MPC - Earnings call transcript Q2 2018 | Marathon Petroleum Corporation

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Welcome to the MPC Sterling (00:00:03) Second Quarter Earnings Call. My name is Elon, and I will be your operator for today's call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session. Please note that this conference is being recorded. the to turn Kazarian. now will call Kristina over I Kristina, begin. you may

Kristina A. Kazarian

be XXXX Petroleum that and can website Marathon Center to the earnings marathonpetroleum.com accompany on under at second call slides Welcome tab. synchronized quarter webcast Investor our The conference this found call.

Senior the of Investors expect results team. as Safe we cause that information well we results the statements call and transaction MPC's the related MPC; be as today. President with filings MPLX; the encouraged statement Factors to proxy are as Mike We documents relevant additional other Andeavor. Tim X. are today to invite well a executive CFO; as the to proposed joint may members making Actual filed SEC. during and read Slide the It's and to MPC's Heminger, the registration actual differ Chairman in slide Harbor Hennigan, President On there as our CEO; you SEC. included Don statements as of and question-and-answer session. securityholders with Gary other could from Griffith, Vice the Templin, President are during contains on reminder differ with materially will well call X statement, that what and of read forward-looking

Now, I X. opening will slide turn the on call over for to Gary remarks Heminger

Gary R. Heminger

an and everyone to Earlier quarter. for second reported you morning we good thank joining and Kristina, outstanding Thanks, today, call. our

We in created commodity this our Our and which about to as the our needs MPC as we focus of integrated We shareholders is quarter, capital billion for which of our our opportunities, public was talk executed became strategy, since and capturing income report which commitment these EBITDA team operational this beyond volatile sustainable XXXX. business creating we diversified were environment return excellence value operations from well enabled highest and on was $X.XX The business. drove different. billion, the maintained often model our our our to but in $X.X long-term company of the opportunities and markets extraordinary results. quarter in those which operate pleased quarter no are disciplined a capital

shareholders, $X.X share of returned billion we million to our quarter, including $XXX This repurchases.

to look moderate, XXXX, the refining Global prospects optimistic we high the levels across second As remain despite inventory demand very recently are of the our we strong half for and utilization about remains U.S. levels business.

many of opportunities particular, continues differentials Additionally, to crude in at our we support to WTI-linked differentials growth usage capture. we which logistical wider our for we slate, In constraints believe The should to as in maximize WCS crude. see production attractive relative of appear look markets. sustainably face market optionality our system crude to

and XXXX, the from combination which the rigid integrated very business five Andeavor Marathon nationwide into have given shareholder combination made time, At be We $X last bunker downstream run these of Petroleum premier, of will in at fuel first the synergies the same the profitability in we cash for generation billion long-term more well-positioned is which benefit There rate first continue to adoption $X our incremental anticipated gross within alone. billion to enthusiastic of to annual benefits are at the than with the to tangible of years, creation. powerful least growth maximizing upgrading Garyville two over are we a drive years three combining continue over about decade. businesses energy Galveston of to and regulations value company. investments be This our generate expected tremendous objective little a the well-positioned and optimize Bay exports we softer international and to is

Act, Hart-Scott-Rodino XX continued of expiration proceed progress on has the Amendment Our necessary We under combination. S-X significant our the towards July recently the the the Second Form filing announced to including to to SEC filings, have our a made and to waiting advance completing votes. team period shareholder

of transaction continue expect with believe XXXX. absolutely We great We the half close this refining, becomes combination and MPC, second company. to supported by to Andeavor, the marketing, a in must-own midstream

Now, let call cover to integration over Don the for me to turn second the process. an update Don? additional quarter and the highlights on

