MPC - Earnings call transcript Q3 2018 | Marathon Petroleum Corporation

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Operator

Welcome to the MPC Third Quarter Earnings Call. My name is Elan, and I will be your operator for today's call. [Operator Instructions]. Please note that this conference is now being recorded. I will now turn the call over to Kristina Kazarian. begin. may you Kristina,

Kristina Kazarian

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

Slide the Gary are a Chairman; executive as the as statements Marketing harbor cause other may as Vice could CFO; safe expect and It's as today call Mike well session. during reminder Griffith, X. we be to that We the Heminger, filings that there and invite President Goff, results Tim of CEO; making President Templin, during the the well Hennigan, actual in on our we members results team. Chairman forward-looking differ Actual SEC. you Don and Supply; what Factors will materially of to Executive Greg Refining, from read statement the with MPLX; differ call today. On included question-and-answer are of

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

Gary Heminger

Kristina. our morning, impressive call. another everyone, we reported morning, Earlier quarter. for joining and Thanks, this thank you, Good

to attributable income for EBITDA second and billion $XXX a approximately was to report net Our adjusted we were of in quarter the $X million, row. pleased MPC

and the million during strong quarter, slightly was refineries our both budget. both throughput impressive, which refining under Our considering had turnaround day. north of barrels completed of at This X per we especially Canton time on was Detroit in were and

the which to to continue billion value, over $X.X integrated allowed create Our driving with together us operations, shareholders million team's to return cash operational business model, capture us from in $XXX of to and quarter. our opportunities for commercial execution, over

transaction ability year, and our our resume though leading shareholders market by $XXX overwhelming shares, energy we have cash allow. company sets downstream expect even shareholders the was X, other returning this forward. returned conditions October going proxy strategy first repurchase Andeavor. the to On billion support of are period. X and remain we our as of million activity solicitation we to flow committed quarter,, U.S. now capital our integrated And of with on our repurchased the excess Both the shortly Through limited we closed $X.X as of During months the in of demonstrated repurchase to we

As we look of extraordinary billion across synergies including annual within $X potential forward, the run rate we years. three nationwide our see first over platform,

the energy diligently business, Over the practices commercial first and be few impressed the month, the enthusiasm with first and the just especially deploying our months, working integrating aligning teams. best will teams I'm In cultures. on our the of

synergies We XXXX. on to our are in already starting progress harvesting regularly, report and plan

growth quarter of and we lot As economic positive XXXX, the Both into look continues. and to market we U.S. business. our global a for trends fourth see

factors recent been near demand strong. risk into the we with the regulations changing are in and distillate decade. will given well our the While of distillate remaining focal point are future, over content, strong fundamentals lows. current IMO combined and supply sulfur trends, Inventory investments news the have support of demand we market headlines, made underpin impact business the moderate positioned distillate appears pullback days well the believe of and last We X-year around the have levels that

In poised export gasoline As out sustainably what wider of St. Detroit the both us markets. head Park are the in appears markets, in the opportunity as gasoline-to-distillate these Paul With our be to may allows yields as well per to wider Despite of maximize approximately and XXX,XXX our exported day. to our integrated hydrocracking With has we refining U.S. you advantage we to opportunities. WCS MPC our capacity plants model differentials. many barrels recall, has ratio and take harvest coking flex business limited turnarounds highest XXXX, October, now differentials now to into our crude capture of turnaround, weaker recently as both system

across We across per and run our particular refining these new crudes expect to constraints of approximately be relative levels. day WCS, wider, grades, system. production to meaningful various The differentials Canadian in XXX,XXX sustainably appear barrels to logistics given

look in at WTI-based As we opportunities crude our slate, usage see we maximize crudes. of optionality to

capture barrels per we capacity, MidCon the X day With well barrels that positioned per refining crude addition XXX,XXX in are differentials those million have markets. over to of of the now attractive very day

We quarter for refinery. planned plant turnaround maintenance have at Martinez minor are currently the fourth our wrapping some Robinson up the refinery and

have we which Logistics, Andeavor our may could to the process begin financial MPLX ANDX or all X with policies you consistent move approach toward include engage more intent acquiring for ANDX that the business MPLX. as plans MPC we already financial are and with advisers the MLPs, the of evaluating to MPLX. announced options assessing of seen, Lastly, plans acquiring toward

will as we and an to work evaluation at our this appropriate we Our and comments on investors will through be provide time. the update limited process,

