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~~March 31, 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~~650,260,897 shares of Marathon Petroleum Corporation common stock outstanding as of ~~October 31, 2019~~May 1, 2020.

Table of Contents

MARATHON PETROLEUM CORPORATION

FORM 10-Q

FOR THE QUARTERLY PERIOD ENDED ~~SEPTEMBER 30, 2019~~MARCH 31, 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 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

PART I – FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

MARATHON PETROLEUM CORPORATION

CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)


	Three Months Ended September 30,				Nine Months Ended September 30,				Three Months Ended March 31,
(Millions of dollars, except per share data)	2019		2018		2019		2018
(In millions, except per share data)									2020			2019
Revenues and other income:
Sales and other operating revenues	$	31,043	$	22,988	$	92,857	$	64,171	$	25,215		$	28,253
Income from equity method investments	124		96		330		262
Income (loss) from equity method investments^(a)									(1,210		)	99
Net gain on disposal of assets	4		1		222		6		4			214
Other income	31		47		96		122		71			35
Total revenues and other income	31,202		23,132		93,505		64,561		24,080			28,601
Costs and expenses:
Cost of revenues (excludes items below)	27,300		20,606		82,942		57,772		22,821			25,960
Inventory market valuation adjustment									3,220			—
Impairment expense									7,822			—
Depreciation and amortization	855		555		2,660		1,616		962			919
Selling, general and administrative expenses	833		445		2,618		1,271		821			867
Other taxes	190		123		550		348		251			186
Total costs and expenses	29,178		21,729		88,770		61,007		35,897			27,932
Income from operations	2,024		1,403		4,735		3,554
Income (loss) from operations									(11,817		)	669
Net interest and other financial costs	317		240		945		618		338			306
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) before income taxes									(12,155		)	363
Provision (benefit) for income taxes									(1,937		)	104
Net income (loss)									(10,218		)	259
Less net income (loss) attributable to:
Redeemable noncontrolling interest	20		19		61		55		20			20
Noncontrolling interests	252		185		738		527		(1,004		)	246
Net income attributable to MPC	$	1,095	$	737	$	2,194	$	1,829
Net loss attributable to MPC									$	(9,234	)	$	(7	)
Per Share Data (See Note 7)
Basic:
Net income attributable to MPC per share	$	1.67	$	1.63	$	3.31	$	3.96
Net loss attributable to MPC per share									$	(14.25	)	$	(0.01	)
Weighted average shares outstanding	656		451		663		462		648			673
Diluted:
Net income attributable to MPC per share	$	1.66	$	1.62	$	3.28	$	3.92
Net loss attributable to MPC per share									$	(14.25	)	$	(0.01	)
Weighted average shares outstanding	660		456		668		466		648			673


^(a)	The 2020 period includes $1,315 million of impairment expense. See Note 4 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 March 31,
(Millions of dollars)	2020			2019
Net income (loss)	$	(10,218	)	$	259
Other comprehensive income (loss):
Defined benefit plans:
Actuarial changes, net of tax of $1 and $6, respectively	4			(3		)
Prior service credit, net of tax of ($3) and ($8), respectively	(9		)	(3		)
Other, net of tax of $0 and $0, respectively	(1		)	(1		)
Other comprehensive loss	(6		)	(7		)
Comprehensive income (loss)	(10,224		)	252
Less comprehensive income (loss) attributable to:
Redeemable noncontrolling interest	20			20
Noncontrolling interests	(1,004		)	246
Comprehensive loss attributable to MPC	$	(9,240	)	$	(14	)

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, 2019			December 31, 2018			March 31, 2020			December 31, 2019
Assets
Current assets:
Cash and cash equivalents	$	1,525		$	1,687		$	1,690		$	1,527
Receivables, less allowance for doubtful accounts of $21 and $9, respectively	7,461			5,853
Receivables, less allowance for doubtful accounts of $18 and $17, respectively							5,583			7,479
Inventories	9,696			9,837			7,445			10,243
Other current assets	457			646			975			921
Total current assets	19,139			18,023			15,693			20,170
Equity method investments	6,725			5,898			5,656			6,898
Property, plant and equipment, net	45,034			45,058			45,333			45,615
Goodwill	21,277			20,184			12,710			20,040
Right of use assets	2,522			—			2,562			2,459
Other noncurrent assets	3,442			3,777			4,363			3,374
Total assets	$	98,139		$	92,940		$	86,317		$	98,556
Liabilities
Current liabilities:
Accounts payable	$	11,380		$	9,366		$	8,106		$	11,623
Payroll and benefits payable	939			1,152			1,107			1,126
Accrued taxes	1,015			1,446			1,098			1,186
Debt due within one year	557			544			1,710			711
Operating lease liabilities	586			—			630			604
Other current liabilities	862			708			918			897
Total current liabilities	15,339			13,216			13,569			16,147
Long-term debt	28,282			26,980			29,899			28,127
Deferred income taxes	6,180			4,864			5,772			6,392
Defined benefit postretirement plan obligations	1,487			1,509			1,703			1,643
Long-term operating lease liabilities	1,962			—			1,949			1,875
Deferred credits and other liabilities	1,265			1,318			1,229			1,265
Total liabilities	54,515			47,887			54,121			55,449
Commitments and contingencies (see Note 23)
Commitments and contingencies (see Note 22)
Redeemable noncontrolling interest	968			1,004			968			968
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		)
Issued – 979 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							(15,145		)	(15,143		)
Additional paid-in capital	33,125			33,729			33,169			33,157
Retained earnings	15,891			14,755			6,380			15,990
Accumulated other comprehensive loss	(212		)	(144		)	(326		)	(320		)
Total MPC stockholders’ equity	33,738			35,175			24,088			33,694
Noncontrolling interests	8,918			8,874			7,140			8,445
Total equity	42,656			44,049			31,228			42,139
Total liabilities, redeemable noncontrolling interest and equity	$	98,139		$	92,940		$	86,317		$	98,556

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,						Three Months Ended March 31,
(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)							$	(10,218	)	$	259
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Amortization of deferred financing costs and debt discount	19			51			14			—
Impairment expense							7,822			—
Depreciation and amortization	2,660			1,616			962			919
Inventory market valuation adjustment							3,220			—
Pension and other postretirement benefits, net	(110		)	38			55			52
Deferred income taxes	772			42			(625		)	127
Net gain on disposal of assets	(222		)	(6		)	(4		)	(214		)
Income from equity method investments	(330		)	(262		)
(Income) loss from equity method investments^(a)							1,210			(99		)
Distributions from equity method investments	473			345			175			148
Changes in income tax receivable							(1,335		)	(19		)
Changes in the fair value of derivative instruments	(34		)	13			(47		)	29
Changes in operating assets and liabilities, net of effects of businesses acquired:
Current receivables	(1,615		)	(709		)	1,899			(1,018		)
Inventories	182			215			(422		)	(4		)
Current accounts payable and accrued liabilities	1,942			(316		)	(3,453		)	1,483
Right of use assets and operating lease liabilities, net	20			—			(4		)	(1		)
All other, net	282			(7		)	(17		)	(39		)
Net cash provided by operating activities	7,032			3,431
Net cash provided by (used in) operating activities							(768		)	1,623
Investing activities:
Additions to property, plant and equipment	(3,823		)	(2,315		)	(1,062		)	(1,241		)
Acquisitions, net of cash acquired	(129		)	(453		)
Disposal of assets	44			19			56			24
Investments – acquisitions, loans and contributions	(792		)	(222		)	(169		)	(325		)
– redemptions, repayments and return of capital	75			16			77			2
All other, net	50			60			10			20
Net cash used in investing activities	(4,575		)	(2,895		)	(1,088		)	(1,520		)
Financing activities:
Long-term debt – borrowings	13,774			10,735			4,250			2,604
– repayments	(12,554		)	(5,401		)	(1,521		)	(2,031		)
Debt issuance costs	(22		)	(53		)
Issuance of common stock	6			24			4			2
Common stock repurchased	(1,885		)	(2,612		)	—			(885		)
Dividends paid	(1,054		)	(637		)	(377		)	(354		)
Distributions to noncontrolling interests	(950		)	(599		)	(320		)	(325		)
Contributions from noncontrolling interests	95			9			—			95
All other, net	(64		)	(22		)	(15		)	(26		)
Net cash provided by (used in) financing activities	(2,654		)	1,444			2,021			(920		)
Net increase (decrease) in cash, cash equivalents and restricted cash	(197		)	1,980			165			(817		)
Cash, cash equivalents and restricted cash at beginning of period	1,725			3,015			1,529			1,725
Cash, cash equivalents and restricted cash at end of period	$	1,528		$	4,995		$	1,694		$	908


^(a)	The 2020 period includes $1,315 million of impairment expense. See Note 4 for further information.

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

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



	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	—		—		(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

~~Table of Contents~~

~~MARATHON PETROLEUM CORPORATION~~

~~CONSOLIDATED STATEMENTS OF EQUITY AND REDEEMBALE NONCONTROLLING INTEREST~~

~~(Unaudited)~~


	MPC Stockholders’ Equity																												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			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						Accumulated Other Comprehensive Income (Loss)			Shares				Total Equity			Amount					Shares		Amount						Additional Paid-in Capital		Retained Earnings			Accumulated Other Comprehensive Income (Loss)			Non-controlling Interests			Total Equity			Redeemable Non-controlling Interest
Balance as of December 31, 2017	734	$	7	(248	)	$	(9,869	)	$	11,262	Retained Earnings			$	12,864			$	Non-controlling Interests	(231	)	$	6,795			Redeemable Non-controlling Interest		$	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		)		—
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	—	—		—		—			—		—				—				(179		)	(179		)		(16		)	—		—		—		—			—		—			—			(305		)	(305		)	(20		)
Contributions from noncontrolling interests	—	—		—		—			—		—				—				1			1				—			—		—		—		—			—		—			—			95			95			—
Other comprehensive loss	—	—		—		—			—		—				(2		)		—			(2		)		—			—		—		—		—			—		—			(7		)	—			(7		)	—
Shares repurchased	—	—		(19	)	(1,327		)	—		—				—				—			(1,327		)		—			—		—		(14	)	(885		)	—		—			—			—			(885		)	—
Stock based compensation	—	—		—		(4		)	27		—				—				1			24				—			1		—		—		(3		)	32		—			—			(1		)	28			—
Equity transactions of MPLX & ANDX	—	—		—		—			2,380		—				—				(2,926		)	(546		)		—			—		—		—		—			3		—			—			(1		)	2			—
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
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

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. 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~~6,900 branded outlets. Our retail operations own and operate approximately ~~3,930~~3,880 retail transportation fuel and convenience stores across the United States and 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 October 31, 2019, we announced our intention to ~~Note 4 for further information on the Andeavor acquisition, which closed on October 1, 2018, and to Notes 3 and 9 for additional information about~~separate our ~~operations.~~

~~Refer to Note 24 for further information on planned separation of MPC’s~~ retail transportation fuel and convenience store business, which is operated primarily under the Speedway brand, into an independent, publicly traded company through a tax-free distribution to MPC shareholders of publicly traded stock in the new independent retail transportation fuel and convenience store company. This transaction is targeted to be completed in the fourth quarter of 2020, however timing could change given the COVID-19 related impacts to the business environment and access to capital markets. This transaction is 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 ~~presentation~~effectiveness of a registration statement to be filed with the SEC. 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. Subsequent to the completion of the separation, the historical results of ~~that~~the Speedway business will be presented as discontinued operations in our consolidated financial statements.

Basis of Presentation

All significant intercompany transactions and accounts have been eliminated.

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~~March 31, 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~~transition method. The amendment requires entities to consider a broader range of information to estimate expected credit losses, which may result in earlier recognition of losses. The ASU requires the ~~package~~company to utilize an expected loss methodology in place of ~~practical expedients permitted under~~ the ~~transition guidance within~~incurred loss methodology for financial instruments, including trade receivables, and off-balance sheet credit exposures. Adoption of 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~~have a material impact on our financial statements.

We are exposed to ~~combine lease~~credit losses primarily through our sales of refined petroleum products, crude oil and ~~non-lease components~~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 to determine liquidity, leverage, trends and business specific risks, market information, pay history and our business strategy. Customers that do not qualify for ~~arrangements in which~~payment terms are required to prepay or provide a letter of credit. We monitor our ongoing credit exposure through timely review of customer payment activity. At March 31, 2020, we ~~are the lessor. In instances where the practical expedient was not elected, lease~~reported $5,583 million of accounts and ~~non-lease consideration is allocated based on relative standalone selling price.~~

~~Right~~notes receivable, net of ~~use (“ROU”) assets represent our right to use an underlying asset in which we obtain substantially all~~allowances of the economic benefits and the right to direct the use of the asset during the lease term. Lease liabilities represent our obligation to make lease payments arising from the lease. Operating lease ROU assets and lease liabilities are recognized at commencement date based on the present value of lease payments over the lease term. We recognize ROU assets and lease liabilities on the balance sheet for leases with a lease term of greater than one year. Payments that are not fixed at the commencement of the lease are considered variable and are excluded from the ROU asset and lease liability calculations. In the measurement of our ROU assets and lease liabilities, the fixed lease payments in the agreement are discounted using a secured incremental borrowing rate$18 million.

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We are also exposed to credit losses from off-balance sheet exposures, such as guarantees of joint venture debt. See Note 22 for ~~a term similar to the duration of the lease, as our leases do not provide implicit rates. Operating lease expense is recognized~~more information on ~~a straight-line basis over the lease term.~~

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 impact our consolidated statements of income, cash flows or equity as a result of adoption.

As a lessor under ASC 842, MPLX may be required to re-classify existing operating leases to sales-type leases upon modification and related reassessment of the 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.these off-balance sheet exposures.

We also adopted the following ~~ASUs~~ASU during the first ~~nine~~three 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~~
~~2017-12~~	~~Derivatives and Hedging - Targeted Improvements to Accounting for Hedging Activities~~	~~January 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. 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~~March 31, 2020 we owned approximately 63 percent of the outstanding MPLX common units.

As described in Notes 4 and 5, we have consolidated Andeavor Logistics LP (“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 asMPLX’s Acquisition of ~~the Andeavor acquisition date of October 1, 2018.~~ANDX

On July 30, 2019, MPLX completed its acquisition of ~~ANDX,~~Andeavor Logistics LP (“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, 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.

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.ASC 810.

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.