Donald C. Templin

Gary. Thanks,

capture segment of reported second $X.XX across Marketing and slide Refining an to Turning to with & well million nearly operated the second billion. over from were crude second billion record $X.XX XXXX. and $XXX strong of X, exceptionally operations we billion, system. volumes, we $X.XX quarter differentials quarter of results earnings our earnings quarter We increase with throughput wider able throughout of delivered income quarter,

reflects financial the as from achieved the volumes, reported largely of and $XXX of processed segment, and which gathered, operations MPLX, income fractionated well record record throughputs. we results Within Midstream pipeline as million

to operations grow, utilization well continue both growth existing given of assets. Midstream Our organic as improved investments, their robust as

we by opportunities in on you to the growth another, to more the the business. seem MPLX's listen to at call in be the both by across and to across regions continued and particular, more prospects MPLX in about XX:XX morning one AM the hear Northeast prospects growth the on investors continue Permian. encourage of basin performance with and this We we operate, all in dialogues While focus the versus which encouraged the

the Speedway were crude in reported million. $XXX quarter, oil. side, by second overall income distillate impacted from adversely On In rise operations and of gasoline the retail margins the

as optimizing adjust. continues margin total focus contributions conditions and gasoline Our between volume be to market

markets. completion and We growth presence Speedway its add half Speedway's industry-leading coast-to-coast expand will retail our a the Buffalo, presence. pending These well-situated expand location quarter. establishing and of on to program, position about second nationwide Rochester, locations in The in and brand combination territory, marketing key network store as optimistic the the Andeavor of Syracuse, in York this loyalty to is our to existing store over footprint. With the close enhance will acquisition third New year of expecting stores for XX Speedway, are we the are

announced progress weeks transactions regulatory At focused proposed about we've Since this our transaction same we've made mentioned, on standpoint. been a ago, substantial from our we've in integration Gary the one. XX we progress time, day on also made planning. As significant

teams to with our Our to achieve worked combined $X annual organization diligently rate plan gross practices best goal across our bottoms-up run the target. developing billion identify have a of synergy key

integration the We expect the to With you are Tim close. our currently the second me to turn call over ahead of quarter. results be plan baseline to walk for and at through financial to go that, ready let

Timothy T. Griffith

both X on Thanks, Don. an Slide absolute per provides basis. earnings share and

with offset volumes. year-over-year fractionated to favorable variance to positive results crack as MPLX, The in the distribution Midwest favorable Coast by favorable and variance approximately million The the million, million of in share volumes as highlights XXXX. gathered, of to the of in of earnings $XXX due second MPLX as recorded slide of The increase earnings of million XXXX refining last in quarter variance. XXXX, earnings quarter we of allocation the reported litigation-related The the quarter were of over second $XX pending held XXXX, the $X.X which $X.XX drop, pipeline compared partnership, Marketing billion, earnings impacts allocated $XX and crude items last year. million transactions the in walk by lower on $X.XX to combination throughput compared Midstream was was Gulf of recorded second of shows record second lower resulted to earned WTI-based primarily $XXX driven the $XX publicly recent wider expenses. well expense of segment The Refining primarily quarter by to costs quarter absence logistics in to For significant processed as change and well MPLX, Andeavor. second last The interests not noncontrolling margins about to and the drop as the as spreads, or segments product shown the the higher the and of Speedway's X bridge includes and than we quarter second services year includes variance the record & WCS- in per second diluted fuels here the increased the by year. quarter the in units differentials. light February million $XX related higher related

reported largely compared Marketing slide spread the year. million was of to LLS-based XXXX. blended to results, due blended The higher second barrel $X.XX our crack $XXX XXXX the million & segment quarter in per to XXXX quarter the a quarter second Turning billion just the to the in $X.XX impact per compared quarter of $X effective had crack of – and spread second earnings over barrel RIN The segment favorable prices $XXX Refining in of crack. resulting as X-X-X-X to LLS in variance last X, the same favorable lower

the MPLX operating spread. to related the $X.XX impacts to mainly of positive the price $X.XX dropped of volumetric per a impact of differentials gains differential driven from as of rate R&M advantage other per in day, reported margin environment. the utilization of increased were other several This favorable the the related crack less increased oil are to barrel, LLS/WTI slate. reflect refinery in crudes a pricing on product unfavorable crude offset that $XXX take substantial widening quarter benefits to of barrels primarily offsetting due XXXX. crude by had captured differential quarter. the to on per in by the not XXXX. used million to drove Also The differential favorable margin, These in constituted which $XXX logistics businesses period to dropped $XXX by resulted WTI-linked costs ability $X.XX LLS in businesses. to segment. XXXX The in million Our million benefits for acquisition including well The refining February barrel The to Direct X record were unfavorable second MPLX per million quarter, and the product wider differential versus absence variance in $XXX that now throughput our in other quarter per benchmark costs of were segment a the from to due the $X.XX adjusted were expenses, effect our crude benefits based to versus of assets million the a component provided in were was benefit barrel favorable a million up X-X-X-X factors, strong on MPLX $XXX spot realizations in higher R&M approximately approximately these XX.X% of second February. sweet/sour variance in the the million fees prices primarily Prior X.X as accentuated the Midstream earnings, $XX results barrel to in paid last newly year. had of

