FINDLAY, Ohio, March 18, 2020 /PRNewswire/ -- Marathon Petroleum
Corporation (NYSE: MPC) today announced the unanimous decision of
its Board of Directors to maintain MPC's current midstream
structure, with the company remaining the general partner of MPLX
LP (NYSE: MPLX).
"Today's announcement concludes a comprehensive evaluation that
included extensive input from multiple external advisors and
significant feedback from investors," said J. Mike Stice, chair of the special committee of
the Board that led the midstream review process. "Looking forward,
we are excited to provide a clear path for our business. We believe
in MPLX's strategic focus on free cash flow generation, and
distributions from our continued ownership of MPLX will remain an
important, through-cycle source of cash for MPC."
Decision Rationale:
- Midstream Value Already Unlocked: Historical MPC
dropdowns, totaling $1.6 billion of
earnings before interest, taxes, depreciation and amortization
(EBITDA), unlocked $13 billion of
midstream value, including $7 billion
of cash proceeds to MPC. These proceeds enabled MPC's robust
return-of-capital program over the last several years.
- Unwinding Businesses Consumes Capital: In MPLX
separation scenarios, MPC would require the repurchase of Refining
Logistics and Fuels Distribution (RLFD) assets and services,
representing $1.4 billion of 2019
EBITDA. Considering the approximately $1.8
billion of distributions MPC receives from MPLX, executing a
repurchase of RLFD and a separation of the remaining midstream
entity would be cash-flow negative to MPC. It would also require
approximately $11 billion to
$15 billion of balance sheet
resources, which could otherwise be returned to MPC
shareholders.
- Significant Known Cash Costs and Valuation Risks with
Separation: A separation would introduce likely tax costs
of $1 billion or more depending on
the scenario, and MPLX debt restructuring costs of up to
$500 million. Additionally, increased
earnings volatility and market valuation risks would be anticipated
for both MPC and MPLX, post-separation.
- MPC Receives Significant Value from MPLX: MPLX
distributions to MPC of $1.8 billion
in 2019 represent an ongoing, large, stable source of cash flow
that will be even more critical to MPC following the separation of
Speedway and the loss of its predictable cash flows.
About Marathon Petroleum Corporation
Marathon Petroleum Corporation (MPC) is a leading, integrated,
downstream energy company headquartered in Findlay, Ohio. The company operates the
nation's largest refining system with more than 3 million barrels
per day of crude oil capacity across 16 refineries. MPC's marketing
system includes branded locations across the United States, including Marathon brand
retail outlets. Speedway LLC, an MPC subsidiary, owns and operates
retail convenience stores across the
United States. MPC also owns the general partner and
majority limited partner interest in MPLX LP, a midstream company
that owns and operates gathering, processing, and fractionation
assets, as well as crude oil and light product transportation and
logistics infrastructure. More information is available
at www.marathonpetroleum.com.
Investor Relations Contact: (419) 421-2071
Kristina Kazarian, Vice President,
Investor Relations
Taryn Erie, Manager, Investor
Relations
Brian Worthington, Manager, Investor
Relations
Media Contacts:
Hamish
Banks, Vice President, Corporate Communications (419)
421-2521
Jamal Kheiry, Manager, Corporate Communications (419) 421-3312
Forward-Looking Statements
This press release contains forward-looking statements within
the meaning of federal securities laws regarding Marathon Petroleum
Corporation (MPC). These forward-looking statements relate to,
among other things, expectations, estimates and projections
concerning the business and operations, strategy and value creation
plans of MPC. In accordance with "safe harbor" provisions of the
Private Securities Litigation Reform Act of 1995, these statements
are accompanied by cautionary language identifying important
factors, though not necessarily all such factors, that could cause
future outcomes to differ materially from those set forth in the
forward-looking statements. You can identify forward-looking
statements by words such as "anticipate," "believe," budget,"
"commitment," "could," "design," "estimate," "expect," "focus,"
"forecast," "forward," "goal," "guidance," "imply," "intend,"
"may," "objective," "opportunity," "outlook," "plan," "policy,"
"position," "potential," "predict," "priority," "progress,"
"project," "projection," "proposition," "prospective," "pursue,"
"schedule," "seek," "should," "strategy," "target," "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 the
company's control and are difficult to predict. Factors that could
cause MPC's actual results to differ materially from those implied
in the forward-looking statements include but are not limited to:
with respect to the planned Speedway separation, the ability to
successfully complete the separation within the expected timeframe
or at all, based on numerous factors including the macroeconomic
environment, credit markets and equity markets, and our ability to
satisfy customary conditions; future levels of revenues, refining
and marketing margins, operating costs, retail gasoline and
distillate margins, merchandise margins, income from operations,
net income and earnings per share; future levels of capital,
environmental and maintenance expenditures; general and
administrative and other expenses; business strategies, growth
opportunities and expected investment; continued or further
volatility in and/or degradation of general economic, market,
industry or business conditions; the anticipated effects of actions
of third parties such as competitors, activist investors or
federal, foreign, state or local regulatory authorities or
plaintiffs in litigation; the impact of adverse market conditions
or other similar risks to those identified herein affecting MPLX;
and the factors set forth under the heading "Risk Factors" in MPC's
Annual Report on Form 10-K for the year ended Dec. 31, 2019, and in Forms 10-Q, filed with the
SEC. Copies of MPC's Form 10-K and Forms 10-Q are available on the
SEC website, MPC's website at
https://www.marathonpetroleum.com/Investors/ or by contacting MPC's
Investor Relations office. Copies of MPLX's Form 10-K and Forms
10-Q are available on the SEC website, MPLX's website at
http://ir.mplx.com or by contacting MPLX's Investor Relations
office.
We have based our forward-looking statements on our current
expectations, estimates and projections about our business and
industry. We caution that these statements are not guarantees of
future performance and you should not rely unduly on them, as they
involve risks, uncertainties, and assumptions that we cannot
predict. In addition, we have based many of these forward-looking
statements on assumptions about future events that may prove to be
inaccurate. While our management considers these assumptions to be
reasonable, they are inherently subject to significant business,
economic, competitive, regulatory and other risks, contingencies
and uncertainties, most of which are difficult to predict and many
of which are beyond our control. Accordingly, our actual results
may differ materially from the future performance that we have
expressed or forecast in our forward-looking statements. We
undertake no obligation to update any forward-looking statements
except to the extent required by applicable law.
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SOURCE Marathon Petroleum Corporation