UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)



x☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period endedJune 30, ~~2018~~2019



¨☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number001-35054

Marathon Petroleum Corporation

(Exact name of registrant as specified in its charter)



Delaware		27-1284632
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

~~539 South Main Street, Findlay, Ohio~~		~~45840-3229~~
~~(Address of principal executive offices)~~		~~(Zip code)~~

~~(419)~~ 539 South Main Street, Findlay, Ohio45840-3229

(Address of principal executive offices) (Zip code)

(419) 422-2121

(Registrant’s telephone number, including area code)



Securities registered pursuant to Section 12(b) of the Act
Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, par value $.01	MPC	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yesx☑ No ¨☐

Indicate by check mark whether the registrant has submitted electronically ~~and posted on its corporate Web site, if any,~~ every Interactive Data File required to be submitted ~~and posted~~ pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit ~~and post~~ such files.) Yesx☑ No ¨☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large Accelerated Filer☑ Accelerated Filer ☐ Non-accelerated Filer ☐ Smaller reporting company ☐



~~Large accelerated filer~~	x	~~Accelerated filer~~	¨

~~Non-accelerated filer~~	¨ ~~(Do not check if a smaller reporting company)~~	~~Smaller reporting company~~	¨

		~~Emerging growth company~~	¨

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act) Yes ¨☐ No x☑

There were ~~451,004,632~~658,319,324 shares of Marathon Petroleum Corporation common stock outstanding as of ~~August 1, 2018.~~

July 31, 2019.

Table of Contents

MARATHON PETROLEUM CORPORATION

FORM 10-Q

FOR THE QUARTERLY PERIOD ENDED JUNE 30, ~~2018~~2019

TABLE OF CONTENTS



	Page
PART I – FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS (UNAUDITED)
CONSOLIDATED STATEMENTS OF INCOME	3
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME	4
CONSOLIDATED BALANCE SHEETS	5
CONSOLIDATED STATEMENTS OF CASH FLOWS	6
CONSOLIDATED STATEMENTS OF EQUITY AND REDEEMABLE NONCONTROLLING INTEREST	7
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS	89
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	3332
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	55
~~ITEM 4. CONTROLS AND PROCEDURES~~	56
~~SUPPLEMENTARY STATISTICS (UNAUDITED)~~ITEM 4. CONTROLS AND PROCEDURES	57

PART II – OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS	6158
ITEM 1A. RISK FACTORS	6159
ITEM 2. UNREGISTERED SALES OF EQUITY ~~SECURITES~~SECURITIES AND USE OF PROCEEDS	6559
ITEM 5. OTHER INFORMATION	6559
ITEM 6. EXHIBITS	6660
SIGNATURES	6762

Unless otherwise stated or the context otherwise indicates, all references in this Form 10-Q to “MPC,” “us,” “our,” “we” or “the Company” mean Marathon Petroleum Corporation and its consolidated subsidiaries.

GLOSSARY OF TERMS

Throughout this report, the following company or industry specific terms and abbreviations are used:



ANS	Alaskan North Slope crude oil, an oil index benchmark price
ASC	Accounting Standards Codification
ASU	Accounting Standards Update
~~ATB~~	~~Articulated tug barges~~
barrel	One stock tank barrel, or 42 United States gallons liquid volume, used in reference to crude oil or other liquid ~~hydrocarbons.~~hydrocarbons
~~bcf/d~~CARB	~~One billion cubic feet per day~~California Air Resources Board
CARBOB	California Reformulated Gasoline Blendstock for Oxygenate Blending
CBOB	Conventional Blending for Oxygenate Blending
EBITDA (a non-GAAP financial measure)	Earnings Before Interest, Tax, Depreciation and Amortization ~~a non-GAAP financial measure~~
EPA	United States Environmental Protection Agency
FASB	Financial Accounting Standards Board
GAAP	Accounting principles generally accepted in the United States
IDR	Incentive Distribution Right
LCM	Lower of cost or market
LIFO	Last in, first out, an inventory costing method
LLS	Louisiana Light Sweet crude oil, an oil index benchmark price
mbpd	Thousand barrels per day
MMBtu	One million British thermal units, an energy measurement
MMcf/d	One million cubic feet of natural gas per day
NGL	Natural gas liquids, such as ethane, propane, butanes and natural gasoline
NYMEX	New York Mercantile Exchange
OPEC	Organization of Petroleum Exporting Countries
OTC	Over-the-Counter
ppm	Parts per million
RIN	Renewable Identification Number
SEC	United States Securities and Exchange Commission
~~TCJA~~	~~Tax Cuts and Jobs Act~~
ULSD	Ultra-low sulfur diesel
USGC	U.S. Gulf Coast
VIE	Variable interest entity
WTI	West Texas Intermediate crude oil, an oil index benchmark price

PART I – FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

MARATHON PETROLEUM CORPORATION

CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)



	Three Months Ended June 30,				Six Months Ended June 30,
(Millions, except per share data)	2019		2018		2019		2018
Revenues and other income:
Sales and other operating revenues	$	33,547	$	22,317	$	61,814	$	41,183
Income from equity method investments	107		80		206		166
Net gain on disposal of assets	4		3		218		5
Other income	30		45		65		75
Total revenues and other income	33,688		22,445		62,303		41,429
Costs and expenses:
Cost of revenues (excludes items below)	29,682		19,655		55,642		37,166
Depreciation and amortization	886		533		1,805		1,061
Selling, general and administrative expenses	904		424		1,785		826
Other taxes	174		122		360		225
Total costs and expenses	31,646		20,734		59,592		39,278
Income from operations	2,042		1,711		2,711		2,151
Net interest and other financial costs	322		195		628		378
Income before income taxes	1,720		1,516		2,083		1,773
Provision for income taxes	353		281		457		303
Net income	1,367		1,235		1,626		1,470
Less net income attributable to:
Redeemable noncontrolling interest	21		20		41		36
Noncontrolling interests	240		160		486		342
Net income attributable to MPC	$	1,106	$	1,055	$	1,099	$	1,092
Per Share Data (See Note 7)
Basic:
Net income attributable to MPC per share	$	1.67	$	2.30	$	1.65	$	2.34
Weighted average shares outstanding	662		459		667		467
Diluted:
Net income attributable to MPC per share	$	1.66	$	2.27	$	1.63	$	2.31
Weighted average shares outstanding	666		464		672		472

Three Months Ended
June 30, Six Months Ended
June 30,
(In millions, except per share data) 2018 2017 2018 2017
Revenues and other income:
Sales and other operating revenues^(a)
$ 22,118
$ 18,033
$ 40,812
$ 34,167
Sales to related parties 199
147
371
301
Income from equity method investments 80
83
166
140
Net gain on disposal of assets 3
7
5
12
Other income 45
84
75
127
Total revenues and other income 22,445
18,354
41,429
34,747
Costs and expenses:
Cost of revenues (excludes items below)^(a)
19,517
16,101
36,887
31,047
Purchases from related parties 138
150
279
272
Depreciation and amortization 533
521
1,061
1,057
Selling, general and administrative expenses 424
485
826
875
Other taxes 122
115
225
223
Total costs and expenses 20,734
17,372
39,278
33,474
Income from operations 1,711
982
2,151
1,273
Net interest and other financial costs 195
158
378
307
Income before income taxes 1,516
824
1,773
966
Provision for income taxes 281
250
303
291
Net income 1,235
574
1,470
675
Less net income attributable to:
Redeemable noncontrolling interest 20
17
36
33
Noncontrolling interests 160
74
342
129
Net income attributable to MPC $ 1,055
$ 483
$ 1,092
$ 513
Per Share Data (See Note 8)
Basic:
Net income attributable to MPC per share $ 2.30
$ 0.94
$ 2.34
$ 0.99
Weighted average shares outstanding 459
513
467
519
Diluted:
Net income attributable to MPC per share $ 2.27
$ 0.93
$ 2.31
$ 0.98
Weighted average shares outstanding 464
517
472
523
Dividends paid $ 0.46
$ 0.36
$ 0.92
$ 0.72


^(a)	~~The 2018 period reflects an election to present certain taxes on a net basis. See Notes 2 and 3 for further information.~~

The accompanying notes are an integral part of these consolidated financial statements.

Table of Contents

MARATHON PETROLEUM CORPORATION

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited)


	Three Months Ended June 30,						Six Months Ended June 30,						Three Months Ended June 30,						Six Months Ended June 30,
(In millions)	2018			2017			2018			2017
(Millions of dollars)													2019			2018			2019			2018
Net income	$	1,235		$	574		$	1,470		$	675		$	1,367		$	1,235		$	1,626		$	1,470
Other comprehensive income (loss):
Defined benefit postretirement and post-employment plans:
Actuarial changes, net of tax of $2, $4, $5 and $7, respectively	7			7			14			11
Prior service costs, net of tax of ($2), ($4), ($4) and ($8), respectively	(7		)	(6		)	(14		)	(13		)
Other, net of tax of $0, $0, ($1) and $0, respectively	—			—			(2		)	—
Defined benefit plans:
Actuarial changes, net of tax of $0, $2, $6 and $5, respectively													(1		)	7			(4		)	14
Prior service costs, net of tax of ($3), ($2), ($11) and ($4), respectively													(8		)	(7		)	(11		)	(14		)
Other, net of tax of ($1), $0, ($1) and ($1), respectively													(1		)	—			(2		)	(2		)
Other comprehensive income (loss)	—			1			(2		)	(2		)	(10		)	—			(17		)	(2		)
Comprehensive income	1,235			575			1,468			673			1,357			1,235			1,609			1,468
Less comprehensive income attributable to:
Redeemable noncontrolling interest	20			17			36			33			21			20			41			36
Noncontrolling interests	160			74			342			129			240			160			486			342
Comprehensive income attributable to MPC	$	1,055		$	484		$	1,090		$	511		$	1,096		$	1,055		$	1,082		$	1,090

The accompanying notes are an integral part of these consolidated financial statements.

Table of Contents

MARATHON PETROLEUM CORPORATION

CONSOLIDATED BALANCE SHEETS

(Unaudited)


(In millions, except share data)	June 30, 2018			December 31, 2017

(Millions of dollars, except share data)							June 30, 2019			December 31, 2018
Assets
Current assets:
Cash and cash equivalents (MPLX: $3 and $5, respectively)	$	4,999		$	3,011
Receivables, less allowance for doubtful accounts of $10 and $11 (MPLX: $370 and $299, respectively)	4,919			4,695
Inventories (MPLX: $73 and $65, respectively)	5,485			5,550
Other current assets (MPLX: $36 and $29, respectively)	145			145
Cash and cash equivalents							$	1,247		$	1,687
Receivables, less allowance for doubtful accounts of $10 and $9, respectively							7,603			5,853
Inventories							9,088			9,837
Other current assets							458			646
Total current assets	15,548			13,401			18,396			18,023
Equity method investments (MPLX: $4,042 and $4,010, respectively)	4,838			4,787
Property, plant and equipment, net (MPLX: $13,642 and $12,187, respectively)	26,931			26,443
Goodwill (MPLX: $2,460 and $2,245, respectively)	3,586			3,586
Other noncurrent assets (MPLX: $472 and $479, respectively)	833			830
Equity method investments							6,729			5,898
Property, plant and equipment, net							45,335			45,058
Goodwill							20,277			20,184
Right of use assets							2,588			—
Other noncurrent assets							3,571			3,777
Total assets	$	51,736		$	49,047		$	96,896		$	92,940
Liabilities
Current liabilities:
Accounts payable (MPLX: $728 and $621, respectively)	$	8,113		$	8,297
Payroll and benefits payable (MPLX: $2 and $1, respectively)	432			591
Accrued taxes (MPLX: $46 and $38, respectively)	713			670
Debt due within one year (MPLX: $1 and $1, respectively)	26			624
Other current liabilities (MPLX: $222 and $130, respectively)	431			296
Accounts payable							$	10,905		$	9,366
Payroll and benefits payable							778			1,152
Accrued taxes							1,223			1,446
Debt due within one year							554			544
Operating lease liabilities							615			—
Other current liabilities							815			708
Total current liabilities	9,715			10,478			14,890			13,216
Long-term debt (MPLX: $11,874 and $6,945, respectively)	17,241			12,322
Deferred income taxes (MPLX: $11 and $5, respectively)	3,144			2,654
Long-term debt							27,853			26,980
Deferred income taxes							5,235			4,864
Defined benefit postretirement plan obligations	1,156			1,099			1,610			1,509
Deferred credits and other liabilities (MPLX: $246 and $230, respectively)	659			666
Long-term operating lease liabilities							2,068			—
Deferred credits and other liabilities							1,174			1,318
Total liabilities	31,915			27,219			52,830			47,887
Commitments and contingencies (see Note 22)
Commitments and contingencies (see Note 23)
Redeemable noncontrolling interest	1,003			1,000			1,005			1,004
Equity
MPC stockholders’ equity:
Preferred stock, no shares issued and outstanding (par value $0.01 per share, 30 million shares authorized)	—			—			—			—
Common stock:
Issued – 735 million and 734 million shares (par value $0.01 per share, 1 billion shares authorized)	7			7
Held in treasury, at cost – 279 million and 248 million shares	(12,093		)	(9,869		)
Issued – 978 million and 975 million shares (par value $0.01 per share, 2 billion shares authorized)							10			10
Held in treasury, at cost – 318 million and 295 million shares							(14,573		)	(13,175		)
Additional paid-in capital	13,688			11,262			33,785			33,729
Retained earnings	13,589			12,864			15,146			14,755
Accumulated other comprehensive loss	(233		)	(231		)	(161		)	(144		)
Total MPC stockholders’ equity	14,958			14,033			34,207			35,175
Noncontrolling interests	3,860			6,795			8,854			8,874
Total equity	18,818			20,828			43,061			44,049
Total liabilities, redeemable noncontrolling interest and equity	$	51,736		$	49,047		$	96,896		$	92,940

The accompanying notes are an integral part of these consolidated financial statements.

Table of Contents

MARATHON PETROLEUM CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)


	Six Months Ended June 30,						Six Months Ended June 30,
(In millions)	2018			2017
(Millions of dollars)							2019			2018
Operating activities:
Net income	$	1,470		$	675		$	1,626		$	1,470
Adjustments to reconcile net income to net cash provided by operating activities:
Amortization of deferred financing costs and debt discount	35			30			9			35
Depreciation and amortization	1,061			1,057			1,805			1,061
Pension and other postretirement benefits, net	65			(59		)	86			65
Deferred income taxes	2			23			360			2
Net gain on disposal of assets	(5		)	(12		)	(218		)	(5		)
Income from equity method investments	(166		)	(140		)	(206		)	(166		)
Distributions from equity method investments	217			136			310			217
Changes in the fair value of derivative instruments	1			59			(27		)	1
Changes in:
Changes in operating assets and liabilities, net of effects of businesses acquired:
Current receivables	(225		)	344			(1,750		)	(225		)
Inventories	66			107			740			66
Current accounts payable and accrued liabilities	(231		)	(208		)	1,297			(231		)
Right of use assets and operating lease liabilities, net							9			—
All other, net	(41		)	(51		)	204			(41		)
Net cash provided by operating activities	2,249			1,961			4,245			2,249
Investing activities:
Additions to property, plant and equipment	(1,466		)	(1,265		)	(2,419		)	(1,466		)
Acquisitions, net of cash acquired	—			(220		)	6			—
Disposal of assets	14			37			33			14
Investments – acquisitions, loans and contributions	(118		)	(677		)	(595		)	(118		)
– redemptions, repayments and return of capital	15			24			58			15
All other, net	37			89			37			37
Net cash used in investing activities	(1,518		)	(2,012		)	(2,880		)	(1,518		)
Financing activities:
Commercial paper – issued	—			300
– repayments	—			(300		)
Long-term debt – borrowings	9,610			2,241			7,964			9,610
– repayments	(5,270		)	(213		)	(7,116		)	(5,270		)
Debt issuance costs	(53		)	(21		)	—			(53		)
Issuance of common stock	21			20			3			21
Common stock repurchased	(2,212		)	(1,170		)	(1,385		)	(2,212		)
Dividends paid	(430		)	(376		)	(706		)	(430		)
Issuance of MPLX LP common units	—			434
Distributions to noncontrolling interests	(394		)	(324		)	(640		)	(394		)
Contributions from noncontrolling interests	5			128			95			5
Contingent consideration payment	—			(89		)
All other, net	(19		)	(17		)	(56		)	(19		)
Net cash provided by financing activities	1,258			613
Net increase in cash, cash equivalents and restricted cash	1,989			562
Net cash provided by (used in) financing activities							(1,841		)	1,258
Net increase (decrease) in cash, cash equivalents and restricted cash							(476		)	1,989
Cash, cash equivalents and restricted cash at beginning of period	3,015			892			1,725			3,015
Cash, cash equivalents and restricted cash at end of period	$	5,004		$	1,454		$	1,249		$	5,004

The accompanying notes are an integral part of these consolidated financial statements.

Table of Contents

MARATHON PETROLEUM CORPORATION

CONSOLIDATED STATEMENTS OF EQUITY AND REDEEMBALE NONCONTROLLING INTEREST

(Unaudited)

MPC Stockholders’ Equity
(In millions) Common
Stock Treasury
Stock Additional
Paid-in
Capital Retained
Earnings Accumulated
Other
Comprehensive
Loss Non-controlling
Interests Total
Equity Redeemable Non-controlling Interest
Balance as of December 31, 2016 $ 7
$ (7,482 ) $ 11,060
$ 10,206
$ (234 ) $ 6,646
$ 20,203
$ 1,000
Net income —
—
—
513
—
129
642
33
Dividends declared —
—
—
(375 ) —
—
(375 ) —
Distributions to noncontrolling interests —
—
—
—
—
(291 ) (291 ) (33 )
Contributions from noncontrolling interests —
—
—
—
—
128
128
—
Other comprehensive loss —
—
—
—
(2 ) —
(2 ) —
Shares repurchased —
(1,170 ) —
—
—
—
(1,170 ) —
Stock-based compensation —
(12 ) 47
—
—
1
36
—
Impact from equity transactions of MPLX LP —
—
78
—
—
315
393
—
Balance as of June 30, 2017 $ 7
$ (8,664 ) $ 11,185
$ 10,344
$ (236 ) $ 6,928
$ 19,564
$ 1,000
Balance as of December 31, 2017 $ 7
$ (9,869 ) $ 11,262
$ 12,864
$ (231 ) $ 6,795
$ 20,828
$ 1,000
Cumulative effect of adopting new accounting standards —
—
—
63
—
1
64
—
Net income —
—
—
1,092
—
342
1,434
36
Dividends declared —
—
—
(430 ) —
—
(430 ) —
Distributions to noncontrolling interests —
—
—
—
—
(361 ) (361 ) (33 )
Contributions from noncontrolling interests —
—
—
—
—
5
5
—
Other comprehensive loss —
—
—
—
(2 ) —
(2 ) —
Shares repurchased —
(2,212 ) —
—
—
—
(2,212 ) —
Stock-based compensation —
(12 ) 45
—
—
5
38
—
Impact from equity transactions of MPLX LP —
—
2,381
—
—
(2,927 ) (546 ) —
Balance as of June 30, 2018 $ 7
$ (12,093 ) $ 13,688
$ 13,589
$ (233 ) $ 3,860
$ 18,818
$ 1,003

(Shares in millions) Common
Stock Treasury
Stock
Balance as of December 31, 2016 731
(203 )
Shares repurchased —
(23 )
Shares issued – stock-based compensation 1
—

Balance as of June 30, 2017 732
(226 )
Balance as of December 31, 2017 734
(248 )
Shares repurchased —
(31 )
Shares issued – stock-based compensation 1
—

Balance as of June 30, 2018 735
(279 )



	MPC Stockholders’ Equity
	Common Stock			Treasury Stock					Additional Paid-in Capital		Retained Earnings			Accumulated Other Comprehensive Income (Loss)			Non-controlling Interests			Total Equity			Redeemable Non-controlling Interest
(In millions)	Shares	Amount		Shares		Amount			Additional Paid-in Capital		Retained Earnings			Accumulated Other Comprehensive Income (Loss)			Non-controlling Interests			Total Equity			Redeemable Non-controlling Interest
Balance as of December 31, 2018	975	$	10	(295	)	$	(13,175	)	$	33,729	$	14,755		$	(144	)	$	8,874		$	44,049		$	1,004
Net income (loss)	—	—		—		—			—		(7		)	—			246			239			20
Dividends declared on common stock ($0.53 per share)	—	—		—		—			—		(357		)	—			—			(357		)	—
Distributions to noncontrolling interests	—	—		—		—			—		—			—			(305		)	(305		)	(20		)
Contributions from noncontrolling interests	—	—		—		—			—		—			—			95			95			—
Other comprehensive loss	—	—		—		—			—		—			(7		)	—			(7		)	—
Shares repurchased	—	—		(14	)	(885		)	—		—			—			—			(885		)	—
Stock based compensation	1	—		—		(3		)	32		—			—			(1		)	28			—
Impact from equity transactions of MPLX & ANDX	—	—		—		—			3		—			—			(1		)	2			—
Other	—	—		—		—			—		—			—			(1		)	(1		)	—
Balance as of March 31, 2019	976	$	10	(309	)	$	(14,063	)	$	33,764	$	14,391		$	(151	)	$	8,907		$	42,858		$	1,004
Net income	—	—		—		—			—		1,106			—			240			1,346			21
Dividends declared on common stock ($0.53 per share)	—	—		—		—			—		(351		)	—			—			(351		)	—
Distributions to noncontrolling interests	—	—		—		—			—		—			—			(295		)	(295		)	(20		)
Other comprehensive loss	—	—		—		—			—		—			(10		)	—			(10		)	—
Shares repurchased	—	—		(9	)	(500		)	—		—			—			—			(500		)	—
Stock based compensation	2	—		—		(10		)	19		—			—			2			11			—
Impact from equity transactions of MPLX & ANDX	—	—		—		—			2		—			—			(1		)	1			—
Other	—	—		—		—			—		—			—			1			1			—
Balance as of June 30, 2019	978	$	10	(318	)	$	(14,573	)	$	33,785	$	15,146		$	(161	)	$	8,854		$	43,061		$	1,005

The accompanying notes are an integral part of these consolidated financial statements.

Table of Contents

MARATHON PETROLEUM CORPORATION

CONSOLIDATED STATEMENTS OF EQUITY AND REDEEMBALE NONCONTROLLING INTEREST

(Unaudited)



	MPC Stockholders’ Equity
	Common Stock			Treasury Stock					Additional Paid-in Capital		Retained Earnings			Accumulated Other Comprehensive Income (Loss)			Non-controlling Interests			Total Equity			Redeemable Non-controlling Interest
(Shares in millions; amounts in millions of dollars)	Shares	Amount		Shares		Amount			Additional Paid-in Capital		Retained Earnings			Accumulated Other Comprehensive Income (Loss)			Non-controlling Interests			Total Equity			Redeemable Non-controlling Interest
Balance as of December 31, 2017	734	$	7	(248	)	$	(9,869	)	$	11,262	$	12,864		$	(231	)	$	6,795		$	20,828		$	1,000
Cumulative effect of adopting new accounting standards	—	—		—		—			—		63			—			1			64			—
Net income	—	—		—		—			—		37			—			182			219			16
Dividends declared on common stock ($0.46 per share)	—	—		—		—			—		(219		)	—			—			(219		)	—
Distributions to noncontrolling interests	—	—		—		—			—		—			—			(179		)	(179		)	(16		)
Contributions from noncontrolling interests	—	—		—		—			—		—			—			1			1			—
Other comprehensive loss	—	—		—		—			—		—			(2		)	—			(2		)	—
Shares repurchased	—	—		(19	)	(1,327		)	—		—			—			—			(1,327		)	—
Stock based compensation	—	—		—		(4		)	27		—			—			1			24			—
Impact from equity transactions of MPLX & ANDX	—	—		—		—			2,380		—			—			(2,926		)	(546		)	—
Balance as of March 31, 2018	734	$	7	(267	)	$	(11,200	)	$	13,669	$	12,745		$	(233	)	$	3,875		$	18,863		$	1,000
Net income	—	—		—		—			—		1,055			—			160			1,215			20
Dividends declared on common stock ($0.46 per share)	—	—		—		—			—		(211		)	—			—			(211		)	—
Distributions to noncontrolling interests	—	—		—		—			—		—			—			(182		)	(182		)	(17		)
Contributions from noncontrolling interests	—	—		—		—			—		—			—			4			4			—
Other comprehensive loss	—	—		—		—			—		—			—			—			—			—
Shares repurchased	—	—		(12	)	(885		)	—		—			—			—			(885		)	—
Stock based compensation	1	—		—		(8		)	18		—			—			4			14			—
Impact from equity transactions of MPLX & ANDX	—	—		—		—			1		—			—			(1		)	—			—
Balance as of June 30, 2018	735	$	7	(279	)	$	(12,093	)	$	13,688	$	13,589		$	(233	)	$	3,860		$	18,818		$	1,003

The accompanying notes are an integral part of these consolidated financial statements.

Table of Contents

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

1. DESCRIPTION OF THE BUSINESS AND BASIS OF PRESENTATION

Description of the Business

We are a leading, integrated, downstream energy company headquartered in Findlay, Ohio. We operate the nation's largest refining system with more than 3 million barrels per day of crude oil capacity across 16 refineries. We sell refined products to wholesale marketing customers domestically and internationally, to buyers on the spot market, to consumers through our Retail business segment and to independent entrepreneurs who operate approximately 7,000 branded outlets. Our ~~business consists of refining~~retail operations own and ~~marketing,~~operate approximately 3,910 retail transportation fuel and ~~midstream services conducted primarily in the Midwest, Gulf Coast, East Coast, Northeast and Southeast regions of~~convenience stores across the United States and also sell transportation fuel to consumers through ~~subsidiaries, including Marathon Petroleum Company~~approximately 1,060 direct dealer locations under long-term supply contracts. MPC’s midstream operations are primarily conducted through MPLX LP (“~~MPC LP”), Speedway LLC and its subsidiaries (“Speedway”~~MPLX”) and ~~MPLX~~Andeavor Logistics LP (“ANDX”), which own and ~~its subsidiaries (“MPLX”).~~operate crude oil and light product transportation and logistics infrastructure as well as gathering, processing, and fractionation assets. We own the general partner and majority limited partner interests in these two midstream companies.

~~See~~Refer to Note 104 for further information on the Andeavor acquisition, which closed on October 1, 2018, and to Notes 3 and 9 for additional information about our operations.

Basis of Presentation

All significant intercompany transactions and accounts have been eliminated.

These interim consolidated financial statements are unaudited; however, in the opinion of our management, these statements reflect all adjustments necessary for a fair statement of the results for the periods reported. All such adjustments are of a normal, recurring nature unless otherwise disclosed. These interim consolidated financial statements, including the notes, have been prepared in accordance with the rules of the SEC applicable to interim period financial statements and do not include all of the information and disclosures required by GAAP for complete financial statements.

These interim consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, ~~2017.~~2018. The results of operations for the three and six months ended June 30, ~~2018~~2019 are not necessarily indicative of the results to be expected for the full year.

~~Certain prior period financial statement amounts have been reclassified to conform to current period presentation.~~

2. ~~SUMMARY OF PRINCIPAL ACCOUNTING POLICIES~~

~~Revenue Recognition~~

As described in Note 3, we adopted ASU 2014-09, Revenue from Contracts with Customers (“ASC 606”) effective January 1, 2018. We recognize revenue based on consideration specified in contracts or agreements with customers when we satisfy our performance obligations by transferring control over products or services to a customer. Concurrent with our adoption of ASC 606, we made an accounting policy election that all taxes assessed by a governmental authority that are both imposed on and concurrent with a revenue-producing transaction and collected from our customers will be recognized on a net basis within “Sales and other operating revenues.”

~~The adoption of ASC 606 did not materially change our revenue recognition patterns, which are described below by reportable segment:~~

Refining & Marketing - The vast majority of our Refining & Marketing contracts contain pricing that is based on the market price for the product at the time of delivery. Our obligations to deliver product volumes are typically satisfied and revenue is recognized when control of the product transfers to our customers. Concurrent with the transfer of control, we typically receive the right to payment for the delivered product, the customer accepts the product and the customer has significant risks and rewards of ownership of the product. Payment terms require customers to pay shortly after delivery and do not contain significant financing components.

Speedway - Revenue is recognized when our customers receive control of the transportation fuels or merchandise. Payments from customers are received at the time sales occur in cash or by credit or debit card. Speedway offers a loyalty rewards program to its customers. We defer a minor portion of revenue on sales to the loyalty program participants until the participants redeem their rewards. The related contract liability, as defined in the standard, is not material to our financial statements.

Midstream - Midstream revenue transactions typically are defined by contracts under which we sell a product or provide a service. Revenues from sales of product are recognized when control of the product transfers to the customer. Revenues from sales of services are recognized over time when the performance obligation is satisfied as services are provided in a series. We have elected to use the output measure of progress to recognize revenue based on the units delivered, processed or transported. The transaction price in our Midstream contracts often has both fixed components, related to minimum volume commitments, and variable components which are primarily dependent on volumes. Variable consideration will generally not be estimated at contract inception as the transaction price is specifically allocable to the services provided at each period end.

~~Table of Contents~~

~~Refer to Note 10 for disclosure of our revenue disaggregated by segment and product line, as well as a description of our reportable segment operations.~~

3. ACCOUNTING STANDARDS

Recently Adopted

ASU ~~2014-09, Revenue - Revenue from Contracts with Customers (ASC 606)~~2016-02, Leases

~~On January 1, 2018, we~~We adopted ~~the new revenue standard, applying the modified retrospective method, whereby a cumulative effect is recorded to opening retained earnings and~~ ASU No. 2016-02, Leases (“ASC ~~606 is applied prospectively. We recorded a net increase of $1 million to our retained earnings balance~~842”), as of January 1, ~~2018 due~~2019, electing the transition method which permits entities to adopt the provisions of the standard using the modified retrospective approach without adjusting comparative periods. We also elected the package of practical expedients permitted under the transition guidance within the new standard, which among other things, allowed us to grandfather the historical accounting conclusions until a reassessment event is present. We have also elected the practical expedient to not recognize short-term leases on the balance sheet, the practical expedient related to right of way permits and land easements which allows us to carry forward our accounting treatment for those existing agreements, and the practical expedient to combine lease and non-lease components for the majority of our underlying classes of assets except for our third-party contractor service and equipment agreements and boat and barge equipment agreements in which we are the lessee. We did not elect the practical expedient to combine lease and non-lease components for arrangements in which we are the lessor. In instances where the practical expedient was not elected, lease and non-lease consideration is allocated based on relative standalone selling price.

Right of use (“ROU”) assets represent our right to use an underlying asset in which we obtain substantially all of the economic benefits and the right to direct the use of the asset during the lease term. Lease liabilities represent our obligation to make lease payments arising from the lease. Operating lease ROU assets and lease liabilities are recognized at commencement date based on the present value of lease payments over the lease term. We recognize ROU assets and lease liabilities on the balance sheet for leases with a lease term of greater than one year. Payments that are not fixed at the commencement of the lease are considered variable and are excluded from the ROU asset and lease liability calculations. In the measurement of our ROU assets and lease liabilities, the fixed lease payments in the agreement are discounted using a secured incremental borrowing rate for a term similar to the ~~cumulative effect~~duration of ~~applying~~the lease, as our leases do not provide implicit rates. Operating lease expense is recognized on a straight-line basis over the lease term.

Table of Contents

Adoption of the new ~~revenue standard.~~

~~Impact~~standard resulted in the recording of ~~Adoption~~

~~The adoption~~ROU assets and lease liabilities of ~~ASC 606 did not materially change our revenue recognition patterns. The most significant impacts of adopting ASC 606 for the period ended June 30, 2018 are as follows:~~

a reduction of “Sales and other operating revenues” of $1.36 billion for the three months ended June 30, 2018 and $2.61 billion for the six months ended June 30, 2018 due to our accounting policy election to present taxes incurred concurrently with revenue producing transactions and collected on behalf of our customers on a net basis. For the three and six months ended June 30, 2017, taxes are reflected on a gross basis in “Sales and other operating revenues” and “Cost of revenues”, and include $1.27approximately $2.81 billion and ~~$2.47~~$2.90 billion, respectively, ~~of taxes that are now subject to our net basis accounting policy election.~~

an increase to both “Sales and other operating revenues” and “Cost of revenues” of $124 million for the three months ended June 30, 2018 and $240 million for the six months ended June 30, 2018 related to certain Midstream contract provisions for third-party reimbursements, non-cash consideration and imbalances that require gross presentation under ASC 606. Comparative information continues to be reported under the accounting standards in effect for those periods.

~~Practical Expedients~~

~~We elected the completed contract practical expedient and only applied ASC 606 to contracts that were not completed~~ as of January 1, ~~2018.~~2019. The standard did not materially impact our consolidated statements of income, cash flows or equity as a result of adoption.

~~We do not disclose information on~~As a lessor under ASC 842, MPLX may be required to re-classify existing operating leases to sales-type leases upon modification and related reassessment of the ~~future performance obligations for any contract with expected duration of one year or less at inception. As of June 30, 2018, we do not have future performance obligations that are material~~leases. If such a modification were to ~~future periods.~~

~~Receivables~~

On the accompanying consolidated balance sheets, “Receivables, less allowance for doubtful accounts” primarily consists of customer receivables. Significant, non-customer balances included in our receivables at June 30, 2018 include matching buy/sell receivables of $1.50 billion and income tax receivables of $117 million.

~~ASU 2016-16, Income Taxes - Intra-Entity Transfers of Assets Other Than Inventory~~

~~We adopted this accounting standards update~~occur, it may result in the ~~first quarter~~de-recognition of ~~2018~~existing assets, recognition of a receivable in the amount of the present value of fixed payments expected to be received by MPLX under the lease, and ~~recorded~~recognition of a ~~$61 million cumulative-effect adjustment~~corresponding gain or loss in the period of change. MPLX will evaluate the impact of a lease reassessment as ~~an increase to retained earnings as of January 1, 2018 with the offset recorded as a reduction to “Deferred Income Taxes.”~~modifications occur.

We also adopted the following ~~standards~~ASUs during the first six months of ~~2018,~~2019, none of which had a material impact to our financial statements or financial statement disclosures:



ASU		Effective Date
~~2017-09~~2018-02	~~Stock Compensation~~Reporting Comprehensive Income - ~~Scope~~Reclassification of ~~Modification Accounting~~Certain Tax Effects from Accumulated Other Comprehensive Income	January 1, ~~2018~~2019
~~2017-07~~2017-12	~~Retirement Benefits~~Derivatives and Hedging - ~~Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Cost~~Targeted Improvements to Accounting for Hedging Activities	January 1, ~~2018~~
~~2017-05~~	~~Gains and Losses from the Derecognition of Nonfinancial Assets - Clarifying the Scope of Asset Derecognition Guidance~~	~~January 1, 2018~~
~~2017-01~~	~~Business Combinations - Clarifying the Definition of a Business~~	~~January 1, 2018~~
~~2016-18~~	~~Statement of Cash Flows - Restricted Cash~~	~~January 1, 2018~~
~~2016-15~~	~~Statement of Cash Flows - Classification of Certain Cash Receipts and Cash Payments~~	~~January 1, 2018~~
~~2016-01~~	~~Financial Instruments - Recognition and Measurement of Financial Assets and Liabilities~~	~~January 1, 2018~~2019

~~Table of Contents~~

Not Yet Adopted

~~ASU 2018-02, Reporting Comprehensive Income - Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income~~

In February 2018, the FASB issued an accounting standards update allowing an entity the choice to reclassify to retained earnings the tax effects related to the TCJA that are stranded in accumulated other comprehensive income. We do not expect adoption of this standard to have a material impact on our financial statements. The amendment is effective beginning in 2019 with early adoption permitted.

~~ASU 2017-12, Derivatives and Hedging - Targeted Improvements to Accounting for Hedging Activities~~

In August 2017, the FASB issued an accounting standards update to amend the hedge accounting rules to simplify the application of hedge accounting guidance and better portray the economic results of risk management activities in the financial statements. The guidance expands the ability to hedge nonfinancial and financial risk components, reduces complexity in fair value hedges of interest rate risk, eliminates the requirement to separately measure and report hedge ineffectiveness and eases certain hedge effectiveness assessment requirements. The guidance is effective beginning in 2019 with early adoption permitted. We are currently evaluating the impact of this guidance, including transition elections and required disclosures, on our financial statements and the timing of adoption. However, since we have not historically designated our commodity derivatives as hedges, we do not expect the adoption of this accounting standards update to have a material impact on our consolidated financial statements.

ASU 2017-04, Intangibles - Goodwill and Other - Simplifying the Test for Goodwill Impairment

In January 2017, the FASB issued an ~~accounting standards update~~ASU which simplifies the subsequent measurement of goodwill by eliminating Step 2 from the goodwill impairment test. Under the new guidance, the recognition of an impairment charge is calculated based on the amount by which the carrying amount exceeds the reporting unit’s fair value, which could be different from the amount calculated under the current method using the implied fair value of the goodwill; however, the loss recognized should not exceed the total amount of goodwill allocated to that reporting unit. The guidance should be applied on a prospective basis and is effective for annual or any interim goodwill impairment tests in fiscal years beginning after December 15, 2019.

ASU 2016-13, Credit Losses - Measurement of Credit Losses on Financial Instruments

In June 2016, the FASB issued an ~~accounting standards update~~ASU related to the accounting for credit losses on certain financial instruments. The guidance requires that for most financial assets, losses be based on an expected loss approach which includes estimates of losses over the life of exposure that considers historical, current and forecasted information. Expanded disclosures related to the methods used to estimate the losses as well as a specific disaggregation of balances for financial assets are also required. The change is effective for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years, with early adoption permitted for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years. We do not expect application of this ~~accounting standards update~~ASU to have a material impact on our consolidated financial statements.

~~ASU 2016-02, Leases~~

In February 2016, the FASB issued an accounting standards update requiring lessees to record virtually all leases on their balance sheets. The accounting standards update also requires expanded disclosures to help financial statement users better understand the amount, timing and uncertainty of cash flows arising from leases. For lessors, this amended guidance modifies the classification criteria and the accounting for sales-type and direct financing leases. The change will be effective on a modified retrospective basis for fiscal years beginning after December 15, 2018, and interim periods within those years, with early adoption permitted. We continue to evaluate the impact of this standard on our financial statements and disclosures, internal controls and accounting policies. This evaluation process includes reviewing all forms of leases, performing a completeness assessment over the lease population and analyzing the practical expedients in order to determine the best path of implementing changes to existing processes and controls. We are implementing a third-party supported lease accounting information system to account for our lease population in accordance with this new standard and establishing internal controls over the new system. We believe the adoption of the standard will have a material impact on our consolidated financial statements as virtually all leases will be recognized as a right of use asset and lease obligation.

~~Table of Contents~~3. MASTER LIMITED PARTNERSHIPS

4.We own the general partner and majority limited partner interests in two midstream companies, MPLX LP

~~MPLX is a diversified, growth-oriented publicly traded master limited partnership formed by us to~~and ANDX, which own ~~operate, develop~~ and ~~acquire midstream energy infrastructure assets. MPLX is engaged in the~~operate gathering, processing, and ~~transportation of natural gas; the gathering, transportation,~~ fractionation ~~storage and marketing of NGLs; and the transportation, storage, distribution and marketing of~~assets, as well as crude oil and ~~refined petroleum products.~~

light product transportation and logistics infrastructure. As of June 30, ~~2018,~~2019, we owned ~~63.6~~64 percent of the outstanding ~~MPLX~~ common units of both MPLX and ANDX. We control both MPLX and ANDX through our ownership of the general partner ~~interest~~interest.

As described in ~~MPLX.~~Notes 4 and 5, we have consolidated ANDX since October 1, 2018 in accordance with ASC 810 and previously recorded ANDX’s assets and liabilities to our balance sheet at preliminary fair values as of the Andeavor acquisition date of October 1, 2018.

On July 30, 2019, MPLX iscompleted its acquisition of ANDX. At the effective time of the ANDX acquisition, each common unit held by ANDX’s public unitholders was converted into the right to receive 1.135 MPLX common units. ANDX common units held by MPC were converted into the right to receive 1.0328 MPLX common units. ANDX common unitholders will not receive any future distributions from ANDX, but instead will receive a ~~VIE because~~second quarter 2019 distribution as and when declared by the ~~limited partners~~Board of Directors of MPLX dowith respect to the MPLX common units issued in connection with the acquisition. Additionally, the ANDX Series A Preferred unitholders will not ~~have substantive kick-out or substantive participating rights over~~receive any future distributions from ANDX, but instead will receive the ~~general partner. We are~~semi-annual distributions payable August 15, 2019 on MPLX Series B Preferred units issued in connection with the ~~primary beneficiary~~acquisition. As of ~~MPLX because~~July 30, 2019, MPC will account for this transaction as a common control transaction, as defined by ASC 805, which will result in ~~addition~~adjustments to our significant economic interest, we also have the power, through our 100 percent ownership of the general partner, to control the decisions that most significantly impact MPLX. We therefore consolidate MPLX and record a noncontrolling interest ~~for the 36.4 percent interest owned by the public. We also record a redeemable noncontrolling interest related to MPLX’s preferred units.~~and additional paid-in capital balances.