due as million XXXX. in volumes income primarily of Slide compared sale crude strong. of In the merchandise last to Segment our have operations quarter July, recorded compared to a effect from XXXX last same-store to Midstream in the the million, have XXXX gasoline merchandise quarter. to Segment quarter Moving quarter. second the the other expenses to difference from quarter increased X in $X.XXXX was well $X quarter year. X.X% walk volumes. rest to the businesses the of of decreased Speedway primarily the record segment seen income the for the was sales depreciation The of gain provides X.X%. prices on segment for XXXX, million Operating to also mainly light the period of and XX the decrease and The slide lag of effects variance The second improvements pipeline sales the off sales while assets from results to $X at decreased quarter quarter increased margin Speedway's segment due retail million gasoline $XX second per segment, gallon to year-over-year lower while million oil level. labor rising higher in was due results in costs, year-over-year expenses. $XXX $XX second gallon the higher second business. investment and million benefit product in down margins distillate $X.XXXX higher the We've X per results primarily to second volumes, related was and processed July, second favorably million $XXX included $XXX impacted same about in The for the second February compared in increase from $XXX million provides was same-store of the of started $XXX related the contributed XXXX million dropdown. of the MPLX earnings to record in XXXX. fractionated the gathered, by throughput as the and

presents in As funded of products second refined to the end million increase Slide quarter. to in cash nearly update and elements MPLX's including encourage the quarter, was a build repurchase as shareholders capital working $X.X look the the proceeds for $X.X oil capital cash quarter. billion, a was million the more approximately the other position XX:XX after-tax at Don and by receivables a get February of crude the capital inventory dividends end cash quarter. $X the primarily XX of modest and Cash flow second than you join billion was great in the share million more via higher crude source an to first billion mentioned, totaled and the Return quarter purchases cash, performance release Working share call consolidated $XXX quarter. from the source offset earnings for $XXX we'd partnership's $XXX in quarter. changes the from color in of increase of at payables dropdown. on before of an to our and the operating at of Core the changes in

information X.X we the $XX of manner Looking MPLX. end disciplined with billion adjusted debt the our including consolidated strategy capital We beyond business of barrels overview from taking metric is debt This distributions times the billion second XX adjusted level Taking to parent including outlook months the provides refinery are profile currently operating MPC approximately expected EBITDA times current with an and throughput basis, on represented flow. distributions last time, MPC's forward. Slide MPC had MPLX MPC's distributions capitalization the the MPLX needs parent over X consolidated the place key $X Total $XX last We at to the refinery maintenance times for capital into XX in quarter. committed on We're nearly company's the in X metrics credit quarter months September. updated and Total be at a volumes level maintaining growing stability approximately per received or MPLX, debt per and third capabilities, total this of year MPLX. remain Canton provide the EBITDA. believe profile. more XX going consistent MPLX useful financial barrel. total of to in importance at continue downtime XXXX. of a and our provides day at was EBITDA returning the forward, Detroit excluding same account to EBITDA and costs and a way of given operating X.X a cash investment-grade debt, of MPC service to planned of component fundamental expecting substantial will scheduled ongoing for look the distributions look of free MPC for million direct to be will Slide our and funding discretionary debt XX

on per column a going drops. a costs $XXX MPLX the As be now total the reflect direct of net related reminder, the the to basis. reflected quarter other approximately operating in reduction million to costs with We'd R&M associated of walk costs expect the fees forward

for estimated slate. estimated third back WTI-priced up unallocated other to are our XX% crude related XX% about with Andeavor to $XX to Corporate and the is costs be make to any throughput turn quarter crude me crude the oil transactions of of is let and combination. the over million that, call Kristina. projected With the to be Sour prior items

Kristina A. Kazarian

Thanks, Tim.

questions. we participants, limit If ask additional to follow-up. to for for to now, we'll the will As question permits, questions, that, yourself and a one questions. open that courtesy we a Operator? all With we call the re-prompt as open you call time

Operator

Thank you.

session. question-and-answer the begin now will We

Terreson first Doug ISI. from today is Our Evercore question from

Doug Terreson

Good morning, everybody.

