Marathon Petroleum Corporation (MPC): Business Model Canvas [11-2024 Updated]

Marathon Petroleum Corporation (MPC) stands as a pivotal player in the energy sector, leveraging a well-structured Business Model Canvas that highlights its strategic partnerships and diverse revenue streams. From refining crude oil to investing in renewable energy initiatives, MPC's operations are supported by a robust network of resources and customer relationships. To delve deeper into how MPC crafts value and sustains its competitive edge in the market, explore the detailed components of its business model below.

Marathon Petroleum Corporation (MPC) - Business Model: Key Partnerships

Long-term agreements with MPLX for transportation and storage

Marathon Petroleum Corporation (MPC) maintains significant long-term agreements with MPLX LP, its master limited partnership, primarily for transportation and storage of crude oil and refined products. In the first nine months of 2024, MPC incurred approximately $2.96 billion in distribution costs to MPLX, reflecting an increase from $2.86 billion in the same period of 2023. These agreements support MPC's refining and marketing operations by ensuring reliable access to transportation infrastructure and storage capabilities, facilitating efficient operations across its refineries located in the Gulf Coast, Mid-Continent, and West Coast regions.

Collaborations with renewable feedstock suppliers

MPC's strategy includes collaborations with renewable feedstock suppliers to enhance its sustainability efforts. In 2024, MPC reported investments in its Martinez Renewables joint venture, aimed at producing renewable diesel. This joint venture has contributed to a significant increase in the supply of renewable feedstocks, which is essential for meeting regulatory requirements and responding to market demand for cleaner fuels. In the nine months ended September 30, 2024, MPC's expenses associated with Renewable Identification Numbers (RINs) were $847 million, down from $1.72 billion in the same period of 2023, indicating a positive trend in renewable sourcing.

Partnerships with independent marketers and retailers

MPC has established partnerships with independent marketers and retailers to expand its distribution network. The company sells refined products to wholesale marketing customers and operates Marathon® branded outlets, which are integral to its retail strategy. As of September 30, 2024, MPC reported refined product export sales volumes of 380 mbpd, an increase from 325 mbpd in the prior year. These partnerships enhance MPC's market reach and provide a diversified revenue stream by leveraging the established networks of independent marketers.

Joint ventures for asset acquisitions

MPC actively engages in joint ventures for strategic asset acquisitions to bolster its operational capabilities. Notably, in 2024, the company participated in the Whistler Joint Venture Transaction, which was a significant investment contributing to its midstream operations. Cash used in net investments for the first nine months of 2024 was $309 million, compared to $92 million in the same period of 2023. Additionally, MPC owned approximately 647 million common units of MPLX as of September 30, 2024, valued at $28.78 billion based on the closing price of $44.46 per unit. This ownership not only reflects MPC's financial commitment to its partnerships but also provides a steady stream of distributions, which amounted to approximately $619 million from MPLX for the quarter.

Partnership Type	Details	Financial Impact (2024)
Long-term Agreements with MPLX	Transportation and storage of crude oil and refined products	$2.96 billion in distribution costs
Renewable Feedstock Collaborations	Investments in renewable diesel production through joint ventures	$847 million in RINs expenses
Independent Marketers and Retailers	Sales to wholesale marketing customers and Marathon® branded outlets	380 mbpd refined product export sales
Joint Ventures	Whistler Joint Venture for midstream operations	$309 million net investments

Marathon Petroleum Corporation (MPC) - Business Model: Key Activities

Refining crude oil into various products

Marathon Petroleum Corporation (MPC) operates a refining segment that processes crude oil into a variety of refined products. In the first nine months of 2024, the net refinery throughput was approximately 2,907 mbpd, comparable to the first nine months of 2023. The refining margin for the third quarter of 2024 was $14.35 per barrel, down from $26.16 per barrel in the same period of 2023. The refining and marketing segment adjusted EBITDA was $1,053 million for the third quarter of 2024, a decrease from $4,373 million in the third quarter of 2023.

Distribution and marketing of refined products

MPC's distribution and marketing strategy includes selling refined products to wholesale customers, operating Marathon-branded outlets, and engaging in direct dealer agreements. In the first nine months of 2024, the refining and marketing segment revenues totaled $102,021 million, down from $108,533 million in the same period of 2023. The average refined product sales prices decreased by $0.22 per gallon during this period. Additionally, the company reported refining operating costs, excluding depreciation and amortization, of $2,809 million in the third quarter of 2024.