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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



	Three Months Ended March 31,
(In millions)	2020			2019
Increase due to the issuance of MPLX & ANDX common units	$	2		$	4
Tax impact	(7		)	(1		)
Increase (decrease) in MPC's additional paid-in capital, net of tax	$	(5	)	$	3

4. ~~ACQUISITIONS~~IMPAIRMENTS

~~Acquisition~~The recent outbreak of ~~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 significantly reduced global economic activity and resulted in airlines dramatically cutting back on flights and a decrease in motor vehicle use at a time when seasonal driving patterns typically result in an increase of consumer demand for gasoline. In addition, recent global geopolitical events and macroeconomic conditions have exacerbated the decline in crude oil prices and have contributed to an increase in crude oil price volatility. The decrease in the demand for refined petroleum products coupled with the decline in the price of crude oil has resulted in a significant decrease in the price of the refined petroleum products we produce and sell.

~~On October 1, 2018,~~The overall deterioration in the economy and the environment in which we ~~acquired Andeavor.~~ operate, the related changes to our expected future cash flows, as well as a sustained decrease in share price were considered triggering events requiring various assessments to identify any potential impairments of the carrying values of our assets. During the first quarter of 2020, we recognized impairment charges related to goodwill, equity method investments and long-lived assets (including intangibles).

The ~~total~~table below provides information related to the impairments recognized during the first quarter of 2020 and the location of these impairments within the consolidated statements of income.



(In millions)	Income Statement Line	Impairment
Goodwill	Impairment expense	$	7,330
Equity method investments	Income (loss) from equity method investments	1,315
Long-lived assets	Impairment expense	492
Total impairments		$	9,137

Goodwill

During the first quarter of 2020, we recorded an impairment of goodwill. 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 guidance related to the slowing of drilling activity, which has reduced production growth forecasts from MPLX’s producer customers.

The fair value of ~~consideration transferred~~the reporting units for the goodwill impairment analysis was ~~$23.46 billion, consisting of $19.97 billion in equity and $3.49 billion in cash.~~determined based on applying both a discounted cash flow or income approach as well as a market approach. The discounted cash ~~portion~~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 ~~purchase price was funded using~~fair values under the discounted cash ~~on hand. Our financial results reflect the results of Andeavor from the date~~flow method included management’s best estimates of the ~~acquisition.~~

~~We accounted~~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 ~~Andeavor acquisition using~~individual reporting units’ overall fair values represent Level 3 measurements.

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The changes in carrying amount of goodwill were as follows:



(In millions)	Refining & Marketing			Retail		Midstream			Total
Balance at January 1, 2020	$	5,572		$	4,951	$	9,517		$	20,040
Impairments	(5,516		)	—		(1,814		)	(7,330		)
Transfers	(56		)	—		56			—
Balance at March 31, 2020	$	—		$	4,951	$	7,759		$	12,710

Equity Method Investments

During the ~~acquisition~~first quarter of 2020, we recorded equity method investment impairment charges, of ~~accounting,~~ which ~~requires Andeavor assets~~$1.25 billion related to MarkWest Utica EMG, L.L.C. and ~~liabilities~~its investment in Ohio Gathering Company, L.L.C. The impairments were largely due to ~~be recorded to our balance sheet at~~a reduction in forecasted volumes gathered and processed by the systems operated by the joint ventures. The fair value as of the ~~acquisition~~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 ~~size and~~significant assumptions that were used to develop 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 determinationestimate 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 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, company-owned convenience store locations for Retail 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 16 of our refinery asset groups as a result of significant impacts to the Refining & Marketing segment forecasted 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. All other refinery asset groups undiscounted estimated pretax cash flows exceeded the carrying value by at least 21 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 ~~assets and liabilities during~~Refining & Marketing segment cash flows to the ~~three months ended September 30, 2019 and recorded adjustments to our preliminary purchase price allocation. These adjustments reflect~~individual refineries, the ~~completion of valuation studies~~estimated useful lives of the ~~acquired~~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.

It was determined that the fair value of the Gallup refinery’s property, plant and equipment ~~in order~~was less than the carrying value. As a result, we recorded a charge of $142 million to ~~finalize assumptions used in their cost approach valuation methodology and finalization~~impairment expense on the consolidated statements of ~~specific valuation assumptions and data inputs for other individual asset valuation models.~~income. The fair value ~~estimates~~measurements for the Gallup refinery assets represent Level 3 measurements.

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 impacts to forecasted cash flows for these asset groups resulting from the effects of COVID-19. The cash flows associated with these assets ~~acquired and liabilities assumed~~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 Western G&P reporting unit for impairment. It was determined that the fair value of the ~~acquisition date~~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 and intangibles, which are ~~noted~~included in ~~the table below.~~impairment expense on our consolidated statements of income. Fair value of property, plant and equipment was determined using a combination of an income and cost

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(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


^(a)	~~Includes intangible assets.~~

approach. 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 indicativeincome approach utilized significant assumptions including management’s best estimates of the ~~results~~expected future cash flows and the estimated useful life 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

the asset group. The ~~pro forma information includes adjustments to align accounting policies, including our policy to expense refinery turnarounds when they occur, an adjustment to~~cost approach utilized assumptions for the current replacement costs of similar assets adjusted for estimated depreciation ~~expense to reflect~~and deterioration of the ~~increased~~existing equipment and economic obsolescence. The fair value of ~~property, plant and equipment, increased amortization expense related to identifiable intangible assets~~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 ~~related income tax effects.~~

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

~~During~~ the ~~third quarter~~impairment analysis will prove to be an accurate prediction 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.

~~Table of Contents~~

~~Based on~~ the ~~final~~future. The fair value ~~estimates of assets acquired and liabilities assumed at~~measurements for the acquisition date, $38 million of the purchase price was allocated to property, plant and equipment, $3 million to inventory and $94 million to goodwill. Goodwill is tax deductible and represents the value expected to be created by geographically expanding our retail platform and the assembled workforce. The terminal is accounted for within the R&M segment and 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~~asset group fair value estimates of assets acquired and liabilities assumed at the acquisition date, $97 million of the purchase price was allocated to property, plant and equipment, $9 million to inventory, $2 million to intangibles and $158 million to goodwill. Goodwill is tax deductible and represents the value expected to be created by geographically expanding our retail platform and the assembled workforce. These operations are accounted for within the Retail segment.

~~Acquisition of Mt. Airy Terminal~~

On September 26, 2018, MPLX acquired an eastern U.S. Gulf Coast export terminal (“Mt. Airy Terminal”) from Pin Oak Holdings, LLC for total consideration of $451 million. At the time of the acquisition, the terminal included tanks with 4 million barrels of third-party leased storage capacity and a dock with 120 mbpd of capacity. The 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 of goodwill and the remainder being attributable to net liabilities assumed.

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

Assuming the acquisition of the terminal and retail locations from NOCO Incorporated had occurred on January 1, 2018 and the acquisitions 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 the reported results.values represent Level 3 measurements.

5. 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 2322 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 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.

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



(In millions)	March 31, 2020		December 31, 2019
Assets
Cash and cash equivalents	$	57	$	15
Receivables, less allowance for doubtful accounts	544		615
Inventories	105		110
Other current assets	45		110
Equity method investments	3,992		5,275
Property, plant and equipment, net	22,030		22,174
Goodwill	7,722		9,536
Right of use assets	352		365
Other noncurrent assets	1,105		1,323
Liabilities
Accounts payable	$	521	$	744
Payroll and benefits payable	1		5
Accrued taxes	72		80
Debt due within one year	4		9
Operating lease liabilities	67		66
Other current liabilities	268		259
Long-term debt	20,467		19,704
Deferred income taxes	11		12
Long-term operating lease liabilities	284		302
Deferred credits and other liabilities	422		409

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September 30,
2019 December 31,
2018
(In millions) MPLX MPLX ANDX
Assets
Cash and cash equivalents $ 41
$ 68
$ 10
Receivables, less allowance for doubtful accounts 592
425
199
Inventories 104
77
22
Other current assets 71
45
57
Equity method investments 5,182
4,174
602
Property, plant and equipment, net 21,921
14,639
6,845
Goodwill 10,735
2,586
1,051
Right of use assets 366
—
—
Other noncurrent assets 1,364
458
1,242
Liabilities
Accounts payable $ 756
$ 776
$ 215
Payroll and benefits payable 5
2
10
Accrued taxes 96
48
23
Debt due within one year 510
1
504
Operating lease liabilities 61
—
—
Other current liabilities 276
177
77
Long-term debt 19,190
13,392
4,469
Deferred income taxes 15
13
1
Long-term operating lease liabilities 309
—
—
Deferred credits and other liabilities 383
276
68

6. RELATED PARTY TRANSACTIONS

Transactions with related parties were as follows:


	Three Months Ended September 30,				Nine Months Ended September 30,				Three Months Ended March 31,
(In millions)	2019		2018		2019		2018		2020		2019
Sales to related parties^(a)	$	186	$	201	$	558	$	572	$	165	$	186
Purchases from related parties^(b)	184		149		571		428		195		204

^(a)

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

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


^(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. ~~EARNINGS~~LOSS 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.

~~Table of Contents~~

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 March 31,
(In millions, except per share data)	2020			2019
Basic loss per share:
Allocation of loss:
Net loss attributable to MPC	$	(9,234	)	$	(7	)
Income allocated to participating securities	—			—
Loss available to common stockholders – basic	$	(9,234	)	$	(7	)
Weighted average common shares outstanding	648			673
Basic loss per share	$	(14.25	)	$	(0.01	)
Diluted loss per share:
Allocation of loss:
Net loss attributable to MPC	$	(9,234	)	$	(7	)
Income allocated to participating securities	—			—
Loss available to common stockholders – diluted	$	(9,234	)	$	(7	)
Weighted average common shares outstanding	648			673
Effect of dilutive securities	—			—
Weighted average common shares, including dilutive effect	648			673
Diluted loss per share	$	(14.25	)	$	(0.01	)

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 March 31,
(In millions)	2019	2018	2019	2018	2020	2019
Shares issuable under stock-based compensation plans	4	—	3	—	10	7

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8. EQUITY

As of ~~September 30, 2019,~~March 31, 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 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 March 31,
(In millions, except per share data)	2019		2018		2019		2018		2020		2019
Number of shares repurchased	10		5		33		36		—		14
Cash paid for shares repurchased	$	500	$	400	$	1,885	$	2,612	$	—	$	885
Average cost per share	$	53.82	$	73.03	$	58.75	$	71.80	$	—	$	62.98

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

~~Table of Contents~~

9. SEGMENT INFORMATION

We have 3 reportable segments: Refining & ~~Marketing; Retail;~~Marketing, Retail and Midstream. Each of these segments is organized and managed based upon the nature of the products and services it offers.

•

Refining & Marketing – refines crude oil and other feedstocks at our 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 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.

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. 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			Retail		Midstream		Total
Three Months Ended September 30, 2019
Three Months Ended March 31, 2020
Revenues:
Third party^(a)	$	21,437	$	8,677	$	929	$	31,043	$	17,528		$	6,769	$	918	$	25,215
Intersegment	5,100		2		1,235		6,337		3,617			2		1,242		4,861
Segment revenues	$	26,537	$	8,679	$	2,164	$	37,380	$	21,145		$	6,771	$	2,160	$	30,076
Segment income from operations	$	883	$	442	$	919	$	2,244
Segment income (loss) from operations									$	(622	)	$	519	$	905	$	802

Supplemental Data
Depreciation and amortization^(b)	$	397	$	113	$	300	$	810	$	447		$	125	$	345	$	917
Capital expenditures and investments^(c)	561		177		783		1,521		459			76		474		1,009

(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		Retail		Midstream		Total		Refining & Marketing			Retail		Midstream		Total
Nine Months Ended September 30, 2018
Three Months Ended March 31, 2019
Revenues:
Third party^(a)	$	46,635	$	15,231	$	2,305	$	64,171	$	19,920		$	7,376	$	957	$	28,253
Intersegment	8,181		4		2,180		10,365		4,416			2		1,232		5,650
Segment revenues	$	54,816	$	15,235	$	4,485	$	74,536	$	24,336		$	7,378	$	2,189	$	33,903
Segment income from operations	$	1,558	$	415	$	1,863	$	3,836
Segment income (loss) from operations									$	(334	)	$	170	$	908	$	744

Supplemental Data
Depreciation and amortization^(b)	$	761	$	228	$	577	$	1,566	$	427		$	126	$	307	$	860
Capital expenditures and investments^(c)	613		225		1,676		2,514		394			73		823		1,290


^(a)	Includes related party sales. See Note 6 for additional information.


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


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

~~Table of Contents~~

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


	Three Months Ended September 30,						Nine Months Ended September 30,						Three Months Ended March 31,
(In millions)	2019			2018			2019			2018			2020			2019
Segment income from operations	$	2,244		$	1,506		$	5,265		$	3,836		$	802		$	744
Items not allocated to segments:
Corporate and other unallocated items^(a)	(198		)	(99		)	(568		)	(269		)	(227		)	(191		)
Capline restructuring gain^(b)	—			—			207			—
Equity method investment restructuring gain^(b)													—			207
Transaction-related costs^(c)	(22		)	(4		)	(147		)	(14		)	(35		)	(91		)
Litigation	—			—			(22		)	—
Impairments	—			—			—			1
Income from operations	2,024			1,403			4,735			3,554
Impairments^(d)													(9,137		)	—
Inventory market valuation adjustment^(e)													(3,220		)	—
Income (loss) from operations													(11,817		)	669
Net interest and other financial costs	317			240			945			618			338			306
Income before income taxes	$	1,707		$	1,163		$	3,790		$	2,936
Income (loss) before income taxes													$	(12,155	)	$	363


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


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


^(c)	~~The transaction-related~~2020 includes costs ~~recognized~~incurred in connection with the Speedway separation and Midstream strategic review. 2019 ~~year-to-date period include~~includes employee severance, retention and other costs related to the ~~recognition~~acquisition of ~~an obligation for employee benefits provided to former Andeavor employees.~~Andeavor.


^(d)	Includes goodwill impairment, impairment of equity method investments and impairment of long lived assets. See Note 4 for additional information.


^(e)	See Note 12.

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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 March 31,
(In millions)	2019		2018		2019		2018		2020		2019
Segment capital expenditures and investments	$	1,521	$	917	$	4,175	$	2,514	$	1,009	$	1,290
Less investments in equity method investees	197		104		792		222		169		325
Plus items not allocated to segments:
Corporate	30		7		44		42		27		10
Capitalized interest	32		21		97		55		29		31
Total capital expenditures^(a)	$	1,386	$	841	$	3,524	$	2,389	$	896	$	1,006


^(a)	~~Capital expenditures include~~Includes changes in capital expenditure accruals. See Note 19 for a reconciliation of total capital expenditures to additions to property, plant and equipment for the ~~nine~~three months ended ~~September 30,~~March 31, 2020 and 2019 ~~and 2018~~ as reported in the consolidated statements of cash flows.