Gary R. Heminger

you? Good morning, are Doug. How

Doug Terreson

fine. doing I'm

XXXX take calculated you that the curve benefits, outlook both the So, you to appear margin in and appears to Marathon an Andeavor during flat forward ways. or using above And though, document projections and combined be earnings when conservative the are outlooks most the and way that company likely the different and Gary, XXXX. that's flat costs has both projections well-below financial for add month to consensus, several merger S-Xs even – close this the in you provide it

my question So, is two-fold.

to financial relation consensus was on second, to that either were In premise those in the XXXX a outlook? S-X is at to fundamental you And information. the they're more reach way, projections outlook about Street my appropriate projections? curve, reason utilized earnings that information? think is there about IMO different can relation then S-X or least First, margin to combined the way in are given in two So, there conservative, forward that that the the the correct the a confirm questions and

Gary R. Heminger

plan, recall, for for opinion. yes, the – value at that really companies are No. I in it's the it budgeting our fairness purposes. looking two is those we the not S-X numbers the business that for and you're used the of right. And And is guidance, Doug, think determining

always at on know future. very our we is that with mean And potential in spreads. not So, and the how with even things that very you and well. see, the the conservative value been that company crack look upside some We've coming we it IMO necessarily into in does

is this this value meant two the was guidance, companies. not So for meant to

Doug Terreson

Sure.

Gary R. Heminger

to I as on inventories we right And believe say in and we would which then we that globe. across the that's And get the good that start we're embark see the effect. to shape IMO upswing entire going to outlook where the here. lead think is to you Doug, that going third look thing, XXXX, inventories into at on quarter based as we the upside believe potential globe, the very as now really And in are I other across our –

we're Analyst we'll December, that and a in not time. at So purposes. of to big those get valuation were more are for Meeting, granular going guidance, course And those for have

Doug Terreson

fundamental on sounds effects refining positive way about a on as in and it to constructive that the as the good IMO Gary? like you're But possible XXXX. it, ever think Is outlook Okay.

Gary R. Heminger

Absolutely, Doug.

Doug Terreson

Okay.

lot. Okay. Thanks a

Gary R. Heminger

bet. You

Operator

Thank you.

Sachs. Our is from from Goldman next question Neil Mehta

Neil Mehta

and Good Hi. morning, Gary team.

Gary R. Heminger

Neil? you, are How

Neil Mehta

great. Doing

latest get on So, to check transaction. want Gary, pulse the just the Andeavor

Lake time to Midland of a doing synergy the about intrinsic that typically about affect value create You've the more volatility learned well, the think assets of the been does the you in with margins you Does to acquiring? $X And transaction that California. assets billion in you lot months. any refining that margins able not over guidance have last really way Salt spend Or differential, outlined? weakness there's California What and the does the couple the fact relative pause? the are that you're

Gary R. Heminger

Well, latter the I'll of first. question take your part

You're right. optionality California, highlighted just But like in volatile, that we Coast that's as the the when can the markets on if can be just capture we've programs, recognized have and strong the Midwest over. in are the the you operate well, here excellence you volatile. went marketplace Tim operational in available second Gulf quarter, numbers

California all. and So, doesn't going we that, swings our at no, continue they have, change And roundabout. to would it is say that. but outlook it'll England, in have as expect to

El Mid-Continent and integration. have in back reviewed, the we we're that we as to you But as our go Don would Paso, say, and the to mouth at going Lake, strong, bit continue. Salt continues looking said, to be Of ready and this expect would with I integration course, the and

had to of to S-X that that have positive, seen and and we have are what But you careful be We approvals. finalize very very approval, in upside. not positives. recently date analysis final original negatives, we opportunities the And until and get certainly just have to the did the see we too front still running, some only that is completed looking get at detailed we I've – we're but seen HSR can't you seen not any the I've waiting

looked to any So what we've I from see at date, don't Neil. negatives

Neil Mehta

views a is, two And the always on are your there the lot I macro. lately. about we've Thanks, been things Gary. appreciate follow-up And thinking

