Marathon Petroleum Corp - Quarter Report: 2021 September (Form 10-Q)

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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, 2021


☐			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 615,587,681 shares of Marathon Petroleum Corporation common stock outstanding as of October 29, 2021.

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MARATHON PETROLEUM CORPORATION

FORM 10-Q

FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2021

TABLE OF CONTENTS


			Page
PART I – FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS (UNAUDITED)
CONSOLIDATED STATEMENTS OF INCOME			3
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME			4
CONSOLIDATED BALANCE SHEETS			5
CONSOLIDATED STATEMENTS OF CASH FLOWS			6
CONSOLIDATED STATEMENTS OF EQUITY AND REDEEMABLE NONCONTROLLING INTEREST			8
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS			10
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS			30
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK			53
ITEM 4. CONTROLS AND PROCEDURES			54

PART II – OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS			55
ITEM 1A. RISK FACTORS			55
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS			56
ITEM 5. OTHER INFORMATION			56
ITEM 6. EXHIBITS			57
SIGNATURES			58

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.

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GLOSSARY OF TERMS

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


ANS			Alaska North Slope crude oil, an oil index benchmark price
ASC			Accounting Standards Codification
ASU			Accounting Standards Update
barrel			One stock tank barrel, or 42 U.S. gallons liquid volume, used in reference to crude oil or other liquid hydrocarbons
CBOB			Conventional Blending for Oxygenate Blending
EBITDA (a non-GAAP financial measure)			Earnings Before Interest, Tax, Depreciation and Amortization
EPA			U.S. Environmental Protection Agency
GAAP			Accounting principles generally accepted in the United States
LA CARB			California Air Resources Board
LA CARBOB			California Reformulated Gasoline Blendstock for Oxygenate Blending
LCM			Lower of cost or market
LIFO			Last in, first out, an inventory costing method
LLS			Louisiana Light Sweet crude oil, an oil index benchmark price
mbpd			Thousand barrels per day
MEH			Magellan East Houston crude oil, an oil index benchmark price
MMBtu			One million British thermal units, an energy measurement
NGL			Natural gas liquids, such as ethane, propane, butanes and natural gasoline
NYMEX			New York Mercantile Exchange
OTC			Over-the-Counter
PP&E			Property, plant and equipment
RIN			Renewable Identification Number
SEC			U.S. 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

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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,
(In millions, except per share data)	2021		2020		2021		2020
Revenues and other income:
Sales and other operating revenues	$	32,321	$	17,408	$	84,647	$	51,807
Income (loss) from equity method investments(a)	122		117		306		(1,037)
Net gain on disposal of assets	—		1		3		6
Other income	170		22		366		69
Total revenues and other income	32,613		17,548		85,322		50,845
Costs and expenses:
Cost of revenues (excludes items below)	29,563		16,673		77,824		48,517
LCM inventory valuation adjustment	—		(530)		—		1,185
Impairment expense	—		433		—		8,280
Depreciation and amortization	836		830		2,551		2,526
Selling, general and administrative expenses	681		673		1,881		2,080
Restructuring expenses	—		348		—		348
Other taxes	193		178		544		546
Total costs and expenses	31,273		18,605		82,800		63,482
Income (loss) from continuing operations	1,340		(1,057)		2,522		(12,637)
Net interest and other financial costs	328		359		1,053		1,032
Income (loss) from continuing operations before income taxes	1,012		(1,416)		1,469		(13,669)
Provision (benefit) for income taxes on continuing operations	(18)		(436)		21		(2,237)
Income (loss) from continuing operations, net of tax	1,030		(980)		1,448		(11,432)
Income from discontinued operations, net of tax	—		371		8,448		881
Net income (loss)	1,030		(609)		9,896		(10,551)
Less net income (loss) attributable to:
Redeemable noncontrolling interest	38		20		79		61
Noncontrolling interests	298		257		853		(501)
Net income (loss) attributable to MPC	$	694	$	(886)	$	8,964	$	(10,111)

Per share data (See Note 9)
Basic:
Continuing operations	$	1.10	$	(1.93)	$	0.80	$	(16.93)
Discontinued operations	—		0.57		13.10		1.35
Net income (loss) per share	$	1.10	$	(1.36)	$	13.90	$	(15.58)

Weighted average shares outstanding	633		650		645		649
Diluted:
Continuing operations	$	1.09	$	(1.93)	$	0.79	$	(16.93)
Discontinued operations	—		0.57		13.02		1.35
Net income (loss) per share	$	1.09	$	(1.36)	$	13.81	$	(15.58)

Weighted average shares outstanding	637		650		649		649

(a) The nine months ended September 30, 2021 and September 30, 2020 include impairment expense. See Note 6 for further information.

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

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MARATHON PETROLEUM CORPORATION

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited)


	Three Months Ended September 30,				Nine Months Ended September 30,
(Millions of dollars)	2021		2020		2021		2020
Net income (loss)	$	1,030	$	(609)	$	9,896	$	(10,551)
Other comprehensive income (loss):
Defined benefit plans:
Actuarial changes, net of tax of $1, $5, $65 and $6, respectively	4		13		196		16
Prior service, net of tax of $(3), $(2), $(8) and $(8), respectively	(8)		(9)		(24)		(26)
Other, net of tax of $—, $—, $(2) and $(1), respectively	—		(2)		(4)		(4)
Other comprehensive income (loss)	(4)		2		168		(14)
Comprehensive income (loss)	1,026		(607)		10,064		(10,565)
Less comprehensive income (loss) attributable to:
Redeemable noncontrolling interest	38		20		79		61
Noncontrolling interests	298		257		853		(501)
Comprehensive income (loss) attributable to MPC	$	690	$	(884)	$	9,132	$	(10,125)

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

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MARATHON PETROLEUM CORPORATION

CONSOLIDATED BALANCE SHEETS (Unaudited)


(Millions of dollars, except share data)	September 30, 2021		December 31, 2020
Assets
Current assets:
Cash and cash equivalents	$	5,874	$	415
Short-term investments	7,352		—
Receivables, less allowance for doubtful accounts of $43 and $18, respectively	9,511		5,760
Inventories	9,211		7,999
Other current assets	2,175		2,724
Assets held for sale	20		11,389
Total current assets	34,143		28,287
Equity method investments	5,384		5,422
Property, plant and equipment, net	37,630		39,035
Goodwill	8,256		8,256
Right of use assets	1,424		1,521
Other noncurrent assets	2,463		2,637
Total assets	$	89,300	$	85,158
Liabilities
Current liabilities:
Accounts payable	$	12,196	$	7,803
Payroll and benefits payable	808		732
Accrued taxes	2,114		1,105
Debt due within one year	73		2,854
Operating lease liabilities	444		497
Other current liabilities	1,263		822
Liabilities held for sale	—		1,850
Total current liabilities	16,898		15,663
Long-term debt	27,270		28,730
Deferred income taxes	5,545		6,203
Defined benefit postretirement plan obligations	1,354		2,121
Long-term operating lease liabilities	975		1,014
Deferred credits and other liabilities	1,294		1,207
Total liabilities	53,336		54,938
Commitments and contingencies (see Note 24)
Redeemable noncontrolling interest	986		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 – 983 million and 980 million shares (par value $0.01 per share, 2 billion shares authorized)	10		10
Held in treasury, at cost – 361 million and 329 million shares	(17,126)		(15,157)
Additional paid-in capital	33,256		33,208
Retained earnings	12,484		4,650
Accumulated other comprehensive loss	(344)		(512)
Total MPC stockholders’ equity	28,280		22,199
Noncontrolling interests	6,698		7,053
Total equity	34,978		29,252
Total liabilities, redeemable noncontrolling interest and equity	$	89,300	$	85,158

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

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MARATHON PETROLEUM CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)


	Nine Months Ended September 30,
(Millions of dollars)	2021		2020
Operating activities:
Net income (loss)	$	9,896	$	(10,551)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Amortization of deferred financing costs and debt discount	59		49
Impairment expense	—		8,280
Depreciation and amortization	2,551		2,526
LCM inventory valuation adjustment	—		1,185
Pension and other postretirement benefits, net	(535)		172
Deferred income taxes	(175)		(763)
Net gain on disposal of assets	(3)		(6)
(Income) loss from equity method investments	(306)		1,037
Distributions from equity method investments	466		428
Income from discontinued operations	(8,448)		(881)
Changes in income tax receivable	535		(1,172)
Net recognized (gains) losses on investments and derivatives	(11)		37
Changes in operating assets and liabilities, net of effects of businesses acquired:
Current receivables	(3,765)		2,328
Inventories	(1,206)		1,165
Current accounts payable and accrued liabilities	4,670		(4,018)
Right of use assets and operating lease liabilities, net	5		(2)
All other, net	(187)		45
Cash provided by (used in) operating activities - continuing operations	3,546		(141)
Cash provided by (used in) operating activities - discontinued operations	(2,860)		1,232
Net cash provided by operating activities	686		1,091
Investing activities:
Additions to property, plant and equipment	(983)		(2,330)

Disposal of assets	98		73
Investments – acquisitions and contributions	(150)		(436)
– redemptions, repayments and return of capital	39		122
Purchases of short-term investments	(9,457)		—
Sales of short-term investments	455		—
Maturities of short-term investments	1,652		—
All other, net	381		19
Cash used in investing activities - continuing operations	(7,965)		(2,552)
Cash provided by (used in) investing activities - discontinued operations	21,314		(272)
Net cash provided by (used in) investing activities	13,349		(2,824)
Financing activities:
Commercial paper – issued	7,414		—
– repayments	(8,437)		—
Long-term debt – borrowings	10,975		13,212
– repayments	(14,274)		(10,144)
Debt issuance costs	—		(48)
Issuance of common stock	71		6
Common stock repurchased	(1,912)		—
Dividends paid	(1,130)		(1,133)
Distributions to noncontrolling interests	(923)		(941)

Repurchases of noncontrolling interests	(465)		—
All other, net	(35)		(30)
Net cash provided by (used in) financing activities	(8,716)		922

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	Nine Months Ended September 30,
(Millions of dollars)	2021		2020
Net change in cash, cash equivalents and restricted cash	$	5,319	$	(811)
Cash, cash equivalents and restricted cash balances:(a)
Continuing operations - beginning of period	$	416	$	1,395
Discontinued operations - beginning of period(b)	140		134
Less: Discontinued operations - end of period(b)	—		98
Continuing operations - end of period	$	5,875	$	620

(a)Restricted cash is included in other current assets on our consolidated balance sheets.

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

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

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MARATHON PETROLEUM CORPORATION

CONSOLIDATED STATEMENTS OF EQUITY AND REDEEMBALE NONCONTROLLING INTEREST

(Unaudited)


	MPC Stockholders’ Equity
	Common Stock			Treasury Stock			Additional Paid-in Capital		Retained Earnings		Accumulated Other Comprehensive Income (Loss)		Non-controlling Interests		Total Equity		Redeemable Non-controlling Interest
(Shares in millions; amounts in millions of dollars)	Shares	Amount		Shares	Amount
Balance as of December 31, 2020	980	$	10	(329)	$	(15,157)	$	33,208	$	4,650	$	(512)	$	7,053	$	29,252	$	968
Net income (loss)	—	—		—	—		—		(242)		—		286		44		20
Dividends declared on common stock ($0.58 per share)	—	—		—	—		—		(379)		—		—		(379)		—
Distributions to noncontrolling interests	—	—		—	—		—		—		—		(300)		(300)		(20)
Other comprehensive income	—	—		—	—		—		—		1		—		1		—
Stock-based compensation	1	—		—	(1)		18		—		—		—		17		—
Equity transactions of MPLX	—	—		—	—		(4)		—		—		(120)		(124)		—

Balance as of March 31, 2021	981	$	10	(329)	$	(15,158)	$	33,222	$	4,029	$	(511)	$	6,919	$	28,511	$	968
Net income	—	—		—	—		—		8,512		—		269		8,781		21
Dividends declared on common stock ($0.58 per share)	—	—		—	—		—		(381)		—		—		(381)		—
Distributions to noncontrolling interests	—	—		—	—		—		—		—		(272)		(272)		(21)
Other comprehensive income	—	—		—	—		—		—		171		—		171		—
Shares repurchased	—	—		(16)	(984)		—		—		—		—		(984)		—
Stock-based compensation	2	—		—	(5)		50		—		—		2		47		—
Equity transactions of MPLX	—	—		—	—		(34)		—		—		(114)		(148)		—

Balance as of June 30, 2021	983	$	10	(345)	$	(16,147)	$	33,238	$	12,160	$	(340)	$	6,804	$	35,725	$	968
Net income	—	—		—	—		—		694		—		298		992		38
Dividends declared on common stock ($0.58 per share)	—	—		—	—		—		(370)		—		—		(370)		—
Distributions to noncontrolling interests	—	—		—	—		—		—		—		(290)		(290)		(20)

Other comprehensive loss	—	—		—	—		—		—		(4)		—		(4)		—
Shares repurchased	—	—		(16)	(978)		—		—		—		—		(978)		—
Stock-based compensation	—	—		—	(1)		32		—		—		2		33		—
Equity transactions of MPLX	—	—		—	—		(14)		—		—		(116)		(130)		—

Balance as of September 30, 2021	983	$	10	(361)	$	(17,126)	$	33,256	$	12,484	$	(344)	$	6,698	$	34,978	$	986

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

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MARATHON PETROLEUM CORPORATION

CONSOLIDATED STATEMENTS OF EQUITY AND REDEEMBALE NONCONTROLLING INTEREST

(Unaudited)


	MPC Stockholders’ Equity
	Common Stock			Treasury Stock			Additional Paid-in Capital		Retained Earnings		Accumulated Other Comprehensive Income (Loss)		Non-controlling Interests		Total Equity		Redeemable Non-controlling Interest
(Shares in millions; amounts in millions of dollars)	Shares	Amount		Shares	Amount
Balance as of December 31, 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
Net income	—	—		—	—		—		9		—		246		255		21
Dividends declared on common stock ($0.58 per share)	—	—		—	—		—		(380)		—		—		(380)		—
Distributions to noncontrolling interests	—	—		—	—		—		—		—		(279)		(279)		(21)
Other comprehensive loss	—	—		—	—		—		—		(10)		—		(10)		—

Stock-based compensation	—	—		—	(4)		31		—		—		3		30		—
Equity transactions of MPLX	—	—		—	—		8		—		—		(2)		6		—
Other	—	—		—	—		—		(1)		—		—		(1)		—
Balance as of June 30, 2020	979	$	10	(329)	$	(15,149)	$	33,208	$	6,008	$	(336)	$	7,108	$	30,849	$	968
Net income (loss)	—	—		—	—		$	—	(886)		—		257		(629)		20
Dividends declared on common stock ($0.58 per share)	—	—		—	—		—		(379)		—		—		(379)		—
Distributions to noncontrolling interests	—	—		—	—		—		—		—		(301)		(301)		(20)
Other comprehensive income	—	—		—	—		—		—		2		—		2		—

Stock-based compensation	1	—		—	(1)		18		—		—		2		19		—
Equity transactions of MPLX	—	—		—	—		(43)		—		—		27		(16)		—
Other	—	—		—	—		—		1		—		—		1		—
Balance as of September 30, 2020	980	$	10	(329)	$	(15,150)	$	33,183	$	4,744	$	(334)	$	7,093	$	29,546	$	968

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

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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. We sell refined products to wholesale marketing customers domestically and internationally, to buyers on the spot market and to independent entrepreneurs who operate branded outlets. We also sell transportation fuel to consumers through 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.