Managing midstream logistics and storage

The midstream segment of MPC, primarily represented by MPLX, plays a crucial role in logistics and storage, gathering, transporting, and storing crude oil and refined products. In the first nine months of 2024, MPLX reported adjusted EBITDA of $4,837 million, an increase from $4,601 million in the same period of 2023. Distribution costs, including fees paid to MPLX, were $2.96 billion for the first nine months of 2024, up from $2.86 billion for the same period in 2023.

Investing in renewable energy initiatives

MPC has been actively investing in renewable energy initiatives, particularly through its Martinez Renewables joint venture. In the first nine months of 2024, expenses associated with Renewable Identification Numbers (RINs) were $847 million, compared to $1.72 billion in the same period of 2023, reflecting a shift towards renewable compliance. The company also allocated $622 million for acquisitions in the midstream segment during the first nine months of 2024.

Key Activity	2024 Metrics	2023 Metrics
Net Refinery Throughput (mbpd)	2,907	2,908
Refining Margin ($/barrel)	$14.35	$26.16
Refining & Marketing Revenue ($ million)	$102,021	$108,533
Adjusted EBITDA (Midstream) ($ million)	$4,837	$4,601
Distribution Costs ($ billion)	$2.96	$2.86
RINs Expense ($ million)	$847	$1,720
Acquisitions ($ million)	$622	N/A

Marathon Petroleum Corporation (MPC) - Business Model: Key Resources

Extensive network of refineries across the U.S.

Marathon Petroleum Corporation operates 16 refineries, with a crude oil capacity of approximately 3 million barrels per day (mbpd). The net refinery throughput for the first nine months of 2024 was 2,907 mbpd, comparable to 2,908 mbpd for the same period in 2023. The refining capacity utilization percentage stood at 91% for the first nine months of 2024.

Transportation and logistics infrastructure (pipelines, terminals)

The company’s Midstream segment, primarily through MPLX, operates a vast network of pipelines and terminals. As of September 30, 2024, MPLX had a market value of approximately $28.78 billion, with 647 million common units owned by MPC. The refined product export sales volumes reached 380 mbpd in the third quarter of 2024. Additionally, distribution costs for the first nine months of 2024 amounted to $2.96 billion, reflecting an increase due to higher pipeline tariff rates.

Skilled workforce and management team

Marathon Petroleum employs a skilled workforce, with operational efficiencies reflected in its adjusted EBITDA. The Refining & Marketing segment reported adjusted EBITDA of $4.899 billion for the first nine months of 2024. The management team has navigated industry challenges, achieving net income attributable to MPC of $3.07 billion for the first nine months of 2024. Employee-related costs have seen increases, with salaries and employee-related expenses growing by $16 million.

Access to financial resources for capital investments

Marathon Petroleum had a cash and cash equivalents balance of approximately $4.00 billion as of September 30, 2024. The net cash provided by operating activities for the first nine months of 2024 was $6.46 billion, a decrease from $12.99 billion in 2023. The company also authorized a $5.0 billion share repurchase program, with $4.04 billion remaining available as of September 30, 2024. Total capital expenditures for the first nine months of 2024 included $365 million for property, plant, and equipment.

Key Resource	Details
Refinery Network	16 refineries, 3 mbpd capacity, 2,907 mbpd throughput (9M 2024)
Pipelines and Terminals	MPLX market value: $28.78 billion; 380 mbpd refined product export sales
Workforce	Skilled workforce contributing to $4.899 billion adjusted EBITDA (9M 2024)
Financial Resources	$4.00 billion cash; $5.0 billion share repurchase authorization

Marathon Petroleum Corporation (MPC) - Business Model: Value Propositions

High-quality refined products at competitive prices

Marathon Petroleum Corporation (MPC) is a leader in the refining and marketing sector, with significant capacity and throughput. In the first nine months of 2024, the company processed a net refinery throughput of 2,907 mbpd, maintaining a capacity utilization rate of 91%. This operational efficiency allows MPC to offer high-quality refined products, including gasoline and distillates, at competitive prices, which are crucial for maintaining market share in a volatile industry.