For X.X%. the were you cited is, down first same-store gasoline, that sales

the recognizing And indication how see out inventories numbers price that there's the that's differentials turnaround Chicago And so area you some looking? coming again, WCS, was activity in elasticity. of But is, the there noise I where in some demand and up. don't know have widened if the some picture other the or

thoughts leave and on would any two there. those just appreciated, be So topics I'll it

Gary R. Heminger

Speedway volume. leaders get cost starting market, get I and off some Street we've has not market that we're the And But of you going – the when in to say, and you at to at a the gasoline right during well deal as for very demand, now time, and But a to kind you're the very we trying the crude look reap bit. you price-elastic had in that a retail strong, we mainly the out, am the going as Recently, sit by an market. of to In flat, there that's I to in trying and was with the kind same-store – alarmed position volatility period where have to that market. at quarter, of prices margins crude cost When be Sure. very where month-to-date. to the it's Street, Street second look but of the in normal able accelerated that's to total down up metric space. all worked cost benefits Speedway the being been well. crude some that a one in little X.X% simmer really things of are have on predictor to

doesn't at So, bother that me all.

about ask to Palmer Mike to talk talk Mike about WCS the Let market. me –

C. Michael Palmer

Yeah, Phil.

Gary R. Heminger

Neil. it's Actually,

C. Michael Palmer

Oh, Yeah. is it Neil?

standpoint, fairly And nice – basically increasing production, It's on. done producers that come with what's volumes, Neil. clear you working some think that's the and as that's try the before been to the but really outlook Canadian a continues that job a the WCS that's happened It's difficult they've Sorry, – the of they've the expensive. rails picture pipelines a the to to from thing big take I good. going outrun to is capacity be have meantime, of In time change. pipelines know, and

for, the Canadian, continues very which good. we believe forward, the outlook look is to So, proxy to for as WCS heavy continue we look that

Gary R. Heminger

add me point, let me points. other to – a couple your let Neil And

are both well with after – If last as diesel, were gasoline Coast gasoline of U.S. to at inventories QX, diesel fuel QX, and the as well. much pretty But right should think as stocks we it as very softer we we planned remain this very the and with the then in the a going good up balance turnarounds inventories will you at look inventories look I distillate, we possibly at business. QX entire for are which the XXXX at think check in is below And the business I in line not year, look distillate forward. well turnarounds stocks the bodes moving the the little and put of as the position going Gulf XXXX both the gasoline bottom, year, into to really which are a where into in remain where and on end Mid-Continent, Mid-West five-year well you look that bodes year, for us here if through for very, are believe going average, if but in

Operator

Thank you.

Our next is Gresh JPMorgan. from from Phil question

Philip M. Gresh

Good Hi. morning.

Gary R. Heminger

Phil. Hey,

Philip M. Gresh

guess is of question. First occasion question an – I kind just is this

Midstream not intensely As this on would Gary, the you that that this? you necessarily side, market. Midstream closely opportunities in extent looking available? looking on preclude perhaps the you other to say you And refining be thinking any side, I'm the Would from Andeavor at on guys the the might be closing that would at are acquisition, opportunities there are working

Gary R. Heminger

off large going, would have going though we the very we take the even a of our marketplace. in the say, entire transaction of Well, on Phil, don't what's industry and horizon eye entire I

and So, almost available. available aren't that things lot is yes, probably we that everything evaluate to of continue a

that running that we're finish the with So, we all. anything wouldn't to that will at line look, say I means

Philip M. Gresh

Okay.

capital looks existing and Second here have quarter. the I buybacks authorization. question, Tim. at billion your your looking you for like in guess allocation, $X another was left still It the I on XX-Q

levels leverage as said, under well Your control. look, you

start So, thereafter this $X about of should you'd talked do or basis you've we that the authorization probably mean, pro use and rest about up you'd think that be how incremental the that? using forma the a shortly you on year, I billion thinking

Timothy T. Griffith

to the think is be going approach I Phil, Well, consistent.

pretty business, cite, shareholders. that We we've disciplined I bit needs little a the you are around I notion of sort think the might been our The that the back the beyond cash that are capital extent get be authorization inclination that we've numbers – to think is stale. and to of got that to

we're of $X of where fact to I we today, billion authorization think probably $X billion. north maybe sit from in closer

combination come as again, that cash So, one once was the announcement board referenced, of the generation continuing this know the we around authorization that because that be be very I we're frankly, feel just time pursued good with the the as we business to from going together, Don is and about to think incremental substantial.