On May 14, 2021, we completed the sale of Speedway, our company-owned and operated retail transportation fuel and convenience store business, to 7-Eleven, Inc. (“7-Eleven”). Speedway’s results are reported separately as discontinued operations, net of tax, in our consolidated statements of income for all periods presented and its assets and liabilities are presented in our consolidated balance sheets as assets and liabilities held for sale as of December 31, 2020. In addition, we separately disclose the operating and investing cash flows of Speedway as discontinued operations within our consolidated statements of cash flow. See Note 4 for discontinued operations disclosures.

Basis of Presentation

All significant intercompany transactions and accounts have been eliminated.

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

These interim consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2020. The results of operations for the three and nine months ended September 30, 2021 are not necessarily indicative of the results to be expected for the full year.

In accordance with ASC 205, Discontinued Operations, intersegment sales from our Refining & Marketing segment to Speedway are no longer eliminated as intercompany transactions and are now presented within sales and other operating revenue, since we continue to supply fuel to Speedway subsequent to ts sale to 7-Eleven. All periods presented have been retrospectively adjusted through the sale date of May 14, 2021 to reflect this change. Additionally, beginning August 2, 2020, in accordance with ASC 360, Property, Plant, and Equipment, we ceased recording depreciation and amortization for Speedway’s PP&E, finite-lived intangible assets and right of use lease assets.

We invested a significant portion of the Speedway sale proceeds in investment grade debt, commercial paper and certificates of deposit with maturities greater than three months. As a result, we have updated our accounting policies for short-term investments and fair value as disclosed below:

Short-Term Investments

Investments with a maturity date greater than three months that we intend to convert to cash or cash equivalents within a year or less are classified as short-term investments in our consolidated balance sheets. Additionally, in accordance with ASC 320, Investments - Debt Securities, we have classified all short-term investments as available-for-sale securities and changes in fair market value are reported in other comprehensive income.

Fair Value

We account for certain assets and liabilities at fair value. The hierarchy below lists three levels of fair value based on the extent to which inputs used in measuring fair value are observable in the market. We categorize each of our fair value measurements in one of these three levels based on the lowest level input that is significant to the fair value measurement in its entirety. These levels are:

•Level 1 – inputs are based upon unadjusted quoted prices for identical instruments in active markets. Our Level 1 derivative assets and liabilities include 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.

•Level 2 – inputs are based upon quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-based valuation techniques for which all significant inputs

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are observable in the market or can be corroborated by observable market data for substantially the full term of the assets or liabilities. Where applicable, these models project future cash flows and discount the future amounts to a present value using market-based observable inputs including interest rate curves, credit spreads, and forward and spot prices for currencies. Our Level 2 investments include commercial paper, certificates of deposit, time deposits and corporate notes and bonds. Our Level 2 derivative assets and liabilities primarily include certain OTC contracts.

•Level 3 – inputs are generally unobservable and typically reflect management’s estimates of assumptions that market participants would use in pricing the asset or liability. The fair values are therefore determined using model-based techniques, including option pricing models and discounted cash flow models. Our Level 3 assets and liabilities include goodwill, long-lived assets and intangible assets, when they are recorded at fair value due to an impairment charge and an 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, 2021 used significant unobservable inputs including: (1) NGL prices interpolated and extrapolated due to inactive markets ranging from $0.68 to $1.80 per gallon with a weighted average of $0.88 per gallon and (2) the probability of renewal of 100 percent for the first and second five-year term of the natural gas purchase agreement and the related keep-whole processing agreement. Increases or decreases in the fractionation spread result in an increase or decrease in the fair value of the embedded derivative liability. Unobservable inputs used in the models are significant to the fair values of the assets and liabilities.

2. ACCOUNTING STANDARDS

Recently Adopted

We adopted the following ASU during the first nine months of 2021, which did not have a material impact to our financial statements or financial statement disclosures:


ASU		Effective Date
2019-12	Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes	January 1, 2021

3. SHORT-TERM INVESTMENTS

Investments Components

The components of investments were as follows:


	September 30, 2021
(In millions)	Fair Value Level	Amortized Cost		Unrealized Gains		Unrealized Losses		Fair Value		Cash and Cash Equivalents		Short-term Investments
Available-for-sale debt securities
Commercial paper	Level 2	$	7,747	$	1	$	—	$	7,748	$	1,369	$	6,379
Certificates of deposit and time deposits	Level 2	1,903		—		—		1,903		1,200		703
U.S. government securities	Level 1	128		—		—		128		100		28



Corporate notes and bonds	Level 2	397		—		—		397		155		242

Total available-for-sale debt securities		$	10,175	$	1	$	—	$	10,176	$	2,824	$	7,352

Cash								3,050		3,050		—
Total								$	13,226	$	5,874	$	7,352

Our investment policy includes concentration limits and credit rating requirements which limits our investments to high quality, short term and highly liquid securities.

Unrealized losses on debt investments held from May 14, 2021 to September 30, 2021 were not material. Realized gains/losses were not material. All of our available-for-sale debt securities held as of September 30, 2021 mature within one year or less or are readily available for use.

4. DISCONTINUED OPERATIONS

On May 14, 2021, we completed the sale of Speedway, our company-owned and operated retail transportation fuel and convenience store business, to 7-Eleven for cash proceeds of approximately $21.38 billion. After-tax proceeds were approximately $17.22 billion. This transaction resulted in a pretax gain of $11.68 billion ($8.02 billion after income taxes) after deducting the book value of the net assets and certain other adjustments.

The Speedway sale gain is accounted for as a discrete item within the discontinued operations income tax provision and includes a current tax provision of $4.16 billion and a deferred income tax benefit of $497 million due to the reversal of MPC’s deferred tax liabilities related to Speedway.

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The proceeds and related Speedway sale gain may be adjusted in future periods based on provisions of the purchase and sale agreement that allow for adjustments of working capital amounts and other miscellaneous items subsequent to the transaction closing date of May 14, 2021.

Results of operations for Speedway are reflected through the close of the sale. The following table presents Speedway results and the gain on sale as reported in income from discontinued operations, net of tax, within our consolidated statements of income.


	Three Months Ended September 30,				Nine Months Ended September 30,
(In millions)	2021		2020		2021		2020
Revenues, other income and net gain on disposal of assets:
Revenues and other income	$	—	$	5,291	$	8,420	$	14,997
Net gain (loss) on disposal of assets	—		(1)		11,682		—
Total revenues, other income and net gain on disposal of assets	—		5,290		20,102		14,997
Costs and expenses:
Cost of revenues (excludes items below)	—		4,696		7,654		13,176
LCM inventory valuation adjustment	—		—		—		25
Depreciation and amortization	—		36		3		237
Selling, general and administrative expenses	—		71		121		231
Other taxes	—		49		75		146
Total costs and expenses	—		4,852		7,853		13,815
Income from operations	—		438		12,249		1,182
Net interest and other financial costs	—		5		6		15
Income before income taxes	—		433		12,243		1,167
Provision for income taxes	—		62		3,795		286
Income from discontinued operations, net of tax	$	—	$	371	$	8,448	$	881

Fuel Supply Agreements

During the second quarter of 2021, we entered into various 15-year fuel supply agreements through which we continue to supply fuel to Speedway.

5. MASTER LIMITED PARTNERSHIP

We own the general partner and a majority limited partner interest in MPLX, which owns and operates crude oil and light product transportation and logistics infrastructure as well as gathering, processing and fractionation assets. We control MPLX through our ownership of the general partner interest. As of September 30, 2021, we owned approximately 63 percent of the outstanding MPLX common units.

Unit Repurchase Program

On November 2, 2020, MPLX announced its board authorized a unit repurchase program for the repurchase of up to $1 billion of MPLX’s outstanding common units held by the public.

During the nine months ended September 30, 2021, MPLX repurchased 17,563,855 common units at an average cost per unit of $26.79 and paid $465 million of cash, with an additional $5 million of cash paid in early October in connection with the settlement of certain late September repurchases. As of September 30, 2021, MPLX has $497 million remaining under its unit repurchase authorization.

MPLX may utilize various methods to effect the repurchases, which could include open market repurchases, negotiated block transactions, tender offers, accelerated unit repurchases or open market solicitations for units, some of which may be effected through Rule 10b5-1 plans. The timing and amount of repurchases will depend upon several factors, including market and business conditions, and repurchases may be initiated, suspended or discontinued at any time. The repurchase authorization has no expiration date.

Cash Distributions

On November 2, 2021, MPLX declared a cash distribution for the third quarter of 2021, totaling $1.31 billion, or $1.28 per common unit, consisting of a base distribution amount of $0.7050 per common unit and a special distribution amount of $0.5750

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per common unit. This distribution will be paid on November 19, 2021 to common unitholders of record on November 12, 2021. MPC’s portion of this distribution is approximately $829 million.

Agreements

We have various long-term, fee-based commercial agreements with MPLX. Under these agreements, MPLX provides transportation, storage, distribution and marketing services to us. With certain exceptions, these agreements generally contain minimum volume commitments. These transactions are eliminated in consolidation but are reflected as intersegment transactions between our Refining & Marketing and Midstream segments. We also have agreements with MPLX that establish fees for operational and management services provided between us and MPLX and for executive management services and certain general and administrative services provided by us to MPLX. These transactions are eliminated in consolidation but are reflected as intersegment transactions between our Corporate and Midstream segments.

Noncontrolling Interest

As a result of equity transactions of MPLX, 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 were as follows:


	Nine Months Ended September 30,
(In millions)	2021		2020
Decrease due to change in ownership	$	(120)	$	(23)
Tax impact	68		(17)
Decrease in MPC's additional paid-in capital, net of tax	$	(52)	$	(40)

6. IMPAIRMENTS

During the first nine months of 2021, we recognized impairment expense within our Midstream segment related to the divestiture, abandonment or closure of certain assets as detailed in the table below.

During the first quarter of 2020, the outbreak of COVID-19 caused overall deterioration in the economy and the environment in which we operate. The related changes to our expected future cash flows, as well as a sustained decrease in share price, were considered triggering events requiring the performance of various tests of the carrying values of our assets. Triggering events requiring the performance of various tests of the carrying value of our Midstream assets were also identified by MPLX as a result of the overall deterioration in the economy and the environment in which MPLX and its customers operate, which led to a reduction in forecasted volumes processed by the systems operated by MarkWest Utica EMG, L.L.C., MPLX’s equity method investee, as well as a sustained decrease in the MPLX unit price.

The table below provides information related to the impairments recognized, along with the location of these impairments within our consolidated statements of income.


		Three Months Ended September 30,				Nine Months Ended September 30,
(In millions)	Income Statement Line	2021		2020		2021		2020
Goodwill	Impairment expense	$	—	$	64	$	—	$	7,394
Equity method investments	Income (loss) from equity method investments	—		—		13		1,315
Long-lived assets	Impairment expense	—		369		—		886
Long-lived assets	Depreciation and amortization	13		—		56		—
Total impairments		$	13	$	433	$	69	$	9,595

Goodwill

During the first quarter of 2020, we recorded an impairment of goodwill of $7.33 billion. The $5.516 billion goodwill impairment within the Refining & Marketing segment was primarily driven by the effects of COVID-19 and the decline in commodity prices. The $1.814 billion impairment within the Midstream segment was primarily driven by additional information related to the slowing of drilling activity, which had reduced production growth forecasts from MPLX’s producer customers. The fair values of the reporting units for the first quarter of 2020 goodwill impairment analysis were determined based on applying both a discounted cash flow method, or income approach, as well as a market approach.

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

Equity Method Investments

During the first quarter of 2020, we recorded equity method investment impairment charges totaling $1.315 billion, of which $1.25 billion related to MarkWest Utica EMG, L.L.C. and its investment in Ohio Gathering Company, L.L.C. The impairments were largely due to a reduction in forecasted volumes gathered and processed by the systems operated by the equity method investments. The fair value of the investments was determined based upon applying the discounted cash flow method, an income approach.

Long-lived Assets

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

During the first quarter of 2020, we identified an impairment trigger relating to asset groups within MPLX’s Western Gathering and Processing (“G&P”) reporting unit as a result of significant changes to expected future cash flows for these asset groups resulting from the effects of COVID-19. The cash flows associated with these assets were significantly impacted by volume declines reflecting decreased forecasted producer customer production as a result of lower commodity prices. We 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.

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

Fair values of property, plant and equipment were determined using a combination of income and cost approaches. 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 groups. The cost approach utilized assumptions for the current replacement costs of similar assets adjusted for estimated depreciation and deterioration of the existing equipment and economic obsolescence. The fair value of the intangibles was determined based on applying the multi-period excess earnings method, which is an income approach.

7. VARIABLE INTEREST ENTITIES

Consolidated VIE

We control MPLX through our ownership of its general partner. MPLX is a VIE because the limited partners do not have substantive kick-out or 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

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MPLX holds an interest. See Note 24 for more information. The assets of MPLX can only be used to settle its own obligations and its creditors have no recourse to our assets, except as noted earlier.

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


(In millions)	September 30, 2021		December 31, 2020
Assets
Cash and cash equivalents	$	39	$	15
Receivables, less allowance for doubtful accounts	624		478
Inventories	141		118
Other current assets	54		67
Assets held for sale	20		188
Equity method investments	4,001		4,036
Property, plant and equipment, net	20,158		21,418
Goodwill	7,657		7,657
Right of use assets	282		309
Other noncurrent assets	925		1,006
Liabilities
Accounts payable	$	605	$	468
Payroll and benefits payable	6		4
Accrued taxes	95		76
Debt due within one year	1		764
Operating lease liabilities	61		63
Liabilities held for sale	—		101
Other current liabilities	284		297
Long-term debt	18,253		19,375
Deferred income taxes	11		12
Long-term operating lease liabilities	220		244
Deferred credits and other liabilities	527		437

8. RELATED PARTY TRANSACTIONS

Transactions with related parties were as follows:


	Three Months Ended September 30,				Nine Months Ended September 30,
(In millions)	2021		2020		2021		2020
Sales to related parties	$	13	$	35	$	67	$	85
Purchases from related parties	251		187		673		540

Sales to related parties, which are included in sales and other operating revenues, consist primarily of refined product sales to certain of our equity affiliates.

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

9. 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.

