UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)



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

For the quarterly period ended September 30, ~~2019~~2020



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

For the transition period from to

Commission file number 001-35054

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) 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. Yes ☑ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted 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 such files.) Yes ☑ 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 ☐

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 ☑

There were ~~649,321,709~~650,650,746 shares of Marathon Petroleum Corporation common stock outstanding as of October ~~31, 2019~~29, 2020.

Table of Contents

MARATHON PETROLEUM CORPORATION

FORM 10-Q

FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, ~~2019~~2020

TABLE OF CONTENTS

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~~Alaska North Slope crude oil, an oil index benchmark price
ASC	Accounting Standards Codification
ASU	Accounting Standards Update
barrel	One stock tank barrel, or 42 United States gallons liquid volume, used in reference to crude oil or other liquid hydrocarbons
CARB	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
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
LIBOR	London Interbank Offered Rate
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
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

Table of Contents

PART I – FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

MARATHON PETROLEUM CORPORATION

CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)

~~(Unaudited)~~


	Three Months Ended September 30,				Nine Months Ended September 30,				Three Months Ended September 30,					Nine Months Ended September 30,
(Millions of dollars, except per share data)	2019		2018		2019		2018
(In millions, except per share data)									2020			2019		2020			2019
Revenues and other income:
Sales and other operating revenues	$	31,043	$	22,988	$	92,857	$	64,171	$	17,408		$	27,552	$	51,807		$	83,140
Income from equity method investments	124		96		330		262
Income (loss) from equity method investments^(a)									117			104		(1,037		)	272
Net gain on disposal of assets	4		1		222		6		1			2		6			220
Other income	31		47		96		122		22			30		69			93
Total revenues and other income	31,202		23,132		93,505		64,561		17,548			27,688		50,845			83,725
Costs and expenses:
Cost of revenues (excludes items below)	27,300		20,606		82,942		57,772		16,673			24,345		48,517			74,626
LCM inventory valuation adjustment									(530		)	0		1,185			0
Impairment expense									433			0		8,280			0
Depreciation and amortization	855		555		2,660		1,616		830			761		2,526			2,375
Selling, general and administrative expenses	833		445		2,618		1,271		673			761		2,080			2,413
Restructuring expenses									348			0		348			0
Other taxes	190		123		550		348		178			141		546			407
Total costs and expenses	29,178		21,729		88,770		61,007		18,605			26,008		63,482			79,821
Income from operations	2,024		1,403		4,735		3,554
Income (loss) from continuing operations									(1,057		)	1,680		(12,637		)	3,904
Net interest and other financial costs	317		240		945		618		359			312		1,032			932
Income before income taxes	1,707		1,163		3,790		2,936
Provision for income taxes	340		222		797		525
Net income	1,367		941		2,993		2,411
Less net income attributable to:
Income (loss) from continuing operations before income taxes									(1,416		)	1,368		(13,669		)	2,972
Provision (benefit) for income taxes on continuing operations									(436		)	255		(2,237		)	600
Income (loss) from continuing operations, net of tax									(980		)	1,113		(11,432		)	2,372
Income from discontinued operations, net of tax									371			254		881			621
Net income (loss)									(609		)	1,367		(10,551		)	2,993
Less net income (loss) attributable to:
Redeemable noncontrolling interest	20		19		61		55		20			20		61			61
Noncontrolling interests	252		185		738		527		257			252		(501		)	738
Net income attributable to MPC	$	1,095	$	737	$	2,194	$	1,829
Per Share Data (See Note 7)
Net income (loss) attributable to MPC									$	(886	)	$	1,095	$	(10,111	)	$	2,194

Per share data (See Note 9)
Basic:
Net income attributable to MPC per share	$	1.67	$	1.63	$	3.31	$	3.96
Continuing operations									$	(1.93	)	$	1.28	$	(16.93	)	$	2.37
Discontinued operations									0.57			0.39		1.35			0.94
Net income (loss) per share									$	(1.36	)	$	1.67	$	(15.58	)	$	3.31

Weighted average shares outstanding	656		451		663		462		650			656		649			663
Diluted:
Net income attributable to MPC per share	$	1.66	$	1.62	$	3.28	$	3.92
Continuing operations									$	(1.93	)	$	1.27	$	(16.93	)	$	2.35
Discontinued operations									0.57			0.39		1.35			0.93
Net income (loss) per share									$	(1.36	)	$	1.66	$	(15.58	)	$	3.28

Weighted average shares outstanding	660		456		668		466		650			660		649			668


^(a)	The nine months ended September 30, 2020 includes $1,315 million of impairment expense. See Note 6 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
September 30, Nine Months Ended
September 30,
(Millions of dollars) 2019 2018 2019 2018
Net income $ 1,367
$ 941
$ 2,993
$ 2,411
Other comprehensive income (loss):
Defined benefit plans:
Actuarial changes, net of tax of ($14), $24, ($8) and $29, respectively (42 ) 75
(46 ) 89
Prior service credit, net of tax of ($3), ($3), ($14) and ($7), respectively (8 ) (7 ) (19 ) (21 )
Other, net of tax of $0, ($1), ($1) and ($2), respectively (1 ) (3 ) (3 ) (5 )
Other comprehensive income (loss) (51 ) 65
(68 ) 63
Comprehensive income 1,316
1,006
2,925
2,474
Less comprehensive income attributable to:
Redeemable noncontrolling interest 20
19
61
55
Noncontrolling interests 252
185
738
527
Comprehensive income attributable to MPC $ 1,044
$ 802
$ 2,126
$ 1,892



	Three Months Ended September 30,						Nine Months Ended September 30,
(Millions of dollars)	2020			2019			2020			2019
Net income (loss)	$	(609	)	$	1,367		$	(10,551	)	$	2,993
Other comprehensive income (loss):
Defined benefit plans:
Actuarial changes, net of tax of $5, ($14), $6 and ($8), respectively	13			(42		)	16			(46		)
Prior service, net of tax of ($2), ($3), ($8) and ($14), respectively	(9		)	(8		)	(26		)	(19		)
Other, net of tax of $0, $0, ($1) and ($1), respectively	(2		)	(1		)	(4		)	(3		)
Other comprehensive income (loss)	2			(51		)	(14		)	(68		)
Comprehensive income (loss)	(607		)	1,316			(10,565		)	2,925
Less comprehensive income (loss) attributable to:
Redeemable noncontrolling interest	20			20			61			61
Noncontrolling interests	257			252			(501		)	738
Comprehensive income (loss) attributable to MPC	$	(884	)	$	1,044		$	(10,125	)	$	2,126

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

Table of Contents

MARATHON PETROLEUM CORPORATION

CONSOLIDATED BALANCE SHEETS

(Unaudited)



(Millions of dollars, except share data)	September 30, 2020			December 31, 2019
Assets
Current assets:
Cash and cash equivalents	$	618		$	1,393
Receivables, less allowance for doubtful accounts of $22 and $17, respectively	4,911			7,233
Inventories	7,403			9,804
Other current assets	2,199			893
Assets held for sale	11,069			11,135
Total current assets	26,200			30,458
Equity method investments	5,462			6,568
Property, plant and equipment, net	39,757			40,870
Goodwill	8,256			15,650
Right of use assets	1,640			1,806
Other noncurrent assets	2,705			3,204
Total assets	$	84,020		$	98,556
Liabilities
Current liabilities:
Accounts payable	$	6,701		$	11,222
Payroll and benefits payable	878			987
Accrued taxes	1,023			1,015
Debt due within one year	2,500			704
Operating lease liabilities	531			514
Other current liabilities	900			758
Liabilities held for sale	1,713			1,748
Total current liabilities	14,246			16,948
Long-term debt	29,377			28,020
Deferred income taxes	5,703			6,392
Defined benefit postretirement plan obligations	1,816			1,617
Long-term operating lease liabilities	1,116			1,300
Deferred credits and other liabilities	1,248			1,172
Total liabilities	53,506			55,449
Commitments and contingencies (see Note 24)
Redeemable noncontrolling interest	968			968
Equity
MPC stockholders’ equity:
Preferred stock, no shares issued and outstanding (par value $0.01 per share, 30 million shares authorized)	0			0
Common stock:
Issued – 980 million and 978 million shares (par value $0.01 per share, 2 billion shares authorized)	10			10
Held in treasury, at cost – 329 million and 329 million shares	(15,150		)	(15,143		)
Additional paid-in capital	33,183			33,157
Retained earnings	4,744			15,990
Accumulated other comprehensive loss	(334		)	(320		)
Total MPC stockholders’ equity	22,453			33,694
Noncontrolling interests	7,093			8,445
Total equity	29,546			42,139
Total liabilities, redeemable noncontrolling interest and equity	$	84,020		$	98,556

(Millions of dollars, except share data) September 30,
2019 December 31,
2018
Assets
Current assets:
Cash and cash equivalents $ 1,525
$ 1,687
Receivables, less allowance for doubtful accounts of $21 and $9, respectively 7,461
5,853
Inventories 9,696
9,837
Other current assets 457
646
Total current assets 19,139
18,023
Equity method investments 6,725
5,898
Property, plant and equipment, net 45,034
45,058
Goodwill 21,277
20,184
Right of use assets 2,522
—
Other noncurrent assets 3,442
3,777
Total assets $ 98,139
$ 92,940
Liabilities
Current liabilities:
Accounts payable $ 11,380
$ 9,366
Payroll and benefits payable 939
1,152
Accrued taxes 1,015
1,446
Debt due within one year 557
544
Operating lease liabilities 586
—
Other current liabilities 862
708
Total current liabilities 15,339
13,216
Long-term debt 28,282
26,980
Deferred income taxes 6,180
4,864
Defined benefit postretirement plan obligations 1,487
1,509
Long-term operating lease liabilities 1,962
—
Deferred credits and other liabilities 1,265
1,318
Total liabilities 54,515
47,887
Commitments and contingencies (see Note 23)

Redeemable noncontrolling interest 968
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 – 978 million and 975 million shares (par value $0.01 per share, 2 billion shares authorized) 10
10
Held in treasury, at cost – 328 million and 295 million shares (15,076 ) (13,175 )
Additional paid-in capital 33,125
33,729
Retained earnings 15,891
14,755
Accumulated other comprehensive loss (212 ) (144 )
Total MPC stockholders’ equity 33,738
35,175
Noncontrolling interests 8,918
8,874
Total equity 42,656
44,049
Total liabilities, redeemable noncontrolling interest and equity $ 98,139
$ 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)


	Nine Months Ended September 30,						Nine Months Ended September 30,
(Millions of dollars)	2019			2018			2020			2019
Operating activities:
Net income	$	2,993		$	2,411
Adjustments to reconcile net income to net cash provided by operating activities:
Net income (loss)							$	(10,551	)	$	2,993
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Amortization of deferred financing costs and debt discount	19			51			49			19
Impairment expense							8,280			0
Depreciation and amortization	2,660			1,616			2,526			2,375
LCM inventory valuation adjustment							1,185			0
Pension and other postretirement benefits, net	(110		)	38			172			(110		)
Deferred income taxes	772			42			(763		)	603
Net gain on disposal of assets	(222		)	(6		)	(6		)	(220		)
Income from equity method investments	(330		)	(262		)
(Income) loss from equity method investments^(a)							1,037			(272		)
Distributions from equity method investments	473			345			428			402
Income from discontinued operations							(881		)	(621		)
Changes in income tax receivable							(1,172		)	(251		)
Changes in the fair value of derivative instruments	(34		)	13			37			(34		)
Changes in operating assets and liabilities, net of effects of businesses acquired:
Current receivables	(1,615		)	(709		)	2,328			(1,360		)
Inventories	182			215			1,165			178
Current accounts payable and accrued liabilities	1,942			(316		)	(4,018		)	1,903
Right of use assets and operating lease liabilities, net	20			—			(2		)	0
All other, net	282			(7		)	45			351
Cash provided by (used in) operating activities - continuing operations							(141		)	5,956
Cash provided by operating activities - discontinued operations							1,232			1,076
Net cash provided by operating activities	7,032			3,431			1,091			7,032
Investing activities:
Additions to property, plant and equipment	(3,823		)	(2,315		)	(2,330		)	(3,461		)
Acquisitions, net of cash acquired	(129		)	(453		)	0			(129		)
Disposal of assets	44			19			73			30
Investments – acquisitions, loans and contributions	(792		)	(222		)	(436		)	(792		)
– redemptions, repayments and return of capital	75			16			122			75
All other, net	50			60			19			50
Cash used in investing activities - continuing operations							(2,552		)	(4,227		)
Cash used in investing activities - discontinued operations							(272		)	(348		)
Net cash used in investing activities	(4,575		)	(2,895		)	(2,824		)	(4,575		)
Financing activities:
Long-term debt – borrowings	13,774			10,735			13,212			13,774
– repayments	(12,554		)	(5,401		)	(10,144		)	(12,554		)
Debt issuance costs	(22		)	(53		)	(48		)	(22		)
Issuance of common stock	6			24			6			6
Common stock repurchased	(1,885		)	(2,612		)	0			(1,885		)
Dividends paid	(1,054		)	(637		)	(1,133		)	(1,054		)
Distributions to noncontrolling interests	(950		)	(599		)	(941		)	(950		)
Contributions from noncontrolling interests	95			9			0			95
All other, net	(64		)	(22		)	(30		)	(64		)
Net cash provided by (used in) financing activities	(2,654		)	1,444			922			(2,654		)
Net increase (decrease) in cash, cash equivalents and restricted cash	(197		)	1,980
Cash, cash equivalents and restricted cash at beginning of period	1,725			3,015
Cash, cash equivalents and restricted cash at end of period	$	1,528		$	4,995
Net change in cash, cash equivalents and restricted cash							(811		)	(197		)
Cash, cash equivalents and restricted cash continuing operations - beginning of period							1,395			1,521
Cash, cash equivalents and restricted cash discontinued operations - beginning of period^(b)							134			204
Less: Cash, cash equivalents and restricted cash discontinued operations - end of period^(b)							98			180
Cash, cash equivalents and restricted cash continuing operations - end of period							$	620		$	1,348


^(a)	The nine months ended September 30, 2020 includes $1,315 million of impairment expense. See Note 6 for further information.


^(b)	Reported as assets held for sale on our consolidated balance sheets.

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
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
—
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
—
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
Net income —
—
—
—
—
1,095
—
252
1,347
20
Dividends declared on common stock ($0.53 per share) —
—
—
—
—
(350 ) —
—
(350 ) —
Distributions to noncontrolling interests —
—
—
—
—
—
—
(289 ) (289 ) (21 )
Other comprehensive loss —
—
—
—
—
—
(51 ) —
(51 ) —
Shares repurchased —
—
(10 ) (500 ) —
—
—
—
(500 ) —
Stock based compensation —
—
—
(3 ) 31
—
—
2
30
—
Equity transactions of MPLX & ANDX —
—
—
—
(691 ) —
—
95
(596 ) (36 )
Other —
—
—
—
—
—
—
4
4
—
Balance as of September 30, 2019 978
$ 10
(328 ) $ (15,076 ) $ 33,125
$ 15,891
$ (212 ) $ 8,918
$ 42,656
$ 968



	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, 2019	978	$	10		(329	)	$	(15,143	)	$	33,157		$	15,990		$	(320	)	$	8,445		$	42,139		$	968
Net income (loss)	—	—			—		—			—			(9,234		)	—			(1,004		)	(10,238		)	20
Dividends declared on common stock ($0.58 per share)	—	—			—		—			—			(377		)	—			—			(377		)	—
Distributions to noncontrolling interests	—	—			—		—			—			—			—			(300		)	(300		)	(20		)
Other comprehensive loss	—	—			—		—			—			—			(6		)	—			(6		)	—
Stock based compensation	1	—			0		(2		)	17			—			—			1			16			—
Equity transactions of MPLX	—	—			—		—			(5		)	—			—			(2		)	(7		)	—
Other	—	—			—		—			—			1			—			—			1			—
Balance as of March 31, 2020	979	$	10		(329	)	$	(15,145	)	$	33,169		$	6,380		$	(326	)	$	7,140		$	31,228		$	968
Net income	—	—			—		—			—			9			—			246			255			21
Dividends declared on common stock ($0.58 per share)	—	—			—		—			—			(380		)	—			—			(380		)	—
Distributions to noncontrolling interests	—	—			—		—			—			—			—			(279		)	(279		)	(21		)
Other comprehensive loss	—	—			—		—			—			—			(10		)	—			(10		)	—
Stock based compensation	0	—			0		(4		)	31			—			—			3			30			—
Equity transactions of MPLX	—	—			—		—			8			—			—			(2		)	6			—
Other	—	—			—		—			—			(1		)	—			—			(1		)	—
Balance as of June 30, 2020	979	$	10		(329	)	$	(15,149	)	$	33,208		$	6,008		$	(336	)	$	7,108		$	30,849		$	968
Net income (loss)	—	—			—		—			—			(886		)	—			257			(629		)	20
Dividends declared on common stock ($0.58 per share)	—	—			—		—			—			(379		)	—			—			(379		)	—
Distributions to noncontrolling interests	—	—			—		—			—			—			—			(301		)	(301		)	(20		)
Other comprehensive income	—	—			—		—			—			—			2			—			2			—
Stock based compensation	1	—			0		(1		)	18			—			—			2			19			—
Equity transactions of MPLX	—	—			—		—			(43		)	—			—			27			(16		)	—
Other	—	—			—		—			—			1			—			—			1			—
Balance as of September 30, 2020	980	$	10		(329	)	$	(15,150	)	$	33,183		$	4,744		$	(334	)	$	7,093		$	29,546		$	968

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

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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
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
—
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
—
Shares repurchased —
—
(12 ) (885 ) —
—
—
—
(885 ) —
Stock based compensation 1
—
—
(8 ) 18
—
—
4
14
—
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
Net income —
$ —
—
$ —
$ —
$ 737
$ —
$ 185
$ 922
$ 19
Dividends declared on common stock ($0.46 per share) —
—
—
—
—
(207 ) —
—
(207 ) —
Distributions to noncontrolling interests —
—
—
—
—
—
—
(186 ) (186 ) (19 )
Contributions from noncontrolling interests —
—
—
—
—
—
—
4
4
—
Other comprehensive income —
—
—
—
—
—
65
—
65
—
Shares repurchased —
—
(5 ) (400 ) —
—
—
—
(400 ) —
Stock based compensation —
—
—
(2 ) 14
—
—
3
15
—
Equity transactions of MPLX & ANDX —
—
—
—
1
—
—
(1 ) —
—
Balance as of September 30, 2018 735
$ 7
(284 ) $ (12,495 ) $ 13,703
$ 14,119
$ (168 ) $ 3,865
$ 19,031
$ 1,003



	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, 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	—		0		(3		)	32			—			—			(1		)	28			—
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	—		0		(10		)	19			—			—			2			11			—
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
Net income	—	—		—		—			$	—		1,095			—			252			1,347			20
Dividends declared on common stock ($0.53 per share)	—	—		—		—			—			(350		)	—			—			(350		)	—
Distributions to noncontrolling interests	—	—		—		—			—			—			—			(289		)	(289		)	(21		)
Other comprehensive loss	—	—		—		—			—			—			(51		)	—			(51		)	—
Shares repurchased	—	—		(10	)	(500		)	—			—			—			—			(500		)	—
Stock based compensation	0	—		0		(3		)	31			—			—			2			30			—
Equity transactions of MPLX & ANDX	—	—		—		—			(691		)	—			—			95			(596		)	(36		)
Other	—	—		—		—			—			—			—			4			4			—
Balance as of September 30, 2019	978	$	10	(328	)	$	(15,076	)	$	33,125		$	15,891		$	(212	)	$	8,918		$	42,656		$	968

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

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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.~~system. 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 ~~6,800~~7,000 branded outlets. ~~Our retail operations own and operate approximately 3,930 retail transportation fuel and convenience stores across the United States and~~We also sell transportation fuel to consumers through approximately 1,070 direct dealer locations under long-term supply contracts. MPC’s midstream operations are primarily conducted through MPLX LP (“MPLX”), which owns and operates crude oil and light product transportation and logistics infrastructure as well as gathering, processing, and fractionation assets. We own the general partner and a majority limited partner interest in MPLX.

~~Refer~~On August 2, 2020, we entered into a definitive agreement to ~~Note 4 for further information on the Andeavor acquisition, which closed on October 1, 2018,~~sell Speedway, our company-owned and ~~to Notes 3 and 9 for additional information about our operations.~~

~~Refer to Note 24 for further information on planned separation of MPC’s~~operated retail transportation fuel and convenience store business, ~~which~~to 7-Eleven, Inc. for $21 billion in cash, subject to certain adjustments based on the levels of cash, debt (as defined in the agreement) and working capital at closing and certain other items. The taxable transaction is ~~operated primarily under~~expected to close in the first quarter of 2021, subject to customary closing conditions and regulatory approvals. We will retain our direct dealer business.

As a result of the agreement to sell the Speedway ~~brand, into an independent, publicly traded company,~~business, its results are reported separately as discontinued operations in our consolidated statements of income for all periods presented and its assets and liabilities have been presented in our consolidated balance sheets as assets and liabilities held for sale. In addition, we separately disclosed the operating and investing cash flows of the Speedway business as discontinued operations within our consolidated statements of cash flow. See Note 4 for discontinued operations disclosures.

Prior to presentation of Speedway as discontinued operations, Speedway and our retained direct dealer business were the two reporting units within our Retail segment. Beginning with the third quarter of 2020, the direct dealer business is managed as part of the Refining & Marketing segment. The results of the Refining & Marketing segment have been retrospectively adjusted to include the results of ~~that~~the direct dealer business in all periods presented. See Note 11 for our ~~consolidated financial statements.~~segment reporting disclosures.

Basis of Presentation

All significant intercompany transactions and accounts have been eliminated.

As a result of our agreement to sell Speedway, the following changes in our basis of presentation have occurred:

In accordance with ASC 205, Discontinued Operations, intersegment sales from our Refining & Marketing segment to the Speedway business are no longer eliminated as intercompany transactions and are now presented within sales and other operating revenue, since we will continue to supply fuel to the Speedway business subsequent to the sale to 7-Eleven. All periods presented have been retrospectively adjusted to reflect this change.

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

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, ~~2018.~~2019. The results of operations for the three and nine months ended September 30, ~~2019~~2020 are not necessarily indicative of the results to be expected for the full year.

2. ACCOUNTING STANDARDS

Recently Adopted

~~ASU 2016-02, Leases~~

WeEffective January 1, 2020, we adopted ASU ~~No. 2016-02, Leases (“ASC 842”), as~~2016-13, “Financial Instruments-Credit Losses (Topic 326): Measurement of ~~January 1, 2019, electing the transition method which permits entities to adopt the provisions of the standard~~Credit Losses on Financial Instruments,” 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 ratemethod. The amendment requires entities

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~~for~~to consider a ~~term similar~~broader range of information to estimate expected credit losses, which may result in earlier recognition of losses. The ASU requires the ~~duration~~company to utilize an expected loss methodology in place of the ~~lease, as our leases do not provide implicit rates. Operating lease expense is recognized on a straight-line basis over the lease term.~~

incurred loss methodology for financial instruments, including trade receivables, and off-balance sheet credit exposures. Adoption of the ~~new standard resulted in the recording of ROU assets and lease liabilities of approximately $2.8 billion and $2.9 billion, respectively, as of January 1, 2019. The~~ standard did not ~~materially~~have a material impact on our ~~consolidated~~financial statements.

We are exposed to credit losses primarily through our sales of refined petroleum products, crude oil and midstream services. We assess each customer’s ability to pay through our credit review process. The credit review process considers various factors such as external credit ratings, a review of financial statements ~~of income, cash flows or equity as a result of adoption.~~

~~As a lessor under ASC 842, MPLX may be~~to determine liquidity, leverage, trends and business specific risks, market information, pay history and our business strategy. Customers that do not qualify for payment terms are required to ~~re-classify existing operating leases~~prepay or provide a letter of credit. We monitor our ongoing credit exposure through timely review of customer payment activity. At September 30, 2020, we reported $4,911 million of accounts and notes receivable, net of allowances of $22 million.

We are also exposed to ~~sales-type leases upon modification and related reassessment~~credit losses from off-balance sheet exposures, such as guarantees of the leases. As modifications occur, it may result in the de-recognition of existing assets and recognition of a receivable in the amount of the present value of fixed payments expected to be received by MPLX under the lease. MPLX will evaluate the impact of lease reassessments as modifications occur.joint venture debt. See Note 24 for more information on these off-balance sheet exposures.

We also adopted the following ASUs during the first nine months of ~~2019, none of~~2020, which ~~had~~also did not have a material impact to our financial statements or financial statement disclosures:



ASU		Effective Date
~~2018-02~~2018-13	~~Reporting Comprehensive Income~~Fair Value Measurement (Topic 820): Disclosure Framework - ~~Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income~~Changes to the Disclosure Requirements for Fair Value Measurement	January 1, ~~2019~~2020
~~2017-12~~2020-04	~~Derivatives and Hedging - Targeted Improvements to Accounting for Hedging Activities~~Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting	~~January~~April 1, ~~2019~~2020

Not Yet Adopted

ASU ~~2017-04, Intangibles - Goodwill and Other -~~2019-12, Income Taxes (Topic 740): Simplifying the ~~Test~~Accounting for ~~Goodwill Impairment~~Income Taxes

In ~~January 2017,~~December 2019, the FASB issued ~~an 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 ASU related to~~simplify the accounting for ~~credit losses on~~income taxes. Amendments include removal of certain ~~financial instruments. The guidance requires~~exceptions to the general principles of ASC 740 and simplification in several other areas such as accounting for a franchise tax or similar tax that ~~for most financial assets, losses be~~is partially 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.income. 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,~~2020, and interim periods within those fiscal years. Early adoption is permitted in any interim or annual period, with any adjustments reflected as of the beginning of the fiscal year of adoption. We do not expect the application of this ASU to have a material impact on our consolidated financial statements.

3. RESTRUCTURING

During the third quarter of 2020, we announced strategic actions to lay a foundation for long-term success, including plans to optimize our assets and structurally lower costs in 2021 and beyond, which included indefinitely idling the refineries located in Gallup, New Mexico and Martinez, California and the approval of an involuntary workforce reduction plan. In connection with these strategic actions, we recorded restructuring expenses of $348 million for the three months ended September 30, 2020.

The indefinite idling of the Gallup and Martinez refineries and progression of activities associated with the conversion of the Martinez refinery to a renewable diesel facility resulted in $189 million of restructuring expenses. Of the $189 million of restructuring expenses, we expect $130 million to settle in cash for costs related to decommissioning refinery processing units and storage tanks and fulfilling environmental remediation obligations. Additionally, we recorded a non-cash reserve against our materials and supplies inventory at these facilities of $51 million.

The involuntary workforce reduction plan, together with employee reductions resulting from MPC's indefinite idling of its Martinez and Gallup refineries, affected approximately 2,050 employees. We recorded $159 million of restructuring expenses for separation benefits payable under our employee separation plan and certain collective bargaining agreements that we expect to settle in cash. Certain of the affected MPC employees provide services to MPLX. MPLX has various employee services agreements and secondment agreements with MPC pursuant to which MPLX reimburses MPC for employee costs, along with the provision of operational and management services in support of MPLX’s operations. Pursuant to such agreements, MPC was reimbursed by MPLX for $36 million of the $159 million of restructuring expenses recorded for these actions.

As of September 30, 2020, $291 million of restructuring expenses were accrued as restructuring reserves within payroll and benefits payable, other current liabilities and deferred credits and other liabilities within our consolidated balance sheets. We expect cash payments for the majority of these reserves to occur within the next twelve months.

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4. DISCONTINUED OPERATIONS AND ASSETS HELD FOR SALE

On August 2, 2020, we entered into a definitive agreement to sell Speedway to 7-Eleven, Inc. for $21 billion, subject to certain adjustments based on the levels of cash, debt (as defined in the agreement) and working capital at closing and certain other items. The taxable transaction is expected to close in the first quarter of 2021, subject to customary closing conditions and regulatory approvals.

As a result of the agreement to sell the Speedway business, its results are reported separately as discontinued operations, net of tax, in our consolidated statements of income for all periods presented and its assets and liabilities have been presented in our consolidated balance sheets as assets and liabilities held for sale. Additionally, beginning August 2, 2020, in accordance with ASC 360, Property, Plant, and Equipment, we ceased recording depreciation and amortization for the Speedway business’ property, plant and equipment, finite-lived intangible assets and right of use lease assets. In addition, we separately disclosed the operating and investing cash flows of the Speedway business as discontinued operations within our consolidated statements of cash flow.

The following tables present Speedway results as reported in income from discontinued operations, net of tax, within our consolidated statements of income and the carrying value of assets and liabilities as presented within assets and liabilities held for sale on our consolidated balance sheets.



	Three Months Ended September 30,				Nine Months Ended September 30,
(In millions)	2020		2019		2020		2019
Total revenues and other income	$	5,235	$	7,074	$	14,868	$	20,228
Costs and expenses:
Cost of revenues (excludes items below)	4,641		6,533		13,047		18,814
LCM inventory valuation adjustment	0		0		25		0
Depreciation and amortization	36		94		237		285
Selling, general and administrative expenses	71		54		231		155
Other taxes	49		49		146		143
Total costs and expenses	4,797		6,730		13,686		19,397
Income from operations	438		344		1,182		831
Net interest and other financial costs	5		5		15		13
Income before income taxes	433		339		1,167		818
Provision for income taxes	62		85		286		197
Income from discontinued operations, net of tax	$	371	$	254	$	881	$	621

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(In millions)	September 30, 2020		December 31, 2019
Assets
Current assets:
Cash and cash equivalents	$	98	$	134
Receivables	238		246
Inventories	409		439
Other current assets	34		28
Equity method investments	316		330
Property, plant and equipment, net	4,711		4,745
Goodwill	4,390		4,390
Right of use assets	716		653
Other noncurrent assets	157		170
Total assets classified as held for sale	$	11,069	$	11,135
Liabilities
Current liabilities:
Accounts payable	$	301	$	401
Payroll and benefits payable	129		139
Accrued taxes	177		171
Debt due within one year	7		7
Operating lease liabilities	94		90
Other current liabilities	161		139
Long-term debt	113		107
Defined benefit postretirement plan obligations	23		26
Long-term operating lease liabilities	618		575
Deferred credits and other liabilities	90		93
Total liabilities classified as held for sale	$	1,713	$	1,748

Separation Agreements

In connection with the definitive agreement to sell the Speedway business, we have agreed to enter into a 15-year fuel supply agreement, at closing, through which we will continue to supply fuel to the Speedway business subsequent to the sale to 7-Eleven. Due to our expected continuing involvement with the Speedway business through a fuel supply agreement, intersegment sales from our Refining & Marketing segment to the Speedway business are no longer eliminated as intercompany transactions and are now presented within sales and other operating revenue.

5. MASTER LIMITED PARTNERSHIP

We own the general partner and a majority limited partner interest in MPLX, which owns and operates crude oil and light product transportation and logistics infrastructure as well as gathering, processing, and fractionation assets. We control MPLX through our ownership of the general partner interest and as of September 30, ~~2019~~2020 we owned approximately 6362 percent of the outstanding MPLX common units.

~~As described~~Redemption of business from MPLX

On July 31, 2020, Western Refining Southwest, Inc. (“WRSW”), a wholly owned subsidiary of MPC, entered into a Redemption Agreement (the “Redemption Agreement”) with MPLX, pursuant to which MPLX transferred to WRSW all of the outstanding membership interests in ~~Notes 4 and 5, we have consolidated~~Western Refining Wholesale, LLC, (“WRW”) in exchange for the redemption of MPLX common units held by WRSW. The transaction effects the transfer to MPC of the Western wholesale distribution business that MPLX acquired as a result of its acquisition of Andeavor Logistics LP (“ANDX”) ~~since October 1, 2018~~. Beginning in ~~accordance with ASC 810 and previously recorded ANDX’s assets and liabilities to our balance sheet at preliminary fair values as~~the third quarter of 2020, the results of these operations are presented in MPC’s Refining & Marketing segment.