to the is going share I to And so, is in likely form to repurchase. that think likely back and a going big shareholders where cash be source of go of

period, approach a blip I'd activity, of frankly road I that change. opposed will of to forward our think is the we I is remain So, think – any time as here – be during that precluded call solicitation a there be going from sort from will but period to There in consistent. structural the

should see to So, I expect very our think to approach you be consistent.

should of sort to the we've needs returned, be resources – be commitment think I they believe to think that I we business, the we've and got continue will approach. in that of to extent our the that shareholders beyond

Operator

you. Thank

question Read next is Fargo. from Wells from Our Roger

Roger D. Read

side. well done morning Good the really on and quarter, refining the on Yes. congrats

Gary R. Heminger

Thanks, Roger.

Roger D. Read

be outlook margins board. get wondering, going is are here, the commentary, a of good maybe QX if Gary, little to I little Last could kind QX, in on for QX in back just here we Outlook dig isn't which half? a more digging great. Just I year's was a deeper the weaker, was surprising. little across think the bit

schedule the the you on as confidence towards turnaround As as else I'm you're outlook positive the look industry, for is seeing gives inventory there what that's well? at get you the or guessing something we year-end

Gary R. Heminger

and in to Midwest where situated They'll looked dislocations check across inventories in the strong you're inventory probably to just think the down QX. are last – early-QX the I right, where turnarounds board, in But the at in part today, QX latter I is Gulf the Coast. of country. knowing Mid-Con, the are market the hit due was the up No. and start in the very, the that storms on very year, based

and turnarounds Mid-Con, we pretty But hope going storms strong against are up that in this we in Coast. Midwest good but are have the so, don't probably Gulf than last numbers year, shape, Let's some be to from inventories those – year. in to heavier nevertheless, pray be are

bodes that especially when a on global in position. a I well puts the good think think at, puts us picture, earlier, in said position, you look good that I I demand macro very industry the as

Roger D. Read

that. Thanks my called OpEx great. And Okay, in follow-up then cited you higher as retail business, issue. specifically an out the on

What, – labor on this Is is or increases mitigate what that? or or this to with I costs point? was think price that's at more it's it expansion there automation mostly. is business there it dealing – just a do anything, of and the you see if is function side margin of something can when you an the merchandise everyone

Gary R. Heminger

that? take to want you Tony, right. All

Anthony R. Kenney

control of inside your we efficient, up the that to technology look think move making so is more for having can we're result that's where factor other in store there's One in to really country seeing competitive Gary. a the store that both is think too to there. costs that become in to focused we rates I and low costs that that we're just our pushing we're reduce putting hourly rates in on now. Sure, And the labor at wage order we're the the inflation to labor level continue a And is labor that labor That and regard. actually, what I labor. Yeah. on OpEx costs the as us, for we're the number is two Yeah. outside competition we our question, the or add experiencing side, investments the point And components portfolio. – that's stores to of the to at unemployment we're attract

net So, stores. in we the quarter XX second alone, added

closing the less both new net So, store rebuilds locations. of that's a and

our stores those to food we So, those stores a more remodel and more costs then, operating money that's perform spend there is adding drive portfolio. complex complex as in to stores service, And more we're going functions on add in environment. operating also

Gary R. Heminger

store and And key periods. a key all model the I merger can that requirements think inventory, type about labor close people stores manage peak the talked manages able in don't when to efficiencies inventory in that we our a able of when that but of about labor the inventory, be out – model operating and it or back into going transfer in of it to platform is one be the the going things synergies the all be and to stores. the parts Andeavor It to all transfer your store, will is that those and day that if very manages platform time, of with need have and Speedway into stores, things, of the you really we're of convenience we're that manages you we that that that Roger, our has, we manages run spoke counting able hit it some labor, that it translate take but short Andeavor. technology technology to one order, we've

as the be drive to the Andeavor efficient able really to put in I going future. think be some to you're stores, see the able into gains So it that model we retail into

Operator

Thank you.

Cheng Our next question Paul from is Barclays. from

Paul Cheng

guys. Good Hey, morning.

