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).
- Short-term debt (Debt due within one year)
- The debt due within one year exhibits significant variability over the analyzed period. The amount was relatively moderate at 711 million USD at the end of 2019, surged sharply to 2,854 million USD by the end of 2020, then declined substantially to 571 million USD at the end of 2021. Following this, it increased again to 1,066 million USD by the end of 2022 and rose further to 1,954 million USD by the end of 2023. This pattern suggests fluctuations in short-term financing requirements or potential refinancing activity.
- Long-term debt (Long-term debt due after one year)
- The long-term debt remained relatively stable but showed a slight general decline over the five-year span. Starting at 28,127 million USD at the close of 2019, it slightly increased to 28,730 million USD in 2020, then decreased noticeably to 24,968 million USD in 2021. Subsequently, it modestly rebounded to 25,634 million USD in 2022 before marginally decreasing again to 25,329 million USD in 2023. This pattern implies some repayment or restructuring of long-term obligations, particularly the notable reduction between 2020 and 2021.
- Total debt (carrying amount)
- The total debt follows a pattern reflecting the combined movements of short-term and long-term liabilities. It increased from 28,838 million USD in 2019 to a peak of 31,584 million USD in 2020, driven strongly by the sharp rise in short-term debt. This was followed by a significant decline to 25,539 million USD in 2021, corresponding with the reduction in both short-term and long-term debt. A slight recovery occurred in 2022, bringing total debt to 26,700 million USD, followed by a modest increase to 27,283 million USD in 2023. Overall, total debt demonstrates periods of borrowing spikes and subsequent repayments or refinancing.
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 |
|---|---|---|---|
| 3.63% | 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).
- Overall Trend in Interest Expense, Net of Interest Capitalized
- The net interest expense exhibited fluctuations over the five-year period. Starting at $1,238 million in 2019, it increased to a peak of $1,333 million in 2020 before decreasing to $1,267 million in 2021. The amount continued to decline reaching a low of $1,195 million in 2022, followed by a slight rise to $1,265 million in 2023. This indicates variability in interest costs when adjusted for capitalized interest, with the highest net expense recorded in 2020.
- Trend in Interest Capitalized
- Interest capitalized consistently declined over the period. Beginning at $158 million in 2019, the capitalized interest decreased to $129 million in 2020, further dropped to $73 million in 2021, then slightly rebounded to $104 million in 2022, before falling again to the lowest point of $60 million in 2023. This downward trajectory suggests a reduction in the costs allocated to assets under construction or development.
- Interest Expense (Gross)
- The gross interest expense exhibited a declining trend with some fluctuations. It started at $1,396 million in 2019 and increased to $1,462 million in 2020, followed by a decline to $1,340 million in 2021. It continued decreasing to $1,299 million in 2022 and marginally increased to $1,325 million in 2023. This overall downward movement after 2020 points to a reduction in total interest obligations before capitalized amounts are deducted.
- Insights from the Data
- The data indicates that while the company’s total gross interest expense slightly increased in 2020 before generally decreasing, the net interest expense pattern closely mirrors this trend but stabilizes somewhat towards the latter years. The steady decline in interest capitalized suggests a scaling back in capital projects or changes in the accounting treatment of interest costs, which in turn affects the net interest expense figures. The fluctuations in net interest expense, despite the declining capitalized interest, may reflect changes in borrowing costs, debt levels, or interest rates impacting the company's financial expenses over time.
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
- Interest Coverage Ratio Trends
-
The interest coverage ratio (without capitalized interest) experienced significant volatility over the analyzed period. Starting at 4.5 in 2019, the ratio sharply declined to -9.21 in 2020, indicating a period of substantial financial stress or very low earnings relative to interest obligations during that year. Subsequently, the ratio recovered to positive territory in 2021 at 3.22, showing improvement in earnings or reduced interest expenses. The recovery strengthened further in 2022, reaching a peak of 18.13, suggesting robust earnings capacity relative to interest payments. In 2023, the ratio slightly decreased to 12.06 but remained at a healthy level, indicating continued strong coverage of interest obligations.
- Adjusted Interest Coverage Ratio Trends
-
The adjusted interest coverage ratio, which includes capitalized interest, follows a trend similar to the unadjusted ratio, confirming the overall pattern of financial performance and interest expense management. It began at 3.99 in 2019 before plunging to -8.4 in 2020, mirroring the significant downturn observed without adjustment. The ratio improved to 3.05 in 2021, increased sharply to 16.68 in 2022, and then declined somewhat to 11.51 in 2023. These levels track closely with the unadjusted figures, though consistently slightly lower due to the inclusion of capitalized interest in the coverage calculation.
- Overall Insights
-
The data reflects a challenging period in 2020, likely associated with external economic factors affecting earnings and interest coverage. A strong recovery phase followed in 2021 and 2022, indicating effective operational or financial adjustments. Although there was a minor reduction in coverage ratios in 2023, the ratios remain well above initial 2019 levels, signifying improved financial stability and capacity to service debt interest obligations.