At the closing, per the terms of Redemption Agreement, MPLX redeemed 18,582,088 MPLX common units (the “Redeemed Units”) held by WRSW. The number of Redeemed Units was calculated by dividing WRW’s aggregate valuation of $340 million by the simple average of the ~~Andeavor acquisition date~~volume weighted average New York Stock Exchange prices of ~~October 1, 2018.~~an MPLX common unit for the ten trading days ending at market close on July 27, 2020. The transaction resulted in a minor decrease in MPC’s ownership interest in MPLX.

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MPLX’s Acquisition of ANDX

On July 30, 2019, MPLX completed its acquisition of ANDX, and ANDX survived as a ~~wholly-owned~~wholly owned subsidiary of MPLX. 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. Additionally, as a result of MPLX’s acquisition of ANDX, 600,000 ANDX preferred units were converted into 600,000 preferred units of MPLX (“Series B preferred units”). Series B preferred unitholders are entitled to receive, when and if declared by the board of directors of MPLX’s general partner, a fixed distribution of $68.75 per unit, per annum, payable semi-annually in arrears on February 15 and August 15, or the first business day ~~thereafter.~~ thereafter, up to and including February 15, 2023. After February 15, 2023, the holders of Series B preferred units are entitled to receive cumulative, quarterly distributions payable in arrears on the 15th day of February, May, August and November of each year, or the first business day thereafter, based on a floating annual rate equal to the three month LIBOR plus 4.652 percent.

MPC accounted for this transaction as a common control transaction, as defined by ASC 805, which resulted in an increase to noncontrolling interest and a decrease to additional paid-in capital of approximately $55 million, net of tax.During the third quarter of 2019, we pushed down to MPLX the portion of the goodwill attributable to ANDX as of October 1, ~~2018.~~2018, the date of our acquisition of Andeavor. Due to this push down of goodwill, we also recorded an incremental

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~~$642~~ $642 million deferred tax liability associated with the portion of the non-deductible goodwill attributable to the noncontrolling interest in MPLX with an offsetting reduction of our additional paid-in capital balance.

~~Dropdowns to MPLX and GP/IDR Exchange~~

~~On February~~ We have consolidated ANDX since we acquired Andeavor on October 1, 2018 ~~we contributed 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~~accordance with a $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.ASC 810.

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.

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. With certain exceptions, these agreements generally contain minimum volume commitments. These transactions are eliminated in consolidation but are reflected as intersegment transactions between our Refining & Marketing and Midstream segments. 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 Corporate and Midstream segments.

Noncontrolling Interest

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:

Nine Months Ended
September 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 (decrease) due to the issuance of MPLX & ANDX common units (52 ) 6
Increase (decrease) in MPC's additional paid-in capital (52 ) 2,928
Tax impact (634 ) (546 )
Increase (decrease) in MPC's additional paid-in capital, net of tax $ (686 ) $ 2,382



	Nine Months Ended September 30,
(In millions)	2020			2019
Decrease due to the issuance of MPLX & ANDX common units	$	(23	)	$	(52	)
Tax impact	(17		)	(634		)
Decrease in MPC's additional paid-in capital, net of tax	$	(40	)	$	(686	)

~~4. ACQUISITIONS~~6. IMPAIRMENTS

~~Acquisition~~The outbreak of ~~Andeavor~~

~~On October 1, 2018, we acquired Andeavor.~~COVID-19 and its development into a pandemic in March 2020 have resulted in significant economic disruption globally. Actions taken by various governmental authorities, individuals and companies around the world to prevent the spread of COVID-19 through social distancing have restricted travel, many business operations, public gatherings and the overall level of individual movement and in-person interaction across the globe. This has in turn significantly reduced global economic activity and resulted in a decrease in motor vehicle use at a time when seasonal driving patterns typically result in an increase of consumer demand for gasoline and a dramatic reduction in airline flights. These macroeconomic conditions and certain global geopolitical events in the first quarter of 2020 contributed to a significant decline in crude oil prices as well as an increase in crude oil price volatility. The ~~total value of consideration transferred was $23.46 billion, consisting of $19.97 billion~~decrease in ~~equity~~demand for refined petroleum products has resulted in a significant decrease in the price and ~~$3.49 billion in cash. The cash portion~~volume of the ~~purchase price was funded using cash on hand. Our financial results reflect~~refined petroleum products we produce and sell as compared to 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~~three and liabilities to be recorded to our balance sheet at fair value as of the acquisition date. The size and the breadth of the Andeavor acquisition necessitated the use of the one year measurement period provided under ASC 805 to fully analyze all the factors used in establishing the asset and liability fair values as of the acquisition date. We completed a final determination of the fair value of certain assets and liabilities during the threenine months ended September 30, ~~2019~~2019.

During the first quarter of 2020, the overall deterioration in the economy and ~~recorded adjustments~~the environment in which we operate, the related changes to our ~~preliminary purchase~~expected future cash flows, as well as a sustained decrease in share price ~~allocation. These adjustments reflect the completion of valuation studies~~were considered triggering events requiring various impairment assessments of the ~~acquired property, plant and equipment~~carrying values of our assets, which resulted in order to finalize assumptions used in their cost approach valuation methodology and finalization of specific valuation assumptions and data inputs for other individual asset valuation models. The fair value estimates of assets acquired and liabilities assumed asthe majority of the ~~acquisition date are noted in~~impairment charges for the ~~table~~nine months ended September 30, 2020, as discussed below.

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The table below provides information related to the impairments recognized during the three and nine months ended September 30, 2020 and the location of these impairments within the consolidated statements of income.

(In millions) As originally reported Adjustments As adjusted
Cash and cash equivalents $ 382
$ —
$ 382
Receivables 2,744
(7 ) 2,737
Inventories 5,204
37
5,241
Other current assets 378
(6 ) 372
Equity method investments 865
(113 ) 752
Property, plant and equipment, net 16,545
(1,059 ) 15,486
Other noncurrent assets^(a)
3,086
(11 ) 3,075
Total assets acquired 29,204
(1,159 ) 28,045
Accounts payable 4,003
(41 ) 3,962
Payroll and benefits payable 348
9
357
Accrued taxes 590
(110 ) 480
Debt due within one year 34

34
Other current liabilities 392
27
419
Long-term debt 8,875
1
8,876
Deferred income taxes 1,609
(60 ) 1,549
Defined benefit postretirement plan obligations 432
—
432
Deferred credit and other liabilities 714
33
747
Noncontrolling interests 5,059
3
5,062
Total liabilities and noncontrolling interest assumed 22,056
(138 ) 21,918
Net assets acquired excluding goodwill 7,148
(1,021 ) 6,127
Goodwill 16,314
1,021
17,335
Net assets acquired $ 23,462
$ —
$ 23,462



		Three Months Ended September 30,		Nine Months End September 30,
(In millions)	Income Statement Line	2020		2020
Goodwill	Impairment expense	$	64	$	7,394
Equity method investments	Income (loss) from equity method investments	0		1,315
Long-lived assets	Impairment expense	369		886
Total impairments		$	433	$	9,595

Goodwill

During the first quarter of 2020, we recorded an impairment of goodwill of $7.33 billion. See the table below for detail by segment. The goodwill impairment within the Refining & Marketing segment was primarily driven by the effects of COVID-19 and the decline in commodity prices. The impairment within the Midstream segment was primarily driven by additional information related to the slowing of drilling activity, which has reduced production growth forecasts from MPLX’s producer customers.

During the third quarter of 2020, we recorded an impairment of goodwill of $64 million. The $64 million of goodwill was transferred from our Midstream segment to our Refining & Marketing segment during the third quarter of 2020 in connection with the transfer to MPC of the MPLX wholesale distribution business as described in Note 5. The transfer required goodwill impairment tests for the transferor and transferee reporting units. Our Refining & Marketing reporting unit that recorded the $64 million impairment expense has no remaining goodwill.

The fair values of the reporting units for the goodwill impairment analysis were determined based on applying both a discounted cash flow or income approach as well as a market approach. The discounted cash flow fair value estimate is based on known or knowable information at the measurement date. The significant assumptions that were used to develop the estimates of the fair values under the discounted cash flow method included management’s best estimates of the expected future results and discount rates, which range from 9.0 percent to 13.5 percent. Fair value determinations require considerable judgment and are sensitive to changes in underlying assumptions and factors. As a result, there can be no assurance that the estimates and assumptions made for purposes of the interim goodwill impairment test will prove to be an accurate prediction of the future. The fair value measurements for the individual reporting units’ overall fair values represent Level 3 measurements.

The changes in carrying amount of goodwill were as follows:



(In millions)	Refining & Marketing			Midstream			Total
Balance at January 1, 2020	$	6,133		$	9,517		$	15,650
Transfers^(a)	8			(8		)	0
Impairments	(5,580		)	(1,814		)	(7,394		)
Balance at September 30, 2020^(b)	$	561		$	7,695		$	8,256


^(a)	Includes ~~intangible assets.~~goodwill of $64 million transferred from our Midstream segment to our Refining & Marketing segment in connection with the transfer to MPC of the MPLX wholesale distribution business as described in Note 5.

The purchase consideration allocation resulted in the recognition of $17.3 billion in goodwill, of which $1.0 billion is tax deductible due to a carryover basis from Andeavor. Our Refining & Marketing, Midstream and Retail segments recognized $5.2 billion, $8.1 billion and $4.0 billion of 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
September 30, Nine Months Ended
September 30,
(In millions) 2018 2018
Sales and other operating revenues $ 35,250
$ 99,588
Net income attributable to MPC 1,057
2,562

^(b)

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.

~~Acquisition of Terminal and Retail Locations in Buffalo, New York~~

During the third quarter of 2019, we acquired a 900,000-barrel capacity light product and asphalt terminal and 33 NOCO Express retail stores in Buffalo, Syracuse and Rochester, New York, from NOCO Incorporated for total consideration of $135 million.

As described in Notes 1 and 11, the Refining & Marketing reportable segment includes the direct dealer business, which was a reporting unit in our former Retail segment and now is a reporting unit within our Refining & Marketing segment with $561 million of goodwill.

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~~Based~~Equity Method Investments

During the first quarter of 2020, we recorded equity method investment impairment charges totaling $1.315 billion, of which $1.25 billion related to MarkWest Utica EMG, L.L.C. and its investment in Ohio Gathering Company, L.L.C. The impairments were largely due to a reduction in forecasted volumes gathered and processed by the systems operated by the joint ventures. The fair value of the investments was determined based upon applying the discounted cash flow method, which is an income approach. The discounted cash flow fair value estimate is based on known or knowable information at the interim measurement date. The significant assumptions that were used to develop the estimate of the fair value under the discounted cash flow method include management’s best estimates of the expected future cash flows, including prices and volumes, the weighted average cost of capital and the long-term growth rate. Fair value determinations require considerable judgment and are sensitive to changes in underlying assumptions and factors. As a result, there can be no assurance that the estimates and assumptions made for purposes of the impairment test will prove to be an accurate prediction of the future. The fair value of these equity method investments represents a Level 3 measurement.

Long-lived Assets

Long-lived assets used in operations are assessed for impairment whenever changes in facts and circumstances indicate that the carrying value of the assets may not be recoverable based on the ~~final~~expected undiscounted future cash flow of an asset group. For purposes of impairment evaluation, long-lived assets must be grouped at the lowest level for which independent cash flows can be identified, which generally is the refinery and associated distribution system level for Refining & Marketing segment assets and the plant level or pipeline system level for Midstream segment assets. If the sum of the undiscounted estimated pretax cash flows is less than the carrying value of an asset group, fair value ~~estimates~~is calculated, and the carrying value is written down to the calculated fair value.

During the first quarter of 2020, we identified long-lived asset impairment triggers relating to all 16 of our refinery asset groups within the Refining & Marketing segment as a result of decreases to the Refining & Marketing segment expected future cash flows. The cash flows associated with these assets ~~acquired~~were significantly impacted by the effects of COVID-19 and ~~liabilities assumed at~~commodity price declines. We assessed each refinery asset group for impairment by comparing the ~~acquisition date, $38 million~~undiscounted estimated pretax cash flows to the carrying value of each asset group. Of the 16 refinery asset groups, only the Gallup refinery’s carrying value exceeded its undiscounted estimated pretax cash flows. It was determined that the fair value of the ~~purchase price was allocated to~~Gallup refinery’s property, plant and equipment $3was less than the carrying value. As a result, we recorded a charge of $142 million in the first quarter of 2020 to ~~inventory~~impairment expense on the consolidated statements of income. The fair value measurements for the Gallup refinery assets represent Level 3 measurements.

During the second quarter of 2020, we identified long-lived asset impairment triggers relating to all of our refinery asset groups within the Refining & Marketing segment, except the Gallup refinery which had been impaired in the first quarter, as a result of continued macroeconomic developments impacting the Refining & Marketing segment expected future cash flows. All of these refinery asset groups’ undiscounted estimated pretax cash flows exceeded their carrying value by at least 17 percent. The determination of undiscounted estimated pretax cash flows utilized significant assumptions including management’s best estimates of the expected future cash flows, allocation of certain Refining & Marketing segment cash flows to the individual refineries, the estimated useful lives of the asset groups, and ~~$94 million~~the salvage values of the refineries.

On August 3, 2020, we announced our plans to ~~goodwill. Goodwill is tax deductible~~evaluate possibilities to strategically reposition our Martinez refinery, including the potential conversion of the refinery into a renewable diesel facility. Subsequent to August 3, 2020, we progressed activities associated with the conversion of the Martinez refinery to a renewable diesel facility, including applying for permits, advancing discussions with feedstock suppliers, and ~~represents~~beginning detailed engineering activities. As envisioned, the ~~value~~Martinez facility would be expected to start producing renewable diesel in 2022, with a potential to build to full capacity of 48,000 barrels per day in 2023. As a result of the progression of these activities, we identified assets that would be ~~created~~repurposed and utilized in a renewable diesel facility configuration and assets that would be abandoned since they had no function in a renewable diesel facility configuration. This change in our intended use for the Martinez refinery is a long-lived asset impairment trigger for the assets that would be repurposed and remain as part of the Martinez asset group. We assessed the asset group for impairment by ~~geographically expanding our retail platform~~comparing the undiscounted estimated pretax cash flows to the carrying value of the asset group and the ~~assembled workforce.~~ undiscounted estimated pretax cash flows exceeded the Martinez asset group carrying value. We recorded impairment expense of $342 million for the abandoned assets as we are no longer using these assets and have no expectation to use these assets in the future. Additionally, as a result of our efforts to progress the conversion of Martinez refinery into a renewable diesel facility, MPLX cancelled in-process capital projects related to its Martinez refinery logistics operations resulting in impairments of $27 million in the third quarter.

The ~~terminal~~determinations of expected future cash flows and the salvage values of refineries, as described earlier, require considerable judgment and are sensitive to changes in underlying assumptions and factors. As a result, there can be no assurance that the estimates and assumptions made for purposes of our impairment analysis will prove to be an accurate prediction of the future.

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Should our assumptions significantly change in future periods, it is ~~accounted~~possible we may determine the carrying values of certain of our refinery asset groups exceed the undiscounted estimated pretax cash flows of their refinery asset groups, which would result in future impairment charges.

During the first quarter of 2020, we identified an impairment trigger relating to asset groups within MPLX’s Western G&P reporting unit as a result of significant changes to expected future cash flows for these asset groups resulting from the effects of COVID-19. The cash flows associated with these assets were significantly impacted by volume declines reflecting decreased forecasted producer customer production as a result of lower commodity prices. We assessed each asset group within the ~~R&M segment and~~Western G&P reporting unit for impairment. It was determined that the ~~retail stores are accounted for within the Retail segment.~~

~~Acquisition of Express Mart~~

During the fourth quarter of 2018, Speedway acquired 78 transportation fuel and convenience store locations from Petr-All Petroleum Consulting Corporation for total consideration of $266 million. These stores are located primarily in the 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 ~~purchase price was allocated~~East Texas G&P asset group’s underlying assets were less than the carrying value. As a result, MPLX recorded impairment charges totaling $350 million related to its property, plant and equipment ~~$9 million to inventory, $2 million to~~and intangibles, ~~and $158 million to goodwill. Goodwill is tax deductible and represents the~~which are included in impairment expense on our consolidated statements of income. Fair 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 Mt. Airy Terminal is located on the Mississippi River between New Orleans and Baton Rouge, near several Gulf Coast refineries, including our Garyville Refinery, and numerous rail lines and pipelines. The Mt. Airy Terminal is accounted for 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~~was determined using a combination of ~~goodwill~~an income and cost approach. The income approach utilized significant assumptions including management’s best estimates of the expected future cash flows and the ~~remainder being attributable to net liabilities assumed.~~

~~Goodwill represents the significant growth potential~~estimated useful life of the ~~terminal due to~~asset group. The cost approach utilized assumptions for the ~~multiple pipelines~~current replacement costs of similar assets adjusted for estimated depreciation 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~~deterioration of the ~~terminal to MPC’s Garyville refinery~~existing equipment and ~~other refineries in the region as well as the opportunity to construct an additional dock at the site. All~~economic obsolescence. The fair value of the ~~goodwill recognized related to this transaction~~intangibles was determined based on applying the multi-period excess earnings method, which is ~~tax deductible.~~

~~Assuming the acquisition~~an income approach. Key assumptions included management’s best estimates of the ~~terminal and retail locations~~expected future cash flows from ~~NOCO Incorporated had occurred on January 1, 2018~~existing customers, customer attrition rates and the ~~acquisitions~~discount rate. Fair value determinations require considerable judgment and are sensitive to changes in underlying assumptions and factors. As a result, there can be no assurance that the estimates and assumptions made for purposes of ~~Express Mart and Mt. Airy Terminal had occurred on January 1, 2017,~~ the ~~consolidated pro forma results would not have been materially different from~~impairment analysis will prove to be an accurate prediction of the ~~reported results.~~future. The fair value measurements for the asset group fair values represent Level 3 measurements.

5. 7. VARIABLE INTEREST ENTITIES

Consolidated VIE

We control MPLX through our ownership of ~~the~~its general partner. MPLX is a VIE because the limited partners do not have substantive kick-out or ~~substantive~~ participating rights over the general partner. We are the primary beneficiary of MPLX because in addition to our significant economic interest, we also have the ability, through our 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 interest owned by the public. We also record a redeemable noncontrolling interest related to MPLX’s Series A preferred units.

The creditors of MPLX do not have recourse to MPC’s general credit through guarantees or other financial arrangements, except as noted. MPC has effectively guaranteed certain indebtedness of LOOP LLC (“LOOP”) and LOCAP LLC (“LOCAP”), in which MPLX holds an interest. See Note 2324 for more information. The assets of MPLX can only be used to settle their own obligations and their creditors have no recourse to our assets, except as noted earlier.

We have consolidated ANDX since October 1, 2018 in accordance with ASC 810. The ANDX balances at December 31, 2018 reflected in the table below are ANDX’s historical balances as the preliminary purchase accounting adjustments related to ANDX’s assets and liabilities in connection with the Andeavor acquisition had not yet been pushed down to ANDX. On July 30, 2019, MPLX acquired ANDX. The MPLX balances at September 30, 2019 reflect the inclusion

Table of ~~ANDX’s balances at the fair values determined in connection with MPC’s acquisition of Andeavor on October 1, 2018. See Notes 3 and 4 for additional information.~~Contents

The following table presents balance sheet information for the assets and liabilities of MPLX, ~~and ANDX,~~ which are included in our balance sheets.

~~Table of Contents~~


	September 30, 2019		December 31, 2018
(In millions)	MPLX		MPLX		ANDX		September 30, 2020		December 31, 2019
Assets
Cash and cash equivalents	$	41	$	68	$	10	$	28	$	15
Receivables, less allowance for doubtful accounts	592		425		199		483		615
Inventories	104		77		22		117		110
Other current assets	71		45		57		60		110
Equity method investments	5,182		4,174		602		4,081		5,275
Property, plant and equipment, net	21,921		14,639		6,845		21,815		22,174
Goodwill	10,735		2,586		1,051		7,657		9,536
Right of use assets	366		—		—		323		365
Other noncurrent assets	1,364		458		1,242		1,039		1,323
Liabilities
Accounts payable	$	756	$	776	$	215	$	470	$	744
Payroll and benefits payable	5		2		10		3		5
Accrued taxes	96		48		23		93		80
Debt due within one year	510		1		504		307		9
Operating lease liabilities	61		—		—		65		66
Other current liabilities	276		177		77		272		259
Long-term debt	19,190		13,392		4,469		20,042		19,704
Deferred income taxes	15		13		1		12		12
Long-term operating lease liabilities	309		—		—		258		302
Deferred credits and other liabilities	383		276		68		482		409

6. 8. RELATED PARTY TRANSACTIONS

Transactions with related parties were as follows:


	Three Months Ended September 30,				Nine Months Ended September 30,				Three Months Ended September 30,				Nine Months Ended September 30,
(In millions)	2019		2018		2019		2018		2020		2019		2020		2019
Sales to related parties^(a)	$	186	$	201	$	558	$	572	$	35	$	16	$	85	$	47
Purchases from related parties^(b)	184		149		571		428		187		184		540		571


^(a) Sales to related parties, which are included in sales and other operating revenues, consist primarily of refined product sales to certain of our equity affiliates. Purchases from related parties are included in cost of revenues. We obtain utilities, transportation services and purchase ethanol from certain of our equity affiliates.	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.~~

7. 9. EARNINGS PER SHARE

We compute basic earnings (loss) per share by dividing net income (loss) 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 (loss) per share using the two-class method. Diluted income (loss) per share assumes exercise of certain stock-based compensation awards, provided the effect is not anti-dilutive.

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Three Months Ended
September 30, Nine Months Ended
September 30,
(In millions, except per share data) 2019 2018 2019 2018
Basic earnings per share:
Allocation of earnings:
Net income attributable to MPC $ 1,095
$ 737
$ 2,194
$ 1,829
Income allocated to participating securities —
—
1
1
Income available to common stockholders – basic $ 1,095
$ 737
$ 2,193
$ 1,828
Weighted average common shares outstanding 656
451
663
462
Basic earnings per share $ 1.67
$ 1.63
$ 3.31
$ 3.96
Diluted earnings per share:
Allocation of earnings:
Net income attributable to MPC $ 1,095
$ 737
$ 2,194
$ 1,829
Income allocated to participating securities —
—
1
1
Income available to common stockholders – diluted $ 1,095
$ 737
$ 2,193
$ 1,828
Weighted average common shares outstanding 656
451
663
462
Effect of dilutive securities 4
5
5
4
Weighted average common shares, including dilutive effect 660
456
668
466
Diluted earnings per share $ 1.66
$ 1.62
$ 3.28
$ 3.92



	Three Months Ended September 30,					Nine Months Ended September 30,
(In millions, except per share data)	2020			2019		2020			2019
Income (loss) from continuing operations, net of tax	$	(980	)	$	1,113	$	(11,432	)	$	2,372
Less: Net income (loss) attributable to noncontrolling interest	277			272		(440		)	799
Net income allocated to participating securities	0			0		0			1
Income (loss) from continuing operations available to common stockholders	$	(1,257	)	$	841	$	(10,992	)	$	1,572
Income from discontinued operations, net of tax	371			254		881			621
Income (loss) available to common stockholders	$	(886	)	$	1,095	$	(10,111	)	$	2,193

Weighted average common shares outstanding:
Basic	650			656		649			663
Effect of dilutive securities	0			4		0			5
Diluted	650			660		649			668

Income (loss) available to common stockholders per share:
Basic:
Continuing operations	$	(1.93	)	$	1.28	$	(16.93	)	$	2.37
Discontinued operations	0.57			0.39		1.35			0.94
Net income (loss) per share	$	(1.36	)	$	1.67	$	(15.58	)	$	3.31
Diluted:
Continuing operations	$	(1.93	)	$	1.27	$	(16.93	)	$	2.35
Discontinued operations	0.57			0.39		1.35			0.93
Net income (loss) per share	$	(1.36	)	$	1.66	$	(15.58	)	$	3.28

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


	Three Months Ended September 30,		Nine Months Ended September 30,		Three Months Ended September 30,		Nine Months Ended September 30,
(In millions)	2019	2018	2019	2018	2020	2019	2020	2019
Shares issuable under stock-based compensation plans	4	—	3	—	12	4	11	3

8. 10. EQUITY

As of September 30, ~~2019,~~2020, we had ~~$3.02~~$2.96 billion of remaining share repurchase authorizations from our board of directors. We may utilize various methods to effect the repurchases, which could include open market repurchases, negotiated block transactions, tender offers, 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 initiated, suspended or discontinued at any time.

Total share repurchases were as follows for the respective periods:


	Three Months Ended September 30,				Nine Months Ended September 30,				Three Months Ended September 30,				Nine Months Ended September 30,
(In millions, except per share data)	2019		2018		2019		2018		2020		2019		2020		2019
Number of shares repurchased	10		5		33		36		0		10		0		33
Cash paid for shares repurchased	$	500	$	400	$	1,885	$	2,612	$	0	$	500	$	0	$	1,885
Average cost per share	$	53.82	$	73.03	$	58.75	$	71.80	$	0	$	53.82	$	0	$	58.75

~~As of September 30, 2019, we had agreements to acquire 97,078 common shares for $6 million, which settled in early October 2019.~~

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9. 11. SEGMENT INFORMATION

On August 2, 2020 we entered into a definitive agreement to sell Speedway to 7-Eleven, Inc. for $21 billion in cash, subject to certain adjustments based on the levels of cash, debt (as defined in the agreement) and working capital at closing and certain other items. In connection with the announced sale, we reassessed our organizational structure and management of segments. As a result of this assessment, we have made the following changes for all periods presented:

Speedway’s results are presented separately as discontinued operations. See Note 4 for related disclosures.

Refining & Marketing intersegment sales to Speedway that were previously eliminated in consolidation are reported as third party sales as we will continue to supply fuel to the Speedway business following its disposition.

The retained direct dealer business results, previously included in the Retail segment, are reported within the Refining & Marketing segment.

As a result of the above, we no longer present a separate Retail segment, which had included these two businesses.

Corporate costs are no longer allocated to Speedway under discontinued operations accounting.

We have 32 reportable segments: Refining & ~~Marketing; Retail;~~Marketing 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 16 refineries in the Gulf Coast, Mid-Continent and 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 Retail business segment and to~~ independent entrepreneurs who operate primarily Marathon^® branded ~~outlets.~~

•

~~Retail – sells transportation fuels and convenience products in the retail market across the United States~~outlets, 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~~mainly under the ARCO^® ~~brand.~~ brand and to approximately 3,900 Speedway locations.

Midstream – 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.

Segment income represents income (loss) from operations attributable to the reportable segments. Corporate administrative expenses, except for those attributable to MPLX, and costs related to certain non-operating assets are not allocated to the Refining & Marketing ~~and Retail segments.~~segment. 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		Refining & Marketing			Midstream		Total
Three Months Ended September 30, 2019
Three Months Ended September 30, 2020
Revenues:
Third party^(a)	$	21,437	$	8,677	$	929	$	31,043	$	16,493		$	915	$	17,408
Intersegment	5,100		2		1,235		6,337		23			1,232		1,255
Segment revenues	$	26,537	$	8,679	$	2,164	$	37,380	$	16,516		$	2,147	$	18,663
Segment income from operations	$	883	$	442	$	919	$	2,244
Segment income (loss) from operations^(b)									$	(1,569	)	$	960	$	(609	)

Supplemental Data
Depreciation and amortization^(b)(c)	$	397	$	113	$	300	$	810	$	456		$	335	$	791
Capital expenditures and investments^(c)(d)	561		177		783		1,521		254			300		554

(In millions) Refining & Marketing Retail Midstream Total
Three Months Ended September 30, 2018
Revenues:
Third party^(a)
$ 16,751
$ 5,395
$ 842
$ 22,988
Intersegment 2,931
1
787
3,719
Segment revenues $ 19,682
$ 5,396
$ 1,629
$ 26,707
Segment income from operations $ 666
$ 161
$ 679
$ 1,506

Supplemental Data
Depreciation and amortization^(b)
$ 257
$ 76
$ 205
$ 538
Capital expenditures and investments^(c)
226
98
593
917

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(In millions) Refining & Marketing Retail Midstream Total
Nine Months Ended September 30, 2019
Revenues:
Third party^(a)
$ 65,043
$ 24,997
$ 2,817
$ 92,857
Intersegment 15,011
6
3,685
18,702
Segment revenues $ 80,054
$ 25,003
$ 6,502
$ 111,559
Segment income from operations $ 1,455
$ 1,105
$ 2,705
$ 5,265

Supplemental Data
Depreciation and amortization^(b)
$ 1,235
$ 369
$ 925
$ 2,529
Capital expenditures and investments^(c)
1,385
370
2,420
4,175



(In millions)	Refining & Marketing		Midstream		Total
Three Months Ended September 30, 2019
Revenues:
Third party^(a)	$	26,620	$	932	$	27,552
Intersegment	30		1,232		1,262
Segment revenues	$	26,650	$	2,164	$	28,814
Segment income from operations^(b)	$	989	$	919	$	1,908

Supplemental Data
Depreciation and amortization^(c)	$	416	$	300	$	716
Capital expenditures and investments^(d)	569		783		1,352

(In millions) Refining & Marketing Retail Midstream Total
Nine Months Ended September 30, 2018
Revenues:
Third party^(a)
$ 46,635
$ 15,231
$ 2,305
$ 64,171
Intersegment 8,181
4
2,180
10,365
Segment revenues $ 54,816
$ 15,235
$ 4,485
$ 74,536
Segment income from operations $ 1,558
$ 415
$ 1,863
$ 3,836

Supplemental Data
Depreciation and amortization^(b)
$ 761
$ 228
$ 577
$ 1,566
Capital expenditures and investments^(c)
613
225
1,676
2,514



(In millions)	Refining & Marketing			Midstream		Total
Nine Months Ended September 30, 2020
Revenues:
Third party^(a)	$	49,164		$	2,643	$	51,807
Intersegment	52			3,638		3,690
Segment revenues	$	49,216		$	6,281	$	55,497
Segment income (loss) from operations^(b)	$	(3,610	)	$	2,734	$	(876	)

Supplemental Data
Depreciation and amortization^(c)	$	1,392		$	1,010	$	2,402
Capital expenditures and investments^(d)	995			1,199		2,194



(In millions)	Refining & Marketing		Midstream		Total
Nine Months Ended September 30, 2019
Revenues:
Third party^(a)	$	80,315	$	2,825	$	83,140
Intersegment	74		3,677		3,751
Segment revenues	$	80,389	$	6,502	$	86,891
Segment income from operations^(b)	$	1,750	$	2,705	$	4,455

Supplemental Data
Depreciation and amortization^(c)	$	1,319	$	925	$	2,244
Capital expenditures and investments^(d)	1,411		2,420		3,831


^(a)	Includes Refining & Marketing sales to Speedway (as discussed above) and related party sales. See Note 68 for additional information.


^(b)	Recast to reflect direct dealer income from operations of $103 million and $106 million for the three months ended September 30, 2020 and 2019, respectively, and $303 million and $295 million for the nine months ended September 30, 2020 and 2019, respectively, within the Refining & Marketing segment.

^(c)

Recast to reflect direct dealer depreciation of $30 million and $19 million for the three months ended September 30, 2020 and 2019, respectively, and $86 million and $84 million for the nine months ended September 30, 2020 and 2019, respectively, within the Refining & Marketing segment. Differences between segment totals and MPC consolidated totals represent amounts related to corporate and other ~~unallocated items and are included in~~ items not allocated to ~~segments in the reconciliation below.~~segments.

^(c)(d)

~~Capital~~Recast to reflect direct dealer capital expenditures ~~include~~of $6 million and $8 million for the three months ended September 30, 2020 and 2019, respectively, and $25 million and $26 million for the nine months ended September 30, 2020 and 2019, respectively, within the Refining & Marketing segment. Includes changes in capital expenditure accruals and investments in affiliates. See reconciliation from segment totals to MPC consolidated total capital expenditures below.