10. 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 March 31,
(In millions)	2019			2018			2019			2018			2020			2019
Interest income	$	(12	)	$	(26	)	$	(30	)	$	(71	)	$	(6	)	$	(9	)
Interest expense	352			233			1,042			675			357			340
Interest capitalized	(45		)	(21		)	(112		)	(55		)	(36		)	(32		)
Pension and other postretirement non-service costs^(a)	6			45			6			47
Loss on extinguishment of debt	—			—			—			4
Pension and other postretirement non-service credits^(a)													(3		)	(3		)
Other financial costs	16			9			39			18			26			10
Net interest and other financial costs	$	317		$	240		$	945		$	618		$	338		$	306


^(a)	See Note 21.

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 the income for the 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 in response to the COVID-19 pandemic. The CARES Act contains numerous income tax provisions, some of which materially impact MPC's calculation of income taxes including:

Reducing 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.

We recorded an overall income tax benefit of $1.9 billion for the three months ended March 31, 2020, of which $411 million was attributable to the expected NOL carryback provided for under the CARES Act. The combined federal, state and foreign income tax rate was 16 percent for the three months ended March 31, 2020. Our effective tax benefit rate was lower than the statutory rate primarily due to a significant amount of our pre-tax loss consisting of non-tax deductible goodwill impairment charges, partially offset by a favorable rate effect of the CARES Act legislation. Additionally, our effective tax rate is generally benefited by our noncontrolling interest in MPLX, but this benefit was lower for the three months ended March 31, 2020 compared to the three months ended March 31, 2019 due to impairment charges recorded by MPLX. We recorded an income tax receivable of $1.3 billion in other noncurrent assets to reflect our estimate of the tax benefit we will realize at the time of our 2020 tax return filing which is expected during the second half of 2021. A reconciliation of the federal statutory income tax rate applied to income (loss) before income taxes to the (benefit) provision for income taxes follows:

1816

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	Three Months Ended March 31,
	2020		2019
Statutory rate applied to income before income taxes	21	%	21	%
State and local income taxes, net of federal income tax effects	2		12
Goodwill impairment	(10	)	—
Noncontrolling interests	(1	)	(4	)
CARES Act legislation	3		—
Other	1		—
Effective tax rate	16	%	29	%

~~11. INCOME TAXES~~

The combined federal, state and foreign income tax rate was 20 percent and 19 percent for the three months ended September 30, 2019 and 2018, respectively, and 21 percent and 18 percent for the nine months ended September 30, 2019 and 2018, respectively. 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, 2019 was equal to 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 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.

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,~~March 31, 2020, we had ~~$201~~$27 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 2322 for indemnification information.

12. INVENTORIES


(In millions)	September 30, 2019		December 31, 2018		March 31, 2020			December 31, 2019
Crude oil and refinery feedstocks	$	3,415	$	3,655
Crude oil					$	3,717		$	3,472
Refined products	5,152		5,234		5,700			5,548
Materials and supplies	907		720		1,000			996
Merchandise	222		228		248			227
Inventories before LCM inventory valuation reserve					10,665			10,243
LCM inventory valuation reserve					(3,220		)	—
Total	$	9,696	$	9,837	$	7,445		$	10,243

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 if the LIFO cost basis of these inventories may have to be written down to market values. At March 31, 2020, market values for these inventories were lower than their LIFO cost basis and, as a result, we recorded an inventory valuation charge of $3.22 billion to value these inventories at the lower of cost or market. 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.

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 the ~~nine~~three months ended ~~September 30, 2019.~~March 31, 2020.

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13. EQUITY METHOD INVESTMENTS

Significant Equity Method Investments

Summarized financial information, in the aggregate, for our significant equity method investments on a 100 percent basis were as follows:



	Three Months Ended March 31,
(In millions)	2020			2019
Revenues and other income	$	1,072		$	1,628
Income (loss) from operations	(20		)	336
Net income (loss)	(44		)	314

Capline LLC

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. PROPERTY, PLANT AND EQUIPMENT


(In millions)	September 30, 2019		December 31, 2018		March 31, 2020		December 31, 2019
Refining & Marketing	$	28,470	$	27,590	$	29,511	$	29,037
Retail	6,939		6,637		7,161		7,104
Midstream	26,652		25,692		27,490		27,193
Corporate and Other	1,229		1,294		1,308		1,289
Total	63,290		61,213		65,470		64,623
Less accumulated depreciation(a)	18,256		16,155		20,137		19,008
Property, plant and equipment, net	$	45,034	$	45,058	$	45,333	$	45,615


^(a)	The March 31, 2020 balance includes property, plant and equipment impairment charges recorded during the first quarter of 2020. See Note 4 for additional information.

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15. FAIR VALUE MEASUREMENTS

Fair Values—Recurring

The following tables present assets and liabilities accounted for at fair value on a recurring basis as of ~~September 30, 2019~~March 31, 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													March 31, 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	$	754	$	32	$	—	$	(679	)	$	107	$	7
Liabilities:
Commodity contracts	$	165	$	12	$	—	$	(176	)	$	1	$	—	$	610	$	19	$	—	$	(628	)	$	1	$	—
Embedded derivatives in commodity contracts	—		—		54		—			54		—		—		—		45		—			45		—

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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	$	—	$	(55	)	$	8	$	73
Liabilities:
Commodity contracts	$	255	$	37	$	—	$	(284	)	$	8	$	—	$	95	$	11	$	—	$	(106	)	$	—	$	—
Embedded derivatives in commodity contracts	—		—		61		—			61		—		—		—		60		—			60		—

^(a)

Represents the impact of netting assets, liabilities and cash collateral when a legal right of offset exists. As of ~~September 30, 2019,~~March 31, 2020, cash collateral of ~~$15~~$67 million was netted with mark-to-market assets and $16 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~~March 31, 2020 used significant unobservable inputs including: (1) NGL prices interpolated and extrapolated due to inactive markets ranging from ~~$0.41~~$0.26 to ~~$1.07~~$0.68 per gallon with a weighted average of $0.39 per gallon per the current term of the embedded derivative and (2) the probability of renewal of 9395 percent for the first ~~five-term~~five-year term and ~~82.5~~83.5 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. Beyond the embedded derivative discussed above, we had no outstanding commodity contracts as of March 31, 2020.

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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 March 31,
(In millions)	2019			2018			2019			2018			2020			2019
Beginning balance	$	65		$	68		$	61		$	66		$	60		$	61
Unrealized and realized losses included in net income	(9		)	20			(2		)	29
Unrealized and realized (gains) losses included in net income													(14		)	6
Settlements of derivative instruments	(2		)	(4		)	(5		)	(11		)	(1		)	(2		)
Ending balance	$	54		$	84		$	54		$	84		$	45		$	65

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 (gains) losses for the period included in earnings attributable to the change in unrealized losses relating to assets still held at the end of period:													$	(13	)	$	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 $31.0 billion and $27.7 billion at March 31, 2020, respectively, and approximately $28.3 billion and ~~$30.2 billion at September 30, 2019, respectively, and approximately $27.0 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. DERIVATIVES

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

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~~March 31, 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, 2019				March 31, 2020
Balance Sheet Location	Asset		Liability		Asset		Liability
Commodity derivatives
Other current assets	$	184	$	176	$	786	$	629
Other current liabilities^(a)	1		6		—		2
Deferred credits and other liabilities^(a)	—		49		—		43

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(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		—		5
Deferred credits and other liabilities^(a)	—		54		—		55


^(a)	Includes embedded derivatives.

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The table below summarizes open commodity derivative contracts for crude oil, refined products and blending products as of ~~September 30, 2019.~~March 31, 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	94.8%	29,202	46,121
Refined products	97.1%	17,014	11,258	84.3%	20,370	16,960
Blending products	84.2%	2,750	7,708	100.0%	3,581	3,359
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~~3,840 long and ~~1,500~~640 short; Refined products - ~~925~~2,575 long and ~~225 short; Blending products - 257 long and 182~~1,775 short

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 March 31,
Income Statement Location	2019			2018			2019			2018			2020		2019
Sales and other operating revenues	$	(1	)	$	3		$	(18	)	$	1		$	84	$	(20	)
Cost of revenues	50			(69		)	(15		)	(152		)	131		(80		)
Total	$	49		$	(66	)	$	(33	)	$	(151	)	$	215	$	(100	)

17. DEBT

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


(In millions)	September 30, 2019			December 31, 2018			March 31, 2020			December 31, 2019
Marathon Petroleum Corporation	$	9,174		$	9,114
MPLX LP	20,120			13,856
ANDX^(a)	—			5,010
Marathon Petroleum Corporation:
Bank revolving credit facility							$	2,000		$	—
Senior notes							8,474			8,474
Notes payable							10			10
Finance lease obligations							692			679
MPLX LP:
Bank revolving credit facility							750			—
Term loan facility							1,000			1,000
Senior notes							19,100			19,100
Finance lease obligations							14			19
Total debt	$	29,294		$	27,980		$	32,040		$	29,282
Unamortized debt issuance costs	(137		)	(128		)	(129		)	(134		)
Unamortized discount	(318		)	(328		)
Unamortized (discount) premium, net							(302		)	(310		)
Amounts due within one year	(557		)	(544		)	(1,710		)	(711		)
Total long-term debt due after one year	$	28,282		$	26,980		$	29,899		$	28,127


^(a)	On July 30, 2019, MPLX acquired ANDX and assumed its debt obligations. See Note 3 and 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.

2321

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Available Capacity under our Facilities as of March 31, 2020


(Dollars in millions)	Total Capacity		Outstanding Borrowings		Outstanding Letters of Credit		Available Capacity		Weighted Average Interest Rate		Expiration	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	$	1,000	$	—	$	—	$	1,000	—		September 2020
MPC bank revolving credit facility(a)	5,000		—		1		4,999		—		October 2023	5,000		2,000		1		2,999		1.89	%	October 2023
MPC trade receivables securitization facility(b)	750		—		—		750		—		July 2021	750		—		—		750		—		July 2021
MPLX bank revolving credit facility(c)	3,500		—		3		3,497		—		July 2024	3,500		750		—		2,750		1.94	%	July 2024
MPLX term loan facility	1,000		500		—		500		2.795	%	September 2021

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

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

^(a) ~~September 26, 2021~~ ~~and may be prepaid at any time without premium or penalty.~~

The term loan agreement contains representations and warranties, affirmative and negative covenants and events of default that we consider to be customary for an agreement of this type and are substantially similar to MPLX’s existing 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.

~~MPLX Floating Rate Senior Notes~~

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%.

~~Table of Contents~~

~~MPLX Senior Notes~~

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.

Borrowed $2 billion on March 30, 2020.


^(b)	Borrowed $925 million and repaid $925 million during the three months ended March 31, 2020.


^(c)	Borrowed $1.325 billion at an average interest rate of 2.14 percent and repaid $575 million during the three months ended March 31, 2020.

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 March 31, 2020
Refined products	$	16,539	$	5,289	$	169	$	21,997
Merchandise	1		1,456		—		1,457
Crude oil	875		—		—		875
Midstream services and other	113		24		749		886
Sales and other operating revenues	$	17,528	$	6,769	$	918	$	25,215

(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		Retail		Midstream		Total
Nine Months Ended September 30, 2018
Three Months Ended March 31, 2019
Refined products	$	43,493	$	11,462	$	649	$	55,604	$	18,750	$	5,947	$	216	$	24,913
Merchandise	3		3,753		—		3,756		1		1,409		—		1,410
Crude oil and refinery feedstocks	2,871		—		154		3,025
Crude oil									1,071		—		—		1,071
Midstream services and other	268		16		1,502		1,786		98		20		741		859
Sales and other operating revenues	$	46,635	$	15,231	$	2,305	$	64,171	$	19,920	$	7,376	$	957	$	28,253

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,~~March 31, 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~~March 31, 2020 include matching buy/sell receivables of ~~$2.25~~$2.33 billion.

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19. SUPPLEMENTAL CASH FLOW INFORMATION



	Three Months Ended March 31,
(In millions)	2020			2019
Net cash provided by operating activities included:
Interest paid (net of amounts capitalized)	$	303		$	269
Net income taxes paid to taxing authorities	(9		)	42
Non-cash investing and financing activities:
Contribution of assets^(a)	—			143
Fair value of assets acquired^(b)	—			350

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
—


^(a)	~~Disclosure added in~~ 2019 ~~following~~includes the ~~adoption~~contribution of ~~ASC 842.~~net assets to Capline LLC. See Note 13.


^(b)	2019 includes the recognition of the Capline LLC equity method investment. See Note 13.


(In millions)	September 30, 2019		December 31, 2018		March 31, 2020		December 31, 2019
Cash and cash equivalents	$	1,525	$	1,687	$	1,690	$	1,527
Restricted cash^(a)	3		38		4		2
Cash, cash equivalents and restricted cash	$	1,528	$	1,725	$	1,694	$	1,529


^(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,					Three Months Ended March 31,
(In millions)	2019			2018		2020			2019
Additions to property, plant and equipment per the consolidated statements of cash flows	$	3,823		$	2,315	$	1,062		$	1,241
Asset retirement expenditures	1			7
Increase (decrease) in capital accruals	(300		)	67
Decrease in capital accruals						(166		)	(235		)
Total capital expenditures	$	3,524		$	2,389	$	896		$	1,006

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20. ACCUMULATED OTHER COMPREHENSIVE LOSS

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


(In millions)	Pension Benefits			Other Benefits			Gain on Cash Flow Hedge			Workers Compensation			Total			Pension Benefits			Other Benefits			Gain on Cash Flow Hedge		Workers Compensation			Total
Balance as of December 31, 2017	$	(190	)	$	(48	)	$	4		$	3		$	(231	)
Other comprehensive income (loss) before reclassifications, net of tax of $10	35			(1		)	(2		)	—			32
Balance as of December 31, 2018																$	(132	)	$	(23	)	$	2	$	9		$	(144	)
Other comprehensive loss before reclassifications, net of tax of $0																(1		)	—			—		—			(1		)
Amounts reclassified from accumulated other comprehensive loss:
Amortization – prior service credit^(a)	(25		)	(2		)	—			—			(27		)	(11		)	—			—		—			(11		)
– actuarial loss^(a)	26			(1		)	—			—			25			4			—			—		—			4
– settlement loss^(a)	47			—			—			—			47			—			—			—		—			—
Other	—			—			—			(4		)	(4		)	—			—			—		(1		)	(1		)
Tax effect	(12		)	1			—			1			(10		)	2			—			—		—			2
Other comprehensive income (loss)	71			(3		)	(2		)	(3		)	63
Balance as of September 30, 2018	$	(119	)	$	(51	)	$	2		$	—		$	(168	)
Other comprehensive loss																(6		)	—			—		(1		)	(7		)
Balance as of March 31, 2019																$	(138	)	$	(23	)	$	2	$	8		$	(151	)

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(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 ($1)															(2		)	(2		)	—		—			(4		)
Amounts reclassified from accumulated other comprehensive loss:
Amortization – prior service credit^(a)	(34		)	—			—		—			(34		)	(11		)	—			—		—			(11		)
– actuarial loss^(a)	16			(1		)	—		—			15			8			1			—		—			9
– settlement loss^(a)	9			—			—		—			9			—			—			—		—			—
Other	—			—			—		(4		)	(4		)	—			—			—		(1		)	(1		)
Tax effect	2			—			—		1			3			1			—			—		—			1
Other comprehensive loss	(65		)	—			—		(3		)	(68		)	(4		)	(1		)	—		(1		)	(6		)
Balance as of September 30, 2019	$	(197	)	$	(23	)	$	2	$	6		$	(212	)
Balance as of March 31, 2020															$	(216	)	$	(117	)	$	1	$	6		$	(326	)


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

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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, 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,												Three Months Ended March 31,
	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		$	69		$	58		$	9	$	8
Interest cost	82			54			28			22			25			28			8		9
Expected return on plan assets	(94		)	(75		)	—			—			(34		)	(32		)	—		—
Amortization – prior service credit	(34		)	(25		)	—			(2		)	(11		)	(11		)	—		—
– actuarial loss	16			26			(1		)	(1		)	8			4			1		—
– settlement loss	9			47			—			—			—			—			—		—
Net periodic benefit cost	$	154		$	134		$	51		$	41		$	57		$	47		$	18	$	17

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~~three months ended ~~September 30, 2019,~~March 31, 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~~$6 million and ~~$32~~$11 million, respectively, during the ~~nine~~three months ended ~~September 30, 2019.~~March 31, 2020.