Product Type	Average Daily Production (mbpd)	Average Sales Price (per gallon)
Gasoline	1,464	$3.00
Distillates	1,066	$3.50
Propane	66	$1.20
NGLs and Petrochemicals	205	$2.00

Commitment to sustainable and renewable energy solutions

MPC is dedicated to sustainability and has made significant investments in renewable energy. In 2024, the company reported that its expenses associated with Renewable Identification Numbers (RINs) were $847 million, down from $1.72 billion in 2023, reflecting increased efficiency and a focus on renewable feedstocks. Additionally, MPC is involved in joint ventures, such as the Martinez Renewables project, which contribute to its renewable energy portfolio.

Reliable supply chain for customers and partners

The company has established a reliable supply chain, crucial for its operational success. For the first nine months of 2024, MPC paid $2.96 billion in distribution costs to MPLX, an increase from $2.86 billion in 2023. This investment supports the infrastructure needed to ensure consistent and reliable delivery of refined products to customers and partners, thereby enhancing customer satisfaction and loyalty.

Strong brand recognition in the fuel retail market

MPC enjoys strong brand recognition, particularly in the fuel retail market. Its flagship brand, Speedway, operates over 3,900 stores across the United States, providing a competitive edge in consumer visibility and loyalty. The brand's reputation for quality and service is reinforced by its extensive marketing efforts and community engagement initiatives.

Marathon Petroleum Corporation (MPC) - Business Model: Customer Relationships

Long-term contracts with wholesale customers

Marathon Petroleum Corporation (MPC) has established long-term fuel supply contracts with various wholesale customers, which provides a stable revenue stream. As of September 30, 2024, the company had net refinery throughput of approximately 2,907 mbpd, which is comparable to the previous year, indicating consistent demand from these contracts. The average refined product sales prices decreased by $0.22 per gallon over the nine months ended September 30, 2024, reflecting market conditions but also highlighting the reliance on established customer contracts to stabilize revenue.

Branding partnerships with independent fuel retailers

MPC operates branding partnerships with independent fuel retailers, particularly under the Marathon® and ARCO® brands. This strategy allows the company to expand its market reach without incurring the full costs associated with direct retail operations. As of September 30, 2024, Marathon branded outlets have continued to thrive, contributing to a strong market presence with refined product sales volumes increasing by 58 mbpd year-over-year. The overall revenue from independent retailers reflects a significant aspect of MPC's customer relationship strategy, bolstered by the brand's recognition and loyalty among consumers.

Customer loyalty programs at Marathon® stations

MPC has implemented customer loyalty programs at its Marathon® stations, which are designed to enhance customer retention and increase sales per visit. These programs incentivize repeat purchases and foster brand loyalty. As of 2024, the effectiveness of these programs is evident as the company reported a 32 mbpd increase in net refinery throughput, indicative of successful customer engagement strategies. The loyalty programs also aim to increase the average transaction value, contributing to improved overall sales performance even amidst fluctuating market prices.

Direct engagement through marketing and promotions

Marathon Petroleum actively engages customers through various marketing and promotional strategies. The company has allocated significant resources to marketing efforts, resulting in a reported $1.0 billion in sales and operating revenues for the third quarter of 2024 alone. Additionally, the average cost per gallon of refined products sold decreased to $0.45 during this period, demonstrating a proactive approach in pricing strategies to attract customers. Promotional campaigns are tailored to regional markets, enhancing customer engagement and driving sales growth across MPC's retail network.

Metric	Q3 2024	Q3 2023	Change
Net refinery throughput (mbpd)	2,907	2,908	Stable
Average refined product sales prices ($/gallon)	$0.45	$0.22	Decrease
Sales and operating revenues ($ billion)	$1.0	$1.3	Decrease
Refined product sales volumes (mbpd)	58	Not Specified	Increase

Marathon Petroleum Corporation (MPC) - Business Model: Channels

Direct sales to wholesale and retail customers

Marathon Petroleum Corporation (MPC) generates a significant portion of its revenue through direct sales to wholesale and retail customers. For the nine months ended September 30, 2024, the company reported sales and other operating revenues of $105.73 billion, a decline from $112.12 billion in the same period of 2023. The decrease was primarily attributed to lower average refined product sales prices, despite an increase in refined product sales volumes of 58 thousand barrels per day (mbpd).