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

Donald Templin

Gary. Thanks,

segment our X. in third turnaround We well our income exceptionally Canton despite throughout achieved and $XXX million of of Slide earnings reported from We Detroit operations refining the Marketing $XXX Refining strong of having quarter. across million. with utilization third billion. system, and results quarter to quarter delivered earnings during the and & operated XX% quarter $X.X Turning refineries

volumes largely ANDX's and $XXX third both we which We of be segment, reported to as results including call you quarter, gathered long-haul Midstream MPLX's pipelines to from a the during Coast the new strong financial of investments announced during X, segment volumes will of quarter. income acquisition XX about the as several projects Midstream Gulf business. terminal at the well going as more pipeline of MPLX a.m. this November part across our operations forward. listen and on the the as also reflects planned call morning the in well driven to two MPLX, Louisiana. in export hear encourage by would in throughput as MPLX performance million, opportunities process the you fractionated Within We on point partnerships record

retail On reported $XXX continued ability In rising margins the Speedway pressures be prices. rising react which distillate million. there quarter, is to impacted In crude of to and oil market, gasoline side, delay at our a by income operations adversely from margins. Street, the The in a third

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

legacy earnings quarter of tremendous $XX.XX Andeavor of look in strong not the demonstrate key fourth businesses combining performance million throughput the materials two quarter to refining XX%. X.X had with cost per think segment per utilization. evident. the the barrel. results margin continued We I for these quarter, would capture Manufacturing roughly a The quarter per While index to legacy we was the which barrels was rate was some reflect our which third for in the basis forward provide when reporting on like Andeavor, do benefits day, The statistics XX% $X.XX Andeavor barrel powerful a starting for be consolidated to will business.

are Speedway roughly integration on of immediately capture and the tangible These company-owned Slide synergy operated an retail the by Andeavor signs of St. markets converting segment. comes started end sites X, important sites end conversions the to element converted, As October, from and Paul brand. been one XX XXX expect driving. the the the stores We of we first of the At and in we have to XXXX. approximately the Minneapolis in are complete shown

stores providing the and forward midstream are Speedway detailed across the each financial to turn upcoming from day, quarter. are an point implementing for call walk-through to updates look refining, milestone of provide more the organization, the Investor learning conversions retail while out, results our the let We each over of that, best easy third more organizations first practices our Tim With to at a to and our Day. me we

Timothy Griffith

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

third XXXX, MPC to share of quarter compared diluted per $X.XX the share year. reported earnings diluted For last per $X.XX

$X.XX by or bridge million to shows here earnings earnings. I'm MPLX $XX sorry, million in & of this the to during combination as an in settlement fuels the to compared financing not last to last year items higher financing as third segments Third resulted over increased taxes operating expenses. by to light was of X variance. was to Andeavor year benefit compared income share. by costs volumes transaction related $XXX and on same of were the variance lower to Midstream driven drop record last included allocated taxable reflect of MPLX impact $XXX change $XX million as quarter charges largely earnings of $X.XX interest and higher due were primarily the transaction as The per a partnership, to higher held The quarter. share results. publicly quarter favorable year. variance and per lower refining pretax earnings of $XXX year. of of to the decline $XX the at year in shows MPLX earnings million -- in quarter approximately of million lower to Refining Slide don't these spreads The crack the costs pipeline and $XX well $XXX MPLX costs results than prior million in in quarter transaction a in we by related in services last fractionated turnaround increased gathered $XXX units were diluted charges to compared taxes variance in and lower the to levels lower product settlement period resulted process dropdown Marketing combined log February were million Interest the pension unfavorable volumes third the income, shown segment X The segment as X and Speedway's costs the driven year. the distribution in of February noncontrolling pension lower higher Approximately year-over-year The XXXX debt was costs quarter higher and due drops and The tax allocation rate, and employee variance million third margins higher due last is the with benefit related quarter. and logistics the remaining million, Interest costs. in

Turning Slide to X.