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	Three Months Ended September 30,				Nine Months Ended September 30,
(In millions, except per share data)	2021		2020		2021		2020
Income (loss) from continuing operations, net of tax	$	1,030	$	(980)	$	1,448	$	(11,432)
Less: Net income (loss) attributable to noncontrolling interest	336		277		932		(440)
Net income allocated to participating securities	—		—		1		—
Income (loss) from continuing operations available to common stockholders	694		(1,257)		515		(10,992)
Income from discontinued operations, net of tax	—		371		8,448		881
Income (loss) available to common stockholders	$	694	$	(886)	$	8,963	$	(10,111)

Weighted average common shares outstanding:
Basic	633		650		645		649
Effect of dilutive securities	4		—		4		—
Diluted	637		650		649		649

Income (loss) available to common stockholders per share:
Basic:
Continuing operations	$	1.10	$	(1.93)	$	0.80	$	(16.93)
Discontinued operations	—		0.57		13.10		1.35
Net income (loss) per share	$	1.10	$	(1.36)	$	13.90	$	(15.58)
Diluted:
Continuing operations	$	1.09	$	(1.93)	$	0.79	$	(16.93)
Discontinued operations	—		0.57		13.02		1.35
Net income (loss) per share	$	1.09	$	(1.36)	$	13.81	$	(15.58)

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,
(In millions)	2021	2020	2021	2020
Shares issuable under stock-based compensation plans	3	12	3	11

10. EQUITY

In connection with the Speedway sale, our board of directors approved an additional $7.1 billion share repurchase authorization bringing total share repurchase authorizations to $10.0 billion prior to the June 2021 tender offer discussed below. The authorization has no expiration date.

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 suspended or discontinued at any time.

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Total share repurchases were as follows for the respective periods:


	Three Months Ended September 30,				Nine Months Ended September 30,
(In millions, except per share data)	2021		2020		2021		2020
Number of shares repurchased	16		—		32		—
Cash paid for shares repurchased	$	928	$	—	$	1,912	$	—
Average cost per share	$	58.78	$	—	$	60.91	$	—

As of September 30, 2021, MPC has $8.04 billion remaining under its share repurchase authorizations, which reflects the repurchase of 804,147 common shares for $50 million that settled in the fourth quarter.

During the second quarter of 2021, MPC completed a modified Dutch auction tender offer, purchasing 15,573,365 shares of its common stock at a purchase price of $63.00 per share, for an aggregate purchase price of approximately $981 million, excluding fees and expenses related to the tender offer.

11. SEGMENT INFORMATION

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

•Refining & Marketing – refines crude oil and other feedstocks at our 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 independent entrepreneurs who operate primarily Marathon® branded outlets and through long-term fuel supply contracts with direct dealers who operate locations 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 consists primarily of MPC’s corporate administrative expenses and costs related to certain non-operating assets, except for corporate overhead expenses attributable to MPLX, which are included in the Midstream segment. In addition, certain items that affect comparability (as determined by the chief operating decision maker (“CODM”)) are not allocated to the reportable segments. Assets by segment are not a measure used to assess the performance of the company by the CODM and thus are not reported in our disclosures.

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


	Three Months Ended September 30,				Nine Months Ended September 30,
(In millions)	2021		2020		2021		2020
Refining & Marketing	$	509	$	(1,569)	$	135	$	(3,610)
Midstream	1,042		960		2,991		2,734
Segment income (loss) from operations	1,551		(609)		3,126		(876)
Corporate	(186)		(197)		(523)		(625)
Items not allocated to segments:
LCM inventory valuation adjustment	—		530		—		(1,185)
Impairments(a)	(13)		(433)		(69)		(9,595)
Idling expenses	(12)		—		(12)		—
Restructuring expenses(b)	—		(348)		—		(348)

Transaction-related costs(c)	—		—		—		(8)
Income (loss) from continuing operations	1,340		(1,057)		2,522		(12,637)
Net interest and other financial costs	328		359		1,053		1,032
Income (loss) from continuing operations before income taxes	$	1,012	$	(1,416)	$	1,469	$	(13,669)

(a)Includes impairment of goodwill, equity method investments and long lived assets. See Note 6 for additional information.

(b)See Note 16.

(c)Includes costs incurred in connection with the Midstream strategic review. Costs incurred in connection with the Speedway separation are included in discontinued operations. See Note 4.

The following reconciles segment depreciation and amortization to total depreciation and amortization as reported in the consolidated statements of income:


	Three Months Ended September 30,				Nine Months Ended September 30,
(In millions)	2021		2020		2021		2020
Refining & Marketing	$	462	$	456	$	1,406	$	1,392
Midstream	329		335		994		1,010
Segment depreciation and amortization	791		791		2,400		2,402
Corporate	45		39		151		124
Total depreciation and amortization	$	836	$	830	$	2,551	$	2,526

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The following reconciles segment revenues to sales and other operating revenues as reported in the consolidated statements of income:


	Three Months Ended September 30,				Nine Months Ended September 30,
(In millions)	2021		2020		2021		2020
Refining & Marketing
Revenues from external customers(a)	$	31,109	$	16,493	$	81,324	$	49,164
Intersegment revenues	37		23		95		52
Refining & Marketing segment revenues	31,146		16,516		81,419		49,216
Midstream
Revenues from external customers(a)	1,212		915		3,323		2,643
Intersegment revenues	1,242		1,232		3,689		3,638
Midstream segment revenues	2,454		2,147		7,012		6,281
Total segment revenues	33,600		18,663		88,431		55,497
Less: intersegment revenues	1,279		1,255		3,784		3,690
Sales and other operating revenues	$	32,321	$	17,408	$	84,647	$	51,807

(a)Includes Refining & Marketing intercompany sales to Speedway prior to May 14, 2021 and related party sales. See Notes 4 and 8 for additional information.

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


	Three Months Ended September 30,				Nine Months Ended September 30,
(In millions)	2021		2020		2021		2020
Refining & Marketing	$	228	$	254	$	538	$	995
Midstream	190		300		506		1,199
Segment capital expenditures and investments	418		554		1,044		2,194
Less investments in equity method investees	37		53		150		436
Plus:
Corporate	28		16		72		61
Capitalized interest	18		29		48		85
Total capital expenditures(a)	$	427	$	546	$	1,014	$	1,904

(a)Includes changes in capital expenditure accruals. See Note 21 for a reconciliation of total capital expenditures to additions to property, plant and equipment for the nine months ended September 30, 2021 and 2020 as reported in the consolidated statements of cash flows.

12. NET INTEREST AND OTHER FINANCIAL COSTS

Net interest and other financial costs were as follows:


	Three Months Ended September 30,				Nine Months Ended September 30,
(In millions)	2021		2020		2021		2020
Interest income	$	(5)	$	(1)	$	(8)	$	(9)
Interest expense	331		376		1,019		1,102
Interest capitalized	(18)		(32)		(54)		(103)
Pension and other postretirement non-service costs(a)	10		6		66		2
Other financial costs	10		10		30		40
Net interest and other financial costs	$	328	$	359	$	1,053	$	1,032

(a)See Note 23.

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13. INCOME TAXES

We recorded a combined federal, state and foreign income tax benefit of $18 million for the three months ended September 30, 2021, which was lower than the tax computed at the U.S. statutory rate primarily due to certain permanent tax benefits related to net income attributable to noncontrolling interests, state taxes, and an increase in benefit related to the net operating loss (“NOL”) carryback provided under the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”). We recorded a combined federal, state and foreign income tax expense of $21 million for the nine months ended September 30, 2021, which was lower than the tax computed at the U.S. statutory rate primarily due to certain permanent tax benefits related to net income attributable to noncontrolling interests and a change in benefit related to the NOL carryback provided under the CARES Act offset by state taxes.

We recorded a combined federal, state and foreign income tax benefit of $436 million for the three months ended September 30, 2020, which was higher than the tax computed at the U.S. statutory rate primarily due to certain permanent tax benefits related to net income attributable to noncontrolling interests, state taxes and a change in estimate related to the expected NOL carryback provided under the CARES Act, partially offset by non-tax deductible goodwill impairment. We recorded a combined federal, state and foreign income tax benefit of $2,237 million for the nine months ended September 30, 2020, which was lower than the tax computed at the U.S. statutory rate due to a significant amount of our pre-tax loss consisting of non-tax deductible goodwill impairment charges, partially offset by the tax rate differential resulting from the expected NOL carryback provided under the CARES Act. Additionally, our non-controlling interest in MPLX generally provides an effective tax rate benefit since the tax associated with these ownership interests is paid by those interests, but this benefit was lower for the nine months ended September 30, 2020 due to impairment charges recorded by MPLX.

A reconciliation of the continuing operations tax provision (benefit) in dollars as determined using the federal statutory income tax rate applied to income (loss) before income taxes to the provision (benefit) for income taxes is shown in the table below.


	Three Months Ended September 30,				Nine Months Ended September 30,
(In millions)	2021		2020		2021		2020
Tax computed at statutory rate	$	213	$	(297)	$	309	$	(2,870)
State and local income taxes, net of federal income tax effects	(10)		(59)		12		(275)
Goodwill impairment	—		13		—		1,170
Noncontrolling interests	(127)		(63)		(196)		81
Legislation(a)	(55)		(29)		(72)		(354)
Tax credits	(15)		(4)		(19)		(12)
Other	(24)		3		(13)		23
Provision (benefit) for income taxes on continuing operations	$	(18)	$	(436)	$	21	$	(2,237)

(a)2021 and 2020 primarily reflect the impact of the CARES Act.

On March 27, 2020, the CARES Act was enacted by Congress and signed into law by President Trump in response to the COVID-19 pandemic. The CARES Act contained an NOL carryback provision, which allowed us to carryback our 2020 taxable loss to 2015 and later years. The five-year NOL carryback is available for all businesses producing taxable losses in 2018 through 2020 when tax was previously paid in the carryback years. As provided by the NOL carryback provision in the CARES Act, as of September 30, 2021, we have realized a total income tax benefit of $2.30 billion. As of September 30, 2021, $1.61 billion is recorded as an income tax receivable in other current assets, $388 million was utilized to offset our third quarter cash tax payment obligation to the Internal Revenue Service (“IRS”), and $302 million has been recorded as an offset to our accrued taxes due in the fourth quarter of 2021. Additionally, on October 8, 2021, MPC received $1.55 billion of the refund from the IRS and expects to receive the remaining income tax receivable of $59 million in the first half of 2022.

14. INVENTORIES


(In millions)	September 30, 2021		December 31, 2020
Crude oil	$	2,959	$	2,588
Refined products	5,303		4,478
Materials and supplies	949		933
Total	$	9,211	$	7,999

Inventories are carried at the lower of cost or market value. Costs of crude oil and refined products are aggregated on a consolidated basis for purposes of assessing whether the LIFO cost basis of these inventories may have to be written down to market values.

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15. PROPERTY, PLANT AND EQUIPMENT


	September 30, 2021						December 31, 2020
(In millions)	Gross PP&E		Accumulated Depreciation		Net PP&E		Gross PP&E		Accumulated Depreciation		Net PP&E
Refining & Marketing	$	30,794	$	14,490	$	16,304	$	30,306	$	13,257	$	17,049
Midstream	27,948		7,114		20,834		27,677		6,217		21,460
Corporate	1,415		923		492		1,356		830		526
Total	$	60,157	$	22,527	$	37,630	$	59,339	$	20,304	$	39,035

16. RESTRUCTURING

During the third quarter of 2020, we indefinitely idled our refinery located in Gallup, New Mexico and initiated actions to strategically reposition our Martinez, California refinery to a renewable diesel facility. We also approved an involuntary workforce reduction plan. In connection with these strategic actions, we recorded restructuring expenses of $367 million in 2020.

The indefinite idling of the Gallup refinery and actions to strategically reposition the Martinez refinery to a renewable diesel facility resulted in $195 million of restructuring expenses. Of the $195 million of restructuring expenses, we expect $130 million to settle in cash for costs related to decommissioning refinery processing units and storage tanks and fulfilling environmental remediation obligations. Additionally, we recorded a non-cash reserve against our materials and supplies inventory at these facilities of $51 million.

The involuntary workforce reduction plan, together with employee reductions resulting from our actions affecting the Gallup and Martinez refineries, affected approximately 2,050 employees. We recorded $172 million of restructuring expenses for separation benefits payable under our employee separation plan and certain collective bargaining agreements that we have settled in cash. Certain of the affected MPC employees provided services to MPLX. MPLX has various employee services agreements and secondment agreements with MPC pursuant to which MPLX reimburses MPC for employee costs, along with the provision of operational and management services in support of MPLX’s operations. Pursuant to such agreements, MPC was reimbursed by MPLX for $37 million of the $172 million of restructuring expenses recorded for these actions.

Restructuring expenses were accrued as restructuring reserves within accounts payable, payroll and benefits payable, other current liabilities and deferred credits and other liabilities within our consolidated balance sheets. We expect cash payments for the remaining exit and disposal costs reserve to occur through 2024.


(In millions)	Employee separation costs		Exit and disposal costs		Total
Restructuring reserve balance at December 31, 2020	$	38	$	103	$	141
Cash payments	(37)		(41)		(78)
Restructuring reserve balance at September 30, 2021	$	1	$	62	$	63

17. FAIR VALUE MEASUREMENTS

Fair Values—Recurring

The following tables present assets and liabilities accounted for at fair value on a recurring basis as of September 30, 2021 and December 31, 2020 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, 2021
	Fair Value Hierarchy
(In millions)	Level 1		Level 2		Level 3		Netting and Collateral(a)		Net Carrying Value on Balance Sheet(b)		Collateral Pledged Not Offset
Assets:
Commodity contracts	$	543	$	4	$	—	$	(542)	$	5	$	86
Liabilities:
Commodity contracts	$	615	$	12	$	—	$	(627)	$	—	$	—
Embedded derivatives in commodity contracts	—		—		104		—		104		—

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	December 31, 2020
	Fair Value Hierarchy
(In millions)	Level 1		Level 2		Level 3		Netting and Collateral(a)		Net Carrying Value on Balance Sheet(b)		Collateral Pledged Not Offset
Assets:
Commodity contracts	$	82	$	6	$	—	$	(80)	$	8	$	31
Liabilities:
Commodity contracts	$	81	$	10	$	—	$	(91)	$	—	$	—
Embedded derivatives in commodity contracts	—		—		63		—		63		—

(a)Represents the impact of netting assets, liabilities and cash collateral when a legal right of offset exists. As of September 30, 2021, cash collateral of $85 million was netted with the mark-to-market derivative liabilities. As of December 31, 2020, cash collateral of $11 million was netted with mark-to-market derivative liabilities.