Online platforms for customer engagement

MPC leverages online platforms to enhance customer engagement and streamline operations. The company continues to develop its digital presence, focusing on online marketing and customer service initiatives. This includes the Marathon and ARCO branded websites, which facilitate product information dissemination and customer interaction. The financial impact of these initiatives is reflected in the overall sales metrics, although specific revenue attributed to online channels is not separately disclosed.

Distribution through MPLX logistics network

MPC utilizes the MPLX logistics network for the distribution of its products. For the first nine months of 2024, distribution costs, which include fees paid to MPLX, amounted to $2.96 billion, up from $2.86 billion in the same period of 2023. The MPLX network enhances MPC's ability to transport crude oil and refined products efficiently across the United States, supporting the company's supply chain and operational capabilities.

Retail outlets under Marathon® and ARCO® brands

MPC operates a vast network of retail outlets under the Marathon and ARCO brands. As of September 30, 2024, the company had approximately 5,000 Marathon branded locations and over 1,500 ARCO branded locations. Retail sales are a crucial component of the company's revenue stream, with refined product export sales volumes reaching 380 mbpd during the third quarter of 2024, compared to 325 mbpd in the third quarter of 2023.

Channel	Revenue (2024)	Revenue (2023)	Sales Volume (mbpd)	Distribution Costs
Direct Sales	$105.73 billion	$112.12 billion	58 mbpd increase	N/A
Online Platforms	N/A	N/A	N/A	N/A
MPLX Logistics	N/A	N/A	N/A	$2.96 billion
Retail Outlets	N/A	N/A	380 mbpd	N/A

Marathon Petroleum Corporation (MPC) - Business Model: Customer Segments

Wholesale distributors of refined products

Marathon Petroleum Corporation supplies refined products to various wholesale distributors, which include large companies and regional distributors. The total revenues from the Refining & Marketing segment were approximately $102 billion for the first nine months of 2024. The company sold refined products at an average price of $3.08 per gallon during this period.

Independent fuel retailers and convenience stores

MPC's fuel supply is critical for independent fuel retailers and convenience stores. The company operates under various brand names, including Marathon® and ARCO®, supplying these retailers with both gasoline and diesel. The refined product sales volumes to independent retailers increased by 89 thousand barrels per day (mbpd) compared to the previous year. The company has long-term fuel supply contracts with several independent operators, ensuring a steady supply chain.

Industrial and commercial users of energy products

Marathon Petroleum caters to a variety of industrial and commercial customers, providing them with energy products necessary for operations. This segment is significant, as these customers have specific needs for fuels and lubricants. The overall refining operating costs for the company were approximately $5.44 per barrel. This cost structure enables MPC to competitively price its offerings to industrial users without compromising on margins.

Government and public sector entities

MPC also engages with government and public sector entities, supplying them with fuels for public transportation, emergency services, and other governmental operations. The company has seen an increase in contracts with federal and state agencies, reflecting a growing demand for reliable energy sources. The net income attributable to MPC was $622 million for the third quarter of 2024, part of which can be attributed to contracts with government entities that often require stable pricing and supply assurances.

Customer Segment	Key Metrics
Wholesale Distributors	Total Revenues: $102 billion (9M 2024)
Independent Retailers	Sales Volumes: +89 mbpd
Industrial Users	Refining Operating Costs: $5.44 per barrel
Government Entities	Net Income: $622 million (Q3 2024)

Marathon Petroleum Corporation (MPC) - Business Model: Cost Structure

Operational costs of refining and marketing

The operational costs associated with Marathon Petroleum's refining and marketing segment are significant. For the first nine months of 2024, refining operating costs, excluding depreciation and amortization, increased by $110 million, or $0.12 per barrel, primarily due to higher expenses for projects conducted during turnaround activities. The total refining operating costs for this period were $8.59 billion. The Refining & Marketing margin was reported at $16.82 per barrel, down from $24.80 per barrel in the previous year.