crack spreads. in X-X-X-X reflecting quarter per the 'XX of & third cracks impact $XXX spread million Midwest blended of million quarter Our was barrel spread Gulf reported XXXX, the $X.XX 'XX during third crack billion The $X.XX in last and of wider some to to to quarter the year. nearly extent lower the as of The had compared Coast Hurricane Harvey $X.X unfavorable segment Marketing largely to experienced to earnings quarter year. segment per same $XXX blended crack third LLS barrel due in compared LLS-based in the last results, Refining

were quarter. The 'XX to per versus a the to sweet/sour WTI-linked with third ability the the period related third were slate. of dropped approximately R&M to to XXXX. variance of expenses drove in due MPLX differential for in the LSS/WTI reflect per resulting barrel benefit effect differential per quarter increased differentials crude by segment were the quarter. in $XXX $X.XX the $XXX widening quarter million $X.XX spend Direct third not to had per businesses. was last turnaround provided to in from of per increasing these quarter wider million increase the The with Our in a the impact that based barrel, take $X.XX per on operating primarily paid February. barrel advantage the $X.XX to MPLX $XXX costs unfavorable up This year, benefits million adjusted substantial newly quarter of other million results in positive the driven and constituted Prior maintenance XXXX. in The from fees $XX barrel barrel earnings. differential XXXX, $X.XX our in barrel $X.XX The crude compared differential to higher during third to unfavorable R&M businesses is of in

primarily of third our quarter. product to light the Slide in gallon results and to third depreciation, per in in year-over-year Speedway's labor primarily the effects XXXX, X effect and margins to in distillate segments. to due Operating retail year. to in $XXX for $XX compared of results million crude to per higher margin. Moving quarter the costs the Same-store by $XXX of other $X.XXX gasoline the prices lag quarter million million the year, to last operating the due decrease quarter X.X% $XX in in cigarettes, Segment expenses same was is expenses. walk margin versus Speedway which the $X.XXX sales, level. increase year-over-year, million at gallon last rising oil decreased primarily of $X million segment merchandise the The merchandise excluding XXXX increased increased higher, business. segment third due and lower leading to quarter income benefit was increased to and related third provides and third mainly higher compared investments quarter the the operations XXXX from

period included pipeline The and fractionated processed in is to related for volumes month million of $XXX of $XXX for in volumes provides improvement rest segment dropdown. XX of compared gasoline to Segment we volumes. same-store the increase quarter record favorably in February by year. businesses the was XXXX. income million third X earnings million the XXXX X.X% $XXX in was results For Slide October, experienced versus approximately quarter. third million for MPLX $XXX the from improvement the gathered, the higher of last the and impacted same the The throughput Midstream the

Andeavor to listen performance in third the in call presents encourage As Don the in of XX to referenced, for quarter. of MPLX's in capital cash quarter. quarter. lower strong million position the the Andeavor $XXX cash to the at changes third a of shares our window Cash to in on pending the given in of million we color consolidated of cash at dividends XX payables, you working by totaled repurchase change the million a quarter, quarter. quarter. despite cash net elements Slide hear billion October approximately in largely capital Working accomplished inventory limited shareholders the operating the to was net due X. in a by quarter in crude close necessary of flow extent some volumes the the billion, transaction $X.X vote to reduction including was use nearly $X.X $XXX before the source $X was billion to offset Core having and a was acquired of The more repurchase share to shares, Return the end capital closing. transaction $XXX

are consistent to credit profile returning provides the a guidance share expect an remain in represented had total end months MPLX. Day committed the Looking strategy of strategy debt the at the disciplined the EBITDA the including EBITDA the consolidated our at of needs Investor quarter. MPLX. basis on approximately resume adjusted for of quarter. overview with and capital debt strategy nearly December. maintaining a $XX.X X.Xx during of or from investment-grade forward, with business consistent we debt, of service at X.Xx current [indiscernible] Lower profile capital capital financial provide excluding billion and debt of third to billion to We beyond the debt manner and last company's We repurchase allocation and around XX the capitalization activity MPLX of our update consolidated capabilities distributions XX $XX plan that the added an parent. Total fourth and in Slide to EBITDA

the suspending quarter Moving and our provide publication and Slide fourth then. be to December, of our we'll website until intend We XXXX in data Day market Investor at to XX. guidance on

provide update capital of plan XXXX including combined $X in a to This investment the guidance. the total moving to MLPs, illustration an spending with run billion to remains combined year. line give consolidated we capital On Given to rate this invest expect the company's for all we the want basis, an prior roughly pieces, business.

by MPLX our me investment that, Analyst to slide, We call at Kristina. roughly and X. funded be and you back join turn We to pursued look you As XXXX the directly. Day on the half can With planned outlook of providing will see hope on forward the can let us. December our ANDX capital over

Kristina Kazarian

[Operator Tim. Thanks, Instructions].