~~The creditors~~

Table of MPLX do not have recourse to MPC’s general credit through guarantees or other financial arrangements. The assets of MPLX are the property of MPLX and cannot be used to satisfy the obligations of MPC. MPC has effectively guaranteed certain indebtedness of LOOP LLC (“LOOP”) and LOCAP LLC (“LOCAP”), in which MPLX holds an interest. See Note 22 for more information.Contents

Dropdowns to MPLX and GP/IDR Exchange

On February 1, 2018, we contributed ~~our~~ refining logistics assets and fuels distribution services to MPLX in exchange for $4.1 billion in cash and approximately 112 million common units and 2 million general partner units from MPLX. MPLX financed the cash portion of the transaction with its $4.1 billion 364-day term loan facility, which was entered into on January 2, 2018. We agreed to waive approximately one-third of the first quarter 2018 distributions on the common units issued in connection with this transaction. The contributions of these assets were accounted for as transactions between entities under common control and we did not record a gain or loss.

Immediately following the February 1, 2018 dropdown to MPLX, our IDRs were cancelled and our economic general partner interest was converted into a non-economic general partner interest, all in exchange for 275 million newly issued MPLX common units (“GP/IDR Exchange”). As a result of this transaction, the general partner units and IDRs were eliminated, are no longer outstanding and no longer participate in distributions of cash from MPLX.

~~On September 1, 2017, we contributed~~Agreements

We have various long-term, fee-based commercial agreements with MPLX and ANDX. Under these agreements, MPLX and ANDX provide transportation, storage, distribution and marketing services to us. With certain exceptions, these agreements generally contain minimum volume commitments. These transactions are eliminated in consolidation but are reflected as intersegment transactions between our ~~joint-interest ownership in~~Refining & Marketing and Midstream segments. We also have agreements with MPLX and ANDX that establish fees for operational and management services provided between us and MPLX and ANDX and for executive management services and certain ~~pipelines~~general and ~~storage facilities~~administrative services provided by us to MPLX and ANDX. These transactions are eliminated in exchange for $420 million in cash and approximately 19 million common units and 378 thousand general partner units from MPLX. We also agreed to waive approximately two-thirds of the third quarter 2017 common unit distributions, IDRs and general partner distributions with respect to the common units issued in this transaction. The contributions of these assets were accounted forconsolidation but are reflected as intersegment transactions between ~~entities under common control~~our Corporate and ~~we did not record a gain or loss.~~

On March 1, 2017, we contributed certain terminal, pipeline and storage assets to MPLX in exchange for $1.5 billion in cash and approximately 13 million common units and 264 thousand general partner units from MPLX. We also agreed to waive two-thirds of the first quarter 2017 common unit distributions, IDRs and general partner distributions with respect to the common units issued in this transaction. The contributions of these assets were accounted for as transactions between entities under common control and we did not record a gain or loss.Midstream segments.

Noncontrolling Interest ~~in MPLX~~

As a result of equity transactions of MPLX and ANDX, we are required to adjust non-controlling interest and additional paid-in capital. Changes in MPC’s additional paid-in capital resulting from changes in its ownership interests in MPLX and ANDX were as follows:



	Six Months Ended June 30,
(In millions)	2019			2018
Increase due to the issuance of MPLX common units and general partner units to MPC	$	—		$	1,114
Increase due to GP/IDR Exchange	—			1,808
Increase due to the issuance of MPLX & ANDX common units	7			5
Increase in MPC's additional paid-in capital	7			2,927
Tax impact	(2		)	(546		)
Increase in MPC's additional paid-in capital, net of tax	$	5		$	2,381

Six Months Ended
June 30,
(In millions) 2018 2017
Increase due to the issuance of MPLX LP common units to the public $ 5
$ 25
Increase due to the issuance of MPLX LP common units and general partner units to MPC 1,114
94
Increase due to GP/IDR Exchange 1,808
—
Increase in MPC's additional paid-in capital 2,927
119
Tax impact (546 ) (41 )
Increase in MPC's additional paid-in capital, net of tax $ 2,381
$ 78

4. ACQUISITIONS

Acquisition of Andeavor

On October 1, 2018, we acquired Andeavor. The total value of consideration transferred was $23.46 billion, consisting of $19.97 billion in equity and $3.49 billion in cash. The cash portion of the purchase price was funded using cash on hand. Our financial results reflect the results of Andeavor from the date of the acquisition.

We accounted for the Andeavor acquisition using the acquisition method of accounting, which requires Andeavor assets and liabilities to be recorded to our balance sheet at fair value as of the acquisition date. We will complete a final determination of the fair value of certain assets and liabilities within the one year measurement period from the date of the acquisition as required by ASC 805. Due to the level of effort required to develop fair value measurements, the valuation studies necessary to determine the fair value of assets acquired and liabilities assumed are preliminary, including the underlying cash flows used to determine the fair value of identified intangible assets and economic obsolescence adjustments to property, plant and equipment. The size and the breadth of the Andeavor acquisition necessitates the use of the one year measurement period to fully analyze all the factors used in establishing the asset and liability fair values as of the acquisition date, including, but not limited to, property, plant and equipment, intangible assets, real property, leases, environmental and asset retirement obligations and the related tax impacts of any changes made. Any potential adjustments made could be material in relation to the preliminary values.

Table of Contents

~~Agreements~~

We have various long-term, fee-based commercial agreements with MPLX. Under these agreements, MPLX provides transportation, storage, distribution and marketing services to us. Under certain agreements, we commit to provide MPLX with minimum quarterly throughput and distribution volumes of crude oil and refined products and minimum storage volumes of crude oil, refined products and butane. Under certain other agreements, we commit to pay for 100 percent of available capacity for certain marine transportation and refining logistics assets. We also have agreements with MPLX that establish fees for operational and management services provided between us and MPLX and for executive management services and certain general and administrative services provided by us to MPLX. These transactions are eliminated in consolidation, but are reflected as intersegment transactions between our Refining & Marketing and Midstream segments.

~~5. ACQUISITIONS AND INVESTMENTS~~

~~Pending Merger with Andeavor~~

~~On April 29, 2018, MPC and Andeavor (“ANDV”) entered into a definitive merger agreement under which MPC has agreed to acquire all of ANDV’s outstanding shares. Under~~During the terms of the agreement, ANDV shareholders will have the option to choose 1.87 shares of MPC stock or $152.27 in cash per share of ANDV common stock. The merger agreement includes election proration provisions that will result in approximately 22.9 million Andeavor shares being converted into cash consideration and the remaining Andeavor shares of approximately 128.2 million being converted into stock consideration. The aggregate cash consideration will be approximately $3.5 billion. The transaction was unanimously approved by the boards of directors of both companies, and MPC’s joint proxy statement/prospectus with ANDV has been declared effective by the Securities and Exchange Commission. The closing of the transaction remains subject to, among other things, customary closing conditions, including receipt of the approval of shareholders at the special meetings of both MPC and ANDV, which are scheduled for September 24, 2018.

~~We recognized transaction costs related to the pending merger of $10 million, which are reflected in selling, general and administrative expenses for the three and~~ six months ended June 30, ~~2018.~~2019, we recorded adjustments to the preliminary fair value estimates of assets acquired and liabilities assumed as of the acquisition date as noted in the table below.



(In millions)	As originally reported		Adjustments			As adjusted
Cash and cash equivalents	$	382	$	—		$	382
Receivables	2,744		(2		)	2,742
Inventories	5,204		(9		)	5,195
Other current assets	378		—			378
Equity method investments	865		37			902
Property, plant and equipment, net	16,545		(78		)	16,467
Other noncurrent assets^(a)	3,086		(1		)	3,085
Total assets acquired	29,204		(53		)	29,151
Accounts payable	4,003		(4		)	3,999
Payroll and benefits payable	348		—			348
Accrued taxes	590		—			590
Debt due within one year	34		—			34
Other current liabilities	392		30			422
Long-term debt	8,875		1			8,876
Deferred income taxes	1,609		16			1,625
Defined benefit postretirement plan obligations	432		—			432
Deferred credit and other liabilities	714		15			729
Noncontrolling interests	5,059		3			5,062
Total liabilities and noncontrolling interest assumed	22,056		61			22,117
Net assets acquired excluding goodwill	7,148		(114		)	7,034
Goodwill	16,314		114			16,428
Net assets acquired	$	23,462	$	—		$	23,462


^(a)	Includes intangible assets.

The preliminary purchase consideration allocation resulted in the recognition of $16.43 billion in goodwill, of which $893 million is tax deductible due to a carryover basis from Andeavor. Our Refining & Marketing, Midstream and Retail segments recognized $4.82 billion, $7.72 billion and $3.89 billion of preliminary goodwill, respectively. The recognized goodwill represents the value expected to be created by further optimization of crude supply, a nationwide retail and marketing platform, diversification of our refining and midstream footprints and optimization of information systems and business processes.

Pro Forma Financial Information

The following unaudited pro forma financial information presents consolidated results assuming the Andeavor acquisition occurred on January 1, 2017. The unaudited pro forma information does not give effect to potential synergies that could result from the transaction and is not necessarily indicative of the results of future operations.



	Three Months Ended June 30,		Six Months Ended June 30,
(In millions)	2018		2018
Sales and other operating revenues	$	34,959	$	64,338
Net income attributable to MPC	1,452		1,478

The pro forma information includes adjustments to align accounting policies, including our policy to expense refinery turnarounds when they occur, an adjustment to depreciation expense to reflect the increased fair value of property, plant and equipment, increased amortization expense related to identifiable intangible assets and the related income tax effects.

Table of Contents

Acquisition of ~~Ozark Pipeline~~Express Mart

~~On March 1, 2017, MPLX~~During the fourth quarter of 2018, Speedway acquired ~~the Ozark pipeline~~78 transportation fuel and convenience store locations from ~~Enbridge Pipelines (Ozark) LLC~~Petr-All Petroleum Consulting Corporation for ~~approximately $219 million, including purchase price adjustments made~~total consideration of $266 million. These stores are located primarily in the ~~second quarter of 2017.~~ Syracuse, Rochester and Buffalo markets in New York and had been operated under the Express Mart brand.

Based on the final fair value estimates of assets acquired and liabilities assumed at the acquisition date, $97 million of the ~~final~~ purchase price was ~~primarily~~ allocated to property, plant and ~~equipment.~~equipment, $9 million to inventory, $2 million to intangibles and $158 million to goodwill. Goodwill is tax deductible and represents the value expected to be created by geographically expanding our retail platform and the assembled workforce. These operations are accounted for within the Retail segment.

Acquisition of Mt. Airy Terminal

On September 26, 2018, MPLX acquired an eastern U.S. Gulf Coast export terminal (“Mt. Airy Terminal”) from Pin Oak Holdings, LLC for total consideration of $451 million. At the time of the acquisition, the terminal included tanks with 4 million barrels of third-party leased storage capacity and a dock with 120 mbpd of capacity. The ~~Ozark pipeline~~Mt. Airy Terminal is ~~a 433-mile, 22-inch crude oil pipeline originating in Cushing, Oklahoma,~~located on the Mississippi River between New Orleans and ~~terminating in Wood River, Illinois, capable of transporting approximately 230 mbpd. We account~~Baton Rouge, near several Gulf Coast refineries, including our Garyville Refinery, and numerous rail lines and pipelines. The Mt. Airy Terminal is accounted for ~~the Ozark pipeline~~ within the Midstream segment. In the first quarter of 2019, an adjustment to the initial purchase price was made for approximately $5 million related to the final settlement of the acquisition. This reduced the total purchase price to $446 million and resulted in $336 million of property, plant and equipment, $121 million of goodwill and the remainder being attributable to net liabilities assumed.

Goodwill represents the significant growth potential of the terminal due to the multiple pipelines and rail lines which cross the property, the terminal’s position as an aggregation point for liquids growth in the region for both ocean-going vessels and inland barges, the proximity of the terminal to MPC’s Garyville refinery and other refineries in the region as well as the opportunity to construct an additional dock at the site. All of the goodwill recognized related to this transaction is tax deductible.

Assuming the ~~acquisition~~acquisitions of ~~the Ozark pipeline~~Express Mart and Mt. Airy Terminal had occurred on January 1, ~~2016,~~2017, the consolidated pro forma results would not have been materially different from the reported results.

~~Investment in Pipeline Company~~

~~On February 15, 2017,~~5. VARIABLE INTEREST ENTITIES

Consolidated VIEs

We control MPLX ~~acquired a partial, indirect equity interest in the Dakota Access Pipeline (“DAPL”)~~ and ~~Energy Transfer Crude Oil Company Pipeline (“ETCOP”) projects, collectively referred to as the Bakken Pipeline system,~~ANDX through a joint venture with Enbridge Energy Partners L.P. (“Enbridge Energy Partners”). The Bakken Pipeline system is capable of transporting more than 520 mbpd of crude oil from the Bakken/Three Forks production area in North Dakota to the Midwest through Patoka, Illinois and ultimately to the Gulf Coast. MPLX contributed $500 millionour ownership of the $2 billion purchase price paid by the joint venture, MarEn Bakken Company LLC (“MarEn Bakken”), to acquire a 36.75 percent indirect equity interest in the Bakken Pipeline system from Energy Transfer Partners, L.P. (“ETP”) and Sunoco Logistics Partners, L.P. (“SXL”). MPLX holds, through a subsidiary, a 25 percent interest in MarEn Bakken, which equates to an approximate 9.2 percent indirect equity interest in the Bakken Pipeline system. We account for the investment in MarEn Bakken as partgeneral partner of ~~our Midstream segment using the equity method of accounting.~~

~~Formation of Gathering and Processing Joint Venture~~

~~Effective January 1, 2017,~~both entities. MPLX and ~~Antero Midstream formed a joint venture, Sherwood Midstream LLC (“Sherwood Midstream”), to support~~ANDX are VIEs because the ~~development~~limited partners do not have substantive kick-out or substantive participating rights over the general partners. We are the primary beneficiary of Antero Resources Corporation’s Marcellus Shale acreage in West Virginia. MPLX has a 50 percent ownership interest in Sherwood Midstream. In connection with this transaction, MPLX contributed assets then under construction at the Sherwood Complex with a fair value of approximately $134 million and cash of approximately $20 million. Antero Midstream made an initial capital contribution of approximately $154 million.

Also effective January 1, 2017, MPLX converted all of its ownership interests in MarkWest Ohio Fractionation Company, L.L.C. (“Ohio Fractionation”), a previously wholly-owned subsidiary, to Class A Interests and amended its LLC Agreement to create Class B-3 Interests, which were sold to Sherwood Midstream for $126 million in cash. The Class B-3 Interests provide

~~Table of Contents~~

~~Sherwood Midstream with the right to fractionation revenue and the obligation to pay expenses related to 20 mbpd of capacity in the Hopedale 3 fractionator.~~

~~Effective January 1, 2017,~~both MPLX and ~~Sherwood Midstream formed a joint venture, Sherwood Midstream Holdings LLC (“Sherwood Midstream Holdings”), for~~ANDX because in addition to our significant economic interest, we also have the ~~purpose of owning, operating and maintaining all~~ability, through our ownership of the ~~shared assets for~~general partners, to control the ~~benefit of~~decisions that most significantly impact MPLX and ~~use in the operation of the gas plants~~ANDX. We therefore consolidate MPLX and ~~other assets owned by Sherwood Midstream~~ANDX and the gas plants and deethanization facilities owned by MPLX. MPLX contributed certain real property, equipment and facilities with a fair value of approximately $209 million to Sherwood Midstream Holdings in exchange for a 79 percent initial ownership interest. Sherwood Midstream contributed cash of approximately $44 million to Sherwood Midstream Holdings in exchange for a 21 percent ownership interest. The net book value of the contributed assets was approximately $203 million. The contribution was determined to be an in-substance sale of real estate. During the six months ended June 30, 2018, MPLX sold to Sherwood Midstream six percent of its equity ownership in Sherwood Midstream Holdings for $15 million.

We account for our direct interests in Sherwood Midstream and Sherwood Midstream Holdings as part of our Midstream segment using the equity method of accounting. We continue to consolidate Ohio Fractionation and have recognizedrecord a noncontrolling interest for ~~Sherwood Midstream’s~~the interest ~~in that entity.~~

~~See Note 6 for additional information~~owned by the public. We also record a redeemable noncontrolling interest related to ~~the investments in Sherwood Midstream, Ohio Fractionation~~MPLX’s preferred units.

The creditors of MPLX and ~~Sherwood Midstream Holdings.~~

~~6. VARIABLE INTEREST ENTITIES~~

~~In addition to MPLX, as described in Note 4, the following entities are also VIEs.~~

~~Crowley Coastal Partners~~

In May 2016, Crowley Coastal Partners was formed to own an interest in both Crowley Ocean Partners and Crowley Blue Water Partners. We have determined that Crowley Coastal Partners is a VIE based on the terms of the existing financing arrangements for Crowley Blue Water Partners and Crowley Ocean Partners and the associated debt guarantees by MPC and Crowley. Our maximum exposure to loss at June 30, 2018 was $483 million, which includes our equity method investment in Crowley Coastal Partners and the debt guarantees provided to each of the lenders to Crowley Blue Water Partners and Crowley Ocean Partners. We are not the primary beneficiary of this VIE because weANDX do not have ~~the power~~recourse to ~~control the activities that significantly influence the economic outcomes~~MPC’s general credit through guarantees or other financial arrangements, except as noted. MPC has effectively guaranteed certain indebtedness of ~~the entity~~LOOP LLC (“LOOP”) and ~~therefore, do not consolidate the entity.~~

~~MarkWest Utica EMG~~

~~On January 1, 2012, MarkWest Utica Operating Company,~~LOCAP LLC (“~~Utica Operating”~~LOCAP”), in which MPLX holds an interest. See Note 23 for more information. Western Refining Southwest, Inc., a wholly-owned ~~and consolidated~~ subsidiary of ~~MarkWest,~~MPC and ~~EMG Utica, LLC ("EMG Utica") (together~~unitholder of ANDX, has guaranteed certain outstanding borrowings under the "Members"), executed agreements to form a joint venture, MarkWest Utica EMG LLC (“MarkWest Utica EMG”), to develop significant natural gas gathering, processing and NGL fractionation, transportation and marketing infrastructureANDX dropdown credit facility that were made in ~~eastern Ohio.~~connection with the August 2018 dropdown transaction.

As of June 30, 2018, MarkWest had a 56 percent ownership interest in MarkWest Utica EMG. MarkWest Utica EMG's inability to fund its planned activities without subordinated financial support qualify it as a VIE. Utica Operating is not deemed to be the primary beneficiary due to EMG Utica’s voting rights on significant matters. We account for our ownership interest in MarkWest Utica EMG as an equity method investment. Our maximum exposure to loss as a result of our involvement with MarkWest Utica EMG includes our equity investment, any additional capital contribution commitments and any operating expenses incurred by the subsidiary operator in excess of compensation received for the performance of the operating services. Our equity investment in MarkWest Utica EMG at June 30, 2018 was $2.1 billion.

~~Ohio Gathering~~

Ohio Gathering Company, L.L.C. (“Ohio Gathering”) is a subsidiary of MarkWest Utica EMG and is engaged in providing natural gas gathering services in the Utica Shale in eastern Ohio. Ohio Gathering is a joint venture between MarkWest Utica EMG and Summit Midstream Partners, LLC. As of June 30, 2018, we had a 34 percent indirect ownership interest in Ohio Gathering. As this entity is a subsidiary of MarkWest Utica EMG, which is accounted for as an equity method investment, MPLX reports its portion of Ohio Gathering’s net assets as a component of its investment in MarkWest Utica EMG.

~~Sherwood Midstream~~

As described in Note 5, MPLX and Antero Midstream formed a joint venture, Sherwood Midstream, to support the development of Antero Resources Corporation’s Marcellus Shale acreage in West Virginia. As of June 30, 2018, MPLX had a 50 percent ownership interest in Sherwood Midstream. Sherwood Midstream’s inability to fund its planned activities without additional subordinated financial support qualify it as a VIE. MPLX is not deemed to be the primary beneficiary, due to Antero Midstream’s voting rights on significant matters. We account for our ownership interest in Sherwood Midstream using the

Table of Contents

~~equity method~~The assets of ~~accounting. Our maximum exposure~~MPLX and ANDX can only be used to ~~loss~~settle their own obligations and their creditors have no recourse to our assets, except as a result of our involvement with Sherwood Midstream includes our equity investment, any additional capital contribution commitments and any operating expenses incurred by the subsidiary operator in excess of compensation receivednoted above. The following table presents balance sheet information for the ~~performance~~assets and liabilities of ~~the operating services. Our equity investment in Sherwood Midstream at June 30, 2018 was $291 million.~~

~~Ohio Fractionation~~

As described in Note 5, MPLX converted all of its ownership interests in Ohio Fractionation to Class A Interests and amended its LLC Agreement to create Class B-3 Interests, which were sold to Sherwood Midstream, providing it with the right to fractionation revenue and the obligation to pay expenses related to 20 mbpd of capacity in the Hopedale 3 fractionator. Ohio Fractionation’s inability to fund its operations without additional subordinated financial support qualify it as a VIE. MPLX has been deemed to be the primary beneficiary of Ohio Fractionation because it has control over decisions that could significantly impact its financial performance, and as a result, consolidates Ohio Fractionation.

~~Sherwood Midstream Holdings~~

~~As described in Note 5,~~ MPLX and ~~Sherwood Midstream entered into a joint venture, Sherwood Midstream Holdings, for the purpose of owning, operating and maintaining all of the shared assets for the benefit of and use~~ANDX, which are included in the operation of the gas plants and other assets owned by Sherwood Midstream and the gas plants and deethanization facilities owned by MPLX. MPLX had an initial 79 percent direct ownership in Sherwood Midstream Holdings, in addition to a 10.5 percent indirect interest through its ownership in Sherwood Midstream. Sherwood Midstream Holdings’ inability to fund its operations without additional subordinated financial support qualify it as a VIE. We account for our ownership interest in Sherwood Midstream Holdings using the equity method of accounting as Sherwood Midstream is considered to be the general partner and controls all decisions related to Sherwood Midstream Holdings. Our maximum exposure to loss as a result of our involvement with Sherwood Midstream Holdings includes our equity investment, any additional capital contribution commitments and any operating expenses incurred by the subsidiary operator in excess of compensation received for the performance of the operating services. Our equity investment in Sherwood Midstream Holdings at June 30, 2018 was $155 million.balance sheets.



	June 30, 2019				December 31, 2018
(In millions)	MPLX		ANDX^(a)		MPLX		ANDX^(a)
Assets
Cash and cash equivalents	$	7	$	25	$	68	$	10
Receivables, less allowance for doubtful accounts	345		202		425		199
Inventories	77		22		77		22
Other current assets	34		42		45		57
Equity method investments	4,409		605		4,174		602
Property, plant and equipment, net	15,021		6,929		14,639		6,845
Goodwill	2,581		1,052		2,586		1,051
Right of use assets	255		121		—		—
Other noncurrent assets	441		1,234		458		1,242
Liabilities
Accounts payable	$	532	$	290	$	776	$	215
Payroll and benefits payable	5		1		2		10
Accrued taxes	57		19		48		23
Debt due within one year	6		503		1		504
Operating lease liabilities	47		12		—		—
Other current liabilities	204		88		177		77
Long-term debt	14,030		4,726		13,392		4,469
Deferred income taxes	11		1		13		1
Long-term operating lease liabilities	209		108		—		—
Deferred credits and other liabilities	303		78		276		68


^(a)	The balances reflected here are ANDX’s historical balances as the preliminary purchase accounting adjustments related to ANDX’s assets and liabilities in connection with the Andeavor acquisition and reflected on our consolidated balance sheets as of June 30, 2019 and December 31, 2018 have not yet been pushed down to this subsidiary.

7.6. RELATED PARTY TRANSACTIONS

~~Our related parties include:~~

~~Crowley Blue Water Partners, in which we have a~~ ~~50 percent~~ ~~indirect noncontrolling interest. Crowley Blue Water Partners owns and operates three Jones Act ATB vessels.~~

~~Crowley Ocean Partners, in which we have a 50 percent indirect noncontrolling interest. Crowley Ocean Partners owns and operates Jones Act product tankers.~~

Illinois Extension Pipeline Company, L.L.C. (“Illinois Extension Pipeline”), in which we have a 35 percent noncontrolling interest. Illinois Extension Pipeline owns and operates the Southern Access Extension (“SAX”) crude oil pipeline.

~~LOCAP, in which we have a~~ ~~59 percent~~ ~~noncontrolling interest. LOCAP owns and operates a crude oil pipeline.~~

~~LOOP, in which we have a~~ ~~51 percent~~ ~~noncontrolling interest. LOOP owns and operates the only U.S. deepwater crude oil port.~~

~~MarkWest Utica EMG, in which we have a 56 percent noncontrolling interest. MarkWest Utica EMG is engaged in natural gas processing and NGL fractionation, transportation and marketing in Ohio.~~

Ohio Gathering, in which we have a 34 percent indirect noncontrolling interest. Ohio Gathering is a subsidiary of MarkWest Utica EMG providing natural gas gathering service in the Utica Shale region of eastern Ohio.

~~PFJ Southeast, in which we have a 29 percent noncontrolling interest. PFJ Southeast owns and operates travel plazas primarily in the Southeast region of the United States.~~

~~Sherwood Midstream, in which we have a~~ ~~50 percent~~ ~~noncontrolling interest. Sherwood Midstream supports the development of Antero Resources Corporation’s Marcellus Shale acreage in West Virginia.~~

Sherwood Midstream Holdings, in which we have an 81 percent direct and indirect noncontrolling interest. Sherwood Midstream Holdings owns certain infrastructure at the Sherwood Complex that is shared by and supports the operation of both the Sherwood Midstream and MarkWest gas processing plants and deethanization facilities.

The Andersons Albion Ethanol LLC (“TAAE”), in which we have a 45 percent noncontrolling interest, The Andersons Clymers Ethanol LLC (“TACE”), in which we have a 61 percent noncontrolling interest and The Andersons Marathon Ethanol LLC (“TAME”), in which we have a 67 percent noncontrolling interest. These companies each own and operate an ethanol production facility.

~~Other equity method investees.~~

~~Table of Contents~~

~~We believe that transactions~~Transactions with related parties were ~~conducted on terms comparable to those with unaffiliated parties.~~

~~Sales to related parties were~~ as follows:



	Three Months Ended June 30,				Six Months Ended June 30,
(In millions)	2019		2018		2019		2018
Sales to related parties^(a)	$	186	$	199	$	372	$	371
Purchases from related parties^(b)	183		138		387		279


^(a)	Sales to related parties, which are included in sales and other operating revenues, consist primarily of sales of refined products to PFJ Southeast, an equity affiliate which owns and operates travel plazas primarily in the Southeast region of the United States.


^(b)	Purchases from related parties are included in cost of revenues. We obtain utilities, transportation services and purchase ethanol from certain of our equity affiliates.

Three Months Ended
June 30, Six Months Ended
June 30,
(In millions) 2018 2017 2018 2017
PFJ Southeast $ 196
$ 145
$ 365
$ 296
Other equity method investees 3
2
6
5
Total $ 199
$ 147
$ 371
$ 301

~~Sales to related parties consists primarily of sales of refined products.~~

~~Other income from related parties, which is included in “Other income” on the accompanying consolidated statements of income, was as follows:~~

Three Months Ended
June 30, Six Months Ended
June 30,
(In millions) 2018 2017 2018 2017
MarkWest Utica EMG $ 4
$ 4
$ 8
$ 8
Ohio Gathering 4
4
8
8
Sherwood Midstream 2
3
5
4
Other equity method investees 4
4
6
6
Total $ 14
$ 15
$ 27
$ 26

~~Other income from related parties consists primarily of fees received for operating transportation assets for our related parties.~~

~~Purchases from related parties were as follows:~~

Three Months Ended
June 30, Six Months Ended
June 30,
(In millions) 2018 2017 2018 2017
Crowley Blue Water Partners $ 14
$ 14
$ 30
$ 28
Crowley Ocean Partners 20
20
40
39
Illinois Extension Pipeline 23
24
47
49
LOCAP 3
6
7
11
LOOP 14
26
31
39
TAAE 22
23
41
31
TACE 10
9
18
25
TAME 25
21
45
38
Other equity method investees 7
7
20
12
Total $ 138
$ 150
$ 279
$ 272

Related party purchases from Crowley Blue Water Partners and Crowley Ocean Partners consist of leasing marine equipment primarily used to transport refined products. Related party purchases from Illinois Extension Pipeline, LOCAP, LOOP and other equity method investees consist primarily of crude oil transportation costs. Related party purchases from TAAE, TACE and TAME consist of ethanol purchases.

~~Table of Contents~~

~~Receivables from related parties, which are included in “Receivables, less allowance for doubtful accounts” on the accompanying consolidated balance sheets, were as follows:~~

(In millions) June 30,
2018 December 31,
2017
PFJ Southeast $ 30
$ 28
Other equity method investees 8
8
Total $ 38
$ 36

~~Payables to related parties, which are included in “Accounts payable” on the accompanying consolidated balance sheets, were as follows:~~

(In millions) June 30,
2018 December 31,
2017
Illinois Extension Pipeline $ 8
$ 8
LOOP 4
3
MarkWest Utica EMG 26
29
Ohio Gathering —
9
Sherwood Midstream 8
8
Other equity method investees 10
12
Total $ 56
$ 69

~~8. INCOME~~7. EARNINGS PER ~~COMMON~~ SHARE

We compute basic earnings per share by dividing net income attributable to MPC less income allocated to participating securities by the weighted average number of shares of common stock outstanding. Since MPC grants certain incentive compensation awards to employees and non-employee directors that are considered to be participating securities, we have calculated our earnings per share using the two-class method. Diluted income per share assumes exercise of certain stock-based compensation awards, provided the effect is not anti-dilutive.

Three Months Ended
June 30, Six Months Ended
June 30,
(In millions, except per share data) 2018 2017 2018 2017
Basic earnings per share:
Allocation of earnings:
Net income attributable to MPC $ 1,055
$ 483
$ 1,092
$ 513
Income allocated to participating securities 1
—
1
—
Income available to common stockholders – basic $ 1,054
$ 483
$ 1,091
$ 513
Weighted average common shares outstanding 459
513
467
519
Basic earnings per share $ 2.30
$ 0.94
$ 2.34
$ 0.99
Diluted earnings per share:
Allocation of earnings:
Net income attributable to MPC $ 1,055
$ 483
$ 1,092
$ 513
Income allocated to participating securities 1
—
1
—
Income available to common stockholders – diluted $ 1,054
$ 483
$ 1,091
$ 513
Weighted average common shares outstanding 459
513
467
519
Effect of dilutive securities 5
4
5
4
Weighted average common shares, including dilutive effect 464
517
472
523
Diluted earnings per share $ 2.27
$ 0.93
$ 2.31
$ 0.98

1614

Table of Contents



	Three Months Ended June 30,				Six Months Ended June 30,
(In millions, except per share data)	2019		2018		2019		2018
Basic earnings per share:
Allocation of earnings:
Net income attributable to MPC	$	1,106	$	1,055	$	1,099	$	1,092
Income allocated to participating securities	—		1		1		1
Income available to common stockholders – basic	$	1,106	$	1,054	$	1,098	$	1,091
Weighted average common shares outstanding	662		459		667		467
Basic earnings per share	$	1.67	$	2.30	$	1.65	$	2.34
Diluted earnings per share:
Allocation of earnings:
Net income attributable to MPC	$	1,106	$	1,055	$	1,099	$	1,092
Income allocated to participating securities	—		1		1		1
Income available to common stockholders – diluted	$	1,106	$	1,054	$	1,098	$	1,091
Weighted average common shares outstanding	662		459		667		467
Effect of dilutive securities	4		5		5		5
Weighted average common shares, including dilutive effect	666		464		672		472
Diluted earnings per share	$	1.66	$	2.27	$	1.63	$	2.31

The following table summarizes the shares that were anti-dilutive and, therefore, were excluded from the diluted share calculation.



	Three Months Ended June 30,		Six Months Ended June 30,
(In millions)	2019	2018	2019	2018
Shares issuable under stock-based compensation plans	4	1	3	1

Three Months Ended
June 30, Six Months Ended
June 30,
(In millions) 2018 2017 2018 2017
Shares issued under stock-based compensation plans 1
—
1
2

9.8. EQUITY

As of June 30, ~~2018,~~2019, we had ~~$5.98~~$3.52 billion of share repurchase authorization remaining under authorizations from our board of directors. We may utilize various methods to effect the repurchases, which could include open market repurchases, negotiated block transactions, accelerated share repurchases or open market solicitations for shares, some of which may be effected through Rule 10b5-1 plans. The timing and amount of future repurchases, if any, will depend upon several factors, including market and business conditions, and such repurchases may be discontinued at any time.

Total share repurchases were as follows:



	Three Months Ended June 30,				Six Months Ended June 30,
(In millions, except per share data)	2019		2018		2019		2018
Number of shares repurchased	9		12		23		31
Cash paid for shares repurchased	$	500	$	885	$	1,385	$	2,212
Average cost per share	$	57.18	$	76.30	$	60.75	$	71.58

Three Months Ended
June 30, Six Months Ended
June 30,
(In millions, except per share data) 2018 2017 2018 2017
Number of shares repurchased 12
14
31
23
Cash paid for shares repurchased $ 885
$ 750
$ 2,212
$ 1,170
Average cost per share $ 76.30
$ 52.35
$ 71.58
$ 51.53

As of June 30, ~~2018,~~2019, we had agreements to acquire ~~495,702~~109,200 common shares for ~~$35~~$6 million, which ~~were~~ settled in early July ~~2018.~~2019.

~~10.~~

Table of Contents

9. SEGMENT INFORMATION

We have three reportable segments: Refining & Marketing; ~~Speedway;~~Retail; and Midstream. Each of these segments is organized and managed based upon the nature of the products and services it offers.

•

Refining & Marketing – refines crude oil and other feedstocks at our ~~six~~16 refineries in the Gulf Coast, Mid-Continent and ~~Midwest~~West Coast regions of the United States, purchases refined products and ethanol for resale and distributes refined products through transportation, storage, distribution and marketing services provided largely by our Midstream segment. We sell refined products to wholesale marketing customers domestically and internationally, to buyers on the spot market, to our ~~Speedway~~Retail business segment and to independent entrepreneurs who operate primarily Marathon^® ~~retail~~ branded outlets.

~~Speedway – sells transportation fuels and convenience merchandise in retail markets in the Midwest, East Coast, Southeast and Gulf Coast regions of the United States.~~


•	Retail – sells transportation fuels and convenience products in the retail market across the United States through company-owned and operated convenience stores, primarily under the Speedway^® brand, and long-term fuel supply contracts with direct dealers who operate locations primarily under the ARCO^® brand.

Midstream – ~~gathers, processes and transports natural gas; gathers, transports, fractionates, stores and markets NGLs; and~~ transports, stores, distributes and markets crude oil and refined products principally for the Refining & Marketing segment via refining logistics assets, pipelines, terminals, towboats and ~~barges.~~barges; gathers, processes and transports natural gas; and gathers, transports, fractionates, stores and markets NGLs. The Midstream segment primarily reflects the results of MPLX ~~our sponsored master limited partnership.~~

~~As discussed in Note 4, on February 1, 2018, we contributed certain refining logistics assets~~ and fuels distribution services to MPLX. The results of these new businesses are reported in the Midstream segment prospectively from February 1, 2018, resulting in a net reduction of $232 million and $413 million to Refining & Marketing segment results and a net increase to Midstream segment results of the same amount for the three and six months ended June 30, 2018, respectively. No effect was given to prior periods as these entities were not considered businesses prior to February 1, 2018.ANDX.

Segment income represents income from operations attributable to the reportable segments. Corporate administrative expenses, except for those attributable to MPLX and ANDX, and costs related to certain non-operating assets are not allocated to the ~~reportable~~Refining & Marketing and Retail segments. In addition, certain items that affect comparability (as determined by the chief operating decision maker) are not allocated to the reportable segments.



(In millions)	Refining & Marketing		Retail		Midstream		Total
Three Months Ended June 30, 2019
Revenues:
Third party^(a)	$	23,672	$	8,944	$	931	$	33,547
Intersegment	5,482		2		1,218		6,702
Segment revenues	$	29,154	$	8,946	$	2,149	$	40,249
Segment income from operations	$	906	$	493	$	878	$	2,277

Supplemental Data
Depreciation and amortization^(b)	$	411	$	130	$	318	$	859
Capital expenditures and investments^(c)	430		120		814		1,364



(In millions)	Refining & Marketing		Retail		Midstream		Total
Three Months Ended June 30, 2018
Revenues:
Third party^(a)	$	16,302	$	5,265	$	750	$	22,317
Intersegment	2,871		2		762		3,635
Segment revenues	$	19,173	$	5,267	$	1,512	$	25,952
Segment income from operations	$	1,025	$	159	$	617	$	1,801

Supplemental Data
Depreciation and amortization^(b)	$	252	$	73	$	191	$	516
Capital expenditures and investments^(c)	196		88		601		885

Table of Contents


(In millions)	Refining & Marketing		Speedway		Midstream		Total		Refining & Marketing		Retail		Midstream		Total
Three Months Ended June 30, 2018
Six Months Ended June 30, 2019
Revenues:
Third party(a)	$	16,105	$	5,263	$	750	$	22,118	$	43,606	$	16,320	$	1,888	$	61,814
Intersegment	2,871		2		762		3,635		9,911		4		2,450		12,365
Related party	197		2		—		199
Segment revenues	$	19,173	$	5,267	$	1,512	$	25,952	$	53,517	$	16,324	$	4,338	$	74,179
Segment income from operations	$	1,025	$	159	$	617	$	1,801	$	572	$	663	$	1,786	$	3,021
Income from equity method investments^(b)	4		19		56		79

Supplemental Data
Depreciation and amortization^(b)	252		73		191		516		$	838	$	256	$	625	$	1,719
Capital expenditures and investments^(c)	196		88		601		885		824		193		1,637		2,654



(In millions)	Refining & Marketing		Retail		Midstream		Total
Six Months Ended June 30, 2018
Revenues:
Third party^(a)	$	29,884	$	9,836	$	1,463	$	41,183
Intersegment	5,250		3		1,393		6,646
Segment revenues	$	35,134	$	9,839	$	2,856	$	47,829
Segment income from operations	$	892	$	254	$	1,184	$	2,330

Supplemental Data
Depreciation and amortization^(b)	$	504	$	152	$	372	$	1,028
Capital expenditures and investments^(c)	387		127		1,083		1,597

(In millions) Refining & Marketing Speedway Midstream Total
Three Months Ended June 30, 2017
Revenues:
Third party $ 12,691
$ 4,794
$ 548
$ 18,033
Intersegment^(a)
2,808
1
363
3,172
Related party 145
2
—
147
Segment revenues $ 15,644
$ 4,797
$ 911
$ 21,352
Segment income from operations $ 562
$ 238
$ 332
$ 1,132
Income from equity method investments^(b)
2
21
40
63
Depreciation and amortization^(b)
272
65
168
505
Capital expenditures and investments^(c)
180
78
494
752

(In millions) Refining & Marketing Speedway Midstream Total
Six Months Ended June 30, 2018
Revenues:
Third party $ 29,517
$ 9,832
$ 1,463
$ 40,812
Intersegment 5,250
3
1,393
6,646
Related party 367
4
—
371
Segment revenues $ 35,134
$ 9,839
$ 2,856
$ 47,829
Segment income from operations $ 892
$ 254
$ 1,184
$ 2,330
Income from equity method investments^(b)
7
33
125
165
Depreciation and amortization^(b)
504
152
372
1,028
Capital expenditures and investments^(c)
387
127
1,083
1,597

~~Table of Contents~~

(In millions) Refining & Marketing Speedway Midstream Total
Six Months Ended June 30, 2017
Revenues:
Third party $ 23,912
$ 9,175
$ 1,080
$ 34,167
Intersegment^(a)
5,398
2
707
6,107
Related party 297
4
—
301
Segment revenues $ 29,607
$ 9,181
$ 1,787
$ 40,575
Segment income from operations $ 492
$ 373
$ 641
$ 1,506
Income from equity method investments^(b)
4
34
82
120
Depreciation and amortization^(b)
539
129
359
1,027
Capital expenditures and investments^(c)(d)
372
113
1,564
2,049


^(a)	~~Management believes intersegment transactions were conducted under terms comparable to those with unaffiliated parties.~~Includes related party sales. See Note 6 for additional information.


^(b)	Differences between segment totals and MPC consolidated totals represent amounts related to corporate and other unallocated items and are included in ~~“Items~~items not allocated to ~~segments”~~segments in the reconciliation below.


^(c)	Capital expenditures include changes in capital accruals ~~acquisitions~~ and investments in affiliates. See reconciliation from segment totals to MPC consolidated total capital expenditures below.


^(d)	The Midstream segment includes $220 million for the acquisition of the Ozark pipeline and an investment of $500 million in MarEn Bakken related to the Bakken Pipeline system for the six months ended June 30, 2017.