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.

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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

~~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.

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At ~~September 30, 2019~~March 31, 2020 and December 31, ~~2018,~~2019, accrued liabilities for remediation totaled ~~$447~~$418 million and ~~$455~~$433 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~~$29 million and ~~$35~~$29 million at ~~September 30, 2019~~March 31, 2020 and December 31, ~~2018,~~2019, respectively.

Governmental and other entities in California, Hawaii, Maryland, New York ~~Maryland~~ and Rhode Island have filed lawsuits against coal, gas, oil and petroleum companies, including the Company. The lawsuits allege damages as a result of climate change and the plaintiffs are seeking unspecified damages and abatement under various tort theories. Similar lawsuits may be filed in other jurisdictions. At this early stage, the ultimate outcome of these matters remains uncertain, and neither the likelihood of an unfavorable outcome nor the ultimate liability, if any, can be determined.

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

Other Lawsuits

In May 2015, the Kentucky attorney general filed a lawsuit against our ~~wholly-owned~~wholly owned subsidiary, Marathon Petroleum Company LP (“MPC LP”), in the United States District Court for the Western District 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, the ultimate outcome of this litigation remains uncertain, and neither the likelihood of an unfavorable outcome nor the ultimate liability, if any, can be determined, and we are unable to estimate a reasonably possible loss (or range of loss) for this matter. We intend to vigorously defend ourselves in this matter.

In May 2007, the Kentucky attorney general filed a lawsuit against us and Marathon Oil in state court in Franklin County, Kentucky for alleged violations of Kentucky’s emergency pricing and consumer protection laws following Hurricanes Katrina and Rita in 2005. The lawsuit 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 not have a material adverse effect on our consolidated financial position, results of operations or cash flows.

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

Guarantees

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

Guarantees related to indebtedness of equity method investees—MPC and MPLX hold interests in an offshore oil port, LOOP, and MPLX holds an interest in a crude oil pipeline system, LOCAP. Both LOOP and LOCAP have secured various project financings with throughput and deficiency agreements. Under the agreements, MPC, as a shipper, is required to advance funds if the investees are unable to service their debt. Any such advances are considered prepayments of future transportation charges. The duration of the agreements ~~vary~~varies but ~~tend~~tends to follow the terms of the underlying debt, which extend through 2037. Our maximum potential undiscounted payments under these agreements for the debt principal totaled $171 million as of ~~September 30, 2019.~~March 31, 2020.

In connection with our 25 percent interest in Gray Oak Pipeline, LLC (“Gray Oak Pipeline”), we have entered into an Equity Contribution Agreement obligating us to make certain equity contributions to Gray Oak Pipeline to support its obligations under a construction loan facility. Gray Oak ~~Pipeline is constructing the Gray Oak~~ oil pipeline is 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 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 construction loan facility (after giving effect to the exercise of all options to increase its borrowing capacity). As of ~~September 30, 2019,~~March 31, 2020, our maximum potential undiscounted payments under the Equity Contribution Agreement for the debt principal totaled ~~$226~~$345 million.

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In connection with MPLX’s ~~approximate 9~~9.19 percent indirect interest in a joint venture that owns and operates the Dakota Access Pipeline and Energy Transfer Crude Oil Pipeline projects, collectively referred to as the Bakken Pipeline system, MPLX has entered into a Contingent Equity Contribution Agreement. MPLX, along with the other joint venture owners in the Bakken Pipeline system, have agreed to make equity contributions to the joint venture upon certain events occurring to allow the entities that own and operate the Bakken Pipeline system to satisfy their senior note payment obligations. The senior notes were issued to repay amounts owed by the pipeline companies to fund the cost of construction of the Bakken Pipeline system.

In March 2020, the U.S. District Court for the District of Columbia ordered the U.S. Army Corps of Engineers, which granted permits for the Bakken Pipeline system, to conduct a full environmental impact statement (“EIS”), and further requested briefing on whether an easement permit necessary for the operation of the Bakken Pipeline system should be vacated while the EIS is being prepared. If the permit is vacated pending completion of the EIS and the vacatur is deemed temporary, MPLX would have to contribute its 9.19 percent pro rata share of funds required to pay interest accruing on the notes while the pipeline is shutdown and 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 court vacates the permit and such action 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, if any. As of ~~September 30, 2019,~~March 31, 2020, our maximum potential undiscounted payments under the Contingent Equity Contribution Agreement was approximately $230 million.

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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,~~March 31, 2020, our maximum potential undiscounted payments under this agreement for debt principal totaled $125 million.

In connection with our 50 percent indirect interest in Crowley Blue Water Partners LLC, we have agreed to provide a conditional guarantee of up to 50 percent of its outstanding debt balance in the event there is no charter agreement in place with an investment grade customer for the entity’s three vessels as well as other financial support in certain circumstances. As of ~~September 30, 2019,~~March 31, 2020, our maximum potential undiscounted payments under this arrangement was ~~$122~~$118 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, theThe 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~~$103 million as of ~~September 30, 2019,~~March 31, 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,~~March 31, 2020, our contractual commitments to acquire property, plant and equipment and advance funds to equity method investees totaled ~~$1.55 billion.~~$626 million.

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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.~~23. SUBSEQUENT ~~EVENT~~EVENTS

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~~end of the ~~separation,~~quarter, we completed a number of financing activities to enhance our liquidity as described below.

Additional MPC 364-Day Bank Revolving Credit Facility

On April 27, 2020, MPC entered into a credit agreement with a syndicate of lenders providing for an additional $1 billion 364-day revolving credit facility. The credit agreement for the ~~historical results~~additional 364-day revolving credit facility contains representations and warranties, affirmative and negative covenants and events of ~~the Speedway business will be presented as discontinued operations~~default that we consider customary for agreements of their nature and type and substantially similar to those contained in our ~~consolidated financial statements.~~existing $5.0 billion five-year revolving credit facility and $1.0 billion 364-day revolving credit facility.

MPC Senior Notes Issuance

On April 27, 2020, we 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 May 2023 and $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 amounts outstanding under its five-year revolving credit facility.

The following table shows our available credit capacity, excluding MPLX, as of May 5, 2020.



(Dollars in millions)	Total Capacity		Outstanding Borrowings		Outstanding Letters of Credit		Available Capacity		Expiration
MPC 364-day bank revolving credit facility	$	1,000	$	—	$	—	$	1,000	September 2020
MPC 364-day bank revolving credit facility	1,000		—		—		1,000		April 2021
MPC bank revolving credit facility^(a)	5,000		750		1		4,249		October 2023
MPC trade receivables securitization facility^(b)	517		—		—		517		July 2021
Available capacity, excluding MPLX, as of May 5, 2020							6,766


^(a)	Borrowed $2 billion on March 30, 2020 and $1.5 billion in April. Repaid $2.75 billion in May.


^(b)	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. As of April 30, 2020 eligible trade receivables supported borrowings of approximately $517 million.

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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;

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 recent outbreak of COVID-19 and the adverse impact thereof 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 recent outbreak of COVID-19, 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 separation within the expected timeframe or at all;

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;

risks relating to any unforeseen liabilities of Andeavor;

further impairments;

risks related to the acquisition of Andeavor Logistics LP (“ANDX”) by MPLX LP (“MPLX”);

our ability to complete any divestitures on commercially reasonable terms and within the expected timeframe, and the effects of any such divestitures on the business, financial condition, results of operations and cash flows;

the effect of restructuring or reorganization of business components;

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 the availability of sufficient cash flow to execute business plans and to effect any share repurchases or dividend increases, including within the expected timeframe;

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

continued or further volatility orin and degradation inof general economic, market, industry or business ~~conditions;~~conditions as a result of the COVID-19 pandemic, other infectious disease outbreaks or otherwise;

~~availability~~

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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

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

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~~an independent petroleum refining and marketing, retail and midstream company. We own and operate the nation’s largest refining system ~~with more than 3 million barrels per calendar day of crude oil capacity across~~through 16 refineries, located in the Gulf Coast, Mid-Continent and West Coast regions of the United ~~States.~~States, with an aggregate crude oil refining capacity of approximately 3.1 mmbpcd. 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 6,900 branded outlets operated by independent entrepreneurs in 35 states, the District of Columbia and Mexico. We believe our Retail segment operates the second largest chain of company-owned and operated retail ~~transportation fuel~~gasoline and convenience stores in the United States, with approximately ~~3,930~~3,880 convenience ~~stores. Our Retail segment also sells transportation fuel to consumers through approximately~~stores, primarily under the Speedway brand, and 1,070 direct dealer ~~locations. Our company-owned and operated~~ locations, primarily ~~carry~~under the ~~Speedway~~^®ARCO brand, ~~name and~~across the ~~direct dealer locations carry primarily the ARCO~~^® ~~brand name.~~United States.

~~We are one of the largest midstream operators in North America.~~ We primarily conduct our midstream operations through our ownership interest in MPLX, which owns and operates crude oil and ~~light~~refined product transportation and logistics infrastructure ~~as well as~~and natural gas and NGL gathering, processing, and fractionation assets. As of ~~September 30, 2019,~~March 31, 2020, we owned, leased or had ownership interests in approximately ~~16,600~~17,200 miles of crude oil and refined product pipelines to deliver crude oil to our refineries and other locations and refined products to wholesale and retail market areas. We distribute our refined products through one of the largest terminal operations in the United States and one of the largest private domestic fleets of inland petroleum product barges. Our integrated midstream ~~gathering and processing~~energy asset network links

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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 reportable operating segments: Refining & ~~Marketing; Retail;~~Marketing, Retail, and Midstream. Each of these segments is organized and managed based upon the nature of the products and services ~~it offers.~~they offer.

•


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


•	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

Business Update

The recent 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 airlines dramatically cutting back on flights and a decrease in motor vehicle use at a time when seasonal driving patterns typically result in an increase of consumer demand for gasoline. As a result, there has also been a decline in the demand for the refined petroleum products that we manufacture and sell.

In addition, recent global geopolitical events and macroeconomic conditions have exacerbated the decline in crude oil prices and have contributed to an increase in crude oil price volatility.

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

The price of refined products we sell and the feedstocks we purchase impact our revenues, income from operations, net income and cash flows. In addition, a decline in the market 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 March 31, 2020, market values for these inventories were lower than their LIFO cost basis and, as a result, we recorded an inventory valuation charge of $3.22 billion to value these inventories at the lower of cost or market. 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 are actively responding to the impacts that these matters are having on our business. During March and continuing through April 2020, we started reducing the amount of crude oil processed at our refineries in response to the decreased demand for our products, and we temporarily idled portions of refining capacity to further limit production. In addition to these measures to address our operations, we are addressing our liquidity as outlined below.

We expect to defer or delay certain capital expenditures of approximately $1.35 billion, or approximately 30 percent, which is expected to reduce planned spending levels down to $3.0 billion for 2020. The reductions are planned across all segments of the business, including: $250 million in Refining & Marketing; $770 million in Midstream, which includes MPLX; $250 million in Retail; and $80 million in Corporate. 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.

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We have taken actions to reduce forecasted annual operating expenses by approximately of $950 million, primarily through reductions of fixed costs and deferral of certain expense projects, which includes $200 million of operating expense reductions at MPLX.

Throughput levels have been reduced across the organization including the temporary idling of some facilities. The company plans to continue to monitor market conditions and optimize crude oil acquisition, refining run rates, and logistics systems to respond on a regional basis.

Share repurchases have temporarily been suspended. The company will evaluate the timing of future repurchases as market conditions evolve.

On April 27, 2020, we entered into an additional $1 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 amounts outstanding on the five-year revolving credit facility.

The company continues to evaluate further actions to enhance liquidity.

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.

Strategic Actions to Enhance Shareholder Value

On October 31, 2019, we announced our intention 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~~company through a tax-free distribution to MPC shareholders of publicly traded stock in the new independent retail transportation fuel and convenience store company. ~~The~~This transaction is ~~expected~~targeted to be completed ~~by year-end~~in the fourth quarter of 2020, however timing could change given the COVID-19 related impacts to the business environment and access to capital markets. This transaction is subject to

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market, regulatory and certain other conditions, including final approval by ~~the MPC Board~~MPC’s board of ~~Directors,~~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. MPC will retain its ~~direct-dealer~~direct dealer business, which is also included in the Retail segment as currently reported.