Operator

[Operator Instructions].

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

Douglas Terreson

And factors by profile either company at your during to situation to the of this question turnarounds given other it was in the benefits overall prepared as point years? turnaround such high refinery work? period of are on XXXX implications activity the design this Andeavor XXXX, is for or And well. first, Gary, the the IMO and high next close quarter, the what And abnormally higher my then couple in Midwest seemed or utilization really be the on were is, Refining, somewhat, way, transaction. over the Congratulations as -- capture XXXX during

Gary Heminger

what a very question Doug. on on, kind working of of top we're and good That's the charts

all, to don't out in the companies, a the of lumpy turnaround we really so these First with -- have given are new attempting combining turnarounds in any we smooth schedule period.

Martinez. barrels say, we're have really As million 'XX going going Paso, I completed WTI X in turnaround capacity when believe -- and day 'XX just But of smooth at be especially as script And just around a now and out X a work to turnaround in really barrels a look to done behind at we significant forward there's million MidCon, and is earlier, around I things what the a we're Canton, Detroit, soft refining year completing here, and those we that over day to which said some we're benefit. that El Paul, Cushing-related markets 'XX kind space. is you the and work St. and in into look at have a all a the of us, my little going crudes, at in I going about as

Douglas Terreson

Okay, restricted talked the about just utilization. clarify, repurchases, and my from also, that recollection guys sounds is for of purchasing then good. And for quarter. That were share shares to about Tim great you X/X

in with that that for some because you share seems plan So And we a I if or my flows like ramp it a good see provide transaction, the for significantly second, area. see repurchases question term with to the cash is approximation? is, could should medium derived want the that's color more

Timothy Griffith

-- we repurchase. doing precluded Yes, you're period were right share the during proxy question. from that Doug, The it's exactly a good

could the periods in clip be actually, pretty million the we given So market. that good not a $XXX was

was come an think can needs approach I as allocation I I think the the see beyond assumption. that cash the provided business ever. online, as incremental to expectation capital share mean, this on to perform, combination, And return synergies as going part transaction. be an and of part the appropriate you is our repurchase the expect cash the the the steadfast our continues is of to big the of important by be that business certainly, of a flow will

Operator

Our next from question is from Mehta Sachs. Neil Goldman

Neil Mehta

XXX,XXX in your the big prepared your you're want to in a crude now. It's right barrels start taking number. comment I Gary, that around Canadian of off a remarks day on

a So the kind that bringing how talk about all it the getting can views in? of you on tailwind Canadian could that on of of you from broader basis? talk much you're differentials a of out, And not heavier being about that what barrel. that economics I'm And here. crude to your if light is sure frame discounted you go-forward see just Western

Gary Heminger

very more Syncrude but tremendous Sure. more margins, as And Rick I'm Canadian had WCS, well. ask we or differentials into detail. detail. of we very to bit in which should side, a you in to going week, have But say, only visited large we're that we I large talked a as give purchaser Rick will are not some as get last Hessling little the as you the know, well. And about

Rick Hessling

is it a good question. Yes, Neil, very

front, $XX know, under. Syncrude, touched on So yesterday on I under the think, you and side, the WCS it's touched as $XX TI; heavy

when upside share is isn't. not a lot of eke Park St. when our the though, that I benefit connectivity barrels. break more these of share, being and mentioned that and advantaged even PADD purchases is the out So Paul and to fully mentioned, do our now, amongst how discounted We for much optionality especially much can most really you us down grid, II, is how XXX,XXX. We in for into there's What Gary us. put allows as significant optionality north

XXX is There we're it the the to Going slightly bullish. leaving will X is discounts, That forward, over constraints. doing high see mid-Xs Canada. we sit and limited. the certainly Neil, today, and on XXXX. get may in not into alleviate We production basin. constraints in Rail Rail all-time are

of by we're not that really, relief Neil, big forward, going basin, differentials the light be players the only but until on may out bullish lying you heavy accounts, And in and three we're at the X. be medium, might and which, on all another XXXX of all best. end happen, won't get which So pipeline

