Speedway Segment Income Down

Asset sale contributes to MPC subsidiary's decline, while parent sees gain; Marathon Oil also down

ENON, Ohio -- Speedway LLC's third-quarter 2011 segment income from operations was $85 million, down $20 million compared to income from operations of $105 million in third-quarter 2010, Findlay, Ohio-based parent Marathon Petroleum Corp. said as it reported third-quarter net income of $1.13 billion, or $3.16 per diluted share, compared with net income of $277 million, or 77 cents per diluted share, in third-quarter 2010.

The decrease in Enon, Ohio-based Speedway's results is primarily attributable to the sale of 166 convenience stores and 67 franchise c-stores that were part of the December 2010 sale of the company's Minnesota refinery and related assets.

Speedway's gasoline and distillate gross margin per gallon averaged 12.57 cents in third-quarter of 2011, compared to 13.73 cents in third-quarter 2010. In addition to this lower gross margin, lower sales volumes related to the Minnesota asset disposition also impacted results. Merchandise gross margin of $200 million was 7% lower in third-quarter 2011 compared to third-quarter 2010, also reflecting the effects of the Minnesota asset disposition.

Same-store gasoline sales volume at Speedway in third-quarter 2011 decreased 2%, compared to an increase of 6% in third-quarter 2010. The primary factor affecting same-store gasoline sales volume in third-quarter 2011 was the higher average retail price of gasoline.

Speedway's same-store merchandise sales increased 2% in third-quarter 2011, compared with an increase of 3% for third-quarter 2010.

President and CEO Gary R. Heminger said MPC's third-quarter profitability can be attributed to relatively strong crack spreads leveraged across the company's entire crude slate, as well as the company's balance in terms of its geographic location, business integration and crude oil sourcing.

Total segment income from operations was $1.85 billion in third-quarter 2011, compared with $496 million in third-quarter 2010.

Refining & Marketing segment income from operations was $1.71 billion in third-quarter 2011, compared with $352 million in third-quarter 2010. The increase was primarily the result of a higher refining and marketing gross margin, which increased to $13.18 per barrel in third-quarter 2011 from $3.75 per barrel in third-quarter 2010.

Pipeline transportation segment income from operations of $56 million was $17 million higher than third-quarter 2010 segment income.

MPC is the nation's fifth-largest refiner with a crude capacity in excess of 1.1 million barrels per day in its six-refinery system. Marathon brand gasoline is sold through approximately 5,100 independently owned locations across 18 states. In addition, Speedway, an MPC subsidiary, owns and operates the nation's fourth largest convenience store chain, with approximately 1,375 locations in seven states. MPC also owns, operates, leases or has ownership interest in approximately 9,600 miles of pipeline. MPC's fully integrated system provides operational flexibility to move crude oil, feedstocks and petroleum-related products efficiently through the company's distribution network in the Midwest, Southeast and Gulf Coast regions.

Houston-based Marathon Oil Corp., which spun off its refining, marketing and transportation business in June as MPC, reported third-quarter 2011 net income of $405 million, or 57 cents per diluted share, versus third-quarter 2010 net income of $696 million, or 98 cents per diluted share.