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 the company remaining 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 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,							Three Months Ended March 31,
(In millions, except per share data)		2019			2018			2019			2018				2020			2019
Income from operations by segment
Income (loss) from operations by segment														Income (loss) from operations by segment
Refining & Marketing	Refining & Marketing	$	883		$	666		$	1,455		$	1,558		Refining & Marketing	$	(622	)	$	(334	)
Retail	Retail	442			161			1,105			415			Retail	519			170
Midstream	Midstream	919			679			2,705			1,863			Midstream	905			908
Items not allocated to segments	Items not allocated to segments	(220		)	(103		)	(530		)	(282		)	Items not allocated to segments	(12,619		)	(75		)
Income from operations	Income from operations	$	2,024		$	1,403		$	4,735		$	3,554		Income from operations	$	(11,817	)	$	669
Net income attributable to MPC		$	1,095		$	737		$	2,194		$	1,829
Net loss attributable to MPC														Net loss attributable to MPC	$	(9,234	)	$	(7	)
Net income attributable to MPC per diluted share	Net income attributable to MPC per diluted share	$	1.66		$	1.62		$	3.28		$	3.92		Net income attributable to MPC per diluted share	$	(14.25	)	$	(0.01	)

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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 ~~$1.10~~$(9.23) billion, or ~~$1.66 per diluted share, in the third quarter of 2019 compared to $737 million, or $1.62 per diluted share, for the third quarter of 2018. Net income attributable to MPC was $2.19 billion, or $3.28~~$(14.25) per diluted share, in the first ~~nine months~~quarter of ~~2019~~2020 compared to ~~$1.83 billion,~~$(7) million, or ~~$3.92~~$(0.01) per diluted share, for the first ~~nine months~~quarter of ~~2018. In both periods~~2019. The change was primarily due to impairment charges of ~~2019,~~$7.82 billion to goodwill and long-lived assets, an LCM charge of $3.22 billion and impairments of equity method investments of $1.32 billion during the current period primarily ~~as a result~~driven by the effects of COVID-19 and the ~~Andeavor acquisition, increased~~decline in commodity prices. Increased income from operations in our Retail segment due to higher fuel and merchandise margins was partially offset by ~~increased net interest~~a higher loss from operations in our Refining & Marketing segment due to decreases in refined product sales volumes and ~~other financial costs, provision~~prices during the current quarter.

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 ~~income taxes~~purposes of assessing if the cost basis of these inventories may have to be written down to market values. 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. The impairments of goodwill, equity method investments and ~~net income attributable~~long-lived assets are based on fair value determinations, which require considerable judgment and are sensitive to ~~noncontrolling interests.~~changes in underlying assumptions and factors. As a result, there can be no assurance that the estimates and assumptions made for purposes of the impairments recognized in the first three months of 2020 will prove to be an accurate prediction of the future.

Refer to the Results of Operations section for a discussion of consolidated financial results and segment results for the ~~third~~first quarter of ~~2019 as compared to the third quarter of 2018 and the first nine months of 2019~~2020 as compared to the first ~~nine months~~quarter 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 million MPLX common units at ~~September 30, 2019~~March 31, 2020 with a market value of ~~$18.65~~$7.74 billion based on the ~~September 30, 2019~~March 31, 2020 closing price of ~~$28.01~~$11.62 per common unit. On ~~October 25, 2019,~~April 28, 2020, MPLX declared a quarterly cash distribution of ~~$0.6775~~$0.6875 per common unit payable on ~~November 14, 2019.~~May 15, 2020. As a result, MPLX will make distributions totaling ~~$704~~$728 million to its common unitholders. MPC’s portion of these distributions is approximately ~~$438~~$458 million.

We received ~~MPLX~~ limited partner distributions of ~~$1.39 billion and $775~~$446 million from MPLX in the ~~nine~~three months ended ~~September 30, 2019~~March 31, 2020 and ~~2018, respectively. These distributions include~~$473 million from MPLX ~~distributions received~~and ANDX combined in the ~~nine~~three months ended ~~September 30, 2019 and 2018 and~~March 31, 2019. The decrease in distributions from the prior year is due to the fact that ANDX ~~distributions received in~~had a higher per unit distribution prior to the ~~nine months ended September 30, 2019.~~Merger when compared to the MPLX distribution per unit post-merger.

See Note 3 to the unaudited consolidated financial statements for additional information on MPLX.

Share Repurchases

During the ~~nine~~three months ended ~~September 30, 2019,~~March 31, 2020, we ~~returned $1.89 billion to~~did not repurchase any of our ~~shareholders through repurchases of approximately 33 million shares of~~ common stock, ~~at an average price per share of $58.75.~~

which helped preserve our liquidity during the COVID-19 pandemic. 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 as of ~~September 30, 2019.~~March 31, 2020. We will evaluate the timing to resume any future repurchases as market conditions evolve. See Note 8 to the unaudited consolidated financial statements.

Liquidity

As of ~~September 30, 2019,~~March 31, 2020, we had cash and cash equivalents of approximately ~~$1.48~~$1.63 billion, excluding MPLX cash and cash equivalents of ~~$41~~$57 million ~~no borrowings and $1 million in letters of credit outstanding~~, $3.0 billion available under ~~our $6.0 billion~~a five-year bank revolving credit ~~facilities~~facility, $1.0 billion available under a 364-day bank revolving credit facility, and ~~no borrowings outstanding~~$750 million available under our ~~$750 million~~ trade receivables securitization facility resulting in cash and available liquidity of ~~$8.23~~$6.38 billion. MPC drew $2.0 billion on the five-year bank revolving credit facility in the first quarter of 2020. This borrowing was undertaken to provide financial flexibility given the recent commodity price downturn and the significant working capital impact associated with the decline in crude prices. The company has made short-term borrowings to manage the impact of commodity prices on working capital in the past and expects to do so from time to time in the future.

MPLX’s liquidity totaled $4.31 billion at March 31, 2020. As of ~~September 30, 2019,~~March 31, 2020, MPLX had ~~approximately $3.50~~cash and cash equivalents of $57 million, $2.75 billion available ~~through~~under its ~~bank~~$3.5 billion revolving credit agreement and ~~$1.38~~$1.5 billion available through its intercompany ~~credit facility~~loan agreement with MPC.

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 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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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.

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.~~

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. 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 and engineering projects are expensed in the period incurred.~~

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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 March 31,
(In millions)		2019		2018		Variance			2019		2018		Variance				2020			2019			Variance
Revenues and other income:	Revenues and other income:															Revenues and other income:
Sales and other operating revenues	Sales and other operating revenues	$	31,043	$	22,988	$	8,055		$	92,857	$	64,171	$	28,686		Sales and other operating revenues	$	25,215		$	28,253		$	(3,038	)
Income from equity method investments		124		96		28			330		262		68
Income (loss) from equity method investments^(a)																Income (loss) from equity method investments^(a)	(1,210		)	99			(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	4			214			(210		)
Other income	Other income	31		47		(16		)	96		122		(26		)	Other income	71			35			36
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	24,080			28,601			(4,521		)
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)	22,821			25,960			(3,139		)
Inventory market valuation adjustment																Inventory market valuation adjustment	3,220			—			3,220
Impairment expense																Impairment expense	7,822			—			7,822
Depreciation and amortization	Depreciation and amortization	855		555		300			2,660		1,616		1,044			Depreciation and amortization	962			919			43
Selling, general and administrative expenses	Selling, general and administrative expenses	833		445		388			2,618		1,271		1,347			Selling, general and administrative expenses	821			867			(46		)
Other taxes	Other taxes	190		123		67			550		348		202			Other taxes	251			186			65
Total costs and expenses	Total costs and expenses	29,178		21,729		7,449			88,770		61,007		27,763			Total costs and expenses	35,897			27,932			7,965
Income from operations		2,024		1,403		621			4,735		3,554		1,181
Income (loss) from operations																Income (loss) from operations	(11,817		)	669			(12,486		)
Net interest and other financial costs	Net interest and other financial costs	317		240		77			945		618		327			Net interest and other financial costs	338			306			32
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) before income taxes																Income (loss) before income taxes	(12,155		)	363			(12,518		)
Provision (benefit) for income taxes																Provision (benefit) for income taxes	(1,937		)	104			(2,041		)
Net income (loss)																Net income (loss)	(10,218		)	259			(10,477		)
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			—
Noncontrolling interests	Noncontrolling interests	252		185		67			738		527		211			Noncontrolling interests	(1,004		)	246			(1,250		)
Net income attributable to MPC		$	1,095	$	737	$	358		$	2,194	$	1,829	$	365
Net loss attributable to MPC																Net loss attributable to MPC	$	(9,234	)	$	(7	)	$	(9,227	)


^(a)	The 2020 period includes $1.32 billion of impairment expense. See Note 4 to the unaudited consolidated financial statements for further information.

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

Net ~~income~~loss attributable to MPC increased ~~$358 million~~$9.23 billion in the ~~third~~first quarter of 2020 compared to the first quarter of 2019 ~~compared to the third quarter of 2018~~ primarily due to impairment expenses for goodwill and long-lived assets of $7.82 billion, an ~~increase in income from operations, partially offset by increases in~~inventory market valuation adjustment of $3.22 billion and impairments of equity method investments of $1.32 billion during the ~~provision for income taxes, net interest and other financial costs and net income attributable to noncontrolling interests.~~period.

Revenues and other income ~~increased $8.07 billion. Sales~~decreased $4.52 billion primarily due to:

decreased sales and other operating revenues ~~increased $8.06~~of $3.04 billion primarily due to ~~increased~~decreased Refining & Marketing segment refined product sales volumes, which ~~increased 1,324~~decreased 81 mbpd, and decreased average refined product sales prices of $0.22 per gallon largely due to ~~the Andeavor acquisition on October 1, 2018.~~

~~Costs~~reduced travel and ~~expenses increased $7.45 billion primarily due to:~~

~~increased cost of revenues of $6.69 billion mainly due to the inclusion of costs related to the Andeavor~~business 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~~associated with the ~~Andeavor acquisition;~~COVID-19 pandemic;

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.~~

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

Provision for income taxes increased $118 million primarily due to increased income before income taxes of $544 million. The combined federal, state and foreign income tax rate was 20 percent and 19 percent for the three months ended September 30, 2019 and 2018, respectively. 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 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 Compared to Nine Months Ended September 30, 2018~~

Net income attributable to MPC increased $365 million in the first nine months of 2019 compared to the first nine months of 2018 primarily due to an increase in income from operations, partially offset by increases in net interest and other financial costs, provision for income taxes and net income attributable to noncontrolling interests.

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

increased sales and other operating revenues of $28.69 billion primarily due to increased Refining & Marketing segment refined product sales volumes, which increased 1,384 mbpd, largely due to the Andeavor acquisition on October 1, 2018;

~~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~~$210 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.

Costs and expenses increased ~~$27.76~~$7.97 billion primarily due to:

~~increased~~decreased cost of revenues of ~~$25.17 billion primarily due to the inclusion of costs related to the Andeavor operations following the acquisition;~~

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

~~increased selling, general and administrative expenses of $1.35~~$3.14 billion mainly due to lower refined product sales volumes, which decreased 81 mbpd primarily due to reduced travel and business operations associated with the ~~inclusion~~COVID-19 pandemic;

Table of ~~costs related to Andeavor operations~~Contents

an inventory market valuation adjustment charge of $3.22 billion primarily driven by the effects of COVID-19 and ~~reflecting MPC’s classification~~the decline in commodity prices;

impairment expense of ~~costs~~$7.82 billion recorded for goodwill and ~~expenses;~~long-lived assets of $7.33 billion and $492 million, respectively, primarily driven by the effects of COVID-19 and the decline in commodity prices; and

increased other taxes of ~~$202 million primarily due to the inclusion of other taxes related to the acquired Andeavor operations.~~

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

~~Provision for income taxes increased $272~~$65 million primarily due to increased property and environmental taxes of approximately $34 million and $21 million, respectively. Property taxes increased in the current period mainly due to the absence of property tax refunds received in the first quarter of 2019 and environmental taxes increased largely due to the reinstatement of the Oil Spill Tax in 2020 after not being active in 2019.

Benefit for income taxes was $1.94 billion at March 31, 2020 compared to provision for income taxes of $104 million at March 31, 2019, primarily due to 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.~~$12.52 billion. The combined federal, state and foreign income tax rate was ~~21 percent and 18~~a tax benefit of 16 percent for the ~~nine~~three months ended ~~September 30, 2019 and 2018, respectively.~~March 31, 2020. The effective tax rate for the ~~nine~~three months ended ~~September 30,~~March 31, 2020 was less 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 a favorable rate effect of the CARES Act legislation. Additionally, our effective tax rate is generally benefited by our noncontrolling interest in MPLX, but this benefit was lower for the three months ended March 31, 2020 compared to the three months ended March 31, 2019 due to impairment charges recorded by MPLX. The combined federal, state and foreign income tax rate was 29 percent for the three months ended March 31, 2019. The effective tax rate for the three months ended March 31, 2019 was ~~equal to~~greater than the U.S. statutory rate of 21 percent primarily due to $36 million of state deferred tax expense recorded as an out of period adjustment partially offset by permanent tax differences related to net income attributable to noncontrolling interests. ~~The effective tax rate for the nine months ended September 30, 2018 was less than the U.S. statutory rate of 21 percent primarily~~

Non-controlling interests decreased $1.25 billion due to ~~certain permanent tax differences related to~~MPLX’s net ~~income attributable to noncontrolling interests offset by state and local tax expense.~~

~~Net income attributable to noncontrolling interests increased $211 million~~loss primarily ~~due to net income attributable to noncontrolling interest in ANDX, which was acquired by MPLX on July 30, 2019.~~resulting from impairment expense recognized during the quarter.

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Segment Results

Our segment income from operations was approximately $5.27 billion and $3.84 billion for the nine months ended September 30, 2019 and 2018, respectively. The following shows the percentage of segment income from operations by segment for these periods.

Refining & Marketing

The following includes key financial and operating data for the ~~third~~first quarter of ~~2019~~2020 compared to the ~~third~~first 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.~~

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


	Three Months Ended September 30,						Nine Months Ended September 30,						Three Months Ended March 31,
	2019			2018			2019			2018			2020			2019
Refining & Marketing Operating Statistics
Total refinery throughputs (mbpd)	3,156			2,032			3,125			1,992
Net refinery throughput (mbpd)													2,994			3,084
Refining & Marketing margin per barrel^(a)(b)	$	14.66		$	14.25		$	13.72		$	13.48		$	11.30		$	11.17
Less:
Refining operating costs per barrel^(c)	5.44			4.25			5.45			4.55			6.00			5.58
Distribution costs per barrel^(d)	4.31			4.17			4.48			4.02			4.73			4.65
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			1.21			0.68
Depreciation and amortization per barrel	1.45			1.38			1.46			1.40			1.64			1.54
Purchase accounting-depreciation and amortization^(f)	(0.09		)	—			(0.01		)	—
Refining & Marketing segment income per barrel	$	3.04		$	3.56		$	1.70		$	2.86
Plus:
Other per barrel^(e)													—			0.07
Refining & Marketing segment loss per barrel													$	(2.28	)	$	(1.21	)


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


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


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


^(d)	Includes fees paid to MPLX. On a per barrel throughput basis, these fees were ~~$2.74~~$3.15 and ~~$3.22~~$2.83 for the three months ended ~~September 30,~~March 31, 2020 and 2019, ~~and 2018, respectively, and $2.79 and $3.08 for the nine months ended September 30, 2019 and 2018,~~ respectively. Excludes depreciation and amortization expense.