Neil Mehta

follow-up some early Andeavor billion, couple just billion, that that out get color. of Sure, saying your little a all The least you assets of that just It had Appreciate $X here $X as think use conviction this any expect flavor of we'll there's come at that a potential the billion couple is of upside. you've to synergies. at But where around you to sense only in on but weeks know for us your discount a of level most weeks, point. want $X achievability of a get more thoughts? gets

Gary Heminger

some synergies Don. Don integration team. let seeing. I put seeing -- have Neil, to to to but flavor we number, the a weren't give Meeting. to going hard more has Day that could Analyst our to because we're ask you're upfront the due lot this more color I'm operating, recognized some We're -- period. continue our going really Don diligence people really have opportunities we we're just now on what really Day to But already you what be led above right, going that our belt we color. hear the Don still exercise. under I'm sitting working when in able I of you to at think some we at And to and what see. give rest going had transition beyond We're ask days you we're at and -- XX in Meeting Analyst some I discount give

Donald Templin

on are those we of realization really synergies. Neil, the Yes, positive

a and not in some my also the million the billion X, To confident in the $XXX little but talked ramping Speedway had conversion. prepared achievability, comments, of you $X at $X around that a about I'm billion the talked ramp bit give about, us billion. to examples, $X up we year had about we ramp. of You only like very the

assets. have refineries are about of you contemplated crude Midwest we'd when originally of are sort of a MidContinent, as logistics synergies seeing of faster we helping logistics assets acquisition, mentioned, barrels processing we think more the than than achieve X.X million optimization And gave in we at sorts Rick all us the You and those those that capacity XX pace numbers. and

-- the teams a Coast, On and from as turnarounds. mentioned an opportunities the Park turnaround option as a we couple we've now. Paul refined Coast side, the Gary products our contractors. then which at with key leverage were had cargoes well Gulf have of we both leverage able customer, on MPC actually to we cargoes combined. mentioned, If of wasn't or And refining We some to can place employees the either place having We West before were supplementing side, able we St. were Martinez. to the

both in in schedule. of so came of under And those and turnarounds under budget are -- coming ahead or budget

doing the crude are deliver. those retail, of tangible side product supply confidence what us to lot that on acquisition, a think X about of our ability we're refined So I refining and examples, sort give

Operator

question Barclays Paul from from Cheng Our next is Capital.

Paul Cheng

integration on questions. some the merger, integration. back support, that overlook oftentimes the how or Two I In the office just importance any people think

seen do on fell because job that they a have We they cases that. many good didn't

and us kind system what [indiscernible] place you that the know back guys we that, and I pipeline some it's that and so in And that of basis been you that -- conduct financial from how maybe synergy can seeing can result? us idea but perhaps the give are the you process standpoint, outside that on early, also will opportunity has So from have to that. benefit that to track your help reconcile from

Timothy Griffith

We up the that an from back systems Tim. and are be evaluating what integration. outset. the business. pulled the I certainly short There right, Yes, We'll legacy Paul, think process important couple up that point the to the that exactly will on continue complete, it's integration integrated we recognized we've a very Andeavor the order, processes the of take getting will, plans systems, are into still get would to and together take full of in systems and done those side underway within come be part,

give a time time We are it at this not a you a but big be over take, to that what will period what focus. that -- in position time will over line

I think themselves, are segment is be integration, be importantly a achievement. really but mean, some that the the though, driven. synergies will those mentioned lion's the the systems massive small part a this synergies share of not of I going there's to synergies for items of Don the the of component are certainly that where

are and regard not synergy and going go that out, gating It again. with over a color will critical not what the path So bringing that to The focused recognize expect to item. been on market to clearly a -- it is it expect well accounting been is the exactly we share we'll a and achievement be stay along a but framework we on we again, I we has but the I full -- see we the what the to and we'll time, -- we mean, be in as reporting regular and reporting I I a mean, the has around some to beyond, share synergies color we'll on Investor the at basis. protocol building go Day sort way. progress of think as think

Whether or and in along way. ability the have something is our radar. high the full out reporting not, integrate progress that's in systems anticipate this the the we'll So