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


	Three Months Ended September 30,						Nine Months Ended September 30,						Three Months Ended September 30,						Nine Months Ended September 30,
(In millions)	2019			2018			2019			2018			2020			2019			2020			2019
Segment income from operations	$	2,244		$	1,506		$	5,265		$	3,836
Segment income (loss) from operations													$	(609	)	$	1,908		$	(876	)	$	4,455
Corporate^(a)													(197		)	(206		)	(625		)	(589		)
Items not allocated to segments:
Corporate and other unallocated items^(a)	(198		)	(99		)	(568		)	(269		)
Capline restructuring gain^(b)	—			—			207			—
Equity method investment restructuring gain^(b)													0			0			0			207
Transaction-related costs^(c)	(22		)	(4		)	(147		)	(14		)	0			(22		)	(8		)	(147		)
Litigation	—			—			(22		)	—			0			0			0			(22		)
Impairments(d)	—			—			—			1			(433		)	0			(9,595		)	0
Income from operations	2,024			1,403			4,735			3,554
Restructuring expenses^(e)													(348		)	0			(348		)	0
LCM inventory valuation adjustment^(f)													530			0			(1,185		)	0
Income (loss) from continuing operations													(1,057		)	1,680			(12,637		)	3,904
Net interest and other financial costs	317			240			945			618			359			312			1,032			932
Income before income taxes	$	1,707		$	1,163		$	3,790		$	2,936
Income (loss) from continuing operations before income taxes													$	(1,416	)	$	1,368		$	(13,669	)	$	2,972

^(a)

Corporate ~~and other unallocated items consist~~consists primarily of MPC’s corporate administrative expenses and costs related to certain non-operating assets, except for corporate overhead expenses attributable to MPLX, which are included in the Midstream segment. Corporate ~~overhead expenses~~includes corporate costs of $7 million and $8 million for the three months ended September 30, 2020 and 2019, respectively, and $20 million and $21 million for nine months ended September 30, 2020 and 2019, respectively, that are ~~not allocated~~no longer allocable to ~~the Refining & Marketing and Retail segments.~~Speedway under discontinued operations accounting.


^(b)	Includes gain related to Capline Pipeline Company LLC (“Capline LLC”). See Note ~~13.~~15.

^(c)

~~The transaction-related~~2020 includes costs ~~recognized~~incurred in connection with the Midstream strategic review. Costs incurred in 2020 in connection with the Speedway separation are included in discontinued operations. See Note 4. 2019 ~~year-to-date period include~~includes employee severance, retention and other costs related to the ~~recognition~~acquisition of ~~an obligation~~Andeavor.


^(d)	Includes goodwill impairment, impairment of equity method investments and impairment of long lived assets. See Note 6 for ~~employee benefits provided to former Andeavor employees.~~additional information.


^(e)	See Note 3.


^(f)	See Note 14.

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


	Three Months Ended September 30,				Nine Months Ended September 30,				Three Months Ended September 30,				Nine Months Ended September 30,
(In millions)	2019		2018		2019		2018		2020		2019		2020		2019
Segment capital expenditures and investments	$	1,521	$	917	$	4,175	$	2,514	$	554	$	1,352	$	2,194	$	3,831
Less investments in equity method investees	197		104		792		222		53		197		436		792
Plus items not allocated to segments:
Corporate	30		7		44		42		16		30		61		44
Capitalized interest	32		21		97		55		29		32		85		97
Total capital expenditures^(a)	$	1,386	$	841	$	3,524	$	2,389	$	546	$	1,217	$	1,904	$	3,180


^(a)	~~Capital expenditures include~~Includes changes in capital expenditure accruals. See Note 1921 for a reconciliation of total capital expenditures to additions to property, plant and equipment for the nine months ended September 30, ~~2019~~2020 and ~~2018~~2019 as reported in the consolidated statements of cash flows.

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~~10.~~ 12. NET INTEREST AND OTHER FINANCIAL COSTS

Net interest and other financial costs were as follows:


	Three Months Ended September 30,						Nine Months Ended September 30,						Three Months Ended September 30,						Nine Months Ended September 30,
(In millions)	2019			2018			2019			2018			2020			2019			2020			2019
Interest income	$	(12	)	$	(26	)	$	(30	)	$	(71	)	$	(1	)	$	(12	)	$	(9	)	$	(30	)
Interest expense	352			233			1,042			675			376			349			1,102			1,037
Interest capitalized	(45		)	(21		)	(112		)	(55		)	(32		)	(44		)	(103		)	(111		)
Pension and other postretirement non-service costs^(a)	6			45			6			47			6			6			2			6
Loss on extinguishment of debt	—			—			—			4
Other financial costs	16			9			39			18			10			13			40			30
Net interest and other financial costs	$	317		$	240		$	945		$	618		$	359		$	312		$	1,032		$	932


^(a)	See Note ~~21.~~23.

~~Table of Contents~~13.

~~11.~~ INCOME TAXES

We have historically provided for income taxes during interim reporting periods based on an estimate of the annual effective tax rate applied to book income for the year to date interim period. For 2020, we continue to utilize this approach.

On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) was enacted by Congress and signed into law by the President in response to the COVID-19 pandemic. The CARES Act contains numerous income tax provisions, some of which have the potential to materially impact MPC's calculation of income taxes including:

Revising the limitations on the deductibility of interest from 30 percent of adjusted taxable income to 50 percent.

Ability to carry back tax net operating losses ("NOL") five years for NOLs arising in taxable years 2018 through 2020. This provision allows the taxpayer to recover taxes previously paid at a 35 percent federal income tax rate during years prior to 2018. The limitation on the percentage of taxable income that may be offset by the NOL, formerly 80 percent of income, was eliminated for years beginning before 2021.

The income tax benefit from continuing and discontinued operations, as recorded on the balance sheet, was $2.0 billion for the nine months ended September 30, 2020. Approximately $354 million of the recorded benefit was attributable to the income tax rate differential in the NOL carryback years. Absent the CARES Act, we would have recorded a deferred tax asset for the expected NOL carryforward under the currently effective federal income tax rate.

Based on the estimated NOL carryback, as provided by the CARES Act, we recorded an income tax receivable of $1.2 billion in other current assets to reflect our estimate of the tax refund we expect to realize from our 2020 federal tax return. The refund is expected to be received during the second half of 2021.

The combined federal, state and foreign income tax rate was 2031 percent (tax benefit rate) and 19 percent for the three months ended September 30, ~~2019~~2020 and ~~2018,~~2019, respectively, and 2116 percent and 1820 percent for the nine months ended September 30, 2020 and 2019, respectively. The effective tax benefit rate for the three months ended September 30, 2020 was higher than the U.S. statutory rate due to certain permanent tax benefits related to net income attributable to noncontrolling interests, state taxes, and ~~2018, respectively.~~a change in estimate related to the expected NOL carryback provided by the CARES Act offset by non-tax deductible goodwill impairment. The effective tax rate for the three months ended September 30, 2019 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 offset by equity compensation and state and local tax expense. The effective tax rate for the nine months ended September 30, 2020 was lower than the statutory rate due to a significant amount of our pre-tax loss consisting of non-tax deductible goodwill impairment charges, partially offset by the tax rate differential resulting from the expected NOL carryback provided under the CARES Act. The effective tax rate for the nine months ended September 30, 2019 was ~~equal to~~less 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, offset by permanent tax differences related to net income attributable to noncontrolling interests. ~~The effective~~

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A reconciliation of the continuing operations tax provision (benefit) in dollars as determined using the federal statutory income tax rate applied to income (loss) before income taxes to the (benefit) provision for income taxes is shown in the three and nine months ended September 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 offset by state and local tax expense.table below.



	Three Months Ended September 30,						Nine Months Ended September 30,
(In millions)	2020			2019			2020			2019
Tax computed at statutory rate	$	(297	)	$	287		$	(2,870	)	$	624
State and local income taxes, net of federal income tax effects	(59		)	63			(275		)	136
Goodwill impairment	13			0			1,170			0
Noncontrolling interests	(63		)	(109		)	81			(195		)
CARES Act legislation	(29		)	0			(354		)	0
Other	(1		)	14			11			35
Total provision (benefit) for income tax from continuing operations	$	(436	)	$	255		$	(2,237	)	$	600

During the first quarter of 2019, MPC’s ~~deferred tax liabilities increased $68 million with an offsetting increase to goodwill and the~~ provision for income taxes ~~of $32 million and~~was increased $36 million ~~respectively~~ for an out of period adjustment to correct the tax effects recorded in 2018 related to the Andeavor acquisition. The impact of the adjustment was not material to any previous period.

We are continuously undergoing examination of our income tax returns, which have been completed through the ~~2006~~2005 tax year for state returns and the ~~2008~~2010 tax year for our U.S. federal return. As of September 30, ~~2019,~~2020, we had ~~$201~~$20 million of unrecognized tax benefits.

Prior to its 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 U.S. Internal Revenue Service for taxable year 2010, relating to certain 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. In the third quarter of 2019, the U.S. Tax court entered a decision in favor of both Marathon Oil and us for all material items and the U.S. Internal Revenue Service is in the process of preparing the final reports for these tax years.

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 2324 for indemnification information.

~~12.~~ 14. INVENTORIES


(In millions)	September 30, 2019		December 31, 2018		September 30, 2020			December 31, 2019
Crude oil and refinery feedstocks	$	3,415	$	3,655
Crude oil					$	2,481		$	3,472
Refined products	5,152		5,234		5,198			5,359
Materials and supplies	907		720		909			973
Merchandise	222		228
Inventories before LCM inventory valuation reserve					8,588			9,804
LCM inventory valuation reserve					(1,185		)	0
Total	$	9,696	$	9,837	$	7,403		$	9,804

Inventories are carried at the lower of cost or market value. Costs of crude oil and refined products are aggregated on a consolidated basis for purposes of assessing whether the LIFO cost basis of these inventories may have to be written down to market values. At September 30, 2020, market values for these inventories were lower than their LIFO cost basis, resulting in a reserve. The change from the LCM inventory valuation reserve at June 30, 2020 resulted in a benefit of $530 million for the three months ended September 30, 2020.

The cost of inventories of crude oil and ~~refinery feedstocks,~~ refined products ~~and merchandise~~ is determined primarily under the LIFO method. ~~There were 0 LIFO inventory liquidations recognized for~~During the three and nine ~~months~~month periods ended September 30, ~~2019.~~2020, we recorded a $256 million charge to reflect an expected LIFO liquidation for our crude oil inventories. The costs of inventories in the historical LIFO layer which is expected to be liquidated are higher than current costs, which resulted in the charge to cost of revenues.

~~13.~~ 15. 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 the Capline pipeline system in exchange for a 33 percent ownership interest in Capline LLC. In connection with our execution of these agreements, Capline LLC initiated a binding open season for southbound service from Patoka, ILIllinois to St. James, LALouisiana or Liberty, ~~MS,~~Mississippi with an additional origination point at Cushing, ~~OK.~~Oklahoma. Service from Cushing, OKOklahoma is part of a joint tariff with Diamond pipeline. ~~Crude oil service is expected to begin in the first half of 2021.~~

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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.~~million. This is a nonrecurring fair value measurement and is categorized in ~~level~~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.~~ 16. PROPERTY, PLANT AND EQUIPMENT


(In millions)	September 30, 2019		December 31, 2018		September 30, 2020		December 31, 2019
Refining & Marketing(a)	$	28,470	$	27,590	$	30,155	$	29,101
Retail	6,939		6,637
Midstream	26,652		25,692		27,823		27,193
Corporate and Other	1,229		1,294
Corporate					1,346		1,292
Total	63,290		61,213		59,324		57,586
Less accumulated depreciation	18,256		16,155
Less accumulated depreciation^(b)					19,567		16,716
Property, plant and equipment, net	$	45,034	$	45,058	$	39,757	$	40,870


^(a)	Recast to include the direct dealer business. See Note 11 for additional information.


^(b)	The September 30, 2020 balance includes property, plant and equipment impairment charges recorded during 2020. See Note 6 for additional information.

~~15.~~ 17. FAIR VALUE MEASUREMENTS

Fair Values—Recurring

The following tables present assets and liabilities accounted for at fair value on a recurring basis as of September 30, ~~2019~~2020 and December 31, ~~2018~~2019 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.


	September 30, 2019													September 30, 2020
	Fair Value Hierarchy													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		Level 1		Level 2		Level 3		Netting and Collateral^(a)			Net Carrying Value on Balance Sheet^(b)		Collateral Pledged Not Offset
Assets:
Commodity contracts	$	176	$	9	$	—	$	(161	)	$	24	$	77	$	62	$	3	$	0	$	(59	)	$	6	$	39
Liabilities:
Commodity contracts	$	165	$	12	$	—	$	(176	)	$	1	$	—	$	56	$	3	$	0	$	(59	)	$	0	$	0
Embedded derivatives in commodity contracts	—		—		54		—			54		—		0		0		61		0			61		0

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	December 31, 2018													December 31, 2019
	Fair Value Hierarchy													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		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	$	57	$	6	$	0	$	(55	)	$	8	$	73
Liabilities:
Commodity contracts	$	255	$	37	$	—	$	(284	)	$	8	$	—	$	95	$	11	$	0	$	(106	)	$	0	$	0
Embedded derivatives in commodity contracts	—		—		61		—			61		—		0		0		60		0			60		0

^(a)

Represents the impact of netting assets, liabilities and cash collateral when a legal right of offset exists. As of September 30, ~~2019,~~2020, cash collateral of ~~$15~~less than $1 million was netted with the mark-to-market derivative liabilities. As of December 31, ~~2018,~~2019, cash collateral of ~~$52 million was netted with mark-to-market derivative assets and $13~~$51 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.

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 September 30, ~~2019~~2020 used significant unobservable inputs including: (1) NGL prices interpolated and extrapolated due to inactive markets ranging from ~~$0.41~~$0.46 to ~~$1.07~~$0.97 per gallon with a weighted average of $0.58 per gallon and (2) the probability of renewal of 93100 percent for the first ~~five-term~~five-year term and ~~82.5~~100 percent for the second ~~five-term~~five-year 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.~~ Increases or decreases in 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.

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 September 30,						Nine Months Ended September 30,						Three Months Ended September 30,						Nine Months Ended September 30,
(In millions)	2019			2018			2019			2018			2020			2019			2020			2019
Beginning balance	$	65		$	68		$	61		$	66		$	51		$	65		$	60		$	61
Unrealized and realized losses included in net income	(9		)	20			(2		)	29
Unrealized and realized losses/(gains) included in net income													12			(9		)	5			(2		)
Settlements of derivative instruments	(2		)	(4		)	(5		)	(11		)	(2		)	(2		)	(4		)	(5		)
Ending balance	$	54		$	84		$	54		$	84		$	61		$	54		$	61		$	54

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:	$	(9	)	$	21		$	(5	)	$	22
The amount of total losses/(gains) for the period included in earnings attributable to the change in unrealized losses/(gains) relating to assets still held at the end of period:													$	11		$	(9	)	$	2		$	(5	)

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Fair Values – Reported

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 and term loan facility, which include variable interest rates, approximate fair value. The fair value of our fixed and floating rate long-term debt is based on prices from recent trade activity and is categorized in level 3 of the fair value hierarchy. The carrying and fair values of our debt were approximately ~~$28.3~~$31.4 billion and ~~$30.2~~$33.3 billion at September 30, ~~2019,~~2020, respectively, and approximately ~~$27.0~~$28.3 billion and ~~$26.5~~$30.1 billion at December 31, ~~2018,~~2019, respectively. These carrying and fair values of our debt exclude the unamortized issuance costs which are netted against our total debt.

~~16.~~ 18. DERIVATIVES

For further information regarding the fair value measurement of derivative instruments, including any effect of master netting agreements or collateral, see Note ~~15.~~17. We do not designate any of our commodity derivative instruments as hedges for accounting purposes.

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 fair value of derivative instruments as of September 30, ~~2019~~2020 and December 31, ~~2018~~2019 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)	September 30, 2020
Balance Sheet Location	Asset		Liability
Commodity derivatives
Other current assets	$	65	$	59
Other current liabilities^(a)	0		4
Deferred credits and other liabilities^(a)	0		57

(In millions) September 30, 2019
Balance Sheet Location Asset Liability
Commodity derivatives
Other current assets $ 184
$ 176
Other current liabilities^(a)
1
6
Deferred credits and other liabilities^(a)
—
49


(In millions)	December 31, 2018				December 31, 2019
Balance Sheet Location	Asset		Liability		Asset		Liability
Commodity derivatives
Other current assets	$	400	$	283	$	63	$	106
Other current liabilities^(a)	1		16		0		5
Deferred credits and other liabilities^(a)	—		54		0		55


^(a)	Includes embedded derivatives.

~~Table of Contents~~

The table below summarizes open commodity derivative contracts for crude oil, refined products and blending products as of September 30, ~~2019.~~2020.


	Percentage of contracts that expire next quarter	Position		Percentage of contracts that expire next quarter	Position
(Units in thousands of barrels)	Percentage of contracts that expire next quarter	Long	Short	Percentage of contracts that expire next quarter	Long	Short
Exchange-traded^(a)
Crude oil	92.1%	35,825	40,897	98.6%	8,756	6,691
Refined products	97.1%	17,014	11,258	95.4%	27,158	20,138
Blending products	84.2%	2,750	7,708	94.3%	1,775	6,107
OTC
Crude oil	100.0%	160	—
Blending products	100.0%	313	313


^(a)	Included in exchange-traded are spread contracts in thousands of barrels: Crude oil - ~~6,520~~2,460 long and ~~1,500~~1,260 short; Refined products - ~~925~~200 long and ~~225~~200 short; Blending products - ~~257 long and 182~~75 short

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


	Gain (Loss)												Gain (Loss)
(In millions)	Three Months Ended September 30,						Nine Months Ended September 30,						Three Months Ended September 30,						Nine Months Ended September 30,
Income Statement Location	2019			2018			2019			2018			2020			2019			2020		2019
Sales and other operating revenues	$	(1	)	$	3		$	(18	)	$	1		$	0		$	(1	)	$	77	$	(18	)
Cost of revenues	50			(69		)	(15		)	(152		)	(23		)	50			3		(15		)
Total	$	49		$	(66	)	$	(33	)	$	(151	)	$	(23	)	$	49		$	80	$	(33	)

~~17.~~ 19. DEBT

Our outstanding borrowings at September 30, ~~2019~~2020 and December 31, ~~2018~~2019 consisted of the following:



(In millions)	September 30, 2020			December 31, 2019
Marathon Petroleum Corporation:
Senior notes	$	10,974		$	8,474
Notes payable	1			1
Finance lease obligations	613			574
MPLX LP:
Bank revolving credit facility	95			0
Term loan facility	0			1,000
Senior notes	20,650			19,100
Finance lease obligations	12			19
Total debt	$	32,345		$	29,168
Unamortized debt issuance costs	(159		)	(134		)
Unamortized (discount) premium, net	(309		)	(310		)
Amounts due within one year	(2,500		)	(704		)
Total long-term debt due after one year	$	29,377		$	28,020

Available Capacity under our Credit Facilities as of September 30, 2020

(In millions) September 30,
2019 December 31,
2018
Marathon Petroleum Corporation $ 9,174
$ 9,114
MPLX LP 20,120
13,856
ANDX^(a)
—
5,010
Total debt $ 29,294
$ 27,980
Unamortized debt issuance costs (137 ) (128 )
Unamortized discount (318 ) (328 )
Amounts due within one year (557 ) (544 )
Total long-term debt due after one year $ 28,282
$ 26,980



(Dollars in millions)	Total Capacity		Outstanding Borrowings		Outstanding Letters of Credit		Available Capacity		Weighted Average Interest Rate		Expiration
MPC, excluding MPLX
MPC 364-day bank revolving credit facility	$	1,000	$	0	$	0	$	1,000	0		September 2021
MPC 364-day bank revolving credit facility	1,000		0		0		1,000		0		April 2021
MPC bank revolving credit facility^(a)	5,000		0		1		4,999		0		October 2023
MPC trade receivables securitization facility^(b)	750		0		0		750		0		July 2021

MPLX
MPLX bank revolving credit facility^(c)	3,500		95		0		3,405		1.40	%	July 2024


^(a)	~~On July~~Borrowed $3.5 billion and repaid $3.5 billion during the nine months ended September 30, ~~2019, MPLX acquired ANDX~~2020.


^(b)	Borrowed $1.225 billion and ~~assumed its debt obligations. See Note 3~~repaid $1.225 billion during the nine months ended September 30, 2020. Availability under our $750 million trade receivables facility is a function of eligible trade receivables, which will be lower in a sustained lower price environment for refined products.


^(c)	Borrowed $2.995 billion and repaid $2.9 billion during the discussion below for additional information. The ANDX December 31, 2018 balance includes senior notes of $3,750 million, borrowings under the revolving and dropdown credit facilities of $1,245 million and capital leases of $15 million.nine months ended September 30, 2020.

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~~Available Capacity under our Facilities~~

(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 2020
MPC bank revolving credit facility 5,000
—
1
4,999
—
October 2023
MPC trade receivables securitization facility 750
—
—
750
—
July 2021
MPLX bank revolving credit facility 3,500
—
3
3,497
—
July 2024
MPLX term loan facility 1,000
500
—
500
2.795 % September 2021

MPC 364-Day Bank Revolving Credit ~~Facility~~Facilities

On ~~July 26, 2019, we~~September 23, 2020, MPC entered into a ~~new $1 billion~~ 364-day revolving credit facility with a syndicate of banks that 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.

~~MPLX Term Loan~~

~~On September 26, 2019, MPLX entered into a term loan~~ agreement with a syndicate of ~~lenders providing~~lenders. This revolving credit agreement provides for ~~borrowings up~~a $1.0 billion unsecured revolving credit facility that matures in September 2021, and replaces a similar 364-day revolving credit agreement that expired on September 28, 2020.

MPC is also party to $1an April 27, 2020 364-day revolving credit agreement that provides for a $1.0 billion ~~available to be drawn~~unsecured revolving credit facility that matures in up to four separate borrowings. If not fully utilized, the term loan commitments expire 90 days after September 26, 2019. Borrowings under the term loan agreement bear interest, at MPLX’s election, at either the Adjusted LIBO Rate (as defined in the term loan agreement) plus a margin or the Alternate Base Rate (as defined in the term loan agreement) plus a margin. The applicable margin to the benchmark interest rates fluctuate from time-to-time based on ourApril 2021.

These two credit ratings. The proceeds from borrowings under the term loan agreement are to be used to fund the repayment of MPLX’s existing indebtedness and/or for general business purposes. The term loan agreement matures on ~~September 26, 2021~~ ~~and may be prepaid at any time without premium or penalty.~~

~~The term loan agreement contains~~agreements contain representations and warranties, affirmative and negative covenants and events of default that ~~we consider to be~~MPC considers customary for ~~an agreement~~agreements of ~~this~~similar nature and type and that are substantially similar to ~~MPLX’s existing~~each other and those contained in the credit agreement for MPC’s $5.0 billion bank revolving credit facility, including a covenant that requires MPLX’s ratio of Consolidated Total Debt to Consolidated EBITDA (as both terms are defined in the Term Loan Agreement) for the 4 prior fiscal quarters not to exceed 5.0 to 1.0 as of the last day of each fiscal quarter (or during the six-month period following certain acquisitions, 5.5 to 1.0). Consolidated EBITDA is subject to adjustments for certain acquisitions completed and capital projects undertaken during the relevant period.facility.

~~MPLX Floating Rate~~MPC Senior Notes

On ~~September 9, 2019, MPLX issued $2~~April 27, 2020, we closed on the issuance of $2.5 billion in aggregate principal amount of ~~floating rate~~ senior notes in a public offering, consisting of $1$1.25 billion aggregate principal amount of 4.500 percent unsecured senior notes due ~~September 2021~~May 2023 and $1$1.25 billion aggregate principal amount of 4.700 percent unsecured senior notes due May 2025. Interest is payable semi-annually in arrears. MPC used the net proceeds from this offering to repay certain amounts outstanding under its five-year revolving credit facility.

On September ~~2022. The~~25, 2020, we announced that all of the $650 million outstanding aggregate principal amount of 3.400 percent senior notes due December 2020 will be redeemed on November 15, 2020, at a price equal to par, plus accrued and unpaid interest to, but not including, such date.

On October 1, 2020, all of the $475 million outstanding aggregate principal amount of 5.375 percent senior notes due October 2022 were redeemed at a price equal to par.

MPLX Senior Notes

On August 18, 2020, MPLX issued $3.0 billion aggregate principal amount of senior notes in a public offering, consisting of $1.5 billion aggregate principal amount of 1.750 percent senior notes due March 2026 and $1.5 billion aggregate principal amount of 2.650 percent senior notes due August 2030. Interest is payable semi-annually in arrears.

During the third quarter of 2020, a portion of the net proceeds ~~were~~from the senior notes offering was used to repay ~~various~~$1.0 billion of outstanding borrowings under the MPLX ~~borrowings and for general business purposes. Interest is payable quarterly in March, June, September and December, commencing on December 9, 2019. The interest rate applicable~~term loan agreement, to repay the $1.0 billion floating rate senior notes due September 2021 ~~is LIBOR plus 0.9% while~~and to redeem all of the ~~interest rate applicable to the floating rate~~$450 million aggregate principal amount of 6.375 percent senior notes due ~~September 2022 is LIBOR plus 1.1%.~~May 2024.

On October 15, 2020, a portion of the remaining net proceeds from the senior notes offering was used to redeem all of the $300 million aggregate principal amount of MPLX’s 6.250 percent senior notes due October 2022.

20. REVENUE

As discussed in Notes 1 and 11, the presentation of Refining & Marketing segment revenues reflects changes associated with the expected sale of our Speedway business and our new reportable segments. The following table presents our revenues disaggregated by segment and product line.



(In millions)	Refining & Marketing		Midstream		Total
Three Months Ended September 30, 2020
Refined products	$	15,356	$	166	$	15,522
Crude oil	990		0		990
Midstream services and other	147		749		896
Sales and other operating revenues	$	16,493	$	915	$	17,408

2428

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~~MPLX Senior Notes~~



(In millions)	Refining & Marketing		Midstream		Total
Three Months Ended September 30, 2019
Refined products	$	25,661	$	174	$	25,835
Crude oil	792		0		792
Midstream services and other	167		758		925
Sales and other operating revenues	$	26,620	$	932	$	27,552

In connection with the merger of MPLX and ANDX, MPLX assumed ANDX’s outstanding senior notes which had an aggregate principal amount of $3.75 billion, with interest rates ranging from 3.5% to 6.375% and maturity dates ranging from 2019 to 2047. On September 23, 2019, approximately $3.06 billion aggregate principal amount of ANDX’s outstanding senior notes were exchanged for new unsecured senior notes issued by MPLX having the same maturity and interest rates as the ANDX senior notes in an exchange offer and consent solicitation undertaken by MPLX, leaving approximately $690 million aggregate principal of outstanding senior notes held by ANDX. Of this, $500 million was related to the 5.5% unsecured senior notes due 2019. The principal amount of $500 million and accrued interest of $14 million was paid on October 15, 2019 and includes interest through the payoff date.



(In millions)	Refining & Marketing		Midstream		Total
Nine Months Ended September 30, 2020
Refined products	$	45,893	$	460	$	46,353
Crude oil	2,868		0		2,868
Midstream services and other	403		2,183		2,586
Sales and other operating revenues	$	49,164	$	2,643	$	51,807

~~18. REVENUE~~

~~The following table presents our revenues disaggregated by segment and product line.~~

(In millions) Refining & Marketing Retail Midstream Total
Three Months Ended September 30, 2019
Refined products $ 20,330
$ 6,956
$ 176
$ 27,462
Merchandise 1
1,697
—
1,698
Crude oil and refinery feedstocks 945
—
41
986
Midstream services and other 161
24
712
897
Sales and other operating revenues $ 21,437
$ 8,677
$ 929
$ 31,043

(In millions) Refining & Marketing Retail Midstream Total
Three Months Ended September 30, 2018
Refined products $ 15,636
$ 4,051
$ 238
$ 19,925
Merchandise 1
1,339
—
1,340
Crude oil and refinery feedstocks 1,009
—
60
1,069
Midstream services and other 105
5
544
654
Sales and other operating revenues $ 16,751
$ 5,395
$ 842
$ 22,988

(In millions) Refining & Marketing Retail Midstream Total
Nine Months Ended September 30, 2019
Refined products $ 60,963
$ 20,206
$ 593
$ 81,762
Merchandise 3
4,719
—
4,722
Crude oil and refinery feedstocks 3,682
—
145
3,827
Midstream services and other 395
72
2,079
2,546
Sales and other operating revenues $ 65,043
$ 24,997
$ 2,817
$ 92,857


(In millions)	Refining & Marketing		Retail		Midstream		Total		Refining & Marketing		Midstream		Total
Nine Months Ended September 30, 2018
Nine Months Ended September 30, 2019
Refined products	$	43,493	$	11,462	$	649	$	55,604	$	76,703	$	585	$	77,288
Merchandise	3		3,753		—		3,756
Crude oil and refinery feedstocks	2,871		—		154		3,025
Crude oil									3,173		0		3,173
Midstream services and other	268		16		1,502		1,786		439		2,240		2,679
Sales and other operating revenues	$	46,635	$	15,231	$	2,305	$	64,171	$	80,315	$	2,825	$	83,140

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 September 30, ~~2019,~~2020, we do not have future performance obligations that are material to future periods.

~~Table of Contents~~

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 September 30, ~~2019~~2020 include matching buy/sell receivables of ~~$2.25~~$1.59 billion.

~~19.~~ 21. SUPPLEMENTAL CASH FLOW INFORMATION



	Nine Months Ended September 30,
(In millions)	2020			2019
Net cash provided by operating activities included:
Interest paid (net of amounts capitalized)	$	901		$	867
Net income taxes paid to (received from) taxing authorities	(130		)	376
Non-cash investing and financing activities:
Contribution of assets^(a)	0			143
Fair value of assets acquired^(b)	0			350


^(a)	2019 includes the contribution of net assets to Capline LLC. See Note 15.


^(b)	2019 includes the recognition of the Capline LLC equity method investment. See Note 15.

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Nine Months Ended
September 30,
(In millions) 2019 2018
Net cash provided by operating activities included:
Interest paid (net of amounts capitalized) $ 871
$ 520
Net income taxes paid to taxing authorities 376
153
Cash paid for amounts included in the measurement of lease liabilities
Payments on operating leases^(a)
572
—
Interest payments under finance lease obligations^(a)
25
—
Net cash provided by financing activities included:
Principal payments under finance lease obligations^(a)
35
—
Non-cash investing and financing activities:
Capital leases —
171
Right of use assets obtained in exchange for new operating lease obligations^(a)
235
—
Right of use assets obtained in exchange for new finance lease obligations^(a)
87
—
Contribution of net assets to Capline LLC^(b)
143
—
Recognition of Capline LLC equity method investment^(b)
350
—



(In millions)	September 30, 2020		December 31, 2019
Cash and cash equivalents^(a)	$	618	$	1,393
Restricted cash^(b)	2		2
Cash, cash equivalents and restricted cash	$	620	$	1,395


^(a)	~~Disclosure added~~Excludes $98 million and $134 million of cash included in ~~2019 following the adoption of ASC 842.~~assets held for sale representing Speedway store cash.


^(b)	~~See Note 13.~~

(In millions) September 30,
2019 December 31,
2018
Cash and cash equivalents $ 1,525
$ 1,687
Restricted cash^(a)
3
38
Cash, cash equivalents and restricted cash $ 1,528
$ 1,725


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

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 to total capital expenditures:


	Nine Months Ended September 30,					Nine Months Ended September 30,
(In millions)	2019			2018		2020			2019
Additions to property, plant and equipment per the consolidated statements of cash flows	$	3,823		$	2,315	$	2,330		$	3,461
Asset retirement expenditures	1			7		0			1
Increase (decrease) in capital accruals	(300		)	67
Decrease in capital accruals						(426		)	(282		)
Total capital expenditures	$	3,524		$	2,389	$	1,904		$	3,180

~~Table of Contents~~22.