Table of Contents

The following reconciles segment income from operations to income before income taxes as reported in the consolidated statements of income:


	Three Months Ended June 30,						Six Months Ended June 30,						Three Months Ended June 30,						Six Months Ended June 30,
(In millions)	2018			2017			2018			2017			2019			2018			2019			2018
Segment income from operations	$	1,801		$	1,132		$	2,330		$	1,506		$	2,277		$	1,801		$	3,021		$	2,330
Items not allocated to segments:
Corporate and other unallocated items^(a)	(91		)	(83		)	(180		)	(166		)	(179		)	(81		)	(370		)	(170		)
Capline restructuring gain^(b)													—			��			207			—
Transaction-related costs^(c)													(34		)	(10		)	(125		)	(10		)
Litigation	—			(86		)	—			(86		)	(22		)	—			(22		)	—
Impairments^(b)	1			19			1			19
Impairments													—			1			—			1
Income from operations	1,711			982			2,151			1,273			2,042			1,711			2,711			2,151
Net interest and other financial costs	195			158			378			307			322			195			628			378
Income before income taxes	$	1,516		$	824		$	1,773		$	966		$	1,720		$	1,516		$	2,083		$	1,773


^(a)	Corporate and other unallocated items ~~consists~~consist primarily of MPC’s corporate administrative expenses and costs related to certain non-operating assets, except for corporate overhead expenses attributable to MPLX and ANDX, which are included in the Midstream segment. Corporate overhead expenses are not allocated to the Refining & Marketing and ~~Speedway~~Retail segments.


^(b)	~~Includes MPC’s share~~See Note 13.


^(c)	The transaction-related costs recognized in the 2019 year-to-date period include the recognition of ~~gains from the sale of assets remaining from the canceled Sandpiper pipeline project.~~an obligation for employee benefits provided to former Andeavor employees.

~~Table of Contents~~

The following reconciles segment capital expenditures and investments to total capital expenditures:



	Three Months Ended June 30,				Six Months Ended June 30,
(In millions)	2019		2018		2019		2018
Segment capital expenditures and investments	$	1,364	$	885	$	2,654	$	1,597
Less investments in equity method investees	270		77		595		118
Plus items not allocated to segments:
Corporate	4		17		14		35
Capitalized interest	34		16		65		34
Total capital expenditures^(a)	$	1,132	$	841	$	2,138	$	1,548

Three Months Ended
June 30, Six Months Ended
June 30,
(In millions) 2018 2017 2018 2017
Segment capital expenditures and investments $ 885
$ 752
$ 1,597
$ 2,049
Less investments in equity method investees^(a)
77
111
118
677
Plus items not allocated to segments:
Corporate 17
18
35
34
Capitalized interest 16
14
34
26
Total capital expenditures^(b)
$ 841
$ 673
$ 1,548
$ 1,432


^(a)	~~The six months ended June 30, 2017 includes an investment of $500 million in MarEn Bakken related to the Bakken Pipeline system.~~


^(b)	Capital expenditures include changes in capital accruals. See Note 1819 for a reconciliation of total capital expenditures to additions to property, plant and equipment for the six months ended June 30, 2019 and 2018 as reported in the consolidated statements of cash flows.

~~Revenues by product line were as follows:~~

Three Months Ended
June 30, Six Months Ended
June 30,
(In millions) 2018 2017 2018 2017
Refined products $ 19,292
$ 15,439
$ 35,450
$ 29,315
Merchandise 1,286
1,343
2,416
2,535
Crude oil and refinery feedstocks 978
824
1,861
1,511
Midstream services, transportation and other 562
427
1,085
806
Sales and other operating revenues $ 22,118
$ 18,033
$ 40,812
$ 34,167

~~11.~~10. NET INTEREST AND OTHER ~~ITEMS~~FINANCIAL COSTS

Net interest and other financial costs were as follows:



	Three Months Ended June 30,						Six Months Ended June 30,
(In millions)	2019			2018			2019			2018
Interest income	$	(9	)	$	(25	)	$	(18	)	$	(45	)
Interest expense	350			229			690			442
Interest capitalized	(35		)	(16		)	(67		)	(34		)
Pension and other postretirement non-service costs^(a)	3			2			—			2
Loss on extinguishment of debt	—			—			—			4
Other financial costs	13			5			23			9
Net interest and other financial costs	$	322		$	195		$	628		$	378


^(a)	See Note 21.

Three Months Ended
June 30, Six Months Ended
June 30,
(In millions) 2018 2017 2018 2017
Interest income $ (25 ) $ (4 ) $ (45 ) $ (9 )
Interest expense 229
173
442
336
Interest capitalized (16 ) (18 ) (34 ) (33 )
Loss on extinguishment of debt —
—
4
—
Other financial costs 7
7
11
13
Net interest and other financial costs $ 195
$ 158
$ 378
$ 307

~~12.~~

Table of Contents

11. INCOME TAXES

The combined federal, state and foreign income tax rate was 1921 percent and 3019 percent for the three months ended June 30, ~~2018~~2019 and ~~2017,~~2018, respectively, and 1722 percent and 3017 percent for the six months ended June 30, 2019 and 2018, respectively. The effective tax rate for the three months ended June 30, 2019 was equal to the U.S. statutory rate of 21 percent primarily due to certain permanent tax differences related to net income attributable to noncontrolling interests offset by equity compensation and ~~2017, respectively.~~state and local tax expense. The effective tax rate for the six months ended June 30, 2019 was greater than the U.S. statutory rate of 21 percent primarily due to $36 million of state deferred tax expense recorded as an out of period adjustment, partially offset by permanent tax differences related to net income attributable to noncontrolling interests. The effective tax rate for the three and six months ended June 30, 2018 was less than the U.S. statutory rate ~~of 21 percent~~ primarily due to certain permanent tax differences related to net income attributable to noncontrolling ~~interest~~interests and equity compensation offset by state and local tax expense. ~~The effective~~

During the first quarter of 2019, MPC’s deferred tax ~~rate~~liabilities increased $68 million with an offsetting increase to goodwill and the provision for income taxes of $32 million and $36 million, respectively for an out of period adjustment to correct the ~~three and six months ended June 30, 2017 was less than the then applicable U.S. statutory rate of 35 percent primarily due to certain permanent~~ tax ~~differences~~effects recorded in 2018 related to ~~net income attributable~~the Andeavor acquisition. The impact of the adjustment was not material to ~~noncontrolling interest, the domestic manufacturing deduction and equity compensation offset by state and local tax expense.~~any previous period.

We are continuously undergoing examination of our income tax returns, which have been completed through the ~~2007~~2006 tax year for state returns and the ~~2009~~2008 tax year for our U.S. federal return. As of June 30, ~~2018,~~2019, we had ~~$21~~$202 million of unrecognized tax benefits.

~~Table of Contents~~

Prior to its ~~spin-off~~spinoff on June 30, 2011, Marathon Petroleum Corporation was included in the Marathon Oil Corporation (“Marathon Oil”) U.S. federal income tax returns for all applicable years. During the third quarter of 2017, Marathon Oil received a notice of Final Partnership Administrative Adjustment (“FPAA”) from the ~~IRS~~U.S. Internal Revenue Service for taxable year 2010, relating to certain ~~pre-spinoff~~partnership transactions. Marathon Oil filed a U.S. Tax Court petition disputing these adjustments during the fourth quarter of 2017. We received an FPAA for taxable years 2011-2014 for items resulting from this matter and filed a U.S. Tax Court petition for tax years 2011-2014 to dispute these corollary adjustments in the fourth quarter of 2017. We continue to believe that the issue in dispute is more likely than not to be fully sustained and, therefore, no liability has been accrued for this matter.

Pursuant to our tax sharing agreement with Marathon Oil, the unrecognized tax benefits related to pre-spinoff operations for which Marathon Oil was the taxpayer remain the responsibility of Marathon Oil and we have indemnified Marathon Oil accordingly. See Note 2223 for indemnification information.

~~13.~~12. INVENTORIES



(In millions)	June 30, 2019		December 31, 2018
Crude oil and refinery feedstocks	$	3,468	$	3,655
Refined products	4,601		5,234
Materials and supplies	801		720
Merchandise	218		228
Total	$	9,088	$	9,837

(In millions) June 30,
2018 December 31,
2017
Crude oil and refinery feedstocks $ 2,059
$ 2,056
Refined products 2,811
2,839
Materials and supplies 455
494
Merchandise 160
161
Total $ 5,485
$ 5,550

Inventories are carried at the lower of cost or market value. The cost of inventories of crude oil and refinery feedstocks, refined products and merchandise is determined primarily under the LIFO method. There were no ~~material~~LIFO inventory liquidations ~~of LIFO inventories~~recognized for the six months ended June 30, ~~2018.~~2019.

13. EQUITY METHOD INVESTMENTS

During the three months ended March 31, 2019, we executed agreements with Capline Pipeline Company LLC (“Capline LLC”) to contribute our 33 percent undivided interest in Capline pipeline system in exchange for a 33 percent ownership interest in Capline LLC. Concurrent with our execution of these agreements, Capline LLC initiated a binding open season for southbound service from Patoka, IL to St. James, LA or Liberty, MS, with an additional origination point at Cushing, OK. Service from Cushing, OK is part of a joint tariff with Diamond pipeline. Crude oil service is expected to begin in the third quarter of 2020.

Table of Contents

In accordance with ASC 810, we derecognized our undivided interest amounting to $143 million of net assets and recognized the Capline LLC ownership interest we received at fair value. We used an income approach to determine the fair value of our ownership interest under a Monte Carlo simulation method. We estimated the fair value of our ownership interest to be $350 million as of January 30, 2019. This is a nonrecurring fair value measurement and is categorized in level 3 of the fair value hierarchy. The Monte Carlo simulation inputs include ranges of tariff rates, operating volumes, operating cost and capital expenditure assumptions. The estimated cash flows were discounted using a Monte Carlo market participant weighted average cost of capital estimate. None of the inputs to the Monte Carlo simulation are individually significant. The excess of the estimated fair value of our ownership interest over the carrying value of the derecognized net assets resulted in a $207 million non-cash net gain recorded as a net gain on disposal of assets in the accompanying consolidated statements of income.

As the Capline system is currently idled, Capline LLC is unable to fund its operations without financial support from its equity owners and is a VIE. MPC is not deemed to be the primary beneficiary, due to our inability to unilaterally control significant decision-making rights. Our maximum exposure to loss as a result of our involvement with Capline LLC includes our equity investment, any additional capital contribution commitments and any operating expenses incurred by Capline LLC in excess of compensation received for performance of the operating services.

14. PROPERTY, PLANT AND EQUIPMENT



(In millions)	June 30, 2019		December 31, 2018
Refining & Marketing	$	28,429	$	27,590
Retail	6,767		6,637
Midstream	26,472		25,692
Corporate and Other	1,234		1,294
Total	62,902		61,213
Less accumulated depreciation	17,567		16,155
Property, plant and equipment, net	$	45,335	$	45,058

(In millions) June 30,
2018 December 31,
2017
Refining & Marketing^(a)
$ 18,314
$ 19,490
Speedway 5,433
5,358
Midstream^(a)
17,411
14,898
Corporate and Other 827
792
Total 41,985
40,538
Less accumulated depreciation 15,054
14,095
Property, plant and equipment, net $ 26,931
$ 26,443


^(a)	On February 1, 2018, we contributed certain refining logistics assets and fuels distribution services to MPLX. In connection with this transaction, approximately $830 million of net property, plant and equipment was recorded to the Midstream segment with an offsetting reduction to the Refining & Marketing segment.

We own a 33 percent undivided joint interest in the Capline Pipeline System (“Capline”), a crude oil pipeline that runs from St. James, LA to Patoka, IL. We account for this undivided joint interest by recognizing our proportionate share of Capline’s assets on our balance sheet, which are primarily classified as property, plant and equipment. Capline experienced a significant reduction in shipment volumes in the second quarter of 2018 primarily due to recently completed competing pipelines. The pipeline`s owners are proceeding with planning for the reversal of the pipeline to support southbound movements of crude oil as supported by shipper interest indicated during a non-binding open season conducted in 2017. Pending agreement among the owners, southbound service is estimated to commence by the second half of 2022. In the second quarter of 2018, we evaluated our share of Capline assets for impairment in accordance with ASC 360, and determined no impairment existed due to the probability of continuing future cash flows associated with a reversed Capline. As of June 30, 2018, our carrying value was $155 million.

~~Table of Contents~~

15. FAIR VALUE MEASUREMENTS

Fair Values—Recurring

The following tables present assets and liabilities accounted for at fair value on a recurring basis as of June 30, ~~2018~~2019 and December 31, ~~2017~~2018 by fair value hierarchy level. We have elected to offset the fair value amounts recognized for multiple derivative contracts executed with the same counterparty, including any related cash collateral as shown below; however, fair value amounts by hierarchy level are presented on a gross basis in the following tables.

June 30, 2018
Fair Value Hierarchy
(In millions) Level 1 Level 2 Level 3
Netting and Collateral^(a)

Net Carrying Value on Balance Sheet^(b)
Collateral Pledged Not Offset
Commodity derivative instruments, assets $ 134
$ —
$ —
$ (134 ) $ —
$ 16
Other assets 3
—
—
N/A
3
—
Total assets at fair value $ 137
$ —
$ —
$ (134 ) $ 3
$ 16

Commodity derivative instruments, liabilities $ 171
$ —
$ 2
$ (171 ) $ 2
$ —
Embedded derivatives in commodity contracts^(c)
—
—
66
—
66
—
Total liabilities at fair value $ 171
$ —
$ 68
$ (171 ) $ 68
$ —



	June 30, 2019
	Fair Value Hierarchy
(In millions)	Level 1		Level 2		Level 3		Netting and Collateral^(a)			Net Carrying Value on Balance Sheet^(b)		Collateral Pledged Not Offset
Assets:
Commodity contracts	$	227	$	12	$	—	$	(200	)	$	39	$	68
Liabilities:
Commodity contracts	$	193	$	12	$	—	$	(203	)	$	2	$	—
Embedded derivatives in commodity contracts	—		—		65		—			65		—

Table of Contents

December 31, 2017
Fair Value Hierarchy
(In millions) Level 1 Level 2 Level 3
Netting and Collateral^(a)

Net Carrying Value on Balance Sheet^(b)
Collateral Pledged Not Offset
Commodity derivative instruments, assets $ 127
$ —
$ —
$ (118 ) $ 9
$ 8
Other assets 3
—
—
N/A
3
—
Total assets at fair value $ 130
$ —
$ —
$ (118 ) $ 12
$ 8

Commodity derivative instruments, liabilities $ 126
$ —
$ 2
$ (126 ) $ 2
$ —
Embedded derivatives in commodity contracts^(c)
—
—
64
—
64
—
Total liabilities at fair value $ 126
$ —
$ 66
$ (126 ) $ 66
$ —



	December 31, 2018
	Fair Value Hierarchy
(In millions)	Level 1		Level 2		Level 3		Netting and Collateral^(a)			Net Carrying Value on Balance Sheet^(b)		Collateral Pledged Not Offset
Assets:
Commodity contracts	$	370	$	31	$	—	$	(323	)	$	78	$	2
Liabilities:
Commodity contracts	$	255	$	37	$	—	$	(284	)	$	8	$	—
Embedded derivatives in commodity contracts	—		—		61		—			61		—

^(a)

Represents the impact of netting assets, liabilities and cash collateral when a legal right of offset exists. As of June 30, ~~2018,~~2019, cash collateral of ~~$37~~$3 million was netted with the mark-to-market derivative liabilities. As of December 31, ~~2017, $8~~2018, cash collateral of $52 million was netted with mark-to-market derivative assets and $13 million was netted with mark-to-market derivative liabilities.


^(b)	We have no derivative contracts that are subject to master netting arrangements reflected gross on the balance sheet.


^(c)	~~Level 3 includes $12 million classified as current at both June 30, 2018 and December 31, 2017.~~

Commodity derivatives in Level 1 are exchange-traded contracts for crude oil and refined products measured at fair value with a market approach using the close-of-day settlement prices for the market. Commodity derivatives are covered under master netting agreements with an unconditional right to offset. Collateral deposits in futures commission merchant accounts covered by master netting agreements related to Level 1 commodity derivatives are classified as Level 1 in the fair value hierarchy.

Level 2 instruments are valued based on quoted prices for similar assets and liabilities in active markets, and inputs other than quoted prices, such as liquidity, that are observable for the asset or liability. Commodity derivatives in Level 2 are OTC contracts, which are valued using market quotations from independent price reporting agencies, third-party brokers and commodity exchange price curves that are corroborated with market data.

Level 3 instruments are OTC NGL contracts and embedded derivatives in commodity contracts. The embedded derivative liability relates to a natural gas purchase agreement embedded in a keep‑whole processing agreement. The fair value calculation for these Level 3 instruments at June 30, 2019 used significant unobservable inputs including: (1) NGL prices interpolated and extrapolated due to inactive markets ranging from ~~$0.70~~$0.46 to ~~$1.58~~$1.14 per gallon and (2) the probability of renewal of 6592 percent for the first ~~five-year term~~five-term and 8482 percent for the second ~~five-year term~~five-term of the natural gas purchase agreement and the related keep-whole processing agreement. For these contracts, increases in forward NGL prices result in a decrease in the fair value of the derivative assets and an increase in the fair value of the derivative liabilities. ~~The forward prices for the individual NGL products generally increase or decrease in a positive correlation with one another.~~ Increases or decreases in ~~forward NGL prices~~the fractionation spread result in an increase or decrease in the fair value of the embedded derivative liability. An increase in the probability of renewal would result in an increase in the fair value of the related embedded derivative liability.

~~Table of Contents~~

The following is a reconciliation of the beginning and ending balances recorded for net liabilities classified as Level 3 in the fair value hierarchy.



	Three Months Ended June 30,						Six Months Ended June 30,
(In millions)	2019			2018			2019			2018
Beginning balance	$	65		$	60		$	61		$	66
Unrealized and realized losses included in net income	1			12			7			9
Settlements of derivative instruments	(1		)	(4		)	(3		)	(7		)
Ending balance	$	65		$	68		$	65		$	68

The amount of total losses for the period included in earnings attributable to the change in unrealized losses relating to assets still held at the end of period:	$	2		$	11		$	5		$	5

Three Months Ended
June 30, Six Months Ended
June 30,
(In millions) 2018 2017 2018 2017
Beginning balance $ 60
$ 175
$ 66
$ 190
Contingent consideration payment —
(131 ) —
(131 )
Unrealized and realized (gains) losses included in net income 12
(2 ) 9
(14 )
Settlements of derivative instruments (4 ) (1 ) (7 ) (4 )
Ending balance $ 68
$ 41
$ 68
$ 41

The amount of total losses for the period included in earnings attributable to the change in unrealized losses relating to assets still held at the end of period:
Derivative instruments $ 11
$ (1 ) $ 5
$ (12 )
Contingent consideration agreement —
—
—
1
Total $ 11
$ (1 ) $ 5
$ (11 )

Fair Values – Reported

~~The following table summarizes~~We believe the carrying value of our other financial instruments, including cash and cash equivalents, receivables, accounts payable and certain accrued liabilities, approximate fair value. Our fair value assessment incorporates a variety of considerations, including the short-term duration of the instruments and the expected insignificance of bad debt expense, which includes an evaluation of counterparty credit risk. The borrowings under our revolving credit facilities, which include variable interest rates, approximate fair value. The fair value of our fixed rate long-term debt is based on prices from recent trade activity and is categorized in level 3 of the ~~basis~~fair value hierarchy. The carrying and fair values of ~~their nature, characteristics~~our debt were approximately $27.9 billion and ~~risk~~$29.4 billion at June 30, ~~2018~~2019, respectively, and approximately $27.0 billion and $26.5 billion at

Table of Contents

December 31, ~~2017, excluding the derivative financial instruments~~2018, respectively. These carrying and ~~contingent consideration reported above.~~

June 30, 2018 December 31, 2017
(In millions) Fair Value Carrying Value Fair Value Carrying Value
Financial assets:
Environmental receivables and misc. deposits 30
30
17
17
Total financial assets $ 30
$ 30
$ 17
$ 17
Financial liabilities:
Long-term debt^(a)
$ 17,321
$ 17,023
$ 13,893
$ 12,642
Deferred credits and other liabilities 116
107
122
109
Total financial liabilities $ 17,437
$ 17,130
$ 14,015
$ 12,751


^(a)	~~Excludes capital leases and debt issuance costs; includes amount classified as debt due within one year.~~

~~Our current assets and liabilities include financial instruments, the most significant of which are trade accounts receivable and payables.~~

~~Fair~~fair values of our ~~financial assets and of~~debt exclude the unamortized issuance costs which are netted against our financial liabilities included in deferred credits and other liabilities are measured primarily using an income approach and most inputs are internally generated, which results in a Level 3 classification. Estimated future cash flows are discounted using a rate deemed appropriate to obtain the fair value. Deferred credits and other liabilities primarily consist of a liability resulting from a financing arrangement for the construction of MPLX’s steam methane reformer at the Javelina gas processing and fractionation complex in Corpus Christi, Texas, insurance liabilities and environmental remediation liabilities.

~~Fair value of fixed-rate long-term debt is measured using Level 3 inputs. Fair value of variable-rate long-term debt approximates the carrying value.~~total debt.

16. DERIVATIVES

For further information regarding the fair value measurement of derivative instruments, including any effect of master netting agreements or collateral, see Note 15. We do not designate any of our commodity derivative instruments as hedges for accounting purposes.

~~Table of Contents~~

Derivatives that are not designated as accounting hedges may include commodity derivatives used to hedge price risk on (1) inventories, (2) fixed price sales of refined products, (3) the acquisition of foreign-sourced crude oil, (4) the acquisition of ethanol for blending with refined products, (5) the sale of NGLs and (6) the purchase of natural gas.

The following table presents the ~~gross~~ fair ~~values~~value of derivative instruments ~~excluding cash collateral, and where they appear on the consolidated balance sheets~~ as of June 30, ~~2018~~2019 and December 31, ~~2017:~~2018 and the line items in the balance sheets in which the fair values are reflected. The fair value amounts below are presented on a gross basis and do not reflect the netting of asset and liability positions permitted under the terms of our master netting arrangements including cash collateral on deposit with, or received from, brokers. We offset the recognized fair value amounts for multiple derivative instruments executed with the same counterparty in our financial statements when a legal right of offset exists. As a result, the asset and liability amounts below will not agree with the amounts presented in our consolidated balance sheets.


(In millions)	June 30, 2018				June 30, 2019
Balance Sheet Location	Asset		Liability		Asset		Liability
Commodity derivatives
Other current assets	$	134	$	171	$	237	$	201
Other current liabilities^(a)	—		14		2		11
Deferred credits and other liabilities^(a)	—		54		—		58


(In millions)	December 31, 2017				December 31, 2018
Balance Sheet Location	Asset		Liability		Asset		Liability
Commodity derivatives
Other current assets	$	127	$	126	$	400	$	283
Other current liabilities^(a)	—		14		1		16
Deferred credits and other liabilities^(a)	—		52		—		54


^(a)	Includes embedded derivatives.

The ~~tables~~table below ~~summarize~~summarizes open commodity derivative contracts for crude oil, refined products and ~~refined~~blending products as of June 30, ~~2018.~~2019.



	~~Position~~	~~Total Barrels~~ ~~(In thousands)~~
~~Crude Oil~~^(a)
~~Exchange-traded~~	~~Long~~	~~31,732~~
~~Exchange-traded~~	~~Short~~	~~(33,530~~	)



	Percentage of contracts that expire next quarter	Position
(Units in thousands of barrels)	Percentage of contracts that expire next quarter	Long	Short
Exchange-traded^(a)
Crude oil	77.3%	44,617	54,420
Refined products	91.4%	20,300	8,703
Blending products	74.1%	1,521	4,416
OTC
Crude oil	—%	400	—
Blending products	4.5%	1,156	1,156


^{(a )(a)}	~~98.6 percent~~Included in exchange-traded are spread contracts in thousands of ~~the exchange-traded contracts expire in the third quarter of 2018.~~barrels: Crude oil - 2,910 long and 2,310 short; Refined products - 1,450 long and 275 short; Blending products - 961 long and 831 short

Table of Contents



	~~Position~~	~~Total Gallons~~ ~~(In thousands)~~
~~Refined Products~~^(a)
~~Exchange-traded~~	~~Long~~	~~111,762~~
~~Exchange-traded~~	~~Short~~	~~(228,396~~	)


^{(a )}	~~92.5 percent of the exchange-traded contracts expire in the third quarter of 2018.~~

The following table summarizes the effect of all commodity derivative instruments in our consolidated statements of income:



(In millions)	Three Months Ended June 30,					Six Months Ended June 30,
Income Statement Location	2019		2018			2019			2018
Sales and other operating revenues	$	3	$	(1	)	$	(17	)	$	(2	)
Cost of revenues	15		(56		)	(65		)	(83		)
Total	$	18	$	(57	)	$	(82	)	$	(85	)

Gain (Loss) Gain (Loss)
(In millions) Three Months Ended June 30, Six Months Ended June 30,
Income Statement Location 2018 2017 2018 2017
Sales and other operating revenues $ (1 ) $ 2
$ (2 ) $ 18
Cost of revenues (56 ) (7 ) (83 ) (31 )
Total $ (57 ) $ (5 ) $ (85 ) $ (13 )

~~Table of Contents~~

17. DEBT

Our outstanding borrowings at June 30, ~~2018~~2019 and December 31, ~~2017~~2018 consisted of the following:



(In millions)	June 30, 2019			December 31, 2018
Marathon Petroleum Corporation	$	9,119		$	9,114
MPLX LP	14,473			13,856
ANDX LP	5,263			5,010
Total debt	$	28,855		$	27,980
Unamortized debt issuance costs	(124		)	(128		)
Unamortized discount	(324		)	(328		)
Amounts due within one year	(554		)	(544		)
Total long-term debt due after one year	$	27,853		$	26,980

Available Capacity under our Facilities

(In millions) June 30,
2018 December 31,
2017
Marathon Petroleum Corporation:
Commercial paper $ —
$ —
364-day bank revolving credit facility due July 2018^(a)
—
—
Trade receivables securitization facility due July 2019 —
—
Bank revolving credit facility due 2022 —
—
Senior notes, 2.700% due December 2018 —
600
Senior notes, 3.400% due December 2020 650
650
Senior notes, 5.125% due March 2021 1,000
1,000
Senior notes, 3.625%, due September 2024 750
750
Senior notes, 6.500%, due March 2041 1,250
1,250
Senior notes, 4.750%, due September 2044 800
800
Senior notes, 5.850% due December 2045 250
250
Senior notes, 5.000%, due September 2054 400
400
Capital lease obligations due 2018-2033 344
356
MPLX LP:
MPLX bank revolving credit facility due 2022 —
505
MPLX senior notes, 5.500%, due February 2023 710
710
MPLX senior notes, 3.375%, due March 2023 500
—
MPLX senior notes, 4.500%, due July 2023 989
989
MPLX senior notes, 4.875%, due December 2024 1,149
1,149
MPLX senior notes, 4.000%, due February 2025 500
500
MPLX senior notes, 4.875%, due June 2025 1,189
1,189
MarkWest senior notes, 4.500% - 5.500%, due 2023 - 2025 63
63
MPLX senior notes, 4.125%, due March 2027 1,250
1,250
MPLX senior notes, 4.000%, due March 2028 1,250
—
MPLX senior notes, 4.500%, due April 2038 1,750
—
MPLX senior notes, 5.200%, due March 2047 1,000
1,000
MPLX senior notes, 4.700%, due April 2048 1,500
—
MPLX senior notes, 4.900%, due April 2058 500
—
MPLX capital lease obligations due 2020 7
7
Total 17,801
13,418
Unamortized debt issuance costs (107 ) (59 )
Unamortized discount^(b)
(427 ) (413 )
Amounts due within one year (26 ) (624 )
Total long-term debt due after one year $ 17,241
$ 12,322



(Dollars in millions)	Total Capacity		Outstanding Borrowings		Outstanding Letters of Credit		Available Capacity		Weighted Average Interest Rate		Expiration
MPC 364-day bank revolving credit facility	$	1,000	$	—	$	—	$	1,000	—		September 2019
MPC bank revolving credit facility	5,000		—		32		4,968		—		October 2023
MPC trade receivables securitization facility	750		—		—		750		—		July 2019
MPLX bank revolving credit facility	2,250		615		3		1,632		3.80	%	July 2022
ANDX revolving & dropdown credit facilities^(a)	2,100		1,500		—		600		3.90	%	January 2021
	$	11,100	$	2,115	$	35	$	8,950


^(a)	~~The 364-day~~Western Refining Southwest, Inc., a wholly-owned subsidiary of MPC and unitholder of ANDX, has guaranteed certain outstanding borrowings under the ANDX dropdown credit facility ~~expired on July 20, 2018.~~ that were made in connection with the August 2018 dropdown transaction.

MPC 364-Day Bank Revolving Credit Facility

On July 26, 2019, we entered into a new $1 billion 364-day revolving credit facility with a syndicate of banks that will, subject to the satisfaction of customary conditions, become effective upon the expiration of our existing $1 billion 364-day revolving credit facility in September 2019. The new 364-day revolving credit facility contains substantially the same terms and conditions as our existing 364-day revolving credit facility and will expire in September 2020.

MPC Trade Receivables Securitization Facility

On July 19, 2019, we amended our $750 million trade receivables securitization facility to extend the maturity date to July 16, 2021.

MPLX Credit Agreement

Upon the completion of the merger of MPLX and ANDX on July 30, 2019, the MPLX bank revolving credit facility was amended and restated to increase the borrowing capacity to $3.5 billion and to extend the maturity date to July 30, 2024. The ANDX revolving and dropdown credit facilities were terminated and all outstanding balances were repaid and funded with the new $3.5 billion bank revolving credit facility.

Table of Contents

18. REVENUE

The following table presents our revenues disaggregated by product line.



	Three Months Ended June 30,				Six Months Ended June 30,
(In millions)	2019		2018		2019		2018
Refined products	$	29,668	$	19,489	$	54,504	$	35,816
Merchandise	1,601		1,286		3,065		2,416
Crude oil and refinery feedstocks	1,669		978		3,036		1,861
Midstream services, transportation and other	609		564		1,209		1,090
Sales and other operating revenues	$	33,547	$	22,317	$	61,814	$	41,183

We do not disclose information on the future performance obligations for any contract with expected duration of one year or less at inception. As of June 30, 2019, we do not have future performance obligations that are material to future periods.

Receivables

On the accompanying consolidated balance sheets, receivables, less allowance for doubtful accounts primarily consists of customer receivables. Significant, non-customer balances included in our receivables at June 30, 2019 include matching buy/sell receivables of $2.21 billion.

19. SUPPLEMENTAL CASH FLOW INFORMATION



	Six Months Ended June 30,
(In millions)	2019		2018
Net cash provided by operating activities included:
Interest paid (net of amounts capitalized)	$	579	$	279
Net income taxes paid to taxing authorities	362		40
Cash paid for amounts included in the measurement of lease liabilities
Payments on operating leases^(a)	380		—
Interest payments under finance lease obligations^(a)	15		—
Net cash provided by financing activities included:
Principal payments under finance lease obligations^(a)	21		—
Non-cash investing and financing activities:
Right of use assets obtained in exchange for new operating lease obligations^(a)	114		—
Right of use assets obtained in exchange for new finance lease obligations^(a)	22		—
Contribution of net assets to Capline LLC^(b)	143		—
Recognition of Capline LLC equity method investment^(b)	350		—


^(a)	Disclosure added in 2019 following the adoption of ASC 842.


^(b)	Includes $349 million and $374 million of unamortized discount as of June 30, 2018 and December 31, 2017, respectively, related to the difference between the fair value and the principal amount of assumed MarkWest debt.See Note 13.

~~Commercial Paper~~

~~During the six months ended June 30, 2018, we had no borrowings or repayments under the commercial paper program. At June 30, 2018, we had no amounts outstanding under the commercial paper program.~~

~~Table of Contents~~

~~Trade Receivables Securitization Facility~~

~~At June 30, 2018, we had no amounts outstanding under our trade receivables securitization facility.~~

~~MPC Bank Revolving Credit Facilities~~

~~There were no borrowings or letters of credit outstanding under the MPC bank revolving credit facility at June 30, 2018.~~

~~MPC Senior Notes~~

On March 15, 2018, we redeemed all of the $600 million outstanding aggregate principal amount of our 2.700 percent senior notes due December 2018. The 2018 senior notes were redeemed at a price equal to par plus a make whole premium, plus accrued and unpaid interest. The make whole premium of $2.5 million was calculated based on the market yield of the applicable treasury issue as of the redemption date as determined in accordance with the indenture governing the 2018 senior notes.

~~MPLX Credit Agreement~~

During the six months ended June 30, 2018, MPLX borrowed $50 million under the MPLX bank revolving credit facility, at an average interest rate of 3.0 percent, and repaid $555 million. At June 30, 2018, MPLX had no outstanding borrowings and $3 million letters of credit outstanding under the MPLX bank revolving credit facility, resulting in total availability of approximately $2.25 billion.

~~MPLX 364-Day Term Loan~~

On January 2, 2018, MPLX entered into a term loan agreement with a syndicate of lenders providing for a $4.1 billion, 364-day term loan facility. MPLX drew the entire amount of the term loan facility in a single borrowing to fund the cash portion of the consideration for the February 1, 2018 dropdown. On February 8, 2018, MPLX used $4.1 billion of the net proceeds from the issuance of MPLX senior notes to repay the 364-day term-loan facility.

~~MPLX Senior Notes~~

On February 8, 2018, MPLX issued $5.5 billion in aggregate principal amount of senior notes in a public offering, consisting of $500 million aggregate principal amount of 3.375 percent unsecured senior notes due March 2023, $1.25 billion aggregate principal amount of 4.000 percent unsecured senior notes due March 2028, $1.75 billion aggregate principal amount of 4.500 percent unsecured senior notes due April 2038, $1.5 billion aggregate principal amount of 4.700 percent unsecured senior notes due April 2048, and $500 million aggregate principal amount of 4.900 percent unsecured senior notes due April 2058. MPLX used $4.1 billion of the net proceeds of the offering to repay the 364-day term-loan facility. The remaining proceeds were used to repay outstanding borrowings under MPLX’s revolving credit facility and intercompany loan agreement with us and for general partnership purposes.

~~18. SUPPLEMENTAL CASH FLOW INFORMATION~~

Six Months Ended
June 30,
(In millions) 2018 2017
Net cash provided by operating activities included:
Interest paid (net of amounts capitalized) $ 279
$ 231
Income taxes paid to taxing authorities 40
198
Non-cash investing and financing activities:
Contribution of assets to joint venture^(a)
—
337



(In millions)	June 30, 2019		December 31, 2018
Cash and cash equivalents	$	1,247	$	1,687
Restricted cash^(a)	2		38
Cash, cash equivalents and restricted cash	$	1,249	$	1,725


^(a)	~~MarkWest’s contribution of assets to Sherwood Midstream and Sherwood Midstream Holdings. See Note 5.~~

(In millions) June 30,
2018 December 31,
2017
Cash and cash equivalents $ 4,999
$ 3,011
Restricted cash^(a)
5
4
Cash, cash equivalents and restricted cash^(b)
$ 5,004
$ 3,015


^(a)	The restricted cash balance is included within ~~“Other~~other current ~~assets”~~assets on the consolidated balance sheets.


^(b)	~~As a result of the adoption of ASU 2016-18, the consolidated statements of cash flows now explain the change during the period of both “Cash and cash equivalents” and “Restricted cash.”~~

2624

Table of Contents

The consolidated statements of cash flows exclude changes to the consolidated balance sheets that did not affect cash. The following is a reconciliation of additions to property, plant and equipment ~~per the consolidated statements of cash flows~~ to total capital expenditures:



	Six Months Ended June 30,
(In millions)	2019			2018
Additions to property, plant and equipment per the consolidated statements of cash flows	$	2,419		$	1,466
Asset retirement expenditures	—			5
Increase (decrease) in capital accruals	(281		)	77
Total capital expenditures	$	2,138		$	1,548

Six Months Ended
June 30,
(In millions) 2018 2017
Additions to property, plant and equipment per the consolidated statements of cash flows $ 1,466
$ 1,265
Asset retirement expenditures 5
1
Increase (decrease) in capital accruals 77
(54 )
Total capital expenditures before acquisitions 1,548
1,212
Acquisitions^(a)
—
220
Total capital expenditures $ 1,548
$ 1,432


^(a)	~~The six months ended June 30, 2017 reflects the acquisition of the Ozark pipeline.~~

~~19.~~20. ACCUMULATED OTHER COMPREHENSIVE LOSS

The following table shows the changes in accumulated other comprehensive loss by component. Amounts in parentheses indicate debits.


(In millions)	Pension Benefits			Other Benefits			Gain on Cash Flow Hedge		Workers Compensation			Total			Pension Benefits			Other Benefits			Gain on Cash Flow Hedge			Workers Compensation			Total
Balance as of December 31, 2016	$	(233	)	$	(7	)	$	4	$	2		$	(234	)
Other comprehensive income before reclassifications	1			—			—		—			1
Balance as of December 31, 2017															$	(190	)	$	(48	)	$	4		$	3		$	(231	)
Other comprehensive income (loss) before reclassifications															2			(1		)	(2		)	—			(1		)
Amounts reclassified from accumulated other comprehensive loss:
Amortization – prior service credit^(a)	(19		)	(2		)	—		—			(21		)	(16		)	(2		)	—			—			(18		)
– actuarial loss/(gain)^(a)	18			(1		)	—		—			17
– actuarial loss^(a)															17			—			—			—			17
– settlement loss^(a)	1			—			—		—			1			2			—			—			—			2
Other^(b)	—			—			—		(1		)	(1		)	—			—			—			(2		)	(2		)
Tax effect	(1		)	2			—		—			1			(1		)	1			—			—			—
Other comprehensive loss	—			(1		)	—		(1		)	(2		)
Balance as of June 30, 2017	$	(233	)	$	(8	)	$	4	$	1		$	(236	)
Other comprehensive income (loss)															4			(2		)	(2		)	(2		)	(2		)
Balance as of June 30, 2018															$	(186	)	$	(50	)	$	2		$	1		$	(233	)


(In millions)	Pension Benefits			Other Benefits			Gain on Cash Flow Hedge			Workers Compensation			Total			Pension Benefits			Other Benefits			Gain on Cash Flow Hedge		Workers Compensation			Total
Balance as of December 31, 2017	$	(190	)	$	(48	)	$	4		$	3		$	(231	)
Balance as of December 31, 2018																$	(132	)	$	(23	)	$	2	$	9		$	(144	)
Other comprehensive income (loss) before reclassifications	2			(1		)	(2		)	—			(1		)	(7		)	1			—		—			(6		)
Amounts reclassified from accumulated other comprehensive loss:
Amortization – prior service credit^(a)	(16		)	(2		)	—			—			(18		)	(23		)	—			—		—			(23		)
– actuarial loss^(a)	17			—			—			—			17			11			(1		)	—		—			10
– settlement loss^(a)	2			—			—			—			2			2			—			—		—			2
Other^(b)	—			—			—			(2		)	(2		)	—			—			—		(2		)	(2		)
Tax effect	(1		)	1			—			—			—			2			—			—		—			2
Other comprehensive income (loss)	4			(2		)	(2		)	(2		)	(2		)
Balance as of June 30, 2018	$	(186	)	$	(50	)	$	2		$	1		$	(233	)
Other comprehensive loss																(15		)	—			—		(2		)	(17		)
Balance as of June 30, 2019																$	(147	)	$	(23	)	$	2	$	7		$	(161	)


^(a)	These accumulated other comprehensive loss components are included in the computation of net periodic benefit cost. See Note ~~20.~~


^(b)	~~This amount was reclassified out of accumulated other comprehensive loss and is included in selling, general and administrative on the consolidated statements of income.~~21.

2725

Table of Contents

~~20. DEFINED BENEFIT~~21. PENSION AND OTHER POSTRETIREMENT ~~PLANS~~BENEFITS

The following summarizes the components of net periodic benefit costs:



	Three Months Ended June 30, 2019
	Pension Benefits						Other Benefits
(In millions)	2019			2018			2019			2018
Components of net periodic benefit cost:
Service cost	$	60		$	35		$	8		$	8
Interest cost	27			18			10			8
Expected return on plan assets	(31		)	(24		)	—			—
Amortization – prior service credit	(12		)	(8		)	—			(1		)
– actuarial loss	7			8			(1		)	—
– settlement loss	2			1			—			—
Net periodic benefit cost	$	53		$	30		$	17		$	15

Three Months Ended June 30,
Pension Benefits Other Benefits
(In millions) 2018 2017 2018 2017
Components of net periodic benefit cost:
Service cost $ 35
$ 35
$ 8
$ 6
Interest cost 18
18
8
7
Expected return on plan assets (24 ) (24 ) —
—
Amortization – prior service credit (8 ) (9 ) (1 ) (1 )
– actuarial loss (gain) 8
9
—
(1 )
– settlement loss 1
1
—
—
Net periodic benefit cost $ 30
$ 30
$ 15
$ 11



	Six Months Ended June 30,
	Pension Benefits						Other Benefits
(In millions)	2019			2018			2019			2018
Components of net periodic benefit cost:
Service cost	$	118		$	71		$	16		$	15
Interest cost	55			36			19			15
Expected return on plan assets	(63		)	(50		)	—			—
Amortization – prior service credit	(23		)	(16		)	—			(2		)
– actuarial loss	11			17			(1		)	—
– settlement loss	2			2			—			—
Net periodic benefit cost	$	100		$	60		$	34		$	28

Six Months Ended June 30,
Pension Benefits Other Benefits
(In millions) 2018 2017 2018 2017
Components of net periodic benefit cost:
Service cost $ 71
$ 66
$ 15
$ 13
Interest cost 36
37
15
15
Expected return on plan assets (50 ) (50 ) —
—
Amortization – prior service credit (16 ) (19 ) (2 ) (2 )
– actuarial loss (gain) 17
18
—
(1 )
– settlement loss 2
1
—
—
Net periodic benefit cost $ 60
$ 53
$ 28
$ 25

The components of net periodic benefit cost other than the service cost component are included in ~~the line item “Net~~net interest and other financial ~~costs” in~~costs on the ~~income statement.~~consolidated statements of income.

