
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Income 16 ($MM unless otherwise noted) 20122013 1Q2Q3Q4Q1Q2Q Refining & Marketing segment income Speedway segment income Pipeline Transportation segment income 943 50 42 1,325 107 50 1,691 76 52 1,139 77 72 1,105 67 51 903 123 58 Corporate and other unallocated items (79)(92)(74)(91)(67)(64) Pension settlement expenses -(83)(33)(8)-(60) MN asset sale settlement gain --183--- Income from operations 956 (22) 1,307 (17) 1,895 (25) 1,189 (45) 1,156 (48) 960 (45) Net interest and other financing income (costs) Income before income taxes 9341,2901,8701,1441,108915 Income tax provision 338476646385378316 Net income 5968141,224759730599 Less net income attributable to noncontrolling interests ---456 Net income attributable to MPC 5968141,224755725593 Effective tax rate 36%37%35%34% 35%
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EBITDA Reconciliation to Net Income (Loss) Attributable to MPC 17 ($MM) 201120122013 4Q1Q2Q3Q4Q1Q2Q Net Income (Loss) attributable to MPC (75)5968141,224755725593 Less: Net interest and other financial income (costs) (22) (17)(25)(45)(48)(45) Add: Net income attributable to noncontrolling interests ----456 Add: Provision (benefit) for income taxes (105)338476646385378316 Add: Depreciation and amortization 230 236246283287302 EBITDA 721,1861,5432,1411,4721,4431,262 Last Twelve Months EBITDA 4,9426,3426,5996,318
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Cash Provided from Operations Before Changes in Working Capital Reconciliation to Cash Provided by (Used in) Operations 18 ($MM) 20122013 (Quarter to date) 3Q4Q1Q2Q Net cash provided by (used in) operations1,8332,0432,079(436) Less changes in working capital: Changes in current receivables(393)491(884)(655) Changes in inventories142440(517)62 Changes in current accounts payable and accrued liabilities862(63)2,491(702) Changes in the fair value of derivative instruments(98)51(57)-- Total changes in working capital5139191,033(1,295) Cash provided from operations before changes in working capital1,3201,1241,046859
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Capital Expenditures & Investments* 19 ($MM) 2013 Budget2Q 20132013 YTD Refining & Marketing1,016134257 Speedway25576112 Pipeline Transportation1844161 Corporate and Other1602852 Subtotal1,615279482 Capitalized Interest4348 Total Capital Expenditures & Investments1,658283490 *Excludes $1.37 billion in capital expenditures and investments attributable to the acquisition of the Galveston Bay refinery and related assets
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MPC Crude Slate 20
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Refining & Marketing Indicative Gross Margin – 2Q 2013 21 *Based on market indicators using actual volumes
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