~~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
Balance as of December 31, 2018	$	(132	)	$	(23	)	$	2	$	9		$	(144	)
Other comprehensive income (loss) before reclassifications, net of tax of ($20)	(58		)	1			0		0			(57		)
Amounts reclassified from accumulated other comprehensive loss:
Amortization – prior service credit^(a)	(34		)	0			—		—			(34		)
– actuarial loss^(a)	16			(1		)	—		—			15
– settlement loss^(a)	9			0			—		—			9
Other	—			—			—		(4		)	(4		)
Tax effect	2			0			0		1			3
Other comprehensive loss	(65		)	0			0		(3		)	(68		)
Balance as of September 30, 2019	$	(197	)	$	(23	)	$	2	$	6		$	(212	)

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(In millions) Pension Benefits Other Benefits Gain on Cash Flow Hedge Workers Compensation Total
Balance as of December 31, 2017 $ (190 ) $ (48 ) $ 4
$ 3
$ (231 )
Other comprehensive income (loss) before reclassifications, net of tax of $10 35
(1 ) (2 ) —
32
Amounts reclassified from accumulated other comprehensive loss:
Amortization – prior service credit^(a)
(25 ) (2 ) —
—
(27 )
– actuarial loss^(a)
26
(1 ) —
—
25
– settlement loss^(a)
47
—
—
—
47
Other —
—
—
(4 ) (4 )
Tax effect (12 ) 1
—
1
(10 )
Other comprehensive income (loss) 71
(3 ) (2 ) (3 ) 63
Balance as of September 30, 2018 $ (119 ) $ (51 ) $ 2
$ —
$ (168 )


(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, 2018	$	(132	)	$	(23	)	$	2	$	9		$	(144	)
Other comprehensive income (loss) before reclassifications, net of tax of ($20)	(58		)	1			—		—			(57		)
Balance as of December 31, 2019															$	(212	)	$	(116	)	$	1	$	7		$	(320	)
Other comprehensive loss before reclassifications, net of tax of ($4)															(12		)	(2		)	0		0			(14		)
Amounts reclassified from accumulated other comprehensive loss:
Amortization – prior service credit^(a)	(34		)	—			—		—			(34		)	(34		)	0			—		—			(34		)
– actuarial loss^(a)	16			(1		)	—		—			15			27			2			—		—			29
– settlement loss^(a)	9			—			—		—			9			10			0			—		—			10
Other	—			—			—		(4		)	(4		)	—			—			—		(5		)	(5		)
Tax effect	2			—			—		1			3			(1		)	0			0		1			0
Other comprehensive loss	(65		)	—			—		(3		)	(68		)	(10		)	0			0		(4		)	(14		)
Balance as of September 30, 2019	$	(197	)	$	(23	)	$	2	$	6		$	(212	)
Balance as of September 30, 2020															$	(222	)	$	(116	)	$	1	$	3		$	(334	)


^(a)	These accumulated other comprehensive loss components are included in the computation of net periodic benefit cost. See Note ~~21.~~23.

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~~21.~~ PENSION AND OTHER POSTRETIREMENT BENEFITS

The following summarizes the components of net periodic benefit costs:



	Three Months Ended September 30,
	Pension Benefits				Other Benefits
(In millions)	2020		2019		2020	2019
Components of net periodic benefit cost:
Service cost	70		51		9	9
Interest cost	25		27		8	8
Expected return on plan assets	(33	)	(30	)	0	0
Amortization – prior service credit	(12	)	(11	)	0	0
– actuarial loss	9		5		1	0
– settlement loss	8		7		0	0
Net periodic benefit cost	67		49		18	17

Three Months Ended September 30, 2019
Pension Benefits Other Benefits
(In millions) 2019 2018 2019 2018
Components of net periodic benefit cost:
Service cost $ 57
$ 36
$ 8
$ 7
Interest cost 27
18
9
7
Expected return on plan assets (31 ) (25 ) —
—
Amortization – prior service credit (11 ) (9 ) —
—
– actuarial loss 5
9
—
(1 )
– settlement loss 7
45
—
—
Net periodic benefit cost $ 54
$ 74
$ 17
$ 13


	Nine Months Ended September 30,												Nine Months Ended September 30,
	Pension Benefits						Other Benefits						Pension Benefits						Other Benefits
(In millions)	2019			2018			2019			2018			2020			2019			2020		2019
Components of net periodic benefit cost:
Service cost	$	175		$	107		$	24		$	22		$	210		$	161		$	27	$	24
Interest cost	82			54			28			22			73			81			24		27
Expected return on plan assets	(94		)	(75		)	—			—			(98		)	(93		)	0		0
Amortization – prior service credit	(34		)	(25		)	—			(2		)	(34		)	(34		)	0		0
– actuarial loss	16			26			(1		)	(1		)	26			16			2		0
– settlement loss	9			47			—			—			9			9			0		0
Net periodic benefit cost	$	154		$	134		$	51		$	41		$	186		$	140		$	53	$	51

The components of net periodic benefit cost other than the service cost component are included in net interest and other financial costs on the consolidated statements of income.

During the nine months ended September 30, ~~2019,~~2020, we made contributions of ~~$267~~$3 million to our funded pension plans. Benefit payments related to unfunded pension and other postretirement benefit plans were ~~$16~~$51 million and ~~$32~~$29 million, respectively, during the nine months ended September 30, ~~2019.~~

~~22. LEASES~~

~~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 50 years and, in certain leases, also include purchase options. The 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.2020.

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

Three Months Ended
September 30, Nine Months Ended
September 30,
(In millions) 2019 2019
Finance lease cost:
Amortization of right of use assets $ 17
$ 46
Interest on lease liabilities 12
32
Operating lease cost 209
597
Variable lease cost 23
66
Short-term lease cost 197
511
Total lease cost $ 458
$ 1,252

24.

~~Supplemental balance sheet data related to leases were as follows:~~

(In millions) September 30, 2019
Operating leases
Assets
Right of use assets $ 2,522
Liabilities
Operating lease liabilities $ 586
Long-term operating lease liabilities 1,962
Total operating lease liabilities $ 2,548

Weighted average remaining lease term (in years) 6.4
Weighted average discount rate 4.09 %

Finance leases
Assets
Property, plant and equipment, gross $ 814
Accumulated depreciation 224
Property, plant and equipment, net $ 590
Liabilities
Debt due within one year $ 55
Long-term debt 654
Total finance lease liabilities $ 709

Weighted average remaining lease term (in years) 12.1
Weighted average discount rate 6.56 %

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As of September 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 $ 174
$ 29
2020 665
94
2021 572
86
2022 388
94
2023 277
96
2024 and thereafter 855
611
Gross lease payments 2,931
1,010
Less: imputed interest 383
301
Total lease liabilities $ 2,548
$ 709

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 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 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 terms 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 $64 million and $195 million for the three and nine months ended September 30, 2019, respectively. The 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 nine months ended September 30, 2019, MPLX did not receive any material contingent lease payments. The following is a schedule of minimum future rentals on the non‑cancellable operating leases as of September 30, 2019:

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(In millions)
2019 $ 47
2020 186
2021 178
2022 176
2023 170
2024 and thereafter 1,269
Total minimum future rentals $ 2,026

~~The following schedule summarizes our investment in assets held for operating lease by major classes as of September 30, 2019:~~

(In millions) September 30, 2019
Natural gas gathering and NGL transportation pipelines and facilities $ 1,061
Natural gas processing facilities 633
Terminal and related assets 82
Land, building, office equipment and other 45
Property, plant and equipment 1,821
Less accumulated depreciation 304
Property, plant and equipment, net $ 1,517

~~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 September 30, ~~2019~~2020 and December 31, ~~2018,~~2019, accrued liabilities for remediation totaled ~~$447~~$388 million and ~~$455~~$396 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 ~~$30~~$7 million and ~~$35~~$9 million at September 30, ~~2019~~2020 and December 31, ~~2018,~~2019, respectively.

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

Other ~~Lawsuits~~Legal Proceedings

In ~~May 2015,~~early July 2020, MPLX received a Notification of Trespass Determination from the ~~Kentucky attorney general filed~~Bureau of Indian Affairs (“BIA”) relating to a ~~lawsuit against our wholly-owned subsidiary, Marathon Petroleum Company LP (“MPC LP”),~~portion of the Tesoro High Plains Pipeline that crosses the Fort Berthold Reservation in North Dakota. The notification covered the ~~United States District Court~~rights of way for 23 tracts of land and demanded the immediate cessation of pipeline operations. The notification also assessed trespass damages of approximately $187 million. MPLX appealed this determination, which triggered an automatic stay of the requested pipeline shutdown and payment. On October 29, the Assistant Secretary - Indian Affairs issued an order vacating the BIA’s trespass order and requiring the Regional Director for the ~~Western District~~BIA Great Plains Region to issue a new decision on or before December 15 covering all 34 tracts at issue.

MPLX continues to work towards a settlement of ~~Kentucky asserting claims under~~

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~~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,property rights at issue. Management does not believe the ultimate ~~outcome~~resolution 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 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 2019, MPC and the attorney general reached a settlement to resolve this litigation. This resolution did notmatter 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—

LOOP and LOCAP

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~~varies but ~~tend~~tends to

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follow the terms of the underlying debt, which extend through 2037. Our maximum potential undiscounted payments under these agreements for the debt principal totaled $171 million as of September 30, ~~2019.~~2020.

Gray Oak Pipeline, LLC

In connection with our 25 percent interest in Gray Oak Pipeline, LLC (“Gray Oak Pipeline”), we ~~have~~ entered into an Equity Contribution Agreement ~~obligating~~that obligated us to make certain equity contributions to Gray Oak Pipeline to support its obligations under a construction loan facility. Gray Oak ~~Pipeline~~ is ~~constructing the Gray Oak oil pipeline,~~ a crude oil transportation system from West Texas and the Eagle Ford formation to destinations in the Ingleside, Corpus Christi and 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~~required us to contribute our pro rata share of any amounts necessary to allow Gray 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 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 the~~The construction loan facility ~~(after giving effect to~~was repaid in full with the ~~exercise~~proceeds of ~~all options to increase its borrowing capacity). As of September 30, 2019,~~a senior, unsecured notes offering undertaken by Gray Oak Pipeline, and our ~~maximum potential undiscounted payments~~obligations under the Equity Contribution Agreement ~~for~~automatically terminated during the ~~debt principal totaled $226 million.~~third quarter of 2020.

Dakota Access Pipeline

In connection with MPLX’s ~~approximate 9~~9.19 percent indirect interest in a joint venture (“Dakota Access”) 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~~has 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.

In March 2020, the U.S. District Court for the District of Columbia (the “D.D.C.”) ordered the U.S. Army Corps of Engineers (“Army Corps”), which granted permits and an easement for the Bakken Pipeline system, to conduct a full environmental impact statement (“EIS”), and further requested briefing on whether an easement necessary for the operation of the Bakken Pipeline system should be vacated while the EIS is being prepared.

On July 6, 2020, the D.D.C. ordered vacatur of the easement to cross Lake Oahe during the pendency of an EIS and further ordered a shut down of the pipeline by August 5, 2020. The D.D.C. denied a motion to stay that order. Dakota Access and the Army Corps appealed the D.D.C.’s order to the U.S. Court of Appeals for the District of Columbia Circuit (the “Court of Appeals”). On July 14, 2020, the Court of Appeals issued an administrative stay while the court considered Dakota Access and the Army Corps’ emergency motion for stay pending appeal. On August 5, 2020, the Court of Appeals stayed the D.D.C.’s injunction that required the pipeline be shutdown and emptied of oil by August 5, 2020. The Court of Appeals denied a stay of the D.D.C.’s March order, which required the EIS, and further denied a stay of the D.D.C.’s July order, which vacated the easement. In the D.D.C., briefing is ongoing for a renewed request for an injunction, which is expected to be completed by the end of 2020. Oral argument on the merits of the case at the Court of Appeals occurred on November 4, 2020. The pipeline remains operational.

If the pipeline is temporarily shut down pending completion of the EIS, MPLX would have to contribute its 9.19 percent pro rata share of funds required to pay interest accruing on the notes and any portion of the principal that matures while the pipeline is shutdown. It is expected that MPLX would contribute its 9.19 percent pro rata share of any costs to remediate any deficiencies to reinstate the permit and/or return the pipeline into operation. If the vacatur of the easement permit results in a permanent shutdown of the pipeline, MPLX would have to contribute its 9.19 percent pro rata share of the cost to redeem the bonds (including the one percent redemption premium required pursuant to the indenture governing the notes) and any accrued and unpaid interest. As of September 30, ~~2019,~~2020, our maximum potential undiscounted payments under the Contingent Equity Contribution Agreement ~~was~~were approximately $230 million.

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Crowley Ocean Partners LLC and Crowley Blue Water Partners LLC

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 September 30, ~~2019,~~2020, our maximum potential undiscounted payments under this agreement for debt principal totaled ~~$125~~$119 million.

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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. As of September 30, ~~2019,~~2020, our maximum potential undiscounted payments under this arrangement was ~~$122~~$115 million.

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 $1 million as of September 30, 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 11, and other contingent liabilities Marathon Oil may incur related to taxes. Furthermore, the

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 ~~$122~~$94 million as of September 30, ~~2019,~~2020, which primarily consist of a commitment to contribute cash to an equity method investee for certain catastrophic events, 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.

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 September 30, ~~2019,~~2020, our contractual commitments to acquire property, plant and equipment and advance funds to equity method investees totaled ~~$1.55 billion.~~$447 million.

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.

~~24. SUBSEQUENT EVENT~~

On October 31, 2019, we announced plans to separate our retail transportation fuel and convenience store business, which is operated primarily under the Speedway brand, into an independent, publicly traded company. The transaction is intended to take the form of a tax-free distribution to MPC shareholders of publicly traded stock in the new independent retail transportation fuel and convenience store company. The transaction is expected to be completed by year-end 2020, subject to market, regulatory and certain other conditions, including final approval by the MPC Board of Directors, receipt of customary assurances regarding the intended tax-free nature of the transaction, and the effectiveness of a registration statement to be filed with the SEC. The Speedway business is currently a reporting unit within our Retail segment. Subsequent to the completion of the separation, the historical results of the Speedway business will be presented as discontinued operations in our consolidated financial statements.

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ITEM 2. 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, ~~2018.~~2019.

~~All statements in this section, other than statements~~Disclosures Regarding Forward-Looking Statements

This Quarterly Report on Form 10-Q, particularly Management’s Discussion and Analysis of ~~historical fact, are~~Financial Condition and Results of Operations and Quantitative and Qualitative Disclosures about Market Risk, includes forward-looking statements that are ~~inherently uncertain.~~subject to risks, contingencies or uncertainties. You can identify ~~our~~ forward-looking statements by words such as “anticipate,” “believe,” “commitment,” “could,” “design,” “estimate,” “expect,” “forecast,” “goal,” “guidance,” “imply,” “intend,” “may,” “objective,” “opportunity,” “outlook,” “plan,” “policy,” “position,” “potential,” “predict,” “priority,” “project,” “proposition,” “prospective,” “pursue,” “seek,” “should,” “strategy,” “target,” “will,” “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, that could cause future outcomes to differ materially from those set forth in the forward-looking statements.

Forward-looking statements include, ~~but are not limited to,~~among other things, 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;

with respect to the planned separation of our retail transportation fuel and convenience store business, which is operated primarily under the Speedway brand, the ability to successfully complete the separation within the expected timeframe or at all, based on numerous factors including the macroeconomic environment, credit markets and equity markets, our ability to satisfy customary conditions, and our ability to achieve our strategic and other objectives;

~~with respect to the Midstream review, our ability to achieve the strategic and other objectives related to the strategic review;~~

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

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;

expected savings from the restructuring or reorganization of business components;

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;~~investment;

~~share repurchase authorizations, including~~ consumer demand for refined products, natural gas and NGLs;

the timing and ~~amounts~~amount of any future 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;~~

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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:

the effects of the COVID-19 pandemic, including any related government policies and actions, on our business, financial condition, results of operations and cash flows, including our growth, operating costs, labor availability, logistical capabilities, customer demand for our products and industry demand generally, margins, inventory value, cash position, taxes, the price of our securities and trading markets with respect thereto, our ability to access capital markets, and the global economy and financial markets generally;

the effects of the COVID-19 pandemic, and the current economic environment generally, on our working capital, cash flows and liquidity, which can be significantly affected by decreases in commodity prices;

our ability to successfully complete the planned Speedway sale and realize the expected benefits within the expected timeframe or at all;

the risk that we may not proceed with converting the Martinez refinery to a renewable diesel facility or that our expectations of future cash flows for a Martinez renewable diesel facility will not be fully realized;

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

further impairments;

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

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

the reliability of processing units and other equipment;

the adequacy of capital resources and liquidity, including availability, timing and amounts of free cash flow necessary to execute business plans and to effect any share repurchases or to maintain or increase the dividend;

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

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continued or further volatility orin and degradation inof general economic, market, industry or business ~~conditions;~~conditions as a result of the COVID-19 pandemic (including any related government policies and actions), other infectious disease outbreaks, natural hazards, extreme weather events or otherwise;

~~availability~~compliance with federal and ~~pricing of domestic~~state environmental, economic, health and ~~foreign supplies of natural gas, NGLs and crude oil~~safety, energy and other ~~feedstocks;~~policies and regulations, including the cost of compliance with the Renewable Fuel Standard, and enforcement actions initiated thereunder;

~~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;~~adverse market conditions or other similar risks affecting MPLX;

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;

non-payment or non-performance by our producer and other customers;

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 Mexico, 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 and other stakeholders 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;~~

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~~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 plan;~~

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

For additional risk factors affecting our business, see the ~~other~~risk factors described ~~in Item 1A. Risk Factors~~ in our Annual Report on Form 10-K for the year ended December 31, ~~2018.~~

2019, as updated in our Quarterly Reports on Form 10-Q for the quarters ended March 31, 2020 and June 30, 2020. We undertake no obligation to update any forward-looking statements except to the extent required by applicable law.

CORPORATE OVERVIEW

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

We have three strong brands: Marathon^®, Speedway^® and ARCO^®. ~~Approximately 6,800~~The branded outlets, which primarily ~~carrying~~operate under the Marathon brand, ~~name,~~ are established motor fuel brands across the United States available through approximately 7,000 branded outlets operated by independent entrepreneurs in 35 states, the District of Columbia and Mexico. ~~We believe our Retail segment~~The direct dealer network primarily operates under the ~~second largest chain~~ARCO brand, and consists of company-owned and operated retail transportation fuel and convenience stores in the United States, with approximately 3,930 convenience stores. Our Retail segment also sells transportation fuel to consumers through approximately 1,070 direct dealer ~~locations. Our company-owned and operated~~ locations primarily ~~carry~~located in the ~~Speedway~~^® ~~brand name and the direct dealer locations carry primarily the ARCO~~^® ~~brand name.~~

~~We are one~~West Coast region of the ~~largest midstream operators~~United States. As discussed in ~~North America.~~ Recent Developments, we have entered into a sale agreement for our Speedway business.

We primarily conduct our midstream operations through our ownership interest in MPLX, which owns and operates crude oil and ~~light~~refined product transportation and logistics infrastructure ~~as well as~~and natural gas and NGL gathering, processing, and fractionation

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assets. As of September 30, ~~2019,~~2020, we owned, leased or had ownership interests in approximately ~~16,600~~17,200 miles of crude oil and refined product pipelines tothat deliver crude oil to ourrefineries and other locations and refined products to wholesale, brand marketing and ~~retail market areas.~~direct dealer locations. 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. Our integrated midstream ~~gathering and processing~~energy asset 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: natural gas gathering, processing and transportation; and NGL gathering, transportation, fractionation, storage and marketing.

~~At September 30, 2019, our~~Our operations ~~consisted~~consist of ~~three~~two reportable operating segments: Refining & ~~Marketing; Retail;~~Marketing and Midstream. Each of these segments is organized and managed based upon the nature of the products and services ~~it offers.~~they offer.

•


•	Midstream – 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.

Recent Developments

Strategic Actions to Enhance Shareholder Value

On ~~October 31, 2019,~~August 2, 2020, we ~~announced~~entered into a definitive agreement to sell Speedway, our ~~intention to separate our~~company-owned and operated retail transportation fuel and convenience store business, ~~which is operated primarily under~~to 7-Eleven, Inc. for $21 billion in cash, subject to certain adjustments based on the ~~Speedway brand, into an independent, publicly traded company. The transaction is intended to take the form~~levels of ~~a tax-free distribution to MPC shareholders of publicly traded stock~~cash, debt (as defined in the ~~new independent retail transportation fuel~~agreement) and ~~convenience store company.~~working capital at closing and certain other items. The taxable transaction is expected to ~~be completed by year-end~~close in the first quarter of 2021, subject to customary closing conditions and regulatory approvals. This transaction is expected to result in after-tax cash proceeds of approximately $16.5 billion. The company expects to use the proceeds from the sale to strengthen the balance sheet and return capital to shareholders. We will retain our direct dealer business.

In connection with the agreement to sell Speedway, the Company has agreed to enter into certain ancillary agreements, including a 15-year fuel supply agreement for approximately 7.7 billion gallons per year associated with 7-Eleven, Inc. or its subsidiaries. Further, the Company expects incremental opportunities over time to supply 7-Eleven's remaining business as existing arrangements mature and as new locations are added in connection with its announced U.S. and Canada growth strategy.

As a result of the agreement to sell the Speedway business, its results are reported separately as discontinued operations in our consolidated statements of income for all periods presented and its assets and liabilities have been reclassified in our consolidated balance sheets to assets and liabilities held for sale. Prior to presentation of Speedway as discontinued operations, Speedway and our retained direct dealer business were the two reporting units within our Retail segment. Beginning with the third quarter of 2020, ~~subject~~the direct dealer business is managed as part of the Refining & Marketing segment. The results of the Refining & Marketing segment have been retrospectively adjusted to include the results of the direct dealer business in all periods presented.

As a result of our agreement to sell Speedway, the following changes in our basis of presentation have occurred:

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Business Update

The outbreak of COVID-19 and its development into a pandemic in March 2020 have resulted in significant economic disruption globally. Actions taken by various governmental authorities, individuals and companies around the world to prevent the spread of COVID-19 through social distancing have restricted travel, many business operations, public gatherings and the overall level of individual movement and in-person interaction across the globe.

This has in turn significantly reduced global economic activity and resulted in a decrease in motor vehicle use at a time when seasonal driving patterns typically result in an increase of consumer demand for gasoline and a dramatic reduction in airline flights. As a result, there has also been a decline in the demand for the refined petroleum products that we manufacture and sell.

The decrease in the demand for refined petroleum products coupled with a decline in the price of crude oil has resulted in a significant decrease in the price and volume of the refined petroleum products we produce and sell and had a negative impact on working capital during the first nine months of 2020.

In addition, a decline in the market ~~regulatory~~prices for products held in our inventories below the carrying value of our inventory resulted in an adjustment to the value of our inventories. At September 30, 2020, market values for these inventories were lower than their LIFO cost basis and, as a result, we recorded an LCM inventory valuation reserve of $1.19 billion. Based on movements of refined product prices, future inventory valuation adjustments could have a negative or positive effect to earnings. Such losses are subject to reversal in subsequent periods if prices recover.

We have been and continue to actively respond to the impacts that these matters are having on our business. During the third quarter of 2020, we announced strategic actions to lay a foundation for long-term success, including plans to optimize our assets and structurally lower costs in 2021 and beyond, which included indefinitely idling the Gallup and Martinez refineries and the approval of an involuntary workforce reduction plan. In connection with these strategic actions, we recorded restructuring expenses of $348 million for the three months ended September 30, 2020. We also progressed activities associated with the conversion of the Martinez refinery to a renewable diesel facility, including applying for permits, advancing discussions with feedstock suppliers, and beginning detailed engineering activities. As envisioned, the Martinez facility would be expected to start producing renewable diesel in 2022, with a potential to build to full capacity of 48,000 barrels per day in 2023.

We previously announced a goal to reduce capital spending by $1.35 billion, resulting in planned 2020 capital spending of $3.0 billion, or a reduction of approximately 30 percent from our initial plan for the year. We are currently on track to exceed this targeted reduction. The reductions are planned across all segments of the business. Our remaining capital spend primarily relates to growth projects that are already in progress or spending that supports the safe and reliable operation of our facilities.

We are also on track to exceed our targeted $950 million reduction of 2020 forecasted operating expenses, primarily through reductions of fixed costs and deferral of certain ~~other conditions,~~expense projects, which includes $200 million of operating expense reductions at MPLX.

In addition to these measures to address our operations, earlier in the year we took action to address our liquidity as outlined below:

Share repurchases have temporarily been suspended. The timing and amount of future repurchases, if any, will depend upon several factors, including ~~final approval~~market and business conditions.

On April 27, 2020, we entered into an additional $1.0 billion 364-day revolving credit facility, which expires in 2021, to provide incremental liquidity and financial flexibility during the commodity price and demand downturn.

On April 27, 2020, we closed on the issuance of $2.5 billion of senior notes. Proceeds from the senior notes were used to pay down certain amounts outstanding on the five-year revolving credit facility.

During June 2020, we repaid the remaining amounts outstanding on the five-year revolving credit facility.

On September 23, 2020, we entered into a 364-day revolving credit agreement, which provides for a $1.0 billion unsecured revolving credit facility that matures in September 2021, and which replaces a similar 364-day revolving credit agreement that expired on September 28, 2020. At September 30, 2020, we had $7.7 billion available on our variable credit facilities.

Many uncertainties remain with respect to COVID-19, including its resulting economic effects, and we are unable to predict the ultimate economic impacts from COVID-19 and how quickly national economies can recover once the pandemic ultimately subsides. However, the adverse impact of the economic effects on MPC has been and will likely continue to be significant. We believe we have proactively addressed many of the known impacts of COVID-19 to the extent possible and will strive to continue to do so, but there can be no guarantee the measures will be fully effective.

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Other Strategic Updates

On November 2, 2020, MPLX announced the board authorization of a unit repurchase program for the repurchase of up to $1 billion of MPLX’s outstanding common units held by the ~~MPC Board~~public. MPLX may utilize various methods to effect the repurchases, which could include open market repurchases, negotiated block transactions, tender offers, accelerated unit repurchases or open market solicitations for units, some of ~~Directors, receipt~~which may be effected through Rule 10b5-1 plans. The timing and amount of ~~customary assurances regarding the intended tax-free nature of the transaction,~~repurchases, if any, will depend upon several factors, including market and ~~the effectiveness of a registration statement to~~business conditions, and repurchases may be ~~filed with the SEC.~~initiated, suspended or discontinued at any time. The ~~Speedway business is currently a reporting unit within our Retail segment. MPC will retain its direct-dealer business, which is also included in the Retail segment as currently reported.~~repurchase authorization has no expiration date.

On March 18, 2020, we announced that MPC’s board of directors ~~has also formed~~unanimously decided to maintain MPC’s current midstream structure, with MPC remaining, through a wholly owned subsidiary, the general partner of MPLX. This decision concluded a comprehensive evaluation, led by a special committee to enhance its evaluation of potential value-creating options for our Midstream business. Among other aspects, the special Board committee will analyze the strategic fit of assets with MPC, the ability to realize full valuation credit for midstream earnings and cash flow, balance sheet impacts including liquidity and credit ratings, transaction tax impacts, separation costs, and overall complexity.

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,~~board, that included extensive input from multiple external advisors and ANDX survived as a wholly-owned subsidiary of MPLX. 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. Additionally, as a result of MPLX’s acquisition of ANDX, 600,000 ANDX preferred units were converted into 600,000 preferred units of MPLX (the “Series B preferred units”). Series B preferred unitholders are entitled to receive, when and if declared by the board, a fixed distribution of $68.75 per unit, per annum, payable semi-annually in arrears on February 15 and August 15, or the first business day thereafter.

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.significant feedback from investors.

EXECUTIVE SUMMARY

Results

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

Three Months Ended
September 30, Nine Months Ended
September 30,
(In millions, except per share data) 2019 2018 2019 2018
Income from operations by segment
Refining & Marketing $ 883
$ 666
$ 1,455
$ 1,558
Retail 442
161
1,105
415
Midstream 919
679
2,705
1,863
Items not allocated to segments (220 ) (103 ) (530 ) (282 )
Income from operations $ 2,024
$ 1,403
$ 4,735
$ 3,554
Net income attributable to MPC $ 1,095
$ 737
$ 2,194
$ 1,829
Net income attributable to MPC per diluted share $ 1.66
$ 1.62
$ 3.28
$ 3.92



	Three Months Ended September 30,						Nine Months Ended September 30,
(In millions)	2020			2019			2020			2019
Income (loss) from continuing operations by segment
Refining & Marketing^(a)	$	(1,569	)	$	989		$	(3,610	)	$	1,750
Midstream	960			919			2,734			2,705
Corporate^(b)	(197		)	(206		)	(625		)	(589		)
Items not allocated to segments:
Equity method investment restructuring gain^(c)	—			—			—			207
Transaction-related costs^(d)	—			(22		)	(8		)	(147		)
Litigation	—			—			—			(22		)
Impairments^(e)	(433		)	—			(9,595		)	—
Restructuring expense^(f)	(348		)	—			(348		)	—
LCM inventory valuation adjustment	530			—			(1,185		)	—
Income (loss) from continuing operations	(1,057		)	1,680			(12,637		)	3,904
Net interest and other financial costs	359			312			1,032			932
Income (loss) from continuing operations before income taxes	(1,416		)	1,368			(13,669		)	2,972
Provision (benefit) for income taxes on continuing operations	(436		)	255			(2,237		)	600
Income (loss) from continuing operations, net of tax	(980		)	1,113			(11,432		)	2,372


^(a)	Recast to reflect direct dealer income from operations of $103 million, $106 million, $303 million and $295 million for the third quarter 2020 and 2019 and the first nine months of 2020 and 2019, respectively. Includes a LIFO liquidation charge of $256 million in the third quarter of 2020.


^(b)	Recast to reflect corporate costs of $7 million, $8 million, $20 million and $21 million for the third quarter 2020 and 2019 and the first nine months of 2020 and 2019, respectively, that are no longer allocated to Speedway under discontinued operations accounting.


^(c)	Represents gain related to the formation of Capline LLC for the nine months ended September 30, 2019.


^(d)	2020 includes costs incurred in connection with the Midstream strategic review. 2019 includes employee severance, retention and other costs related to the acquisition of Andeavor.


^(e)	Includes $7.4 billion goodwill impairment, $1.3 billion impairment of equity method investments and $886 million impairment of long lived assets for the nine months ended September 30, 2020.


^(f)	Restructuring expenses include $189 million of exit and disposal costs related to indefinite idling of the Martinez and Gallup refineries and $159 million of employee separation costs.

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Select results for discontinued operations are reflected in the following table.



	Three Months Ended September 30,					Nine Months Ended September 30,
(In millions)	2020			2019		2020			2019
Income from discontinued operations
Speedway	$	456		$	344	$	1,282		$	831
Transaction-related costs^(a)	(18		)	—		(75		)	—
LCM inventory valuation adjustment	—			—		(25		)	—
Income from discontinued operations	438			344		1,182			831
Net interest and other financial costs	5			5		15			13
Income from discontinued operations before income taxes	433			339		1,167			818
Provision for income taxes on discontinued operations	62			85		286			197
Income from discontinued operations, net of tax	$	371		$	254	$	881		$	621


^(a)	Costs related to the Speedway separation.

The following table includes net income (loss) per diluted share data.



	Three Months Ended September 30,					Nine Months Ended September 30,
	2020			2019		2020			2019
Net income (loss) per diluted share
Continuing operations	$	(1.93	)	$	1.27	$	(16.93	)	$	2.35
Discontinued operations	0.57			0.39		1.35			0.93
Net income (loss) attributable to MPC	$	(1.36	)	$	1.66	$	(15.58	)	$	3.28

Actions taken by various governmental authorities, individuals and companies to prevent the spread of COVID-19 through social distancing have restricted travel, many business operations, public gatherings and the overall level of individual movement and in-person interaction in the areas where we operate which has impacted demand for our products. Net income (loss) attributable to MPC was ~~$1.10 billion,~~$(886) million, or ~~$1.66~~$(1.36) per diluted share, in the third quarter of ~~2019~~2020 compared to ~~$737 million,~~$1.10 billion, or ~~$1.62~~$1.66 per diluted share, for the third quarter of ~~2018. Net income attributable~~2019 and $(10.11) billion, or $(15.58) per diluted share, in the first nine months of 2020 compared to ~~MPC was~~ $2.19 billion, or $3.28 per diluted share, in the first nine months of ~~2019~~2019.