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


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

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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 March 31,
Benchmark Spot Prices (dollars per gallon)		2019			2018			2019			2018				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	$	1.21		$	1.51
Chicago ULSD	Chicago ULSD	1.79			2.20			1.86			2.09			Chicago ULSD	1.43			1.84
USGC CBOB unleaded regular gasoline	USGC CBOB unleaded regular gasoline	1.65			1.98			1.65			1.90			USGC CBOB unleaded regular gasoline	1.25			1.52
USGC ULSD	USGC ULSD	1.83			2.14			1.88			2.06			USGC ULSD	1.47			1.88
LA CARBOB		1.97			2.14			1.99			2.11				1.54			1.82
LA CARB diesel		1.94			2.22			2.00			2.15				1.63			1.92

Market Indicators (dollars per barrel)
LLS		$	60.59		$	74.14		$	63.37		$	71.06			$	47.65		$	62.34
WTI		56.44			69.43			57.10			66.79				45.78			54.90
ANS		63.02			75.42			65.27			72.25				51.03			64.48
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	$	7.39		$	11.70
USGC LLS 3-2-1	USGC LLS 3-2-1	10.05			9.84			8.12			9.15			USGC LLS 3-2-1	6.48			5.23
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	12.68			11.91
Blended 3-2-1^(a)	Blended 3-2-1^(a)	13.88			13.88			13.24			11.44			Blended 3-2-1^(a)	8.31			9.29
Crude Oil Differentials:	Crude Oil Differentials:													Crude Oil Differentials:
Sweet	Sweet	$	(1.31	)	$	(3.26	)	$	(2.40	)	$	(2.36	)	Sweet	$	(0.70	)	$	(3.30	)
Sour	Sour	(2.35		)	(7.65		)	(2.50		)	(6.87		)	Sour	(4.90		)	(3.13		)


^(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~~First Quarter ~~2019~~2020 Compared to ~~Third~~First Quarter ~~2018~~2019

Refining & Marketing segment revenues ~~increased $6.86~~decreased $3.19 billion primarily due to ~~higher~~lower refined product sales volumes, which ~~increased 1,324~~decreased 81 mbpd, ~~mainly due to the Andeavor acquisition on October 1, 2018, partially offset by~~and decreased average refined product sales prices of ~~$0.23~~$0.22 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 9891 percent and net refinery throughputs decreased 90 mbpd during the ~~third~~first quarter of ~~2019 and total refinery throughputs increased 1,124 mbpd primarily due to the refineries acquired from Andeavor.~~2020.

Refining & Marketing segment ~~income~~loss from operations increased ~~$217~~$288 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 were primarily due to ~~increased sales~~lower blended crack spreads and ~~production volumes following the Andeavor acquisition.~~higher planned turnaround expenses.

Refining & Marketing margin was ~~$14.66~~$11.30 per barrel for the ~~third~~first quarter of ~~2019~~2020 compared to ~~$14.25~~$11.17 per barrel for the ~~third~~first 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 ~~positive~~negative impact of approximately ~~$1.4 billion~~$490 million on Refining & Marketing margin for the ~~third~~first quarter of 2020 compared to the first 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,~~lower WTI crack spreads and narrower sweet crude oil differentials, partially offset by ~~narrower~~wider sour 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~~approximately $470 million on Refining & Marketing segment income in the ~~third~~first quarter of ~~2019~~2020 compared to the ~~third~~first quarter of ~~2018.~~2019.

Refining operating costs, excluding depreciation and amortization, increased ~~$1.19~~$0.42 per barrel primarily due to higher engineered projects, maintenance costs and taxes, partially offset by lower energy costs. While, distribution costs, excluding depreciation and amortization, ~~increased $0.14~~were flat as compared to first quarter of 2019, the lower throughput resulted in an $0.08

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increase in these costs on a 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.basis. Distribution costs, excluding depreciation and amortization, include fees paid to MPLX of ~~$794~~$858 million and ~~$601~~$786 million for the ~~third~~first quarter of ~~2019~~2020 and ~~2018,~~2019, respectively. Refining planned turnaround costs ~~decreased $0.50~~increased $0.53 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~~$0.10 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 billion on Refining & Marketing margin for the first nine months of 2019 compared to the first nine months of 2018, 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.Our reported Refining & Marketing margin differs from market indicators due to the mix of crudes purchased and their costs, market structure on our crude oil acquisition prices, RIN prices on the crack spread, and other items like refinery yields and other feedstock variances. These factors had an estimated net negative effect of approximately $500 million on Refining & Marketing segment income in the first nine months of 2019 compared to the first nine months of 2018.

Refining operating costs, excluding depreciation and amortization, increased $0.90 per barrel and distribution costs, excluding depreciation and amortization, increased $0.46 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 $2.38 billion and $1.68 billion for the for the first nine months of 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 per barrel due to the timing of turnaround activity. Depreciation and amortization per barrel increased by $0.06, 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 and amortization which reflects the cumulative effects through June 30, 2019 related to a measurement period adjustment arising from the finalization of purchase accounting.

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barrel.

Supplemental Refining & Marketing Statistics


	Three Months Ended September 30,		Nine Months Ended September 30,		Three Months Ended March 31,
	2019	2018	2019	2018	2020	2019
Refining & Marketing Operating Statistics
Refined product export sales volumes (mbpd)^(a)	379	280	407	289	383	430
Crude oil capacity utilization percent^(b)	98	97	97	97	91	95
Refinery throughputs (mbpd):^(c)
Crude oil refined	2,969	1,833	2,925	1,819	2,784	2,869
Other charge and blendstocks	187	199	200	173	210	215
Total	3,156	2,032	3,125	1,992
Net refinery throughput					2,994	3,084
Sour crude oil throughput percent	47	52	49	53	49	52
Sweet crude oil throughput percent	53	48	51	47	51	48
Refined product yields (mbpd):^(c)
Gasoline	1,553	942	1,538	942	1,488	1,533
Distillates	1,103	676	1,091	659	1,020	1,091
Propane	56	40	55	37	58	53
Feedstocks and petrochemicals	334	313	345	294	352	330
Heavy fuel oil	44	29	47	30	37	45
Asphalt	106	73	90	68	80	80
Total	3,196	2,073	3,166	2,030	3,035	3,132


^(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~~78 mbpd and 5476 mbpd for the three months ended ~~September 30,~~March 31, 2020 and 2019, ~~and 2018, respectively, and 98 mbpd and 53 mbpd for the nine months ended September 30, 2019 and 2018,~~ respectively.

Retail

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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,							Three Months Ended March 31,
Key Financial and Operating Data		2019			2018			2019			2018				2020			2019
Average fuel sales prices (dollars per gallon)	Average fuel sales prices (dollars per gallon)	$	2.66		$	2.80		$	2.64		$	2.71		Average fuel sales prices (dollars per gallon)	$	2.41		$	2.58
Merchandise sales (in millions)		$	1,703		$	1,339		$	4,736		$	3,753			$	1,461		$	1,413
Merchandise margin (in millions)^(a)(b)	Merchandise margin (in millions)^(a)(b)	$	498		$	384		$	1,376		$	1,069		Merchandise margin (in millions)^(a)(b)	$	414		$	407
Same store gasoline sales volume (period over period)^(c)	Same store gasoline sales volume (period over period)^(c)	(2.8		)%	(1.2		)%	(2.8		)%	(1.8		)%	Same store gasoline sales volume (period over period)^(c)	(8.3		)%	(3.2		)%
Same store merchandise sales (period over period)^(c)(d)	Same store merchandise sales (period over period)^(c)(d)	5.2		%	4.9		%	5.6		%	3.4		%	Same store merchandise sales (period over period)^(c)(d)	0.7		%	5.4		%
Convenience stores at period-end		3,931			2,745										3,881			3,918
Direct dealer locations at period-end	Direct dealer locations at period-end	1,067			—									Direct dealer locations at period-end	1,070			1,062


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


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


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


^(d)	Excludes cigarettes.

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

Retail segment revenues ~~increased $3.28 billion~~decreased $607 million primarily due to decreased fuel sales partially offset by 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. Increasedsales. Total fuel sales volumes ~~of 1.17 billion~~decreased 280 million gallons ~~almost all of which was related to the acquisition, were partially offset by decreased~~and average fuel sales prices ~~of $0.14~~decreased $0.17 per gallon. Merchandise sales increased ~~$364 million resulting from~~$48 million. These changes were primarily due to the ~~contributions~~effects of the ~~acquired businesses.~~COVID-19 pandemic which resulted in reduced fuel sales from restricted travel, social distancing and reduced business operations and increased merchandise sales primarily of cigarettes, beer and wine, and other merchandise. 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.

Retail segment income from operations increased ~~$281~~$349 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~~margins partially offset by ~~increases~~an increase in operating ~~expenses and depreciation primarily resulting from the locations acquired from Andeavor. The~~expenses. Retail fuel margin increased to ~~24.53~~32.91 cents per gallon in the ~~third~~first quarter of ~~2019 compared with 16.51~~2020, from 17.15 cents per gallon in the ~~third~~first 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 related2019.

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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

~~Table of Contents~~

$c2nglsfracionated.jpg$


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


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

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		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended March 31,
Benchmark Prices		2019		2018		2019		2018			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)	$	1.87	$	2.87
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)	$	0.40	$	0.62


^(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~~First Quarter ~~2019~~2020 Compared to ~~Third~~First Quarter ~~2018~~2019

Midstream segment revenue ~~increased $535~~decreased $29 million primarily due to lower natural gas and NGL prices during the ~~inclusion of ANDX revenues subsequent to the Andeavor acquisition on October 1, 2018. On July 30, 2019, MPLX completed its acquisition of ANDX.~~quarter.

Midstream segment income from operations ~~increased $240 million largely due to~~was consistent with the first quarter of 2019 as strong performance across MPLX’s base business was driven by stable, fee-based earnings primarily from pipeline volume commitments as well as contributions from ~~ANDX.~~

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

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 primarily due to the inclusion of ANDX revenues subsequent to the Andeavor acquisition on October 1, 2018. On July 30, 2019, MPLX completed its acquisition of ANDX. In addition, 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.

~~Midstream segment income from operations increased $842 million largely due to contributions of $700 million from ANDX and an $142 million increase in Midstream segment results driven primarily by~~organic growth ~~across MPLX’s businesses.~~projects.

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��

Items not Allocated to Segments


Key Financial Information (in millions)		Three Months Ended September 30,						Nine Months Ended September 30,					Three Months Ended March 31,
		2019			2018			2019		2018			2020			2019
Items not allocated to segments:	Items not allocated to segments:											Items not allocated to segments:
Corporate and other unallocated items^(a)	Corporate and other unallocated items^(a)	$	(198	)	$	(99	)	(568	)	(269	)	Corporate and other unallocated items^(a)	$	(227	)	$	(191	)
Capline restructuring gain	Capline restructuring gain	—			—			207		—		Capline restructuring gain	—			207
Transaction-related costs	Transaction-related costs	(22		)	(4		)	(147	)	(14	)	Transaction-related costs	(35		)	(91		)
Litigation		—			—			(22	)	—
Impairments	Impairments	—			—			—		1		Impairments	(9,137		)	—
Inventory market valuation adjustment												Inventory market valuation adjustment	(3,220		)	—


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

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

Corporate and other unallocated items increased ~~$99~~$36 million ~~largely~~primarily due to an information systems integration project and incremental legal expenses.

During the ~~inclusion~~first quarter of ~~costs and expenses~~2020, we recorded impairment charges of approximately $9.14 billion, which includes $7.82 billion related to ~~Andeavor operations.~~goodwill and long-lived assets and impairments of equity method investments of $1.32 billion, and an inventory market valuation adjustment charge of $3.22 billion primarily driven by the effects of COVID-19 and the decline in commodity prices.

Other unallocated items include transaction-related costs of ~~$22~~$35 million for the first quarter of 2020 associated with the ~~Andeavor acquisition including employee retention, severance~~Speedway separation, Midstream strategic review and other ~~costs.~~

~~Nine Months Ended September 30,~~related activities and $91 million for the first quarter of 2019 ~~Compared to Nine Months Ended September 30, 2018~~

~~Corporate and other unallocated items increased $299 million~~ largely ~~due~~related to the ~~inclusion~~recognition of ~~costs and expenses related~~an obligation for vacation benefits provided to former Andeavor ~~operations.~~

~~Other~~employees as part of the Andeavor acquisition. In the first quarter 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 and a litigation reserve adjustment of $22 million. The transaction-related costs recognized in the first nine months include the recognition of an obligation for vacation benefits provided to former Andeavor employees in the first quarter as well as employee retention, severance and other costs.

Non-GAAP Financial Measures

Management uses certain financial measures to evaluate our operating performance that are calculated and presented on the basis of methodologies other than in accordance with GAAP. We believe these non-GAAP financial measures are useful to investors and analysts to assess our ongoing financial performance because, when reconciled to 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 and excludes any LCM inventory market adjustment.~~products.


		Three Months Ended September 30,						Nine Months Ended September 30,							Three Months Ended March 31,
Reconciliation of Refining & Marketing income from operations to Refining & Marketing margin (in millions)	Reconciliation of Refining & Marketing income from operations to Refining & Marketing margin (in millions)	2019			2018			2019			2018			Reconciliation of Refining & Marketing income from operations to Refining & Marketing margin (in millions)	2020			2019
Refining & Marketing income from operations	Refining & Marketing income from operations	$	883		$	666		$	1,455		$	1,558		Refining & Marketing income from operations	$	(622	)	$	(334	)
Plus (Less):	Plus (Less):													Plus (Less):
Refining operating costs^(a)	Refining operating costs^(a)	1,577			795			4,656			2,480			Refining operating costs^(a)	1,636			1,552
Refining depreciation and amortization	Refining depreciation and amortization	328			241			1,083			712			Refining depreciation and amortization	401			387
Refining planned turnaround costs	Refining planned turnaround costs	164			197			587			432			Refining planned turnaround costs	329			186
Distribution costs^(b)	Distribution costs^(b)	1,251			780			3,818			2,183			Distribution costs^(b)	1,290			1,290
Distribution depreciation and amortization	Distribution depreciation and amortization	69			16			152			49			Distribution depreciation and amortization	46			40
Income from equity method investments		(6		)	(7		)	(10		)	(14		)
(Income) loss from equity method investments														(Income) loss from equity method investments	3			(1		)
Net gain on disposal of assets	Net gain on disposal of assets	—			(1		)	(6		)	(5		)	Net gain on disposal of assets	—			(6		)
Other income	Other income	(8		)	(24		)	(30		)	(63		)	Other income	(4		)	(14		)
Refining & Marketing margin	Refining & Marketing margin	$	4,258		$	2,663		$	11,705		$	7,332		Refining & Marketing margin	$	3,079		$	3,100


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


^(b)	Includes fees paid to MPLX of ~~$794~~$858 million and ~~$601~~$786 million for the ~~third~~first quarter ~~2019~~of 2020 and ~~2018, respectively, and $2.38 billion and $1.68 billion for the nine months ended September 30,~~ 2019, ~~and 2018,~~ respectively. Excludes depreciation and amortization expense.