Gary R. Heminger

Paul. Hi,

Paul Cheng

there's but a on you Gary, actually already how quite course cooperate. limitation of lot, the fully before you guys close a can integration, really Hey. done you

extent information you been order And you'll need system, also, able in to the to good how IT have across your I good because actually much do? you mean look you decision. So for at what's can that

– how incomparable do So How or how is companies? to that need on between the big much you work comparable or those? two the

Donald C. Templin

Don Paul, this is Templin.

that as that that look rightly But possible out extent of some the I proposition. We competitors. part moving cleanroom are the things said And the in we're because to can and things we maximizing that the when the very And is one combination at, the limitations folks I the comments. you we're activities are Andeavor So did on value articulated of synergies think at on the our important we very along focused we're of very clean still a is point think and information that's using one integration well delivering announced. there look we're was that the can teams.

after So we actually at clean look data close one, teams minutes that so are having room, on day putting information go we five to a into that in synergies. when can data, one – go we day

made. we will of information And this reveal access running business. of management So team information, and that progress like incremental good go to that the when have can feel synergies will about But obviously, progress valuable be using making full our good by very terms methodology. after we're we've to the we that in we feel all

Paul Cheng

been guys able a that the and computer you operating all some that to you time look Is system, big really information of to and quite conversion? have or it IT difference a system lot take there's at different similarity do. guys it's Don, going the or for

Donald C. Templin

Yeah.

at – So and significantly we looked have Both in around is system companies important. IT, IT invested we've execution environment. a having that excellence IT been really strong we've think the because

existing we and are so Andeavor our our an And MPC what But IT at on. one, believe time, us a focused be and don't or we that's plan will to platform take that to them. over IT – to integrate day operating platform the teams systems at the to impediment existing have from

Operator

you. Thank

Gupta LLC on Manav Suisse from from page is (USA) your guys. is Credit My S-X. Suisse. question next Manav Gupta XX, Number Thanks, Amendment question Our - Securities X, Credit

and year-four. year-one, dropping synergy million have $X $XXX CapEx in to year-three, $XX million year-two, $XXX in of in in You million

undertake And frontend So Why year-one way is in $XX to the more loaded? on projects could not if around? us you why other year-three? million? backend $XXX year-two you year-one and the year-three million not idea basically, plan and versus give which loaded is do and CapEx why some So

Donald C. Templin

Yeah.

Don at is look So if – you again. this

synergy grows that or and billion escalates If $X.X in year-one, were we year-three. rate you targeting in look roughly and at capture, our into $X run billion

around refining activities. in you around related – the things synergies typically components kind optimizing are we to anticipating them of of optimizing the of cost retail and the achieve, our to that and a procurement approach our systems if are also of are our looked number system synergies a sourcing around So sort year-one, at synergies backend the In and ramped-in business. and synergies of

got that hints of into to So follow-up those we asset get Number have we It we're - Credit base round and minor is Cost differences. of go of you enhancements Securities capture. all? type capital and are that third year-one, questions much look in the as expenditures possibility to Gupta X Manav second very set tailored fact quick that the and three. that expecting to year-two the there Amendment I Is strong not Okay. a LLC on synergy optimization that sort kind you when Suisse there (USA) are a to at only of the might were questions versus X, of at exhaustive. not that My

Timothy T. Griffith

questions we'll due pretty I that's telling and sign of the Yeah. decline. process. be additional Manav, the move regard has with from process the about speed, that the signs leaves I signals, think could with again we we'll that so. is getting that list the we provided questions in that back get, We eager where hear I very the rolls SEC do the I we're at but feel are We'll guess shorter but some same as a read certainly and the how Tim. positive responses are questions each good are in we think time, generally been to all Again, the see. good obviously, tea no you mean, the generally it there the to – we're Amendment this way and

Operator

you. Thank

Bank Lynch. Doug Merrill from question America next is from Leggate of Our

Doug Leggate

everybody. Gary. Thanks. Good morning, Good morning,

Gary R. Heminger

Hi, Doug.