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

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,
(In millions)	2021		2020		2021		2020
Beginning balance	$	102	$	51	$	63	$	60
Unrealized and realized losses included in net income	7		12		52		5
Settlements of derivative instruments	(5)		(2)		(11)		(4)
Ending balance	$	104	$	61	$	104	$	61

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:	$	6	$	11	$	44	$	2

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, 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 $26.9 billion and $30.2 billion at September 30, 2021, respectively, and approximately $31.1 billion and $34.9 billion at December 31, 2020, respectively. These carrying and fair values of our debt exclude the unamortized issuance costs which are netted against our total debt.

18. DERIVATIVES

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

Derivatives that are not designated as accounting hedges may include commodity derivatives used to hedge price risk on (1) inventories, (2) fixed price sales of refined products, (3) the acquisition of foreign-sourced crude oil, (4) the acquisition of ethanol for blending with refined products, (5) the sale of NGLs, (6) the purchase of natural gas and (7) the purchase of soybean oil.

The following table presents the fair value of derivative instruments as of September 30, 2021 and December 31, 2020 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.

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(In millions)	September 30, 2021				December 31, 2020
Balance Sheet Location	Asset		Liability		Asset		Liability
Commodity derivatives
Other current assets	$	547	$	627	$	88	$	91
Other current liabilities(a)	—		15		—		7
Deferred credits and other liabilities(a)	—		89		—		56

(a) Includes embedded derivatives.

The table below summarizes open commodity derivative contracts for crude oil, refined products, blending products and soybean oil as of September 30, 2021.


	Percentage of contracts that expire next quarter	Position
(Units in thousands of barrels)		Long	Short
Exchange-traded(a)
Crude oil	88.8%	48,240	56,089
Refined products	93.0%	18,571	21,459
Blending products	61.3%	3,258	8,345
Soybean oil	92.6%	1,210	1,837

(a) Included in exchange-traded are spread contracts in thousands of barrels: Crude oil - 1,900 long and 1,700 short; Refined products - 629 long and 500 short; Blending products - 75 short. There are no spread contracts for soybean oil.

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


	Gain (Loss)
(In millions)	Three Months Ended September 30,				Nine Months Ended September 30,
Income Statement Location	2021		2020		2021		2020
Sales and other operating revenues	$	(19)	$	—	$	(34)	$	77
Cost of revenues	(121)		(23)		(354)		3
Total	$	(140)	$	(23)	$	(388)	$	80

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19. DEBT

Our outstanding borrowings at September 30, 2021 and December 31, 2020 consisted of the following:


(In millions)	September 30, 2021		December 31, 2020
Marathon Petroleum Corporation:
Commercial paper	$	—	$	1,024

Senior notes	8,549		9,849
Notes payable	1		1
Finance lease obligations	606		634
Total	$	9,156	$	11,508
MPLX LP:
Bank revolving credit facility	—		175
Senior notes	18,600		20,350
Finance lease obligations	9		11
Total	$	18,609	$	20,536

Total debt	$	27,765	$	32,044
Unamortized debt issuance costs	(138)		(154)
Unamortized (discount) premium, net	(284)		(306)
Amounts due within one year	(73)		(2,854)
Total long-term debt due after one year	$	27,270	$	28,730

Available Capacity under our Credit Facilities as of September 30, 2021


(Dollars in millions)	Total Capacity		Outstanding Borrowings		Outstanding Letters of Credit		Available Capacity		Weighted Average Interest Rate		Expiration
MPC, excluding MPLX
MPC bank revolving credit facility	$	5,000	$	—	$	1	$	4,999	—	%	October 2023
MPC trade receivables securitization facility	100		—		—		100		—		September 2022

MPLX
MPLX bank revolving credit facility	3,500		—		—		3,500		—	%	July 2024

MPC 364-Day Bank Revolving Credit Facilities

In February 2021, we elected to terminate our $1 billion unsecured 364-day revolving credit facility due in April 2021. This facility provided us with additional liquidity and financial flexibility during the then ongoing commodity price and demand downturn. There were no borrowings under this credit facility, and we determined that the incremental borrowing capacity of the facility was no longer necessary. We do not intend to replace this facility. We incurred no early termination fees as a result of the early termination of this credit agreement.

Effective June 18, 2021, we terminated our $1 billion unsecured 364-day revolving credit facility due in September 2021. There were no borrowings under this credit facility, and we determined that the incremental borrowing capacity of the facility was no longer necessary. We incurred no early termination fees as a result of the early termination of this credit agreement.

Trade Receivables Securitization Facility

On September 30, 2021, we entered into a new trade receivables securitization facility with a group of lenders, which provides for $100 million of borrowing capacity. This facility replaces our previous trade receivables securitization facility that expired on July 16, 2021.

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MPC Senior Notes

On March 1, 2021, we repaid the $1 billion outstanding aggregate principal amount of 5.125% senior notes due March 2021.

In June 2021, all of the $300 million outstanding aggregate principal amount of 5.125% senior notes due April 2024, including the portion of such notes for which Andeavor was the obligor, were redeemed at a price equal to 100.854% of the principal amount.

MPC intends to redeem all of the $1.25 billion outstanding aggregate principal amount of MPC's 4.5% senior notes due May 1, 2023 and the $850 million outstanding aggregate principal amount of MPC’s 4.75% senior notes due December 15, 2023, including the portion of such notes for which Andeavor LLC, a wholly-owned subsidiary of MPC, is the obligor. The notes are expected to be redeemed on December 2, 2021, at a price equal to par, plus a make-whole premium calculated in accordance with the terms of the senior notes and accrued and unpaid interest to, but not including, the redemption date. MPC expects to fund the redemption amount with cash on hand.

MPLX Senior Notes

On January 15, 2021, MPLX redeemed all the $750 million outstanding aggregate principal amount of 5.250% senior notes due January 2025, including the portion of such notes issued by Andeavor Logistics LP, at a price equal to 102.625% of the principal amount.

On September 3, 2021 MPLX redeemed, at par value, all of the $1 billion aggregate principal amount of floating rate senior notes due September 2022. MPLX primarily funded the redemption with borrowings under the MPC intercompany loan agreement.

20. REVENUE

The following table presents our revenues from external customers disaggregated by segment and product line.


	Three Months Ended September 30,				Nine Months Ended September 30,
(In millions)	2021		2020		2021		2020
Refining & Marketing:
Refined products	$	29,257	$	15,356	$	75,594	$	45,893
Crude oil	1,687		990		4,999		2,868
Services and other	165		147		731		403
Total revenues from external customers	31,109		16,493		81,324		49,164
Midstream:
Refined products	441		166		1,027		460
Services and other	771		749		2,296		2,183
Total revenues from external customers	1,212		915		3,323		2,643
Sales and other operating revenues	$	32,321	$	17,408	$	84,647	$	51,807

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, 2021, we do not have future performance obligations that are material to future periods.

Receivables

On the accompanying consolidated balance sheets, receivables, less allowance for doubtful accounts primarily consists of customer receivables. Significant, non-customer balances included in our receivables at September 30, 2021 include matching buy/sell receivables of $3.85 billion.

21. SUPPLEMENTAL CASH FLOW INFORMATION


	Nine Months Ended September 30,
(In millions)	2021		2020
Net cash provided by operating activities included:
Interest paid (net of amounts capitalized)	$	935	$	901
Net income taxes paid to (received from) taxing authorities(a)	2,896		(130)

(a)Includes income tax payments related to continuing and discontinued operations.

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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,
(In millions)	2021		2020
Additions to property, plant and equipment per the consolidated statements of cash flows	$	983	$	2,330
Increase (decrease) in capital accruals	31		(426)
Total capital expenditures	$	1,014	$	1,904

22. ACCUMULATED OTHER COMPREHENSIVE LOSS

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


(In millions)	Pension Benefits		Other Benefits		Gain on Cash Flow Hedge		Workers Compensation		Total
Balance as of December 31, 2019	$	(212)	$	(116)	$	1	$	7	$	(320)
Other comprehensive loss before reclassifications, net of tax of $(4)	(12)		(2)		—		—		(14)
Amounts reclassified from accumulated other comprehensive loss:
Amortization – prior service credit(a)	(34)		—		—		—		(34)
– actuarial loss(a)	27		2		—		—		29
– settlement loss(a)	10		—		—		—		10
Other	—		—		—		(5)		(5)
Tax effect	(1)		—		—		1		—
Other comprehensive loss	(10)		—		—		(4)		(14)
Balance as of September 30, 2020	$	(222)	$	(116)	$	1	$	3	$	(334)


(In millions)	Pension Benefits		Other Benefits		Gain on Cash Flow Hedge		Workers Compensation		Total
Balance as of December 31, 2020	$	(338)	$	(181)	$	1	$	6	$	(512)
Other comprehensive gain (loss) before reclassifications, net of tax of $38	115		1		—		(4)		112
Amounts reclassified from accumulated other comprehensive loss:
Amortization – prior service credit(a)	(34)		2		—		—		(32)
– actuarial loss(a)	35		7		—		—		42
– settlement loss(a)	64		—		—		—		64
Other	—		—		—		(1)		(1)
Tax effect	(15)		(2)		—		—		(17)
Other comprehensive gain (loss)	165		8		—		(5)		168
Balance as of September 30, 2021	$	(173)	$	(173)	$	1	$	1	$	(344)

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

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23. PENSION AND OTHER POSTRETIREMENT BENEFITS

The following summarizes the components of net periodic benefit costs:


	Three Months Ended September 30,				Nine Months Ended September 30,
(In millions)	2021		2020		2021		2020
Pension Benefits
Service cost	$	73	$	70	$	221	$	210
Interest cost	23		25		69		73
Expected return on plan assets	(37)		(33)		(99)		(98)
Amortization – prior service credit	(11)		(12)		(34)		(34)
– actuarial loss	10		9		35		26
– settlement loss	15		8		64		9
Net periodic pension benefit cost	$	73	$	67	$	256	$	186

Other Benefits
Service cost	$	9	$	9	$	26	$	27
Interest cost	7		8		22		24
Amortization – prior service cost	1		—		2		—
– actuarial loss	2		1		7		2
Net periodic other benefit cost	$	19	$	18	$	57	$	53

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

During the nine months ended September 30, 2021, we made contributions of $801 million to our funded pension plans. Benefit payments related to unfunded pension and other postretirement benefit plans were $19 million and $36 million, respectively, during the nine months ended September 30, 2021.

24. COMMITMENTS AND CONTINGENCIES

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

Environmental Matters

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

At September 30, 2021 and December 31, 2020, accrued liabilities for remediation totaled $389 million and $397 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 $6 million and $7 million at September 30, 2021 and December 31, 2020, respectively.

Governmental and other entities in various states have filed lawsuits against energy companies, including MPC. The lawsuits allege damages as a result of climate change and the plaintiffs are seeking unspecified damages and abatement under various tort theories. We are currently subject to such proceedings in federal or state courts in California, Delaware, Maryland, Hawaii, Rhode Island and South Carolina. 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.

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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 Legal Proceedings

In early July 2020, Tesoro High Plains Pipeline Company, LLC (“THPP”), a subsidiary of MPLX, received a Notification of Trespass Determination from the Bureau of Indian Affairs (“BIA”) relating to a portion of the Tesoro High Plains Pipeline that crosses the Fort Berthold Reservation in North Dakota. The notification covered the rights of way for 23 tracts of land and demanded the immediate cessation of pipeline operations. The notification also assessed trespass damages of approximately $187 million. THPP appealed this determination, which triggered an automatic stay of the requested pipeline shutdown and payment. On October 29, 2020, the Assistant Secretary - Indian Affairs issued an order vacating the BIA’s trespass order and requiring the Regional Director for the BIA Great Plains Region to issue a new decision on or before December 15, 2020 covering all 34 tracts at issue. On December 15, 2020, the Regional Director of the BIA issued a new trespass notice to THPP consistent with the Assistant Secretary - Indian Affairs order vacating the prior trespass order. The new order found that THPP was in trespass and assessed trespass damages of approximately $4 million (including interest), which has been paid. The order also required THPP to immediately cease and desist use of the portion of the pipeline that crosses the property at issue. THPP has complied with the Regional Director’s December 15, 2020 notice. On February 12, 2021, landowners filed suit in the U.S. District Court for the District of North Dakota (the “District of North Dakota”) against THPP, the Department of the Interior, the Assistant Secretary - Indian Affairs, the Interior Board of Indian Appeals and the BIA, requesting, among other things, that decisions by the Assistant Secretary - Indian Affairs and the Interior Board of Indian Appeals be vacated as to the award of damages to plaintiffs. In March 2021, THPP received a copy of an order purporting to vacate all orders related to THPP’s alleged trespass issued by the BIA between July 2, 2020 and January 14, 2021. The order directs the Regional Director of the BIA to reconsider the issue of THPP’s alleged trespass and issue a new order, if necessary, after all interested parties have had an opportunity to be heard. Subsequently, landowners voluntarily dismissed the suit filed in the District of North Dakota. On April 23, 2021, THPP filed a lawsuit in the District of North Dakota against the United States of America, the U.S. Department of the Interior and the BIA challenging the March order purporting to vacate all previous orders related to THPP’s alleged trespass.

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

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

Guarantees

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

Guarantees related to indebtedness of equity method investees

LOOP and LOCAP

MPC and MPLX hold interests in an offshore oil port, LOOP, and MPLX holds an interest in a crude oil pipeline system, LOCAP. Both LOOP and LOCAP have secured various project financings with throughput and deficiency agreements. Under the agreements, MPC, as a shipper, is required to advance funds if the investees are unable to service their debt. Any such advances are considered prepayments of future transportation charges. The duration of the agreements varies but 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, 2021.

Dakota Access Pipeline

MPLX holds a 9.19 percent indirect interest in a joint venture (“Dakota Access”) that owns and operates the Dakota Access Pipeline and Energy Transfer Crude Oil Pipeline projects, collectively referred to as the Bakken Pipeline system or DAPL. In 2020, the U.S. District Court for the District of Columbia (the “D.D.C.”) ordered the U.S. Army Corps of Engineers (“Army Corps”), which granted permits and an easement for the Bakken Pipeline system, to prepare an environmental impact statement (“EIS”) relating to an easement under Lake Oahe in North Dakota. The D.D.C. later ordered vacatur of the easement during the pendency of the EIS and further ordered a shut down of the pipeline by August 5, 2020. On August 5, 2020, the U.S. Court of Appeals for the District of Columbia (the “Court of Appeals”) stayed the D.D.C.’s injunction that required the pipeline be shutdown and emptied of oil by August 5, 2020. On January 26, 2021, the Court of Appeals upheld the D.D.C.’s order vacating the easement while the Army Corps prepares the EIS. The Court of Appeals reversed the D.D.C.’s order to the extent it directed that the pipeline be shutdown and emptied of oil. In May 2021, the D.D.C. denied a renewed request for an injunction to shut down the pipeline while the EIS is being prepared. In June 2021, the D.D.C. issued an order dismissing without prejudice the tribes’

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claims against the Dakota Access Pipeline. The judge noted that the plaintiffs may move to reopen the case in the event of a violation of the court’s prior orders. Dakota Access has petitioned the U.S. Supreme Court for review of the Court of Appeal’s decision upholding the D.D.C.’s order vacating the easement. The pipeline remains operational.