Retail Fuel Margin

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

Retail Merchandise Margin

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


		Three Months Ended September 30,						Nine Months Ended September 30,							Three Months Ended March 31,
Reconciliation of Retail income from operations to Retail total margin (in millions)	Reconciliation of Retail income from operations to Retail total margin (in millions)	2019			2018			2019			2018			Reconciliation of Retail income from operations to Retail total margin (in millions)	2020			2019
Retail income from operations	Retail income from operations	$	442		$	161		$	1,105		$	415		Retail income from operations	$	519		$	170
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	598			583
Depreciation and amortization	Depreciation and amortization	113			76			369			228			Depreciation and amortization	125			126
Income from equity method investments	Income from equity method investments	(20		)	(18		)	(58		)	(51		)	Income from equity method investments	(22		)	(17		)
Net gain on disposal of assets	Net gain on disposal of assets	(2		)	(1		)	(4		)	(1		)	Net gain on disposal of assets	(1		)	(2		)
Other income	Other income	(3		)	(2		)	(9		)	(5		)	Other income	(49		)	(2		)
Retail total margin	Retail total margin	$	1,174		$	634		$	3,227		$	1,789		Retail total margin	$	1,170		$	858

Retail total margin:	Retail total margin:													Retail total margin:
Fuel margin	Fuel margin	$	649		$	243		$	1,772		$	699		Fuel margin	$	731		$	429
Merchandise margin	Merchandise margin	498			384			1,376			1,069			Merchandise margin	414			407
Other margin	Other margin	27			7			79			21			Other margin	25			22
Retail total margin	Retail total margin	$	1,174		$	634		$	3,227		$	1,789		Retail total margin	$	1,170		$	858

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LIQUIDITY AND CAPITAL RESOURCES

Cash Flows

Our consolidated cash and cash equivalents balance was approximately ~~$1.53~~$1.69 billion at ~~September 30, 2019~~March 31, 2020 compared to ~~$1.69~~$1.53 billion at December 31, ~~2018.~~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,							Three Months Ended March 31,
(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	$	(768	)	$	1,623
Investing activities	Investing activities	(4,575		)	(2,895		)	Investing activities	(1,088		)	(1,520		)
Financing activities	Financing activities	(2,654		)	1,444			Financing activities	2,021			(920		)
Total increase (decrease) in cash	Total increase (decrease) in cash	$	(197	)	$	1,980		Total increase (decrease) in cash	$	165		$	(817	)

Net cash provided by operating activities ~~increased $3.60~~decreased $2.39 billion in the first ~~nine~~three months of ~~2019~~2020 compared to the first ~~nine~~three months of ~~2018,~~2019, primarily due to an ~~increase in operating results and favorable changes~~unfavorable change in working capital of ~~$1.29 billion.~~$2.52 billion mainly due to a decrease in accounts payable. Changes in working capital exclude changes in short-term debt.

Changes in working capital, excluding changes in short-term debt, were a net ~~$495~~$2.03 billion use of cash in the first three months of 2020 compared to a net $489 million source of cash in the first ~~nine-~~three months of ~~2019 compared to a net $797 million use of cash in the first nine months of 2018.~~2019.

For the first ~~nine~~three months of 2020, changes in working capital, excluding the LCM reserve and changes in short-term debt, were a net $2.03 billion use of cash primarily due to the effects of decreasing energy commodity prices at the end of the period on working capital. Accounts payable decreased primarily due to a decrease in crude prices. Current receivables decreased primarily due to lower crude and refined product prices partially offset by an increase in crude volumes. Excluding the LCM reserve,inventories increased due to increases in crude and refined product inventories.

For the first three months of 2019, changes in working capital, excluding changes in short-term debt, were a net ~~$495~~$489 million source of cash primarily due to the effects of ~~increasing~~increases in energy commodity prices at the end of the period on working capital. Accounts payable increased primarily due to an increase in crude prices. 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~~merchandise 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 billion~~decreased $432 million in the first ~~nine~~three months of ~~2019~~2020 compared to the first ~~nine~~three months of ~~2018,~~2019, primarily due to the following:

~~An increase~~a decrease in additions to property, plant and equipment of ~~$1.51 billion~~$179 million primarily due to ~~increased~~decreased capital expenditures in the first ~~nine~~three months of ~~2019~~2020 in our Midstream and Refining & Marketing segments; and

~~an increase~~a decrease in net investments of ~~$511~~$231 million largely due to investments in the first quarter of 2019 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 and the Whistler Pipeline.~~

~~Table of Contents~~

2019.

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


		Nine Months Ended September 30,						Three Months Ended March 31,
(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	$	1,062		$	1,241
Asset retirement expenditures		1			7
Increase (decrease) in capital accruals		(300		)	67
Decrease in capital accruals							Decrease in capital accruals	(166		)	(235		)
Total capital expenditures	Total capital expenditures	3,524			2,389		Total capital expenditures	896			1,006
Investments in equity method investees (excludes acquisitions)	Investments in equity method investees (excludes acquisitions)	792			222		Investments in equity method investees (excludes acquisitions)	169			325
Total capital expenditures and investments	Total capital expenditures and investments	$	4,316		$	2,611	Total capital expenditures and investments	$	1,065		$	1,331

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Financing activities were a net ~~$2.65 billion use of cash in the first nine months of 2019 compared to a net $1.44~~$2.02 billion source of cash in the first ~~nine~~three months of ~~2018.~~2020 compared to a net $920 million use of cash in the first three months of 2019.

Long-term debt borrowings and repayments ~~including debt issuance costs,~~ were a net ~~$1.20~~$2.73 billion source of cash in the first ~~nine~~three months of ~~2019~~2020 compared to a net ~~$5.28 billion~~$573 million source of cash in the first ~~nine~~three months of ~~2018.~~2019. During the first ~~nine~~three months of 2020, MPC had borrowings of $2.0 billion under its revolving credit facility, borrowed and repaid $925 million under its trade receivables facility and MPLX had net borrowings of $750 million under its revolving credit facility. During the first three months of 2019, MPLX ~~issued $2 billion of floating rate senior notes, the proceeds of which were used to repay various outstanding MPLX borrowings, and~~ had net borrowings of ~~$500~~$425 million under its ~~term loan. During the first nine months~~revolving credit facility and ANDX had net borrowings of ~~2018, MPLX issued $5.5 billion of senior notes, we redeemed $600~~$159 million ~~of our senior notes and MPLX repaid $505 million in outstanding borrowings~~ under its revolving credit facility. MPLX completed its acquisition of ANDX on July 30, 2019.

Cash used in common stock repurchases decreased ~~$727~~$885 million in the first ~~nine~~three months of ~~2019~~2020 compared to the first ~~nine~~three months of ~~2018. Share~~2019. There were no share repurchases ~~totaled $1.89 billion~~ in the first ~~nine~~three months of ~~2019~~2020 compared to ~~$2.61 billion~~$885 million in the first ~~nine~~three months of ~~2018. In 2018, share repurchases were funded primarily by after tax proceeds from the February 1, 2018 dropdown.~~2019. See Note 8 to the unaudited consolidated financial statements for further discussion of share repurchases.

Cash used in dividend payments increased ~~$417~~$23 million in the first ~~nine~~three months of ~~2019~~2020 compared to the first ~~nine~~three 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~~$0.05 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 ~~$1.59~~$0.58 per common share in the first ~~nine~~three months of ~~2019~~2020 compared to ~~$1.38~~$0.53 per common share in the first ~~nine~~three months of ~~2018.~~

Cash used in distributions to noncontrolling interests increased $351 million in the first nine months of 2019 compared to the first nine months of 2018, primarily due to the addition of ANDX distributions subsequent to the acquisition of Andeavor and an increase in MPLX��s distribution per common unit. On July 30, 2019, MPLX completed its acquisition of ANDX.2019.


•	Contributions from noncontrolling interests ~~increased~~decreased $8695 million in the first ~~nine~~three months of ~~2019~~2020 compared to the first ~~nine~~three months of ~~2018~~2019 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.

~~Table of Contents~~

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~~$6.38 billion at ~~September 30, 2019~~March 31, 2020 consisting of:


		September 30, 2019							March 31, 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	$	2,001	$	2,999
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(c)	Trade receivables facility(c)	750		—		750		Trade receivables facility(c)	750		—		750
Total	Total	$	6,750	$	1	$	6,749	Total	$	6,750	$	2,001	$	4,749
Cash and cash equivalents^(c)(d)	Cash and cash equivalents^(c)(d)					1,484		Cash and cash equivalents^(c)(d)					1,633
Total liquidity	Total liquidity					$	8,233	Total liquidity					$	6,382


^(a)	Excludes MPLX’s $3.50 billion bank revolving credit facility, which had approximately ~~$3.50~~$2.75 billion available as of ~~September 30, 2019.~~March 31, 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. As of April 30, 2020 eligible trade receivables supported borrowings of approximately $517 million.


^(d)	Excludes MPLX cash and cash equivalents of ~~$41~~$57 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 and other amounts that may ultimately be paid in connection with contingencies.

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 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,~~March 31, 2020, we had no commercial paper borrowings outstanding.

~~See Note 17~~On April 27, 2020, MPC entered into a credit agreement with a syndicate of lenders providing for an additional $1 billion 364-day revolving credit facility. The credit agreement for the additional 364-day revolving credit facility contains representations and warranties, affirmative and negative covenants and events of default that we consider customary for agreements of their nature and type and substantially similar to those contained in our existing $5.0 billion five-year revolving credit facility and $1.0 billion 364-day revolving credit facility.

On April 27, 2020, MPC closed on the ~~unaudited consolidated financial statements for further discussion~~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 amounts outstanding under its five-year revolving credit facility.

The following table shows our ~~debt.~~available credit capacity, excluding MPLX, as of May 5, 2020.



(Dollars in millions)	Total Capacity		Outstanding Borrowings		Outstanding Letters of Credit		Available Capacity		Expiration
MPC 364-day bank revolving credit facility	$	1,000	$	—	$	—	$	1,000	September 2020
MPC 364-day bank revolving credit facility	1,000		—		—		1,000		April 2021
MPC bank revolving credit facility^(a)	5,000		750		1		4,249		October 2023
MPC trade receivables securitization facility^(b)	517		—		—		517		July 2021
Available capacity, excluding MPLX, as of May 5, 2020							6,766


^(a)	Borrowed $2 billion on March 30, 2020 and $1.5 billion in April. Repaid $2.75 billion in May.


^(b)	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. As of April 30, 2020 eligible trade receivables supported borrowings of approximately $517 million.

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,~~March 31, 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~~0.31 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,~~May 5, 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 17 to ~~raise capital in~~ the ~~future.~~unaudited consolidated financial statements for further discussion of our debt.

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MPLX

MPLX’s liquidity totaled $4.31 billion at March 31, 2020 consisting of:



	March 31, 2020
(In millions)	Total Capacity		Outstanding Borrowings		Available Capacity
MPLX LP - bank revolving credit facility	$	3,500	$	750	$	2,750
MPC Intercompany Loan Agreement	1,500		—		1,500
Total	$	5,000	$	750	$	4,250
Cash and cash equivalents					57
Total liquidity					$	4,307

The MPLX credit agreement and term loan agreement contain 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 March 31, 2020, MPLX was in compliance with the covenants, including the financial covenant with a ratio of Consolidated Total Debt to Consolidated EBITDA of 3.80 to 1.0.

Our intention is to maintain an investment-grade credit profile for MPLX. As of May 5, 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 17 for further discussion of MPLX’s debt.

Capital Requirements

Capital Investment Plan

MPC's capital investment plan for ~~2019 totals~~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. 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 as detailed in the table below. 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 Investment Plan
(In millions)	Revised 2020 Outlook		Original 2020 Guidance		Reduction
MPC, excluding MPLX
Refining & Marketing	$	1,300	$	1,550	$	(250	)
Retail	300		550		(250		)
Midstream - Other	230		300		(70		)
Corporate and Other	120		200		(80		)
Total MPC, excluding MPLX	$	1,950	$	2,600	$	(650	)

Midstream - MPLX	$	1,050	$	1,750	$	(700	)

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,				Three Months Ended March 31,
(In millions)		2019		2018		2020		2019
MPC, excluding MPLX
Refining & Marketing	Refining & Marketing	$	1,385	$	613	$	459	$	394
Retail	Retail	370		225		76		73
Midstream		2,420		1,676
Midstream - Other						76		194
Corporate and Other^(a)	Corporate and Other^(a)	141		97		56		41
Total capital expenditures and investments		$	4,316	$	2,611
Total MPC, excluding MPLX						$	667	$	702

Midstream - MPLX						$	398	$	629


^(a)	Includes capitalized interest of ~~$97~~$29 million and ~~$55~~$31 million for the ~~nine~~three months ended ~~September 30,~~March 31, 2020 and 2019, ~~and 2018,~~ respectively.

Capital expenditures and investments in affiliates during the ~~nine~~three months ended ~~September 30, 2019~~March 31, 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.

Other Capital Requirements

During the ~~nine~~three months ended ~~September 30, 2019,~~March 31, 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,~~April 29, 2020, our board of directors approved a dividend of ~~$0.53~~$0.58 per share on common stock. The dividend is payable ~~December~~June 10, ~~2019,~~2020, to shareholders of record as of the close of business on ~~November~~May 20, ~~2019.~~2020.

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 three months ended March 31, 2020, we did not repurchase any of our common stock, which helped preserve our liquidity during the COVID-19 pandemic. 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.~~March 31, 2020. We will evaluate the timing to resume any future repurchases as market conditions evolve. The table below summarizes our total share repurchases for the ~~nine~~three months ended ~~September 30, 2019~~March 31, 2020 and ~~2018.~~2019. See Note 8 to the unaudited consolidated financial statements for further discussion of the share repurchase plans.

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	Nine Months Ended September 30,				Three Months Ended March 31,
(In millions, except per share data)	2019		2018		2020		2019
Number of shares repurchased	33		36		—		14
Cash paid for shares repurchased	$	1,885	$	2,612	$	—	$	885
Average cost per share	$	58.75	$	71.80	$	—	$	62.98

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 discontinued at any time.

Contractual Cash Obligations

As of ~~September 30, 2019,~~March 31, 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~~three months of ~~2019,~~2020, our long-term debt commitments increased approximately ~~$1.67~~$2.55 billion primarily due to ~~MPLX’s issuance of floating rate senior notes and~~ borrowings under ~~its term loan, partially offset by interest payments made~~the MPC and MPLX bank revolving credit facilities.