For the third quarter of 2020, the change in net income (loss) attributable to MPC was largely due to a loss in our Refining & Marketing segment, long-lived asset impairment charges of $433 million, in addition to restructuring expenses of $348 million related to the idling of the Martinez and Gallup refineries and costs related to our announced workforce reduction. These changes were partially offset by a $530 million LCM benefit recognized in the quarter. The loss from operations in our Refining & Marketing segment is primarily due to decreases in refined product sales volumes, prices and margins during the current period and includes a charge of $256 million for the three months ended September 30, 2020 to reflect an expected LIFO liquidation for our crude oil inventories. These results were partially offset by increased income from discontinued operations, which relates to the Speedway business, in the third quarter of 2020 compared to ~~$1.83 billion, or $3.92 per diluted share, for~~the third quarter of 2019 mainly due to higher fuel margin and merchandise sales and lower operating and depreciation and amortization expenses, partially offset by lower fuel volumes.

For the first nine months of ~~2018. In both periods~~2020, the change in net income (loss) attributable to MPC was primarily due to a loss in our Refining & Marketing segment, goodwill and long-lived asset impairment charges of ~~2019,~~$8.28 billion and impairments of equity method investments of $1.32 billion during the period primarily ~~as a result~~driven by the effects of COVID-19 and the decline in commodity prices, an LCM charge of $1.19 billion and restructuring expenses of $348 million related to the idling of the ~~Andeavor acquisition,~~Martinez and Gallup refineries and costs related to our announced workforce reduction. The loss from operations in our Refining & Marketing segment is primarily due to decreases in refined product sales volumes, prices and margins during the current period and includes a charge of $256 million for the nine months ended September 30, 2020 to reflect an expected LIFO liquidation for our crude oil inventories. The costs of inventories in the historical LIFO layer which is expected to be liquidated are higher than current costs, which resulted in increased cost of revenues and decreased income from ~~operations was~~operations. These results were partially offset by increased ~~net interest~~income from discontinued operations, which relates to the Speedway business,

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in the first nine months of 2020 compared to the first nine months of of 2019 largely due to higher fuel margin and ~~other~~lower depreciation and amortization expense, partially offset by lower fuel volumes.

See Note 4 to the unaudited consolidated financial ~~costs, provision~~statements for ~~income taxes and net income attributable to noncontrolling interests.~~additional information on discontinued operations.

Refer to the Results of Operations section for a discussion of consolidated financial results and segment results for the third quarter of ~~2019~~2020 as compared to the third quarter of ~~2018~~2019 and the first nine months of ~~2019 as~~2020 compared to the first nine 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.

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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. On July 30, 2019, MPLX completed its acquisition of ANDX.

This transaction combined two strong, complementary companies to create a leading nationwide U.S. downstream energy company. The acquisition substantially increased our geographic diversification and scale and strengthened each of our operating segments by diversifying our refining portfolio into attractive markets and increasing access to advantaged feedstocks, enhancing our midstream footprint in the Permian Basin, and creating a nationwide retail and marketing portfolio all of which is expected to substantially improve efficiencies and our ability to serve customers. We expect the combination to generate up to approximately $1.4 billion in gross run-rate synergies within the first three years, significantly enhancing our long-term cash flow generation profile.2019.

MPLX

We owned approximately ~~666~~647 million MPLX common units at September 30, ~~2019~~2020 with a market value of ~~$18.65~~$10.19 billion based on the September 30, ~~2019~~2020 closing price of ~~$28.01~~$15.74 per common unit. On October ~~25, 2019,~~27, 2020, MPLX declared a quarterly cash distribution of ~~$0.6775~~$0.6875 per common unit payable on November ~~14, 2019.~~13, 2020. As a result, MPLX will make distributions totaling ~~$704~~$715 million to its common unitholders. MPC’s portion of these distributions is approximately ~~$438~~$445 million.

We received ~~MPLX~~ limited partner distributions of ~~$1.39~~$1.35 billion ~~and $775 million~~from MPLX in the nine months ended September 30, ~~2019~~2020 and ~~2018, respectively. These distributions include~~$1.39 billion from MPLX ~~distributions received~~and ANDX combined in the nine months ended September 30, ~~2019 and 2018 and~~2019. The decrease in distributions from the prior year is due to the fact that ANDX ~~distributions received~~had a higher per unit distribution prior to the Merger when compared to the MPLX distribution per unit post-merger.

On July 31, 2020, WRSW, a wholly owned subsidiary of MPC, entered into a Redemption Agreement with MPLX, pursuant to which MPLX agreed to transfer to WRSW, all of the outstanding membership interests in WRW in exchange for the redemption of MPLX common units held by WRSW. The transaction effects the transfer to MPC of the Western wholesale distribution business that MPLX acquired as a result of its acquisition of ANDX. Beginning in the ~~nine months ended September 30, 2019.~~third quarter of 2020, the results of these operations are presented in MPC’s Refining & Marketing segment prospectively.

At the closing, per the terms of Redemption Agreement, MPLX redeemed 18,582,088 MPLX common units (the “Redeemed Units”) held by WRSW. The number of Redeemed Units was calculated by dividing WRW’s aggregate valuation of $340 million by the simple average of the volume weighted average New York Stock Exchange prices of an MPLX common unit for the ten trading days ending at market close on July 27, 2020. The transaction resulted in a minor decrease in MPC’s ownership interest in MPLX.

See Note 35 to the unaudited consolidated financial statements for additional information on MPLX.

~~Share Repurchases~~Liquidity

~~During the nine months ended~~Our liquidity, excluding MPLX, totaled $8.44 billion at September 30, ~~2019, we returned $1.89 billion to our shareholders through repurchases of approximately 33 million shares of common stock at an average price per share of $58.75.~~2020 consisting of:

~~Since January 1, 2012, our board of directors has approved $18.0 billion in total share repurchase authorizations and we have repurchased~~



	September 30, 2020
(In millions)	Total Capacity		Outstanding Borrowings		Available Capacity
Bank revolving credit facility^(a)(b)	$	5,000	$	1	$	4,999
364-day bank revolving credit facility	1,000		—		1,000
364-day bank revolving credit facility	1,000		—		1,000
Trade receivables facility^(c)	750		—		750
Total	$	7,750	$	1	$	7,749
Cash and cash equivalents^(d)					688
Total liquidity					$	8,437


^(a)	Excludes MPLX’s $3.50 billion bank revolving credit facility, which had approximately $3.41 billion available as of September 30, 2020.


^(b)	Outstanding borrowings include $1 million in letters of credit outstanding under this facility.


^(c)	Availability under our $750 million trade receivables facility is a function of eligible trade receivables, which will be lower in a sustained lower price environment for refined products.


^(d)	Includes cash and cash equivalents classified as assets held for sale of $98 million and excludes cash and cash equivalents of MPLX of $28 million.

On September 23, 2020, MPC entered into a ~~total of $14.98 billion of our common stock, leaving $3.02 billion available for repurchases as of September 30, 2019. See Note 8 to the unaudited consolidated financial statements.~~

~~Liquidity~~

As of September 30, 2019, we had cash and cash equivalents of approximately $1.48 billion, excluding MPLX cash and cash equivalents of $41 million, no borrowings and $1 million in letters of credit outstanding under our $6.0 billion bank revolving credit facilities and no borrowings outstanding under our $750 million trade receivables facility, resulting in cash and available liquidity of $8.23 billion. As of September 30, 2019, MPLX had approximately $3.50 billion available through its bank364-day revolving credit agreement, ~~and $1.38~~which provides for a $1.0 billion ~~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~~unsecured revolving credit facility ~~was amended~~that matures in September 2021, 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.

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, 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 to extend the term of the intercompany loan agreement to July 31, 2024.

~~On July 26, 2019, we entered into~~which replaces a ~~new $1 billion~~similar 364-day revolving credit ~~facility with a syndicate of banks~~agreement that ~~became effective upon the expiration of our existing $1 billion 364-day revolving facility in~~expired on 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~~28, 2020.

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

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On October 1, 2020, all of the $475 million outstanding aggregate principal amount of 5.375 percent senior notes due October 2022 were redeemed at a price equal to par using available cash on hand and liquidity provided through MPC’s credit facilities.

On September 25, 2020, we announced that all of the $650 million outstanding aggregate principal amount of 3.400 percent senior notes due December 2020 will be redeemed on November 15, 2020, using available cash on hand and liquidity provided through MPC’s credit facilities, at a price equal to par, plus accrued and unpaid interest to, but not including, such date.

MPLX’s liquidity totaled $4.93 billion at September 30, 2020. As of September 30, 2020, MPLX had cash and cash equivalents of $28 million, $3.41 billion available under its $3.5 billion revolving credit agreement and $1.5 billion available through its intercompany loan agreement with MPC.

OVERVIEW OF SEGMENTS

Refining & Marketing

Refining & Marketing segment income from operations depends largely on our Refining & Marketing margin, refining operating costs, distribution costs, refining planned turnaround 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 direction as the cost of crude oil. As a performance benchmark and a comparison with other industry participants, we calculate Gulf Coast, Mid-Continent and West Coast ~~3-2-1~~ crack spreads that we believe most closely track our operations and slate of products. The following are used for these crack-spread 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 crude oil referenced in ~~these~~our Gulf Coast, Mid-Continent and West Coast crack spreads. The amount of these discounts, which we refer to as the sweet differential and sour ~~differentials,~~differential, can vary significantly, causing our Refining & Marketing margin to differ from blended crack spreads. In general, larger sweet and sour 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)
Blended crack spread sensitivity^(a)(per $1.00/barrel change)	Blended crack spread sensitivity^(a)(per $1.00/barrel change)	$	900	Blended crack spread sensitivity^(a)(per $1.00/barrel change)	$	910
Sour differential sensitivity^(b) (per $1.00/barrel change)	Sour differential sensitivity^(b) (per $1.00/barrel change)	450		Sour differential sensitivity^(b) (per $1.00/barrel change)	420
Sweet differential sensitivity^(c) (per $1.00/barrel change)	Sweet differential sensitivity^(c) (per $1.00/barrel change)	370		Sweet differential sensitivity^(c) (per $1.00/barrel change)	420
Natural gas price sensitivity^(d) (per $1.00/MMBtu)	Natural gas price sensitivity^(d) (per $1.00/MMBtu)	300		Natural gas price sensitivity^(d) (per $1.00/MMBtu)	325


^(a)	Crack spread based on 38 percent LLS, 38 percent WTI and 24 percent ANS with Gulf Coast, Mid-Continent and West Coast product pricing, respectively, and assumes all other differentials and pricing relationships remain unchanged.


^(b)	Sour crude oil basket consists of the following crudes: ANS, Argus Sour Crude Index, Maya and Western Canadian ~~Select~~Select. We expect approximately 50 percent of the crude processed at our refineries in 2020 will be sour crude.


^(c)	Sweet crude oil basket consists of the following crudes: Bakken, Brent, LLS, WTI-Cushing and ~~WTI-Midland~~WTI-Midland. We expect approximately 50 percent of the crude processed at our refineries in 2020 will be sweet crude.


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

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

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

the types of crude oil and other charge and blendstocks ~~processed as compared to the assumptions used to calculate the market crack spreads;~~processed;

our refinery yields;

the cost of products purchased for resale; and

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.~~

Inventories are stated at the lower of cost or 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 cost basis of these inventories may have to be written down to market values.risk.

Refining & Marketing segment income from operations is also affected by changes in refinery ~~direct~~ operating costs ~~which include~~and refining planned turnaround ~~and major maintenance, depreciation and amortization and other manufacturing expenses.~~costs in addition to committed distribution costs. Changes in

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~~manufacturing~~ operating 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~~Refining planned turnarounds, requiring temporary shutdown of certain refinery operating units, are periodically performed at each refinery. ~~Costs for planned turnaround, major maintenance~~Distribution costs primarily include long-term agreements with MPLX, as discussed below, which are based on committed volumes and ~~engineering projects~~will negatively impact income from operations in periods when throughput or sales are ~~expensed in the period incurred.~~lower or refineries are idled.

We have various long-term, fee-based commercial agreements with MPLX. Under these agreements, MPLX, which is reported in our Midstream segment, provides 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 other products. Certain other agreements include commitments to pay for 100 percent of available capacity for certain marine transportation and refining logistics assets.

~~Retail~~

Retail segment profitability is impacted by fuel and merchandise margin. Fuel margin for gasoline and distillate is 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). Gasoline and distillate prices are volatile and are impacted by changes in supply and demand in the regions where we operate. Numerous factors impact gasoline and distillate demand throughout the year, including local competition, seasonal demand fluctuations, the available wholesale supply, the level of economic activity in our marketing areas and weather conditions.

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

Inventories are carried at the lower of cost or market value. Costs of refined products and merchandise are stated under the LIFO inventory costing method and aggregated on a consolidated basis for purposes of assessing if the cost basis of 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, which is reported in our Midstream segment, has various long-term, fee-based commercial agreements related to services provided to our Refining & Marketing segment. Under these agreements, MPLX has 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 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.

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.

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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 September 30,							Nine Months Ended September 30,								Three Months Ended September 30,								Nine Months Ended September 30,
(In millions)		2019		2018		Variance			2019		2018		Variance				2020			2019		Variance			2020			2019		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)	$	31,043	$	22,988	$	8,055		$	92,857	$	64,171	$	28,686		Sales and other operating revenues(a)	$	17,408		$	27,552	$	(10,144	)	$	51,807		$	83,140	$	(31,333	)
Income from equity method investments		124		96		28			330		262		68
Income (loss) from equity method investments^(b)																Income (loss) from equity method investments^(b)	117			104		13			(1,037		)	272		(1,309		)
Net gain on disposal of assets	Net gain on disposal of assets	4		1		3			222		6		216			Net gain on disposal of assets	1			2		(1		)	6			220		(214		)
Other income	Other income	31		47		(16		)	96		122		(26		)	Other income	22			30		(8		)	69			93		(24		)
Total revenues and other income	Total revenues and other income	31,202		23,132		8,070			93,505		64,561		28,944			Total revenues and other income	17,548			27,688		(10,140		)	50,845			83,725		(32,880		)
Costs and expenses:	Costs and expenses:															Costs and expenses:
Cost of revenues (excludes items below)	Cost of revenues (excludes items below)	27,300		20,606		6,694			82,942		57,772		25,170			Cost of revenues (excludes items below)	16,673			24,345		(7,672		)	48,517			74,626		(26,109		)
LCM inventory valuation adjustment																LCM inventory valuation adjustment	(530		)	—		(530		)	1,185			—		1,185
Impairment expense																Impairment expense	433			—		433			8,280			—		8,280
Depreciation and amortization	Depreciation and amortization	855		555		300			2,660		1,616		1,044			Depreciation and amortization	830			761		69			2,526			2,375		151
Selling, general and administrative expenses	Selling, general and administrative expenses	833		445		388			2,618		1,271		1,347			Selling, general and administrative expenses	673			761		(88		)	2,080			2,413		(333		)
Restructuring expenses																Restructuring expenses	348			—		348			348			—		348
Other taxes	Other taxes	190		123		67			550		348		202			Other taxes	178			141		37			546			407		139
Total costs and expenses	Total costs and expenses	29,178		21,729		7,449			88,770		61,007		27,763			Total costs and expenses	18,605			26,008		(7,403		)	63,482			79,821		(16,339		)
Income from operations		2,024		1,403		621			4,735		3,554		1,181
Income (loss) from continuing operations																Income (loss) from continuing operations	(1,057		)	1,680		(2,737		)	(12,637		)	3,904		(16,541		)
Net interest and other financial costs	Net interest and other financial costs	317		240		77			945		618		327			Net interest and other financial costs	359			312		47			1,032			932		100
Income before income taxes		1,707		1,163		544			3,790		2,936		854
Provision for income taxes		340		222		118			797		525		272
Net income		1,367		941		426			2,993		2,411		582
Less net income attributable to:
Income (loss) from continuing operations before income taxes																Income (loss) from continuing operations before income taxes	(1,416		)	1,368		(2,784		)	(13,669		)	2,972		(16,641		)
Provision (benefit) for income taxes on continuing operations																Provision (benefit) for income taxes on continuing operations	(436		)	255		(691		)	(2,237		)	600		(2,837		)
Income (loss) from continuing operations, net of tax																Income (loss) from continuing operations, net of tax	(980		)	1,113		(2,093		)	(11,432		)	2,372		(13,804		)
Income from discontinued operations, net of tax																Income from discontinued operations, net of tax	371			254		117			881			621		260
Net income (loss)																Net income (loss)	(609		)	1,367		(1,976		)	(10,551		)	2,993		(13,544		)
Less net income (loss) attributable to:																Less net income (loss) attributable to:
Redeemable noncontrolling interest	Redeemable noncontrolling interest	20		19		1			61		55		6			Redeemable noncontrolling interest	20			20		—			61			61		—
Noncontrolling interests	Noncontrolling interests	252		185		67			738		527		211			Noncontrolling interests	257			252		5			(501		)	738		(1,239		)
Net income attributable to MPC		$	1,095	$	737	$	358		$	2,194	$	1,829	$	365
Net income (loss) attributable to MPC																Net income (loss) attributable to MPC	$	(886	)	$	1,095	$	(1,981	)	$	(10,111	)	$	2,194	$	(12,305	)


^(a)	In accordance with discontinued operations accounting, Speedway sales to retail customers and net results are reflected in Income from discontinued operations, net of tax and Refining & Marketing intercompany sales to Speedway are now presented as third party sales.


^(b)	The first nine months of 2020 includes $1.32 billion of impairment expense. See Note 6 to the unaudited consolidated financial statements for further information.

Third Quarter ~~2019~~2020 Compared to Third Quarter ~~2018~~2019

Net income (loss) attributable to MPC ~~increased $358 million~~decreased $1.98 billion in the third quarter of ~~2019~~2020 compared to the third quarter of ~~2018 primarily~~2019 largely due to ~~an increase~~a decrease in ~~income from operations, partially offset by increases in the provision for income taxes, net interest and other financial costs and net income attributable to noncontrolling interests.~~

~~Revenues and other income increased $8.07 billion. Sales and other operating revenues increased $8.06 billion primarily due to increased Refining & Marketing segment~~ refined product sales volumes, ~~which increased 1,324 mbpd, largely due to~~prices and margin, primarily driven by the ~~Andeavor acquisition on October 1, 2018.~~

~~Costs~~effects of COVID-19 and ~~expenses increased $7.45 billion~~the decline in commodity prices, $433 million of long-lived assets impairment primarily ~~due to:~~

~~increased cost of revenues of $6.69 billion mainly due to the inclusion of costs~~ related to the ~~Andeavor~~repositioning of our Martinez refinery, $348 million of restructuring expenses and a $256 million charge to reflect an expected LIFO liquidation for our crude oil inventories. These charges were partially offset by an LCM benefit of $530 million and increased income from discontinued operations, ~~following the acquisition;~~

~~increased depreciation and amortization of $300 million primarily due to the depreciation of the fair value of assets acquired in connection with the Andeavor acquisition;~~

increased selling, general and administrative expenses of $388 million largely due to the inclusion of costs related to Andeavor operations and reflecting MPC’s classification of costs and expenses; and

~~increased other taxes of $67 million primarily due to the inclusion of other taxes related to the acquired Andeavor operations.~~which represents our Speedway business.

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Revenues and other income decreased $10.14 billion primarily due to decreased Refining & Marketing segment refined product sales volumes, which decreased 505 mbpd, and decreased average refined product sales prices of $0.55 per gallon largely due to reduced travel and business operations associated with the COVID-19 pandemic.

Costs and expenses decreased $7.40 billion primarily due to:

decreased cost of revenues of $7.67 billion mainly due to lower refined product sales volumes, which decreased 505 mbpd primarily due to reduced travel and business operations associated with the COVID-19 pandemic and an LCM benefit of $530 million. This was partially offset by a charge of $256 million to reflect an expected LIFO liquidation for our crude oil inventories. The costs of inventories in the historical LIFO layer which is expected to be liquidated are higher than current costs, which resulted in the LIFO liquidation charge;

long-lived asset impairment expenses of $433 million primarily related to the repositioning of the Martinez refinery;

decreased selling, general and administrative expenses of $88 million mainly due to decreases in salaries and employee-related expenses, contract services expenses, credit card processing fees for brand customers, and transaction-related costs, partially offset by increases in employee benefit costs and other expenses;

restructuring expenses of $348 million related to the idling of the Martinez and Gallup refineries and costs related to our announced workforce reduction. See Note 3 to the unaudited consolidated financial statements for additional information; and

increased other taxes of $37 million primarily due to increased property and environmental taxes of approximately $21 million and $17 million, respectively. Property taxes increased in the current period mainly due to the absence of tax exemptions and property tax refunds received in the third quarter of 2019 and environmental taxes increased largely due to the reinstatement of the Oil Spill Tax in 2020, which was not in effect for all of 2019.

Net interest and other financial costs increased ~~$77~~$47 million ~~mainly~~largely due to ~~debt assumed in the acquisition of Andeavor~~increased MPC borrowings and ~~increased MPLX borrowings, partially offset by a decrease in pension settlement losses of $38 million.~~decreased capitalized interest and interest income.

~~Provision~~Benefit for income taxes ~~increased $118~~on continuing operations was $436 million ~~primarily due~~for the three months ended September 30, 2020 compared to ~~increased income before~~provision for income taxes on continuing operations of ~~$544 million.~~$255 million for the three months ended September 30, 2019. The combined federal, state and foreign income tax rate was 2031 percent (tax benefit rate) and 19 percent for the three months ended September 30, ~~2019~~2020 and ~~2018,~~2019, respectively. The effective tax benefit rate for the three months ended September 30, 2020 was higher than the U.S. statutory rate of 21 percent due to certain permanent tax benefits related to net income attributable to noncontrolling interests, state taxes, and a change in estimate related to the expected NOL carryback provided by the CARES Act offset by non-tax deductible goodwill impairment. The combined federal, state and foreign continuing operations income tax rate for the three months ended September 30, 2019 and 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 offset by equity compensation and state and local tax expense. The effective tax rate for the three months ended September 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 offset by state and local tax expense.

~~Net income attributable to noncontrolling interests increased $67 million primarily due to net income attributable to noncontrolling interest in ANDX, which was acquired by MPLX on July 30, 2019.~~

Nine Months Ended September 30, ~~2019~~2020 Compared to Nine Months Ended September 30, ~~2018~~2019

Net income (loss) attributable to MPC ~~increased $365 million~~decreased $12.31 billion in the first nine months of ~~2019~~2020 compared to the first nine months of ~~2018~~2019 primarily due to impairment expenses for goodwill and long-lived assets of $8.28 billion, impairments of equity method investments of $1.32 billion, an ~~increase~~LCM charge of $1.19 billion, decreased refined product sales volumes, prices and margin, restructuring expenses of $348 million, and a charge of $256 million to reflect an expected LIFO liquidation in ~~income from operations,~~our crude oil inventories. These changes were partially offset by ~~increases in net interest and other financial costs, provision for~~increased income ~~taxes and net income attributable to noncontrolling interests.~~from discontinued operations, which represents our Speedway business.

Revenues and other income ~~increased $28.94~~decreased $32.88 billion primarily due to:

~~increased~~decreased sales and other operating revenues of ~~$28.69~~$31.33 billion primarily due to ~~increased~~decreased Refining & Marketing segment refined product sales volumes, which ~~increased 1,384~~decreased 508 mbpd, ~~largely~~and decreased average refined product sales prices of $0.56 per gallon primarily due to reduced travel and business operations associated with the ~~Andeavor acquisition on October 1, 2018;~~COVID-19 pandemic;

~~increased~~decreased income from equity method investments of ~~$68 million~~$1.31 billion largely due to ~~income from midstream affiliates;~~impairments of equity method investments of $1.32 billion primarily driven by the effects of COVID-19 and the decline in commodity prices; and

~~increased~~decreased net gain on disposal of assets of ~~$216~~$214 million mainly due to the absence of a $207 million gain recognized in 2019 in connection with MPC’s exchange of its undivided interest in the Capline pipeline system for an equity ownership in Capline LLC.

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Costs and expenses ~~increased $27.76~~decreased $16.34 billion primarily due to:

decreased cost of revenues of $26.11 billion primarily due to reduced travel and business operations associated with the COVID-19 pandemic, partially offset by increased cost of revenues of ~~$25.17~~$256 million to reflect an expected LIFO liquidation for our crude oil inventories. The costs of inventories in the historical LIFO layer which is expected to be liquidated are higher than current costs, which resulted in the LIFO liquidation charge;

an LCM charge of $1.19 billion primarily ~~due to~~driven by the ~~inclusion~~effects of ~~costs~~COVID-19 and the decline in commodity prices;

impairment expense of $8.28 billion recorded for goodwill and long-lived assets of $7.39 billion and $886 million, respectively, primarily driven by the effects of COVID-19 and the decline in commodity prices. It also includes impairment of long-lived assets primarily related to the ~~Andeavor operations following the acquisition;~~

~~increased depreciation and amortization of $1.04 billion largely due to the depreciation~~repositioning of the ~~fair value of assets acquired in connection with the Andeavor acquisition;~~Martinez refinery;

~~increased~~decreased selling, general and administrative expenses of ~~$1.35 billion~~$333 million mainly due to decreases in salaries and employee-related expenses, transaction-related expenses, credit card processing fees for brand customers and litigation expense, partially offset by increases in employee benefit costs and other expenses;

restructuring expense of $348 million related to the ~~inclusion~~idling of the Martinez and Gallup refineries and costs related to ~~Andeavor operations and reflecting MPC’s classification of costs and expenses;~~our announced workforce reduction. See Note 3 to the unaudited consolidated financial statements for additional information; and

increased other taxes of ~~$202~~$139 million primarily due to increased property and environmental taxes of approximately $77 million and $56 million, respectively. Property taxes increased in the ~~inclusion of other taxes related~~current period mainly due to the ~~acquired Andeavor operations.~~absence of property tax refunds and tax exemptions received in the first nine months of 2019 and environmental taxes increased largely due to the reinstatement of the Oil Spill Tax in 2020, which was not in effect for all of 2019.

Net interest and other financial costs increased ~~$327~~$100 million largely due to ~~debt assumed in the acquisition of Andeavor~~increased MPC borrowings and ~~increased MPLX borrowings, partially offset by a decrease in pension settlement~~foreign currency exchange losses ~~of $38 million.~~and decreased interest income.

~~Provision~~Benefit for income taxes ~~increased $272~~on continuing operations was $2.24 billion for the nine months ended September 30, 2020 compared to provision for income taxes on continuing operations of $600 million ~~primarily~~for the nine months ended September 30, 2019, mainly due to ~~increased~~decreased income before income taxes of ~~$854 million and $36 million of state deferred tax expense recorded as an out of period adjustment related to the Andeavor acquisition.~~$16.64 billion. The combined federal, state and foreign income tax rate was 2116 percent (tax rate benefit) and 1820 percent for the nine months ended September 30, 2020 and 2019, respectively. The effective tax rate for the nine months ended September 30, 2020 was lower than the U.S. statutory rate of 21 percent primarily due to a significant amount of our pre-tax loss consisting of non-tax deductible goodwill impairment charges, partially offset by the tax rate differential resulting from the expected NOL carryback provided under the CARES Act. Additionally, our effective tax rate is generally benefited by our noncontrolling interest in MPLX, but this benefit was lower for the nine months ended September 30, 2020 compared to the nine months ended September 30, 2019 due to goodwill and ~~2018, respectively.~~other impairment charges recorded by MPLX. The effective tax rate for the nine months ended September 30, 2019 was ~~equal to~~less 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, offset by permanent tax differences related to net income attributable to noncontrolling interests. The effective tax rate for the nine months ended September 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 offset by state and local tax expense.

Net income attributable to noncontrolling interests ~~increased $211 million~~decreased $1.24 billion primarily due to MPLX’s net ~~income attributable to noncontrolling interest in ANDX, which was acquired by MPLX on July 30, 2019.~~

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~~Segment Results~~

~~Our segment income~~loss primarily resulting from ~~operations was approximately $5.27 billion and $3.84 billion for~~impairment expense recognized during the first nine months ~~ended September 30, 2019~~of 2020.

Results of Discontinued Operations

The prospective and ~~2018, respectively. The following shows~~historical results of the ~~percentage of segment income from~~Speedway business are presented as discontinued operations ~~by segment for these periods.~~in our consolidated financial statements.

~~Refining & Marketing~~

The following includes key financial and operating data for Speedway for the third quarter of ~~2019~~2020 compared to the third quarter of ~~2018~~2019 and the nine months ended September 30, ~~2019~~2020 compared to the nine months ended September 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 44. Costs formerly included in Refining & Marketing’s direct operating costs category are now presented in three categories: refining operating costs, refining planned turnaround costs and 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.

2019.

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	Three Months Ended September 30,						Nine Months Ended September 30,
Key Financial and Operating Data	2020			2019			2020			2019
Speedway fuel sales (millions of gallons)	1,583			1,992			4,416			5,820
Speedway fuel margin (dollars per gallon)^(a)(b)	$	0.3025		$	0.2604		$	0.3640		$	0.2379
Merchandise sales (in millions)	$	1,733		$	1,703		$	4,797		$	4,736
Merchandise margin (in millions)^(b)(c)	$	510		$	498		$	1,376		$	1,376
Merchandise margin percent	29.4		%	29.2		%	28.7		%	29.1		%
Same store gasoline sales volume (period over period)^(d)	(16.6		)%	(2.8		)%	(20.6		)%	(2.8		)%
Same store merchandise sales (period over period)^(d)(e)	0.8		%	5.2		%	(0.9		)%	5.6		%
Convenience stores at period-end	3,854			3,931


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

Three Months Ended
September 30, Nine Months Ended
September 30,
2019 2018 2019 2018
Refining & Marketing Operating Statistics
Total refinery throughputs (mbpd)
3,156
2,032
3,125
1,992
Refining & Marketing margin per barrel^(a)(b)
$ 14.66
$ 14.25
$ 13.72
$ 13.48
Less:
Refining operating costs per barrel^(c)
5.44
4.25
5.45
4.55
Distribution costs per barrel^(d)
4.31
4.17
4.48
4.02
Other per barrel^(e)
(0.05 ) (0.17 ) (0.05 ) (0.15 )
Refining planned turnaround costs per barrel 0.56
1.06
0.69
0.80
Depreciation and amortization per barrel 1.45
1.38
1.46
1.40
Purchase accounting-depreciation and amortization^(f)
(0.09 ) —
(0.01 ) —
Refining & Marketing segment income per barrel $ 3.04
$ 3.56
$ 1.70
$ 2.86


^(a)	~~Sales revenue~~The price paid by consumers less the cost of ~~refinery inputs~~refined products, excluding transportation, consumer excise taxes and ~~purchased products,~~bankcard processing fees (where applicable), divided by ~~total refinery throughputs.~~gasoline and distillate sales volume. Excludes inventory valuation adjustments.


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


^(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.

Third Quarter 2020 Compared to Third Quarter 2019

Income from discontinued operations, net of tax, increased $117 million. Quarterly results reflected higher fuel and merchandise margins, partially offset by lower fuel volumes. Changes in fuel sales volumes were primarily due to the effects of the COVID-19 pandemic which resulted in restricted travel, social distancing and reduced business operations. In addition, fuel sales volumes decreased as a result of an agreement between Speedway and Pilot Travel Centers LLC (“PTC”), effective October 1, 2019, in which PTC supplies, prices and sells diesel fuel at certain Speedway and PTC locations with both companies sharing in the diesel fuel margins.

Beginning August 2, 2020, in accordance with ASC 360, Property, Plant, and Equipment, we ceased recording depreciation and amortization for the Speedway business’ property, plant and equipment, finite-lived intangible assets and right of use lease assets. As a result, Speedway depreciation and amortization was $36 million and $94 million, for third quarter of 2020 and 2019, respectively.

The Speedway fuel margin increased to 30.25 cents per gallon in the third quarter of 2020, from 26.04 cents per gallon in the third quarter of 2019.