During the six months ended June 30, ~~2018,~~2019, we made ~~no contributions~~a $16 million contribution to our funded pension plans. Benefit payments related to unfunded pension and other postretirement benefit plans were $7$9 million and ~~$16~~$23 million, respectively, during the six months ended June 30, ~~2018.~~2019.

~~21. STOCK-BASED COMPENSATION PLANS~~22. LEASES

~~Stock Option Awards~~For further information regarding the adoption of ASC 842, including the method of adoption and practical expedients elected, see Note 2.

Lessee

We lease a wide variety of facilities and equipment including land and building space, office and field equipment, storage facilities and transportation equipment. Our remaining lease terms range from less than one year to 60 years. Most long-term leases include renewal options ranging from less than one year to 49 years and, in certain leases, also include purchase options. The ~~following table presents~~lease term included in the measurement of right of use assets and lease liabilities includes options to extend or terminate our leases that we are reasonably certain to exercise. Options were included in the lease term primarily for retail store sites where we constructed property, plant and equipment on leased land that is expected to exist beyond the initial lease term.

Table of Contents

Under ASC 842, the components of lease cost were as follows:



	Three Months Ended June 30,		Six Months Ended June 30,
(In millions)	2019		2019
Finance lease cost:
Amortization of right of use assets	$	15	$	29
Interest on lease liabilities	9		20
Operating lease cost	198		388
Variable lease cost	29		43
Short-term lease cost	162		314
Total lease cost	$	413	$	794

Supplemental balance sheet data related to leases were as follows:



(In millions)	June 30, 2019
Operating leases
Assets
Right of use assets	$	2,588
Liabilities
Operating lease liabilities	$	615
Long-term operating lease liabilities	2,068
Total operating lease liabilities	$	2,683
Weighted average remaining lease term (in years)	6.4
Weighted average discount rate	4.12		%

Finance leases
Assets
Property, plant and equipment, gross	$	786
Accumulated depreciation	243
Property, plant and equipment, net	$	543
Liabilities
Debt due within one year	$	51
Long-term debt	604
Total finance lease liabilities	$	655
Weighted average remaining lease term (in years)	12.8
Weighted average discount rate	6.04		%

Table of Contents

As of June 30, 2019, maturities of lease liabilities for operating lease obligations and finance lease obligations having initial or remaining non-cancellable lease terms in excess of one year are as follows:



(In millions)	Operating		Finance
2019	$	381	$	39
2020	650		78
2021	562		70
2022	383		77
2023	273		83
2024 and thereafter	837		600
Gross lease payments	3,086		947
Less: imputed interest	403		292
Total lease liabilities	$	2,683	$	655

Presented in accordance with ASC 840, future minimum commitments as of December 31, 2018 for operating lease obligations and capital lease obligations having initial or remaining non-cancellable lease terms in excess of one year were as follows:



(In millions)	Operating		Capital
2019	$	709	$	70
2020	619		71
2021	553		66
2022	389		75
2023	295		82
2024 and thereafter	858		586
Total minimum lease payments	$	3,423	950
Less: imputed interest costs			301
Present value of net minimum lease payments			$	649

Lessor

MPLX has certain natural gas gathering, transportation and processing agreements in which it is considered to be the lessor under several implicit operating lease arrangements in accordance with GAAP. MPLX’s primary implicit lease operations relate to a ~~summary~~natural gas gathering agreement in the Marcellus region for which it earns a fixed-fee for providing gathering services to a single producer using a dedicated gathering system. As the gathering system is expanded, the fixed-fee charged to the producer is adjusted to include the additional gathering assets in the lease. The primary term of ~~our stock option award activity~~the natural gas gathering arrangement expires in 2038 and will continue thereafter on a year-to-year basis until terminated by either party. Other implicit leases relate to a natural gas processing agreement in the Marcellus region and a natural gas processing agreement in the Southern Appalachia region for which MPLX earns minimum monthly fees for providing processing services to a single producer using a dedicated processing plant. The primary term of these natural gas processing agreements expire during 2023 and 2033.

MPLX did not elect to use the practical expedient to combine lease and non-lease components for lessor arrangements. The tables below represent the portion of the contract allocated to the lease component based on relative standalone selling price. Lessor agreements are currently deemed operating, as we elected the practical expedient to grandfather in historical ASC 840 lease classifications. MPLX may be required to re-classify existing operating leases to sales-type leases upon modification and related reassessment of the leases.

Our revenue from implicit lease arrangements, excluding executory costs, totaled approximately $63 million and $123 million for the three and six months ended June 30, ~~2018:~~

Number of Shares Weighted Average Exercise Price
Outstanding at December 31, 2017 8,465,398
$ 33.74
Granted 903,797
67.71
Exercised (796,571 ) 25.89
Forfeited or expired (11,219 ) 51.67
Outstanding at June 30, 2018 8,561,405
38.03

2019, respectively. The ~~grant date fair value of stock option awards granted during~~implicit lease arrangements related to the processing facilities contain contingent rental provisions whereby we receive additional fees if the producer customer exceeds the monthly minimum processed volumes. During the three and six months ended June 30, ~~2018 was $17.21 per share.~~2019, MPLX did not receive any material contingent lease payments. The ~~fair value~~following is a schedule of ~~stock options granted to our employees is estimated~~minimum future rentals on the ~~date~~non‑cancellable operating leases as of ~~the grant using the Black Scholes option-pricing model, which employs various assumptions.~~June 30, 2019:

Table of Contents

~~Restricted Stock Awards~~



(In millions)
2019	$	90
2020	178
2021	169
2022	166
2023	161
2024 and thereafter	1,264
Total minimum future rentals	$	2,028

The following ~~table presents a summary~~schedule summarizes our investment in assets held for operating lease by major classes as of ~~restricted stock award activity for the six months ended~~ June 30, ~~2018:~~2019:



(In millions)	June 30, 2019
Natural gas gathering and NGL transportation pipelines and facilities	$	1,039
Natural gas processing facilities	633
Terminal and related assets	111
Land, building, office equipment and other	44
Property, plant and equipment	1,827
Less accumulated depreciation	284
Property, plant and equipment, net	$	1,543

Shares of Restricted Stock (“RS”) Restricted Stock Units (“RSU”)
Number of Shares Weighted Average Grant Date Fair Value Number of Units Weighted Average Grant Date Fair Value
Outstanding at December 31, 2017 1,188,662
$ 45.07
285,164
$ 29.95
Granted 432,792
70.31
14,019
70.54
RS Vested/RSUs Issued (544,900 ) 44.83
(1,829 ) 43.28
Forfeited (31,280 ) 47.13
—
—
Outstanding at June 30, 2018 1,045,274
55.58
297,354
31.78

~~Performance Unit Awards~~

~~The following table presents a summary of the activity for performance unit awards to be settled in shares for the six months ended June 30, 2018:~~

Number of Units Weighted Average Grant Date Fair Value
Outstanding at December 31, 2017 6,851,542
$ 0.81
Granted 3,830,000
0.83
Vested (2,052,959 ) 0.95
Forfeited (10,000 ) 0.92
Outstanding at June 30, 2018 8,618,583
0.79

~~The performance unit awards granted during the six months ended June 30, 2018 have a grant date fair value of $0.83 per unit, as calculated using a Monte Carlo valuation model.~~

~~MPLX Awards~~

During the six months ended June 30, 2018, MPLX granted equity-based compensation awards under the MPLX LP 2018 and MPLX LP 2012 Incentive Compensation Plans. The compensation expense for these awards is not material to our consolidated financial statements.

~~22.~~23. COMMITMENTS AND CONTINGENCIES

We are the subject of, or a party to, a number of pending or threatened legal actions, contingencies and commitments involving a variety of matters, including laws and regulations relating to the environment. Some of these matters are discussed below. For matters for which we have not recorded a liability, we are unable to estimate a range of possible loss because the issues involved have not been fully developed through pleadings, discovery or court proceedings. However, the ultimate resolution of some of these contingencies could, individually or in the aggregate, be material.

Environmental Matters

We are subject to federal, state, local and foreign laws and regulations relating to the environment. These laws generally provide for control of pollutants released into the environment and require responsible parties to undertake remediation of hazardous waste disposal sites and certain other locations including presently or formerly owned or operated retail marketing sites. Penalties may be imposed for noncompliance.

At June 30, ~~2018~~2019 and December 31, ~~2017,~~2018, accrued liabilities for remediation totaled ~~$108~~$449 million and ~~$114~~$455 million, respectively. It is not presently possible to estimate the ultimate amount of all remediation costs that might be incurred or the penalties, if any, that may be imposed. Receivables for recoverable costs from certain states, under programs to assist companies in clean-up efforts related to underground storage tanks at presently or formerly owned or operated retail marketing sites, were ~~$48~~$35 million and ~~$45~~$35 million at June 30, ~~2018~~2019 and December 31, ~~2017,~~2018, respectively.

~~Table~~Governmental and other entities in California, New York, Maryland and Rhode Island have filed lawsuits against coal, gas, oil and petroleum companies, including the Company. The lawsuits allege damages as a result of ~~Contents~~

climate change and the plaintiffs are seeking unspecified damages and abatement under various tort theories. Similar lawsuits may be filed in other jurisdictions. At this early stage, the ultimate outcome of these matters remains uncertain, and neither the likelihood of an unfavorable outcome nor the ultimate liability, if any, can be determined.

We are involved in a number of environmental enforcement matters arising in the ordinary course of business. While the outcome and impact on us cannot be predicted with certainty, management believes the resolution of these environmental matters will not, individually or collectively, have a material adverse effect on our consolidated results of operations, financial position or cash flows.

~~MarkWest Environmental Proceeding~~

MarkWest Liberty Midstream & Resources, L.L.C., a wholly owned subsidiary of MPLX (“MarkWest Liberty Midstream”), and its affiliates agreed in principle to pay a cash penalty of approximately $0.6 million and to undertake certain supplemental environmental projects with an estimated cost of approximately $2.4 million, related to civil enforcement allegations associated with permitting and other regulatory obligations for launcher/receiver and compressor station facilities in southeastern Ohio and western Pennsylvania. On April 24, 2018, MarkWest Liberty Midstream and its affiliates entered into a Consent Decree with the EPA and the Pennsylvania Department of Environmental Protection (“PADEP”) resolving these issues, pursuant to which MarkWest Liberty Midstream will pay a penalty of $0.6 million and undertake certain supplemental environmental projects with an estimated cost of approximately $2.4 million, in addition to other related projects that are substantially complete. The Consent Decree was approved by the court on July 9, 2018 and the penalty has been paid.

~~Litigation Relating to the Pending Merger with Andeavor~~

Between June 20 and July 11, 2018, six putative class actions were filed against some or all of Andeavor, the directors of Andeavor, and MPC Mahi Inc. (“Merger Sub 1”) and Mahi LLC (“Merger Sub 2” and, together with MPC and Merger Sub 1, the “MPC Defendants”), relating to the merger. Two complaints, Malka Raul v. Andeavor, et al., and Stephen Bushansky v. Andeavor, et al., were filed in the U.S. District Court for the Western District of Texas. Four complaints, captioned The Vladimir Gusinsky Rev. Trust v. Andeavor, et al., Lawrence Zucker v. Andeavor, et al., Mel Gross v. Andeavor, et al., and Hudson v. Andeavor, et al. were filed in the U.S. District Court for the District of Delaware. The complaints generally allege that Andeavor, the directors of Andeavor and the MPC Defendants disseminated a false or misleading registration statement regarding the proposed merger in violation of Section 14(a) of the Exchange Act and Rule 14a-9 promulgated thereunder. Specifically, the complaints allege that the registration statement filed by MPC misstated or omitted material information regarding the parties’ financial projections and the analyses performed by Andeavor’s and MPC’s respective financial advisors, and that disclosure of material information is necessary in light of preclusive deal protection provisions in the merger agreement, the financial interests of Andeavor’s officers and directors in completing the deal, and the financial interests of Andeavor’s and MPC’s respective financial advisors. The complaints further allege that the directors of Andeavor and/or the MPC Defendants are liable for these violations as “controlling persons” of Andeavor under Section 20(a) of the Exchange Act. The complaints seek injunctive relief, including to enjoin and/or rescind the merger, damages in the event the merger is consummated, and an award of attorneys’ fees, in addition to other relief. Additional lawsuits arising out of the proposed merger may be filed in the future. We believe that the lawsuits are without merit and intend to defend vigorously against them and any other lawsuits challenging the merger. Therefore, at this time, we do not believe the ultimate resolution of these lawsuits will have a material adverse effect.

~~Other Lawsuits~~

MPLX, MarkWest, MarkWest Liberty Midstream, MarkWest Liberty Bluestone, L.L.C., Ohio Fractionation and MarkWest Utica EMG (collectively, the “MPLX Parties”) are parties to various lawsuits with Bilfinger Westcon, Inc. (“Westcon”) that were instituted in 2016 and 2017 in the Court of Common Pleas in Butler County, Pennsylvania, the Circuit Court in Wetzel County, West Virginia, and the Court of Common Pleas in Harrison County, Ohio. The lawsuits relate to disputes regarding construction work performed by Westcon at the Bluestone, Mobley and Cadiz processing complexes in Pennsylvania, West Virginia and Ohio, respectively, and the Hopedale fractionation complex in Ohio. With respect to work performed by Westcon at the Mobley and Bluestone processing complexes, one or more of the MPLX Parties have asserted breach of contract, fraud, and with respect to work performed at the Mobley processing complex, MarkWest Liberty Midstream has also asserted negligent misrepresentation claims against Westcon. Westcon has also asserted claims against one or more of the MPLX Parties regarding these construction projects for breach of contract, unjust enrichment, promissory estoppel, fraud and constructive fraud, tortious interference with contractual relations, and civil conspiracy. Collectively, in the several cases, the MPLX Parties seek in excess of $10 million, plus an unspecified amount of punitive damages. Collectively, in the several cases, Westcon seeks in excess of $40 million, plus an unspecified amount of punitive damages. While the ultimate outcome and impact cannot be predicted with certainty, and management is not able to estimate a reasonably possible loss (or range of loss), if any, for these matters, we believe the resolution of these claims will not have a material adverse effect on our consolidated financial position, results of operations, or cash flows.

3029

Table of Contents

Lawsuits

In May 2015, the Kentucky attorney general filed a lawsuit against our wholly-owned subsidiary, Marathon Petroleum Company LP (“MPC ~~LP,~~LP”), in the United States District Court for the Western District of Kentucky asserting claims under federal and state antitrust statutes, the Kentucky Consumer Protection Act, and state common law. The complaint, as amended in July 2015, alleges that MPC LP used deed restrictions, supply agreements with customers and exchange agreements with competitors to unreasonably restrain trade in areas within Kentucky and seeks declaratory relief, unspecified damages, civil penalties, restitution and disgorgement of profits. At this stage, the ultimate outcome of this litigation remains uncertain, and neither the likelihood of an unfavorable outcome nor the ultimate liability, if any, can be determined, and we are unable to estimate a reasonably possible loss (or range of loss) for this matter. We intend to vigorously defend ourselves in this matter.

In May 2007, the Kentucky attorney general filed a lawsuit against us and Marathon Oil in state court in Franklin County, Kentucky for alleged violations of Kentucky’s emergency pricing and consumer protection laws following Hurricanes Katrina and Rita in 2005. The lawsuit ~~alleges~~alleged that we overcharged customers by $89 million during September and October 2005. The complaint ~~seeks~~sought disgorgement of these sums, as well as penalties, under Kentucky’s emergency pricing and consumer protection laws. We are vigorously defending this litigation. We believe that this is the first lawsuit for damages and injunctive relief under the Kentucky emergency pricing laws to progress this far and it contains many novel issues. In May 2011, the Kentucky attorney general amended his complaint to include a request for immediate injunctive relief as well as unspecified damages and penalties related to our wholesale gasoline pricing in April and May 2011 under statewide price controls that were activated by the Kentucky governor on April 26, 2011 and which have since expired. The court denied the attorney general’s request for immediate injunctive ~~relief,~~relief. In July 2019, MPC and the ~~remainder of the 2011 claims likely~~attorney general reached a settlement to resolve this litigation. This resolution will be resolved along with those dating from 2005. If the lawsuit is resolved unfavorably in its entirety, it could materially impact our consolidated results of operations, financial position or cash flows. However, management does not ~~believe the ultimate resolution of this litigation will~~ have a material adverse effect on our consolidated financial position, results of operations or cash flows.

We are also a party to a number of other lawsuits and other proceedings arising in the ordinary course of business. While the ultimate outcome and impact to us cannot be predicted with certainty, we believe that the resolution of these other lawsuits and proceedings will not have a material adverse effect on our consolidated financial position, results of operations or cash flows.

Guarantees

We have provided certain guarantees, direct and indirect, of the indebtedness of other companies. Under the terms of most of these guarantee arrangements, we would be required to perform should the guaranteed party fail to fulfill its obligations under the specified arrangements. In addition to these financial guarantees, we also have various performance guarantees related to specific agreements.

Guarantees related to indebtedness of equity method investees—MPC and MPLX hold interests in an offshore oil port, LOOP, and MPLX holds an interest in a crude oil pipeline system, LOCAP. Both LOOP and LOCAP have secured various project financings with throughput and deficiency agreements. Under the agreements, MPC, as a shipper, is required to advance funds if the investees are unable to service their debt. Any such advances are considered prepayments of future transportation charges. The duration of the agreements vary but tend to follow the terms of the underlying debt, which extend through 2037. Our maximum potential undiscounted payments under these agreements for the debt principal totaled ~~$160~~$171 million as of June 30, ~~2018.~~2019.

~~We hold an~~In connection with our 25 percent interest in Gray Oak Pipeline, LLC (“Gray Oak Pipeline”), we have entered into an Equity Contribution Agreement obligating us to make certain equity contributions to Gray Oak Pipeline to support its obligations under a ~~refined products~~construction loan facility. Gray Oak Pipeline is constructing the Gray Oak oil pipeline, ~~through our investment~~a crude oil transportation system from West Texas and the Eagle Ford formation to destinations in ~~Centennial,~~the Ingleside, Corpus Christi and ~~have guaranteed our~~Sweeney, Texas markets. Gray Oak Pipeline has entered into the construction loan facility with a syndicate of banks to finance a portion of the construction costs of the pipeline project.

The Equity Contribution Agreement requires us to contribute our pro rata share of any amounts necessary to allow Gary Oak Pipeline to cure any payment defaults under the construction loan facility or to repay all amounts outstanding under the facility, including principal, accrued interest, fees and expenses, in certain circumstances, including the abandonment of ~~Centennial’s principal, interest and prepayment costs, if applicable,~~the Gray Oak pipeline project prior to completion or the failure of Gray Oak Pipeline to repay or refinance the construction loan facility prior to its scheduled maturity date of June 3, 2022. Gray Oak may borrow up to $1.43 billion under ~~a Master Shelf Agreement, which is scheduled~~the construction loan facility (after giving effect to ~~expire in 2024. The guarantee arose in order for Centennial~~the exercise of all options to ~~obtain adequate financing. Our~~increase its borrowing capacity). As of June 30, 2019, our maximum potential undiscounted payments under ~~this agreement~~the Equity Contribution Agreement for the debt principal totaled ~~$23 million~~$138 million.

In connection with MPLX’s approximate nine percent indirect interest in a joint venture that owns and operates the Dakota Access Pipeline and Energy Transfer Crude Oil Pipeline projects, collectively referred to as the Bakken Pipeline system, MPLX has entered into a Contingent Equity Contribution Agreement. MPLX, along with the other joint venture owners in the Bakken Pipeline system, have agreed to make equity contributions to the joint venture upon certain events occurring to allow the entities that own and operate the Bakken Pipeline system to satisfy their senior note payment obligations. The senior notes were issued to repay amounts owed by the pipeline companies to fund the cost of construction of the Bakken Pipeline system.

Table of Contents

As of June 30, ~~2018.~~2019, our maximum potential undiscounted payments under the Contingent Equity Contribution Agreement was approximately $230 million.

In connection with our 50 percent indirect interest in Crowley Ocean Partners LLC, we have agreed to conditionally guarantee our portion of the obligations of the joint venture and its subsidiaries under a senior secured term loan agreement. The term loan agreement provides for loans of up to $325 million to finance the acquisition of four product tankers. MPC’s liability under the guarantee for each vessel is conditioned upon the occurrence of certain events, including if we cease to maintain an investment grade credit rating or the charter for the relevant product tanker ceases to be in effect and is not replaced by a charter with an investment grade company on certain defined commercial terms. As of June 30, ~~2018,~~2019, our maximum potential undiscounted payments under this agreement for debt principal totaled ~~$163~~$125 million.

In connection with our 50 percent indirect interest in Crowley Blue Water Partners LLC, we have agreed to provide a conditional guarantee of up to 50 percent of its outstanding debt balance in the event there is no charter agreement in place with an investment grade customer for the entity’s three vessels as well as other financial support in certain circumstances. ~~The maximum exposure under these arrangements is 50 percent of the amount of the debt, which was $132 million as~~As of June 30, ~~2018.~~2019, our maximum potential undiscounted payments under this arrangement was $125 million.

~~Table of Contents~~

Marathon Oil indemnifications—In conjunction with our spinoff from Marathon Oil, we have entered into arrangements with Marathon Oil providing indemnities and guarantees with recorded values of $2$1 million as of June 30, ~~2018,~~2019, which consist of unrecognized tax benefits related to MPC, its consolidated subsidiaries and the refining, marketing and transportation business operations prior to our spinoff which are not already reflected in the unrecognized tax benefits described in Note ~~12,~~11, and other contingent liabilities Marathon Oil may incur related to taxes. Furthermore, the separation and distribution agreement and other agreements with Marathon Oil to effect our spinoff provide for cross-indemnities between Marathon Oil and us. In general, Marathon Oil is required to indemnify us for any liabilities relating to Marathon Oil’s historical oil and gas exploration and production operations, oil sands mining operations and integrated gas operations, and we are required to indemnify Marathon Oil for any liabilities relating to Marathon Oil’s historical refining, marketing and transportation operations. The terms of these indemnifications are indefinite and the amounts are not capped.

Other guarantees—We have entered into other guarantees with maximum potential undiscounted payments totaling ~~$92~~$123 million as of June 30, ~~2018,~~2019, which primarily consist of a commitment to contribute cash to an equity method investee for certain catastrophic events, ~~up to $50 million per event,~~ in lieu of procuring insurance coverage, a commitment to fund a share of the bonds issued by a government entity for construction of public utilities in the event that other industrial users of the facility default on their utility payments and leases of assets containing general lease indemnities and guaranteed residual values. See Note 5 for information regarding our guarantee of certain borrowings under the ANDX dropdown credit facility.

General guarantees associated with dispositions—Over the years, we have sold various assets in the normal course of our business. Certain of the related agreements contain performance and general guarantees, including guarantees regarding inaccuracies in representations, warranties, covenants and agreements, and environmental and general indemnifications that require us to perform upon the occurrence of a triggering event or condition. These guarantees and indemnifications are part of the normal course of selling assets. We are typically not able to calculate the maximum potential amount of future payments that could be made under such contractual provisions because of the variability inherent in the guarantees and indemnities. Most often, the nature of the guarantees and indemnities is such that there is no appropriate method for quantifying the exposure because the underlying triggering event has little or no past experience upon which a reasonable prediction of the outcome can be based.

Contractual Commitments and Contingencies

At June 30, ~~2018,~~2019, our contractual commitments to acquire property, plant and equipment and advance funds to equity method investees totaled ~~$901 million.~~$1.15 billion.

Certain natural gas processing and gathering arrangements require us to construct natural gas processing plants, natural gas gathering pipelines and NGL pipelines and contain certain fees and charges if specified construction milestones are not achieved for reasons other than force majeure. In certain cases, certain producer customers may have the right to cancel the processing arrangements with us if there are significant delays that are not due to force majeure.

3231

Table of Contents

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

~~Management’s Discussion and Analysis of Financial Condition and Results of Operations~~This section should also be read in conjunction with the unaudited consolidated financial statements and accompanying footnotes included under Item 1. Financial Statements and in conjunction with our Annual Report on Form 10-K for the year ended December 31, ~~2017.~~2018.

~~Management’s Discussion and Analysis~~All statements in this section, other than statements of ~~Financial Condition and Results of Operations includes various~~historical fact, are forward-looking statements ~~concerning trends or events potentially affecting our business.~~that are inherently uncertain. You can identify our forward-looking statements by words such as “anticipate,” “believe,” “could,” “design,” “estimate,” “expect,” “forecast,” “goal,” “guidance,” “imply,” “intend,” “may,” “objective,” “opportunity,” “outlook,” “plan,” “position,” “potential,” “predict,” “project,” “prospective,” “pursue,” “seek,” “should,” “strategy,” “target,” ~~“could,” “may,” “should,”~~ “will,” ~~“would,”~~“would” or other similar expressions that convey the uncertainty of future events or outcomes. 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, ~~which~~that could cause future outcomes to differ materially from those set forth in the forward-looking statements. ~~For additional~~

Forward-looking statements include, but are not limited to, statements that relate to, or statements that are subject to risks, contingencies or uncertainties that relate to:

the risk that the cost savings and any other synergies from the Andeavor acquisition may not be fully realized or may take longer to realize than expected;

disruption from the Andeavor acquisition making it more difficult to maintain relationships with customers, employees or suppliers;

risks relating to any unforeseen liabilities of Andeavor;

the transaction between MPLX LP and Andeavor Logistics LP, including the risk that anticipated opportunities and any other synergies from or anticipated benefits of the transaction may not be fully realized or may take longer to realize than expected, including whether the transaction will be accretive within the expected timeframe or at all, or disruption from the transaction making it more difficult to maintain relationships with customers, employees or suppliers;

the ability to complete any divestitures on commercially reasonable terms and/or within the expected timeframe;

future levels of revenues, refining and marketing margins, operating costs, retail gasoline and distillate margins, merchandise margins, income from operations, net income or earnings per share;

the regional, national and worldwide availability and pricing of refined products, crude oil, natural gas, NGLs and other feedstocks;

consumer demand for refined products;

our ability to manage disruptions in credit markets or changes to our credit rating;

future levels of capital, environmental or maintenance expenditures, general and administrative and other expenses;

the success or timing of completion of ongoing or anticipated capital or maintenance projects;

the reliability of processing units and other equipment;

business strategies, growth opportunities and expected investments;

share repurchase authorizations, including the timing and amounts of any common stock repurchases;

the adequacy of our capital resources and liquidity, including but not limited to, availability of sufficient cash flow to execute our business plan and to effect any share repurchases or dividend increases, including within the expected timeframe;

the effect of restructuring or reorganization of business components;

the potential effects of judicial or other proceedings on our business, financial condition, results of operations and cash flows;

continued or further volatility in and/or degradation of general economic, market, industry or business conditions;

compliance with federal and state environmental, economic, health and safety, energy and other policies and regulations, including the cost of compliance with the Renewable Fuel Standard, and/or enforcement actions initiated thereunder; and

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.

Our forward-looking 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. Material differences between actual results and any future performance suggested in our forward-looking statements could result from a variety of factors, including the following:

Table of Contents

volatility or degradation in general economic, market, industry or business conditions;

availability and pricing of domestic and foreign supplies of natural gas, NGLs and crude oil and other feedstocks;

the ability of the members of the OPEC to agree on and to influence crude oil price and production controls;

availability and pricing of domestic and foreign supplies of refined products such as gasoline, diesel fuel, jet fuel, home heating oil and petrochemicals;

foreign imports and exports of crude oil, refined products, natural gas and NGLs;

refining industry overcapacity or under capacity;

changes in producer customers’ drilling plans or in volumes of throughput of crude oil, natural gas, NGLs, refined products or other hydrocarbon-based products;

changes in the cost or availability of third-party vessels, pipelines, railcars and other means of transportation for crude oil, natural gas, NGLs, feedstocks and refined products;

changes to our capital budget, expected construction costs and timing of projects;

the price, availability and acceptance of alternative fuels and alternative-fuel vehicles and laws mandating such fuels or vehicles;

fluctuations in consumer demand for refined products, natural gas and NGLs, including seasonal fluctuations;

political and economic conditions in nations that consume refined products, natural gas and NGLs, including the United States, and in crude oil producing regions, including the Middle East, Africa, Canada and South America;

actions taken by our competitors, including pricing adjustments, expansion of retail activities, the expansion and retirement of refining capacity and the expansion and retirement of pipeline capacity, processing, fractionation and treating facilities in response to market conditions;

completion of pipeline projects within the United States;

changes in fuel and utility costs for our facilities;

failure to realize the benefits projected for capital projects, or cost overruns associated with such projects;

modifications to MPLX earnings and distribution growth objectives;

the ability to successfully implement growth opportunities, including strategic initiatives and actions;

risks and uncertainties associated with intangible assets, including any future goodwill or intangible assets impairment charges;

the ability to realize the strategic benefits of joint venture opportunities;

accidents or other unscheduled shutdowns affecting our refineries, machinery, pipelines, processing, fractionation and treating facilities or equipment, or those of our suppliers or customers;

unusual weather conditions and natural disasters, which can unforeseeably affect the price or availability of crude oil and other feedstocks and refined products;

acts of war, terrorism or civil unrest that could impair our ability to produce refined products, receive feedstocks or to gather, process, fractionate or transport crude oil, natural gas, NGLs or refined products;

state and federal environmental, economic, health and safety, energy and other policies and regulations, including the cost of compliance with the renewable fuel standard program;

adverse changes in laws including with respect to tax and regulatory matters;

rulings, judgments or settlements and related expenses in litigation or other legal, tax or regulatory matters, including unexpected environmental remediation costs, in excess of any reserves or insurance coverage;

political pressure and influence of environmental groups upon policies and decisions related to the production, gathering, refining, processing, fractionation, transportation and marketing of crude oil or other feedstocks, refined products, natural gas, NGLs or other hydrocarbon-based products;

labor and material shortages;

the maintenance of satisfactory relationships with labor unions and joint venture partners;

the ability and willingness of parties with whom we have material relationships to perform their obligations to us;

the market price of our common stock and its impact on our share repurchase authorizations;

changes in the credit ratings assigned to our debt securities and trade credit, changes in the availability of unsecured credit, changes affecting the credit markets generally and our ability to manage such changes;

capital market conditions and our ability to raise adequate capital to execute our business ~~see”Risk Factors” below, together~~plan;

the costs, disruption and diversion of management’s attention associated with campaigns commenced by activist investors; and

the other factors described in Item 1A. Risk Factors in our Annual Report on Form 10-K for the year ended December 31, ~~2017.~~2018.

Table of Contents

We undertake no obligation to update any forward-looking statements except to the extent required by applicable law.

CORPORATE OVERVIEW

We are ~~an independent petroleum refining and marketing, retail and midstream services~~a leading, integrated, downstream energy company. We ~~currently~~ own and operate ~~six refineries, all located in~~ the ~~United States,~~nation’s largest refining system with ~~an aggregate crude oil refining capacity of approximately 1.9~~more than 3 million barrels per calendar ~~day.~~day of crude oil capacity across 16 refineries, located in the Gulf Coast, Mid-Continent and West Coast regions of the United States. Our refineries supply refined products to ~~resellers~~wholesale marketing customers domestically and internationally, to buyers on the spot market, to consumers ~~within~~through our ~~market areas, including the Midwest, Gulf Coast, Northeast, East Coast~~Retail business segment and ~~Southeast regions of the United States.~~to independent entrepreneurs who operate branded outlets. We ~~distribute refined products to our customers through transportation, storage, distribution and marketing services provided by our Midstream segment. We~~believe we are one of the largest wholesale suppliers of gasoline and distillates to resellers ~~within our market area.~~in the United States.

We have ~~two~~three strong ~~retail~~ brands: ~~Speedway~~Marathon^®, Speedway^® and ~~Marathon~~ARCO^®. Approximately 7,000 branded outlets, primarily carrying the Marathon brand name, are operated by independent entrepreneurs in 35 states, the District of Columbia and Mexico. We believe ~~that Speedway LLC, a wholly-owned subsidiary,~~our Retail segment operates the second largest chain of company-owned and operated retail ~~gasoline~~transportation fuel and convenience stores in the United States, with approximately ~~2,740~~3,910 convenience ~~stores in 22 states throughout the Midwest, East Coast, Southeast and Gulf Coast. The Marathon brand is an established~~stores. Our Retail segment also sells transportation fuel ~~brand in the Midwest and Southeast regions of the United States, and is available~~to consumers through approximately ~~5,600 retail outlets~~1,060 direct dealer locations. Our company-owned and operated ~~by independent entrepreneurs in 20 states~~locations primarily carry the Speedway^® brand name and the ~~District of Columbia.~~direct dealer locations carry primarily the ARCO^® brand name.

~~Through our ownership interest in MPLX, we own and operate significant midstream energy infrastructure assets.~~

We are one of the largest ~~processors~~midstream operators in North America. We primarily conduct our midstream operations through our ownership interest in MPLX, which owns and operates crude oil and light product transportation and logistics infrastructure as well as gathering, processing, and fractionation assets. On July 30, 2019, MPLX acquired ANDX, as discussed below, to create a leading, large-scale diversified midstream company. As of ~~natural gas~~June 30, 2019, we owned, leased or had ownership interests in approximately 16,600 miles of crude oil and refined product pipelines to deliver crude oil to ourrefineries and other locations and refined products to wholesale and retail market areas. We distribute our refined products through one of the largest terminal operations in the United States and one of the largest ~~processor and fractionator in the Marcellus and Utica shale regions.~~private domestic fleets of inland petroleum product barges. Our integrated midstream ~~energy asset~~gathering and processing network links producers of natural gas and NGLs from some of the largest supply basins in the United States to domestic and international markets. Our midstream gathering and processing operations include: ~~approximately 5.9 bcf/d of gathering capacity, 8.7 bcf/d of~~ natural gas gathering, processing ~~capacity~~ and ~~610 mbpd of~~transportation; and NGL gathering, transportation, fractionation, ~~capacity. We also own, lease or have ownership interests in approximately 10,800 miles of crude oil~~storage and ~~refined product pipelines, as well as refining logistics assets, including tanks, docks and loading racks located at~~marketing.

At June 30, 2019, our ~~six refineries. We distribute our refined products through one of the largest terminal~~ operations in the United States and one of the largest private domestic fleets of inland petroleum product barges. In addition, MPLX provides scheduling and marketing services (“fuels distribution services”) to our Refining & Marketing segment.

~~Our operations consist~~consisted of three reportable segments: Refining & Marketing; ~~Speedway;~~Retail; and Midstream. Each of these segments is organized and managed based upon the nature of the products and services it offers.

•

~~Speedway – sells transportation fuels and convenience merchandise in retail markets in the Midwest, East Coast, Southeast and Gulf Coast regions of the United States.~~


•	Retail – sells transportation fuels and convenience products in the retail market across the United States through company-owned and operated convenience stores, primarily under the Speedway^® brand, and long-term fuel supply contracts with direct dealers who operate locations primarily under the ARCO^® brand.

•

Midstream – ~~gathers, processes and transports natural gas; gathers, transports, fractionates, stores and markets NGLs; and~~ transports, stores, distributes and markets crude oil and refined products principally for the Refining & Marketing segment via refining logistics assets, pipelines, terminals, towboats and barges; gathers, processes and transports natural gas; and gathers, transports, fractionates, stores and markets NGLs. The Midstream segment primarily reflects the results of MPLX and ANDX.

Recent Developments

As described in Notes 4 and 5 to the unaudited consolidated financial statements, we have consolidated ANDX since October 1, 2018 in accordance with ASC 810 and previously recorded ANDX’s assets and liabilities to our balance sheet at preliminary fair values as of the Andeavor acquisition date of October 1, 2018.

On July 30, 2019, MPLX completed its acquisition of ANDX. At the effective time of the ANDX acquisition, each common unit held by ANDX’s public unitholders was converted into the right to receive 1.135 MPLX common units. ANDX common units held by MPC were converted into the right to receive 1.0328 MPLX common units. ANDX common unitholders will not receive any future distributions from ANDX but instead will receive a second quarter 2019 distribution as and when declared by the Board of Directors of MPLX with respect to the MPLX common units issued in connection with the acquisition. Additionally, the ANDX Series A Preferred unitholders will not receive any future distributions from ANDX, but instead will receive the semi-annual distributions payable August 15, 2019 on MPLX Series B Preferred units issued in connection with the acquisition. As of July 30, 2019, MPC will account for this transaction as a common control transaction, as defined by ASC 805, which will result in adjustments to our noncontrolling interest and additional paid-in capital balances.

Table of Contents

The transaction simplifies MPLX and ANDX into a single listed entity to create a leading, large-scale, diversified midstream company anchored by fee-based cash flows. The combined entity will have an expanded geographic footprint that is expected to enhance its long-term growth opportunities and the sustainable cash flow profile of the business.

On August 1, 2019, we highlighted our continued focus on portfolio optimization, which could include asset divestitures. Proceeds from any divestitures would be used for general purposes, such as investments in high-return projects as well as debt reduction.

EXECUTIVE SUMMARY

Results

Select results are reflected in the following table. Our results include the results of Andeavor from the October 1, 2018 acquisition date forward.



	Three Months Ended June 30,						Six Months Ended June 30,
(In millions, except per share data)	2019			2018			2019			2018
Income from operations by segment
Refining & Marketing	$	906		$	1,025		$	572		$	892
Retail	493			159			663			254
Midstream	878			617			1,786			1,184
Items not allocated to segments	(235		)	(90		)	(310		)	(179		)
Income from operations	$	2,042		$	1,711		$	2,711		$	2,151
Net income attributable to MPC	$	1,106		$	1,055		$	1,099		$	1,092
Net income attributable to MPC per diluted share	$	1.66		$	2.27		$	1.63		$	2.31

Net income attributable to MPC was $1.11 billion, or $1.66 per diluted share, in the second quarter of 2019 compared to $1.06 billion, or $2.27 per diluted share, for the second quarter of 2018. Net income attributable to MPC was $1.10 billion, or $1.63 per diluted share, in the first six months of 2019 compared to $1.09 billion, or $2.31 per diluted share, for the first six months of 2018. In both periods of 2019, increased income from operations was partially offset by increased net interest and other financial costs, provision for income taxes and net income attributable to noncontrolling interests.

Refer to the Results of Operations section for a discussion of consolidated financial results and segment results for the second quarter of 2019 as compared to the second quarter of 2018 and the first six months of 2019 as compared to the first six months of 2018.

Andeavor Acquisition

On October 1, 2018, we completed the Andeavor acquisition. Andeavor stockholders received in the aggregate approximately 239.8 million shares of MPC common stock valued at $19.8 billion and approximately $3.5 billion in cash in connection with the Andeavor acquisition.

Andeavor was a highly integrated marketing, logistics and refining company operating primarily in the Western and Mid-Continent United States. Andeavor’s operations included procuring crude oil from its source or from other third parties, transporting the crude oil to one of its 10 refineries, and producing, marketing and distributing refined products. Its marketing system included more than 3,300 stations marketed under multiple well-known fuel brands including ARCO^®. Also, we acquired the general partner and 156 million common units of ANDX, which was formed to own, operate, develop and acquire logistics assets. Its assets are integral to the success of our refining and marketing operations and are used to gather crude oil, natural gas, and water, process natural gas and distribute, transport and store crude oil and refined products principally for the Refining & Marketing segment via refining logistics assets, pipelines, terminals, towboats and barges. The Midstream segment primarily reflects the results of MPLX, our sponsored master limited partnership.

~~Table of Contents~~

~~Recent Developments~~

On April 29, 2018, MPC and Andeavor entered into a definitive merger agreement under which MPC has agreed to acquire all of Andeavor’s outstanding shares. Under the terms of the agreement, Andeavor shareholders will have the option to choose 1.87 shares of MPC stock or $152.27 in cash per share of Andeavor common stock. The merger agreement includes election proration provisions that will result in approximately 22.9 million Andeavor shares being converted into cash consideration and the remaining Andeavor shares of approximately 128.2 million being converted into stock consideration. The aggregate cash consideration will be approximately $3.5 billion.products.

This ~~anticipated~~ transaction ~~combines~~combined two strong, complementary companies to create a leading nationwide U.S. ~~refining, marketing, and midstream~~downstream energy company. The ~~proposed combination~~acquisition substantially ~~increases MPC’s~~increased our geographic diversification and scale and ~~strengthens~~strengthened each of our operating segments ~~by:~~by diversifying our refining portfolio into attractive markets ~~while also~~and increasing access to advantaged feedstocks, enhancing our midstream footprint in the Permian ~~basin,~~Basin, and creating a nationwide retail and marketing portfolio ~~that~~all of which is expected to substantially improve efficiencies and ~~enhance~~ our ability to serve customers. We expect the combination to generate up to approximately $1$1.4 billion in ~~tangible annual~~ gross run-rate ~~cost and operating~~ synergies within the first three years, significantly enhancing our long-term cash flow generation profile.