MPLX has entered into a Contingent Equity Contribution Agreement whereby MPLX LP, along with the other joint venture owners in the Bakken Pipeline system, has agreed to make equity contributions to the joint venture upon certain events occurring to allow the entities that own and operate the Bakken Pipeline system to satisfy their senior note payment obligations. The senior notes were issued to repay amounts owed by the pipeline companies to fund the cost of construction of the Bakken Pipeline system. If the pipeline were temporarily shut down, MPLX would have to contribute its 9.19 percent pro rata share of funds required to pay interest accruing on the notes and any portion of the principal that matures while the pipeline is shutdown. MPLX also expects to contribute its 9.19 percent pro rata share of any costs to remediate any deficiencies to reinstate the permit and/or return the pipeline into operation. If the vacatur of the easement permit results in a permanent shutdown of the pipeline, MPLX would have to contribute its 9.19 percent pro rata share of the cost to redeem the bonds (including the 1% redemption premium required pursuant to the indenture governing the notes) and any accrued and unpaid interest. As of September 30, 2021, our maximum potential undiscounted payments under the Contingent Equity Contribution Agreement were approximately $230 million.

Crowley Ocean Partners LLC and Crowley Blue Water Partners LLC

In connection with our 50 percent indirect interest in Crowley Ocean Partners LLC, we have agreed to conditionally guarantee our portion of the obligations of the joint venture and its subsidiaries under a senior secured term loan agreement. The term loan agreement provides for loans of up to $325 million to finance the acquisition of four product tankers. MPC’s liability under the guarantee for each vessel is conditioned upon the occurrence of certain events, including if we cease to maintain an investment grade credit rating or the charter for the relevant product tanker ceases to be in effect and is not replaced by a charter with an investment grade company on certain defined commercial terms. As of September 30, 2021, our maximum potential undiscounted payments under this agreement for debt principal totaled $108 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, 2021, our maximum potential undiscounted payments under this arrangement was $108 million.

Other guarantees

We have entered into other guarantees with maximum potential undiscounted payments totaling $98 million as of September 30, 2021, 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.

Contractual Commitments and Contingencies

At September 30, 2021, our contractual commitments to acquire property, plant and equipment and advance funds to equity method investees totaled $615 million.

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

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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, 2020.

DISCLOSURES REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q, particularly Management’s Discussion and Analysis of Financial Condition and Results of Operations and Quantitative and Qualitative Disclosures about Market Risk, includes forward-looking statements that are subject to risks, contingencies or uncertainties. You can identify 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.

Forward-looking statements include, among other things, statements regarding:

•future financial and operating results;

•environmental, social and governance (“ESG”) goals and targets, including those related to greenhouse gas emissions, diversity and inclusion and ESG reporting;

•our plans to achieve our ESG goals and targets and to monitor and report progress thereon;

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

•expected savings from the restructuring or reorganization of business components;

•the success or timing of completion of ongoing or anticipated projects or transactions;

•business strategies, growth opportunities and expected investments;

•consumer demand for refined products, natural gas and NGLs;

•the timing and amount of any future common stock repurchases or dividends; and

•the anticipated effects of actions of third parties such as competitors, activist investors, 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. 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:

•general economic, political or regulatory developments, including inflation, changes in governmental policies relating to refined petroleum products, crude oil, natural gas or NGLs, or taxation;

•the magnitude, duration and extent of future resurgences of the COVID-19 pandemic and its effects, including travel restrictions, business and school closures, increased remote work, stay-at-home orders and other actions taken by individuals, governments and the private sector to stem the spread of the virus;

•our ability to realize the expected benefits of the Speedway sale within the expected timeframe or at all;

•further impairments;

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

•disruptions in credit markets or changes to credit ratings;

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

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

•continued or further volatility in and degradation of general economic, market, industry or business conditions as a result of the COVID-19 pandemic, other infectious disease outbreaks, natural hazards, extreme weather events or otherwise;

•compliance with federal and state environmental, economic, health and safety, energy and other policies and regulations and enforcement actions initiated thereunder;

•adverse market conditions or other 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 customers;

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•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;

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

•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, 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;

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

•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;

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

•personnel changes.

For additional risk factors affecting our business, see the risk factors described in our Annual Report on Form 10-K for the year ended December 31, 2020. We undertake no obligation to update any forward-looking statements except to the extent required by applicable law.

EXECUTIVE SUMMARY

Business Update

Through the first nine months of 2021, while demand remains below historical levels, we continue to see recovery in the environment in which our business operates, albeit in some markets and regions more or less than others. The increased availability of vaccinations and the reductions in travel and business restrictions appear to be driving increased economic activity, including the opening of many businesses and schools as well as more in-person interaction broadly. While we have seen improving results through the first nine months of 2021, we are unable to predict the potential effects that further resurgences of COVID-19 may have on our financial position and results.

The outbreak of COVID-19 and its development into a pandemic in March 2020 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 restricted travel, many business operations, public gatherings and the overall level of individual movement and in-person interaction across the globe resulted in dramatic reductions in airline flights and motor vehicle use in 2020 as compared to prior to the pandemic.

In response to this business environment, we continue to focus on three near-term priorities for our businesses:

Strengthen Competitive Position of Assets

We are committed to positioning our assets so that we are a leader in operational, financial, and sustainability performance and are evaluating the strength and fit of assets in our portfolio. Our goal is that each individual asset generates free-cash-flow back to the business and contributes to shareholder returns. With our investments we are focused on high returning projects that we believe will enhance the competitiveness of our portfolio, including our investments in sustainable fuels and technologies that lower our carbon intensity as the global energy mix evolves.

Improve Commercial Performance

We are focused on leveraging advantaged raw material selection, new approaches in the commercial space to be more dynamic amidst changing market conditions and achieving technology improvements to advance our commercial performance.

Lower Cost Structure

We are committed to achieving operational excellence by reducing costs, improving efficiency and driving operational improvements. In response to the pandemic, in March of 2020, we committed to immediately reducing our capital spending and operating expenses. In 2021, we are continuing this focus with planned reductions of over $200 million for our capital

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expenditures and investments as compared to 2020 (excluding capitalized interest, potential acquisitions and MPLX’s capital investment plan).

In connection with our commitment to lower cost and strengthen the competitive position of our assets, in the third quarter of 2020 we announced strategic actions to lay a foundation for long-term success, including plans to optimize our assets and structurally lower costs in 2021 and beyond. These actions included indefinitely idling the Gallup refinery, initiating actions to strategically reposition the Martinez refinery to a renewable diesel facility and the approval of an involuntary workforce reduction plan. Our results in the first nine months of 2021 reflect the favorable effects from these cost reduction actions.

Many uncertainties remain with respect to COVID-19 and we are unable to predict the ultimate economic impacts from COVID-19 and how quickly the U.S. and economies around the world can recover once the pandemic ultimately subsides. However, the adverse impact of the economic effects on MPC have been and may continue to be significant.

Strategic Updates

On August 19, 2021, we announced an agreement to form a joint venture with Archer-Daniels-Midland Company (“ADM”) for the production of soybean oil to supply rapidly growing demand for renewable diesel fuel. Under the terms of the agreement, the joint venture will own and operate ADM’s previously announced soybean processing complex in Spiritwood, North Dakota, with ADM owning 75 percent of the joint venture and MPC owning 25 percent. When complete in 2023, the Spiritwood facility will source and process local soybeans and supply the resulting soybean oil exclusively to MPC. The Spiritwood complex is expected to produce approximately 600 million pounds of refined soybean oil annually, enough feedstock for approximately 75 million gallons of renewable diesel per year.

On May 14, 2021, we completed the sale of Speedway, our company-owned and operated retail transportation fuel and convenience store business, to 7-Eleven for cash proceeds of $21.38 billion. This transaction resulted in a pretax gain of $11.68 billion ($8.02 billion after income taxes) after deducting the book value of the net assets and certain other adjustments. MPC remains committed to executing its plan to use the proceeds from the sale to strengthen the balance sheet and return capital to shareholders.

•During the third quarter of 2021, MPC repurchased approximately 16 million shares of its common stock and paid $928 million of cash, with an additional $50 million of cash paid in early October in connection with the settlement of certain late September repurchases. As of September 30, 2021, MPC has $8.04 billion remaining under its share repurchase authorizations.

•During the second quarter of 2021, MPC completed a modified Dutch auction tender offer, purchasing 15,573,365 shares of its common stock at a purchase price of $63.00 per share, for an aggregate purchase price of approximately $981 million, excluding fees and expenses related to the tender offer.

During the first nine months of 2021, we utilized a portion of the Speedway sale proceeds to structurally reduce debt through the following actions:

•MPC intends to redeem of all of the $1.25 billion outstanding aggregate principal amount of MPC's 4.5% senior notes due May 1, 2023 and the $850 million outstanding aggregate principal amount of MPC’s 4.75% senior notes due December 15, 2023, including the portion of such notes for which Andeavor LLC, a wholly-owned subsidiary of MPC, is the obligor. The notes are expected to be redeemed on December 2, 2021, at a price equal to par, plus a make-whole premium calculated in accordance with the terms of the senior notes and accrued and unpaid interest to, but not including, the redemption date. MPC expects to fund the redemption amount with cash on hand.

•In June of 2021,we redeemed all of the $300 million outstanding aggregate principal amount of 5.125% senior notes due April 2024.

•In May of 2021, we repaid all outstanding commercial paper borrowings, which along with cash had been used to finance the fourth quarter 2020 repayments of two senior notes with total principal of $1.13 billion.

•On March 1, 2021, we repaid the $1.0 billion outstanding aggregate principal amount of 5.125% senior notes due March 2021.

On February 24, 2021, MPC’s board of directors approved our plan to strategically reposition the Martinez refinery to a renewable diesel facility. Converting the Martinez facility from refining petroleum to manufacturing renewable fuels signals our strong commitment to producing a substantial level of lower carbon-intensity fuels in California. As envisioned, the Martinez facility would start producing approximately 260 million gallons per year of renewable diesel by the second half of 2022, with pretreatment capabilities coming online in 2023. The facility is expected to be capable of producing approximately 730 million gallons per year by the end of 2023.

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The Dickinson, North Dakota, renewable fuels facility began operations at the end of 2020 and reached full design operating capacity in the second quarter of 2021. The facility has the capacity to produce 184 million gallons per year of renewable diesel from corn oil, soybean oil, fats, and greases. The produced renewable diesel generates federal RINs and Low Carbon Fuel Standard (“LCFS”) credits when sold in California or similar markets. These instruments are used to help meet our Renewable Fuel Standard and LCFS compliance obligations as a petroleum fuel producer.

Results

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


	Three Months Ended September 30,				Nine Months Ended September 30,
(In millions)	2021		2020		2021		2020
Income (loss) from continuing operations by segment
Refining & Marketing	$	509	$	(1,569)	$	135	$	(3,610)
Midstream	1,042		960		2,991		2,734
Corporate	(186)		(197)		(523)		(625)
Items not allocated to segments:
LCM inventory valuation adjustment	—		530		—		(1,185)
Impairment and idling expenses(a)	(25)		(433)		(81)		(9,595)
Restructuring expense	—		(348)		—		(348)
Transaction-related costs(b)	—		—		—		(8)
Income (loss) from continuing operations	1,340		(1,057)		2,522		(12,637)
Net interest and other financial costs	328		359		1,053		1,032
Income (loss) from continuing operations before income taxes	1,012		(1,416)		1,469		(13,669)
Provision (benefit) for income taxes on continuing operations	(18)		(436)		21		(2,237)
Income (loss) from continuing operations, net of tax	$	1,030	$	(980)	$	1,448	$	(11,432)

(a) 2021 includes impairments of equity method investments and long-lived assets and charges incurred to idle certain assets. 2020 includes impairment of goodwill, equity method investments and long lived assets.

(b) 2020 includes costs incurred in connection with the Midstream strategic review.

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


	Three Months Ended September 30,				Nine Months Ended September 30,
(In millions)	2021		2020		2021		2020
Income from discontinued operations
Speedway	$	—	$	456	$	613	$	1,282
LCM inventory valuation adjustment	—		—		—		(25)
Gain on sale of assets	—		—		11,682		—
Transaction-related costs(a)	—		(18)		(46)		(75)
Income from discontinued operations	—		438		12,249		1,182
Net interest and other financial costs	—		5		6		15
Income from discontinued operations before income taxes	—		433		12,243		1,167
Provision for income taxes on discontinued operations	—		62		3,795		286
Income from discontinued operations, net of tax	$	—	$	371	$	8,448	$	881

(a) Costs related to the Speedway separation.

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


	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
Net income (loss) per diluted share
Continuing operations	$	1.09	$	(1.93)	$	0.79	$	(16.93)
Discontinued operations	—		0.57		13.02		1.35
Net income (loss) attributable to MPC	$	1.09	$	(1.36)	$	13.81	$	(15.58)

Net income (loss) attributable to MPC was $694 million, or $1.09 per diluted share, in the third quarter of 2021 compared to $(886) million, or $(1.36) per diluted share, for the third quarter of 2020 and $8.96 billion, or $13.81 per diluted share, in the first nine months of 2021 compared to $(10.11) billion, or $(15.58) per diluted share, in the first nine months of 2020.

For the third quarter of 2021, the change was largely due to increases in average refined product sales prices and volumes and the absence of impairment and restructuring expenses recognized in the third quarter of 2020, partially offset by the absence of both an LCM benefit recognized and income from discontinued operations, due to the sale of the Speedway business on May 14, 2021, in the third quarter of 2020.

For the first nine months of 2021, the change is primarily due to the gain on the sale of Speedway, the absence of impairment expenses and an LCM inventory charge in the first nine months of 2020 and increases in average refined product sales prices and volumes, partially offset by a partial period of income from discontinued operations due to the sale of the Speedway business on May 14, 2021.

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

Refer to the Results of Operations section for a discussion of consolidated financial results and segment results for the third quarter of 2021 as compared to the third quarter of 2020 and the first nine months of 2021 compared to the first nine months of 2020.

MPLX

We owned approximately 647 million MPLX common units at September 30, 2021 with a market value of $18.43 billion based on the September 30, 2021 closing price of $28.47 per common unit.

On November 2, 2021, MPLX declared a cash distribution for the third quarter of 2021, totaling $1.31 billion, or $1.28 per common unit, consisting of a base quarterly distribution amount of $0.7050 per common unit and a special distribution amount of $0.5750 per common unit. This distribution will be paid on November 19, 2021 to common unitholders of record on November 12, 2021. MPC’s portion of this distribution is approximately $829 million.

We received limited partner distributions of $1.34 billion from MPLX in the nine months ended September 30, 2021 and $1.35 billion in the nine months ended September 30, 2020.