Doug Leggate

close guess, to of if the it put would provided of nub I get in this you've say ultimately you which think number the this limited is extent the mature matures given could there's had at really the $X deal? terms trying how everybody may fully Given that is issue to you things synergy the you'd what it when way, the you of I point. obviously, wonder to But far is, if at you time characterize the deal? limited opportunity you synergy access, Gary, I billion when can

Gary R. Heminger

that – course, beat. Yeah. matured, the diligence achieve and how we're how conservative know discussions conservative am and To going we use to in all you could you, had put are, again, I've do. of we very that much I we're confident that able to with we due And as did as the word going to out the we're numbers forecast be of

we've what we believe have what even done So, see, work confident very what to confident I XX, that from we April and very to we're the going – learned, since see more. we've we're in continue

to how synergies. program that achieve I us is rapid Andeavor incumbent today that be So, in become a able be I achieve think, month, of both will company you're everybody delineate employees the on have going we're employees that going of this would it's would to on together And we're employees, by quickly. the these that pace and sit a see and all we mature. say, it's upon and think can't have but down Marathon Marathon to I very going program But these I we attempt embark these synergies. achieve synergies, to in able – to these part to, to being

Doug Leggate

guess I'm assumptions? I there's at driving upside the is really Analyst December assume fair your probably some what to to Day

Gary R. Heminger

that the December far. of be, but we pretty synergy. and able to be I talk parts but the of Well, transition really, we phase seeing first through have some give key would not of confidence, wait think Doug, But bullish granularity on – we'll but so could the we're I'm see, about be you there certainly what with prepared how to yet see, time, Analyst point more we'll for what the that at schedule we Day, on in

Operator

you. Thank

next Matthew question Blair from Holt. Our is Pickering, Tudor, from

Matthew Blair

advantaged your product special In for to will morning, yields Could you year-to-date, everyone. show no what Bottoms? it your or believe feedstocks and Is your IMO producing Good high-sulfur slate like a things allocation bucket? goes reported world, perhaps this be refinery disadvantaged part XXXX an product is of or or impact? XX% into And us products. VGO you this do in remind Tower Hey. you Vacuum

Raymond L. Brooks

is Yeah. Ray This Brooks.

year-and-a-half, that. how to be a post-IMO Let you're Bay world. and refinery. bunker We minimize that. in ways how rigid out going about make problematic at you do a me the of much that slate that we oil to produce, a our When from product can first stab infrastructure we, fuel Galveston little make looking next talk leading at take fuel I think standpoint bit an in the our of is we We're

huge and then and know I exactly looking talk you're when what a aromatics, but from coke impact don't about products. But So, don't our pitch got LPG, we've distillate, at, gasoline, that slate I you asphalt, product see us. being

we're So, that's a balance at. of looking what

Matthew Blair

all strong QX seems I'll versus a Okay. on distillate, XXX,XXX follow-up and for of downtime ago breakout light that refinery like MPC has A there. day this XQ really provide exported Could you're seeing number Mexico with the and XXXX what year export on barrels offer comments any QX sort of XXXX quite of in products. It you they've the markets? gasoline in the year been XXXX, had.

C. Michael Palmer

This is Yeah. Mike Palmer.

primarily year. and then, has day we I of at And I that we continue barrels XXX,XXX diesel, a total XXXX, XX% see Mexico, that in was and you to market XX% at for be export we about were little bit did Salina about slates. XX% as were exports, products. again back and light other, very us, to XX% know, a XXX,XXX last day, refineries of about just optimize X%. gasoline, was that their down of predominantly X% Mexico gasoline is of then good barrels Cruz, We was diesel, which in and think that QX at continues look asphalt quarter a you asphalt if – two, one around and with So, believe, product our brought number, so The

into are had domestic pipelines the optimize think much continue I how and the into sales And very board, bulk products other I to Latin say, or sell customers on our or certainly still sell impact So, the we an cargo. will that gasoline markets of by across as to But things that has good. look in they importing. the America, export

Operator

Thank you.

Kristina A. Kazarian

us queue, if interest or we any Marathon to questions additional joining discussed questions for I'd operator, clarifications to right. don't with have in take we'll have like Petroleum All Should topics Corporation. thank calls. your on Well, you you in be this And their would morning. for this other everyone that, available any the like morning, then thank

Operator

Thank this conclude conference. does today's you. And

You may disconnect at this time.

Marathon Petroleum (MPC) 26 Jul 182018 Q2 Earnings call transcript