Analysis of Debt
Total Debt (Carrying Amount)
Marathon Petroleum Corp., balance sheet: debt
US$ in millions
Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).
The total debt carrying amount exhibits a fluctuating trend over the five-year period, characterized by a peak in 2020 followed by a significant contraction and a subsequent period of moderate growth. As of December 31, 2023, the total debt remains lower than the levels recorded in 2019 and 2020.
- Total Debt Trajectory
- Total debt increased from US$ 28,838 million in 2019 to a peak of US$ 31,584 million in 2020. A sharp reduction was observed in 2021, with total debt falling to US$ 25,539 million. Since 2021, a gradual upward trend has emerged, with the carrying amount rising to US$ 26,700 million in 2022 and US$ 27,283 million by the end of 2023.
- Short-term Obligations
- Debt due within one year demonstrates significant volatility. Following a baseline of US$ 711 million in 2019, this figure spiked to US$ 2,854 million in 2020. A subsequent decline to US$ 571 million occurred in 2021, followed by a steady increase over the next two years, reaching US$ 1,954 million by December 31, 2023.
- Long-term Debt Composition
- Long-term debt due after one year represents the vast majority of the total debt profile. This component remained relatively stable, peaking at US$ 28,730 million in 2020 and reaching a low of US$ 24,968 million in 2021. The balance as of December 31, 2023, stood at US$ 25,329 million, indicating a consistent reliance on long-term financing structures.
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Total Debt (Fair Value)
| Dec 31, 2023 | |
|---|---|
| Selected Financial Data (US$ in millions) | |
| Debt, excluding finance lease obligations | 25,500) |
| Marathon Petroleum Corporation finance lease obligations | 464) |
| MPLX LP finance lease obligations | 6) |
| Total debt (fair value) | 25,970) |
| Financial Ratio | |
| Debt, fair value to carrying amount ratio | 0.95 |
Based on: 10-K (reporting date: 2023-12-31).
Weighted-average Interest Rate on Debt
Weighted-average interest rate on debt: 4.54%
| Interest rate | Debt amount1 | Interest rate × Debt amount | Weighted-average interest rate2 |
|---|---|---|---|
| 3.62% | 750) | 27) | |
| 4.70% | 1,250) | 59) | |
| 5.13% | 719) | 37) | |
| 3.80% | 496) | 19) | |
| 6.50% | 1,250) | 81) | |
| 4.75% | 800) | 38) | |
| 5.85% | 250) | 15) | |
| 4.50% | 498) | 22) | |
| 5.13% | 36) | 2) | |
| 5.00% | 400) | 20) | |
| 4.88% | 1,149) | 56) | |
| 4.00% | 500) | 20) | |
| 4.88% | 1,189) | 58) | |
| 4.88% | 12) | 1) | |
| 1.75% | 1,500) | 26) | |
| 4.13% | 1,250) | 52) | |
| 4.25% | 732) | 31) | |
| 4.00% | 1,250) | 50) | |
| 4.80% | 750) | 36) | |
| 2.65% | 1,500) | 40) | |
| 4.95% | 1,000) | 50) | |
| 5.00% | 1,100) | 55) | |
| 4.50% | 1,750) | 79) | |
| 5.20% | 1,000) | 52) | |
| 5.20% | 487) | 25) | |
| 5.20% | 31) | 2) | |
| 4.70% | 1,500) | 71) | |
| 5.50% | 1,500) | 83) | |
| 4.95% | 1,500) | 74) | |
| 5.65% | 500) | 28) | |
| 4.90% | 500) | 25) | |
| 5.10% | 470) | 24) | |
| Total | 27,619) | 1,255) | |
| 4.54% | |||
Based on: 10-K (reporting date: 2023-12-31).
1 US$ in millions
2 Weighted-average interest rate = 100 × 1,255 ÷ 27,619 = 4.54%
Interest Costs Incurred
Marathon Petroleum Corp., interest costs incurred
US$ in millions
Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).
The interest cost profile from 2019 to 2023 exhibits relative stability with moderate fluctuations. Total interest expenses peaked in 2020 before undergoing a period of decline and a subsequent slight increase in 2023. A notable characteristic of this period is the steady reduction in the volume of interest being capitalized.
- Total Interest Expense Trends
- Aggregate interest expense increased from 1,396 million USD in 2019 to a peak of 1,462 million USD in 2020. This was followed by two consecutive years of decline, reaching a period low of 1,299 million USD in 2022, before rising to 1,325 million USD by the end of 2023.
- Interest Capitalization Analysis
- A significant downward trend is observed in interest capitalized, which decreased from 158 million USD in 2019 to 60 million USD in 2023. This persistent decline suggests a reduction in the scale of capital projects requiring the capitalization of borrowing costs over the five-year period.
- Net Interest Expense Performance
- Interest expense, net of interest capitalized, closely mirrors the trajectory of the total interest expense. The net cost rose from 1,238 million USD in 2019 to 1,333 million USD in 2020, then contracted to 1,195 million USD in 2022, and concluded the period at 1,265 million USD in 2023.
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Adjusted Interest Coverage Ratio
Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).
2023 Calculations
1 Interest coverage ratio (without capitalized interest) = EBIT ÷ Interest expense, net of interest capitalized
= 15,254 ÷ 1,265 = 12.06
2 Adjusted interest coverage ratio (with capitalized interest) = EBIT ÷ Interest expense
= 15,254 ÷ 1,325 = 11.51
The organization's ability to service its debt obligations experienced extreme volatility between 2019 and 2023, marked by a severe collapse in coverage capacity in 2020 followed by a rapid expansion and subsequent stabilization.
- Adjusted Interest Coverage Ratio (with capitalized interest)
- The adjusted ratio shifted from a stable 3.99 in 2019 to a significant negative value of -8.40 in 2020, reflecting a period where operating earnings were insufficient to meet interest expenses. A recovery phase is evident starting in 2021 with a ratio of 3.05, which surged to a peak of 16.68 in 2022. By the end of 2023, the ratio moderated to 11.51, which remains substantially stronger than the pre-pandemic baseline.
- Interest Coverage Ratio (without capitalized interest)
- The ratio excluding capitalized interest mirrored the broader trend, descending from 4.50 in 2019 to -9.21 in 2020. This metric saw a recovery to 3.22 in 2021 and reached its highest point in 2022 at 18.13, before declining to 12.06 in 2023. The magnitude of the fluctuations in this metric was slightly more pronounced than in the adjusted ratio.
- Comparative Trend Analysis
- A consistent divergence is observed between the two ratios, with the adjusted ratio consistently remaining lower than the non-capitalized ratio across all five years. Despite this gap, both metrics demonstrate a synchronized trajectory, indicating that the primary drivers of coverage volatility were related to overall operating performance rather than changes in interest capitalization policies.
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