Marathon Petroleum Is Taking Several Measures to Weather Coronavirus Challenges
FINDLAY, Ohio — Marathon Petroleum Corp. (MPC) is adjusting its business as a result of the COVID-19 pandemic and stay-at-home directives.
"The recent outbreak of COVID-19 and its development into a pandemic in March 2020 have resulted in significant economic disruption globally. Actions taken by various governmental authorities, individuals and companies around the world to prevent the spread of COVID-19 through social distancing have restricted travel, many business operations, public gatherings and the overall level of individual movement and in-person interaction across the globe," the company said in a filing with the Securities Exchange Commission (SEC) on April 22.
Fuel demand has impacted by the health crisis as airlines cut back on flights and motorists are driving less "at a time when seasonal driving patterns typically result in an increase of consumer demand for gasoline. As a result, there has also been a decline in the demand for the refined petroleum products that we manufacture and sell," MPC explained, adding the decrease in the demand led to a significant decrease in the price of those products.
Global geopolitical events and macroeconomic conditions have also driven down crude oil prices and have contributed to an increase in crude oil price volatility, it noted in the filing.
"We are actively responding to the impacts that these matters are having on our business. During March and continuing through April 2020, we started reducing the amount of crude oil processed at our refineries in response to the decreased demand for our products, and we temporarily idled portions of refining capacity to further limit production," MPC stated, adding it expects to defer or delay certain capital expenditures that the company had expected to make this year.
According to its SEC filing, the company is taking additional steps to address its liquidity. Specifically:
- MPC has taken actions to reduce operating expenses across the business.
- The company has deferred certain direct and indirect tax payments for the first quarter of 2020, and, to the extent possible, plans to defer certain other direct and indirect tax payments in 2020.
- MPC has not purchased any shares of its common stock under our repurchase program in 2020, and will evaluate the timing of any future repurchases when appropriate.
- The company has drawn a total of $3.5 billion under its five-year revolving credit facility. MPC made these borrowings to provide financial flexibility given the recent commodity price downturn and the significant working capital impact associated with the decline in crude oil prices.
- MPC is in the process of negotiating a new $1-billion, 364-day revolving credit facility, which would expire in 2021, to provide additional liquidity and financial flexibility during the commodity price and demand downturn.
Findlay-based MPC is an integrated, downstream energy company. Itoperates the nation's largest refining system with more than 3 million barrels per day of crude oil capacity across 16 refineries. MPC's marketing system includes branded locations across the United States, including Marathon brand retail outlets. Its subsidiary, Enon-based Speedway LLC, owns and operates retail convenience stores across the United States.
MPC also owns the general partner and majority limited partner interests in MPLX LP, a midstream company that owns and operates gathering, processing, and fractionation assets, as well as crude oil and light product transportation and logistics infrastructure.