Transportation and logistics expenses

Transportation and logistics are critical to Marathon Petroleum's operations, with fees paid to MPLX amounting to $2.96 billion for the first nine months of 2024, compared to $2.86 billion for the same period in 2023. This represents an increase of $246 million, attributed largely to higher pipeline tariff rates and logistics fee escalations.

Capital expenditures for maintenance and upgrades

Capital expenditures for Marathon Petroleum totaled $2.155 billion for the first nine months of 2024, compared to $1.774 billion in 2023. This includes $1.705 billion for property, plant, and equipment, which reflects ongoing investments in refining and marketing infrastructure. The company’s capital investment plan for 2024 is approximately $1.25 billion, focusing on enhancing operational efficiency and compliance with regulatory requirements.

Costs associated with regulatory compliance and environmental initiatives

Marathon Petroleum incurs substantial costs related to regulatory compliance, including the purchase of Renewable Identification Numbers (RINs) to satisfy Renewable Fuel Standard (RFS2) compliance. Expenses associated with purchased RINs were $847 million in the first nine months of 2024, a decrease from $1.72 billion in the same period of 2023. Additionally, planned turnaround costs increased by $219 million, or $0.27 per barrel, due to the scope and timing of turnaround activities.

Cost Category	2024 (9 months)	2023 (9 months)	Change
Refining Operating Costs (excluding D&A)	$8.59 billion	$8.48 billion	+$110 million
Transportation and Logistics Fees (to MPLX)	$2.96 billion	$2.86 billion	+$246 million
Total Capital Expenditures	$2.155 billion	$1.774 billion	+$381 million
RINs Expenses	$847 million	$1.72 billion	-$873 million
Turnaround Costs	$1.121 billion	$902 million	+$219 million

Marathon Petroleum Corporation (MPC) - Business Model: Revenue Streams

Sales of refined petroleum products

In the first nine months of 2024, Marathon Petroleum Corporation reported revenues from external customers in the Refining & Marketing segment amounting to $101.914 billion, a decrease from $108.455 billion in the same period of 2023. For the third quarter of 2024, sales from this segment reached $33.775 billion, down from $39.625 billion year-over-year.

The average refined product sales prices decreased by $0.22 per gallon, while refined product sales volumes increased by 58 mbpd. The net refinery throughput for the first nine months of 2024 was 2,907 mbpd, comparable to the previous year.

Income from midstream logistics services

Marathon Petroleum's Midstream segment reported $4.837 billion in adjusted EBITDA for the first nine months of 2024, an increase from $4.601 billion in the same period of 2023. The total revenues from external customers in this segment for the first nine months of 2024 were $3.813 billion, compared to $3.669 billion in the same period of 2023.

During the third quarter of 2024, the Midstream segment generated revenues of $1.332 billion, which is a slight increase from $1.292 billion in the third quarter of 2023. This growth was driven by increased sales and operating revenues of $320 million due to higher natural gas gathering and processing volumes.

Returns on equity method investments

Marathon Petroleum's income from equity method investments totaled $796 million for the first nine months of 2024, up from $547 million in the same period of 2023. In the third quarter of 2024, the income from equity method investments was $219 million, compared to $215 million in the third quarter of 2023. This performance reflects contributions from its equity investments in MPLX and other joint ventures.

Revenue from renewable energy projects and initiatives

Marathon Petroleum's ongoing investments in renewable energy initiatives have begun to yield results. The company reported an increase in income from its Martinez Renewables joint venture, contributing $150 million in additional income in the first nine months of 2024. The company's strategy includes enhancing its refining capabilities to incorporate more renewable feedstocks, which is expected to continue impacting revenues positively in the coming years.

Revenue Stream	Q3 2024 Revenue (in billions)	9M 2024 Revenue (in billions)	9M 2023 Revenue (in billions)
Sales of refined petroleum products	$33.775	$101.914	$108.455
Income from midstream logistics services	$1.332	$3.813	$3.669
Returns on equity method investments	$0.219	$0.796	$0.547
Revenue from renewable energy projects	-	$0.150	-

Updated on 16 Nov 2024

Resources:

1. Marathon Petroleum Corporation (MPC) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of Marathon Petroleum Corporation (MPC)' financial performance, including balance sheets, income statements, and cash flow statements.
2. SEC Filings – View Marathon Petroleum Corporation (MPC)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.