Nine Months Ended September 30, 2020 Compared to Nine Months Ended September 30, 2019

Income from discontinued operations, net of tax, increased $260 million primarily due to higher fuel margin partially offset by lower fuel volumes. Changes in fuel sales volumes were primarily due to the effects of the COVID-19 pandemic which resulted in restricted travel, social distancing and reduced business operations. In addition, fuel sales volumes decreased as a result of an agreement between Speedway and PTC, effective October 1, 2019, in which PTC supplies, prices and sells diesel fuel at certain Speedway and PTC locations with both companies sharing in the diesel fuel margins.

Beginning August 2, 2020, in accordance with ASC 360, Property, Plant, and Equipment, we ceased recording depreciation and amortization for the Speedway business’ property, plant and equipment, finite-lived intangible assets and right of use lease assets. As a result, Speedway depreciation and amortization was $237 million and $285 million for the nine months ended September 30, 2020 and 2019, respectively.

The Speedway fuel margin increased to 36.40 cents per gallon in the first nine months of 2020 compared with 23.79 cents per gallon in the first nine months of 2019.

See Note 4 to the unaudited consolidated financial statements for additional information on discontinued operations.

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Segment Results

Refining & Marketing

Beginning with the third quarter of 2020, the direct dealer business is managed as part of the Refining & Marketing segment. The results of the Refining & Marketing segment have been retrospectively adjusted to include the results of the direct dealer business in all periods presented.

The following includes key financial and operating data for the third quarter of 2020 compared to the third quarter of 2019 and the nine months ended September 30, 2020 compared to the nine months ended September 30, 2019.


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

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	Three Months Ended September 30,					Nine Months Ended September 30,
	2020			2019		2020			2019
Refining & Marketing Operating Statistics
Net refinery throughput (mbpd)	2,536			3,156		2,601			3,125
Refining & Marketing margin, excluding LIFO liquidation charge^(a)(b)(c)	$	8.28		$	15.11	$	9.46		$	14.17
LIFO liquidation charge	(1.10		)	—		(0.36		)	—
Refining & Marketing margin per barrel^(a)(b)(c)	7.18			15.11		9.10			14.17
Less:
Refining operating costs per barrel^(d)	5.41			5.44		5.85			5.45
Distribution costs per barrel^(a)(e)	5.61			4.32		5.35			4.49
Refining planned turnaround costs per barrel	1.01			0.56		1.02			0.69
Depreciation and amortization per barrel^(a)	1.96			1.55		1.95			1.56
Plus:
Purchase accounting-depreciation and amortization^(f)	—			0.12		—			0.01
Other per barrel^(f)	0.08			0.05		0.01			0.06
Refining & Marketing segment income (loss) per barrel	$	(6.73	)	$	3.41	$	(5.06	)	$	2.05


^(a)	Recast to reflect direct dealer results in the Refining & Marketing segment.


^(b)	Sales revenue less cost of refinery inputs and purchased products, divided by net refinery throughput.


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


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


^(d)(e)	Includes fees paid to MPLX. On a per barrel throughput basis, these fees were ~~$2.74~~$3.81 and ~~$3.22~~$2.74 for the three months ended September 30, ~~2019~~2020 and ~~2018,~~2019, respectively, and ~~$2.79~~$3.63 and ~~$3.08~~$2.79 for the nine months ended September 30, ~~2019~~2020 and ~~2018,~~2019, respectively. Excludes depreciation and amortization expense.


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


^(f)	Reflects the cumulative ~~effects~~effect through June 30, 2019 related to a measurement period adjustment arising from the finalization of purchase accounting.


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

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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 third quarter and first nine 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 September 30,						Nine Months Ended September 30,							Three Months Ended September 30,						Nine Months Ended September 30,
Benchmark Spot Prices (dollars per gallon)		2019			2018			2019			2018				2020			2019			2020			2019
Chicago CBOB unleaded regular gasoline	Chicago CBOB unleaded regular gasoline	$	1.73		$	2.06		$	1.73		$	1.94		Chicago CBOB unleaded regular gasoline	$	1.15		$	1.73		$	1.05		$	1.73
Chicago ULSD	Chicago ULSD	1.79			2.20			1.86			2.09			Chicago ULSD	1.17			1.79			1.16			1.86
USGC CBOB unleaded regular gasoline	USGC CBOB unleaded regular gasoline	1.65			1.98			1.65			1.90			USGC CBOB unleaded regular gasoline	1.15			1.65			1.07			1.65
USGC ULSD	USGC ULSD	1.83			2.14			1.88			2.06			USGC ULSD	1.16			1.83			1.18			1.88
LA CARBOB		1.97			2.14			1.99			2.11				1.33			1.97			1.27			1.99
LA CARB diesel		1.94			2.22			2.00			2.15				1.24			1.94			1.28			2.00

Market Indicators (dollars per barrel)
LLS		$	60.59		$	74.14		$	63.37		$	71.06			$	42.49		$	60.59		$	40.15		$	63.37
WTI		56.44			69.43			57.10			66.79				40.92			56.44			38.21			57.10
ANS		63.02			75.42			65.27			72.25				42.75			63.02			41.41			65.27
Crack Spreads:
Mid-Continent WTI 3-2-1	Mid-Continent WTI 3-2-1	$	15.26		$	17.79		$	15.85		14.87			Mid-Continent WTI 3-2-1	$	5.55		$	15.26		$	5.88		15.85
USGC LLS 3-2-1	USGC LLS 3-2-1	10.05			9.84			8.12			9.15			USGC LLS 3-2-1	3.28			10.05			4.15			8.12
West Coast ANS 3-2-1	West Coast ANS 3-2-1	17.77			14.07			17.21			15.00			West Coast ANS 3-2-1	9.21			17.77			9.76			17.21
Blended 3-2-1^(a)	Blended 3-2-1^(a)	13.88			13.88			13.24			11.44			Blended 3-2-1^(a)	5.57			13.88			6.15			13.24
Crude Oil Differentials:	Crude Oil Differentials:													Crude Oil Differentials:
Sweet	Sweet	$	(1.31	)	$	(3.26	)	$	(2.40	)	$	(2.36	)	Sweet	$	(0.59	)	$	(1.31	)	$	(1.00	)	$	(2.40	)
Sour	Sour	(2.35		)	(7.65		)	(2.50		)	(6.87		)	Sour	(2.26		)	(2.35		)	(3.64		)	(2.50		)


^(a)	Blended 3-2-1 Mid-Continent/USGC/West Coast crack spread is 38/38/24 percent in ~~2019~~2020 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.~~2019. These blends are based on our refining capacity by region in each period.

Third Quarter ~~2019~~2020 Compared to Third Quarter ~~2018~~2019

Refining & Marketing segment revenues ~~increased $6.86~~decreased $10.13 billion primarily due to ~~higher~~lower refined product sales volumes, which ~~increased 1,324~~decreased 505 mbpd, ~~mainly due to the Andeavor acquisition on October 1, 2018, partially offset by~~and decreased average refined product sales prices of ~~$0.23~~$0.55 per gallon. These decreases were primarily the result of reduced travel and business operations associated with the COVID-19 pandemic.

~~Refinery crude oil capacity utilization was 98 percent~~Net refinery throughputs decreased 620 mbpd during the third quarter of ~~2019 and total refinery throughputs increased 1,124 mbpd~~2020, primarily due to reducing throughputs and indefinitely idling certain facilities during the ~~refineries acquired from Andeavor.~~COVID-19 pandemic.

Refining & Marketing segment income from operations increased $217 million primarily driven by higher Refining & Marketing margin, which was partially offset by higher operating and distribution costs as well as higher depreciation and amortization. The increases in Refining & Marketing margin and costs and expenses weredecreased $2.56 billion primarily due to ~~increased sales and production volumes following the Andeavor acquisition.~~lower blended crack spreads.

Refining & Marketing margin, excluding LIFO liquidation charge, was ~~$14.66~~$8.28 per barrel for the third quarter of ~~2019~~2020 compared to ~~$14.25~~$15.11 per barrel for the third quarter of ~~2018.~~2019. Refining & Marketing margin is affected by our performance against 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 negative impact of approximately $3 billion on Refining & Marketing margin for the third quarter of 2020 compared to the third quarter of 2019, primarily due to lower crack spreads. Our reported Refining & Marketing margin differs from market indicators due to the mix of crudes purchased and their costs, the 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, other feedstock variances, direct dealer fuel margin and, for the third quarter of 2020, a LIFO liquidation charge of $256 million. These factors had an estimated net positive effect of approximately $200 million on Refining & Marketing segment income in the third quarter of 2020 compared to the third quarter of 2019.

For the three months ended September 30, 2020, refining operating costs, excluding depreciation and amortization, decreased $314 million compared to the three months ended September 30, 2019 as we took actions to reduce costs in response to the

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economic effects of COVID-19, including operating at lower throughput at our refineries and idling portions of our refining capacity. This decrease was partially offset by increased turnaround and distribution costs, excluding depreciation and amortization, of $70 million and $53 million, respectively. Net refinery throughput was 620 mbpd lower as compared to the three months ended September 30, 2019. On a per barrel basis, refining operating costs, excluding depreciation and amortization, decreased $0.03 primarily due to lower throughput partially offset by decreased costs. Distribution costs, excluding depreciation and amortization, increased $1.29 per barrel, primarily due to lower throughput. Distribution costs, excluding depreciation and amortization, include fees paid to MPLX of $889 million and $794 million for the third quarter of 2020 and 2019, respectively. Refining planned turnaround costs increased $0.45 per barrel due to the timing of turnaround activity and lower throughput. Depreciation and amortization per barrel increased by $0.41 per barrel primarily due to lower throughput and increased costs.

Nine Months Ended September 30, 2020 Compared to Nine Months Ended September 30, 2019

Refining & Marketing segment revenues decreased $31.17 billion primarily due to lower refined product sales volumes, which decreased 508 mbpd, and decreased average refined product sales prices of $0.56 per gallon. These decreases were primarily the result of reduced travel and business operations associated with the COVID-19 pandemic.

Net refinery throughputs decreased 524 mbpd in the first nine months of 2020, primarily due to reducing throughputs and indefinitely idling certain facilities during the COVID-19 pandemic.

Refining & Marketing segment income from operations decreased $5.36 billion primarily driven by lower blended crack spreads.

Refining & Marketing margin, excluding LIFO liquidation charge, was $9.46 per barrel for the first nine months of 2020 compared to $14.17 per barrel for the first nine months of 2019. 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~~negative impact of approximately $1.4 billion on Refining & Marketing margin for the third quarter of 2019 compared to the third quarter of 2018, primarily due to an approximate $1.9 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

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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 net positive effect of $200 million on Refining & Marketing segment income in the third quarter of 2019 compared to the third quarter of 2018.

Refining operating costs, excluding depreciation and amortization, increased $1.19 per barrel and distribution costs, excluding depreciation and amortization, increased $0.14 per barrel primarily due to the inclusion of costs for the refining operations acquired from Andeavor. 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 of $794 million and $601 million for the third quarter of 2019 and 2018, respectively. Refining planned turnaround costs decreased $0.50 per barrel due to the timing of turnaround activity. Depreciation and amortization per barrel increased by $0.07, primarily due to intangible asset amortization related to the fair value of assets acquired from Andeavor as of October 1, 2018. During the period, we recorded a $0.09 per barrel adjustment to reduce depreciation and amortization which reflects the cumulative effects through June 30, 2019 related to a measurement period adjustment arising from the finalization of purchase accounting.

~~Nine Months Ended September 30, 2019 Compared to Nine Months Ended September 30, 2018~~

Refining & Marketing segment revenues increased $25.24 billion primarily due to higher refined product sales volumes, which increased 1,384 mbpd mainly due to the Andeavor acquisition on October 1, 2018, and decreased average refined product sales prices of $0.13 per gallon.

~~Refinery crude oil capacity utilization was 97 percent in the first nine months of 2019 and total refinery throughputs increased 1,133 mbpd primarily due to the refineries acquired from Andeavor.~~

Refining & Marketing segment income from operations decreased $103 million primarily driven by higher Refining & Marketing margin, more than offset by higher operating, distribution and depreciation and amortization costs. The increases in Refining & Marketing margin and costs and expenses are primarily due to increased sales and production volumes following the Andeavor acquisition.

Refining & Marketing margin was $13.72 per barrel for the first nine months of 2019 compared to $13.48 per barrel for the first nine 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 $4.9$7 billion on Refining & Marketing margin for the first nine months of ~~2019~~2020 compared to the first nine months of ~~2018,~~2019, primarily due to an approximate $5.1 billion benefit from increased throughput volume, mainly attributed to the Andeavor acquisition, and wider sweet crude oil differentials, partially offset by narrower sour crude oil differentials.lower crack spreads. 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.~~variances, direct dealer fuel margin and, for the third quarter of 2020, a LIFO liquidation charge of $256 million. These factors had an estimated net ~~negative~~positive effect of approximately ~~$500 million~~$1.4 billion on Refining & Marketing segment income in the first nine months of ~~2019~~2020 compared to the first nine months of ~~2018.~~2019.

~~Refining~~For the nine months ended September 30, 2020, refining operating and distribution costs, excluding depreciation and amortization, were $7.99 billion. This was a decrease of $499 million compared to the nine months ended September 30, 2019 as we took actions to reduce costs in response to the economic effects of COVID-19, including operating at lower throughput at our refineries and idling portions of our refining capacity. This decrease was partially offset by increased ~~$0.90~~refining planned turnaround costs of $138 million. Net refinery throughput was 524 mbpd lower as compared to the nine months ended September 30, 2019. On a per barrel basis, refining operating costs and distribution costs, excluding depreciation and amortization, increased ~~$0.46 per barrel primarily~~$0.40 and $0.86, respectively, mainly due to the inclusion of costs for the refining operations acquired from Andeavor. 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 regionslower throughput partially offset by a decrease in ~~which we operate due to specific geographical location and regulatory factors.~~costs. Distribution costs, excluding depreciation and amortization, include fees paid to MPLX of ~~$2.38~~$2.59 billion and ~~$1.68~~$2.38 billion for the for the first nine months of 2020 and 2019, ~~and 2018,~~ respectively. ~~The first nine 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.~~ Refining planned turnaround costs ~~decreased $0.11~~increased $0.33 per barrel due to the timing of turnaround ~~activity.~~activity and a decrease in throughput. Depreciation and amortization per barrel increased by ~~$0.06,~~$0.39 primarily due to ~~the intangible asset amortization related to the fair value of assets acquired from Andeavor as of October 1, 2018. During the period, we recorded~~ a ~~$0.01 per barrel adjustment to reduce depreciation~~decrease in throughput and ~~amortization which reflects the cumulative effects through June 30, 2019 related to a measurement period adjustment arising from the finalization of purchase accounting.~~

increased costs.

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Supplemental Refining & Marketing Statistics


	Three Months Ended September 30,		Nine Months Ended September 30,		Three Months Ended September 30,		Nine Months Ended September 30,
	2019	2018	2019	2018	2020	2019	2020	2019
Refining & Marketing Operating Statistics
Refined product export sales volumes (mbpd)^(a)	379	280	407	289	389	379	331	407
Crude oil capacity utilization percent^(b)	98	97	97	97	84	98	82	97
Refinery throughputs (mbpd):^(c)
Crude oil refined	2,969	1,833	2,925	1,819	2,390	2,969	2,446	2,925
Other charge and blendstocks	187	199	200	173	146	187	155	200
Total	3,156	2,032	3,125	1,992
Net refinery throughput					2,536	3,156	2,601	3,125
Sour crude oil throughput percent	47	52	49	53	49	47	50	49
Sweet crude oil throughput percent	53	48	51	47	51	53	50	51
Refined product yields (mbpd):^(c)
Gasoline	1,553	942	1,538	942	1,311	1,553	1,305	1,538
Distillates	1,103	676	1,091	659	872	1,103	908	1,091
Propane	56	40	55	37	50	56	51	55
Feedstocks and petrochemicals	334	313	345	294	230	334	266	345
Heavy fuel oil	44	29	47	30	21	44	28	47
Asphalt	106	73	90	68	92	106	83	90
Total	3,196	2,073	3,166	2,030	2,576	3,196	2,641	3,166


^(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 ~~116~~55 mbpd and 54116 mbpd for the three months ended September 30, ~~2019~~2020 and ~~2018,~~2019, respectively, and 9868 mbpd and 5398 mbpd for the nine months ended September 30, ~~2019~~2020 and ~~2018,~~2019, respectively.

~~Retail~~Midstream

The following includes key financial and operating data for the third quarter of ~~2019~~2020 compared to the third quarter of ~~2018~~2019 and the nine months ended September 30, ~~2019~~2020 compared to the nine months ended September 30, ~~2018. Our results include the results of Andeavor from the October 1, 2018 acquisition date forward.~~2019.

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^(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
September 30, Nine Months Ended
September 30,
Key Financial and Operating Data 2019 2018 2019 2018
Average fuel sales prices (dollars per gallon)
$ 2.66
$ 2.80
$ 2.64
$ 2.71
Merchandise sales (in millions)
$ 1,703
$ 1,339
$ 4,736
$ 3,753
Merchandise margin (in millions)^(a)(b)
$ 498
$ 384
$ 1,376
$ 1,069
Same store gasoline sales volume (period over period)^(c)
(2.8 )% (1.2 )% (2.8 )% (1.8 )%
Same store merchandise sales (period over period)^(c)(d)
5.2 % 4.9 % 5.6 % 3.4 %
Convenience stores at period-end 3,931
2,745

Direct dealer locations at period-end 1,067
—


^(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.~~

~~Third Quarter 2019 Compared to Third Quarter 2018~~

Retail segment revenues increased $3.28 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 1,067 direct dealer locations. Increased fuel sales volumes of 1.17 billion gallons, almost all of which was related to the acquisition, were partially offset by decreased average fuel sales prices of $0.14 per gallon. Merchandise sales increased $364 million resulting from the contributions of the acquired businesses.

Retail segment income from operations increased $281 million largely related to the addition of the Andeavor retail operations as well as a $63 million year-over-year increase in MPC's legacy Speedway segment earnings driven by higher fuel and merchandise margins. 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 24.53 cents per gallon in the third quarter of 2019 compared with 16.51 cents per gallon in the third quarter of 2018 and the merchandise margin increased $114 million.

~~Nine Months Ended September 30, 2019 Compared to Nine Months Ended September 30, 2018~~

Retail segment revenues increased $9.77 billion primarily due to increased fuel and merchandise sales resulting from the Andeavor acquisition on October 1, 2018. Increased fuel sales volumes of 3.43 billion gallons, almost all of which was related

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to the acquisition, were partially offset by decreased average fuel sales prices of $0.07 per gallon. Merchandise sales increased $983 million resulting from the contributions of the acquired businesses.

Retail segment income from operations increased $690 million primarily due to higher light product and merchandise margins largely related to the addition of the Andeavor retail operations as well as a $146 million year-over-year increase in MPC's legacy Speedway segment earnings driven by higher fuel and merchandise margins. 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 22.86 cents per gallon in the first nine months of 2019 compared with 16.20 cents per gallon in the first nine months of 2018 and the merchandise margin increased $307 million.

~~Midstream~~

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

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$chart-midstreamfractionation.jpg$


^(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 September 30,				Nine Months Ended September 30,					Three Months Ended September 30,				Nine Months Ended September 30,
Benchmark Prices		2019		2018		2019		2018			2020		2019		2020		2019
Natural Gas NYMEX HH ($ per MMBtu)	Natural Gas NYMEX HH ($ per MMBtu)	$	2.33	$	2.86	$	2.57	$	2.85	Natural Gas NYMEX HH ($ per MMBtu)	$	2.13	$	2.33	$	1.92	$	2.57
C2 + NGL Pricing ($ per gallon)^(a)	C2 + NGL Pricing ($ per gallon)^(a)	$	0.44	$	0.90	$	0.53	$	0.81	C2 + NGL Pricing ($ per gallon)^(a)	$	0.45	$	0.44	$	0.40	$	0.53


^(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,~~iso-butane, 12 percent normal butane and 12 percent natural gasoline.

Third Quarter ~~2019~~2020 Compared to Third Quarter ~~2018~~2019

Midstream segment revenue ~~increased $535~~decreased $17 million primarily due to decreased demand for the ~~inclusion of ANDX revenues subsequent~~products that we produce and transport due to the ~~Andeavor acquisition on October 1, 2018. On July 30, 2019, MPLX completed its acquisition of ANDX.~~current macro-economic conditions in addition to lower natural gas prices.

Midstream segment income from operations increased ~~$240~~$41 million ~~largely~~mainly due to contributions from ~~ANDX.~~organic growth projects and reduced operating expenses. Midstream segment income from operations also benefited from stable, fee based earnings in the current business environment.

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Nine Months Ended September 30, ~~2019~~2020 Compared to Nine Months Ended September 30, ~~2018~~2019

On February 1, 2018, we completed the dropdown of refining logistics assets and fuels distribution services to MPLX, 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 $2.02 billion~~decreased $221 million primarily due to decreased demand for the ~~inclusion of ANDX revenues subsequent~~products that we produce and transport due to the ~~Andeavor acquisition on October 1, 2018. On July 30, 2019, MPLX completed its acquisition of ANDX. In~~current macro-economic conditions in addition to lower natural gas and NGL prices in the first nine 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 to MPLX.~~2020.

Midstream segment income from operations increased ~~$842~~$29 million ~~largely~~mainly due to contributions ~~of $700 million~~ from ~~ANDX~~organic growth projects and ~~an $142 million increase in~~reduced operating expenses. Midstream segment ~~results driven primarily by growth across MPLX’s businesses.~~income from operations also benefited from stable, fee based earnings in the current business environment.

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��

Corporate and Items not Allocated to Segments


Key Financial Information (in millions)		Three Months Ended September 30,						Nine Months Ended September 30,					Three Months Ended September 30,						Nine Months Ended September 30,
		2019			2018			2019		2018			2020			2019			2020			2019
Corporate^(a)												Corporate^(a)	$	(197	)	$	(206	)	$	(625	)	$	(589	)
Items not allocated to segments:	Items not allocated to segments:											Items not allocated to segments:
Corporate and other unallocated items^(a)		$	(198	)	$	(99	)	(568	)	(269	)
Capline restructuring gain	Capline restructuring gain	—			—			207		—		Capline restructuring gain	—			—			—			207
Transaction-related costs(b)	Transaction-related costs(b)	(22		)	(4		)	(147	)	(14	)	Transaction-related costs(b)	—			(22		)	(8		)	(147		)
Litigation	Litigation	—			—			(22	)	—		Litigation	—			—			—			(22		)
Impairments	Impairments	—			—			—		1		Impairments	(433		)	—			(9,595		)	—
Restructuring expense												Restructuring expense	(348		)	—			(348		)	—
LCM inventory valuation adjustment												LCM inventory valuation adjustment	530			—			(1,185		)	—


^(a)	Corporate ~~and other unallocated items~~costs consist primarily of MPC’s corporate administrative expenses and costs related to certain non-operating assets, except for corporate overhead expenses attributable to MPLX, which are included in the Midstream segment. ~~Corporate overhead expenses~~

^(b)

2020 includes costs incurred in connection with the Midstream strategic review. Costs incurred in 2020 in connection with the Speedway separation are ~~not allocated~~included in discontinued operations. See Note 4 to the ~~Refining & Marketing~~unaudited consolidated financial statements for additional information on discontinued operations. 2019 costs include employee severance, retention and ~~Retail segments.~~other costs related to the acquisition of Andeavor.

Third Quarter ~~2019~~2020 Compared to Third Quarter ~~2018~~2019

Corporate costs decreased $9 million. Third quarter 2020and ~~other unallocated items increased $99~~2019 corporate expenses include expenses of $7 million ~~largely~~and $8 million, respectively, which are no longer allocable to Speedway due to discontinued operations accounting.

On August 3, 2020, we announced our plans to evaluate possibilities to strategically reposition our Martinez refinery, including the ~~inclusion~~potential conversion of ~~costs~~the refinery into a renewable diesel facility. Subsequent to August 3, 2020, we progressed activities associated with the conversion of the Martinez refinery to a renewable diesel facility, including applying for permits, advancing discussions with feedstock suppliers, and ~~expenses~~beginning detailed engineering activities. As a result of the progression of these activities, we recorded an impairment charge of $342 million related to ~~Andeavor~~abandoned assets. Additionally, MPLX cancelled in-process Martinez refinery logistics capital projects with $27 million of carrying value due to our progression toward converting Martinez to a renewable diesel facility. Impairment expense also includes $64 million related to goodwill transferred from our Midstream segment to our Refining & Marketing segment in connection with the transfer to MPC of the MPLX wholesale distribution business

During the third quarter of 2020, we announced strategic actions to lay a foundation for long-term success, including plans to optimize our assets and structurally lower costs in 2021 and beyond, which included indefinitely idling the Gallup and Martinez refineries and the approval of an involuntary workforce reduction plan. In connection with these strategic actions, we recorded restructuring expenses of $348 million for the three months ended September 30, 2020

The involuntary workforce reduction plan, including employee reductions resulting from MPC's indefinite idling of its Martinez and Gallup refineries, affected approximately 2,050 employees. We recorded $159 million of restructuring expenses for separation benefits payable under our employee separation plan and certain collective bargaining agreements that we expect to settle in cash. Certain of the affected MPC employees provide services to MPLX. MPLX has various employee services agreements and secondment agreements with MPC pursuant to which MPLX reimburses MPC for employee costs, along with

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the provision of operational and management services in support of MPLX’s operations. Pursuant to such agreements, MPC was reimbursed by MPLX for $36 million of the $159 million of restructuring expenses recorded for these actions.

~~Other unallocated items include transaction-related~~As of September 30, 2020, $291 million of restructuring expenses were accrued as restructuring reserves in our consolidated balance sheet and we expect cash payments for the majority of these reserves to occur within the next twelve months.

The change from the LCM inventory valuation reserve at June 30, 2020 resulted in a benefit of $530 million for the three months ended September 30, 2020.

Transaction-related costs of $22 million ~~associated with~~for the ~~Andeavor acquisition including~~third quarter of 2019 largely related to employee retention, severance and other ~~costs.~~costs associated with the Andeavor acquisition.

Nine Months Ended September 30, ~~2019~~2020 Compared to Nine Months Ended September 30, ~~2018~~2019

Corporate costs increased $36 million primarily due to an information systems integration project. The first nine months of 2020 and 2019 corporate expenses include expenses of $20 million and $21 million, respectively, which are no longer allocable to Speedway due to discontinued operations accounting.

During the first nine months of 2020, we recorded impairment charges of approximately $9.60 billion, which includes $8.28 billion related to goodwill and long-lived assets and $1.32 billion related to equity method investments, and an LCM charge of $1.19 billion primarily driven by the effects of COVID-19 and the decline in commodity prices.

Items not allocated to segments also include transaction-related costs of $8 million for the first nine months of 2020 associated with the Midstream strategic review and other ~~unallocated items increased $299~~related activities and $147 million for the first nine months of 2019 largely ~~due~~related to the ~~inclusion~~recognition of an obligation for vacation benefits provided to former Andeavor employees as part of the Andeavor acquisition as well as employee retention, severance and other costs. Transaction costs ~~and expenses~~for the first nine months of 2020 related to ~~Andeavor~~the Speedway separation are included in discontinued operations.

~~Other~~ In the first nine months of 2019, 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 $147 million associated with the Andeavor acquisition~~LLC and a litigation reserve ~~adjustment~~ of $22 million. ~~The transaction-related~~

During the third quarter of 2020, we announced strategic actions to lay a foundation for long-term success, including plans to optimize our assets and structurally lower costs ~~recognized~~ in 2021 and beyond, which included indefinitely idling the ~~first nine months include~~Gallup and Martinez refineries and the ~~recognition~~approval of an ~~obligation~~involuntary workforce reduction plan. In connection with these strategic actions, we recorded restructuring expenses of $348 million for ~~vacation benefits provided~~the three months ended September 30, 2020. See Note 3 to ~~former Andeavor employees~~the unaudited consolidated financial statements and earlier discussion in ~~the first quarter as well as employee retention, severance and other costs.~~this section for additional information.

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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 their most comparable GAAP financial 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:

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Refining & Marketing Margin

Refining margin is defined as sales revenue less the cost of refinery inputs and purchased ~~products~~products.

Reconciliation of Refining & Marketing income from operations to Refining & Marketing gross margin and ~~excludes any LCM inventory market adjustment.~~Refining & Marketing margin

Three Months Ended
September 30, Nine Months Ended
September 30,
Reconciliation of Refining & Marketing income from operations to Refining & Marketing margin (in millions)
2019 2018 2019 2018
Refining & Marketing income from operations $ 883
$ 666
$ 1,455
$ 1,558
Plus (Less):
Refining operating costs^(a)
1,577
795
4,656
2,480
Refining depreciation and amortization 328
241
1,083
712
Refining planned turnaround costs 164
197
587
432
Distribution costs^(b)
1,251
780
3,818
2,183
Distribution depreciation and amortization 69
16
152
49
Income from equity method investments (6 ) (7 ) (10 ) (14 )
Net gain on disposal of assets —
(1 ) (6 ) (5 )
Other income (8 ) (24 ) (30 ) (63 )
Refining & Marketing margin $ 4,258
$ 2,663
$ 11,705
$ 7,332



	Three Months Ended September 30,						Nine Months Ended September 30,
(in millions)	2020			2019			2020			2019
Refining & Marketing income from operations^(a)	$	(1,569	)	$	989		$	(3,610	)	$	1,750
Plus (Less):
Selling, general and administrative expenses	518			536			1,576			1,662
LCM inventory valuation adjustment	530			—			(1,185		)	—
(Income) loss from equity method investments	(16		)	(6		)	6			(10		)
Net gain on disposal of assets	(1		)	—			—			(8		)
Other income	(1		)	(8		)	(9		)	(30		)
Refining & Marketing gross margin	(539		)	1,511			(3,222		)	3,364
Plus (Less):
Operating expenses (excluding depreciation and amortization)	2,408			2,643			7,481			7,881
LCM inventory valuation adjustment	(530		)	—			1,185			—
Depreciation and amortization	456			416			1,392			1,319
Gross margin excluded from Refining & Marketing margin^(b)	(101		)	(179		)	(285		)	(464		)
Other taxes included in Refining & Marketing margin	(19		)	(3		)	(62		)	(8		)
Refining & Marketing margin^(a)	1,675			4,388			6,489			12,092
LIFO liquidation charge	256			—			256			—
Refining & Marketing margin, excluding LIFO liquidation charge	$	1,931		$	4,388		$	6,745		$	12,092


^(a)	~~Includes refining major maintenance~~LCM inventory valuation adjustments are excluded from Refining & Marketing income from operations and ~~operating costs. Excludes turnaround and depreciation and amortization expense.~~Refining & Marketing margin.

^(b)

Includes fees paid to MPLX of $794 million and $601 million for the third quarter 2019 and 2018, respectively, and $2.38 billion and $1.68 billion for the nine months ended September 30, 2019 and 2018, respectively. ExcludesThe gross margin, excluding depreciation and amortization, ~~expense.~~of operations that support Refining & Marketing such as biodiesel and ethanol ventures, power facilities and processing of credit card transactions.

~~Retail~~

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Speedway Fuel Margin

~~Retail~~Speedway 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.~~.

