Marathon Petroleum Corporation — FY2023 Form 10-K
Reporting period: Fiscal year ended December 31, 2023. This filing reports annual results; it does not provide a clear standalone fourth-quarter financial summary. MPC is an integrated downstream energy company with Refining & Marketing and Midstream segments; Midstream primarily reflects MPLX. MPC owned about 65% of MPLX at year-end.
Financial and operating results
| Metric | FY2023 | FY2022 |
|---|---|---|
| Sales and other operating revenues | $148.38 billion | $177.45 billion |
| Income from continuing operations | $11.17 billion, net of tax | $15.98 billion, net of tax |
| Net income attributable to MPC | $9.68 billion | $14.52 billion |
| Diluted EPS attributable to MPC | $23.63 | $28.12 |
| Operating cash flow, continuing operations | $14.12 billion | $16.32 billion |
| Capital expenditures | $2.07 billion | $2.38 billion |
| Segment adjusted EBITDA (non-GAAP) | $19.72 billion | $25.03 billion |
Revenue fell about 16%, primarily as average refined-product sales prices declined $0.52 per gallon (17%); sales volumes increased 1%. Net income attributable to MPC declined $4.84 billion, mainly from lower refining margins and lower asset-disposal gains. Continuing-operations income before tax was $13.99 billion, versus $20.47 billion. The effective tax rate was 20%, compared with 22%.
Segments: Refining & Marketing adjusted EBITDA was $13.55 billion, down from $19.26 billion; margin excluding LIFO was $23.16 per barrel versus $28.10, and refinery throughput declined to 2.914 million barrels per day from 2.951 million. Midstream adjusted EBITDA rose to $6.17 billion from $5.77 billion. Planned refinery turnaround costs were $1.20 billion, and the LIFO inventory charge was $145 million, compared with a $148 million credit in 2022.
Cash, debt and liquidity: Year-end cash and cash equivalents were $5.44 billion and short-term investments were $4.78 billion. Total debt, including finance leases, was $27.62 billion, up from $27.08 billion; $20.71 billion was attributable to MPLX. MPC, excluding MPLX, reported $14.28 billion of liquidity, including cash, short-term investments and available facilities; MPLX reported $4.55 billion. Debt principal maturities include $1.90 billion in 2024 and $2.95 billion in 2025. Both companies reported investment-grade ratings with stable outlooks and covenant compliance.
Capital returns: MPC repurchased $11.57 billion of shares in 2023 and paid $1.26 billion in dividends. It had $6.78 billion remaining under share repurchase authorizations at year-end. The board later declared a quarterly dividend of $0.825 per share, payable March 2024.
Material changes and unusual items
- Refining & Marketing adjusted EBITDA decreased $5.71 billion, as weaker crack spreads and lower throughput outweighed favorable effects from other income and lower refining operating costs.
- Midstream results improved, including from higher equity-method investment income and lower purchased-product costs.
- 2022 included substantial one-time gains: $549 million on formation of the Martinez Renewables joint venture and $509 million from a lease reclassification. In 2023, gains included $106 million on the sale of MPC’s South Texas Gateway interest and $92 million from remeasurement of its Torñado investment upon acquiring the remaining interest.
- Operating cash flow declined year over year, though working capital was a $230 million source of cash in 2023, a favorable change of $1.57 billion versus 2022.
Outlook, management commentary and risks
Management described demand as strong but noted that results remain exposed to market prices and seasonal fluctuations. Its priorities include asset competitiveness, commercial performance, cost and capital discipline, and investments in lower-carbon fuels and technologies. MPC’s 2024 capital plan was approximately $1.25 billion, excluding MPLX; MPLX’s plan was approximately $1.10 billion, net of reimbursements. Planned projects include Los Angeles refinery improvements and a Galveston Bay distillate hydrotreater, alongside Midstream growth investments.
Renewable initiatives advanced during 2023: the Martinez Renewables facility began ramping up renewable diesel production, and the Green Bison soybean-processing joint venture began operations. These projects and other low-carbon investments carry execution, feedstock, market and regulatory risks. The filing provides no formal 2024 earnings or margin guidance.
Key exposures include volatile refining margins, commodity prices, feedstock and transportation availability, refinery outages and severe weather, cybersecurity threats, changing environmental and fuel regulations, and a possible decline in petroleum-fuel demand. California’s SBx 1-2 authorizes a potential gasoline refining-margin cap and expands reporting and oversight of refinery maintenance; the ultimate impact is not yet clear. The Dakota Access Pipeline remains operational while the Army Corps reviews its Lake Oahe easement, with a decision expected by the end of 2024; MPC disclosed maximum potential undiscounted payments of about $170 million under a related contingent funding agreement. Climate-related lawsuits and other legal matters remain pending; management generally does not expect disclosed civil penalties to be material, but outcomes are uncertain. The filing reports $387 million in accrued remediation liabilities.
Management and the independent auditor concluded that internal control over financial reporting was effective as of year-end. The audit opinion on the financial statements was unqualified.
Important facts for investors to verify
- Whether refining margins, throughput and operating costs sustain the 2023 earnings and cash-flow base as market conditions change.
- How California’s margin-cap and turnaround rules develop, and whether they affect refinery profitability or maintenance plans.
- The Army Corps’ final Dakota Access easement decision and any resulting funding, remediation or operating obligations.
- Execution, costs and expected returns for the Martinez, Los Angeles and Galveston Bay projects, as well as MPLX’s growth program.
- Capital-return plans relative to debt maturities, liquidity needs and the cyclical cash demands of the business.