On July 3, 2018, MPC and Andeavor announced that the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 expired in connection with the proposed transaction. The parties have also received the necessary regulatory clearance by the Canadian Commissioner of Competition pursuant to the Competition Act (Canada). Together, these matters satisfy certain conditions for the closing of the proposed merger.

MPC’s joint proxy statement/prospectus with Andeavor has been declared effective by the Securities and Exchange Commission. The closing of the transaction remains subject to, among other things, customary closing conditions, including receipt of the approval of shareholders at the special meetings of both MPC and Andeaovor, which are scheduled for September 24, 2018.

In connection with this strategic combination, on April 30, 2018, we also announced that our board authorized an incremental $5 billion of share repurchases. Following the combination, we plan to continue our balanced approach to investing in the business and returning cash to our investors, while maintaining our commitment to an investment-grade credit profile.

The above discussion contains forward-looking statements with respect to the proposed transaction between MPC and Andeavor. Factors that could affect the proposed transaction between MPC and Andeavor include, but are not limited to, the ability of MPC and Andeavor to complete the proposed transaction on the anticipated terms and timetable; the ability to obtain shareholder approval; the ability to satisfy various other conditions to the closing of the proposed transaction; the risk that the cost savings and any other synergies from the proposed transaction may not be fully realized or may take longer to realize than expected; disruption from the proposed transaction making it more difficult to maintain relationships with customers, employees or suppliers; and risks relating to any unforeseen liabilities of Andeavor. Some factors that could cause actual results to differ materially from those implied in the forward-looking statements regarding the benefits of the proposed transaction include: future levels of revenues, refining and marketing margins, operating costs, retail gasoline and distillate margins, merchandise margins, income from operations, net income or earnings per share; the regional, national and worldwide availability and pricing of refined products, crude oil, natural gas, NGLs and other feedstocks; consumer demand for refined products; our ability to manage disruptions in credit markets or changes to our credit rating; future levels of capital, environmental or maintenance expenditures, general and administrative and other expenses; the success or timing of completion of ongoing or anticipated capital or maintenance projects; the reliability of processing units and other equipment; business strategies, growth opportunities and expected investment; MPC’s share repurchase authorizations, including the timing and amounts of any common stock repurchases; the adequacy of our capital resources and liquidity, including but not limited to, availability of sufficient cash flow to execute our business plan and to effect any share repurchases, including within the expected timeframe; the effect of restructuring or reorganization of business components; the potential effects of judicial or other proceedings on our business, financial condition, results of operations and cash flows; continued or further volatility in and/or degradation of general economic, market, industry or business conditions; compliance with federal and state environmental, economic, health and safety, energy and other policies and regulations, including the cost of compliance with the Renewable Fuel Standard, and/or enforcement actions initiated thereunder; 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; and the impact of adverse market conditions or other similar risks to those identified herein affecting MPLX and ANDX. For additional information on forward-looking statements and risks that can affect our business, see “Disclosures Regarding Forward-Looking Statements” and “Risk Factors” below, together with Item 1A. Risk Factors in our Annual Report on Form 10-K for the year ended Dec. 31, 2017.

~~Table of Contents~~

~~EXECUTIVE SUMMARY~~

~~Results~~

~~Select results are reflected in the following table.~~

Three Months Ended
June 30, Six Months Ended
June 30,
(In millions, except per share data) 2018 2017 2018 2017
Income from operations by segment
Refining & Marketing $ 1,025
$ 562
$ 892
$ 492
Speedway 159
238
254
373
Midstream 617
332
1,184
641
Items not allocated to segments (90 ) (150 ) (179 ) (233 )
Income from operations $ 1,711
$ 982
$ 2,151
$ 1,273
Provision for income taxes $ 281
$ 250
$ 303
$ 291
Net income attributable to noncontrolling interests $ 160
$ 74
$ 342
$ 129
Net income attributable to MPC $ 1,055
$ 483
$ 1,092
$ 513
Net income attributable to MPC per diluted share $ 2.27
$ 0.93
$ 2.31
$ 0.98

Net income attributable to MPC was $1.06 billion, or $2.27 per diluted share, in the second quarter and $1.09 billion, or $2.31 per diluted share, in the first six months of 2018 compared to $483 million, or $0.93 per diluted share, and $513 million, or $0.98 per diluted share, for the same periods of 2017.

Refining & Marketing segment income from operations increased $463 million in the second quarter and $400 million in the first six months of 2018, compared to the same periods of 2017. The increases in segment results were primarily driven by positive Midwest and Gulf Coast crack spreads on an ex-RIN basis as well as wider sweet and sour and WTI crude differentials. These favorable effects more than offset the net reduction in Refining & Marketing segment results associated with the February 1, 2018, dropdown transaction of $232 million and $413 million for the second quarter and first six months of 2018, respectively. Midstream segment results include net increases of the same amounts. No effect was given to prior periods as these entities were not considered businesses prior to February 1, 2018. The change in segment results in the first six months of 2018 also reflects a benefit related to the retroactive enactment of a biodiesel blending tax credit for 2017.

Refinery utilization was 99.9 percent during the second quarter resulting in record crude throughput of 1.9 million barrels per day. The USGC and Chicago LLS blended 6-3-2-1 crack spread on an ex-RIN basis was $6.98 per barrel in the second quarter of 2018 as compared to $5.71 per barrel in the second quarter of 2017. These crack spreads reflect blended 6-3-2-1 crack spreads of $9.14 and $9.18 per barrel for the second quarter of 2018 and 2017, respectively, less RIN crack adjustments of $2.16 and $3.46 per barrel for the second quarter of 2018 and 2017, respectively.

The USGC and Chicago LLS blended 6-3-2-1 crack spread on an ex-RIN basis was $5.86 per barrel in the first six months of 2018 as compared to $5.24 per barrel in the first six months of 2017. These crack spreads reflect blended 6-3-2-1 crack spreads of $8.43 and $8.46 per barrel for the first six months of 2018 and 2017, respectively, less RIN crack adjustments of $2.58 and $3.22 per barrel for the first six months of 2018 and 2017, respectively.

Speedway segment income from operations decreased $79 million in the second quarter and $119 million in the first six months of 2018, compared to the same periods of 2017. The decreases were primarily related to lower light product margins and higher expenses. Speedway’s gasoline and distillate margin decreased to 16.45 cents per gallon in the second quarter of 2018 compared with 18.35 cents per gallon in the second quarter of 2017 and decreased to 16.04 cents per gallon in the first six months of 2018 compared with 17.04 cents per gallon in the first six months of 2017, primarily due to the effects of rising crude oil prices.

Expenses increased $24 million and $42 million in the second quarter and first six months of 2018, respectively, primarily due to higher labor and benefit costs. Depreciation was $8 million and $23 million higher in the second quarter and first six months of 2018, respectively, due to increased investment in the business as well as accelerated depreciation in the first six months of 2018 due to Speedway’s upgrade of dispenser technology to provide marketing earnings enhancements and strengthen customer bank card security in advance of the required timeframe. Gains on the sale of assets of $6 million and $10 million in the second quarter and first six months of 2017, respectively, also contributed to the change in segment earnings. In addition, during the first quarter of 2018, multiple storms in the Northeast and Midwest markets resulted in reduced traffic at Speedway stores.

Table of Contents

Midstream segment income from operations, which largely reflects MPLX, increased $285 million in the second quarter and $543 million in the first six months of 2018 compared to the same periods of 2017. These results include $232 million and $413 million in the second quarter and first six months of 2018, respectively, from the refining logistics assets and fuels distribution services contributed to MPLX on February 1, 2018. Prior period Midstream segment results do not reflect the impact of these new businesses. Strong second-quarter Midstream segment results benefited from record gathered, processed and fractionated volumes as well as pipeline throughput volumes.

Items not allocated to segments in both periods of 2018 include approximately $10 million of transaction costs related to the pending merger with Andeavor. Both periods of 2017 include an $86 million litigation charge and a $19 million gain on asset liquidations related to a canceled project.

Net income attributable to noncontrolling interests increased $86 million in the second quarter and $213 million in the first six months of 2018 compared to the same periods of 2017 due to higher MPLX net income resulting primarily from the February 1, 2018 dropdown transaction, partially offset by the reduced ownership in MPLX held by noncontrolling interests following the recent dropdown transactions and the GP/IDR Exchange. Noncontrolling interest ownership in MPLX decreased to 36.4 percent at June 30, 2018 from 72.8 percent at June 30, 2017. Beginning with the second quarter of 2018, the holders of MPLX preferred units are entitled to receive a quarterly distribution equal to the greater of $0.528125 per unit or the amount of distributions they would have received on an as converted basis. On July 26, 2018, MPLX declared a quarterly cash distribution of $0.6275 per common unit representing the distribution of income earned during the second quarter of 2018. The Preferred units will receive this rate in lieu of the lower $0.528125 base amount.

~~MPLX LP~~

~~As of June 30, 2018, we owned 63.6 percent of the outstanding MPLX common units and control MPLX through our ownership of the general partner interest in MPLX.~~

MPLX ~~Highlights~~

On February 1, 2018, we completed the dropdown of the remaining identified assets related to our strategic actions to enhance shareholder value announced in January 2017. We contributed our refining logistics assets and ~~fuels distribution services to MPLX in exchange for $4.1 billion in cash and approximately 114 million newly issued MPLX units.~~

Immediately following the dropdown, our IDRs were cancelled and our economic general partner interest was converted into a non-economic general partner interest, all in exchange for 275 million newly issued MPLX common units.

~~MPLX financed the cash portion of the February 1, 2018 dropdown with its $4.1 billion 364-day term loan facility, which was entered into on January 2, 2018.~~

On February 8, 2018, MPLX issued $5.5 billion in aggregate principal amount of senior notes in a public offering. MPLX used $4.1 billion of the net proceeds of the offering to repay the 364-day term-loan facility. The remaining proceeds were used to repay outstanding borrowings under MPLX’s revolving credit facility and intercompany loan agreement with us and for general partnership purposes.

~~On September 1, 2017, we contributed our joint-interest ownership in certain pipelines and storage facilities to MPLX in exchange for $420 million in cash and approximately 19 million MPLX units.~~

~~On March 1, 2017, we contributed certain terminal, pipeline and storage assets to MPLX in exchange for $1.5 billion in cash and approximately 13 million MPLX units.~~

On February 10, 2017, MPLX issued $2.25 billion in aggregate principal amount of senior notes in a public offering. The net proceeds were used to fund the $1.5 billion cash portion of the consideration MPLX paid MPC for the dropdown of assets on March 1, 2017, as well as for general partnership purposes.

~~Table of Contents~~

��

~~Distributions from MPLX~~

~~The following table summarizes the cash distributions we received from MPLX.~~

Six Months Ended
June 30,
(In millions) 2018 2017
Cash distributions received from MPLX:
General partner distributions, including IDRs $ —
$ 124
Limited partner distributions 459
92
Total $ 459
$ 216
ANDX

We owned approximately 505 million MPLX common units at June 30, ~~2018 valued at $17.23~~2019 with a market value of $16.25 billion based on the June ~~29, 2018~~28, 2019 closing price of ~~$34.14~~$32.19 per common unit.

On July ~~25, 2018,~~22, 2019, MPLX declared a quarterly cash distribution of ~~$0.6275~~$0.6675 per common unit payable on August 14, ~~2018.~~2019. As a result, MPLX will make distributions totaling ~~$497~~$692 million to its common unitholders, which includes $94 million to former ANDX common unitholders. MPC’s portion of these distributions is approximately ~~$316~~$431 million.

We owned approximately 156 million ANDX common units at June 30, 2019 with a market value of $5.67 billion based on the June 28, 2019 closing price of $36.33 per common unit. Subsequent to MPLX’s acquisition of ANDX, as previously discussed, ANDX common unitholders will not receive any future distributions from ANDX but instead will receive a second quarter 2019 distribution noted above with respect to the MPLX common units issued in connection with the merger. Additionally, the ANDX Series A Preferred unitholders will not receive any future distributions from ANDX, but instead will receive the semi-annual distribution payable August 15, 2019 on MPLX Series B Preferred units issued in connection with the merger.

The following table summarizes the MPLX distributions we received in the six months ended June 30, 2019 and 2018 and ANDX distributions we received in the six months ended June 30, 2019.



	Six Months Ended June 30,
(In millions)	2019		2018
Cash distributions received:
Limited partner distributions - MPLX	$	659	$	459
Limited partner distributions - ANDX	294		—
Total	$	953	$	459

See Note 43 to the unaudited consolidated financial statements for additional information on ~~MPLX.~~MPLX and ANDX.

~~Acquisitions and Investments~~

~~Our acquisition and investment activity in 2017 was primarily focused on our Midstream segment as follows:~~

~~On March 1, 2017, MPLX purchased the Ozark pipeline from Enbridge Pipelines (Ozark) LLC for approximately $219 million.~~

On February 15, 2017, MPLX acquired a partial, indirect equity interest in the Dakota Access Pipeline (“DAPL”) and Energy Transfer Crude Oil Company Pipeline (“ETCOP”) projects, collectively referred to as the Bakken Pipeline system, through a joint venture with Enbridge Energy Partners L.P. (“Enbridge Energy Partners”). MPLX holds, through a subsidiary, a 25 percent interest in MarEn Bakken, which equates to an approximate 9.2 percent indirect equity interest in the Bakken Pipeline system.

Effective January 1, 2017, MPLX, through its wholly owned subsidiary MarkWest, and Antero Midstream formed a joint venture, Sherwood Midstream, to support the development of Antero Resources Corporation’s Marcellus Shale acreage in West Virginia. MarkWest has a 50 percent ownership interest in Sherwood Midstream. In connection with this transaction, MarkWest contributed certain gas processing plants currently under construction at the Sherwood Complex with a fair value of approximately $134 million and cash of approximately $20 million and sold Class A Interests in MarkWest Ohio Fractionation to Sherwood Midstream for $126 million in cash. Sherwood Midstream Holdings, a joint venture with MarkWest and Sherwood Midstream, was also formed to own, operate and maintain certain assets owned by Sherwood Midstream and MarkWest. MarkWest contributed certain real property, equipment and facilities with a fair value of approximately $209 million to Sherwood Midstream Holdings in exchange for a 79 percent initial ownership interest. During the three months ended March 31, 2018, MarkWest Liberty Midstream sold to Sherwood Midstream 6 percent of their equity ownership in Sherwood Midstream Holdings for $15 million.

See Note 5 to the unaudited consolidated financial statements for additional information on these acquisitions and investments and Note 6 for additional information related to the investments in Sherwood Midstream, Ohio Fractionation and Sherwood Midstream Holdings.

Share Repurchases

During the six months ended June 30, ~~2018,~~2019, we ~~repurchased 31~~returned $1.39 billion to our shareholders through repurchases of approximately 23 million shares of common ~~shares~~stock at an average ~~cost~~price per share of ~~$71.58 funded primarily by after tax proceeds from the February 1, 2018 dropdown to MPLX.~~$60.75.

Liquidity

As of June 30, ~~2018,~~2019, we had cash and cash equivalents of approximately ~~$5.00~~$1.22 billion, excluding ~~MPLX's~~MPLX and ANDX cash and cash equivalents ~~$3.5~~of $7 million and $25 million, respectively, no borrowings and $32 million in letters of credit outstanding under our $6.0 billion ~~of unused~~ bank revolving credit facilities and ~~full availability~~no borrowings outstanding under our $750 million trade receivables ~~facility. Our $1 billion 364-day~~ facility, ~~which was part~~resulting in cash and available liquidity of ~~our unused bank revolving credit facilities, expired on July 20, 2018. We intend to replace this facility with a new facility to become effective upon the closing of the Andeavor merger. As of~~

~~Table of Contents~~

June 30, 2018, we did not have any commercial paper borrowings outstanding. We do not intend to have outstanding commercial paper borrowings in excess of available capacity under our bank revolving credit facility.$7.93 billion. As of June 30, ~~2018,~~2019, MPLX had ~~cash and cash equivalents of $3 million and~~ approximately ~~$2.25~~$1.63 billion available through its bank revolving credit agreement and $956 million available through its intercompany credit facility with MPC. As of June 30, 2019, ANDX had approximately $600 million available through its bank revolving credit agreements and ~~approximately $888~~$500 million available through its intercompany credit facility with MPC.

Upon the completion of the merger of MPLX and ANDX on July 30, 2019, the MPLX bank revolving credit facility was amended and restated to increase the borrowing capacity to $3.5 billion and to extend the maturity date to July 30, 2024. The ~~above discussion contains forward-looking statements~~ANDX revolving and dropdown credit facilities were terminated and all outstanding balances were repaid and funded with ~~respect~~the new $3.5 billion bank revolving credit facility.

On July 31, 2019, in connection with the closing of the ANDX merger, we amended and restated the existing intercompany loan agreement with MPLX to, ~~our business strategies~~among other things, increase MPLX’s borrowing capacity thereunder from $1.0 billion to $1.5 billion in loans at any one time outstanding and ~~our share repurchase authorizations. Factors~~to extend the term of the intercompany loan agreement to July 31, 2024.

On July 26, 2019, we entered into a new $1 billion 364-day revolving credit facility with a syndicate of banks that ~~could affect our business strategies include, but are not limited to, our ability to achieve the strategic and other objectives related~~will, subject to the ~~strategic initiatives;~~satisfaction of customary conditions, become effective upon the impact of adverse market conditions affecting MPC’s and MPLX’s midstream businesses; and adverse changes in laws including with respect to tax and regulatory matters. Factors that could affect the share repurchase authorizations and the timing of any repurchases include, but are not limited to, our ability to generate sufficient income and cash flow to effect share repurchases; our ability to manage disruption in credit markets or changes to our credit rating; business conditions; availability of liquidity and the market priceexpiration of our ~~common stock. These factors, among others, could cause actual results~~existing $1 billion 364-day revolving facility in September 2019. The new 364-day revolving credit facility contains substantially the same terms and conditions as our existing 364-day revolving credit facility and will expire in September 2020.

Table of Contents

On July 19, 2019, we amended our $750 million trade receivables securitization facility to ~~differ materially from those set forth in~~extend the forward-looking statements. For additional information on forward-looking statements and risks that can affect our business, see “Disclosures Regarding Forward-Looking Statements” and “Risk Factors”, together with Item 1A. Risk Factors in our Annual Report on Form 10-K for the year ended December 31, 2017.maturity date to July 16, 2021.

OVERVIEW OF SEGMENTS

Refining & Marketing

Refining & Marketing segment income from operations depends largely on our Refining & Marketing margin and refinery throughputs.

Our Refining & Marketing margin is the difference between the prices of refined products sold and the costs of crude oil and other charge and blendstocks refined, including the costs to transport these inputs to our refineries and the costs of products purchased for resale. The crack spread is a measure of the difference between market prices for refined products and crude oil, commonly used by the industry as a proxy for the refining margin. Crack spreads can fluctuate significantly, particularly when prices of refined products do not move in the same relationship as the cost of crude oil. As a performance benchmark and a comparison with other industry participants, we calculate ~~Midwest (Chicago)~~Gulf Coast, Mid-Continent and ~~USGC~~West Coast 3-2-1 crack spreads that we believe most closely track our operations and slate of products. ~~LLS prices and a 6-3-2-1 ratio of products (6 barrels of LLS crude oil producing 3 barrels of unleaded regular gasoline, 2 barrels of ULSD and 1 barrel of three percent residual fuel oil)~~The following are used for these crack-spread ~~calculations.~~calculations:

The Gulf Coast crack spread uses three barrels of LLS crude producing two barrels of USGC CBOB gasoline and one barrel of USGC ULSD;

The Mid-Continent crack spread uses three barrels of WTI crude producing two barrels of Chicago CBOB gasoline and one barrel of Chicago ULSD; and

The West Coast crack spread uses three barrels of ANS crude producing two barrels of LA CARBOB and one barrel of LA CARB Diesel.

Our refineries can process significant amounts of sweet and sour crude oil, which typically can be purchased at a discount to ~~sweet~~ crude ~~oil.~~oil referenced in these crack spreads. The amount of ~~this discount,~~these discounts, the ~~sweet/~~sweet and sour ~~differential,~~differentials, can vary significantly, causing our Refining & Marketing margin to differ from crack ~~spreads based on sweet crude oil.~~spreads. In general, a larger ~~sweet/~~sweet and sour ~~differential~~differentials will enhance our Refining & Marketing margin.

Future crude oil differentials will be dependent on a variety of market and economic factors, as well as U.S. energy policy.

The following table provides sensitivities showing an estimated change in annual net income due to potential changes in market conditions.

(In millions, after-tax)
LLS 6-3-2-1 crack spread sensitivity^(a)(per $1.00/barrel change)
$ 590
Sweet/sour differential sensitivity^(b) (per $1.00/barrel change)
300
LLS-WTI differential sensitivity^(c) (per $1.00/barrel change)
90
Natural gas price sensitivity^(d) (per $1.00/million British thermal unit change)
200



(In millions, after-tax)
Blended crack spread sensitivity^(a)(per $1.00/barrel change)	$	900
Sour differential sensitivity^(b) (per $1.00/barrel change)	450
Sweet differential sensitivity^(c) (per $1.00/barrel change)	370
Natural gas price sensitivity^(d) (per $1.00/MMBtu)	300


^(a)	~~Weighted 40~~Crack spread based on 38 percent ~~Chicago~~LLS, 38 percent WTI and 6024 percent ~~USGC LLS 6-3-2-1 crack spreads~~ANS with Gulf Coast, Mid-Continent and West Coast product pricing, respectively, and assumes all other differentials and pricing relationships remain unchanged.


^(b)	~~LLS (prompt) - [delivered cost~~Sour crude oil basket consists of ~~sour crude oil: Arab Light, Kuwait,~~the following crudes: ANS, Argus Sour Crude Index, Maya and Western Canadian Select ~~and Mars] and assumes approximately 58 percent of crude throughput are sour based.~~


^(c)	~~Assumes 17 percent of~~Sweet crude oil ~~throughput volumes are WTI-based domestic crude oil.~~basket consists of the following crudes: Bakken, Brent, LLS, WTI-Cushing and WTI-Midland


^(d)	This is consumption based exposure for our Refining & Marketing segment and does not include the ~~sales exposure for~~effects to our Midstream segment.

In addition to the market changes indicated by the crack spreads, the ~~sweet/~~sour differential and the ~~discount of WTI to LLS,~~sweet differential, our Refining & Marketing margin is impacted by factors such as:

the selling prices realized for and the mix of refined ~~products;~~products as compared to the assumptions used to calculate the market crack spreads;

the types of crude oil and other charge and blendstocks ~~processed;~~

~~Table of Contents~~

processed as compared to the assumptions used to calculate the market crack spreads;

our refinery yields;

the cost of products purchased for resale;

the impact of commodity derivative instruments used to hedge price risk; and

the potential impact of LCM adjustments to inventories in periods of declining ~~prices; and~~

~~the minimum commitments under certain agreements with MPLX.~~prices.

Inventories are ~~carried~~stated at the lower of cost or ~~market value.~~market. Costs of crude oil, refinery feedstocks and refined products are stated under the LIFO inventory costing method and aggregated on a consolidated basis for purposes of assessing if the ~~LIFO~~ cost basis of these inventories may have to be written down to market values.

Table of Contents

Refining & Marketing segment income from operations is also affected by changes in refinery direct operating costs, which include turnaround and major maintenance, depreciation and amortization and other manufacturing expenses. Changes in manufacturing costs are primarily driven by the cost of energy used by our refineries, including purchased natural gas, and the level of maintenance costs. Planned major maintenance activities, or turnarounds, requiring temporary shutdown of certain refinery operating units, are periodically performed at each refinery. Costs for planned turnaround, major maintenance and engineering projects are expensed in the period incurred.

We have various long-term, fee-based commercial agreements with ~~MPLX.~~MPLX and ANDX. Under these agreements, MPLX and ANDX, which isare reported in our Midstream segment, ~~provides~~provide transportation, storage, distribution and marketing services to our Refining & Marketing segment. Certain of these agreements include commitments for minimum quarterly throughput and distribution volumes of crude oil and refined products and minimum storage volumes of crude oil, refined products and ~~butane.~~other products. Certain other agreements include commitments to pay for 100 percent of available capacity for certain marine transportation and refining logistics assets.

~~Speedway~~Retail

~~Our retail marketing~~Retail segment profitability is impacted by fuel and merchandise margin. Fuel margin for gasoline and distillate ~~which~~ is the price paid by consumers or direct dealers less the cost of refined products, including transportation, consumer excise taxes and bankcard processing fees ~~impacts~~(where applicable). Gasoline and distillate prices are volatile and are impacted by changes in supply and demand in the ~~Speedway segment profitability.~~regions where we operate. Numerous factors impact gasoline and distillate demand throughout the year, including local competition, ~~transportation fuel prices,~~ seasonal demand fluctuations, ~~availability of~~the available wholesale supply, the level of economic activity in our marketing areas and weather conditions. ~~Market demand increases for gasoline and distillate generally increase the product margin we can realize.~~

The margin on merchandise sold at our convenience stores historically has been less volatile and has contributed substantially to ~~Speedway’s~~our Retail segment margin. ~~Speedway’s~~Our Retail convenience stores offer a wide variety of merchandise, including prepared foods, beverages and non-food items.

~~Midstream~~

~~NGL~~Inventories are carried at the lower of cost or market value. Costs of refined products and ~~natural gas prices~~merchandise are ~~volatile~~stated under the LIFO inventory costing method and ~~are impacted by changes in fundamental supply and demand, as well as market uncertainty, availability~~aggregated on a consolidated basis for purposes of NGL transportation and fractionation capacity and a variety of additional factors that are beyond our control. Our Midstream segment profitability is affected by prevailing commodity prices primarily as a result of processing or conditioning at our own or third‑party processing plants, purchasing and selling or gathering and transporting volumes of natural gas at index‑related prices andassessing if the cost basis of third‑party transportation and fractionation services. To the extent that commodity prices influence the level of natural gas drilling by our producer customers, such prices also affect profitability.these inventories may have to be written down to market values.

Midstream

Our Midstream segment transports, stores, distributes and markets crude oil and refined products, principally for our Refining & Marketing segment. The profitability of our pipeline transportation operations primarily depends on tariff rates and the volumes shipped through the pipelines. The profitability of our marine operations primarily depends on the quantity and availability of our vessels and barges. The profitability of our light product terminal operations primarily depends on the throughput volumes at these terminals. The profitability of our fuels distribution services primarily depends on the sales volumes of certain refined products. The profitability of our refining logistics operations depends on the quantity and availability of our refining logistics assets. A majority of the crude oil and refined product shipments on our pipelines and marine vessels and the refined product throughput at our terminals serve our Refining & Marketing segment and our refining logistics assets and fuels distribution services are used solely by our Refining & Marketing segment. As discussed above in the Refining & Marketing section, MPLX and ANDX, which isare reported in our Midstream segment, ~~has~~have various long-term, fee-based commercial agreements related to services provided to our Refining & Marketing segment. Under these agreements, MPLX ~~has~~and ANDX have received various commitments of minimum throughput, storage and distribution volumes as well as commitments to pay for all available capacity of certain assets. The volume of crude oil that we transport is directly affected by the supply of, and refiner demand for, crude oil in the markets served directly by our crude oil pipelines, terminals and marine operations. Key factors in this supply and demand balance are the production levels of crude oil by producers in various regions or fields, the availability and cost of alternative

~~Table of Contents~~

modes of transportation, the volumes of crude oil processed at refineries and refinery and transportation system maintenance levels. The volume of refined products that we transport, store, distribute and market is directly affected by the production levels of, and user demand for, refined products in the markets served by our refined product pipelines and marine operations. In most of our markets, demand for gasoline and distillate peaks during the summer driving season, which extends from May through September of each year, and declines during the fall and winter months. As with crude oil, other transportation alternatives and system maintenance levels influence refined product movements.

Table of Contents

Our Midstream segment also gathers and processes natural gas and NGLs. NGL and natural gas prices are volatile and are impacted by changes in fundamental supply and demand, as well as market uncertainty, availability of NGL transportation and fractionation capacity and a variety of additional factors that are beyond our control. Our Midstream segment profitability is affected by prevailing commodity prices primarily as a result of processing at our own or third‑party processing plants, purchasing and selling or gathering and transporting volumes of natural gas at index‑related prices and the cost of third‑party transportation and fractionation services. To the extent that commodity prices influence the level of natural gas drilling by our producer customers, such prices also affect profitability.

RESULTS OF OPERATIONS

The following discussion includes comments and analysis relating to our results of operations. Our results include the results of Andeavor from the October 1, 2018 acquisition date forward. This discussion should be read in conjunction with Item 1. Financial Statements and is intended to provide investors with a reasonable basis for assessing our historical operations, but should not serve as the only criteria for predicting our future performance.

Consolidated Results of Operations


		Three Months Ended June 30,							Six Months Ended June 30,								Three Months Ended June 30,							Six Months Ended June 30,
(In millions)		2018		2017		Variance			2018		2017		Variance				2019		2018		Variance			2019		2018		Variance
Revenues and other income:	Revenues and other income:															Revenues and other income:
Sales and other operating revenues^(a)	Sales and other operating revenues^(a)	$	22,118	$	18,033	$	4,085		$	40,812	$	34,167	$	6,645		Sales and other operating revenues^(a)	$	33,547	$	22,317	$	11,230		$	61,814	$	41,183	$	20,631
Sales to related parties		199		147		$	52		371		301		$	70
Income from equity method investments	Income from equity method investments	80		83		(3		)	166		140		26			Income from equity method investments	107		80		27			206		166		40
Net gain on disposal of assets	Net gain on disposal of assets	3		7		(4		)	5		12		(7		)	Net gain on disposal of assets	4		3		1			218		5		213
Other income	Other income	45		84		(39		)	75		127		(52		)	Other income	30		45		(15		)	65		75		(10		)
Total revenues and other income	Total revenues and other income	22,445		18,354		4,091			41,429		34,747		6,682			Total revenues and other income	33,688		22,445		11,243			62,303		41,429		20,874
Costs and expenses:	Costs and expenses:															Costs and expenses:
Cost of revenues (excludes items below)^(a)		19,517		16,101		3,416			36,887		31,047		5,840
Purchases from related parties		138		150		(12		)	279		272		7
Cost of revenues (excludes items below)																Cost of revenues (excludes items below)	29,682		19,655		10,027			55,642		37,166		18,476
Depreciation and amortization	Depreciation and amortization	533		521		12			1,061		1,057		4			Depreciation and amortization	886		533		353			1,805		1,061		744
Selling, general and administrative expenses	Selling, general and administrative expenses	424		485		(61		)	826		875		(49		)	Selling, general and administrative expenses	904		424		480			1,785		826		959
Other taxes	Other taxes	122		115		7			225		223		2			Other taxes	174		122		52			360		225		135
Total costs and expenses	Total costs and expenses	20,734		17,372		3,362			39,278		33,474		5,804			Total costs and expenses	31,646		20,734		10,912			59,592		39,278		20,314
Income from operations	Income from operations	1,711		982		729			2,151		1,273		878			Income from operations	2,042		1,711		331			2,711		2,151		560
Net interest and other financial costs	Net interest and other financial costs	195		158		37			378		307		71			Net interest and other financial costs	322		195		127			628		378		250
Income before income taxes	Income before income taxes	1,516		824		692			1,773		966		807			Income before income taxes	1,720		1,516		204			2,083		1,773		310
Provision for income taxes	Provision for income taxes	281		250		31			303		291		12			Provision for income taxes	353		281		72			457		303		154
Net income	Net income	1,235		574		661			1,470		675		795			Net income	1,367		1,235		132			1,626		1,470		156
Less net income attributable to:	Less net income attributable to:															Less net income attributable to:
Redeemable noncontrolling interest	Redeemable noncontrolling interest	20		17		3			36		33		3			Redeemable noncontrolling interest	21		20		1			41		36		5
Noncontrolling interests	Noncontrolling interests	160		74		86			342		129		213			Noncontrolling interests	240		160		80			486		342		144
Net income attributable to MPC	Net income attributable to MPC	$	1,055	$	483	$	572		$	1,092	$	513	$	579		Net income attributable to MPC	$	1,106	$	1,055	$	51		$	1,099	$	1,092	$	7


^(a)	~~We adopted ASU 2014-09, Revenue - Revenue from contracts with customers (ASC 606), as of January 1,~~ Second Quarter 2019 Compared to Second Quarter 2018 and elected to report certain taxes on a net basis. We applied the standard using the modified retrospective method and, therefore, comparative information continues to reflect certain taxes on a gross basis.

Net income attributable to MPC increased ~~$572~~$51 million in the second quarter ~~and $579 million in the first six months~~ of ~~2018~~2019 compared to the ~~same periods~~second quarter of ~~2017,~~2018 primarily due to ~~increases~~an increase in income from operations, partially offset by increases in net interest and other financial costs, net income attributable to noncontrolling ~~interests.~~interests and provision for income taxes.

Revenues and other income increased $11.24 billion. Sales and other operating revenues increased ~~$4.09~~$11.23 billion ~~in the second quarter and $6.65 billion in the first six months of 2018 compared to the same periods of 2017. The increases were~~ primarily due to ~~higher average~~increased Refining & Marketing segment refined product sales ~~prices,~~volumes, which increased ~~$0.53 per gallon~~1,422 mbpd, largely due to the Andeavor acquisition on October 1, 2018.

Costs and ~~$0.40 per gallon, respectively. These increases were partially offset by our election to present revenues net~~expenses increased $10.91 billion primarily due to:

increased cost of ~~certain taxes under ASC 606 prospectively from January 1, 2018, which resulted in a decrease in~~ revenues of ~~$1.36~~$10.03 billion ~~and $2.61 billion in the second quarter and first six months of 2018, respectively. See Notes 2 and 3~~mainly due to the ~~unaudited consolidated financial statements for additional information.~~inclusion of costs related to the Andeavor operations following the acquisition;

4039

Table of Contents

~~Sales to related parties~~ increased ~~$52~~depreciation and amortization of $353 million ~~in the second quarter and $70 million in the first six months of 2018 compared to the same periods of 2017, due to higher average refined product sales prices.~~

~~Income from equity method investments increased $26 million in the first six months of 2018 compared to the same period of 2017,~~ primarily due to ~~an increase~~the depreciation of the fair value of assets acquired in ~~income from gathering and processing affiliates.~~connection with the Andeavor acquisition;

~~Other income decreased $39 million in the second quarter and $52 million in the first six months of 2018 compared to the same periods of 2017, primarily due to decreases in RIN sales.~~

~~Cost of revenues~~ increased ~~$3.42 billion in the second quarter and $5.84 billion in the first six months of 2018 compared to the same periods of 2017, primarily due to:~~

~~increases in refined product cost of sales of $4.43 billion and $7.80 billion, respectively, primarily due to higher raw material costs; and~~

decreases in certain taxes of $1.36 billion and $2.61 billion, respectively, as a result of our election to present revenues net of certain taxes under ASC 606 prospectively from January 1, 2018. For the second quarter and first six months of 2017, certain taxes continue to be presented on a gross basis and are included in cost of revenues. See Notes 2 and 3 to the unaudited consolidated financial statements for additional information on recently adopted accounting standards.

~~Selling,~~selling, general and administrative expenses ~~decreased $61~~of $480 million ~~in the second quarter and $49 million in the first six months of 2018 compared~~largely due to the ~~same periods~~inclusion of ~~2017. Selling, general and administrative expenses in both periods of 2018 include approximately $10 million of transaction~~ costs related to Andeavor operations and reflecting MPC’s classification of costs and expenses; and

increased other taxes of $52 million primarily due to the ~~pending merger with~~inclusion of other taxes related to the acquired Andeavor ~~and both periods of 2017 include an $86 million litigation charge.~~operations.

Net interest and other financial costs increased ~~$37~~$127 million mainly due to debt assumed in the ~~second quarter~~acquisition of Andeavor and ~~$71 million in the first six months of 2018 compared to the same periods of 2017, primarily due to~~ increased MPLX borrowings.

Provision for income taxes increased ~~$31~~$72 million ~~in the second quarter and $12 million in the first six months of 2018 compared to the same periods of 2017,~~ primarily due to ~~increases in~~increased income before income taxes of ~~$692 million and $807 million, respectively, offset by lower effective tax rates under the TCJA.~~$204 million. The combined federal, state and foreign income tax rate was 1921 percent and 3019 percent for the three months ended June 30, 2019 and 2018, respectively. The effective tax rate for the three months ended June 30, 2019 was equal to the U.S. statutory rate of 21 percent primarily due to certain permanent tax differences related to net income attributable to noncontrolling interests offset by equity compensation and ~~2017, respectively,~~state and local tax expense. The effective tax rate for the three months ended June 30, 2018 was less than the U.S. statutory rate of 21 percent primarily due to certain permanent tax differences related to net income attributable to noncontrolling interests and equity compensation offset by state and local tax expense.

Net income attributable to noncontrolling interests increased $80 million primarily due to net income attributable to noncontrolling interest in ANDX.

Six Months Ended June 30, 2019 Compared to Six Months Ended June 30, 2018

Net income attributable to MPC increased $7 million in the first six months of 2019 compared to the first six months of 2018 primarily due to an increase in income from operations, partially offset by increases in net interest and other financial costs, provision for income taxes and net income attributable to noncontrolling interests.

Revenues and other income increased $20.87 billion primarily due to:

increased sales and other operating revenues of $20.63 billion primarily due to increased Refining & Marketing segment refined product sales volumes, which increased 1,415 mbpd, largely due to the Andeavor acquisition on October 1, 2018; and

increased net gain on disposal of assets of $213 million mainly due to a $207 million gain recognized in connection with MPC’s exchange of its undivided interest in the Capline pipeline system for an equity ownership in Capline LLC.

Costs and expenses increased $20.31 billion primarily due to:

increased cost of revenues of $18.48 billion primarily due to the inclusion of costs related to the Andeavor operations following the acquisition;

increased depreciation and amortization of $744 million largely due to the depreciation of the fair value of assets acquired in connection with the Andeavor acquisition;

increased selling, general and administrative expenses of $959 million mainly due to the inclusion of costs related to Andeavor operations and reflecting MPC’s classification of costs and expenses; and

increased other taxes of $135 million primarily due to the inclusion of other taxes related to the acquired Andeavor operations.

Net interest and other financial costs increased $250 million largely due to debt assumed in the acquisition of Andeavor and increased MPLX borrowings.

Provision for income taxes increased $154 million primarily due to increased income before income taxes of $310 million and $36 million of state deferred tax expense recorded as an out of period adjustment related to the Andeavor acquisition. The combined federal, state and foreign income tax rate was 22 percent and 17 ~~percent and 30~~ percent for the six months ended June 30, ~~2018~~2019 and ~~2017,~~2018, respectively. The effective tax rate for the ~~three and~~six months ended June 30, 2019 was greater than the U.S. statutory rate of 21 percent primarily due to $36 million of state deferred tax expense recorded as an out of period adjustment, partially offset by permanent tax differences related to net income attributable to noncontrolling interests. The effective tax rate for the six months ended June 30, 2018 was less than the U.S. statutory rate of 21 percent primarily due to certain permanent tax differences related to net income attributable to noncontrolling interest and equity compensation offset by state and local tax expense. The effective tax rate for the three and six months ended June 30, 2017 was less than the U.S. statutory rate of 35 percent primarily due to certain permanent tax differences related to net income attributable to noncontrolling interest, the domestic manufacturing deductioninterests and equity compensation offset by state and local tax expense.

Net income attributable to noncontrolling interests increased ~~$86~~$144 million primarily due to net income attributable to noncontrolling interest in ANDX.

Table of Contents

Segment Results

Our segment income from operations was approximately $3.02 billion and $2.33 billion for the six months ended June 30, 2019 and 2018, respectively. The following shows the percentage of segment income from operations by segment for these periods.

Refining & Marketing

The following includes key financial and operating data for the second quarter of 2019 compared to the second quarter of 2018 and the six months ended June 30, 2019 compared to the six months ended June 30, 2018. Our results include the results of Andeavor from the October 1, 2018 acquisition date forward.

We revised our Refining & Marketing segment supplemental reporting in the second quarter as shown in the table on page 42. Costs formerly included in MPC’s direct operating costs category are now presented in three categories: refining operating costs, refining planned turnaround costs and ~~$213~~depreciation and amortization. We also present distribution costs, formerly referred to as other operating expenses, which are primarily related to transportation and marketing of refined products, including fees paid to MPLX and ANDX.

Table of Contents


^(a)	Includes intersegment sales and sales destined for export.



	Three Months Ended June 30,						Six Months Ended June 30,
	2019			2018			2019			2018
Refining & Marketing Operating Statistics
Total refinery throughputs (mbpd)	3,135			2,038			3,109			1,972
Refining & Marketing margin per barrel^(a)(b)	$	15.24		$	15.40		$	13.23		$	13.08
Less:
Refining operating costs per barrel^(c)	5.35			4.19			5.47			4.72
Distribution costs per barrel^(d)	4.48			4.17			4.56			3.93
Other per barrel^(e)	(0.04		)	(0.18		)	(0.06		)	(0.14		)
Refining planned turnaround costs per barrel	0.83			0.33			0.75			0.66
Depreciation and amortization per barrel	1.44			1.36			1.49			1.41
Refining & Marketing segment income per barrel	$	3.18		$	5.53		$	1.02		$	2.50


^(a)	Sales revenue less cost of refinery inputs and purchased products, divided by total refinery throughputs.


^(b)	See “Non-GAAP Measures” section for reconciliation and further information regarding this non-GAAP measure.