~~Retail~~Speedway Merchandise Margin

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

Reconciliation of income from discontinued operations to Speedway gross margin and Speedway margin


		Three Months Ended September 30,						Nine Months Ended September 30,							Three Months Ended September 30,						Nine Months Ended September 30,
Reconciliation of Retail income from operations to Retail total margin (in millions)		2019			2018			2019			2018
Retail income from operations		$	442		$	161		$	1,105		$	415
(in millions)														(in millions)	2020			2019			2020			2019
Income from discontinued operations^(a)														Income from discontinued operations^(a)	$	438		$	344		$	1,182		$	831
Plus (Less):	Plus (Less):													Plus (Less):
Operating, selling, general and administrative expenses	Operating, selling, general and administrative expenses	644			418			1,824			1,203			Operating, selling, general and administrative expenses	584			618			1,779			1,754
Depreciation and amortization		113			76			369			228
Income from equity method investments	Income from equity method investments	(20		)	(18		)	(58		)	(51		)	Income from equity method investments	(21		)	(20		)	(70		)	(58		)
Net gain on disposal of assets	Net gain on disposal of assets	(2		)	(1		)	(4		)	(1		)	Net gain on disposal of assets	1			(2		)	—			(2		)
Other income	Other income	(3		)	(2		)	(9		)	(5		)	Other income	(34		)	(3		)	(127		)	(9		)
Retail total margin		$	1,174		$	634		$	3,227		$	1,789
Speedway gross margin														Speedway gross margin	968			937			2,764			2,516
Plus (Less):														Plus (Less):
LCM inventory valuation adjustment														LCM inventory valuation adjustment	—			—			25			—
Depreciation and amortization														Depreciation and amortization	36			94			237			285
Speedway margin^(a)														Speedway margin^(a)	$	1,004		$	1,031		$	3,026		$	2,801

Retail total margin:
Speedway margin:														Speedway margin:
Fuel margin	Fuel margin	$	649		$	243		$	1,772		$	699		Fuel margin	$	478		$	519		$	1,607		$	1,385
Merchandise margin	Merchandise margin	498			384			1,376			1,069			Merchandise margin	510			498			1,376			1,376
Other margin	Other margin	27			7			79			21			Other margin	16			14			43			40
Retail total margin		$	1,174		$	634		$	3,227		$	1,789
Speedway margin														Speedway margin	$	1,004		$	1,031		$	3,026		$	2,801


^(a)	LCM inventory valuation adjustments are excluded from income from discontinued operations and Speedway margin.

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LIQUIDITY AND CAPITAL RESOURCES

Cash Flows

Our consolidated cash and cash equivalents balance for continuing operations was approximately ~~$1.53 billion~~$618 million at September 30, ~~2019~~2020 compared to ~~$1.69~~$1.39 billion at December 31, ~~2018.~~2019. Cash and cash equivalents for discontinued operations was $98 million at September 30, 2020 compared to $134 million at December 31, 2019. 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.~~


		Nine Months Ended September 30,							Nine Months Ended September 30,
(In millions)		2019			2018				2020			2019
Net cash provided by (used in):	Net cash provided by (used in):							Net cash provided by (used in):
Operating activities	Operating activities	$	7,032		$	3,431		Operating activities	$	1,091		$	7,032
Investing activities	Investing activities	(4,575		)	(2,895		)	Investing activities	(2,824		)	(4,575		)
Financing activities	Financing activities	(2,654		)	1,444			Financing activities	922			(2,654		)
Total increase (decrease) in cash	Total increase (decrease) in cash	$	(197	)	$	1,980		Total increase (decrease) in cash	$	(811	)	$	(197	)

Net cash provided by operating activities ~~increased $3.60~~decreased $5.94 billion in the first nine months of ~~2019~~2020 compared to the first nine months of ~~2018,~~2019, primarily due to ~~an increase~~a decrease in operating results and ~~favorable changes~~an unfavorable change in working capital of ~~$1.29 billion.~~$1.18 billion

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mainly due to a decrease in accounts payable. These changes were partially offset by an increase in cash provided by discontinued operations of $156 million which reflect the results of the Speedway business. Changes in working capital exclude changes in short-term debt.

Changes in working capital, excluding changes in short-term debt, were a net ~~$495 million source of cash in the first nine- months of 2019 compared to a net $797~~$490 million use of cash in the first nine months of ~~2018.~~2020 compared to a net $687 million source of cash in the first nine months of 2019.

For the first nine months of 2020, changes in working capital, excluding the LCM reserve and changes in short-term debt, were a net $490 million use of cash primarily due to the effects of decreasing energy commodity prices and volumes at the end of the period on working capital. Accounts payable decreased primarily due to decreases in crude prices and volumes. Current receivables decreased primarily due to lower crude prices and lower refined product prices and volumes. Excluding the LCM reserve, inventories decreased primarily due to a decrease in crude and refined products inventories.

For the first nine months of 2019, changes in working capital, excluding changes in short-term debt, were a net ~~$495~~$687 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 ~~crude~~refined product and ~~refined product~~crude inventories, partially offset by an increase in materials and supplies inventory.

For the first nine months of 2018, changes in working capital, excluding changes in short-term debt, were a net $797 million use of cash primarily due to the effect of increases in energy commodity prices at the end of the period, partially offset by decreases in volumes, on working capital. Current receivables increased primarily due to higher refined product and crude prices. Accounts payable decreased primarily due to a decrease in crude purchases partially offset by an increase in crude prices. Inventories decreased due to decreases in crude and materials and supplies inventories, partially offset by an increase in refined products inventories.

Net cash used in investing activities ~~increased $1.68~~decreased $1.75 billion in the first nine months of ~~2019~~2020 compared to the first nine months of ~~2018,~~2019, primarily due to the following:

~~An increase~~a decrease in additions to property, plant and equipment of ~~$1.51~~$1.13 billion primarily due to ~~increased~~decreased capital expenditures in the first nine months of ~~2019~~2020 in our Midstream and Refining & Marketing segments; ~~and~~

~~an increase~~a decrease in net investments of ~~$511~~$403 million largely due to investments in the first nine months of 2019 in connection with the construction of the Gray Oak Pipeline, which ~~is scheduled to commence operations~~began initial start-up in the fourth quarter of ~~2019, the Wink to Webster Pipeline~~2019; and ~~the Whistler Pipeline.~~


•	a decrease in cash used in investing activities related to discontinued operations of $76 million primarily due to decreased capital expenditures in the first nine months of 2020 for Speedway.

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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.


		Nine Months Ended September 30,						Nine Months Ended September 30,
(In millions)		2019			2018			2020			2019
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	$	3,823		$	2,315	Additions to property, plant and equipment per the consolidated statements of cash flows	$	2,330		$	3,461
Asset retirement expenditures	Asset retirement expenditures	1			7		Asset retirement expenditures	—			1
Increase (decrease) in capital accruals		(300		)	67
Decrease in capital accruals							Decrease in capital accruals	(426		)	(282		)
Total capital expenditures	Total capital expenditures	3,524			2,389		Total capital expenditures	1,904			3,180
Investments in equity method investees (excludes acquisitions)	Investments in equity method investees (excludes acquisitions)	792			222		Investments in equity method investees (excludes acquisitions)	436			792
Total capital expenditures and investments	Total capital expenditures and investments	$	4,316		$	2,611	Total capital expenditures and investments	$	2,340		$	3,972

Financing activities were a net $922 million source of cash in the first nine months of 2020 compared to a net $2.65 billion use of cash in the first nine months of ~~2019 compared to~~2019.

Long-term debt borrowings and repayments were a net ~~$1.44~~$3.02 billion source of cash in the first nine months of ~~2018.~~

~~Long-term debt borrowings and repayments, including debt issuance costs, were~~2020 compared to a net $1.20 billion source of cash in the first nine months of ~~2019 compared to a net $5.28 billion source of cash in~~2019. During the first nine months of ~~2018.~~2020, MPC issued $2.5 billion of senior notes, borrowed and repaid $3.5 billion under its revolving credit facility and borrowed and repaid $1.23 billion under its trade receivables facility. MPLX issued $3.0 billion of senior notes, which were used to repay $1.0 billion of outstanding borrowings under its term loan, $1.0 billion of floating rate senior notes and to redeem $450 million of senior notes, and had net borrowings of $95 million under its revolving credit facility. During the first nine months of 2019, MPLX issued $2$2.0 billion of floating rate senior notes, the proceeds of which were used to repay various outstanding MPLX borrowings, and had net borrowings of $500 million under its term loan. During the first nine 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 its revolving credit facility.

Cash used in common stock repurchases decreased ~~$727 million in the first nine months of 2019 compared to the first nine months of 2018. Share repurchases totaled~~ $1.89 billion in the first nine months of ~~2019~~2020 compared to ~~$2.61~~the first nine months of 2019. There were no share repurchases in the first nine months of 2020 compared to $1.89 billion in the first nine months of ~~2018. In 2018, share repurchases were funded primarily by after tax proceeds from the February 1, 2018 dropdown.~~2019. See Note 810 to the unaudited consolidated financial statements for further discussion of share repurchases.

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Cash used in dividend payments increased ~~$417~~$79 million in the first nine months of ~~2019~~2020 compared to the first nine months of ~~2018,~~2019, primarily due to a ~~net increase in the number of shares of our common stock outstanding related to the Andeavor acquisition and a $0.21~~$0.15 per share increase in our base dividend, partially offset by a reduction of shares resulting from share ~~repurchases.~~repurchases in 2019. Our dividend payments were $1.74 per common share in the first nine months of 2020 compared to $1.59 per common share in the first nine months of ~~2019 compared to $1.38 per common share in the first nine months of 2018.~~2019.

~~Cash used in distributions to~~Contributions from noncontrolling interests ~~increased $351~~decreased $95 million in the first nine months of ~~2019~~2020 compared to the first nine months of ~~2018,~~2019 primarily due to ~~the addition of ANDX distributions subsequent to the acquisition of Andeavor and~~cash received in 2019 for an ~~increase~~increased noncontrolling interest in ~~MPLX��s distribution per common unit. On July 30, 2019,~~an MPLX ~~completed its acquisition of ANDX.~~subsidiary.


•	~~Contributions from noncontrolling interests increased~~ ~~$86 million~~ ~~in the first nine months of 2019 compared to the first nine months of 2018 primarily due to cash received in 2019 for an increased noncontrolling interest in an MPLX subsidiary.~~

Derivative Instruments

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

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Capital Resources

MPC, Excluding MPLX

We control MPLX through our ownership of the general partner, however, the creditors of MPLX do not have recourse to MPC’s general credit through guarantees or other financial arrangements. The assets of MPLX can only be used to settle its own obligations and its creditors have no recourse to our assets. Therefore, in the following table, we present the liquidity of MPC, excluding MPLX. MPLX liquidity is discussed in the following section.

Our liquidity, excluding MPLX, totaled ~~$8.23~~$8.44 billion at September 30, ~~2019~~2020 consisting of:


		September 30, 2019							September 30, 2020
(In millions)		Total Capacity		Outstanding Borrowings		Available Capacity			Total Capacity		Outstanding Borrowings		Available Capacity
Bank revolving credit facility^(a)(b)	Bank revolving credit facility^(a)(b)	$	5,000	$	1	$	4,999	Bank revolving credit facility^(a)(b)	$	5,000	$	1	$	4,999
364-day bank revolving credit facility	364-day bank revolving credit facility	1,000		—		$	1,000	364-day bank revolving credit facility	1,000		—		1,000
Trade receivables facility		750		—		750
364-day bank revolving credit facility								364-day bank revolving credit facility	1,000		—		1,000
Trade receivables facility^(c)								Trade receivables facility^(c)	750		—		750
Total	Total	$	6,750	$	1	$	6,749	Total	$	7,750	$	1	$	7,749
Cash and cash equivalents^(c)						1,484
Cash and cash equivalents^(d)								Cash and cash equivalents^(d)					688
Total liquidity	Total liquidity					$	8,233	Total liquidity					$	8,437


^(a)	Excludes MPLX’s $3.50 billion bank revolving credit facility, which had approximately ~~$3.50~~$3.41 billion available as of September 30, ~~2019.~~2020.


^(b)	Outstanding borrowings include $1 million in letters of credit outstanding under this facility.


^(c)	~~Excludes MPLX~~Availability under our $750 million trade receivables facility is a function of eligible trade receivables, which will be lower in a sustained lower price environment for refined products.


^(d)	Includes cash and cash equivalents classified as assets held for sale of $98 million (see Note 4 to the unaudited consolidated financial statements) and excludes cash and cash equivalents of ~~$41~~MPLX of $28 million.

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, the repurchase of shares of our common stock and other amounts that may ultimately be paid in connection with contingencies.

On September 26, 2019, MPLX entered into a term loan agreement with a syndicate of lenders providing for borrowings up to $1 billion available to be drawn in up to four separate borrowings. If not fully utilized, the term loan commitments expire 90 days after September 26, 2019. Borrowings under the term loan agreement bear interest, at MPLX’s election, at either the Adjusted LIBO Rate (as defined in the term loan agreement) plus a margin or the Alternate Base Rate (as defined in the term loan agreement) plus a margin. The applicable margin to the benchmark interest rates fluctuate from time-to-time based on our credit ratings. The proceeds from borrowings under the term loan agreement are to be used to fund the repayment of MPLX’s existing indebtedness and/or for general business purposes. The term loan agreement matures on September 26, 2021 and may be prepaid at any time without premium or penalty.

On September 9, 2019, MPLX issued $2 billion aggregate principal amount of floating rate senior notes in a public offering, consisting of $1 billion aggregate principal amount of notes due September 2021 and $1 billion aggregate principal amount of notes due September 2022. The proceeds were used to repay various outstanding MPLX borrowings and for general business purposes. Interest is payable quarterly in March, June, September and December, commencing on December 9, 2019. The interest rate applicable to the floating rate senior notes due September 2021 is LIBOR plus 0.9% while the interest rate applicable to the floating rate senior notes due September 2022 is LIBOR plus 1.1%.

In connection with the merger of MPLX and ANDX, MPLX assumed ANDX’s outstanding senior notes which had an aggregate principal amount of $3.75 billion, with interest rates ranging from 3.5% to 6.375% and maturity dates ranging from 2019 to 2047. On September 23, 2019, approximately $3.06 billion aggregate principal amount of ANDX’s outstanding senior notes were exchanged for new unsecured senior notes issued by MPLX having the same maturity and interest rates as the ANDX senior notes in an exchange offer and consent solicitation undertaken by MPLX, leaving approximately $690 million aggregate principal of outstanding senior notes held by ANDX. Of this, $500 million is related to the 5.5% unsecured senior notes due 2019. The principal amount of $500 million and accrued interest of $14 million was paid on October 15, 2019 and includes interest through the payoff date.

On July 26, 2019, we entered into a new $1 billion 364-day revolving credit facility with a syndicate of banks that became effective upon the expiration of our 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.

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

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We 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 September 30, ~~2019,~~2020, we had no commercial paper borrowings outstanding.

~~See Note 17~~On October 1, 2020, all of the $475 million outstanding aggregate principal amount of 5.375 percent senior notes due October 2022 were redeemed at a price equal to par using available cash on hand and liquidity provided through MPC’s credit facilities.

On September 25, 2020, we announced that all of the ~~unaudited consolidated financial statements~~$650 million outstanding aggregate principal amount of 3.400 percent senior notes due December 2020 will be redeemed on November 15, 2020, using available cash on hand and liquidity provided through MPC’s credit facilities, at a price equal to par, plus accrued and unpaid interest to, but not including, such date.

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On September 23, 2020, MPC entered into a 364-day revolving credit agreement with a syndicate of lenders. This revolving credit agreement provides for ~~further discussion~~a $1.0 billion unsecured revolving credit facility that matures in September 2021, and replaces a similar 364-day revolving credit agreement that expired on September 28, 2020.

On April 27, 2020, MPC entered into a 364-day revolving credit agreement with a syndicate of ~~our debt.~~lenders providing for a $1.0 billion unsecured revolving credit facility that matures in April 2021.

These two credit agreements contain representations and warranties, affirmative and negative covenants and events of default that MPC considers customary for agreements of similar nature and type and that are substantially similar to each other and those contained in the credit agreement for MPC’s $5.0 billion bank revolving credit facility.

On April 27, 2020, MPC closed on the issuance of $2.5 billion in aggregate principal amount of senior notes in a public offering, consisting of $1.25 billion aggregate principal amount of 4.500 percent unsecured senior notes due 2023 and $1.25 billion aggregate principal amount of 4.700 percent unsecured senior notes due 2025. MPC used the net proceeds from this offering to repay certain amounts outstanding under its five-year revolving credit facility.

The MPC credit agreements and our trade receivables facility 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 September 30, ~~2019,~~2020, we were in compliance with ~~this~~the covenants contained in the MPC bank revolving credit facility and our trade receivables facility, including the financial covenant with a ratio of Consolidated Net Debt to Total Capitalization of ~~0.21~~0.36 to ~~1.00, as well as the other covenants contained in the MPC bank revolving credit facility.~~

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 September 30, 2019, MPLX was in compliance with this debt covenant, with a ratio of Consolidated Total Debt to Consolidated EBITDA of 3.80 to 1.0, as well as the other covenants contained in the MPLX credit agreement.1.00.

Our intention is to maintain an investment-grade credit profile. As of ~~November 1, 2019,~~September 30, 2020, the credit ratings on our senior unsecured debt ~~were~~are as follows.



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

None of the MPC credit agreements ~~the MPLX credit agreement,~~ or our trade receivables facility 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 could increase the applicable interest rates, yields and other fees payable under such ~~agreements.~~agreements and may limit our flexibility to obtain financing in the future, including to refinance existing indebtedness. In addition, a downgrade of our senior unsecured debt rating to below 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 and could result in us having to post letters of credit under existing transportation services or other ~~agreements and make it more difficult~~agreements.

See Note 19 to ~~raise capital in~~ the ~~future.~~unaudited consolidated financial statements for further discussion of our debt.

MPLX

MPLX’s liquidity totaled $4.93 billion at September 30, 2020 consisting of:



	September 30, 2020
(In millions)	Total Capacity		Outstanding Borrowings		Available Capacity
MPLX LP - bank revolving credit facility	$	3,500	$	95	$	3,405
MPC Intercompany Loan Agreement	1,500		—		1,500
Total	$	5,000	$	95	$	4,905
Cash and cash equivalents					28
Total liquidity					$	4,933

5660

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During the third quarter of 2020, a portion of the net proceeds from the senior notes offering was used to repay the $1.0 billion of outstanding borrowings under the MPLX term loan agreement, to repay the $1.0 billion floating rate senior notes due September 2021 and to redeem all of the $450 million aggregate principal amount of 6.375 percent senior notes due May 2024. On October 15, 2020, a portion of the remaining net proceeds from the senior notes offering was used to redeem all of the $300 million aggregate principal amount of 6.250 percent senior notes due October 2022.

The MPLX credit agreement contains certain representations and warranties, affirmative and restrictive covenants and events of default that we consider to be usual and customary for an agreement of this type. The financial covenant requires MPLX to maintain a ratio of Consolidated Total Debt as of the end of each fiscal quarter to Consolidated EBITDA (both as defined in the MPLX credit agreement) for the prior four fiscal quarters of no 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 September 30, 2020, MPLX was in compliance with the covenants, including the financial covenant with a ratio of Consolidated Total Debt to Consolidated EBITDA of 3.9 to 1.0.

Our intention is to maintain an investment-grade credit profile for MPLX. As of September 30, 2020, the credit ratings on MPLX’s senior unsecured debt are as follows.



Company	Rating Agency	Rating
MPLX	Moody’s	Baa2 (negative outlook)
	Standard & Poor’s	BBB (negative outlook)
	Fitch	BBB (negative 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 for MPLX, 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.

The agreements governing MPLX’s debt obligations do not contain credit rating triggers that would result in the acceleration of interest, principal or other payments in the event that MPLX credit ratings are downgraded. However, any downgrades of MPLX senior unsecured debt to below investment grade ratings could increase the applicable interest rates, yields and other fees payable under such agreements. In addition, a downgrade of MPLX senior unsecured debt ratings to below investment-grade levels may limit MPLX’s ability to obtain future financing, including to refinance existing indebtedness.

See Item 8. Financial Statements and Supplementary Data – Note 19 for further discussion of MPLX’s debt.

Capital Requirements

Capital Investment Plan

MPC's capital investment plan for ~~2019 totals~~continuing and discontinued operations for 2020 originally totaled approximately ~~$2.8~~$2.6 billion for capital projects and investments, excluding MPLX, 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 plan includes~~ all of the planned capital spending for Refining & Marketing, ~~Retail and~~ Corporate, ~~as well as~~ a portion of the planned capital investments in ~~Midstream.~~Midstream and Speedway’s capital spending, which is now reported separately as discontinued operations. MPLX’s capital investment plan for ~~2019, excluding capitalized interest~~2020 originally totaled approximately $1.75 billion.

In response to the COVID-19 environment, the company announced a consolidated capital spending reduction of $1.35 billion to $3.0 billion for 2020. Remaining capital spend primarily relates to growth projects that are already in progress or spending that supports the safe and ~~acquisitions, includes $2.8 billion~~reliable operation of ~~organic growth capital and approximately $300 million of maintenance capital.~~our facilities. We continuously evaluate our capital investment plan and make changes as conditions warrant.

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Capital expenditures and investments for MPC and MPLX 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.~~


		Nine Months Ended September 30,				Nine Months Ended September 30,
(In millions)		2019		2018		2020		2019
MPC continuing operations, excluding MPLX
Refining & Marketing	Refining & Marketing	$	1,385	$	613	$	995	$	1,411
Retail		370		225
Midstream		2,420		1,676
Midstream - Other						193		306
Corporate and Other^(a)	Corporate and Other^(a)	141		97		146		141
Total capital expenditures and investments		$	4,316	$	2,611
Total MPC continuing operations, excluding MPLX						$	1,334	$	1,858

MPC discontinued operations - Speedway						$	200	$	344

Midstream - MPLX						$	1,006	$	2,114


^(a)	Includes capitalized interest of ~~$97~~$85 million and ~~$55~~$97 million for the nine months ended September 30, ~~2019~~2020 and ~~2018,~~2019, respectively.

Capital expenditures and investments in affiliates during the nine months ended September 30, ~~2019~~2020 were primarily for Midstream and Refining & Marketing segment ~~projects and investments in affiliates.~~

The Midstream segment capital investment plan primarily includes projects for MPLX. MPLX’s capital investment plan includes the addition of approximately 825 MMcf/d of processing capacity at five gas processing plants, 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, projects to increase its export capability, 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 non-MPLX 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 is expected to be in service by the end of 2019.

The Refining & Marketing segment capital investment plan includes projects focused on high-return investments in refinery optimization, production of higher value products, increased capacity to upgrade residual fuel oil and expanded export capacity. We also plan to continue investing in domestic light products supply placement flexibility.projects.

Other Capital Requirements

During the nine months ended September 30, ~~2019,~~2020, we contributed ~~$267~~$3 million to our funded pension ~~plans, largely consisting of voluntary contributions, and have additional required funding for the 2019 plan year of approximately $32 million.~~plans. We may choose to make additional contributions to our pension plans.

On October ~~30, 2019,~~28, 2020, our board of directors approved a dividend of ~~$0.53~~$0.58 per share on common stock. The dividend is payable December 10, ~~2019,~~2020, to shareholders of record as of the close of business on November ~~20, 2019.~~18, 2020.

We have $1.0 billion of 5.125 percent senior notes due in March 2021.

As of September 30, 2020, $291 million of restructuring expenses were accrued as restructuring reserves in our consolidated balance sheet and we expect cash payments for the majority of these reserves to occur within the next twelve months.

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

Share Repurchases

During the nine months ended September 30, 2020, share repurchases were temporarily suspended, which has helped preserve our liquidity during the COVID-19 pandemic. The timing and amount of future repurchases, if any, will depend upon several factors, including market and business conditions, and such repurchases may be initiated, suspended or discontinued at any time. 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 ~~$14.98~~$15.05 billion of our common stock, leaving ~~$3.02~~$2.96 billion available for repurchases at September 30, ~~2019.~~2020. The table below summarizes our total share repurchases for the nine months ended September 30, ~~2019~~2020 and ~~2018.~~2019. See Note 810 to the unaudited consolidated financial statements for further discussion of the share repurchase plans.

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	Nine Months Ended September 30,				Nine Months Ended September 30,
(In millions, except per share data)	2019		2018		2020		2019
Number of shares repurchased	33		36		—		33
Cash paid for shares repurchased	$	1,885	$	2,612	$	—	$	1,885
Average cost per share	$	58.75	$	71.80	$	—	$	58.75

We may utilize various methods to effect the repurchases, which could include open market repurchases, negotiated block transactions, tender offers, accelerated share repurchases or open market solicitations for shares, some of which may be effected through Rule 10b5-1 plans. ~~The timing and amount~~

Table of ~~future repurchases, if any, will depend upon several factors, including market and business conditions, and such repurchases may be discontinued at any time.~~Contents

Contractual Cash Obligations

As of September 30, ~~2019,~~2020, our contractual cash obligations included long-term debt, capital and operating lease obligations, purchase obligations and other long-term liabilities. During the first nine months of ~~2019,~~2020, our long-term debt commitments increased approximately ~~$1.67~~$2.9 billion primarily due to ~~MPLX’s issuance~~$2.5 billion of MPC senior notes issued and $3.0 billion of MPLX senior notes issued, the proceeds of which were used to repay $1.0 billion of the MPLX term loan and $1.0 billion of MPLX floating rate ~~senior~~ notes and ~~borrowings under its term loan, partially offset by interest payments made during the period.~~redeem $450 million of MPLX senior notes.

There were no other material changes to our contractual cash obligations outside the ordinary course of business since December 31, ~~2018.~~2019.

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 our 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 2324 to the unaudited consolidated financial statements.

ENVIRONMENTAL MATTERS AND COMPLIANCE ~~COSTS~~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.

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. From 2014 through 2018, we made approximately $490 million in capital expenditures to comply with these standards. We expect to make approximately $245 million in capital expenditures for these standards in 2019 with $45 million of these capital expenditures remaining as of September 30, 2019.

There have been no significant changes to our environmental matters and compliance costs during the nine months ended September 30, ~~2019.~~2020.

CRITICAL ACCOUNTING ESTIMATES

As of September 30, ~~2019,~~2020, there have been no significant changes to our critical accounting estimates since our Annual Report on Form 10-K for the year ended December 31, ~~2018.~~2019 except as noted below.

Impairment Assessments of Long-Lived Assets, Intangible Assets, Goodwill and Equity Method Investments

Fair value calculated for the purpose of testing our long-lived assets, intangible assets, goodwill and equity method investments for impairment is estimated using the expected present value of future cash flows method and comparative market prices when appropriate. Significant judgment is involved in performing these fair value estimates since the results are based on forecasted financial information prepared using significant assumptions including:


•	Future operating performance. Our estimates of future operating performance are based on our analysis of various supply and demand factors, which include, among other things, industry-wide capacity, our planned utilization rate, end-user demand, capital expenditures and economic conditions. Such estimates are consistent with those used in our planning and capital investment reviews.

•

Future volumes. Our estimates of future refinery, pipeline throughput and natural gas and natural gas liquid processing volumes are based on internal forecasts prepared by our Refining & Marketing and Midstream segments operations personnel. Assumptions about the effects of COVID-19 on our future volumes are inherently subjective and contingent upon the duration of the pandemic, which is difficult to forecast.


•	Discount rate commensurate with the risks involved. We apply a discount rate to our cash flows based on a variety of factors, including market and economic conditions, operational risk, regulatory risk and political risk. This discount rate is also compared to recent observable market transactions, if possible. A higher discount rate decreases the net present value of cash flows.

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•	Future capital requirements. These are based on authorized spending and internal forecasts.

Assumptions about the effects of COVID-19 and the macroeconomic environment are inherently subjective and contingent upon the duration of the pandemic and its impact on the macroeconomic environment, which is difficult to forecast. We base our fair value estimates on projected financial information which we believe to be reasonable. However, actual results may differ from these projections.

The need to test for impairment can be based on several indicators, including a significant reduction in prices of or demand for products produced, a weakened outlook for profitability, a significant reduction in pipeline throughput volumes, a significant reduction in natural gas or natural gas liquids processed, a significant reduction in refining margins, other changes to contracts or changes in the regulatory environment.

Long-lived assets used in operations are assessed for impairment whenever changes in facts and circumstances indicate that the carrying value of the assets may not be recoverable based on the expected undiscounted future cash flow of an asset group. For purposes of impairment evaluation, long-lived assets must be grouped at the lowest level for which independent cash flows can be identified, which generally is the refinery and associated distribution system level for Refining & Marketing segment assets, and the plant level or pipeline system level for Midstream segment assets. If the sum of the undiscounted estimated pretax cash flows is less than the carrying value of an asset group, fair value is calculated, and the carrying value is written down to the calculated fair value.

During the first quarter of 2020, we identified long-lived asset impairment triggers relating to all of our refinery asset groups within the Refining & Marketing segment as a result of decreases to the Refining & Marketing segment expected future cash flows. The cash flows associated with these assets were significantly impacted by the effects of COVID-19 and commodity price declines. We assessed each refinery asset group for impairment by comparing the undiscounted estimated pretax cash flows to the carrying value of each asset group. Of the 16 refinery asset groups, only the Gallup refinery’s carrying value exceeded its undiscounted estimated pretax cash flows. It was determined that the fair value of the Gallup refinery’s property, plant and equipment was less than the carrying value. As a result, we recorded a charge of $142 million in the first quarter of 2020 to impairment expense on the consolidated statements of income. The fair value measurements for the Gallup refinery assets represent Level 3 measurements.

On August 3, 2020, we announced our plans to evaluate possibilities to strategically reposition our Martinez refinery, including the potential conversion of the refinery into a renewable diesel facility. Subsequent to August 3, 2020, we progressed activities associated with the conversion of the Martinez refinery to a renewable diesel facility, including applying for permits, advancing discussions with feedstock suppliers, and beginning detailed engineering activities. As envisioned, the Martinez facility would be expected to start producing renewable diesel in 2022, with a potential to build to full capacity of 48,000 barrels per day in 2023. As a result of the progression of these activities, we identified assets that would be repurposed and utilized in a renewable diesel facility configuration and assets that would be abandoned since they had no function in a renewable diesel facility configuration. This change in our intended use for the Martinez refinery is a long-lived asset impairment trigger for the assets that would be repurposed and remain as part of the Martinez asset group. We assessed the asset group for impairment by comparing the undiscounted estimated pretax cash flows to the carrying value of the asset group and the undiscounted estimated pretax cash flows exceeded the Martinez asset group carrying value. We recorded impairment expense of $342 million for the abandoned assets as we are no longer using these assets and have no expectation to use these assets in the future. Additionally, as a result of our efforts to progress the conversion of Martinez refinery into a renewable diesel facility, MPLX cancelled in-process capital projects related to its Martinez refinery logistics operations resulting in impairments of $27 million in the third quarter.

The determination of undiscounted estimated pretax cash flows for our long-lived asset impairment tests utilized significant assumptions including management’s best estimates of the expected future cash flows, allocation of certain Refining & Marketing segment cash flows to the individual refineries, the estimated useful lives of the asset groups, and the salvage values of the refineries. The determinations of expected future cash flows and the salvage values of refineries require considerable judgment and are sensitive to changes in underlying assumptions and factors. As a result, there can be no assurance that the estimates and assumptions made for purposes of our impairment analysis will prove to be an accurate prediction of the future. Should our assumptions significantly change in future periods, it is possible we may determine the carrying values of additional refinery asset groups exceed the undiscounted estimated pretax cash flows of their refinery asset groups, which would result in future impairment charges.

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During the first quarter of 2020, MPLX identified an impairment trigger relating to asset groups within its Western Gathering & Processing (“G&P”) reporting unit as a result of significant changes to expected future cash flows for these asset groups resulting from the effects of COVID-19. The cash flows associated with these assets were significantly impacted by volume declines reflecting decreased forecasted producer customer production as a result of lower commodity prices. MPLX assessed each asset group within the Western G&P reporting unit for impairment. It was determined that the fair value of the East Texas G&P asset group’s underlying assets was less than the carrying value. As a result, MPLX recorded impairment charges totaling $350 million related to its property, plant and equipment and intangibles, which are included in impairment expense on our consolidated statements of income. Fair value of MPLX’s PP&E was determined using a combination of an income and cost approach. The income approach utilized significant assumptions including management’s best estimates of the expected future cash flows and the estimated useful life of the asset group. The cost approach utilized assumptions for the current replacement costs of similar assets adjusted for estimated depreciation and deterioration of the existing equipment. The fair value of the intangibles was determined based on applying the multi-period excess earnings method, which is an income approach. Key assumptions included management’s best estimates of the expected future cash flows from existing customers, customer attrition rates and the discount rate. Fair value determinations require considerable judgment and are sensitive to changes in underlying assumptions and factors. As a result, there can be no assurance that the estimates and assumptions made for purposes of the impairment analysis will prove to be an accurate prediction of the future. The fair value measurements for the asset group fair values represent Level 3 measurements.