During the nine months ended September 30, 2021, MPLX repurchased 17,563,855 MPLX common units at an average cost per unit of $26.79 and paid $465 million of cash, with an additional $5 million of cash paid in early October in connection with the settlement of certain late September repurchases. As of September 30, 2021, $497 million remained available under the authorization for future unit repurchases.

See Note 5 to the unaudited consolidated financial statements for additional information on MPLX.

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Liquidity

Our liquidity, excluding MPLX, totaled $18.29 billion at September 30, 2021 consisting of:


	September 30, 2021
(In millions)	Total Capacity		Outstanding Borrowings		Available Capacity
Bank revolving credit facility(a)	$	5,000	$	1	$	4,999
Trade receivables facility	100		—		100
Total	$	5,100	$	1	$	5,099
Cash and cash equivalents and short-term investments(b)					13,187
Total liquidity					$	18,286

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

(b)Excludes cash and cash equivalents of MPLX of $39 million.

On September 30, 2021, we entered into a new trade receivables securitization agreement with a lender, which provides for a $100 million trade receivables securitization facility. This facility replaces a similar facility that expired on July 16, 2021.

As of September 30, 2021, $1.61 billion is recorded as an income tax receivable in other current assets, $388 million was utilized to offset our third quarter cash tax payment obligation to the IRS, and $302 million has been recorded as an offset to our accrued taxes due in the fourth quarter of 2021. Additionally, on October 8, 2021, MPC received $1.55 billion of the refund from the IRS and expects to receive the remaining income tax receivable of $59 million in the first half of 2022.

MPLX’s liquidity totaled $3.67 billion at September 30, 2021. As of September 30, 2021, MPLX had cash and cash equivalents of $39 million, $3.5 billion available under its $3.5 billion revolving credit agreement and $130 million available through its intercompany loan agreement with MPC.

OVERVIEW OF SEGMENTS

Refining & Marketing

Refining & Marketing segment income from operations depends largely on our refinery throughputs, Refining & Marketing margin, refining operating costs, refining planned turnarounds, distribution costs, and depreciation expenses.

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 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 MEH crude producing two barrels of USGC CBOB gasoline and one barrel of USGC ULSD. In the first quarter of 2021, we transitioned to MEH crude from LLS crude;

•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 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 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.

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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)	$	838
Sour differential sensitivity(b) (per $1.00/barrel change)	396
Sweet differential sensitivity(c) (per $1.00/barrel change)	381
Natural gas price sensitivity(d) (per $1.00/MMBtu)	275

(a)Crack spread based on 40 percent MEH, 40 percent WTI and 20 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. We expect approximately 51 percent of the crude processed at our refineries in 2021 will be sour crude.

(c)Sweet crude oil basket consists of the following crudes: Bakken, Brent, MEH, WTI-Cushing and WTI-Midland. We expect approximately 49 percent of the crude processed at our refineries in 2021 will be sweet crude.

(d)This is consumption-based exposure for our Refining & Marketing segment and does not include the 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 refined products;

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

•our refinery yields;

•the cost of products purchased for resale;

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

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

•the potential impact of LIFO liquidation charges due to draw-downs from historic inventory levels.

Refining & Marketing segment income from operations is also affected by changes in refinery operating costs and refining planned turnaround costs in addition to committed distribution costs. Changes in operating costs are primarily driven by the cost of energy used by our refineries, including purchased natural gas, and the level of maintenance costs. Refining planned turnarounds, requiring temporary shutdown of certain refinery operating units, are periodically performed at each refinery. Distribution costs primarily include long-term agreements with MPLX, which as discussed below include minimum commitments to MPLX, and will negatively impact income from operations in periods when throughput or sales are lower or refineries are idled.

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

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

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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 or conditioning at our own or third‑party processing plants, purchasing and selling or gathering and transporting volumes of natural gas at index‑related prices and the cost of third‑party transportation and fractionation services. To the extent that commodity prices influence the level of natural gas drilling by our producer customers, such prices also affect profitability.

RESULTS OF OPERATIONS

The following discussion includes comments and analysis relating to our results of operations. 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,
(In millions)	2021		2020		Variance		2021		2020		Variance
Revenues and other income:
Sales and other operating revenues(a)	$	32,321	$	17,408	$	14,913	$	84,647	$	51,807	$	32,840
Income (loss) from equity method investments	122		117		5		306		(1,037)		1,343
Net gain on disposal of assets	—		1		(1)		3		6		(3)
Other income	170		22		148		366		69		297
Total revenues and other income	32,613		17,548		15,065		85,322		50,845		34,477
Costs and expenses:
Cost of revenues (excludes items below)	29,563		16,673		12,890		77,824		48,517		29,307
LCM inventory valuation adjustment	—		(530)		530		—		1,185		(1,185)
Impairment expense	—		433		(433)		—		8,280		(8,280)
Depreciation and amortization	836		830		6		2,551		2,526		25
Selling, general and administrative expenses	681		673		8		1,881		2,080		(199)
Restructuring expenses	—		348		(348)		—		348		(348)
Other taxes	193		178		15		544		546		(2)
Total costs and expenses	31,273		18,605		12,668		82,800		63,482		19,318
Income (loss) from continuing operations	1,340		(1,057)		2,397		2,522		(12,637)		15,159
Net interest and other financial costs	328		359		(31)		1,053		1,032		21
Income (loss) from continuing operations before income taxes	1,012		(1,416)		2,428		1,469		(13,669)		15,138
Provision (benefit) for income taxes on continuing operations	(18)		(436)		418		21		(2,237)		2,258
Income (loss) from continuing operations, net of tax	1,030		(980)		2,010		1,448		(11,432)		12,880
Income from discontinued operations, net of tax	—		371		(371)		8,448		881		7,567
Income (loss) from equity method investments	1,030		(609)		1,639		9,896		(10,551)		20,447
Less net income (loss) attributable to:
Redeemable noncontrolling interest	38		20		18		79		61		18
Noncontrolling interests	298		257		41		853		(501)		1,354
Net income (loss) attributable to MPC	$	694	$	(886)	$	1,580	$	8,964	$	(10,111)	$	19,075

(a)In accordance with discontinued operations accounting, Speedway sales to retail customers and net results are reflected in Income from discontinued operations, net of tax and Refining & Marketing intercompany sales to Speedway are now presented as third party sales through the close of the sale on May 14, 2021.

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Third Quarter 2021 Compared to Third Quarter 2020

Net income attributable to MPC increased $1.58 billion in the third quarter of 2021 compared to the third quarter of 2020 largely due to increases in refined product sales prices and volumes in the third quarter of 2021 and the absence of impairment and restructuring expenses, partially offset by the absence of an LCM inventory benefit, in the third quarter of 2020.

Revenues and other income increased $15.07 billion primarily due to:

•increased sales and other operating revenues of $14.91 billion primarily due to increased Refining & Marketing segment average refined product sales prices of $0.90 per gallon and increased refined product sales volumes of 338 mbpd; and

•increased other income of $148 million primarily due to higher income on RIN sales.

Costs and expenses increased $12.67 billion primarily due to:

•increased cost of revenues of $12.89 billion mainly due to higher crude oil and refined product raw material costs;

•the absence of an LCM benefit of $530 million in the third quarter of 2020;

•decreased impairment expenses of $433 million primarily related to the repositioning of the Martinez refinery in the third quarter of 2020; and

•decreased restructuring expenses of $348 million related to the idling of the Martinez and Gallup refineries and costs related to our workforce reduction in the third quarter of 2020.

Net interest and other financial costs decreased $31 million largely due to decreased interest expense due to lower MPC and MPLX borrowings, partially offset by $15 million of pension settlement losses.

We recorded a combined federal, state and foreign income tax benefit of $18 million for the three months ended September 30, 2021, which was lower than the tax computed at the U.S. statutory rate primarily due to certain permanent tax benefits related to net income attributable to noncontrolling interests, state taxes, and an increase in benefit related to NOL carryback provided under the CARES Act. We recorded a combined federal, state and foreign income tax benefit of $436 million for the three months ended September 30, 2020, which was higher than the tax computed at the U.S. statutory rate primarily due to certain permanent tax benefits related to net income attributable to noncontrolling interests, state taxes and a change in estimate related to the expected NOL carryback provided under the CARES Act offset by non-tax deductible goodwill impairment.

Noncontrolling interests increased $41 million primarily due to an increase in MPLX’s net income.

Nine Months Ended September 30, 2021 Compared to Nine Months Ended September 30, 2020

Net income attributable to MPC increased $19.08 billion in the first nine months of 2021 compared to the first nine months of 2020 primarily due to the gain on the sale of Speedway, the absence of impairment expenses and an LCM inventory charge in the first nine months of 2020 and increases in average refined product sales prices and volumes, partially offset by a partial period of income from discontinued operations due to the sale of the Speedway business on May 14, 2021.

Revenues and other income increased $34.48 billion primarily due to:

•increased sales and other operating revenues of $32.84 billion primarily due to increased average refined product sales prices of $0.73 per gallon and increased refined product sales volumes of 144 mbpd;

•increased income from equity method investments of $1.34 billion largely due to impairments of equity method investments of $1.32 billion recorded in the first nine months of 2020 primarily driven by the effects of COVID-19 and the decline in commodity prices; and

•increased other income of $297 million primarily due to higher income on RIN sales.

Costs and expenses increased $19.32 billion primarily due to:

•increased cost of revenues of $29.31 billion primarily due to higher crude oil and refined product raw material costs;

•the absence of an LCM charge of $1.19 billion primarily driven by the effects of COVID-19 and the decline in commodity prices in the prior year;

•decreased impairment expense of $8.28 billion due to impairments recorded for goodwill and long-lived assets in the first nine months of 2020 primarily driven by the effects of COVID-19 and the decline in commodity prices in the prior year;

•decreased selling, general and administrative expenses of $199 million largely due to cost reductions realized from our 2020 workforce reduction and other cost control efforts; and

•decreased restructuring expenses of $348 million related to the idling of the Martinez and Gallup refineries and costs related to our workforce reduction in the third quarter of 2020.

Net interest and other financial costs increased $21 million largely due to pension settlement losses of $64 million, partially offset by decreased interest expense due to lower MPLX and MPC borrowings.

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We recorded a combined federal, state and foreign income tax expense of $21 million for the nine months ended September 30, 2021, which was lower than the tax computed at the U.S. statutory rate primarily due to certain permanent tax benefits related to net income attributable to noncontrolling interests and a change in benefit related to the NOL carryback provided under the CARES Act offset by state taxes. We recorded a combined federal, state and foreign income tax benefit of $2.24 billion for the nine months ended September 30, 2020, which was lower than the tax computed at the U.S. statutory rate due to a significant amount of our pre-tax loss consisting of non-tax deductible goodwill impairment charges, partially offset by the tax rate differential resulting from the expected NOL carryback provided under the CARES Act. Additionally, our non-controlling interest in MPLX generally provides an effective tax rate benefit since the tax associated with these ownership interests is paid by those interests, but this benefit was lower for the nine months ended September 30, 2020 due to impairment charges recorded by MPLX.

Net income attributable to noncontrolling interests increased $1.35 billion primarily due to an increase in MPLX’s net income largely due to impairment expense recognized during the first nine months of 2020.

Segment Results

Refining & Marketing

The following includes key financial and operating data for the third quarter of 2021 compared to the third quarter of 2020 and the nine months ended September 30, 2021 compared to the nine months ended September 30, 2020.

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(a)Includes intersegment sales to Midstream and sales destined for export.


	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
Refining & Marketing Operating Statistics
Net refinery throughput (mbpd)	2,836		2,536		2,753		2,601
Refining & Marketing margin, excluding LIFO liquidation charge(a)(b)(c)	$	14.51	$	8.28	$	12.46	$	9.46
LIFO liquidation charge	—		(1.10)		—		(0.36)
Refining & Marketing margin per barrel(a)(b)	14.51		7.18		12.46		9.10
Less:
Refining operating costs per barrel, excluding storm impacts(c)	4.97		5.41		4.89		5.85
Storm impacts on refining operating cost(d)	0.07		—		0.07		—
Distribution costs per barrel	5.02		5.61		5.08		5.35
Refining planned turnaround costs per barrel	0.78		1.01		0.50		1.02
Depreciation and amortization per barrel	1.77		1.96		1.87		1.95
Plus:
Other per barrel(e)	0.05		0.08		0.13		0.01
Refining & Marketing segment income (loss) per barrel	$	1.95	$	(6.73)	$	0.18	$	(5.06)
Fees paid to MPLX included in distribution costs above	$	3.23	$	3.81	$	3.40	$	3.63

(a)Sales revenue less cost of refinery inputs and purchased products, divided by net refinery 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 costs. Excludes planned turnaround and depreciation and amortization expense.

(d)Storms in the first and third quarters of 2021 resulted in higher costs, including maintenance and repairs.

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

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The following table presents certain benchmark prices in our marketing areas and market indicators that we believe are helpful in understanding the results of our Refining & Marketing segment. 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,
Benchmark Spot Prices (dollars per gallon)	2021		2020		2021		2020
Chicago CBOB unleaded regular gasoline	$	2.19	$	1.15	$	1.97	$	1.05
Chicago ULSD	2.14		1.17		1.98		1.16
USGC CBOB unleaded regular gasoline	2.15		1.15		1.94		1.07
USGC ULSD	2.08		1.16		1.91		1.18
LA CARBOB	2.29		1.33		2.12		1.27
LA CARB diesel	2.17		1.24		1.98		1.28

Market Indicators (dollars per barrel)
WTI	$	70.52	$	40.92	$	65.04	$	38.21
MEH	71.17		—		65.95		—

LLS	—		42.49		—		40.15
ANS	72.69		42.75		67.52		41.41
Crack Spreads:
Mid-Continent WTI 3-2-1	$	13.53	$	5.55	$	11.27	5.88
USGC MEH 3-2-1	10.70		—		8.47		—
USGC LLS 3-2-1	—		3.28		—		4.15
West Coast ANS 3-2-1	14.60		9.21		12.92		9.76
Blended 3-2-1(a)	12.61		5.57		10.48		6.15
Crude Oil Differentials:
Sweet	$	(0.49)	$	(0.59)	$	(0.59)	$	(1.00)
Sour	(4.62)		(2.26)		(3.62)		(3.64)

(a) Blended 3-2-1 Mid-Continent/USGC/West Coast crack spread is 40/40/20 percent in 2021. Blended 3-2-1 Mid-Continent/USGC/West Coast crack spread is 38/38/24 percent in 2020. These blends are based on our refining capacity by region in each period. Beginning in the first quarter of 2021, the prompt price for USGC was transitioned from LLS to MEH.

Third Quarter 2021 Compared to Third Quarter 2020

Refining & Marketing segment revenues increased $14.63 billion primarily due to increased average refined product sales prices of $0.90 per gallon and increased refined product sales volumes of 338 mbpd.

Net refinery throughputs increased 300 mbpd during the third quarter of 2021, primarily due to continuing industry recovery from the impact of COVID-19 in 2020.