^(c)	Includes refining major maintenance and operating costs. Excludes turnaround and depreciation and amortization expense.


^(d)	Includes fees paid to MPLX and ANDX. On a per barrel throughput basis, these fees were $2.80 and $3.21 for the three months ended June 30, 2019 and 2018, respectively, and $2.81 and $3.01 for the six months ended June 30, 2019 and 2018, respectively. Excludes depreciation and amortization expense.


^(e)	Includes income from equity method investments, net gain on disposal of assets and other income.

Table of Contents

The following table presents certain benchmark prices in our marketing areas and market indicators that we believe are helpful in understanding the results of our Refining & Marketing segment. Following the acquisition of Andeavor in October 2018, we expanded the benchmark prices included in these tables to include market information for the West Coast region of the United States, including LA CARBOB and LA CARB diesel spot prices, ANS crude prices and a West Coast ANS 3-2-1 crack spread. However, since the results of the Andeavor businesses are only included in our results from October 1, 2018 forward, these market indicators did not affect our results for the second quarter and first six months of 2018. The benchmark crack spreads below do not reflect the market cost of RINs necessary to meet EPA renewable volume obligations for attributable products under the Renewable Fuel Standard.



	Three Months Ended June 30,						Six Months Ended June 30,
Benchmark Spot Prices (dollars per gallon)	2019			2018			2019			2018
Chicago CBOB unleaded regular gasoline	$	1.94		$	2.02		$	1.73		$	1.88
Chicago ULSD	1.94			2.12			1.89			2.03
USGC CBOB unleaded regular gasoline	1.79			1.96			1.66			1.87
USGC ULSD	1.94			2.11			1.91			2.02
LA CARBOB	2.18			2.21			2.00			2.10
LA CARB diesel	2.13			2.21			2.02			2.11

Market Indicators (dollars per barrel)
LLS	$	67.15		$	73.03		$	64.79		$	69.51
WTI	59.91			67.91			57.45			65.46
ANS	68.28			74.14			66.41			70.65
Crack Spreads:
Mid-Continent WTI 3-2-1	$	20.43		$	16.58		$	16.15		13.35
USGC LLS 3-2-1	8.98			9.69			7.14			8.81
West Coast ANS 3-2-1	21.78			17.03			16.93			15.45
Blended 3-2-1^(a)	16.41			14.07			12.91			10.63
Crude Oil Differentials:
Sweet	$	(2.62	)	$	(3.27	)	$	(2.95	)	$	(1.90	)
Sour	(2.04		)	(7.86		)	(2.58		)	(6.87		)


^(a)	Blended 3-2-1 Mid-Continent/USGC/West Coast crack spread is 38/38/24 percent in 2019 and Blended 3-2-1 Mid-Continent/USGC crack spread is 40/60 percent in 2018, which reflects MPC’s capacity prior to the Andeavor acquisition. These blends are based on our refining capacity by region in each period.

Second Quarter 2019 Compared to Second Quarter 2018

Refining & Marketing segment revenues increased $9.98 billion primarily due to higher refined product sales volumes, which increased 1,422 mbpd mainly due to the Andeavor acquisition on October 1, 2018, partially offset by decreased average refined product sales prices of $0.07 per gallon.

Refinery crude oil capacity utilization was 97 percent during the second quarter of 2019 and total refinery throughputs increased 1,097 mbpd primarily due to the refineries acquired from Andeavor.

Refining & Marketing segment income from operations decreased $119 million primarily driven by higher Refining & Marketing margin, which was more than offset by higher operating, distribution and planned turnaround costs as well as higher depreciation and amortization. The increases in Refining & Marketing margin and costs and expenses were primarily due to increased sales and production volumes following the Andeavor acquisition.

Refining & Marketing margin was $15.24 per barrel for the second quarter of 2019 compared to $15.40 per barrel for the second quarter of 2018. Refining & Marketing margin is affected by the market indicators shown earlier, which use spot market values and an estimated mix of crude purchases and product sales. Based on the market indicators and our crude oil throughput, we estimate a net positive impact of approximately $2.1 billion on Refining & Marketing margin for the second quarter of 2019 compared to the second quarter of 2018, primarily due to an approximate $2.0 billion benefit from increased throughput volume, mainly attributed to the Andeavor acquisition, partially offset by narrower crude oil differentials. Our reported Refining & Marketing margin differs from market indicators due to the mix of crudes purchased and their costs, the

Table of Contents

effect of market structure on our crude oil acquisition prices, the effect of RIN prices on the crack spread, and other items like refinery yields and other feedstock variances. These factors had an estimated negative effect of $600 million on Refining & Marketing segment income in the second quarter of 2019 compared to the second quarter of 2018.

Refining operating costs, excluding depreciation and amortization, increased $1.16 per barrel, refining planned turnaround costs increased $0.50 per barrel and distribution costs, excluding depreciation and amortization, increased $0.31 per barrel. All of these increases were primarily due to the inclusion of costs for the refining operations acquired from Andeavor and the timing of turnaround activity. The per barrel cost increases, among other items, reflect the addition of Andeavor’s West Coast refineries, which generally have higher operating costs than the other regions in which we operate due to specific geographical location and regulatory factors. Distribution costs, excluding depreciation and amortization, include fees paid to MPLX and ANDX of $798 million and $596 million for the second quarter of 2019 and 2018, respectively. Depreciation and amortization per barrel increased by $0.08, primarily due to the $0.07 increase for intangible asset amortization related to the fair value of assets acquired from Andeavor as of October 1, 2018.

Six Months Ended June 30, 2019 Compared to Six Months Ended June 30, 2018

Refining & Marketing segment revenues increased $18.38 billion primarily due to higher refined product sales volumes, which increased 1,415 mbpd mainly due to the Andeavor acquisition on October 1, 2018, partially offset by decreased average refined product sales prices of $0.07 per gallon.

Refinery crude oil capacity utilization was 96 percent in the first six months of 2019 and total refinery throughputs increased 1,137 mbpd primarily due to the refineries acquired from Andeavor.

Refining & Marketing segment income from operations decreased $320 million primarily driven by higher Refining & Marketing margin, more than offset by higher operating, distribution, planned turnaround and depreciation costs. The increases in Refining & Marketing margin and operating, distribution, planned turnaround and depreciation costs are primarily due to increased sales and production volumes following the Andeavor acquisition.

Refining & Marketing margin was $13.23 per barrel for the first six months 2019 compared to $13.08 per barrel for the first six months of 2018. Refining & Marketing margin is affected by the market indicators shown earlier, which use spot market values and an estimated mix of crude purchases and product sales. Based on the market indicators and our crude oil throughput, we estimate a net positive impact of approximately $3.5 billion on Refining & Marketing margin for the first six months of 2019 compared to the first six months of 2018, primarily due to an approximate $3.2 billion benefit from increased throughput volume, mainly attributed to the Andeavor acquisition, and wider sweet crude oil differentials, partially offset by narrowing sour crude oil differentials.Our reported Refining & Marketing margin differs from market indicators due to the mix of crudes purchased and their costs, market structure on our crude oil acquisition prices, RIN prices on the crack spread, and other items like refinery yields and other feedstock variances. These factors had an estimated negative effect of approximately $700 million on Refining & Marketing segment income in the first six months of 2019 compared to the first six months of 2018.

Refining operating costs, excluding depreciation and amortization, increased $0.75 per barrel, refining planned turnaround costs increased $0.09 per barrel and distribution costs, excluding depreciation and amortization, increased $0.63 per barrel. All of these increases were primarily due to the inclusion of costs for the refining operations acquired from Andeavor and the timing of turnaround activity. The per barrel cost increases, among other items, reflect the addition of Andeavor’s West Coast refineries, which generally have higher operating costs than the other regions in which we operate due to specific geographical location and regulatory factors. Distribution costs, excluding depreciation and amortization, include fees paid to MPLX and ANDX of $1.58 billion and $1.07 billion for the first six months ended of 2019 and 2018, respectively. The first six months of 2019 also increased due to one additional month of fixed fee services provided by MPLX due to timing of dropdown transactions in 2018. Depreciation and amortization per barrel increased by $0.08, primarily due to the $0.07 increase for intangible asset amortization related to the fair value of assets acquired from Andeavor as of October 1, 2018.

Table of Contents

Supplemental Refining & Marketing Statistics



	Three Months Ended June 30,		Six Months Ended June 30,
	2019	2018	2019	2018
Refining & Marketing Operating Statistics
Refined product export sales volumes (mbpd)^(a)	408	311	420	292
Crude oil capacity utilization percent^(b)	97	100	96	96
Refinery throughputs (mbpd):^(c)
Crude oil refined	2,937	1,878	2,902	1,812
Other charge and blendstocks	198	160	207	160
Total	3,135	2,038	3,109	1,972
Sour crude oil throughput percent	47	55	49	53
Sweet crude oil throughput percent	53	45	51	47
Refined product yields (mbpd):^(c)
Gasoline	1,528	970	1,531	943
Distillates	1,080	691	1,086	651
Propane	57	40	55	35
Feedstocks and petrochemicals	370	278	350	283
Heavy fuel oil	51	27	48	31
Asphalt	83	72	81	65
Total	3,169	2,078	3,151	2,008


^(a)	Represents fully loaded export cargoes for each time period. These sales volumes are included in the total sales volume amounts.


^(b)	Based on calendar-day capacity, which is an annual average that includes down time for planned maintenance and other normal operating activities.


^(c)	Excludes inter-refinery volumes which totaled 102 mbpd and 64 mbpd for the three months ended June 30, 2019 and 2018, respectively, and 88 mbpd and 53 mbpd for the six months ended June 30, 2019 and 2018, respectively.

Retail

Table of Contents


^(a)	The price paid by consumers or direct dealers less the cost of refined products, including transportation, consumer excise taxes and bankcard processing fees (where applicable), divided by gasoline and distillate sales volume. Excludes LCM inventory valuation adjustments.


^(b)	See “Non-GAAP Measures” section for reconciliation and further information regarding this non-GAAP measure.



	Three Months Ended June 30,						Six Months Ended June 30,
Key Financial and Operating Data	2019			2018			2019			2018
Average fuel sales prices (dollars per gallon)	$	2.67		$	2.79		$	2.62		$	2.66
Merchandise sales (in millions)	$	1,620		$	1,285		$	3,033		$	2,414
Merchandise margin (in millions)^(a)(b)	$	471		$	366		$	878		$	685
Same store gasoline sales volume (period over period)^(c)	(2.4		%)	(2.6		%)	(2.8		)%	(2.1		)%
Same store merchandise sales (period over period)^(c)(d)	6.3		%	2.9		%	5.9		%	2.6		%
Convenience stores at period-end	3,913			2,744
Direct dealer locations at period-end	1,062			—


^(a)	The price paid by the consumers less the cost of merchandise.


^(b)	See “Non-GAAP Measures” section for reconciliation and further information regarding this non-GAAP measure.


^(c)	Same store comparison includes only locations owned at least 13 months.


^(d)	Excludes cigarettes.

Second Quarter 2019 Compared to Second Quarter 2018

Retail segment revenues increased $3.68 billion primarily due to increased fuel and merchandise sales resulting from the Andeavor acquisition on October 1, 2018. The Andeavor acquisition added approximately 1,100 company-owned and operated locations along with long-term supply contracts for approximately 1,060 direct dealer locations. Increased fuel sales volumes of 1.15 billion gallons, almost all of which was related to the acquisition, were partially offset by decreased average fuel sales prices of $0.12 per gallon. Merchandise sales increased $335 million resulting from the contributions of the acquired businesses.

Retail segment income from operations increased $334 million largely related to the addition of the legacy Andeavor retail operations as well as a $59 million year-over-year increase in MPC's legacy Speedway segment earnings driven by higher fuel margins and merchandise sales. These increases were partially offset by increases in operating expenses and depreciation primarily resulting from the locations acquired from Andeavor. The Retail fuel margin increased to 26.66 cents per gallon in the second quarter of 2019 compared with 16.45 cents per gallon in the second quarter of 2018 and the merchandise margin increased $105 million.

Six Months Ended June 30, 2019 Compared to Six Months Ended June 30, 2018

Retail segment revenues increased $6.49 billion primarily due increased fuel and merchandise sales resulting from the Andeavor acquisition on October 1, 2018. Fuel sales volumes increased 2.26 billion gallons, almost all of which was related to

Table of Contents

the acquisition, and average fuel sales prices decreased $0.04 per gallon. Merchandise sales increased $619 million resulting from the contributions of the acquired businesses.

Retail segment income from operations increased $409 million primarily due to higher light product and merchandise margins largely related to the addition of the legacy Andeavor retail operations as well as an $83 million year-over-year increase in MPC's legacy Speedway segment earnings. These increases were partially offset by increases in operating expenses and depreciation primarily resulting from the locations acquired from Andeavor. The Retail fuel margin increased to 22.00 cents per gallon in the first six months of 2019 compared with 16.04 cents per gallon in the first six months of 2018 and the merchandise margin increased $193 million.

Midstream

The following includes key financial and operating data for the second quarter of 2019 compared to the ~~same periods~~second quarter of ~~2017~~2018 and the six months ended June 30, 2019 compared to the six months ended June 30, 2018. Our results include the results of Andeavor from the October 1, 2018 acquisition date forward.

Table of Contents


^(a)	On owned common-carrier pipelines, excluding equity method investments.


^(b)	Includes amounts related to unconsolidated equity method investments on a 100 percent basis.



	Three Months Ended June 30,				Six Months Ended June 30,
Benchmark Prices	2019		2018		2019		2018
Natural Gas NYMEX HH ($ per MMBtu)	$	2.51	$	2.83	$	2.69	$	2.84
C2 + NGL Pricing ($ per gallon)^(a)	$	0.52	$	0.78	$	0.57	$	0.76


^(a)	C2 + NGL pricing based on Mont Belvieu prices assuming an NGL barrel of approximately 35 percent ethane, 35 percent propane, 6 percent Iso-Butane, 12 percent normal butane and 12 percent natural gasoline.

Second Quarter 2019 Compared to Second Quarter 2018

Midstream segment revenue increased $637 million primarily due to ~~higher~~the inclusion of ANDX revenues subsequent to the Andeavor acquisition on October 1, 2018.

Midstream segment income from operations increased $261 million largely due to contributions of $223 million from ANDX and a $38 million increase in Midstream segment results driven primarily by growth across MPLX’s businesses.

Six Months Ended June 30, 2019 Compared to Six Months Ended June 30, 2018

On February 1, 2018, we completed the dropdown of refining logistics assets and fuels distribution services to MPLX, ~~net income resulting~~which is reported in our Midstream segment. These new businesses were reported in the Midstream segment prospectively from February 1, 2018.

Midstream segment revenue increased $1.48 billion primarily ~~from~~due to the inclusion of ANDX revenues subsequent to the Andeavor acquisition on October 1, 2018. In addition, the first six months of 2019 reflects an extra month of fees charged for fuels distribution and refining logistics services provided to Refining & Marketing following the February 1, 2018 dropdown ~~transaction, partially offset~~to MPLX.

Midstream segment income from operations increased $602 million largely due to contributions of $443 million from ANDX and a $159 million increase in Midstream segment results driven primarily by growth across MPLX’s businesses.

Table of Contents

Items not Allocated to Segments



Key Financial Information (in millions)	Three Months Ended June 30,						Six Months Ended June 30,
	2019			2018			2019		2018
Items not allocated to segments:
Corporate and other unallocated items^(a)	$	(179	)	$	(81	)	(370	)	(170	)
Capline restructuring gain	—			—			207		—
Transaction-related costs	(34		)	(10		)	(125	)	(10	)
Litigation	(22		)	—			(22	)	—
Impairments	—			1			—		1


^(a)	Corporate and other unallocated items consist primarily of MPC’s corporate administrative expenses and costs related to certain non-operating assets, except for corporate overhead expenses attributable to MPLX and ANDX, which are included in the Midstream segment. Corporate overhead expenses are not allocated to the Refining & Marketing and Retail segments.

Second Quarter 2019 Compared to Second Quarter 2018

Corporate and other unallocated items increased $98 million largely due the ~~reduced ownership in MPLX held by noncontrolling interests following~~inclusion of costs and expenses related to Andeavor operations.

Other unallocated items include transaction-related costs of $34 million associated with the ~~recent dropdown transactions~~Andeavor acquisition including employee retention, severance and ~~the GP/IDR Exchange. Noncontrolling interest ownership in MPLX decreased to 36.4 percent at~~other costs and a litigation reserve adjustment of $22 million.

Six Months Ended June 30, ~~2018 from 72.8 percent at~~2019 Compared to Six Months Ended June 30, ~~2017.~~2018

Corporate and other unallocated items increased $200 million largely due to the inclusion of costs and expenses related to Andeavor operations.

~~Segment Results~~Other unallocated items include a $207 million gain resulting from the agreements executed with Capline LLC to contribute our 33 percent undivided interest in the Capline pipeline system in exchange for a 33 percent ownership interest in Capline LLC. Other unallocated items also include transaction-related costs of $125 million associated with the Andeavor acquisition and a litigation reserve adjustment of $22 million. The transaction-related costs recognized in the first six months include the recognition of an obligation for vacation benefits provided to former Andeavor employees in the first quarter as well as employee retention, severance and other costs.

Non-GAAP Financial Measures

Management uses certain financial measures to evaluate our operating performance that are calculated and presented on the basis of methodologies other than in accordance with GAAP. We believe these non-GAAP financial measures are useful to investors and analysts to assess our ongoing financial performance because, when reconciled to ~~its~~their most comparable GAAP financial ~~measure,~~measures, they provide improved comparability between periods through the exclusion of certain items that we believe are not indicative of our core operating performance and that may obscure our underlying business results and trends. These measures should not be considered a substitute for, or superior to, measures of financial performance prepared in accordance with GAAP, and our calculations thereof may not be comparable to similarly titled measures reported by other companies. The non-GAAP financial measures we use are as follows:

Table of Contents

Refining & Marketing Margin

Refining margin is defined as sales revenue less the cost of refinery inputs and purchased products and excludes any LCM inventory market adjustment.

~~Table of Contents~~



	Three Months Ended June 30,						Six Months Ended June 30,
Reconciliation of Refining & Marketing income from operations to Refining & Marketing margin (in millions)	2019			2018			2019			2018
Refining & Marketing income from operations	$	906		$	1,025		$	572		$	892
Plus (Less):
Refining operating costs^(a)	1,527			776			3,079			1,685
Refining depreciation and amortization	368			235			755			471
Refining planned turnaround costs	237			62			423			235
Distribution costs^(b)	1,277			774			2,567			1,403
Distribution depreciation and amortization	43			17			83			33
Income from equity method investments	(3		)	(4		)	(4		)	(7		)
Net gain on disposal of assets	—			(3		)	(6		)	(4		)
Other income	(8		)	(27		)	(22		)	(39		)
Refining & Marketing margin	$	4,347		$	2,855		$	7,447		$	4,669


^(a)	Includes refining major maintenance and operating costs. Excludes turnaround and depreciation and amortization expense.


^(b)	Includes fees paid to MPLX and ANDX of $798 million and $596 million for the second quarter 2019 and 2018, respectively, and $1.58 billion and $1.07 billion for the six months ended June 30, 2019 and 2018, respectively. Excludes depreciation and amortization expense.

~~Speedway Gasoline and Distillate~~Retail Fuel Margin

~~Speedway gasoline and distillate~~Retail fuel margin is defined as the price paid by consumers or direct dealers less the cost of refined products, including transportation, consumer excise taxes and bankcard processing fees (where applicable) and excluding any LCM inventory market adjustment.

~~Speedway~~Retail Merchandise Margin

~~Speedway~~Retail merchandise margin is defined as the price paid by consumers less the cost of merchandise.

~~See the reconciliations of these non-GAAP financial measures in the following segment discussions.~~

~~Refining & Marketing~~

Three Months Ended
June 30, Six Months Ended
June 30,
Key Financial and Operating Data 2018 2017 2018 2017
Refining & Marketing revenues (in millions)^(a)
$ 19,173
$ 15,644
$ 35,134
$ 29,607
Refining & Marketing intersegment sales to Speedway (in millions)^(a)
$ 2,871
$ 2,808
$ 5,250
$ 5,398
Refining & Marketing intersegment fees paid to Midstream (in millions)
$ 762
$ 363
$ 1,393
$ 707
Refining & Marketing income from operations (in millions)
$ 1,025
$ 562
$ 892
$ 492
Refined product sales volumes (mbpd)^(b)
2,392
2,358
2,327
2,215
Refined product intersegment sales volumes to Speedway (millions of gallons)
1,397
1,431
2,729
2,767
Refined product export sales volumes (mbpd)^(c)
311
313
292
271
Average refined product sales prices (dollars per gallon)^(d)
$ 2.16
$ 1.63
$ 2.05
$ 1.65
Average refined product intersegment sales prices to Speedway (dollars per gallon)^(d)
$ 2.45
$ 1.96
$ 2.32
$ 1.94
Refinery throughputs (mbpd):

Crude oil refined 1,878
1,864
1,812
1,688
Other charge and blendstocks 160
159
160
179
Total 2,038
2,023
1,972
1,867
Sour crude oil throughput percent 55
62
53
64
WTI-priced crude oil throughput percent 28
20
27
18
Refining & Marketing margin (dollars per barrel)^(e)
$ 15.40
$ 11.32
$ 13.08
$ 11.47
Refinery direct operating costs (dollars per barrel)^(f):

Planned turnaround and major maintenance $ 0.98
$ 1.01
$ 1.58
$ 1.96
Depreciation and amortization 1.27
1.39
1.32
1.50
Other manufacturing^(g)
3.54
3.84
3.80
4.24
Total $ 5.79
$ 6.24
$ 6.70
$ 7.70



	Three Months Ended June 30,						Six Months Ended June 30,
Reconciliation of Retail income from operations to Retail total margin (in millions)	2019			2018			2019			2018
Retail income from operations	$	493		$	159		$	663		$	254
Plus (Less):
Operating, selling, general and administrative expenses	597			401			1,180			785
Depreciation and amortization	130			73			256			152
Income from equity method investments	(21		)	(19		)	(38		)	(33		)
Net gain on disposal of assets	—			—			(2		)	—
Other income	(4		)	(2		)	(6		)	(3		)
Retail total margin	$	1,195		$	612		$	2,053		$	1,155

Retail total margin:
Fuel margin	$	694		$	239		$	1,123		$	456
Merchandise margin	471			366			878			685
Other margin	30			7			52			14
Retail total margin	$	1,195		$	612		$	2,053		$	1,155


^(a)	We adopted ASU 2014-09, Revenue - Revenue from contracts with customers (ASC 606), as of January 1, 2018, and elected to report certain taxes on a net basis. We applied the standard using the modified retrospective method and, therefore, comparative information continues to reflect certain taxes on a gross basis.


^(b)	~~Includes intersegment sales and sales destined for export.~~


^(c)	~~Represents fully loaded export cargoes for each time period. These sales volumes are included in the total sales volume amounts.~~


^(d)	~~Refined product sales prices include consumer excise taxes.~~


^(e)	~~Sales revenue less cost of refinery inputs and purchased products, divided by total refinery throughputs.~~


^(f)	Per barrel of total refinery throughputs. Effective with the February 1, 2018 dropdown, direct operating costs related to certain refining logistics assets are now reported in the Midstream segment. No effect was given to prior periods as this entity was not considered a business prior to February 1, 2018.


^(g)	~~Includes utilities, labor, routine maintenance and other operating costs.~~

~~Table of Contents~~

Three Months Ended
June 30, Six Months Ended
June 30,
Reconciliation of Refining & Marketing margin to Refining & Marketing income from operations (in millions)
2018 2017 2018 2017
Refining & Marketing income from operations $ 1,025
$ 562
$ 892
$ 492
Plus:
Refinery direct operating costs^(a)
839
894
1,920
2,096
Refinery depreciation and amortization 235
255
471
506
Other:
Operating expenses, net^(a)(b)
739
355
1,353
747
Depreciation and amortization 17
17
33
33
Refining & Marketing margin^(c)
$ 2,855
$ 2,083
$ 4,669
$ 3,874


^(a)	~~Excludes depreciation and amortization.~~


^(b)	~~Includes fees paid to MPLX for various midstream services. MPLX’s results are reported in MPC’s Midstream segment.~~


^(c)	~~Sales revenue less cost of refinery inputs and purchased products, excluding any LCM inventory adjustment.~~

The following table presents certain benchmark prices in our marketing areas and market indicators that we believe are helpful in understanding the results of our Refining & Marketing segment’s business. The benchmark crack spreads below do not reflect the market cost of RINs necessary to meet EPA renewable volume obligations for attributable products under the Renewable Fuel Standard.

Three Months Ended
June 30, Six Months Ended
June 30,
Benchmark Prices (dollars per gallon)
2018 2017 2018 2017
Chicago spot unleaded regular gasoline $ 2.02
$ 1.49
$ 1.88
$ 1.49
Chicago spot ultra-low sulfur diesel 2.12
1.48
2.03
1.50
USGC spot unleaded regular gasoline 2.02
1.52
1.92
1.53
USGC spot ultra-low sulfur diesel 2.11
1.47
2.02
1.52
Market Indicators (dollars per barrel)

Chicago LLS 6-3-2-1 crack spread^(a)(b)
$ 9.24
$ 8.96
$ 8.02
$ 7.80
USGC LLS 6-3-2-1 crack spread^(a)
9.07
9.32
8.71
8.89
Blended 6-3-2-1 crack spread^(a)(c)
9.14
9.18
8.43
8.46
LLS 73.03
50.17
69.51
51.77
WTI 67.91
48.15
65.46
49.95
LLS—WTI crude oil differential^(a)
5.12
2.03
4.05
1.82
Sweet/Sour crude oil differential^(a)(d)
9.46
5.48
8.63
6.15

~~Table of Contents~~

The following table includes the impacts of changes in the market indicators on Refining & Marketing segment results. The benchmark crack spreads below do not reflect the market cost of RINs necessary to meet EPA renewable volume obligations for attributable products under the Renewable Fuel Standard.

Three Months Ended
June 30, Six Months Ended
June 30,
Market Indicators impact on Refining & Marketing segment income 2018 vs. 2017 Variance 2018 vs. 2017 Variance
(dollars per barrel) (in millions) (dollars per barrel) (in millions)
Chicago LLS 6-3-2-1 crack spread^(a)(b)
$ 0.28
$ 26
$ 0.22
$ 91
USGC LLS 6-3-2-1 crack spread^(a)(e)
(0.25 ) (21 ) (0.18 ) 62
LLS – WTI crude oil differential^(a)
3.09
180
2.23
267
Sweet/Sour crude oil differential^(a)(d)
3.98
320
2.48
312
LLS Prompt vs LLS Delivered Cost 1.74
48
0.30
20
Total $ 553
$ 752


^(a)	~~All spreads and differentials are measured against prompt LLS.~~


^(b)	~~Calculation utilizes USGC three percent residual fuel oil price as a proxy for Chicago three percent residual fuel oil price.~~


^(c)	~~Blended Chicago/USGC crack spread is 40 percent/60 percent based on our refining capacity by region.~~


^(d)	~~LLS (prompt) – [delivered cost of sour crude oil: Arab Light, Kuwait, Maya, Western Canadian Select and Mars].~~


^(e)	~~In the first six months of 2018, volume increases offset the narrowing crack spread resulting in a positive impact on segment income.~~

Refining & Marketing segment revenues increased $3.53 billion in the second quarter and $5.53 billion in the first six months of 2018 compared to the same periods of 2017. The increases were primarily due to increases in refined product sales prices, which increased $0.53 per gallon and $0.40 per gallon, respectively. These increases were partially offset by our election to present revenues net of certain taxes under ASC 606 prospectively from January 1, 2018, which resulted in a decrease in Refining & Marketing segment revenues of $1.15 billion and $2.21 billion in the second quarter and first six months of 2018, respectively. See Notes 2 and 3 to the unaudited consolidated financial statements for additional information.

Refining & Marketing intersegment sales to our Speedway segment increased $63 million in the second quarter and decreased $148 million in the first six months of 2018 compared to the same periods of 2017. Refined product sales prices to Speedway increased $0.49 per gallon in the second quarter and $0.38 per gallon in the first six months of 2018. Our election to present revenues net of consumer excise taxes under ASC 606 prospectively from January 1, 2018, and decreases in sales volumes to Speedway partially offset the sales price increase in the second quarter and more than offset the sales price increase in the first six months. See Notes 2 and 3 to the unaudited consolidated financial statements for additional information.

Refining & Marketing intersegment fees paid to our Midstream segment increased $399 million in the second quarter and $686 million in the first six months of 2018 compared to the same periods of 2017, primarily due to the February 1, 2018 dropdown of fuels distribution and refining logistics services. These charges do not impact Refining & Marketing margin but reduce Refining & Marketing segment results with a corresponding increase to Midstream segment results.

Refining & Marketing segment income from operations increased $463 million in the second quarter and $400 million in the first six months of 2018, compared to the same periods of 2017. The increases in segment results were primarily driven by positive Midwest and Gulf Coast crack spreads on an ex-RIN basis as well as wider sweet and sour and WTI based crude differentials. These favorable effects more than offset the net reduction in Refining & Marketing segment results associated with the February 1, 2018, dropdown transaction of $232 million and $413 million for the second quarter and first six months of 2018, respectively. Midstream segment results include net increases of the same amounts. No effect was given to prior periods as these entities were not considered businesses prior to February 1, 2018. The change in segment results in the first six months of 2018 also reflects a benefit related to the retroactive enactment of a biodiesel blending tax credit for 2017.

~~Table of Contents~~

spreads of $8.43 and $8.46 per barrel for the first six months of 2018 and 2017, respectively, less RIN crack adjustments of $2.58 and $3.22 per barrel for the first six months of 2018 and 2017, respectively.

Based on the changes in the market indicators shown above, which use spot market values and an estimated mix of crude purchases and product sales, we estimate a positive impact of $553 million and $752 million on Refining & Marketing segment income from operations in the second quarter and first six months of 2018, respectively, compared to the same periods of 2017. Differences in our results compared to these market indicators, including the effects of product price realizations, the mix of crudes purchased and their costs, market structure on our crude oil acquisition prices, RIN prices on the crack spread, and other items like refinery yields and other feedstock variances, had an estimated positive impact of $219 million and $44 million on Refining & Marketing segment income in the second quarter and first six months of 2018, respectively, compared to the same periods of 2017. Included in these effects were positive impacts of $238 million and $170 million for the second quarter and first six months of 2018, respectively, related to increases in the RIN crack adjustment of $1.30 and $0.64 per barrel from the same periods of 2017, respectively.

Crude oil throughputs increased 124 mbpd in the first six months of 2018 compared to the same period of 2017, primarily due to decreased turnaround activity at our Galveston Bay and Garyville refineries.

Refinery direct operating costs decreased $0.45 per barrel in the second quarter and $1.00 per barrel in the first six months of 2018 compared to the same periods of 2017, primarily due to decreases in planned turnaround and major maintenance of $0.03 per barrel and $0.38 per barrel, respectively, largely attributable to lower turnaround costs incurred by the Galveston Bay refinery in both periods and the Garyville refinery in the first six months. Other manufacturing costs were $0.30 per barrel and $0.44 per barrel lower, respectively, and depreciation and amortization was $0.12 per barrel and $0.18 per barrel lower, respectively, primarily as a result of the dropdown of refining logistics assets to MPLX on February 1, 2018. Subsequent to February 1, 2018, direct operating costs for these assets are reported in the Midstream segment. Higher crude throughputs during the second quarter and first six months of 2018 also reduced refinery direct operating costs per barrel.

We purchase RINs to satisfy a portion of our Renewable Fuel Standard compliance. Our expense associated with RINs decreased to $58 million in the second quarter and $146 million in the first six months of 2018 from $109 million in the second quarter and $206 million in the first six months of 2017, primarily due to a decrease in RINs prices.

~~Speedway~~

Three Months Ended
June 30, Six Months Ended
June 30,
Key Financial and Operating Data 2018 2017 2018 2017
Speedway revenues (in millions)^(a)
$ 5,267
$ 4,797
$ 9,839
$ 9,181
Speedway income from operations (in millions)
$ 159
$ 238
$ 254
$ 373
Convenience stores at period-end 2,744
2,729

Gasoline & distillate sales (millions of gallons)
1,450
1,475
2,843
2,868
Average gasoline & distillate sales prices (dollars per gallon)
$ 2.79
$ 2.30
$ 2.66
$ 2.27
Gasoline and distillate margin (dollars per gallon)^(b)
$ 0.1645
$ 0.1835
$ 0.1604
$ 0.1704
Merchandise sales (in millions)^(a)
$ 1,285
$ 1,271
$ 2,414
$ 2,398
Merchandise margin (in millions)^(c)
$ 366
$ 371
$ 685
$ 691
Merchandise margin percent 28.5 % 29.2 % 28.4 % 28.8 %
Same store gasoline sales volume (period over period)^(d)
(2.6 %) (0.5 %) (2.1 )% (0.8 )%
Same store merchandise sales (period over period)^(d)(e)
2.9 % 2.1 % 2.6 % 2.1 %


^(a)	We adopted ASU 2014-09, Revenue - Revenue from contracts with customers (ASC 606), as of January 1, 2018, and elected to report certain taxes on a net basis. We applied the standard using the modified retrospective method and, therefore, comparative information continues to reflect certain taxes on a gross basis.


^(b)	~~The price paid by consumers less the cost of refined products, including transportation, consumer excise taxes and bankcard processing fees, divided by gasoline and distillate sales volume.~~


^(c)	~~The price paid by the consumers less the cost of merchandise.~~


^(d)	~~Same store comparison includes only locations owned at least 13 months.~~


^(e)	~~Excludes cigarettes.~~

~~Table of Contents~~

Three Months Ended
June 30, Six Months Ended
June 30,
Reconciliation of Speedway total margin to Speedway income from operations (in millions)
2018 2017 2018 2017
Speedway income from operations $ 159
$ 238
$ 254
$ 373
Plus (Less):
Operating, selling, general and administrative expenses 401
377
785
743
Depreciation and amortization 73
65
152
129
Income from equity method investments (19 ) (21 ) (33 ) (34 )
Net gain on disposal of assets —
(6 ) —
(10 )
Other income (2 ) (3 ) (3 ) (6 )
Speedway total margin $ 612
$ 650
$ 1,155
$ 1,195

Speedway total margin:
Gasoline and distillate margin^(a)
$ 239
$ 271
$ 456
$ 489
Merchandise margin^(b)
366
371
685
691
Other margin 7
8
14
15
Speedway total margin $ 612
$ 650
$ 1,155
$ 1,195


^(a)	~~The price paid by consumers less the cost of refined products, including transportation, consumer excise taxes and bankcard processing fees and excluding any LCM inventory adjustment.~~


^(b)	~~The price paid by the consumers less the cost of merchandise.~~

Speedway segment revenues increased $470 million in the second quarter and $658 million in the first six months of 2018 compared to the same periods of 2017. The increases in revenues were primarily due to increases in gasoline and distillate sales of $659 million and $1.03 billion, respectively, resulting from increases in average gasoline and distillate sales prices of $0.49 per gallon and $0.39 per gallon, respectively, partially offset by decreases in gasoline and distillate sales volumes of 25 million gallons in both periods. These increases were also offset by our election to present revenues net of certain taxes under ASC 606 prospectively from January 1, 2018, which resulted in decreases in Speedway segment revenues of $215 million in the second quarter and $408 million in the first six months of 2018. See Notes 2 and 3 to the unaudited consolidated financial statements for additional information.

4650

Table of Contents

~~Midstream~~

Three Months Ended
June 30, Six Months Ended
June 30,
Key Financial and Operating Data
2018 2017 2018 2017
Midstream third party revenues (in millions)^(a)
$ 750
$ 548
$ 1,463
$ 1,080
Midstream intersegment revenues - Refining & Marketing (in millions)
762
363
1,393
707
Total Midstream revenues (in millions)
$ 1,512
$ 911
$ 2,856
$ 1,787
Midstream income from operations (in millions)
617
332
1,184
641
Crude oil and refined product pipeline throughputs (mbpd)^(b)
3,789
3,439
3,625
3,165
Average crude oil and refined products tariff rates (dollars per barrel)^(c)
$ 0.60
$ 0.62
$ 0.59
$ 0.63
Terminal throughput (mbpd)
1,485
1,489
1,465
1,456
Gathering system throughput (MMcf/d)
4,295
3,326
4,233
3,255
Natural gas processed (MMcf/d)
6,850
6,292
6,740
6,212
C2 (ethane) + NGLs (natural gas liquids) fractionated (mbpd)
439
387
432
377

Benchmark Prices
Natural Gas NYMEX HH ($ per MMBtu)
$ 2.83
$ 3.14
$ 2.84
$ 3.10
C2 + NGL Pricing ($ per gallon)^(d)
$ 0.78
$ 0.57
$ 0.76
$ 0.60


^(a)	We adopted ASU 2014-09, Revenue - Revenue from contracts with customers (ASC 606), as of January 1, 2018, using the modified retrospective method. The comparative information has not been restated and continues to be reported under the accounting standards in effect for those periods.


^(b)	~~On common-carrier pipelines and private pipelines owned and operated by MPLX, excluding equity method investments.~~


^(c)	~~Average tariff rates calculated using pipeline transportation revenues divided by pipeline throughput barrels.~~


^(d)	C2 + NGL pricing based on Mont Belvieu prices assuming an NGL barrel of approximately 35 percent ethane, 35 percent propane, six percent Iso-Butane, 12 percent normal butane and 12 percent natural gasoline.

On February 1, 2018, we completed the dropdown of our refining logistics assets and fuels distribution services to MPLX, which is reported in our Midstream segment. Refining logistics contains the integrated tank farm assets that support MPC’s refining operations. These logistics assets include: 619 tanks, with approximately 56 million barrels of storage capacity (for crude, finished products and intermediates), 32 rail and truck racks and 18 docks. Fuels distribution is structured to provide a broad range of scheduling and marketing services as MPC’s sole and exclusive agent. These new businesses were reported in the Midstream segment prospectively from February 1, 2018. No effect was given to prior periods as these entities were not considered businesses prior to February 1, 2018.

Midstream segment revenue increased $601 million in the second quarter and $1.07 billion in the first six months of 2018 compared to the same periods of 2017. Intersegment revenue, related to various midstream services provided to the Refining & Marketing segment, increased in both periods primarily due to fees charged for fuels distribution and refining logistics services following the February 1, 2018 dropdown to MPLX. Revenues also increased by approximately $124 million and $240 million, in the second quarter and first six months of 2018, respectively, due to ASC 606 gross ups. See Note 3 to the unaudited consolidated financial statements for additional information.

Midstream segment income from operations increased $285 million in the second quarter and $543 million in the first six months of 2018 compared to the same periods of 2017. These results include $232 million and $413 million in the second quarter and first six months of 2018, respectively, from the refining logistics assets and fuels distribution services contributed to MPLX on February 1, 2018. Prior period Midstream segment results do not reflect the impact of these new businesses. Strong second-quarter Midstream segment results benefited from record gathered, processed and fractionated volumes as well as pipeline throughput volumes.

~~Table of Contents~~

~~Items not Allocated to Segments~~

Key Financial Information (in millions)
Three Months Ended
June 30, Six Months Ended
June 30,
2018 2017 2018 2017
Items not allocated to segments:
Corporate and other unallocated items^(a)
$ (91 ) $ (83 ) (180 ) (166 )
Litigation —
(86 ) —
(86 )
Impairments^(b)
1
19
1
19


^(a)	~~Corporate overhead expenses attributable to MPLX are included in the Midstream segment. Corporate overhead expenses are not allocated to the Refining & Marketing and Speedway segments.~~


^(b)	~~Includes MPC’s share of gains from the sale of assets remaining from the canceled Sandpiper pipeline project.~~

Corporate and other unallocated items increased $8 million in the second quarter and $14 million in the first six months of 2018 compared to the same periods in 2017, largely due to transaction costs of approximately $10 million related to the pending merger with Andeavor.

~~Other unallocated items in both periods of 2017 include an $86 million litigation charge and a $19 million gain on asset liquidations related to a canceled project.~~

LIQUIDITY AND CAPITAL RESOURCES

Cash Flows

Our consolidated cash and cash equivalents balance was approximately ~~$5.00~~$1.25 billion at June 30, ~~2018~~2019 compared to ~~$3.01~~$1.69 billion at December 31, ~~2017.~~2018. Net cash provided by (used in) operating activities, investing activities and financing activities are presented in the following table.

Our cash flows reflect the results of the business acquired in connection with the Andeavor acquisition from October 1, 2018 forward.


		Six Months Ended June 30,							Six Months Ended June 30,
(In millions)		2018			2017				2019			2018
Net cash provided by (used in):	Net cash provided by (used in):							Net cash provided by (used in):
Operating activities	Operating activities	$	2,249		$	1,961		Operating activities	$	4,245		$	2,249
Investing activities	Investing activities	(1,518		)	(2,012		)	Investing activities	(2,880		)	(1,518		)
Financing activities	Financing activities	1,258			613			Financing activities	(1,841		)	1,258
Total		$	1,989		$	562
Total increase (decrease) in cash								Total increase (decrease) in cash	$	(476	)	$	1,989

Net cash provided by operating activities increased ~~$288 million~~$2.00 billion in the first six months of ~~2018~~2019 compared to the first six months of ~~2017,~~2018, primarily due to an increase in operating results and favorable changes in working capital of $658 million. Changes in working capital exclude changes in short-term debt.