During the quarter our contractual cash obligations for crude oil decreased primarily as a result of the decrease in crude prices during the period.

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 2322 to the unaudited consolidated financial statements.

ENVIRONMENTAL MATTERS AND COMPLIANCE COSTS

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

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~~three months ended ~~September 30, 2019.~~March 31, 2020.

CRITICAL ACCOUNTING ESTIMATES

As of ~~September 30, 2019,~~March 31, 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.

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•

Future volumes. Our estimates of future refinery, retail, pipeline throughput and natural gas and natural gas liquid processing volumes are based on internal forecasts prepared by our Refining & Marketing, Retail 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.


•	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 or retail fuel 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, company-owned convenience store locations for Retail 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 16 of our refinery asset groups as a result of significant impacts to the Refining & Marketing segment forecasted 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. All other refinery asset groups undiscounted estimated pretax cash flows exceeded the carrying value by at least 21 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 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 these additional refinery asset groups exceed the undiscounted estimated pretax cash flows of these refinery asset groups, which would result in future impairment charges.

It was determined that the fair value of the Gallup refinery’s property, plant and equipment (“PP&E”) was less than the carrying value. As a result, we recorded a charge of $142 million to impairment expense on the consolidated statements of income. The fair value measurements for the Gallup refinery assets represent Level 3 measurements.

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 impacts to forecasted 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 were 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

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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 recent outbreak of COVID-19 and its development into a pandemic and the recent decline in commodity prices have had on our business. Due to these developments, we performed impairment assessments 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 which make up this reporting unit were acquired through the merger with ANDX. We accounted for the October 1, 2018 acquisition of Andeavor (including acquiring 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 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 March 31, 2020 we had $5.66 billion of equity method investments recorded on the Consolidated Balance Sheets.

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

The following table includes the composition of net gains and losses on our commodity derivative positions as of ~~September 30,~~March 31, 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 )



	Three Months Ended March 31,
(In millions)	2020		2019
Realized gain on settled derivative positions	$	2	$	39
Unrealized gain (loss) on open net derivative positions	213		(139		)
Net gain (loss)	$	215	$	(100	)

See Note 16 to the unaudited consolidated financial statements for additional information on our open derivative positions at ~~September 30, 2019.~~March 31, 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~~March 31, 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 March 31, 2020														As of March 31, 2020
Crude	Crude	$	(61	)	$	(153	)	$	61		$	153		Crude	$	(56	)	$	(140	)	$	58		$	144
Refined products	Refined products	32			80			(32		)	(80		)	Refined products	12			29			(12		)	(29		)
Blending products	Blending products	(14		)	(36		)	14			36			Blending products	(2		)	(5		)	2			5
Embedded derivatives	Embedded derivatives	(5		)	(14		)	5			14			Embedded derivatives	(5		)	(11		)	5			11

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~~March 31, 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~~March 31, 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.

Table of Contents

(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 March 31, 2020^(a)

Change in
Fair Value^(b)

Change in Net Income for the Three Months Ended

March 31, 2020^(c)

Long-term debt

Fixed-rate

27,979

2,609

n/a

Fixed-rate

22,289

1,772

n/a

Variable-rate

2,507

n/a

Variable-rate

3,751

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~~. March 31, 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~~three months ended ~~September 30, 2019~~. March 31, 2020.

~~Table of Contents~~

At ~~September 30, 2019~~March 31, 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 15 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,~~March 31, 2020, the end of the period covered by this report.

Changes in Internal Control over Financial Reporting

During the quarter ended ~~September 30, 2019,~~March 31, 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,~~10-K.

Litigation

In connection with MPLX’s 9.19 percent indirect interest in a joint venture that owns and operates the Dakota Access Pipeline and Energy Transfer Crude Oil Pipeline projects, collectively referred to as ~~updated~~the Bakken Pipeline system, MPLX has entered into a Contingent Equity Contribution Agreement whereby MPLX LP, along with the other joint venture owners in the ~~Quarterly Reports~~Bakken Pipeline system, have agreed to make equity contributions to the joint venture upon certain events occurring to allow the entities that own and operate the Bakken Pipeline system to satisfy their senior note payment obligations. The senior notes were issued to repay amounts owed by the pipeline companies to fund the cost of construction of Bakken Pipeline system.

Environmental Proceedings

As described in our Annual Report on Form ~~10-Q~~10-K for the ~~quarters~~year ended ~~March~~December 31, 2019 (the “2019 10-K”), governmental and ~~June 30, 2019.~~other entities in California, New York, Maryland and Rhode Island have filed lawsuits against coal, gas, oil and petroleum companies, including the Company. The lawsuits allege damages as a result of climate change and the plaintiffs are seeking unspecified damages and abatement under various tort theories. In March 2020, the City and County of Honolulu, Hawaii filed suit against 20 oil and gas defendants, including MPC, making similar allegations. Similar lawsuits may be filed in other jurisdictions. At this early stage, the ultimate outcome of these matters remain uncertain, and neither the likelihood of an unfavorable outcome nor the ultimate liability, if any, can be determined.

~~Litigation~~Logistics and Storage

On April 10, 2020, we received a Notice of Probable Violation and Proposed Civil Penalty from the Pipeline and Hazardous Materials Safety Administration’s Office of Pipeline Safety (OPS) for alleged violations arising from the release at the Hospah Station pump station in New Mexico on September 7, 2018. The NOPV alleged a failure to follow written procedures for responding to, investigating, and correcting the cause of an increase in pressure of flow rate outside its normal operating limits, and a failure to follow appropriate procedures regarding related personnel performance. This matter was resolved for a cash penalty of approximately $236,000.

Detroit Refinery

As previously disclosed in ~~May 2007,~~our 2019 10-K, in June 2019, we received an offer from the ~~Kentucky attorney general filed a lawsuit against us~~Michigan Department of Environment, Great Lakes, and ~~Marathon Oil~~Energy to settle violations alleged in ~~state court in Franklin County, Kentucky for alleged~~five NOVs issued to the refinery between September 2017 and February 2019. In December 2019, the settlement discussions were expanded to include two additional NOVs issued to the refinery during October and December 2019. The NOVs allege violations of ~~Kentucky’s emergency pricing~~emissions limitations and ~~consumer protection laws following Hurricanes Katrina~~other requirements of the refinery’s air permit and ~~Rita in 2005. The lawsuit alleged that we overcharged customers by $89 million during September~~Michigan air pollution control laws. We have agreed to settle this matter for a cash penalty under $100,000 and ~~October 2005. The complaint sought disgorgement~~a supplemental environmental project with an expected approximate value 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. As disclosed in our Quarterly Report on Form 10-Q for the quarter ended June 30, 2019, in July 2019, MPC and the attorney general reached a settlement to resolve this litigation. This resolution did not have a material adverse effect on our consolidated financial position, results of operations or cash flows.

~~Environmental Proceedings~~$282,000.

Galveston Bay Refinery

InAs previously disclosed on our 2019 10-K, 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 to the Los Angeles refinery in 2017, alleging violations of the state’s summer RVP limits. On August 9, 2019, we~~have agreed to settle ~~the NOV~~this matter for ~~$133,000, of which half will be paid to CARB~~a cash penalty and ~~half will be paid to the South Coast Air Quality Management District as~~ a supplemental environmental ~~project.~~project with a total combined value of under $100,000.

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.

Table of Contents

ITEM 1A. RISK FACTORS

Except as ~~disclosed~~described below, 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.

Our working capital, cash flows and liquidity can be significantly affected by decreases in commodity prices.

Payment terms for our crude oil purchases are generally longer than the terms we extend to our customers for refined product sales. As a result, the payables for our crude oil purchases are proportionally larger than the receivables for our refined product sales. Due to this net payables position, a decrease in commodity prices generally results in a use of working capital, and given the significant volume of crude oil that we purchase the impact can materially affect our working capital, cash flows and liquidity.

The recent outbreak of COVID-19 and certain developments in the global oil markets have had, and may continue to have, material adverse consequences for general economic, financial and business conditions, and could materially and adversely affect our business, financial condition, results of operations and cash flows and those of our customers, suppliers and other counterparties.

The recent outbreak of COVID-19 and the responses of governmental authorities and companies and the self-imposed restrictions by many individuals across the world to stem the spread of the virus have significantly reduced global economic activity, as ~~updated~~there has been a dramatic decrease in the number of businesses open for operation and substantially fewer people across the world traveling to work or leaving their home to purchase goods and services. This has also resulted, for example, in a dramatic reduction in airline flights and has reduced the number of cars on the road. As a result, there has been a decline in the demand for the refined petroleum products that we manufacture and sell.

Concerns over the negative effects of COVID-19 on economic and business prospects across the world have contributed to increased market and oil price volatility and have diminished expectations for the global economy. These factors, coupled with the emergence of decreasing business and consumer confidence and increasing unemployment resulting from the COVID-19 outbreak and the recent abrupt oil price decline, may precipitate a prolonged economic slowdown and recession. Our refinery utilization and operating margins and other aspects of our business have been adversely impacted by these developments. Any such prolonged period of economic slowdown or recession, or a protracted period of depressed prices for our products or crude oil or reduced margins for the refined petroleum products we manufacture and sell could have significant adverse consequences for our financial condition and the financial condition of our customers, suppliers and other counterparties, and could diminish our liquidity and negatively affect our ability to obtain adequate crude oil volumes and to market certain of our products at favorable prices, or at all.

Due to declines in the market prices of products held in our ~~Quarterly Report~~inventories, we recorded a material inventory valuation charge to cost of revenues to value certain of our inventories at the lower of cost or market. Depending on ~~Form 10-Q~~future movements of refined product prices, future inventory valuation adjustments could have a negative or positive effect on our financial performance. In addition, a sustained period of low crude oil prices may also result in significant financial constraints on certain producers from which we acquire our crude oil, which could result in long term crude oil supply constraints for our business. Such conditions could also result in an increased risk that our customers and other counterparties may be unable to fully fulfill their obligations in a timely manner, or at all. Any of the ~~quarters ended March 31, 2019~~foregoing events or conditions, or other unforeseen consequences of COVID-19, could significantly adversely affect our business and ~~June 30, 2019.~~financial condition and the business and financial condition of our customers and other counterparties.

The ultimate extent of the impact of COVID-19 on our business, financial condition, results of operations and cash flows will depend largely on future developments, including the duration and spread of the outbreak, particularly within the geographic areas where we operate, the related impact on overall economic activity and the timing of the lifting of restrictions and return of customer confidence, all of which are uncertain and cannot be predicted with certainty at this time.

The Court of Chancery of the State of Delaware will be, to the extent permitted by law, the sole and exclusive forum for substantially all disputes between us and our shareholders.

Our ~~proposed spin-off~~Restated Certificate of ~~Speedway may not be completed on~~Incorporation provides that 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~~Court 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~~Chancery of the ~~transaction~~State of Delaware will be the sole and ~~the filing and effectiveness~~exclusive forum for:

any derivative action or proceeding brought on behalf of MPC;

any action asserting a claim of breach of a ~~registration statement with the U.S. Securities and Exchange Commission. Unanticipated developments, including possible delays in obtaining various regulatory approvals~~fiduciary duty owed by any director or ~~clearances, uncertainty~~officer of ~~the financial markets and challenges in establishing infrastructure~~MPC to MPC 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-stockholders

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Table of Contents

~~off, the combined value~~any action asserting a claim against MPC arising pursuant to any provision of the ~~common stock~~General Corporation Law of the ~~two publicly traded companies may not be equal to~~State of Delaware, MPC’s Restated Certificate of Incorporation, any Preferred Stock Designation or ~~greater than what~~ the ~~value~~Bylaws of ~~our common stock would have been had the proposed spin-off not occurred. If the proposed spin-off~~MPC; or

any other action asserting a claim against MPC or any Director or officer of MPC that is ~~completed, our diversification of revenue sources will diminish due~~governed by or subject to the ~~separation~~internal affairs doctrine for choice of law purposes.

The forum selection provision may restrict a stockholder’s ability to bring a claim against us or directors or officers of MPC in a forum that it finds favorable, which may discourage stockholders from bringing such claims at all. Alternatively, if a court were to find the ~~Speedway business, and it is possible that~~forum selection provision contained in our Restated Certificate of Incorporation to be inapplicable or unenforceable in an action, we may incur additional costs associated with resolving such action in another forum, which could materially adversely affect our business, financial condition and results of ~~operations and cash flows may be subject~~operations. However, the forum selection provision does not apply 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~~claims, actions or proceedings arising under the ~~strategic review process~~Securities Act 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.Exchange Act.

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,~~March 31, 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)
01/01/2020-01/31/2020	—	$	—	—	$	2,954,604,016
02/01/2020-02/29/2020	1,572	53.37		—	2,954,604,016
03/01/2020-03/31/2020	22,722	46.95		—	2,954,604,016
Total	24,294	47.37		—


^(a)	The amounts in this column include ~~1,325, 229~~0, 1,572 and ~~428~~22,722 shares of our common stock delivered by employees to MPC, upon vesting of restricted stock, to satisfy tax withholding requirements in ~~July, August~~January, February and ~~September,~~March, 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

~~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.

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

Ninth Supplemental Indenture, dated as of April 27, 2020, by and between the Company and The Bank of New York Mellon Trust Company, N.A., as Trustee (including Form of Notes)

8-K

4.1

4/27/2020

001-35054

10.1

364-Day Revolving Credit Agreement, dated as of April 27, 2020, by and among Marathon Petroleum Corporation, as borrower, JPMorgan Chase Bank, N.A., as administrative agent, each of JPMorgan Chase Bank, N.A., Citibank, N.A.(“Citi”), Mizuho Bank, Ltd. (“Mizuho”), Barclays Bank PLC, MUFG Union Bank, N.A., Royal Bank of Canada and TD Securities (USA) LLC, as joint lead arrangers and bookrunners, Citi and Mizuho, as syndication agents, and the other agents and lenders that are parties thereto

8-K

10.1

4/27/2020

001-35054

10.2

Form of 2020 Officer RSU Award Agreement

10.3

Form of 2020 Officer Stock Option Award Agreement

10.4

Form of 2020 Officer Performance Unit Award Agreement 2020 - 2022 Performance Cycle

10.5

Form of 2020 MPLX LP Phantom Unit Award Agreement - MPC Officer

10.6

Form of MPLX LP Performance Unit Award Agreement 2020-2022 Performance Cycle - MPC Officer

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

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.

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.

6457

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~~May 7, 2020	MARATHON PETROLEUM CORPORATION

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

6558



	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	98
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	3428
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	5952
ITEM 4. CONTROLS AND PROCEDURES	6053

PART II – OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS	6154
ITEM 1A. RISK FACTORS	6155
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS	6256
ITEM 5. OTHER INFORMATION	6256
ITEM 6. EXHIBITS	6357
SIGNATURES	6558



(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