Refining & Marketing segment income from operations increased $2.08 billion primarily due to higher blended crack spreads and reduced refining planned turnaround costs, partially offset by increased refining operating costs, excluding depreciation and amortization.

Refining & Marketing margin was $14.51 per barrel for the third quarter of 2021 compared to $8.28 per barrel, excluding LIFO liquidation charge, for the third quarter of 2020. 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 impact of approximately $2 billion on Refining & Marketing margin for the third quarter of 2021 compared to the third quarter of 2020, primarily due to higher crack spreads. Our reported Refining & Marketing margin differs from market indicators due to the mix of crudes purchased and their costs, the effect of market structure on our crude oil acquisition prices, the effect of RIN prices on the crack spread, and other items like refinery yields, other feedstock variances, fuel margin from sales to direct dealers and, for the third quarter of 2020, a LIFO liquidation charge of $256 million. These factors had an estimated net negative effect of approximately $50 million on Refining & Marketing segment income in the third quarter of 2021 compared to the third quarter of 2020.

For the three months ended September 30, 2021, refining operating costs, excluding depreciation and amortization and storm impacts, increased $33 million compared to the three months ended September 30, 2020 primarily due to an increase in energy costs largely as a result of higher natural gas prices. On a per barrel basis, refining operating costs decreased $0.44 due to higher throughputs during the quarter.

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Distribution costs, excluding depreciation and amortization, decreased $1 million and include fees paid to MPLX of $844 million and $889 million for the third quarter of 2021 and 2020, respectively. On a per barrel basis, distribution costs, excluding depreciation and amortization, decreased $0.59 per barrel due to higher throughput.

Refining planned turnaround costs decreased $29 million, or $0.23 per barrel, due to the timing of turnaround activity.

Depreciation and amortization decreased $0.19 per barrel primarily due to higher throughput.

Nine Months Ended September 30, 2021 Compared to Nine Months Ended September 30, 2020

Refining & Marketing segment revenues increased $32.20 billion primarily due to increased average refined product sales prices of $0.73 per gallon and higher refined product sales volumes, which increased 144 mbpd.

Net refinery throughputs increased 152 mbpd in the first nine months of 2021, primarily due to continuing industry recovery from the impact of COVID-19 in 2020.

Refining & Marketing segment income from operations increased $3.75 billion primarily driven by higher blended crack spreads and reduced refining operating and refining planned turnaround costs.

Refining & Marketing margin was $12.46 per barrel for the first nine months of 2021 compared to $9.46 per barrel, excluding LIFO liquidation charge, for the first nine months of 2020. Refining & Marketing margin is affected by the market indicators shown earlier, which use spot market values and an estimated mix of crude purchases and product sales. Based on the market indicators and our crude oil throughput, we estimate a net positive impact of approximately $3 billion on Refining & Marketing margin for the first nine months of 2021 compared to the first nine months of 2020, primarily due to higher crack spreads. Our reported Refining & Marketing margin differs from market indicators due to the mix of crudes purchased and their costs, market structure on our crude oil acquisition prices, RIN prices on the crack spread, and other items like refinery yields, other feedstock variances, direct dealer fuel margin and, for the first nine months of 2020, a LIFO liquidation charge of $256 million. These factors had an estimated net positive effect of approximately $10 million on Refining & Marketing segment income in the first nine months of 2021 compared to the first nine months of 2020.

For the nine months ended September 30, 2021, refining operating costs, excluding depreciation and amortization and storm impacts, decreased $492 million, or $0.96 per barrel, compared to the nine months ended September 30, 2020 as we took actions to reduce costs in response to the economic effects of COVID-19, including idling portions of our refining capacity, partially offset by an increase in energy costs largely as a result of higher natural gas prices.

Distribution costs, excluding depreciation and amortization, were $3.82 billion for the first nine months of 2021 and 2020 and include fees paid to MPLX of $2.56 billion and $2.59 billion for the first nine months of 2021 and 2020, respectively. On a per barrel basis, distribution costs, excluding depreciation and amortization, decreased $0.27 per barrel due to higher throughput.

Refining planned turnaround costs decreased $347 million, or $0.52 per barrel, due to the timing of turnaround activity.

Depreciation and amortization decreased $0.08 per barrel as increased costs were offset by higher throughput.

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Supplemental Refining & Marketing Statistics


	Three Months Ended September 30,		Nine Months Ended September 30,
	2021	2020	2021	2020
Refining & Marketing Operating Statistics
Crude oil capacity utilization percent(a)	93	84	90	82
Refinery throughputs (mbpd):
Crude oil refined	2,684	2,390	2,594	2,446
Other charge and blendstocks	152	146	159	155
Net refinery throughput	2,836	2,536	2,753	2,601
Sour crude oil throughput percent	45	49	47	50
Sweet crude oil throughput percent	55	51	53	50
Refined product yields (mbpd):
Gasoline	1,451	1,311	1,404	1,305
Distillates	968	872	944	908
Propane	53	50	51	51
Feedstocks and petrochemicals	272	230	265	266
Heavy fuel oil	32	21	32	28
Asphalt	93	92	94	83
Total	2,869	2,576	2,790	2,641
Refined product export sales volumes (mbpd)(b)	294	389	256	331

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

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

Midstream

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

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


	Three Months Ended September 30,				Nine Months Ended September 30,
Benchmark Prices	2021		2020		2021		2020
Natural Gas NYMEX HH ($ per MMBtu)	$	4.31	$	2.13	$	3.34	$	1.92
C2 + NGL Pricing ($ per gallon)(a)	$	0.96	$	0.45	$	0.81	$	0.40

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

Third Quarter 2021 Compared to Third Quarter 2020

Midstream segment revenue and segment income from operations increased $307 million and $82 million, respectively. Results for the quarter benefited from higher revenue, primarily due to higher natural gas prices and higher pipeline throughput, in addition to lower operating expenses.

Nine Months Ended September 30, 2021 Compared to Nine Months Ended September 30, 2020

Midstream segment revenue and segment income from operations increased $731 million and $257 million, respectively. Results benefited from higher revenue, primarily due to higher natural gas prices and higher pipeline and terminal throughputs, in addition to lower operating expenses in the first nine months of 2021.

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Corporate


Key Financial Information (in millions)	Three Months Ended September 30,		Nine Months Ended September 30,
	2021	2020	2021	2020
Corporate(a)	(186)	(197)	(523)	(625)

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

Third Quarter 2021 Compared to Third Quarter 2020

Corporate costs decreased $11 million largely due to cost reductions realized from our 2020 workforce reduction and other cost control efforts.

Nine Months Ended September 30, 2021 Compared to Nine Months Ended September 30, 2020

Corporate costs decreased $102 million largely due to cost reductions realized from our 2020 workforce reduction and other cost control efforts.

Items not Allocated to Segments


Key Financial Information (in millions)	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
Items not allocated to segments:
LCM inventory valuation adjustment	$	—	$	530	$	—	$	(1,185)
Impairment and idling expenses	(25)		(433)		(81)		(9,595)
Restructuring expense	—		(348)		—		(348)
Transaction-related costs(a)	—		—		—		(8)
Total items not allocated to segments:	$	(25)	$	(251)	$	(81)	$	(11,136)

(a)2020 includes costs incurred in connection with the Midstream strategic review. Costs incurred in 2020 in connection with the Speedway separation are included in discontinued operations. See Note 4 to the unaudited consolidated financial statements for additional information on discontinued operations.

Third Quarter 2021 Compared to Third Quarter 2020

Total items not allocated to segments included impairment expense of $433 million and an LCM benefit of $530 million in the third quarter of 2020.

Nine Months Ended September 30, 2021 Compared to Nine Months Ended September 30, 2020

In the first nine months of 2021, total items not allocated to segments included impairment expense of $81 million related to the divestiture, abandonment or closure of certain assets within our Midstream segment. During the first nine months of 2020, we recorded impairment charges of approximately $9.60 billion, which includes $8.28 billion related to goodwill and long-lived assets and $1.32 billion related to equity method investments, and an LCM charge of $1.19 billion primarily driven by the effects of COVID-19 and the decline in commodity prices.

Non-GAAP Financial Measure

Management uses a financial measure to evaluate our operating performance that is calculated and presented on the basis of a methodology other than in accordance with GAAP. We believe this non-GAAP financial measure is useful to investors and analysts to assess our ongoing financial performance because, when reconciled to its most comparable GAAP financial measure, it provides 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. This measure should not be considered a substitute for, or superior to, measures of financial performance prepared in accordance with GAAP, and our calculation thereof may not be comparable to similarly titled measures reported by other companies. The non-GAAP financial measure we use is as follows:

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Refining & Marketing Margin

Refining & Marketing margin is defined as sales revenue less the cost of refinery inputs and purchased products and excludes other items as reflected in the table below.

Reconciliation of Refining & Marketing income from operations to Refining & Marketing gross margin and Refining & Marketing margin


	Three Months Ended September 30,				Nine Months Ended September 30,
(in millions)	2021		2020		2021		2020
Refining & Marketing income (loss) from operations(a)	$	509	$	(1,569)	$	135	$	(3,610)
Plus (Less):
Selling, general and administrative expenses	540		518		1,495		1,576
LCM inventory valuation adjustment	—		530		—		(1,185)
(Income) loss from equity method investments	(8)		(16)		(27)		6
Net gain on disposal of assets	(3)		(1)		(6)		—
Other income	(146)		(1)		(289)		(9)
Refining & Marketing gross margin	892		(539)		1,308		(3,222)
Plus (Less):
Operating expenses (excluding depreciation and amortization)	2,527		2,408		7,107		7,481
LCM inventory valuation adjustment	—		(530)		—		1,185
Depreciation and amortization	462		456		1,406		1,392
Gross margin excluded from and other income included in Refining & Marketing margin(b)	(58)		(101)		(353)		(285)
Other taxes included in Refining & Marketing margin	(38)		(19)		(104)		(62)
Refining & Marketing margin(a)	3,785		1,675		9,364		6,489
LIFO liquidation charge	—		256		—		256
Refining & Marketing margin, excluding LIFO liquidation charge	$	3,785	$	1,931	$	9,364	$	6,745

(a)LCM inventory valuation adjustments are excluded from Refining & Marketing income from operations and Refining & Marketing margin.

(b)Reflects the gross margin, excluding depreciation and amortization, of other related operations included in the Refining & Marketing segment and processing of credit card transactions on behalf of certain of our marketing customers, net of other income.

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LIQUIDITY AND CAPITAL RESOURCES

Cash Flows

Our consolidated cash and cash equivalents balance for continuing operations was approximately $5.87 billion at September 30, 2021 compared to $415 million at December 31, 2020. Cash and cash equivalents for discontinued operations was $140 million at December 31, 2020. Net cash provided by (used in) operating activities, investing activities and financing activities are presented in the following table.


	Nine Months Ended September 30,
(In millions)	2021		2020
Net cash provided by (used in):
Operating activities - continuing operations	$	3,546	$	(141)
Operating activities - discontinued operations	(2,860)		1,232
Total Operating activities	686		1,091
Investing activities - continuing operations	(7,965)		(2,552)
Investing activities - discontinued operations	21,314		(272)
Total investing activities	13,349		(2,824)
Financing activities	(8,716)		922
Total increase (decrease) in cash	$	5,319	$	(811)

Net cash provided by operating activities decreased $405 million in the first nine months of 2021 compared to the first nine months of 2020. The change in net cash provided by continuing operations is primarily due to an increase in operating results and a favorable change in working capital of $183 million when comparing the change in working capital in both periods. Net cash used in discontinued operations, which reflects the results of the Speedway business, decreased $4.09 billion mainly due to the sale of Speedway on May 14, 2021, tax payments related to the gain on sale and working capital changes. Changes in working capital exclude changes in short-term debt.

Changes in working capital, excluding changes in short-term debt, were a net $307 million use of cash in the first nine months of 2021 compared to a net $490 million use of cash in the first nine months of 2020.

For the first nine months of 2021, changes in working capital were a net $307 million use of cash primarily due to the effects of increasing energy commodity prices and volumes at the end of the period on working capital. Accounts payable increased primarily due to increases in crude prices and volumes. Current receivables increased primarily due to higher crude and refined product prices and volumes. Inventories increased primarily due to increases in refined product and crude inventories.

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

Net cash provided by investing activities was $13.35 billion in the first nine months of 2021 compared to net cash used in investing activities of $2.82 billion in the first nine months of 2020. The change in net cash used by continuing operations is primarily due to purchases of short-term investments of $9.46 billion, partially offset by a decrease in additions to property, plant and equipment of $1.35 billion and maturities and sales of short-term investments. The change in net cash provided by discontinued operations is primarily due to proceeds from the sale of Speedway of $21.38 billion.

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


	Nine Months Ended September 30,
(In millions)	2021		2020
Additions to property, plant and equipment per the consolidated statements of cash flows	$	983	$	2,330


Increase (decrease) in capital accruals	31		(426)
Total capital expenditures	1,014		1,904
Investments in equity method investees (excludes acquisitions)	150		436
Total capital expenditures and investments	$	1,164	$	2,340

Financing activities were a net $8.72 billion use of cash in the first nine months of 2021 compared to a net $922 million source of cash in the first nine months of 2020.

•MPC borrowed $7.41 billion and repaid $8.44 billion under its commercial paper program in the first nine months of 2021.

•Long-term debt borrowings and repayments were a net $3.30 billion use of cash in the first nine months of 2021 compared to a net $3.02 billion source of cash in the first nine months of 2020. During the first nine months of 2021, MPC repaid $1.3 billion of senior notes, borrowed and repaid $3.65 billion under its revolving credit facility and borrowed and repaid $4.65 billion under its trade receivables facility. MPLX redeemed $1.75 billion of senior notes and had net payments of $175 million under its revolving credit facility.

During the first nine months of 2020, MPC issued $2.5 billion of senior notes, borrowed and repaid $3.5 billion under its revolving credit facility and borrowed and repaid $1.23 billion under its trade receivables facility. MPLX issued $3.0 billion of senior notes, which were used to repay $1.0 billion of outstanding borrowings under its term loan, to repay $1.0 billion of floating rate senior notes, and to redeem $450 million of senior notes, and had net borrowings of $95 million under its revolving credit facility.

•Cash used in common stock repurchases, including fees and expenses, totaled $1.91 billion in the first nine months of 2021. See the “Capital Requirements” section for further discussion of our stock repurchases.

•Cash used in repurchases of noncontrolling interests was $465 million in the first nine months of 2021 related to the repurchase of MPLX common units. See Note 5 to the unaudited consolidated financial statements for further discussion of MPLX.

Derivative Instruments

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

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 $18.29 billion at September 30, 2021 consisting of:


	September 30, 2021
(In millions)	Total Capacity		Outstanding Borrowings		Available Capacity
Bank revolving credit facility(a)	$	5,000	$	1	$	4,999
Trade receivables facility	100		—		100
Total	$	5,100	$	1	$	5,099
Cash and cash equivalents and short-term investments(b)					13,187
Total liquidity					$	18,286

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

(b)Excludes cash and cash equivalents of MPLX of $39 million.