Changes in working capital, excluding changes in short-term debt, were a net $269 million source of cash in the first six- months of 2019 compared to a net $389 million use of cash in the first six months of 2018.

For the first six months of 2019, changes in working capital, excluding changes in short-term debt, were a net $269 million source of cash primarily due to the effects of increasing energy commodity prices at the end of the period on working capital. Current receivables increased primarily due to higher refined product and crude prices and higher crude sales volumes. Accounts payable increased primarily due to increases in crude prices and crude volumes. Inventories decreased due to decreases in refined product and crude inventories, partially offset by an ~~unfavorable change~~increase in ~~working capital~~materials and supplies inventory.

For the first six months of ~~$691 million. Changes~~2018, changes in working capital, excluding changes in short-term debt, were a net $389 million use of cash ~~in the first six months of 2018 compared to a net $302 million source of cash in the first six months of 2017. The changes in working capital for the first six months of 2018 were~~ primarily due to ~~an increase~~the effect of decreases in ~~current receivables and a decrease in accounts payables and accrued liabilities,~~volumes, partially offset by ~~a decrease~~increases in ~~inventories. Changes from December 31, 2017 to June 30, 2018 per~~energy commodity prices at the ~~consolidated balance sheets were as follows:~~

end of the period on working capital. Current receivables increased ~~$224 million from year-end 2017,~~ primarily due to higher refined product and crude prices, partially offset by lower volumes.

Accounts payable decreased ~~$184 million from year-end 2017,~~ primarily due to a decrease in refined product and feedstock purchases.

Inventories decreased ~~$65 million from year-end 2017,~~ due to decreases in materials and supplies and refined products inventories.

~~The net $302 million source of~~Net cash ~~from changes~~used in ~~working capital~~investing activities increased $1.36 billion in the first six months of 2017 was primarily due to decreases in current receivables and inventories partially offset by a decrease in accounts payable and accrued liabilities. Changes from December 31, 2016 to June 30, 2017 per the consolidated balance sheets were as follows:

~~Current receivables decreased $358 million from year-end 2016, primarily due to lower refined product and crude volumes.~~

~~Table of Contents~~

Accounts payable decreased $286 million from year-end 2016, primarily due to the timing of costs incurred for certain major maintenance activity and capital projects, lower feedstocks and other light product purchases and lower crude purchase prices, partially offset by higher crude purchase volumes.

~~Inventories decreased $108 million from year-end 2016, primarily due to decreases in refined product and material and supplies inventories, partially offset by an increase in crude oil inventories.~~

~~Net cash used in investing activities was $494 million lower in the first six months of 2018~~2019 compared to the first six months of ~~2017,~~2018, primarily due to the following:

~~MPLX’s investment of $500 million for a partial interest~~An increase in ~~the Bakken Pipeline system in the first six months of 2017.~~

~~MPLX’s acquisition of the Ozark pipeline for $220 million in the first six months of 2017.~~

~~Additions~~additions to property, plant and equipment ~~increased $201~~of $953 million primarily due to increased capital expenditures in the first six months of ~~2018~~2019 in our Midstream ~~segment.~~and Refining & Marketing segments; and

an increase in net investments of $434 million largely due to investments in connection with the construction of the Gray Oak Pipeline, which is scheduled to commence operations in the fourth quarter of 2019.

The consolidated statements of cash flows exclude changes to the consolidated balance sheets that did not affect cash. A reconciliation of additions to property, plant and equipment per the consolidated statements of cash flows to reported total capital expenditures and investments follows.


		Six Months Ended June 30,						Six Months Ended June 30,
(In millions)		2018		2017				2019			2018
Additions to property, plant and equipment per the consolidated statements of cash flows	Additions to property, plant and equipment per the consolidated statements of cash flows	$	1,466	$	1,265		Additions to property, plant and equipment per the consolidated statements of cash flows	$	2,419		$	1,466
Asset retirement expenditures	Asset retirement expenditures	5		1			Asset retirement expenditures	—			5
Increase (decrease) in capital accruals	Increase (decrease) in capital accruals	77		(54		)	Increase (decrease) in capital accruals	(281		)	77
Total capital expenditures	Total capital expenditures	1,548		1,212			Total capital expenditures	2,138			1,548
Acquisitions^(a)		—		220
Investments in equity method investees^(b)		118		677
Investments in equity method investees (excludes acquisitions)							Investments in equity method investees (excludes acquisitions)	595			118
Total capital expenditures and investments	Total capital expenditures and investments	$	1,666	$	2,109		Total capital expenditures and investments	$	2,733		$	1,666


^(a) 51 Table of Contents	~~The six months ended June 30, 2017 includes the $220 million acquisition of the Ozark pipeline.~~


^(b)	~~The six months ended June 30, 2017 includes an investment of $500 million in MarEn Bakken related to the Bakken Pipeline system.~~

Financing activities were a net $1.84 billion use of cash in the first six months of 2019 compared to a net $1.26 billion source of cash in the first six months of ~~2018 compared to a net $613 million source of cash in the first six months of 2017.~~2018.

Long-term debt borrowings and repayments, including debt issuance costs, were a net $848 million source of cash in the first six months of 2019 compared to a net $4.29 billion source of cash in the first six months of ~~2018 compared to a net $2.01 billion source of cash in~~2018. During the first six months of ~~2017.~~2019, MPLX had net borrowings of $615 million under its revolving credit facility and ANDX had net borrowings of $255 million under its revolving credit facilities. During the first six months of 2018, MPLX issued $5.5 billion of senior notes, we redeemed $600 million of our senior notes and MPLX repaid $505 million in outstanding borrowings under ~~the MPLX~~its revolving credit facility. ~~During the first six months of 2017, MPLX issued $2.25 billion of senior notes and we repaid the remaining $200 million balance under the MPC term loan agreement.~~

Cash used in common stock repurchases ~~increased $1.04~~decreased $827 million in the first six months of 2019 compared to the first six months of 2018. Share repurchases totaled $1.39 billion in the first six months of ~~2018~~2019 compared to ~~the first six months of 2017. Share repurchases totaled~~ $2.21 billion in the first six months of 2018. In 2018, ~~compared to $1.17 billion in~~share repurchases were funded primarily by after tax proceeds from the ~~first six months of 2017.~~February 1, 2018 dropdown. See Note 98 to the unaudited consolidated financial statements for further discussion of ~~the~~ share ~~repurchase authorizations.~~repurchases.

Cash ~~provided by the issuance of MPLX common units decreased $434~~used in dividend payments increased $276 million in the first six months of ~~2018~~2019 compared to the first six months of ~~2017 as MPLX did not issue any~~2018, primarily due to a net increase in the number of shares of our common ~~units for cash~~stock outstanding related to the Andeavor acquisition and a $0.14 per share increase in our base dividend, partially offset by a reduction of shares resulting from share repurchases. Our dividend payments were $1.06 per common share in the first six months of ~~2018.~~

~~Cash provided by contributions from noncontrolling interests decreased $123 million in the first six months of 2018~~2019 compared to ~~the first six months of 2017, primarily due to MPLX’s sale of a noncontrolling interest in Ohio Fractionation to Sherwood Midstream in the first six months of 2017 for $126 million.~~

Cash used in distributions to noncontrolling interests increased $70 million in the first six months of 2018 compared to the first six months of 2017, primarily due to an increase in MPLX’s distribution per common unit.

Cash used in dividend payments increased $54 million in the first six months of 2018 compared to the first six months of 2017, primarily due to a $0.20 per share increase in our quarterly dividend payment, partially offset by a decrease in the number of outstanding shares of our common stock attributable to share repurchases. Our dividend payments were $0.92 per common share in the first six months of ~~2018 compared~~2018.

Cash used in distributions to ~~$0.72 per common share~~noncontrolling interests increased $246 million in the first six months of ~~2017.~~2019 compared to the first six months of 2018, primarily due to the addition of ANDX distributions subsequent to the acquisition of Andeavor and an increase in MPLX’s distribution per common unit.


•	Contributions from noncontrolling interests increased $90 million in the first six months of 2019 compared to the first six months of 2018 primarily due to cash received in 2019 for an increased noncontrolling interest in an MPLX subsidiary.

~~Table of Contents~~

Derivative Instruments

See Item 3. Quantitative and Qualitative Disclosures about Market Risk for a discussion of derivative instruments and associated market risk.

Capital Resources

Our liquidity totaled ~~$9.25~~$7.93 billion at June 30, ~~2018~~2019 consisting of:


		June 30, 2018							June 30, 2019
(In millions)		Total Capacity		Outstanding Borrowings		Available Capacity			Total Capacity		Outstanding Borrowings		Available Capacity
Bank revolving credit facility^(a)	Bank revolving credit facility^(a)	$	2,500	$	—	$	2,500	Bank revolving credit facility^(a)	$	5,000	$	32	$	4,968
364-day bank revolving credit facility^(b)	364-day bank revolving credit facility^(b)	1,000		—		$	1,000	364-day bank revolving credit facility^(b)	1,000		—		$	1,000
Trade receivables facility	Trade receivables facility	750		—		750		Trade receivables facility	750		—		750
Total	Total	$	4,250	$	—	$	4,250	Total	$	6,750	$	32	$	6,718
Cash and cash equivalents^(c)(b)	Cash and cash equivalents^(c)(b)					$	4,996	Cash and cash equivalents^(c)(b)					1,215
Total liquidity	Total liquidity					$	9,246	Total liquidity					$	7,933


^(a)	Outstanding borrowings include $32 million in letters of credit outstanding under this facility. Excludes MPLX’s $2.25 billion bank revolving credit facility, which had approximately ~~$2.25~~$1.63 billion available as of June 30, ~~2018.~~2019, and ANDX’s $2.10 billion bank revolving credit facilities, which had approximately $600 million available as of June 30, 2019.


^(b)	~~Our $1 billion 364-day facility expired on July 20, 2018. We intend to replace this facility with a new facility to become effective upon the closing of the Andeavor merger.~~


^(c)	Excludes ~~MPLX’s~~MPLX and ANDX cash and cash equivalents of ~~$3 million.~~$7 million and $25 million, respectively.

Because of the alternatives available to us, including internally generated cash flow and access to capital markets and a commercial paper program, we believe that our short-term and long-term liquidity is adequate to fund not only our current operations, but also our near-term and long-term funding requirements, including capital spending programs, the repurchase of shares of our common stock, dividend payments, defined benefit plan contributions, repayment of debt maturities and other amounts that may ultimately be paid in connection with contingencies.

Table of Contents

On ~~January 2, 2018, MPLX~~July 26, 2019, we entered into a ~~$4.1~~new $1 billion 364-day ~~term-loan~~revolving credit facility with a syndicate of banks that will, subject to ~~fund~~ the ~~cash portion~~satisfaction of customary conditions, become effective upon the ~~February 1, 2018 dropdown consideration.~~

~~On February 8, 2018, MPLX issued $5.5~~expiration of our existing $1 billion 364-day revolving facility in aggregate principal amount of senior notes in a public offering, consisting of $500 million aggregate principal amount of 3.375 percent unsecured senior notes due March 2023, $1.25 billion aggregate principal amount of 4.000 percent unsecured senior notes due March 2028, $1.75 billion aggregate principal amount of 4.500 percent unsecured senior notes due April 2038, $1.5 billion aggregate principal amount of 4.700 percent unsecured senior notes due April 2048,September 2019. The new 364-day revolving credit facility contains substantially the same terms and ~~$500 million aggregate principal amount of 4.900 percent unsecured senior notes due April 2058. MPLX used $4.1 billion of the net proceeds of the offering to repay the~~conditions as our existing 364-day ~~term-loan facility. The remaining proceeds were used to repay outstanding borrowings under MPLX’s~~ revolving credit facility and will expire in September 2020.

On July 19, 2019, we amended our $750 million trade receivables securitization facility to extend the maturity date to July 16, 2021.

On July 31, 2019, in connection with the closing of the ANDX merger, we amended and restated the existing intercompany loan agreement with ~~us and for general partnership purposes. On April 27, 2018,~~MPLX to, among other things, increase MPLX’s ~~credit facility with MPC was amended to increase its~~borrowing capacity ~~to $1~~thereunder from $1.0 billion to ~~allow additional flexibility~~$1.5 billion in loans at any one time outstanding and to ~~MPLX.~~

~~On March 15, 2018, we redeemed all~~extend the term of the ~~$600 million outstanding aggregate principal amount of our 2.700 percent senior notes due December 2018. The 2018 senior notes were redeemed at a price equal~~intercompany loan agreement to par plus a make whole premium, plus accrued and unpaid interest. The make whole premium of $2.5 million was calculated based on the market yield of the applicable treasury issue as of the redemption date as determined in accordance with the indenture governing the 2018 senior notes.July 31, 2024.

We ~~established~~have a commercial paper program that allows us to have a maximum of $2.0 billion in commercial paper outstanding. We do not intend to have outstanding commercial paper borrowings in excess of available capacity under our bank revolving credit facility. As of June 30, ~~2018,~~2019, we had no commercial paper borrowings outstanding.

See Note 17 to the unaudited consolidated financial statements for further discussion of our debt.

The MPC credit agreements contain representations and warranties, affirmative and negative covenants and events of default that we consider usual and customary for agreements of these types. The financial covenant included in the MPC credit agreements requires us to maintain, as of the last day of each fiscal quarter, a ratio of Consolidated Net Debt to Total Capitalization (as defined in the MPC credit agreements) of no greater than 0.65 to 1.00. As of June 30, ~~2018,~~2019, we were in compliance with this financial covenant, with a ratio of Consolidated Net Debt to Total Capitalization of ~~0.04~~0.21 to 1.00, as well as the other covenants contained in the MPC bank revolving credit facility.

~~Table of Contents~~

The MPLX credit agreement contains representations and warranties, affirmative and negative covenants and events of default that we consider usual and customary for agreements of these types. The MPLX credit agreement includes a financial covenant that requires MPLX to maintain a ratio of Consolidated Total Debt (as defined in the MPLX credit agreement) as of the end of each fiscal quarter to Consolidated EBITDA (as defined in the MPLX credit agreement) for the prior four fiscal quarters of not greater than 5.0 to 1.0 (or 5.5 to 1.0 during the six-month period following certain acquisitions). Consolidated EBITDA is subject to adjustments for certain acquisitions completed and capital projects undertaken during the relevant period. Other covenants restrict MPLX and/or certain of its subsidiaries from incurring debt, creating liens on assets and entering into transactions with affiliates. As of June 30, ~~2018,~~2019, MPLX was in compliance with this debt covenant, with a ratio of Consolidated Total Debt to Consolidated EBITDA of ~~3.66~~3.70 to 1.0, as well as the other covenants contained in the MPLX credit agreement.

As disclosed in Note 3 to the unaudited consolidated financial statements, we expect the adoption of the lease accounting standard update will have a material impact our consolidated financial statements as virtually all leases will be recognized as a right of use asset and lease obligation. The MPC credit agreements and the MPLX credit agreement both contain provisions under which the effects of the new accounting standard are not recognized for purposes of financial covenant calculations.

Our intention is to maintain an investment-grade credit profile. As of ~~June~~July 30, ~~2018,~~2019, the credit ratings on our senior unsecured debt were ~~at or above investment grade level~~ as follows.



Company	Rating Agency	Rating
MPC	Moody’s	Baa2 (stable outlook)
	Standard & Poor’s	BBB (stable outlook)
	Fitch	BBB (stable outlook)
MPLX	Moody’s	~~Baa3~~Baa2 (stable outlook)
	Standard & Poor’s	BBB (stable outlook)
	Fitch	~~BBB-~~BBB (stable outlook)

The ratings reflect the respective views of the rating agencies. Although it is our intention to maintain a credit profile that supports an investment-grade rating, there is no assurance that these ratings will continue for any given period of time. The ratings may be revised or withdrawn entirely by the rating agencies if, in their respective judgments, circumstances so warrant.

~~Neither~~None of the MPC credit agreements, the MPLX credit agreement, ~~nor~~or our trade receivables facility ~~contain~~contains credit rating triggers that would result in the acceleration of interest, principal or other payments in the event that our credit ratings are downgraded. However, any downgrades of our senior unsecured debt ~~ratings would~~could increase the applicable interest rates, yields and other fees payable under ~~the MPC credit agreements, MPLX credit agreement, our trade receivables facility and debt held by our ocean vessel joint venture with Crowley.~~such agreements. In addition, a downgrade of our senior unsecured debt rating to below ~~investment grade~~investment-grade levels could, under certain circumstances, decrease the amount of trade receivables that are eligible to be sold under our trade receivables facility, impact our ability to purchase crude oil on an unsecured basis, or result in us having to post letters of credit under existing transportation services ~~agreements.~~or other agreements and make it more difficult to raise capital in the future.

Table of Contents

Capital Requirements

Capital ~~Spending~~Investment Plan

~~MPC’s~~MPC's capital investment plan ~~excluding MPLX,~~for 2019 totals approximately ~~$1.6~~$2.8 billion for ~~2018~~ capital projects and investments, excluding MPLX, ANDX, capitalized interest and acquisitions. MPC’s capital investment plan includes approximately $1.8 billion of growth capital and $1.0 billion of maintenance capital. This ~~budget~~plan includes all of the planned capital spending ~~on refining~~for Refining & Marketing, Retail and ~~marketing and retail projects~~Corporate as well as ~~amounts designated for corporate projects. Substantially all~~a portion of the ~~midstream projects are included~~planned capital investments in ~~the MPLX~~Midstream. MPLX’s capital investment plan ~~which~~for 2019, excluding capitalized interest and acquisitions, includes $2.2 billion of organic growth capital and approximately ~~$190~~$200 million of maintenance capital. ~~There have been no material changes to our 2018~~ANDX’s capital investment plan for 2019, excluding capitalized interest and acquisitions, includes $600 million of organic growth capital and ~~investment budget since our Annual Report on Form 10-K for the year ended December 31, 2017.~~approximately $100 million of maintenance capital. We continuously evaluate our capital investment plan and make changes as conditions warrant.

~~Table of Contents~~

Capital expenditures and investments are summarized by segment below. These amounts include capital spending and investments related to businesses acquired in connection with the Andeavor acquisition from October 1, 2018 forward.


		Six Months Ended June 30,					Six Months Ended June 30,
(In millions)		2018		2017			2019		2018
Refining & Marketing	Refining & Marketing	$	387	$	372	Refining & Marketing	$	824	$	387
Speedway		127		113
Retail						Retail	193		127
Midstream^(a)	Midstream^(a)	1,083		1,564		Midstream^(a)	1,637		1,083
Corporate and Other^(b)(a)	Corporate and Other^(b)(a)	69		60		Corporate and Other^(b)(a)	79		69
Total capital expenditures and investments	Total capital expenditures and investments	$	1,666	$	2,109	Total capital expenditures and investments	$	2,733	$	1,666


^(a)	~~Includes $220 million for the acquisition of the Ozark pipeline and an investment of $500 million in MarEn Bakken related to the Bakken Pipeline system for the six months ended June 30, 2017.~~


^(b)	Includes capitalized interest of ~~$34~~$65 million and ~~$26~~$34 million for the six months ended June 30, ~~2018~~2019 and ~~2017,~~2018, respectively.

Capital expenditures and investments in affiliates during the six months ended June 30, ~~2018~~2019 were primarily for Midstream and Refining & Marketing segment projects ~~including the completion of a butane cavern~~and investments in ~~Robinson, Illinois,~~affiliates. The Midstream segment capital investment plan includes projects for MPLX and ANDX. MPLX’s capital investment plan includes the addition of approximately 825 MMcf/d of processing capacity at five gas processing plants, ~~five~~two in the Marcellus and three in the Southwest, which expands MPLX’s processing capacity in the Permian Basin and the STACK shale play of Oklahoma. The MPLX capital investment plan also includes the addition of approximately 100 mbpd of fractionation capacity in the Marcellus and Utica basins and the continued expansion of MPLX’s marine fleet, long-haul crude oil, natural gas and NGL pipelines as well as projects to increase its export capability. The ANDX capital investment plan includes the construction of additional crude storage capacity for unloading of marine vessels, the construction of crude gathering systems to provide connectivity to multiple long-haul pipelines and a pipeline interconnect project to provide direct connectivity between certain MPC refineries. The remaining Midstreamsegment’s capital expenditures and investments relate to investments in equity affiliate pipelines, including our expected investments in the Gray Oak Pipeline, a new pipeline spanning from the West Texas Permian Basin to the Gulf Coast which ~~were placed~~is expected to be in service ~~during~~by the ~~first six months~~end of ~~2018, completion~~2019.

The Refining & Marketing segment capital investment plan includes projects focused on high-return investments in refinery optimization, production of ~~major expansion work on the Ozark~~higher value products, increased capacity to upgrade residual fuel oil and ~~Wood River~~expanded export capacity. We also plan to ~~Patoka pipeline systems and expansion of the marine fleet.~~continue investing in domestic light products supply placement flexibility.

Other Capital Requirements

During the six months ended June 30, ~~2018,~~2019, we ~~made no contributions~~contributed $16 million to our funded pension ~~plans. We~~plans and have noadditional required funding for ~~2018, but~~the 2019 plan year of approximately $48 million. We may choose to make ~~voluntary~~additional contributions ~~for future years at~~to our ~~discretion depending on the funding status and the plan asset performance.~~pension plans.

On July ~~25, 2018,~~31, 2019, our board of directors approved a dividend of ~~$0.46~~$0.53 per share on common stock. The dividend is payable September 10, ~~2018,~~2019, to shareholders of record as of the close of business on August ~~16, 2018.~~21, 2019.

We may, from time to time, repurchase our senior notes in the open market, in privately-negotiated transactions or otherwise in such volumes, at such prices and upon such other terms as we deem appropriate.

Share Repurchases

Since January 1, 2012, our board of directors has approved $18.0 billion in total share repurchase authorizations and we have repurchased a total of ~~$12.02~~$14.48 billion of our common stock, leaving ~~$5.98~~$3.52 billion available for repurchases at June 30, ~~2018.~~2019. The table below summarizes our total share repurchases for the six months ended June 30, ~~2018~~2019 and ~~2017.~~2018. See Note 98 to the unaudited consolidated financial statements for further discussion of the share repurchase plans.

Table of Contents


	Six Months Ended June 30,				Six Months Ended June 30,
(In millions, except per share data)	2018		2017		2019		2018
Number of shares repurchased	31		23		23		31
Cash paid for shares repurchased	$	2,212	$	1,170	$	1,385	$	2,212
Average cost per share	$	71.58	$	51.53	$	60.75	$	71.58

We may utilize various methods to effect the repurchases, which could include open market repurchases, negotiated block transactions, accelerated share repurchases or open market solicitations for shares, some of which may be effected through Rule 10b5-1 plans. The timing and amount of future repurchases, if any, will depend upon several factors, including market and business conditions, and such repurchases may be discontinued at any time.

Contractual Cash Obligations

As of June 30, ~~2018,~~2019, our contractual cash obligations included long-term debt, capital and operating lease obligations, purchase obligations and other long-term liabilities. During the first six months of ~~2018,~~2019, our long-term debt commitments ~~increased $9.31 billion~~decreased approximately $550 million due to interest payments made during the ~~public offering of the MPLX senior notes in February 2018,~~period, partially offset by ~~the redemption of $600 million of MPC senior notes and net repayment of $505 million in outstanding~~increased borrowings ~~under~~on the MPLX bank revolving credit facility.

There were no other material changes to our contractual cash obligations outside the ordinary course of business since December 31, ~~2017.~~

~~Table of Contents~~

2018.

Off-Balance Sheet Arrangements

Off-balance sheet arrangements comprise those arrangements that may potentially impact our liquidity, capital resources and results of operations, even though such arrangements are not recorded as liabilities under U.S. GAAP. Our off-balance sheet arrangements are limited to indemnities and guarantees that are described below. Although these arrangements serve a variety of our business purposes, we are not dependent on them to maintain our liquidity and capital resources, and we are not aware of any circumstances that are reasonably likely to cause the off-balance sheet arrangements to have a material adverse effect on liquidity and capital resources.

We have provided various guarantees related to equity method investees. In conjunction with our spinoff from Marathon Oil, we entered into various indemnities and guarantees to Marathon Oil. These arrangements are described in Note 2223 to the unaudited consolidated financial statements.

Our opinions concerning liquidity and capital resources and our ability to avail ourselves in the future of the financing options mentioned in the above forward-looking statements are based on currently available information. If this information proves to be inaccurate, future availability of financing may be adversely affected. Factors that affect the availability of financing include our performance (as measured by various factors, including cash provided by operating activities), the state of worldwide debt and equity markets, investor perceptions and expectations of past and future performance, the global financial climate, and, in particular, with respect to borrowings, the levels of our outstanding debt and credit ratings by rating agencies. The discussion of liquidity and capital resources above also contains forward-looking statements regarding expected capital requirements, including our capital budget and investment spending, costs for projects under construction, project completion dates and expectations or projections about strategies and goals for growth, upgrades and expansion, the carrying value of our Centennial equity investment, future contributions to our funded pension plans and share repurchases. Some factors that could cause actual results to differ materially from those included in our forward-looking statements regarding capital requirements include: the availability of liquidity; business conditions; a further decline or improvement in the long-term outlook of the potential uses of Capline’s assets and the pursuit of different strategic alternatives for such assets; a further decline or improvement in the long-term outlook of the potential uses of Centennial’s assets and the pursuit of different strategic alternatives for such assets; our ability to achieve the strategic and other objectives related to the strategic initiatives discussed herein; adverse changes in laws including with respect to tax and regulatory matters; our ability to generate sufficient income and cash flow to effect the intended share repurchases, including within the expected timeframe; our ability to manage disruptions in credit markets or changes to our credit rating; the potential impact on our share price if we are unable to effect the intended share repurchases; changes to the expected construction costs and timing of projects; delays in obtaining third-party approvals; changes in labor, materials and equipment costs and availability; planned and unplanned outages; the delay of, cancellation of or failure to implement planned capital projects; project cost overruns; disruptions or interruptions of our refining operations due to the shortage of skilled labor or unforeseen hazards such as weather conditions, acts of war or terrorist acts and the governmental or military response; civil protests and resulting legal/regulatory uncertainty regarding environmental and social issues, including pipeline infrastructure, may prevent or delay the construction and operation of such infrastructure and realization of associated revenues; continued/further 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; MPC's ability to successfully implement growth opportunities; modifications to MPLX earnings and distribution growth objectives; compliance with federal and state environmental, economic, health and safety, energy and other policies and regulations, including the cost of compliance with the Renewable Fuel Standard, and/or enforcement actions initiated thereunder; adverse results in litigation; changes to MPC's capital budget; other risk factors inherent to MPC's industry. These factors, among others, could cause actual results to differ materially from those set forth in the forward-looking statements. For additional information on forward-looking statements and risks that can affect our business, see “Disclosures Regarding Forward-Looking Statements” and “Risk Factors”, together with Item 1A. Risk Factors in our Annual Report on Form 10-K for the year ended December 31, 2017.

~~TRANSACTIONS WITH RELATED PARTIES~~

~~We believe that transactions with related parties were conducted under terms comparable to those with unrelated parties.~~

ENVIRONMENTAL MATTERS AND COMPLIANCE COSTS

We have incurred and may continue to incur substantial capital, operating and maintenance, and remediation expenditures as a result of environmental laws and regulations. If these expenditures, as with all costs, are not ultimately reflected in the prices of our products and services, our operating results will be adversely affected. We believe that substantially all of our competitors must comply with similar environmental laws and regulations. However, the specific impact on each competitor may vary depending on a number of factors, including the age and location of its operating facilities, marketing areas, production processes and whether it is also engaged in the petrochemical business or the marine transportation of crude oil and refined products.

~~Table of Contents~~

On March 3, 2014, the EPA signed the final Tier 3 fuel standards. The final Tier 3 fuel standards require, among other things, a lower annual average sulfur level in gasoline to no more than 10 ppm beginning in calendar year 2017. In addition, gasoline refiners and importers may not exceed a maximum per-gallon sulfur standard of 80 ppm while retailers may not exceed a maximum per-gallon sulfur standard of 95 ppm. ~~We anticipate that~~From 2014 through 2018, we ~~will spend an estimated $650~~made approximately $490 million ~~between 2014 and 2019 for~~in capital expenditures to comply with these standards ~~which includes estimated~~and expect to make approximately $245 million in capital expenditures ~~of approximately $400 million~~ for ~~2018 and~~these standards in 2019.

There have been no ~~other~~ significant changes to our environmental matters and compliance costs during the six months ended June 30, ~~2018.~~2019.

CRITICAL ACCOUNTING ESTIMATES

~~There~~As of June 30, 2019, there have been no significant changes to our critical accounting estimates ~~during~~since our Annual Report on Form 10-K for the ~~three months~~year ended ~~June 30,~~December 31, 2018.

ACCOUNTING STANDARDS NOT YET ADOPTED

As discussed in Note 32 to the unaudited consolidated financial statements, certain new financial accounting pronouncements will be effective for our financial statements in the future.

5455

Table of Contents

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

For a detailed discussion of our risk management strategies and our derivative instruments, see Item 7A. Quantitative and Qualitative Disclosures about Market Risk in our Annual Report on Form 10-K for the year ended December 31, ~~2017~~2018.

See Notes 15 and 16 to the unaudited consolidated financial statements for more information about the fair value measurement of our derivatives, as well as the amounts recorded in our consolidated balance sheets and statements of income. We do not designate any of our commodity derivative instruments as hedges for accounting purposes.

The following table includes the composition of net losses on our commodity derivative positions as of June 30, 2019 and 2018, respectively.



	Six Months Ended June 30,
(In millions)	2019			2018
Realized loss on settled derivative positions	$	(3	)	$	(46	)
Unrealized loss on open net derivative positions	(79		)	(39		)
Net loss	$	(82	)	$	(85	)

See Note 16 to the unaudited consolidated financial statements for additional information on our open derivative positions at June 30, 2019.

Sensitivity analysis of the effects on income from operations (“IFO”) of hypothetical 10 percent and 25 percent increases and decreases in commodity prices for open commodity derivative instruments as of June 30, ~~2018~~2019 is provided in the following table.


		Change in IFO from a Hypothetical Price Increase of						Change in IFO from a Hypothetical Price Decrease of					Change in IFO from a Hypothetical Price Increase of						Change in IFO from a Hypothetical Price Decrease of
(In millions)		10%			25%			10%		25%			10%			25%			10%			25%
As of June 30, 2018
As of June 30, 2019												As of June 30, 2019
Crude	Crude	$	(26	)	$	(65	)	$	26	$	65	Crude	$	(112	)	$	(279	)	$	115		$	289
Refined products	Refined products	(2		)	(4		)	2		4		Refined products	44			110			(44		)	(110		)
Blending products												Blending products	(11		)	(28		)	11			28
Embedded derivatives	Embedded derivatives	(7		)	(17		)	7		17		Embedded derivatives	(7		)	(16		)	7			16

We remain at risk for possible changes in the market value of commodity derivative instruments; however, such risk should be mitigated by price changes in the underlying physical commodity. Effects of these offsets are not reflected in the above sensitivity analysis.

We evaluate our portfolio of commodity derivative instruments on an ongoing basis and add or revise strategies in anticipation of changes in market conditions and in risk profiles. Changes to the portfolio after June 30, ~~2018~~2019 would cause future IFO effects to differ from those presented above.

Sensitivity analysis of the effect of a hypothetical 100-basis-point change in interest rates on long-term debt, including the portion classified as current and excluding ~~capital~~finance leases, as of June 30, ~~2018~~2019 is provided in the following table. Fair value of cash and cash equivalents, receivables, accounts payable and accrued interest approximate carrying value and are relatively insensitive to changes in interest rates due to the short-term maturity of the instruments. Accordingly, these instruments are excluded from the table.

(In millions)

Fair Value as of June 30, 2018^(a)

Change in
Fair Value^(b)

Change in Net Income for the Six Months Ended June 30, 2018^(c)

Fair Value as of June 30, 2019^(a)

Change in
Fair Value^(b)

Change in Net Income for the Six Months Ended

June 30, 2019^(c)

Long-term debt

Fixed-rate

17,321

1,692

n/a

Fixed-rate

27,620

2,352

n/a

Variable-rate

—

n/a

Variable-rate

2,117

n/a


^(a)	Fair value was based on market prices, where available, or current borrowing rates for financings with similar terms and maturities.


^(b)	Assumes a 100-basis-point decrease in the weighted average yield-to-maturity at June 30, ~~2018~~2019.


^(c)	Assumes a 100-basis-point change in interest rates. The change to net income was based on the weighted average balance of debt outstanding for the six months ended June 30, ~~2018~~2019.

Table of Contents

At June 30, ~~2018~~2019, our portfolio of long-term debt was comprised of fixed-rate ~~instruments.~~instruments and variable-rate borrowings. The fair value of our fixed-rate debt is relatively sensitive to interest rate fluctuations. Our sensitivity to interest rate declines and corresponding increases in the fair value of our debt portfolio unfavorably affects our results of operations and cash flows only when we elect to repurchase or otherwise retire fixed-rate debt at prices above carrying value. Interest rate fluctuations generally do not impact the fair value of borrowings under our variable-rate debt, but may affect our results of operations and cash flows.

See Note 15 to the unaudited consolidated financial statements for additional information on the fair value of our debt.

~~Table of Contents~~

ITEM 4. CONTROLS AND PROCEDURES

Disclosure Controls and Procedures

An evaluation of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules ~~13(a)-15(e) and 15(d)-15(e)~~13a-15(e) under the Securities Exchange Act of 1934, as amended) was carried out under the supervision and with the participation of our management, including our chief executive officer and chief financial officer. Based upon that evaluation, the chief executive officer and chief financial officer concluded that the design and operation of these disclosure controls and procedures were effective as of June 30, ~~2018,~~2019, the end of the period covered by this report.

Internal Control over Financial Reporting and Changes in Internal Control over Financial Reporting

During the quarter ended June 30, ~~2018,~~2019, there were no changes in our internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

5657

Table of Contents

~~SUPPLEMENTARY STATISTICS (UNAUDITED)~~

Three Months Ended
June 30, Six Months Ended
June 30,
(In millions) 2018 2017 2018 2017
Income from Operations by Segment
Refining & Marketing^(a)
$ 1,025
$ 562
$ 892
$ 492
Speedway 159
238
254
373
Midstream^(a)
617
332
1,184
641
Items not allocated to segments:
Corporate and other unallocated items (91 ) (83 ) (180 ) (166 )
Litigation —
(86 ) —
(86 )
Impairments^(b)
1
19
1
19
Income from operations $ 1,711
$ 982
$ 2,151
$ 1,273
Capital Expenditures and Investments^(c)

Refining & Marketing $ 196
$ 180
$ 387
$ 372
Speedway 88
78
127
113
Midstream^(d)
601
494
1,083
1,564
Corporate and Other^(e)
33
32
69
60
Total capital expenditures and investments $ 918
$ 784
$ 1,666
$ 2,109

^(a)

On February 1, 2018, we contributed certain refining logistics assets and fuels distributions services to MPLX. The results of these new businesses are reported in the Midstream segment prospectively from February 1, resulting in a net reduction of $232 million and $413 million to Refining & Marketing segment results and a net increase to Midstream segment results of the same amount for the three and six months ended June 30, 2018, respectively. ~~No effect was given to prior periods as these entities were not considered businesses prior to February 1, 2018.~~


^(b)	~~Includes MPC’s share of gains from the sales of assets remaining from the canceled Sandpiper pipeline project.~~


^(c)	~~Capital expenditures include changes in capital accruals, acquisitions and investments in affiliates.~~


^(d)	~~The six months ended June 30, 2017 includes $220 million for the acquisition of the Ozark pipeline and an investment of $500 million in MarEn Bakken related to the Bakken Pipeline system.~~


^(e)	Includes capitalized interest of $16 million and $14 million for the three months ended June 30, 2018 and 2017, respectively, and $34 million and $26 million for the six months ended June 30, 2018 and 2017, respectively.

~~Table of Contents~~

~~SUPPLEMENTARY STATISTICS (UNAUDITED)~~

Three Months Ended
June 30, Six Months Ended
June 30,
2018 2017 2018 2017
MPC Consolidated Refined Product Sales Volumes (mbpd)^(a)
2,404
2,370
2,340
2,228
Refining & Marketing Operating Statistics
Refining & Marketing refined product sales volume (mbpd)^(b)
2,392
2,358
2,327
2,215
Export sales volume (mbpd)^(c)
311
313
292
271
Refining & Marketing margin (dollars per barrel)^(d)
$ 15.40
$ 11.32
$ 13.08
$ 11.47
Crude oil capacity utilization percent^(e)
99.9
102.6
96.3
92.9
Refinery throughputs (mbpd):^(f)

Crude oil refined 1,878
1,864
1,812
1,688
Other charge and blendstocks 160
159
160
179
Total 2,038
2,023
1,972
1,867
Sour crude oil throughput percent 55
62
53
64
WTI-priced crude oil throughput percent 28
20
27
18
Refined product yields (mbpd):^(f)

Gasoline 970
922
943
895
Distillates 691
665
651
605
Propane 40
38
35
33
Feedstocks and special products 278
331
283
277
Heavy fuel oil 27
34
31
32
Asphalt 72
70
65
63
Total 2,078
2,060
2,008
1,905
Refinery direct operating costs (dollars per barrel):^(g)

Planned turnaround and major maintenance $ 0.98
$ 1.01
$ 1.58
$ 1.96
Depreciation and amortization 1.27
1.39
1.32
1.50
Other manufacturing^(h)
3.54
3.84
3.80
4.24
Total $ 5.79
$ 6.24
$ 6.70
$ 7.70
Refining & Marketing Operating Statistics By Region - Gulf Coast
Refinery throughputs (mbpd):⁽ⁱ⁾

Crude oil refined 1,156
1,147
1,106
999
Other charge and blendstocks 190
218
179
220
Total 1,346
1,365
1,285
1,219
Sour crude oil throughput percent 65
74
63
78
WTI-priced crude oil throughput percent 16
12
15
8
Refined product yields (mbpd):⁽ⁱ⁾

Gasoline 570
537
552
518
Distillates 458
432
410
371
Propane 26
27
22
24
Feedstocks and special products 290
360
294
302
Heavy fuel oil 16
23
20
20
Asphalt 23
19
20
17
Total 1,383
1,398
1,318
1,252

~~Table of Contents~~

Three Months Ended
June 30, Six Months Ended
June 30,
2018 2017 2018 2017
Refinery direct operating costs (dollars per barrel):^(g)

Planned turnaround and major maintenance $ 0.56
$ 0.91
$ 1.65
$ 2.40
Depreciation and amortization 0.99
1.10
1.04
1.21
Other manufacturing^(h)
3.21
3.45
3.54
3.96
Total $ 4.76
$ 5.46
$ 6.23
$ 7.57
Refining & Marketing Operating Statistics By Region – Midwest
Refinery throughputs (mbpd):⁽ⁱ⁾

Crude oil refined 722
717
706
689
Other charge and blendstocks 34
28
34
30
Total 756
745
740
719
Sour crude oil throughput percent 39
42
38
43
WTI-priced crude oil throughput percent 49
34
48
32
Refined product yields (mbpd):⁽ⁱ⁾

Gasoline 400
385
391
377
Distillates 233
233
241
234
Propane 14
12
13
10
Feedstocks and special products 52
56
42
45
Heavy fuel oil 11
12
11
12
Asphalt 49
51
45
46
Total 759
749
743
724
Refinery direct operating costs (dollars per barrel):^(g)

Planned turnaround and major maintenance $ 1.65
$ 1.06
$ 1.33
$ 1.02
Depreciation and amortization 1.66
1.76
1.71
1.84
Other manufacturing^(h)
3.81
4.13
3.98
4.31
Total $ 7.12
$ 6.95
$ 7.02
$ 7.17
Speedway Operating Statistics
Convenience stores at period-end 2,744
2,729

Gasoline and distillate sales (millions of gallons) 1,450
1,475
2,843
2,868
Gasoline and distillate margin (dollars per gallon)^(j)
$ 0.1645
$ 0.1835
$ 0.1604
$ 0.1704
Merchandise sales (in millions) $ 1,285
$ 1,271
$ 2,414
$ 2,398
Merchandise margin (in millions) $ 366
$ 371
$ 685
$ 691
Merchandise margin percent 28.5 % 29.2 % 28.4 % 28.8 %
Same store gasoline sales volume (period over period)^(k)
(2.6 %) (0.5 %) (2.1 %) (0.8 %)
Same store merchandise sales (period over period)^(k)(l)
2.9 % 2.1 % 2.6 % 2.1 %
Midstream Operating Statistics
Crude oil and refined product pipeline throughputs (mbpd)^(m)
3,789
3,439
3,625
3,165
Terminal throughput (mbpd) 1,485
1,489
1,465
1,456
Gathering system throughput (MMcf/d)⁽ⁿ⁾
4,295
3,326
4,233
3,255
Natural gas processed (MMcf/d)⁽ⁿ⁾
6,850
6,292
6,740
6,212
C2 (ethane) + NGLs (natural gas liquids) fractionated (mbpd)⁽ⁿ⁾
439
387
432
377


^(a)	~~Total average daily volumes of refined product sales to wholesale, branded and retail customers.~~


^(b)	~~Includes intersegment sales.~~


^(c)	~~Represents fully loaded export cargoes for each time period. These sales volumes are included in the total sales volume amounts.~~


^(d)	~~Sales revenue less cost of refinery inputs and purchased products, divided by total refinery throughputs.~~

~~Table of Contents~~


^(e)	~~Based on calendar-day capacity, which is an annual average that includes down time for planned maintenance and other normal operating activities.~~


^(f)	Excludes inter-refinery volumes of 64 mbpd and 87 mbpd for the three months ended June 30, 2018 and 2017, respectively, and 53 mbpd and 71 mbpd for the six months ended June 30, 2018 and 2017, respectively.