Unlike long-lived assets, goodwill is subject to annual, or more frequent if necessary, impairment testing at the reporting unit level. A goodwill impairment loss is measured as the amount by which a reporting unit's carrying value exceeds its fair value, without exceeding the recorded amount of goodwill.

The “Business Update” under Recent Developments in the Corporate Overview section describes the effects that the outbreak of COVID-19, its development into a pandemic and the effect the decline in commodity prices during the first quarter of 2020 have had on our business. Due to these developments, we performed impairment assessments during the first quarter of 2020 as discussed further below.

Prior to performing our goodwill impairment assessment as of March 31, 2020, we had goodwill totaling approximately $20 billion associated with eight of our 10 reporting units. As part of this assessment, we recorded goodwill impairment expenses of $7.33 billion in the first quarter of 2020 related to our Refining & Marketing and MPLX’s Eastern G&P reporting units. The Refining & Marketing and Eastern G&P reporting units recorded goodwill impairment charges of $5.52 billion and $1.81 billion, respectively, which fully impaired both reporting units’ historical goodwill balances. These goodwill impairment expenses are primarily driven by the effects of COVID-19, the decline in commodity prices and the slowing of drilling activity which has reduced production growth forecasts from MPLX’s producer customers. For the remaining six reporting units with goodwill, we determined that no significant adjustments to the carrying value of goodwill were necessary. The impairment assessment performed as of March 31, 2020 resulted in the fair value of the reporting units exceeding their carrying value by percentages ranging from approximately 8.5 percent to 270.0 percent. MPLX’s Crude Gathering reporting unit had goodwill totaling $1.1 billion at March 31, 2020 and MPLX’s fair value estimate for this reporting unit exceeded the reporting unit carrying value by 8.5 percent. The operations that make up this reporting unit were acquired by MPLX when it acquired ANDX. We accounted for the October 1, 2018 acquisition of Andeavor (through which we acquired control of ANDX), using the acquisition method of accounting, which required Andeavor assets and liabilities to be recorded at the acquisition date fair value. As such, given the short amount of time from when fair value was established to the date of the impairment test, the amount by which the fair value exceeded the carrying value within this reporting unit is not unexpected. An increase of one percentage point to the discount rate used to estimate the fair value of this reporting unit would not have resulted in goodwill impairment as of March 31, 2020. No other reporting units had fair values exceeding carrying values of less than 20 percent.

Significant assumptions used to estimate the reporting units’ fair value included estimates of future cash flows and market information for comparable assets. If estimates for future cash flows, which are impacted by future margins on products produced or sold, future volumes, and capital requirements, were to decline, the overall reporting units’ fair values would decrease, resulting in potential goodwill impairment charges. Fair value determinations require considerable judgment and are sensitive to changes in underlying assumptions and factors. As a result, there can be no assurance that the estimates and assumptions made for purposes of the impairment tests will prove to be an accurate prediction of the future.

Equity method investments are assessed for impairment whenever factors indicate an other than temporary loss in value. Factors providing evidence of such a loss include the fair value of an investment that is less than its carrying value, absence of an ability to recover the carrying value or the investee’s inability to generate income sufficient to justify our carrying value. During the first quarter of 2020, we recorded $1.32 billion of equity method investment impairment charges to income from equity method investments in the consolidated statements of income. The impairment charges primarily related to MPLX recording an other than temporary impairment totaling $1.26 billion, of which $1.25 billion related to MarkWest Utica EMG, L.L.C and its investment in Ohio Gathering Company, L.L.C. The fair value of the investments was determined based upon

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applying the discounted cash flow method, which is an income approach. The discounted cash flow fair value estimate is based on known or knowable information at the interim measurement date. The significant assumptions that were used to develop the estimate of the fair value under the discounted cash flow method include management’s best estimates of the expected future cash flows, including prices and volumes, the weighted average cost of capital and the long-term growth rate. Fair value determinations require considerable judgment and are sensitive to changes in underlying assumptions and factors. As such, the fair value of these equity method investments represents a Level 3 measurement. As a result, there can be no assurance that the estimates and assumptions made for purposes of the impairment test will prove to be an accurate prediction of the future. The impairment was recorded through “Income from equity method investments.” The impairments were largely due to a reduction in forecasted volumes gathered and processed by the systems operated by the joint ventures. At September 30, 2020 we had $5.46 billion of equity method investments recorded on the Consolidated Balance Sheets.

An estimate of the sensitivity to net income resulting from impairment calculations is not practicable, given the numerous assumptions (e.g., pricing, volumes and discount rates) that can materially affect our estimates. That is, unfavorable adjustments to some of the above listed assumptions may be offset by favorable adjustments in other assumptions.

ACCOUNTING STANDARDS NOT YET ADOPTED

As discussed in Note 2 to the unaudited consolidated financial statements, certain new financial accounting pronouncements will be effective for our financial statements in the future.

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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, ~~2018~~.2019.

See Notes 1517 and 1618 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 gains and losses on our commodity derivative positions as of September 30, 2020 and 2019, ~~and 2018,~~ respectively.

Nine Months Ended
September 30,
(In millions) 2019 2018
Realized gain (loss) on settled derivative positions $ 54
$ (95 )
Unrealized loss on open net derivative positions (87 ) (56 )
Net loss $ (33 ) $ (151 )



	Nine Months Ended September 30,
(In millions)	2020		2019
Realized gain on settled derivative positions	$	33	$	54
Unrealized gain (loss) on open net derivative positions	47		(87		)
Net gain (loss)	$	80	$	(33	)

See Note 1618 to the unaudited consolidated financial statements for additional information on our open derivative positions at September 30, ~~2019.~~2020.

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 September 30, ~~2019~~2020 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 September 30, 2019
As of September 30, 2020														As of September 30, 2020
Crude	Crude	$	(61	)	$	(153	)	$	61		$	153		Crude	$	3		$	8		$	(3	)	$	(8	)
Refined products	Refined products	32			80			(32		)	(80		)	Refined products	35			87			(35		)	(87		)
Blending products	Blending products	(14		)	(36		)	14			36			Blending products	(13		)	(32		)	13			32
Embedded derivatives	Embedded derivatives	(5		)	(14		)	5			14			Embedded derivatives	(6		)	(15		)	6			15

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 September 30, ~~2019~~2020 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 finance leases, as of September 30, ~~2019~~2020 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.

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(In millions)

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

Change in
Fair Value^(b)

Change in Net Income for the Nine Months Ended

September 30, 2019^(c)

Fair Value as of September 30, 2020^(a)

Change in
Fair Value^(b)

Change in Net Income for the Nine Months Ended

September 30, 2020^(c)

Long-term debt

Fixed-rate

27,979

2,609

n/a

Fixed-rate

32,535

2,633

n/a

Variable-rate

2,507

n/a

Variable-rate

1,095

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 September 30, ~~2019~~. 2020.


^(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 nine months ended September 30, ~~2019~~. 2020.

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At September 30, ~~2019~~,2020, our portfolio of long-term debt was comprised of fixed-rate 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 1517 to the unaudited consolidated financial statements for additional information on the fair value of our debt.

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 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 September 30, ~~2019,~~2020, the end of the period covered by this report.

Changes in Internal Control over Financial Reporting

During the quarter ended September 30, ~~2019,~~2020, 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.

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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~~our Quarterly Reports on Form 10-Q for the quarters ended March 31, ~~2019~~2020 and June 30, ~~2019.~~2020.

~~Litigation~~SEC Matter

As previously disclosed in ~~May 2007,~~our Annual Report on Form 10-K for the ~~Kentucky attorney general filed~~year ended December 31, 2019 (the “2019 10-K”), we have been cooperating with the staff of the SEC in connection with a ~~lawsuit against us~~formal investigation regarding Andeavor’s historical share repurchase activity and ~~Marathon Oil in state court in Franklin County, Kentucky for alleged~~an informal investigation regarding MPC’s share repurchase activity. On October 15, 2020, the SEC announced an agreement with Andeavor LLC, successor-by-merger to Andeavor and a wholly owned subsidiary of MPC, to settle the investigation regarding Andeavor’s historical share repurchase activity. As part of the settlement with the SEC, Andeavor LLC agreed to pay a $20 million penalty and consent to the entry of an Administrative Order containing findings that Andeavor violated Section 13(b)(2)(B) of the Securities Exchange Act of 1934, as amended, and ordering Andeavor LLC to cease and desist from committing or causing any violations and any future violations of ~~Kentucky’s emergency pricing~~that provision. Andeavor LLC neither admitted nor denied the SEC’s findings. Following the announcement of the settlement with Andeavor LLC, the SEC staff informed us that it has concluded its formal and ~~consumer protection laws following Hurricanes Katrina~~informal investigations and ~~Rita~~does not intend to recommend an enforcement action. This settlement did not have a material adverse effect on our results of operations, financial position or cash flows.

Litigation

As described in ~~2005.~~our 2019 10-K and our Quarterly Report on Form 10-Q for the quarter ended March 31, 2020, governmental and other entities in California, Hawaii, New York, Maryland and Rhode Island have filed lawsuits against coal, gas, oil and petroleum companies, including the Company. The ~~lawsuit alleged that we overcharged customers by $89 million during September~~lawsuits allege damages as a result of climate change 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~~plaintiffs are seeking unspecified damages and ~~penalties related~~abatement under various tort theories.

On September 9, the City of Charleston, South Carolina filed suit in South Carolina’s Court of Common Pleas, Ninth Judicial Circuit, against 24 oil and gas industry defendants, including MPC, MPC LP and Speedway. On September 10, the State of Delaware filed suit in the Superior Court of the State of Delaware against 31 oil and gas industry defendants, including MPC, MPC LP and Speedway. On October 12, 2020, the County of Maui, Hawaii, filed suit in the Circuit Court of the Second Circuit for the State of Hawaii against 20 oil and gas industry defendants, including MPC. The claims made in these lawsuits are substantially similar to ~~our wholesale gasoline pricing~~those made in ~~April~~MPC’s previously disclosed climate change litigation.

At this early stage, the ultimate outcome of these matters remains uncertain, and ~~May 2011 under statewide price controls~~neither the likelihood of an unfavorable outcome nor the ultimate liability, if any, can be determined.

Dakota Access Pipeline

In connection with MPLX’s 9.19 percent indirect interest in a joint venture (“Dakota Access”) that owns and operates the Dakota Access Pipeline and Energy Transfer Crude Oil Pipeline projects, collectively referred to as the Bakken Pipeline system or DAPL, MPLX has entered into a Contingent Equity Contribution Agreement whereby MPLX LP, along with the other joint venture owners in the Bakken Pipeline system, has 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 ~~activated~~issued to repay amounts owed by the ~~Kentucky governor on April 26, 2011 and which have since expired. The court denied~~pipeline companies to fund the ~~attorney general’s request for immediate injunctive relief.~~ cost of construction of the Bakken Pipeline system.

As previously disclosed in our Quarterly Report on Form 10-Q for the quarter ended ~~June 30, 2019,~~March 31, 2020, in March 2020, the U.S. District Court for the District of Columbia (the “D.D.C.”) ordered the U.S. Army Corps of Engineers (“Army Corps”), which granted permits and an easement for the Bakken Pipeline system, to conduct a full environmental impact statement (“EIS”), and further requested briefing on whether an easement necessary for the operation of the Bakken Pipeline system should be vacated while the EIS is being prepared.

On July ~~2019, MPC~~6, 2020, the D.D.C. ordered vacatur of the easement to cross Lake Oahe during the pendency of an EIS and further ordered a shut down of the pipeline by August 5, 2020. The D.D.C. denied a motion to stay that order. Dakota Access and the ~~attorney general reached~~Army Corps appealed the D.D.C.’s order to the U.S. Court of Appeals for the District of Columbia Circuit (the “Court of Appeals”). On July 14, 2020, the Court of Appeals issued an administrative stay while the court considered Dakota Access and the Army Corps’ emergency motion for stay pending appeal. On August 5, 2020, the Court of Appeals stayed the D.D.C.’s injunction that required the pipeline be shutdown and emptied of oil by August 5, 2020. The Court of Appeals denied a stay of

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the D.D.C.’s March order, which required the EIS, and further denied a stay of the D.D.C.’s July order, which vacated the easement. In the D.D.C., briefing is ongoing for a renewed request for an injunction, which is expected to be completed by the end of 2020. Oral argument on the merits of the case at the Court of Appeals occurred on November 4, 2020. The pipeline remains operational.

If the pipeline is temporarily shut down pending completion of the EIS, MPLX would have to contribute its 9.19 percent pro rata share of funds required to pay interest accruing on the notes and any portion of the principal that matures while the pipeline is shutdown. It is also expected that MPLX would contribute its 9.19 percent pro rata share of any costs to remediate any deficiencies to reinstate the permit and/or return the pipeline into operation. If the vacatur of the easement permit results in a permanent shutdown of the pipeline, MPLX would have to contribute its 9.19 percent pro rata share of the cost to redeem the bonds (including the one percent redemption premium required pursuant to the indenture governing the notes) and any accrued and unpaid interest.

Tesoro High Plains Pipeline

In early July, MPLX received a Notification of Trespass Determination from the Bureau of Indian Affairs (“BIA”) relating to a portion of the pipeline that crosses the Fort Berthold Reservation in North Dakota. The notification covered the rights of way for 23 tracts of land and demanded the immediate cessation of pipeline operations. The notification also assessed trespass damages of approximately $187 million. MPLX appealed this determination, which triggered an automatic stay of the requested pipeline shutdown and payment. On October 29, the Assistant Secretary - Indian Affairs issued an order vacating the BIA’s trespass order and requiring the Regional Director for the BIA Great Plains Region to issue a new decision on or before December 15 covering all 34 tracts at issue.

MPLX continues to work towards a settlement ~~to resolve~~of this ~~litigation. This~~matter with holders of the property rights at issue. Management does not believe the ultimate resolution ~~did not~~of this matter will have a material adverse effect on our consolidated financial position, results of operations, or cash flows.

Environmental Proceedings

~~Galveston Bay Refinery~~

In August 2019, we received an offer from the Texas Commission on Environmental Quality to settle violations alleged in enforcement notices issued to the refinery in March 2019. The notices allege violations of emissions limitations and other requirements of the refinery’s air permit. We are negotiating a settlement of the allegations and cannot currently estimate the timing of the resolution of this matter.

~~Los Angeles Refinery~~

As previously disclosed in our ~~2018 10-K, CARB issued an NOV~~Quarterly Report on Form 10-Q for the quarter ended June 30, 2020, MPLX had previously reached a settlement in principle to resolve allegations relating to its compliance at its Sarsen facility. In August 2020, MPLX finalized a settlement with the ~~Los Angeles refinery in 2017, alleging violations~~EPA, which resolved this matter with a cash penalty of the state’s summer RVP limits. On August 9, 2019, we agreed to settle the NOV for $133,000, of which half will be paid to CARB and half will be paid to the South Coast Air Quality Management District as a supplemental environmental project.

As previously disclosed in our 2018 10-K, CARB issued an NOV to the Los Angeles refinery in 2018, alleging the refinery produced fuel which exceeded its reported olefin values. On August 9, 2019, we agreed to settle the NOV for $119,000, of which half will be paid to CARB and half will be paid to the South Coast Air Quality Management District as a supplemental environmental project.$150,025.

ITEM 1A. RISK FACTORS

~~Except as disclosed below, there~~There have been no material changes from the risk factors previously disclosed in our Annual Report on Form 10-K for the year ended December 31, ~~2018,~~2019, as updated in our Quarterly ~~Report~~Reports on Form 10-Q for the quarters ended March 31, ~~2019~~2020 and June 30, ~~2019.~~

~~Our proposed spin-off of Speedway may not be completed on the currently contemplated timeline or at all and may not achieve the intended benefits.~~

~~We have announced our intent to separate Speedway into an independent, publicly traded company by the end of~~ 2020. The spin-off is subject to certain conditions, including final approval by our board of directors, receipt of customary assurances regarding the intended tax-free nature of the transaction and the filing and effectiveness of a registration statement with the U.S. Securities and Exchange Commission. Unanticipated developments, including possible delays in obtaining various regulatory approvals or clearances, uncertainty of the financial markets and challenges in establishing infrastructure or processes, could delay or prevent the proposed spin-off or cause the proposed spin-off to occur on terms or conditions that are less favorable or different than expected. Even if the spin-off is completed, we may not realize some or all of the anticipated benefits from the spin-off. On November 1, 2019, Moody’s announced it had changed its outlook for MPC’s and MPLX’s credit ratings from stable to negative following the announcement of the planned spin-off and Midstream review, and the planned spin-off and Midstream review could be factors causing or contributing to a future determination by one or more of the rating agencies to lower MPC’s or MPLX’s credit rating. Expenses incurred to accomplish the proposed spin-off may be significantly higher than what we currently anticipate. Executing the proposed spin-off also requires significant time and attention from management, which could distract them from other tasks in operating our business. Following the proposed spin-

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off, the combined value of the common stock of the two publicly traded companies may not be equal to or greater than what the value of our common stock would have been had the proposed spin-off not occurred. If the proposed spin-off is completed, our diversification of revenue sources will diminish due to the separation of the Speedway business, and it is possible that our business, financial condition, results of operations and cash flows may be subject to increased volatility as a result.

~~Our ongoing review of other strategic alternatives for our Midstream business may pose additional risks to our business.~~

Our board of directors has also formed a special committee to enhance our evaluation of potential value-creating options for our Midstream business, which we primarily conduct through MPLX. Our exploration of strategic alternatives, including any uncertainty created by this process, involves a number of risks: significant fluctuations in our stock price could occur in response to developments relating to the strategic review process or market speculation regarding any such developments; we may encounter difficulties in hiring, retaining and motivating key personnel during this process or as a result of uncertainties generated by this process or any developments or actions relating to it; we may incur substantial increases in general and administrative expense associated with increased legal fees and the need to retain and compensate third-party advisors; and we may experience difficulties in preserving the commercially sensitive information that may need to be disclosed to third parties during this process or in connection with an assessment of our strategic alternatives. As noted above, on November 1, 2019, Moody’s announced that it had changed its outlook for MPC’s and MPLX’s credit ratings from stable to negative following the announcement of the planned spin-off and Midstream review, and the planned spin-off and Midstream review could be factors causing or contributing to a future determination by one or more of the rating agencies to lower MPC’s or MPLX’s credit ratings. The strategic review process also requires significant time and attention from management, which could distract them from other tasks in operating our business. There can be no assurance that this process will result in the pursuit or consummation of any strategic transaction. The occurrence of any one or more of the above risks could have a material adverse impact on our business, financial condition, results of operations and cash flows.

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 September 30, ~~2019,~~2020, 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)
07/01/2019-07/31/2019 1,177,714
$ 55.24
1,176,389
$ 3,454,603,445
08/01/2019-08/31/2019 229
56.72
—
3,454,603,445
09/01/2019-09/30/2019 8,115,381
53.61
8,114,953
3,019,550,854
Total 9,293,324
53.82
9,291,342



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)
07/01/2020-07/31/2020	6,363	$	36.76	—	$	2,954,604,016
08/01/2020-08/31/2020	220	38.73		—	2,954,604,016
09/01/2020-09/30/2020	143	35.25		—	2,954,604,016
Total	6,726	36.79		—


^(a)	The amounts in this column include ~~1,325, 229~~6,363, 220 and ~~428~~143 shares of our common stock delivered by employees to MPC, upon vesting of restricted stock, to satisfy tax withholding requirements in July, August and September, 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 $5.0 billion share repurchase authorization. This share repurchase authorization has no expiration date. The share repurchase authorization announced on April 30, 2018, together with prior authorizations, results in a total of $18.0 billion of share repurchase authorizations since January 1, 2012.

~~ITEM 5. OTHER INFORMATION~~

~~None~~

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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 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
4.1
Fifteenth Supplemental Indenture, dated as of September 9, 2019, between the Issuer and The Bank of New York Mellon Trust Company, N.A., as Trustee (including form of note)
8-K 4.5 9/9/2019 001-35714
4.2
Sixteenth Supplemental Indenture, dated as of September 9, 2019, between the Issuer and The Bank of New York Mellon Trust Company, N.A., as Trustee (including form of note)
8-K 4.6 9/9/2019 001-35714
4.3
Seventeenth Supplemental Indenture, dated as of September 23, 2019, between MPLX LP and the Bank of New York Mellon Trust Company, N.A.
8-K 4.1 9/27/2019 001-35714
4.4
Eighteenth Supplemental Indenture, dated as of September 23, 2019, between MPLX LP and the Bank of New York Mellon Trust Company, N.A.
8-K 4.2 9/27/2019 001-35714
4.5
Nineteenth Supplemental Indenture, dated as of September 23, 2019, between MPLX LP and the Bank of New York Mellon Trust Company, N.A.
8-K 4.3 9/27/2019 001-35714
4.6
Twentieth Supplemental Indenture, dated as of September 23, 2019, between MPLX LP and the Bank of New York Mellon Trust Company, N.A.
8-K 4.4 9/27/2019 001-35714
4.7
Twenty-First Supplemental Indenture, dated as of September 23, 2019, between MPLX LP and the Bank of New York Mellon Trust Company, N.A.
8-K 4.5 9/27/2019 001-35714
4.8
Twenty-Second Supplemental Indenture, dated as of September 23, 2019, between MPLX LP and the Bank of New York Mellon Trust Company, N.A.
8-K 4.6 9/27/2019 001-35714
4.9
Sixth Supplemental Indenture, dated as of September 6, 2019, to Indenture dated as of October 29, 2014, among Andeavor Logistics LP (f/k/a Tesoro Logistics LP), Tesoro Logistics Finance Corp. and U.S. Bank National Association, as Trustee
8-K 4.1 9/9/2019 001-35714
4.10
Fourth Supplemental Indenture, dated as of September 6, 2019, to Indenture dated as of May 12, 2016, among Andeavor Logistics LP (f/k/a Tesoro Logistics LP), Tesoro Logistics Finance Corp. and U.S. Bank National Association, as Trustee
8-K 4.2 9/9/2019 001-35714
4.11
Fourth Supplemental Indenture, dated as of September 6, 2019, to Indenture dated as of December 2, 2016, among Andeavor Logistics LP (f/k/a Tesoro Logistics LP), Tesoro Logistics Finance Corp. and U.S. Bank National Association, as Trustee
8-K 4.3 9/9/2019 001-35714
4.12
Second Supplemental Indenture, dated as of September 6, 2019, to Indenture dated as of November 28, 2017, among Andeavor Logistics LP (f/k/a Tesoro Logistics LP), Tesoro Logistics Finance Corp. and U.S. Bank National Association, as Trustee
8-K 4.4 9/9/2019 001-35714

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

2.5 *

Purchase and Sale Agreement, dated as of August 2, 2020, by and between MPC, the MPC subsidiaries party thereto and 7-Eleven, Inc.

8-K

2.1

8/3/2020

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

4.1

Twenty-Third Supplemental Indenture, dated as of August 18, 2020, by and between MPLX LP and The Bank of New York Mellon Trust Company, N.A., as Trustee (including Form of Notes)

8-K

4.1

8/18/2020

001-35714

4.2

Twenty-Fourth Supplemental Indenture, dated as of August 18, 2020, by and between MPLX LP and The Bank of New York Mellon Trust Company, N.A., as Trustee (including Form of Notes)

8-K

4.2

8/18/2020

001-35714

10.1

Revolving Credit Agreement, dated as of September 23, 2020, by and among Marathon Petroleum Corporation, as borrower, JPMorgan Chase Bank, N.A., as administrative agent, each of JPMorgan Chase Bank, N.A., Wells Fargo Securities, LLC, Barclays Bank PLC, BofA Securities, Inc., Citibank, N.A., Mizuho Bank, Ltd., MUFG Bank, Ltd., Royal Bank of Canada and TD Securities (USA) LLC, 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., Royal Bank of Canada and TD Securities (USA) LLC, as documentation agents, and the other lenders and issuing banks that are parties thereto.

8-K

10.1

9/28/2020

001-35054

10.2

Chief Executive Officer RSU Award Agreement

10.3

Omnibus Amendment No. 1 to Second Amended and Restated Receivables Sale Agreement, Receivables Purchase Agreement and Performance Undertaking, dated as of October 1, 2020, by and among Marathon Petroleum Corporation, Marathon Petroleum Company LP, MPC Trade Receivables Company LLC, Marathon Petroleum Trading Canada LLC, MUFG Bank, LTD., as the 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.

31.1

Certification of Chief Executive Officer pursuant to Rule 13a-14 and 15d-14 under the Securities Exchange Act of 1934

31.2

Certification of Chief Financial Officer pursuant to Rule 13a-14 and 15d-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

99.1

Redemption Agreement, dated July 31, 2020, between MPLX LP and Western Refining Southwest, Inc.

10-Q

99.1

8/3/2020

001-35054

101.INS

Inline 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.

101.SCH

Inline XBRL Taxonomy Extension Schema Document.

6371

Table of Contents

Incorporated by Reference
Filed
Herewith

Furnished
Herewith
Exhibit
Number
Exhibit Description Form Exhibit
Filing
Date

SEC File
No.

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
10.6
Term Loan Agreement, dated as of September 26, 2019, by and among MPLX LP, as borrower, Wells Fargo Bank, National Association, as administrative agent, each of Wells Fargo Securities, LLC, BofA Securities, Inc. and Mizuho Bank, Ltd., as joint lead arrangers and joint bookrunners, and the syndication agents, documentation agents and lenders that are parties thereto
8-K 10.1 9/27/2019 001-35714
31.1
Certification of Chief Executive Officer pursuant to Rule 13a-14 and 15d-14 under the Securities Exchange Act of 1934
X
31.2
Certification of Chief Financial Officer pursuant to Rule 13a-14 and 15d-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 - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded with the Inline XBRL document.
101.SCH Inline XBRL Taxonomy Extension Schema Document. X
101.PRE Inline XBRL Taxonomy Extension Presentation Linkbase Document. X
101.CAL Inline XBRL Taxonomy Extension Calculation Linkbase Document. X
101.DEF Inline XBRL Taxonomy Extension Definition Linkbase Document. X
101.LAB Inline XBRL Taxonomy Extension Label Linkbase Document. X

Incorporated by Reference

Filed

Herewith

Furnished

Herewith

Exhibit

Number

Exhibit Description

Form

Exhibit

Filing

Date

SEC File

No.

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.

104

Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).


*	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.

6472

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.



November ~~4, 2019~~6, 2020	MARATHON PETROLEUM CORPORATION

	By:	/s/ John J. Quaid
		John J. Quaid Senior Vice President and Controller

6573



	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	9
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	3435
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	5967
ITEM 4. CONTROLS AND PROCEDURES	6068

PART II – OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS	6169
ITEM 1A. RISK FACTORS	6170
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS	62
~~ITEM 5. OTHER INFORMATION~~	6270
ITEM 6. EXHIBITS	6371
SIGNATURES	6573



(In millions)	As originally reported		Adjustments			As adjusted
Cash and cash equivalents	$	382	$	—		$	382
Receivables	2,744		(7		)	2,737
Inventories	5,204		37			5,241
Other current assets	378		(6		)	372
Equity method investments	865		(113		)	752
Property, plant and equipment, net	16,545		(1,059		)	15,486
Other noncurrent assets^(a)	3,086		(11		)	3,075
Total assets acquired	29,204		(1,159		)	28,045
Accounts payable	4,003		(41		)	3,962
Payroll and benefits payable	348		9			357
Accrued taxes	590		(110		)	480
Debt due within one year	34					34
Other current liabilities	392		27			419
Long-term debt	8,875		1			8,876
Deferred income taxes	1,609		(60		)	1,549
Defined benefit postretirement plan obligations	432		—			432
Deferred credit and other liabilities	714		33			747
Noncontrolling interests	5,059		3			5,062
Total liabilities and noncontrolling interest assumed	22,056		(138		)	21,918
Net assets acquired excluding goodwill	7,148		(1,021		)	6,127
Goodwill	16,314		1,021			17,335
Net assets acquired	$	23,462	$	—		$	23,462



(In millions)	September 30, 2019
Operating leases
Assets
Right of use assets	$	2,522
Liabilities
Operating lease liabilities	$	586
Long-term operating lease liabilities	1,962
Total operating lease liabilities	$	2,548

Weighted average remaining lease term (in years)	6.4
Weighted average discount rate	4.09		%

Finance leases
Assets
Property, plant and equipment, gross	$	814
Accumulated depreciation	224
Property, plant and equipment, net	$	590
Liabilities
Debt due within one year	$	55
Long-term debt	654
Total finance lease liabilities	$	709

Weighted average remaining lease term (in years)	12.1
Weighted average discount rate	6.56		%



(In millions)	Operating		Finance
2019	$	174	$	29
2020	665		94
2021	572		86
2022	388		94
2023	277		96
2024 and thereafter	855		611
Gross lease payments	2,931		1,010
Less: imputed interest	383		301
Total lease liabilities	$	2,548	$	709



(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



(In millions)	September 30, 2019
Natural gas gathering and NGL transportation pipelines and facilities	$	1,061
Natural gas processing facilities	633
Terminal and related assets	82
Land, building, office equipment and other	45
Property, plant and equipment	1,821
Less accumulated depreciation	304
Property, plant and equipment, net	$	1,517



			Incorporated by Reference			Filed Herewith	Furnished Herewith
Exhibit Number	Exhibit Description	Form	Exhibit	Filing Date	SEC File No.	Filed Herewith	Furnished Herewith
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
4.1	Fifteenth Supplemental Indenture, dated as of September 9, 2019, between the Issuer and The Bank of New York Mellon Trust Company, N.A., as Trustee (including form of note)	8-K	4.5	9/9/2019	001-35714
4.2	Sixteenth Supplemental Indenture, dated as of September 9, 2019, between the Issuer and The Bank of New York Mellon Trust Company, N.A., as Trustee (including form of note)	8-K	4.6	9/9/2019	001-35714
4.3	Seventeenth Supplemental Indenture, dated as of September 23, 2019, between MPLX LP and the Bank of New York Mellon Trust Company, N.A.	8-K	4.1	9/27/2019	001-35714
4.4	Eighteenth Supplemental Indenture, dated as of September 23, 2019, between MPLX LP and the Bank of New York Mellon Trust Company, N.A.	8-K	4.2	9/27/2019	001-35714
4.5	Nineteenth Supplemental Indenture, dated as of September 23, 2019, between MPLX LP and the Bank of New York Mellon Trust Company, N.A.	8-K	4.3	9/27/2019	001-35714
4.6	Twentieth Supplemental Indenture, dated as of September 23, 2019, between MPLX LP and the Bank of New York Mellon Trust Company, N.A.	8-K	4.4	9/27/2019	001-35714
4.7	Twenty-First Supplemental Indenture, dated as of September 23, 2019, between MPLX LP and the Bank of New York Mellon Trust Company, N.A.	8-K	4.5	9/27/2019	001-35714
4.8	Twenty-Second Supplemental Indenture, dated as of September 23, 2019, between MPLX LP and the Bank of New York Mellon Trust Company, N.A.	8-K	4.6	9/27/2019	001-35714
4.9	Sixth Supplemental Indenture, dated as of September 6, 2019, to Indenture dated as of October 29, 2014, among Andeavor Logistics LP (f/k/a Tesoro Logistics LP), Tesoro Logistics Finance Corp. and U.S. Bank National Association, as Trustee	8-K	4.1	9/9/2019	001-35714
4.10	Fourth Supplemental Indenture, dated as of September 6, 2019, to Indenture dated as of May 12, 2016, among Andeavor Logistics LP (f/k/a Tesoro Logistics LP), Tesoro Logistics Finance Corp. and U.S. Bank National Association, as Trustee	8-K	4.2	9/9/2019	001-35714
4.11	Fourth Supplemental Indenture, dated as of September 6, 2019, to Indenture dated as of December 2, 2016, among Andeavor Logistics LP (f/k/a Tesoro Logistics LP), Tesoro Logistics Finance Corp. and U.S. Bank National Association, as Trustee	8-K	4.3	9/9/2019	001-35714
4.12	Second Supplemental Indenture, dated as of September 6, 2019, to Indenture dated as of November 28, 2017, among Andeavor Logistics LP (f/k/a Tesoro Logistics LP), Tesoro Logistics Finance Corp. and U.S. Bank National Association, as Trustee	8-K	4.4	9/9/2019	001-35714