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On May 14, 2021, we completed the sale of Speedway, our company-owned and operated retail transportation fuel and convenience store business, to 7-Eleven for cash proceeds of $21.38 billion. This transaction resulted in a pretax gain of $11.68 billion ($8.02 billion after income taxes) after deducting the book value of the net assets and certain other adjustments. We utilized a portion of the Speedway sale proceeds to structurally reduce debt and the remaining proceeds are included in our liquidity as cash and cash equivalents and short-term investments.

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.

MPC intends to redeem of all of the $1.25 billion outstanding aggregate principal amount of MPC's 4.5% senior notes due May 1, 2023 and the $850 million outstanding aggregate principal amount of MPC’s 4.75% senior notes due December 15, 2023, including the portion of such notes for which Andeavor LLC, a wholly-owned subsidiary of MPC, is the obligor. The notes are expected to be redeemed on December 2, 2021, at a price equal to par, plus a make-whole premium calculated in accordance with the terms of the senior notes and accrued and unpaid interest to, but not including, the redemption date. MPC expects to fund the redemption amount with cash on hand.

Effective June 18, 2021, we terminated our $1.0 billion unsecured 364-day revolving credit facility due in September 2021 and on June 23, 2021, we reduced the capacity under our trade receivables securitization facility from $750 million to $100 million. On September 30, 2021, we entered into a new trade receivables securitization agreement with a lender, which provides for a $100 million trade receivables securitization facility. This facility replaces our previous trade receivables securitization facility that expired on July 16, 2021.

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. At September 30, 2021, we had no borrowings outstanding under the commercial paper program.

The MPC credit agreement and 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 agreement 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, 2021, we were in compliance with 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 0.13 to 1.00.

Our intention is to maintain an investment-grade credit profile. As of September 30, 2021, the credit ratings on our senior unsecured debt are as follows.


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

The ratings reflect the respective views of the rating agencies. There can be 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 MPC credit agreement does not contain 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 thereunder 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, 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.

See Note 19 to the unaudited consolidated financial statements for further discussion of our debt.

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MPLX

MPLX’s liquidity totaled $3.67 billion at September 30, 2021 consisting of:


	September 30, 2021
(In millions)	Total Capacity		Outstanding Borrowings		Available Capacity
MPLX LP - bank revolving credit facility	$	3,500	$	—	$	3,500
MPC intercompany loan agreement	1,500		1,370		130
Total	$	5,000	$	1,370	$	3,630
Cash and cash equivalents					39
Total liquidity					$	3,669

The MPLX credit agreement contains certain representations and warranties, affirmative and restrictive covenants and events of default that we consider to be usual and customary for an agreement of this type. The financial covenant requires MPLX to maintain a ratio of Consolidated Total Debt as of the end of each fiscal quarter to Consolidated EBITDA (both as defined in the MPLX credit agreement) for the prior four fiscal quarters of no greater than 5.0 to 1.0 (or 5.5 to 1.0 during the six-month period following certain acquisitions). Consolidated EBITDA is subject to adjustments for certain acquisitions completed and capital projects undertaken during the relevant period. Other covenants restrict MPLX and/or certain of its subsidiaries from incurring debt, creating liens on assets and entering into transactions with affiliates. As of September 30, 2021, MPLX was in compliance with the covenants, including the financial covenant with a ratio of Consolidated Total Debt to Consolidated EBITDA of 3.64 to 1.0.

Our intention is to maintain an investment-grade credit profile for MPLX. As of September 30, 2021, the credit ratings on MPLX’s senior unsecured debt are as follows.


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

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 Note 19 to the unaudited consolidated financial statements for further discussion of MPLX’s debt.

Capital Requirements

Capital Investment Plan

MPC's capital investment plan for 2021 totals approximately $1.4 billion for capital projects and investments, excluding capitalized interest, potential acquisitions and MPLX’s capital investment plan. MPC’s capital investment plan includes all of the planned capital spending for Refining & Marketing and Corporate, as well as a portion of the planned capital investments in Midstream and Speedway’s capital spending through the close of the sale on May 14, 2021, which is now reported separately as discontinued operations. The remainder of the planned capital spending for Midstream reflects the capital investment plan for MPLX. The plan, which initially reflected a total of $1.0 billion, is currently estimated to be approximately $650 million. We continuously evaluate our capital investment plan and make changes as conditions warrant.

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Capital expenditures and investments for MPC and MPLX are summarized below.


	Nine Months Ended September 30,
(In millions)	2021		2020
Capital expenditures and investments:(a)
MPC continuing operations, excluding MPLX
Refining & Marketing	$	538	$	995
Midstream - Other	42		193
Corporate and Other(b)	72		61
Total MPC continuing operations, excluding MPLX	$	652	$	1,249

MPC discontinued operations - Speedway	$	177	$	200

Midstream - MPLX	$	464	$	1,006

(a) Capital expenditures exclude changes in capital accruals.

(b) Excludes capitalized interest of $48 million and $85 million for the nine months ended September 30, 2021 and 2020, respectively.

Capital expenditures and investments in affiliates during the nine months ended September 30, 2021, were primarily for Refining & Marketing and Midstream segment projects. Major Refining & Marketing projects include the conversion of the Martinez facility from a petroleum refinery to a renewable fuels manufacturing facility, the South Texas Asset Repositioning project, which is intended to optimize operations and reduce costs at our Galveston Bay refinery, and other projects that we expect will help us reduce future operating costs.

Major Midstream projects primarily include gas gathering and processing projects in the Marcellus and Southwest regions, the expansion of crude gathering systems, and the reversal of the Capline crude pipeline.

Other Capital Requirements

During the nine months ended September 30, 2021, we contributed $801 million to our funded pension plans. During the third quarter of 2021, we made a $575 million voluntary pension contribution. We may choose to make additional contributions to our pension plans.

On October 27, 2021, our board of directors approved a dividend of $0.58 per share on common stock. The dividend is payable December 10, 2021, to shareholders of record as of the close of business on November 17, 2021.

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

In connection with the Speedway sale, our board of directors approved an additional $7.1 billion share repurchase authorization bringing total share repurchase authorizations to $10.0 billion prior to the completion of the June tender offer discussed below.

During the third quarter of 2021, MPC repurchased approximately 16 million shares of its common stock at an average cost per share of $58.78 and paid $928 million of cash, with an additional $50 million of cash paid in early October in connection with the settlement of certain late September repurchases.

Since January 1, 2012, our board of directors has approved $25.05 billion in total share repurchase authorizations and we have repurchased a total of $17.01 billion of our common stock.

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During the nine months ended September 30, 2021, MPLX repurchased 17,563,855 MPLX common units at an average cost per unit of $26.79 and paid $465 million of cash, with an additional $5 million of cash paid in early October in connection with the settlement of certain late September purchases. As of September 30, 2021, $497 million remained available under the authorization for future unit repurchases.

Contractual Cash Obligations

As of September 30, 2021, our contractual cash obligations included long-term debt, capital and operating lease obligations, purchase obligations and other long-term liabilities. During the first nine months of 2021, our long-term debt commitments decreased approximately $5.28 billion primarily due to the repayment of $1.3 billion of MPC senior notes, net repayment of $1.0 billion under the MPC commercial paper program, the redemption of $1.75 billion of MPLX senior notes and net repayment of $175 million under the MPLX revolving credit facility.

During the first nine months of 2021, we terminated a transportation services agreement with a total commitment of approximately $560 million through the year 2028. There were no other material changes to our contractual cash obligations outside the ordinary course of business since December 31, 2020.

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 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. These arrangements are described in Note 24 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.

There have been no significant changes to our environmental matters and compliance costs during the nine months ended September 30, 2021.

CRITICAL ACCOUNTING ESTIMATES

As of September 30, 2021, 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, 2020.

ACCOUNTING STANDARDS NOT YET ADOPTED

We have not identified any recent accounting pronouncements that are expected to have a material impact on our financial condition, results of operations or cash flows upon adoption.

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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, 2020.

See Notes 17 and 18 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, 2021 and 2020, respectively.


	Nine Months Ended September 30,
(In millions)	2021		2020
Realized gain (loss) on settled derivative positions	$	(270)	$	33
Unrealized gain (loss) on open net derivative positions	(118)		47
Net gain (loss)	$	(388)	$	80

See Note 18 to the unaudited consolidated financial statements for additional information on our open derivative positions at September 30, 2021.

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, 2021 is provided in the following table.


	Change in IFO from a Hypothetical Price Increase of				Change in IFO from a Hypothetical Price Decrease of
(In millions)	10%		25%		10%		25%
As of September 30, 2021
Crude	$	(63)	$	(158)	$	63	$	158
Refined products	(29)		(72)		29		72
Blending products	(34)		(84)		34		84
Soybean oil	(12)		(30)		12		30
Embedded derivatives	(10)		(26)		10		26

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, 2021 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, 2021 is provided in the following table. Fair value of cash and cash equivalents, receivables, accounts payable and accrued interest approximate carrying value and are relatively insensitive to changes in interest rates due to the short-term maturity of the instruments. Accordingly, these instruments are excluded from the table.

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(In millions)	Fair Value as of September 30, 2021(a)		Change in Fair Value(b)		Change in Net Income for the Nine Months Ended September 30, 2021(c)
Long-term debt
Fixed-rate	$	30,466	$	2,696	n/a
Variable-rate	$	—	—		$	16

(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, 2021.

(c)Assumes a 100-basis-point change in interest rates. The change to net income was based on the weighted average balance of debt outstanding for the nine months ended September 30, 2021.

At September 30, 2021, our long-term debt was composed of fixed-rate instruments. 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 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 our variable-rate debt, but may affect our results of operations and cash flows.

See Note 17 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 Rule 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, 2021, the end of the period covered by this report.

Changes in Internal Control over Financial Reporting

During the quarter ended September 30, 2021, 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. While it is possible that an adverse result in one or more of the lawsuits or proceedings in which we are a defendant could be material to us, based upon current information and our experience as a defendant in other matters, we believe that these lawsuits and proceedings, individually or in the aggregate, will not have a material adverse effect on our consolidated results of operations, financial position or cash flows.

Item 103 of Regulation S-K promulgated by the SEC requires disclosure of certain environmental matters when a governmental authority is a party to the proceedings and such proceedings involve potential monetary sanctions, unless we reasonably believe that the matter will result in no monetary sanctions, or in monetary sanctions, exclusive of interest and costs, of less than $300,000.

Except as described below, there have been no material changes to the legal matters previously disclosed in our Annual Report on Form 10-K for the year ended December 31, 2020 (our “2020 10-K”), as updated in our subsequent Quarterly Reports on Form 10-Q.

Martinez

As previously disclosed in our 2020 10-K, we had been negotiating, through two separate actions, the settlement of 141 NOVs received from the Bay Area Air Quality Management District (“BAAQMD”). The NOVs were issued from 2011 to 2019 and alleged violations of air quality regulations and the idled Martinez refinery’s air permit. In the third quarter of 2021, we finalized a settlement with the BAAQMD, which provides for a cash penalty of approximately $2.2 million to resolve 58 of these NOVs. We continue to negotiate a settlement of the remaining allegations with the BAAQMD through a separate enforcement action. We cannot currently estimate the timing of the resolution of the remaining NOVs.

Dakota Access Pipeline

MPLX has entered into a Contingent Equity Contribution Agreement whereby it, along with the other joint venture owners in the Bakken Pipeline system, has agreed to make equity contributions to the joint venture upon certain events occurring to allow the entities that own and operate the Bakken Pipeline system to satisfy their senior note payment obligations. The senior notes were issued to repay amounts owed by the pipeline companies to fund the cost of construction of the Bakken Pipeline system. If the pipeline were temporarily shut down, MPLX would have to contribute its 9.19 percent pro rata share of funds required to pay interest accruing on the notes and any portion of the principal that matures while the pipeline is shutdown. MPLX also expects to contribute its 9.19 percent pro rata share of any costs to remediate any deficiencies to reinstate the permit and/or return the pipeline into operation. If the vacatur of the easement permit results in a permanent shutdown of the pipeline, MPLX would have to contribute its 9.19 percent pro rata share of the cost to redeem the bonds (including the 1% redemption premium required pursuant to the indenture governing the notes) and any accrued and unpaid interest. As of September 30, 2021, our maximum potential undiscounted payments under the Contingent Equity Contribution Agreement were approximately $230 million.

ITEM 1A. RISK FACTORS

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, 2020.

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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, 2021, 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)(d)
07/01/2021-07/31/2021	171	$	61.30	—	$	9,018,878,009
08/01/2021-08/31/2021	7,792,037	57.91		7,792,016	$	8,567,626,311
09/01/2021-09/30/2021	8,848,532	59.35		8,848,451	$	8,042,451,024
Total	16,640,740	58.68		16,640,467

(a)The amounts in this column include 171, 21 and 81 shares of our common stock delivered by employees to MPC, upon vesting of restricted stock, to satisfy tax withholding requirements in July, August and September, respectively.

(b)Amounts in this column reflect the weighted average price paid for shares repurchased 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.

(c)On April 30, 2018, we announced that our board of directors had approved a $5 billion share repurchase authorization in addition to the remaining authorization pursuant to the May 31, 2017 announcement. On May 14, 2021, we announced that our board of directors had approved an additional $7.1 billion share repurchase authorization. These share purchase authorizations have no expiration date.

ITEM 5. OTHER INFORMATION

On October 27, 2021, our board of directors amended and restated the Company’s Amended and Restated Bylaws (the “Bylaws”) consistent with the Delaware General Corporation Law to increase the age limit, from 72 to 73, after which a director will no longer be eligible for election or re-election to the board of directors.

The foregoing description is qualified in its entirety by reference to the full text of the Bylaws, which is filed as Exhibit 3.2 to this Quarterly Report on Form 10-Q and incorporated herein by reference.

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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†

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

8-K

2.1

8/3/2020

001-35054

2.2

Amendment to Purchase and Sale Agreement, dated as of October 16, 2020, by and among MPC, the MPC subsidiaries party thereto and 7-Eleven, Inc.

10-K

2.7

2/26/2021

001-35054

2.3†

Amendment No. 2 to Purchase and Sale Agreement, dated as of May 14, 2021, by and among the Company, Sellers and Purchaser

8-K

2.3

5/14/2021

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 Marathon Petroleum Corporation, dated October 27, 2021

10.1

Form of 2021 MPC Officer RSU Award Agreement - 2021 Plan

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).

† The exhibits and schedules have been omitted pursuant to Item 601(b)(2) of Regulation S-K and will be provided to the Securities and Exchange Commission upon request.

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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 2, 2021	MARATHON PETROLEUM CORPORATION

	By:	/s/ C. Kristopher Hagedorn
		C. Kristopher Hagedorn Senior Vice President and Controller