^(g)	Per barrel of total refinery throughputs. Effective with the February 1, 2018 dropdown, direct operating costs related to certain refining logistics assets are now reported in the Midstream segment. No effect was given to prior periods as this entity was not considered a business prior to February 1, 2018.


^(h)	~~Includes utilities, labor, routine maintenance and other operating costs.~~


⁽ⁱ⁾	~~Includes inter-refinery transfer volumes.~~


^(j)	~~The price paid by consumers less the cost of refined products, including transportation, consumer excise taxes and bank card processing fees, divided by gasoline and distillate sales volume.~~


^(k)	~~Same store comparison includes only locations owned at least 13 months.~~


^(l)	~~Excludes cigarettes.~~


^(m)	~~Includes common-carrier pipelines and private pipelines owned or operated by MPLX, excluding equity method investments.~~


⁽ⁿ⁾	~~Includes amounts related to unconsolidated equity method investments on a 100 percent basis.~~

~~Table of Contents~~

PART II – OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

We are the subject of, or a party to, a number of pending or threatened legal actions, contingencies and commitments involving

a variety of matters, including laws and regulations relating to the environment. Except as described below, there have been no material changes to the legal proceedings previously disclosed in our Annual Report on Form 10-K, as updated in the Quarterly Report on Form 10-Q for the quarter ended March 31, 2019.

~~Between June 20~~Litigation

As previously disclosed, in May 2007, the Kentucky attorney general filed a lawsuit against us and Marathon Oil in state court in Franklin County, Kentucky for alleged violations of Kentucky’s emergency pricing and consumer protection laws following Hurricanes Katrina and Rita in 2005. The lawsuit alleged that we overcharged customers by $89 million during September and October 2005. The complaint sought disgorgement of these sums, as well as penalties, under Kentucky’s emergency pricing and consumer protection laws. In May 2011, the Kentucky attorney general amended his complaint to include a request for immediate injunctive relief as well as unspecified damages and penalties related to our wholesale gasoline pricing in April and May 2011 under statewide price controls that were activated by the Kentucky governor on April 26, 2011 and which have since expired. The court denied the attorney general’s request for immediate injunctive relief. In July ~~11, 2018, six putative class actions were filed against some or all of Andeavor, the directors of Andeavor, and MPC Mahi Inc. (“Merger Sub 1”) and Mahi LLC (“Merger Sub 2” and, together with~~2019, MPC and ~~Merger Sub 1,~~ the ~~“MPC Defendants”), relating~~attorney general reached a settlement to the merger. Two complaints, Malka Raul v. Andeavor, et al., and Stephen Bushansky v. Andeavor, et al., were filed in the U.S. District Court for the Western District of Texas. Four complaints, captioned The Vladimir Gusinsky Rev. Trust v. Andeavor, et al., Lawrence Zucker v. Andeavor, et al., Mel Gross v. Andeavor, et al., and Hudson v. Andeavor, et al. were filed in the U.S. District Court for the District of Delaware. The complaints generally allege that Andeavor, the directors of Andeavor and the MPC Defendants disseminated a false or misleading registration statement regarding the proposed merger in violation of Section 14(a) of the Exchange Act and Rule 14a-9 promulgated thereunder. Specifically, the complaints allege that the registration statement filed by MPC misstated or omitted material information regarding the parties’ financial projections and the analyses performed by Andeavor’s and MPC’s respective financial advisors, and that disclosure of material information is necessary in light of preclusive deal protection provisions in the merger agreement, the financial interests of Andeavor’s officers and directors in completing the deal, and the financial interests of Andeavor’s and MPC’s respective financial advisors. The complaints further allege that the directors of Andeavor and/or the MPC Defendants are liable for these violations as “controlling persons” of Andeavor under Section 20(a) of the Exchange Act. The complaints seek injunctive relief, including to enjoin and/or rescind the merger, damages in the event the merger is consummated, and an award of attorneys’ fees, in addition to other relief. Additional lawsuits arising out of the proposed merger may be filed in the future. We believe that the lawsuits are without merit and intend to defend vigorously against them and any other lawsuits challenging the merger. Therefore, atresolve this ~~time, we do~~litigation. This resolution will not ~~believe the ultimate resolution of these lawsuits will~~ have a material adverse ~~effect.~~effect on our consolidated financial position, results of operations or cash flows.

Environmental Proceedings

Detroit Refinery

In June 2019, we received an offer from the Michigan Department of Environment, Great Lakes, and Energy (“EGLE”) to settle violations alleged in five NOVs issued to the refinery between September 2017 and February 2019. The NOVs allege violations of emissions limitations and other requirements of the refinery’s air permit. We are negotiating a settlement of the allegations with EGLE and cannot currently estimate the timing of the resolution of this matter.

El Paso Refinery

We are presently negotiating with the EPA regarding several emission events at our El Paso refinery that could subject the refinery to stipulated penalties under the existing Consent Decree in U.S. v. Western Refining Co. LP, W.D. Texas No. 3:11-CV-00276-FM (entered August 31, 2011). We cannot currently estimate the timing of the resolution of this matter.

Gallup Refinery

As previously ~~reported~~disclosed in ~~our~~MPC’s Annual Report on Form 10-K for the year ended December 31, ~~2017, MarkWest Liberty Midstream~~2018 (the “2018 10-K”), on October 19, 2018, Western Refining Southwest, Inc. (“Refining Southwest”) received an offer from the EPA to settle alleged violations of the Resource Conservation and ~~its affiliates agreed~~Recovery Act (“RCRA”) regulations. In the second quarter of 2019, Refining Southwest and the EPA executed a Consent Agreement and Final Order (CAFO) (Effective Date April 3, 2019) to resolve these allegations, which arose from the Gallup refinery’s self-disclosure of incorrectly profiling and shipping hazardous waste between August 26, 2013 and February 18, 2014 to a disposal site that did not have a RCRA permit and could not accept RCRA hazardous waste. The CAFO requires payment of a penalty of $148,303, and the development of a standard operating procedure, training, a system of management review of waste determination, and a narrative of changes since the alleged violations occurred.

As previously disclosed in our 2018 10-K, in March 2016, the EPA conducted a Risk Management Program inspection at our Gallup refinery and issued an Inspection Report on April 7, 2016 identifying Areas of Concern. In the second quarter of 2019, Refining Southwest and the EPA executed a Consent Agreement and Final Order (CAFO) and Administrative Compliance Order (ACO) (Effective Date April 16, 2019) to resolve alleged violations of the Clean Air Act regulations at the Gallup refinery arising from a Risk Management Program (RMP) inspection that EPA conducted at Gallup refinery in March 2016. Pursuant to the CAFO & ACO Gallup paid a civil penalty of $98,874 and will complete a Supplemental Environmental Project (SEP) valued at approximately $91,351.

Galveston Bay Refinery

In the second quarter of 2019, we reached an agreement with the Texas Commission on Environmental Quality to pay a penalty of $62,782 and undertake a supplemental environmental project at a cost of $62,781 to settle allegations arising from an investigation of deviations self-reported in the 2016 Title V deviation reports.

Table of Contents

Los Angeles Refinery

As previously disclosed in our 2018 10-K, Tesoro Refining and Marketing LLC (“TRMC”) previously reached an agreement in principle to pay a ~~cash~~ penalty of ~~approximately $0.6 million~~$425,000 and to undertake ~~certain~~a supplemental environmental ~~projects with an estimated~~project at a cost of ~~approximately $2.4 million, related~~$425,000 to ~~civil enforcement~~settle allegations ~~associated with permitting~~by the CARB relating to the state’s Greenhouse Gas Reporting Standards. The CARB allegations relate to the self-disclosure and other regulatory obligations for launcher/receiver and compressor station facilities in southeastern Ohio and western Pennsylvania. On April 24, 2018, MarkWest Liberty Midstream and its affiliates entered into a Consent Decreecorrection of reported greenhouse gas emissions emitted by the Los Angeles refinery’s calciner unit from May 9, 2014 to June 12, 2017. A formal agreement consistent with the ~~EPA~~foregoing was signed in May 2019, and we expect to make the ~~Pennsylvania Department~~related payments in the third quarter of ~~Environmental Protection resolving these issues, pursuant~~2019.

As previously disclosed in our 2018 10-K, TRMC reached an agreement to ~~which MarkWest Liberty Midstream will~~ pay a penalty of ~~$0.6 million~~$75,000 and undertake certain supplemental environmental projects with an estimated cost of ~~approximately $2.4 million,~~$75,000 to settle five NOVs from the South Coast Air Quality Management District. The NOVs were issued to the Los Angeles refinery between June and October 2017, alleging violations of various federal and district air emission regulations. A formal agreement consistent with the foregoing was signed in ~~addition to other related projects that are substantially complete. The Consent Decree was approved by the court on July 9, 2018~~April 2019 and the penalty has been paid.

Martinez Refinery

As ~~reported~~ previously disclosed in our ~~Annual Report~~2018 10-K, on ~~Form 10-K for~~July 18, 2016, the ~~year ended December 31, 2017, MPL agreed in principle to pay~~U.S. Department of Justice (“DOJ”) lodged a ~~total civil penalty~~complaint on behalf of ~~$335,000 to the Illinois Environmental Protection Agency (“IEPA”) and~~ the EPA ~~related to an April 17, 2016 pipeline release to~~and a Consent Decree with the ~~Wabash River near Crawleyville, Indiana. MPL paid a penalty~~Western District Court of ~~$226,000 to~~Texas. Among other things, the Consent Decree required that the Martinez refinery meet certain annual emission limits for NOx by July 1, 2018. In February 2018, TRMC informed the EPA ~~during~~that it would need additional time to satisfy requirements of the Consent Decree. In the second quarter of ~~2018~~2019, MPC, the EPA and the DOJ reached a settlement in principle, which includes a civil penalty of approximately $6.5 million and a ~~penalty~~schedule for installation of ~~$109,000~~a Selective Catalytic Reduction system to ~~IEPA in July 2018.~~control NOx emissions from the FCCU.

ITEM 1A. RISK FACTORS

~~The~~There have been no material changes from the risk factors ~~below supplement and, where applicable, update the discussion of risk factors that could adversely affect our business included~~previously disclosed in our Annual Report on Form 10-K for the year ended December 31, ~~2017. With the exception of the following, there have been no other material changes~~2018, as updated in our ~~risk factors from those found under Item 1A. Risk Factors in our Annual~~Quarterly Report on Form ~~10-K~~10-Q for the ~~year~~quarter ended ~~December 31, 2017.~~

~~Risks Relating to the Previously Announced Proposed Merger with Andeavor~~

~~Failure to complete the merger with Andeavor could negatively impact the price of shares of MPC common stock, as well as MPC’s future businesses and financial results.~~

The merger agreement contains a number of conditions that must be satisfied or waived prior to the completion of the merger. There can be no assurance that all of the conditions to the merger will be so satisfied or waived. If the conditions to the merger are not satisfied or waived, MPC and Andeavor will be unable to complete the merger and the merger agreement may be terminated.

~~Table of Contents~~

If the merger is not completed for any reason, including the failure to receive the required approvals of MPC’s and Andeavor’s respective stockholders, MPC’s businesses and financial results may be adversely affected as follows:

~~MPC may experience negative reactions from the financial markets, including negative impacts on the market price of shares of MPC common stock;~~

the manner in which customers, vendors, business partners and other third parties perceive MPC may be negatively impacted, which in turn could affect MPC’s marketing operations or its ability to compete for new business or obtain renewals in the marketplace more broadly;

~~MPC may experience negative reactions from employees; and~~

MPC will have expended time and resources that could otherwise have been spent on MPC’s existing businesses and the pursuit of other opportunities that could have been beneficial to MPC, and MPC’s ongoing business and financial results may be adversely affected.

In addition to the above risks, if the merger agreement is terminated and MPC’s board seeks an alternative transaction, MPC’s stockholders cannot be certain that it will be able to find a party willing to engage in a transaction on more attractive terms than the merger. If the merger agreement is terminated under specified circumstances, either MPC or Andeavor may be required to pay the other party a termination fee, reverse termination fee or other termination-related payment.

~~MPC will be subject to business uncertainties while the merger is pending, which could adversely affect its business.~~

Uncertainty about the effect of the merger on employees and customers may have an adverse effect on MPC. These uncertainties may impair MPC’s ability to attract, retain and motivate key personnel until the merger is completed and for a period of time thereafter, and could cause customers and others that deal with MPC to seek to change their existing business relationships with MPC, respectively. In addition, the merger agreement restricts MPC and Andeavor from entering into certain corporate transactions and taking other specified actions without the consent of the other party. These restrictions may prevent MPC from pursuing attractive business opportunities that may arise prior to the completion of the merger.

~~The merger may not be accretive, and may be dilutive, to MPC’s earnings per share and cash flow from operations per share, which may negatively affect the market price of shares of MPC common stock.~~

The merger may not be accretive, and may be dilutive, to MPC’s earnings per share and cash flow from operations per share. Earnings per share and cash flow from operations per share in the future are based on preliminary estimates that may materially change. In addition, future events and conditions could decrease or delay any accretion, result in dilution or cause greater dilution than is currently expected, including:

~~adverse changes in energy market conditions;~~

~~commodity prices for oil, natural gas and natural gas liquids;~~

~~production levels;~~

~~operating results;~~

~~competitive conditions;~~

~~laws and regulations affecting the energy business;~~

~~capital expenditure obligations;~~

~~higher than expected integration costs;~~

~~lower than expected synergies; and~~

~~general economic conditions.~~

~~Any dilution of, or decrease or delay of any accretion to, MPC’s earnings per share or cash flow from operations per share could cause the price of MPC’s common stock to decline.~~

~~MPC will incur significant transaction and merger-related costs in connection with the merger, which may be in excess of those anticipated by MPC.~~

MPC has incurred and will incur substantial expenses in connection with the negotiation and completion of the transactions contemplated by the merger agreement, including the costs and expenses of filing, printing and mailing the joint proxy statement/prospectus and all filing and other fees paid to the SEC in connection with the merger.

~~Table of Contents~~

MPC expects to continue to incur a number of non-recurring costs associated with completing the merger, combining the operations of the two companies and achieving desired synergies. These fees and costs have been, and will continue to be, substantial. The substantial majority of non-recurring expenses will consist of transaction costs related to the merger and include, among others, employee retention costs, fees paid to financial, legal and accounting advisors, severance and benefit costs and filing fees.

MPC will also incur transaction fees and costs related to formulating and implementing integration plans, including facilities and systems consolidation costs and employment-related costs. MPC will continue to assess the magnitude of these costs, and additional unanticipated costs may be incurred in the merger and the integration of the two companies’ businesses. Although MPC expects that the elimination of duplicative costs, as well as the realization of other efficiencies related to the integration of the businesses, should allow MPC to offset integration-related costs over time, this net benefit may not be achieved in the near term, or at all. See the risk factor entitled “~~The integration of Andeavor into MPC may not be as successful as anticipated” below.~~

The costs described above, as well as other unanticipated costs and expenses, could have a material adverse effect on the financial condition and operating results of MPC following the completion of the merger.

~~Many of these costs will be borne by MPC and/or Andeavor even if the merger is not completed.~~

~~The combined company’s debt may limit its financial flexibility.~~

~~As of~~ March 31, 2018, MPC had approximately $17.8 billion of outstanding indebtedness, including approximately $12.4 billion of obligations of MPLX. As of March 31, 2018, Andeavor had approximately $8.8 billion of outstanding indebtedness, including approximately $4.2 billion of obligations of Andeavor Logistics. MPC continues to review the treatment of its and Andeavor’s existing indebtedness and MPC may seek to repay, refinance, repurchase, redeem, exchange or otherwise terminate its or Andeavor’s existing indebtedness prior to, in connection with or following the completion of the merger. If MPC does seek to refinance its or Andeavor’s existing indebtedness, there can be no guarantee that MPC would be able to execute the refinancing on favorable terms or at all. Assuming MPC does not repay, repurchase, redeem, exchange or otherwise terminate any of its or Andeavor’s existing indebtedness, immediately following the completion of the merger, MPC is expected to have outstanding indebtedness of approximately $27.7 billion, based on MPC’s and Andeavor’s outstanding indebtedness as of March 31, 2018.

~~Any increase in MPC’s indebtedness could have adverse effects on its financial condition and results of operations, including:~~

~~increasing MPC’s vulnerability to changing economic, regulatory and industry conditions;~~

~~limiting MPC’s ability to compete and MPC’s flexibility in planning for, or reacting to, changes in its business and the industry;~~

~~limiting MPC’s ability to pay dividends to its stockholders;~~

~~limiting MPC’s ability to borrow additional funds; and~~

requiring MPC to dedicate a substantial portion of its cash flow from operations to payments on its debt, thereby reducing funds available for working capital, capital expenditures, acquisitions, share repurchases, dividends and other purposes.

In addition, in connection with executing MPC’s business strategies following the merger, MPC expects to continue to evaluate the possibility of acquiring additional assets and making further strategic investments, and MPC may elect to finance these endeavors by incurring additional indebtedness.

MPC’s ability to arrange any additional financing for the purposes described above or otherwise will depend on, among other factors, the company’s financial position and performance, as well as prevailing market conditions and other factors beyond MPC’s control. MPC cannot assure you that it will be able to obtain such financing on terms acceptable to MPC or at all.

~~The impact of the recent significant federal tax reform on the combined company is uncertain and may significantly affect the operations of the combined company after the merger.~~

On December 22, 2017, the President signed the budget reconciliation act commonly referred to as the Tax Cuts and Jobs Act, which is referred to as the TCJA, into law. The TCJA makes broad and complex changes to the U.S. tax code. The TCJA will change how the combined company’s earnings are taxed, including, among other items, (1) reducing the U.S. federal corporate tax rate from 35 percent to 21 percent; (2) repealing the corporate alternative minimum tax and changing how existing credits can be utilized; (3) temporarily providing for elective immediate expensing for certain depreciable property; (4) creating a new limitation on the deductibility of interest expense; and (5) changing rules related to uses and limitations of net operating losses

~~Table of Contents~~

created in tax years beginning after December 31, 2017. MPC continues to evaluate the TCJA and its impact on the combined company’s businesses. It is possible that the TCJA will be subject to further changes either in a technical corrections bill or entirely new legislation. The overall impact of the TCJA also depends on the future interpretations and regulations that may be issued by U.S. tax authorities. We expect there will be further guidance provided by these authorities potentially having a material adverse effect on our combined financial condition or results of operations. The impact of broad proposals or of regulatory issuances on our business can vary substantially depending upon the specific changes or further guidance made and how the changes or guidance are implemented by the authorities.

~~The integration of Andeavor into MPC may not be as successful as anticipated.~~

The merger involves numerous operational, strategic, financial, accounting, legal, tax and other risks; potential liabilities associated with the acquired businesses; and uncertainties related to design, operation and integration of Andeavor’s internal control over financial reporting. Difficulties in integrating Andeavor into MPC may result in Andeavor performing differently than expected, in operational challenges or in the failure to realize anticipated expense-related efficiencies. MPC’s and Andeavor’s existing businesses could also be negatively impacted by the merger. Potential difficulties that may be encountered in the integration process include, among other factors:

~~the inability to successfully integrate the businesses of Andeavor into MPC in a manner that permits MPC to acheive the full revenue and cost savings anticipated from the merger;~~

~~complexities associated with managing the larger, more complex, integrated business;~~

~~not realizing anticipated operating synergies or incurring unexpected costs to realize such synergies;~~

~~integrating personnel from the two companies while maintaining focus on providing consistent, high-quality products and services;~~

~~potential unknown liabilities and unforeseen expenses, delays or regulatory conditions associated with the merger;~~

~~loss of key employees;~~

~~integrating relationships with customers, vendors and business partners;~~

~~performance shortfalls at one or both of the companies as a result of the diversion of management’s attention caused by completing the merger and integrating Andeavor’s operations into MPC; and~~

~~the disruption of, or the loss of momentum in, each company’s ongoing business or inconsistencies in standards, controls, procedures and policies.~~

~~MPC’s results may suffer if it does not effectively manage its expanded operations following the merger.~~

Following completion of the merger, MPC’s success will depend, in part, on its ability to manage its expansion, which poses numerous risks and uncertainties, including the need to integrate the operations and business of Andeavor into its existing business in an efficient and timely manner, to combine systems and management controls and to integrate relationships with customers, vendors and business partners.

~~Even if MPC and Andeavor complete the merger, MPC may fail to realize all of the anticipated benefits of the proposed merger.~~

The success of the proposed merger will depend, in part, on MPC’s ability to realize the anticipated benefits and cost savings from combining MPC’s and Andeavor’s businesses, including the approximately $1 billion in annual gross, run-rate, commercial and corporate synergies that MPC expects the combined company to realize within the first three years after the combination. The anticipated benefits and cost savings of the proposed merger may not be realized fully or at all, may take longer to realize than expected, may require more non-recurring costs and expenditures to realize than expected or could have other adverse effects that MPC does not currently foresee. Some of the assumptions that MPC has made, such as with respect to anticipated: operating synergies or the costs associated with realizing such synergies; significant long-term cash flow generation; the benefit from a substantial increase in scale and geographic diversity; complementary growth platforms for both midstream and retail businesses; positioning for potentially significant benefits from the International Maritime Organization change in specifications for marine bunker fuel; the expansion in opportunities for logistics growth in crude oil production basins and regions; further optimization of crude supply; and the continuation of MPC’s investment grade credit profile, may not be realized. The integration process may, for each of MPC and Andeavor, result in the loss of key employees, the disruption of ongoing businesses or inconsistencies in standards, controls, procedures and policies. There could be potential unknown liabilities and unforeseen expenses associated with the merger that were not discovered in the course of performing due diligence.

~~Table of Contents~~

~~The market price of shares of MPC common stock may decline in the future as a result of the sale of shares of MPC common stock held by former Andeavor stockholders or current MPC stockholders.~~

Based on the number of shares of Andeavor common stock outstanding as of April 26, 2018 (other than certain excluded shares held by Andeavor, MPC or any of their respective direct or indirect subsidiaries), MPC expects to issue up to approximately 240 million shares of MPC common stock to Andeavor stockholders in the merger. Following their receipt of shares of MPC common stock as stock consideration in the merger, former Andeavor stockholders may seek to sell the shares of MPC common stock delivered to them. Other MPC stockholders may also seek to sell shares of MPC common stock held by them following, or in anticipation of, completion of the merger. These sales (or the perception that these sales may occur), coupled with the increase in the outstanding number of shares of MPC common stock, may affect the market for, and the market price of, MPC common stock in an adverse manner.

The combined company will record goodwill and other intangible assets that could become impaired and result in material non-cash charges to the results of operations of the combined company in the future.

The merger will be accounted for as an acquisition by MPC in accordance with accounting principles generally accepted in the United States. Under the acquisition method of accounting, the assets and liabilities of Andeavor and its subsidiaries will be recorded, as of completion, at their respective fair values and added to those of MPC. The reported financial condition and results of operations of MPC for periods after completion of the merger will reflect Andeavor balances and results after completion of the merger, but will not be restated retroactively to reflect the historical financial position or results of operations of Andeavor and its subsidiaries for periods prior to the merger.

Under the acquisition method of accounting, the total purchase price will be allocated to Andeavor’s tangible assets and liabilities and identifiable intangible assets based on their fair values as of the date of completion of the merger. The excess of the purchase price over those fair values will be recorded as goodwill. MPC and Andeavor expect that the merger will result in the creation of goodwill based upon the application of the acquisition method of accounting. To the extent the value of goodwill or intangibles becomes impaired, the combined company may be required to incur material non-cash charges relating to such impairment. The combined company’s operating results may be significantly impacted from both the impairment and the underlying trends in the business that triggered the impairment.

We are subject to various risks and uncertainties in the course of our business. The discussion of such risks and uncertainties may be found under Item 1A. Risk Factors in our Annual Report on Form 10-K for the year ended December 31, 2017.2019.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

The following table sets forth a summary of our purchases during the quarter ended June 30, ~~2018,~~2019, of equity securities that are registered by MPC pursuant to Section 12 of the Securities Exchange Act of 1934, as amended.

Period
Total Number
of Shares
Purchased^(a)

Average
Price
Paid per
Share^(b)
Total Number of
Shares Purchased as
Part of Publicly
Announced Plans
or Programs
Maximum Dollar
Value of Shares that
May Yet Be Purchased
Under the Plans or
Programs^(c)
04/01/18-04/30/18 6,367,133
$ 75.58
6,245,920
$ 6,391,663,224
05/01/18-05/31/18 4,296,124
77.31
4,296,124
6,059,509,350
06/01/18-06/30/18 1,048,678
76.07
1,048,448
5,979,755,079
Total 11,711,935
76.26
11,590,492



Period	Total Number of Shares Purchased^(a)	Average Price Paid per Share^(b)		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs	Maximum Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs^(c)
04/01/2019-04/30/2019	5,268,926	$	61.25	5,141,205	$	3,704,606,774
05/01/2019-05/31/2019	410,585	61.05		409,578	3,679,603,410
06/01/2019-06/30/2019	3,193,848	50.11		3,193,663	3,519,582,400
Total	8,873,359	57.23		8,744,446


^(a)	The amounts in this column include ~~121,213~~127,721, 1,007 and ~~230~~185 shares of our common stock delivered by employees to MPC, upon vesting of restricted stock, to satisfy tax withholding requirements in April, May and June,, respectively.

^(b)

Amounts in this column reflect the weighted average price paid for shares purchased under our share repurchase authorizations and for shares tendered to us in satisfaction of employee tax withholding obligations upon the vesting of restricted stock granted under our stock plans. The weighted average price includes commissions paid to brokers on shares purchased under our share repurchase authorizations.

^(c)

On April 30, 2018, we announced that our board of directors had approved a $5$5.0 billion share repurchase ~~authorization in addition to the remaining authorization pursuant to the May 31, 2017 announcement. These~~authorization. This share repurchase ~~authorizations have~~authorization has no expiration date. The share repurchase authorization announced on April 30, 2018, together with prior authorizations, results in a total of ~~$18~~$18.0 billion of share repurchase authorizations since January 1, 2012.

ITEM 5. OTHER INFORMATION

None

6559

Table of Contents

ITEM 6. EXHIBITS

Incorporated by Reference
Filed
Herewith

Furnished
Herewith
Exhibit
Number
Exhibit Description Form Exhibit
Filing
Date

SEC File
No.

2.1*

Agreement and Plan of Merger, dated as of April 29, 2018, by and among Marathon Petroleum Corporation, Andeavor, Mahi Inc. and Mahi LLC
8-K 2.1 4/30/2018 001-35054
2.2

Amendment to Agreement and Plan of Merger, dated as of July 3, 2018, by and among Andeavor, Marathon Petroleum Corporation, Mahi Inc. and Mahi LLC.
S-4/A 2.2 7/5/2018 333-225244
3.1

Restated Certificate of Incorporation of Marathon Petroleum Corporation
8-K 3.1 6/22/2011 001-35054
3.2

Certificate of Amendment of Restated Certificate of Incorporation of Marathon Petroleum Corporation
X
3.3

Amended and Restated Bylaws of Marathon Petroleum Corporation dated May 1, 2018
8-K 3.1 5/1/2018 001-35054
10.1

Voting and Support Agreement, dated as of April 29, 2018, by and among Marathon Petroleum Corporation, Andeavor, Mahi Inc. Mahi LLC, Paul L. Foster and Franklin Mountain Investments, LP
8-K 10.1 4/30/2018
001-35054

31.1

Certification of Chief Executive Officer pursuant to Rule 13(a)-14 and 15(d)-14 under the Securities Exchange Act of 1934
X
31.2

Certification of Chief Financial Officer pursuant to Rule 13(a)-14 and 15(d)-14 under the Securities Exchange Act of 1934
X
32.1

Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350
X
32.2

Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350
X
101.INS XBRL Instance Document X
101.SCH XBRL Taxonomy Extension Schema X
101.PRE XBRL Taxonomy Extension Presentation Linkbase X
101.CAL XBRL Taxonomy Extension Calculation Linkbase X
101.DEF XBRL Taxonomy Extension Definition Linkbase X
101.LAB XBRL Taxonomy Extension Label Linkbase X

Incorporated by Reference

Filed

Herewith

Furnished

Herewith

Exhibit

Number

Exhibit Description

Form

Exhibit

Filing

Date

SEC File

No.

2.1*

Agreement and Plan of Merger, dated as of April 29, 2018, by and among MPC, Andeavor, Mahi Inc. and Mahi LLC

8-K

2.1

4/30/2018

001-35054

2.2

Amendment to Agreement and Plan of Merger, dated as of July 3, 2018, by and among Andeavor, MPC, Mahi Inc. and Mahi LLC

S-4/A

2.2

7/5/2018

333-225244

2.3

Second Amendment to Agreement and Plan of Merger, dated as of September 18, 2018, by and among Andeavor, MPC, Mahi Inc. and Mahi LLC

8-K

2.1

9/18/2018

001-35054

2.4 *

Agreement and Plan of Merger, dated as of May 7, 2019, by and among Andeavor Logistics LP, Tesoro Logistics GP, LLC, MPLX LP, MPLX GP LLC and MPLX MAX LLC.

8-K

2.1

5/8/2019

001-35054

3.1

Restated Certificate of Incorporation of MPC, dated October 1, 2018

8-K

3.2

10/1/2018

001-35054

3.2

Amended and Restated Bylaws of MPC dated February 27, 2019

10-K

3.2

2/28/2019

001-35054

10.1

Support Agreement, dated as of May 7, 2019, by and among MPLX LP, Andeavor Logistics LP, Tesoro Logistics GP, LLC, Western Refining Southwest, Inc. and Marathon Petroleum Corporation.

8-K

10.1

5/8/2019

001-35054

10.2

Second Amendment to Receivables Purchase Agreement, dated July 19, 2019, by and among MPC Trade Receivables Company LLC, as seller, Marathon Petroleum Company LP, as servicer, MUFG Bank, Ltd., as administrative agent, certain committed purchasers and conduit purchasers that are parties thereto from time to time and certain other parties thereto from time to time as managing agents and letter of credit issuers.

8-K

10.1

7/25/2019

001-35054

10.3

364-Day Revolving Credit Agreement, dated as of July 26, 2019, among MPC, as borrower, JPMorgan Chase Bank, N.A., as administrative agent, each of JPMorgan Chase Bank, N.A., Wells Fargo Securities, LLC, Barclays Bank PLC, Citibank, N.A., BofA Securities, Mizuho Bank, Ltd., MUFG Bank, Ltd. and Royal Bank of Canada, as joint lead arrangers and joint bookrunners, Wells Fargo Bank, National Association, as syndication agent, each of Bank of America, N.A., Barclays Bank PLC, Citibank, N.A., Mizuho Bank, Ltd., MUFG Bank, Ltd., and Royal Bank of Canada, as documentation agents, and the other lenders and issuing banks that are parties thereto.

8-K

10.1

8/1/2019

001-35054

10.4

Amended and Restated Credit Agreement, dated as of July 26, 2019, by and among MPLX, as borrower, Wells Fargo Bank, National Association, as administrative agent, each of Wells Fargo Securities, LLC, JPMorgan Chase Bank, N.A., Barclays Bank PLC, BofA Securities, Inc., Citigroup Global Markets Inc., Mizuho Bank, Ltd., MUFG Bank, Ltd. and Royal Bank of Canada, as joint lead arrangers and joint bookrunners, JPMorgan Chase Bank, N.A., as syndication agent, each of Bank of America, N.A., Barclays Bank PLC, Citigroup Global Markets Inc., Mizuho Bank, Ltd., MUFG Bank, Ltd. and Royal Bank of Canada, as documentation agents, and the other lenders and issuing banks that are parties thereto.

8-K

10.2

8/1/2019

001-35054

10.5

Waiver and Second Amendment to Fourth Amended and Restated Omnibus Agreement, dated as of July 29, 2019, by and among MPC, Andeavor Logistics LP, Tesoro Logistics GP, LLC, Tesoro Refining & Marketing Company LLC, Tesoro Companies, Inc., Tesoro Alaska Company LLC and Marathon Petroleum Company LP.

8-K

10.3

8/1/2019

001-35054

31.1

Certification of Chief Executive Officer pursuant to Rule 13(a)-14 and 15(d)-14 under the Securities Exchange Act of 1934

31.2

Certification of Chief Financial Officer pursuant to Rule 13(a)-14 and 15(d)-14 under the Securities Exchange Act of 1934

32.1

Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350

32.2

Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350

101.INS

XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded with the Inline XBRL document.

Table of Contents

Incorporated by Reference

Filed

Herewith

Furnished

Herewith

Exhibit

Number

Exhibit Description

Form

Exhibit

Filing

Date

SEC File

No.

101.SCH

Inline XBRL Taxonomy Extension Schema Document.

101.PRE

Inline XBRL Taxonomy Extension Presentation Linkbase Document.

101.CAL

Inline XBRL Taxonomy Extension Calculation Linkbase Document.

101.DEF

Inline XBRL Taxonomy Extension Definition Linkbase Document.

101.LAB

Inline XBRL Taxonomy Extension Label Linkbase Document.


*	Schedules have been omitted pursuant to Item 601(b)(2) of Regulation S-K. Marathon Petroleum Corporation hereby undertakes to furnish supplementally a copy of any omitted schedule upon request by the SEC.

6661

Table of Contents

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.



August ~~6, 2018~~5, 2019	MARATHON PETROLEUM CORPORATION

	By:	/s/ John J. Quaid
		John J. Quaid Vice President and Controller

6762



	MPC Stockholders’ Equity
(In millions)	Common Stock		Treasury Stock			Additional Paid-in Capital		Retained Earnings			Accumulated Other Comprehensive Loss			Non-controlling Interests			Total Equity			Redeemable Non-controlling Interest
Balance as of December 31, 2016	$	7	$	(7,482	)	$	11,060	$	10,206		$	(234	)	$	6,646		$	20,203		$	1,000
Net income	—		—			—		513			—			129			642			33
Dividends declared	—		—			—		(375		)	—			—			(375		)	—
Distributions to noncontrolling interests	—		—			—		—			—			(291		)	(291		)	(33		)
Contributions from noncontrolling interests	—		—			—		—			—			128			128			—
Other comprehensive loss	—		—			—		—			(2		)	—			(2		)	—
Shares repurchased	—		(1,170		)	—		—			—			—			(1,170		)	—
Stock-based compensation	—		(12		)	47		—			—			1			36			—
Impact from equity transactions of MPLX LP	—		—			78		—			—			315			393			—
Balance as of June 30, 2017	$	7	$	(8,664	)	$	11,185	$	10,344		$	(236	)	$	6,928		$	19,564		$	1,000
Balance as of December 31, 2017	$	7	$	(9,869	)	$	11,262	$	12,864		$	(231	)	$	6,795		$	20,828		$	1,000
Cumulative effect of adopting new accounting standards	—		—			—		63			—			1			64			—
Net income	—		—			—		1,092			—			342			1,434			36
Dividends declared	—		—			—		(430		)	—			—			(430		)	—
Distributions to noncontrolling interests	—		—			—		—			—			(361		)	(361		)	(33		)
Contributions from noncontrolling interests	—		—			—		—			—			5			5			—
Other comprehensive loss	—		—			—		—			(2		)	—			(2		)	—
Shares repurchased	—		(2,212		)	—		—			—			—			(2,212		)	—
Stock-based compensation	—		(12		)	45		—			—			5			38			—
Impact from equity transactions of MPLX LP	—		—			2,381		—			—			(2,927		)	(546		)	—
Balance as of June 30, 2018	$	7	$	(12,093	)	$	13,688	$	13,589		$	(233	)	$	3,860		$	18,818		$	1,003

(Shares in millions)	Common Stock		Treasury Stock
Balance as of December 31, 2016	731		(203		)
Shares repurchased	—		(23		)
Shares issued – stock-based compensation	1		—
Balance as of June 30, 2017	732		(226		)
Balance as of December 31, 2017	734		(248		)
Shares repurchased	—		(31		)
Shares issued – stock-based compensation	1		—
Balance as of June 30, 2018	735		(279		)



	Gain (Loss)						Gain (Loss)
(In millions)	Three Months Ended June 30,						Six Months Ended June 30,
Income Statement Location	2018			2017			2018			2017
Sales and other operating revenues	$	(1	)	$	2		$	(2	)	$	18
Cost of revenues	(56		)	(7		)	(83		)	(31		)
Total	$	(57	)	$	(5	)	$	(85	)	$	(13	)



	Number of Shares		Weighted Average Exercise Price
Outstanding at December 31, 2017	8,465,398		$	33.74
Granted	903,797		67.71
Exercised	(796,571	)	25.89
Forfeited or expired	(11,219	)	51.67
Outstanding at June 30, 2018	8,561,405		38.03



	Shares of Restricted Stock (“RS”)				Restricted Stock Units (“RSU”)
	Number of Shares		Weighted Average Grant Date Fair Value		Number of Units		Weighted Average Grant Date Fair Value
Outstanding at December 31, 2017	1,188,662		$	45.07	285,164		$	29.95
Granted	432,792		70.31		14,019		70.54
RS Vested/RSUs Issued	(544,900	)	44.83		(1,829	)	43.28
Forfeited	(31,280	)	47.13		—		—
Outstanding at June 30, 2018	1,045,274		55.58		297,354		31.78



(In millions, after-tax)
LLS 6-3-2-1 crack spread sensitivity^(a)(per $1.00/barrel change)	$	590
Sweet/sour differential sensitivity^(b) (per $1.00/barrel change)	300
LLS-WTI differential sensitivity^(c) (per $1.00/barrel change)	90
Natural gas price sensitivity^(d) (per $1.00/million British thermal unit change)	200



	Three Months Ended June 30,				Six Months Ended June 30,
Reconciliation of Refining & Marketing margin to Refining & Marketing income from operations (in millions)	2018		2017		2018		2017
Refining & Marketing income from operations	$	1,025	$	562	$	892	$	492
Plus:
Refinery direct operating costs^(a)	839		894		1,920		2,096
Refinery depreciation and amortization	235		255		471		506
Other:
Operating expenses, net^(a)(b)	739		355		1,353		747
Depreciation and amortization	17		17		33		33
Refining & Marketing margin^(c)	$	2,855	$	2,083	$	4,669	$	3,874



	Three Months Ended June 30,				Six Months Ended June 30,
Benchmark Prices (dollars per gallon)	2018		2017		2018		2017
Chicago spot unleaded regular gasoline	$	2.02	$	1.49	$	1.88	$	1.49
Chicago spot ultra-low sulfur diesel	2.12		1.48		2.03		1.50
USGC spot unleaded regular gasoline	2.02		1.52		1.92		1.53
USGC spot ultra-low sulfur diesel	2.11		1.47		2.02		1.52
Market Indicators (dollars per barrel)
Chicago LLS 6-3-2-1 crack spread^(a)(b)	$	9.24	$	8.96	$	8.02	$	7.80
USGC LLS 6-3-2-1 crack spread^(a)	9.07		9.32		8.71		8.89
Blended 6-3-2-1 crack spread^(a)(c)	9.14		9.18		8.43		8.46
LLS	73.03		50.17		69.51		51.77
WTI	67.91		48.15		65.46		49.95
LLS—WTI crude oil differential^(a)	5.12		2.03		4.05		1.82
Sweet/Sour crude oil differential^(a)(d)	9.46		5.48		8.63		6.15



	Three Months Ended June 30,						Six Months Ended June 30,
Market Indicators impact on Refining & Marketing segment income	2018 vs. 2017 Variance						2018 vs. 2017 Variance
	(dollars per barrel)			(in millions)			(dollars per barrel)			(in millions)
Chicago LLS 6-3-2-1 crack spread^(a)(b)	$	0.28		$	26		$	0.22		$	91
USGC LLS 6-3-2-1 crack spread^(a)(e)	(0.25		)	(21		)	(0.18		)	62
LLS – WTI crude oil differential^(a)	3.09			180			2.23			267
Sweet/Sour crude oil differential^(a)(d)	3.98			320			2.48			312
LLS Prompt vs LLS Delivered Cost	1.74			48			0.30			20
Total				$	553					$	752



	Three Months Ended June 30,						Six Months Ended June 30,
Reconciliation of Speedway total margin to Speedway income from operations (in millions)	2018			2017			2018			2017
Speedway income from operations	$	159		$	238		$	254		$	373
Plus (Less):
Operating, selling, general and administrative expenses	401			377			785			743
Depreciation and amortization	73			65			152			129
Income from equity method investments	(19		)	(21		)	(33		)	(34		)
Net gain on disposal of assets	—			(6		)	—			(10		)
Other income	(2		)	(3		)	(3		)	(6		)
Speedway total margin	$	612		$	650		$	1,155		$	1,195

Speedway total margin:
Gasoline and distillate margin^(a)	$	239		$	271		$	456		$	489
Merchandise margin^(b)	366			371			685			691
Other margin	7			8			14			15
Speedway total margin	$	612		$	650		$	1,155		$	1,195