So appreciate Paul. question, the

Gary Heminger

to on add that. me let Paul, So,

the of to really XXX need is next meeting, want of our having transaction the important you it's synergy to investors driving the most what need full understand, a a things going this and the but company to like and recognize vision One we to top efficiency. management big become. have kind a to week the that scale, things to not one for And parts, to be only for of scale of step a in one back you has and driving is how team understand you men this have

lot a going we're want I really so investors. and scale we're -- strive about with going And to to to talk

So that's what we're already. seeing

that of you very could same scale some of important. momentum synergies running had get be very, is is track that down It anticipated capturing the that behind a direction. it. And we're very, the very in the a scale early with of lot positive And we the that

to the So that's I that want across point investors. get to really

Paul Cheng

I scale, phenomenal agree, in I advantage think, at totally be mean, is the this going your that point. I to

if multi-brand. [indiscernible] wholesale the Speedway. using the question, in the strategy, brand I that or is market, brand Marathon, Historically one in a The and in second may, one retail, one legacy on this brand

that going exactly you fast so brand strategy? forward going you that be that? guys in to on going And the how how are move And to

Gary Heminger

as we Speedway. Minnesota from St. Wisconsin mentioned, the assets completing already Paul, Paul, Well, the and into we're turnaround Sure. of SuperAmerica

the Arizona store and and that expect year. -- the we're to managers, end the when completed we going putting there, From the stores market, X December, that putting And able as remerchandising Speedway. move signs X We're just turn in done be here out that there, those probably we from to into crews and to the store entire the every That's doing and at to day. starting say that's southwest by store, quick. We those system the and rebrand we'll the well. to west have the those the in backroom not street. El turn on start stores Paso of get then your and and pumps And to

able the freed California, to We We're analysis. crews the very up ARCO we our be west further to go is brand as brand. Southern a California, until 'XX. Now mid-'XX Northern later won't probably have continuing to strong out very, go to

that may our completing brands analysis we're we to So on in want use what market.

on same very Speedway brands a complete. jobber Marathon, the strong a store maybe you we And the ARCO that has familiar in Andeavor brand are we branded have the then whittle brand. other very is handful we're that or addition, of as said, there the have and with strong there is locations a It the a that dealer either many other one been large very number then jobber by and that And that said, to strong I convenience in used brands of you're this time brands of merchandising in side used intent a a past. time, component. business going our to been down at As historically. potpourri is have

will take of brand to of analysis to over Again, We on up as of going meet time. that Marathon. and little will the forward it but finish with our predominant as meet take will business those a well to expect side which brands, be while majority we the the customers brand we with as suppliers some to the us determine Marathon our

Operator

Phil Our is JPMorgan. Gresh next question from from

Philip Gresh

constraints. access I'm real or up on think follow at crude of because time how crudes. to barrels of just how the have First because widened bit. much wondering question, more capacity just day you point? company exposure you think if view Obviously, the about this just have mentioned forma X temporary a Bakken there pro exposures advantaged quite for one of more do your for up million this pipeline the the you then a maintenance is about wanted advantage you differentials and structural of a versus How

Gary Heminger

invested gives the when crude a our it's good of us MidCon in bring gives it it II point. the ability some It Access Pipeline, refineries. in recall, refineries. you us that Dakota to PADD Phil, Bakken into to run now we Yes, ability down our And

taken the methods other and As you to rail west his of and Greg Bakken of know, the team transportation. have

the what seeing tremendous into our details market. have But of of optionality, about me ask able Rick's use to system. we he's term, on the move Bakken and the So get Rick structure being talk around let to to

Rick Hessling

glad really want lot trade forgotten -- is kind Bakken important basin, Yesterday, is you of if it's Beaver to $XX up. brought at Yes, origin really, of talk differential. to talk I'm Canadian at which us. extremely Midland. people a will, and feeds A and Phil, the to $XX want that DAPL, And you point an this Lodge,

with And immediate going winter, so rail can out. into can have that by is Canadian barrels, as relief, to we difficulties of, flushed out. we it's no flushed no there's every accounts, the you're the So unheard barrels. head of see. we way there's report do with only basin hear And is much. to rail Phil, and all Rail loading story, Really that Phil, similar constraints,

That perfect us, see had storm gives said, we Park kind now. that's So more as we our refinery St. of in Paul the connectivity. Gary optionality,

feeds PADD into well Patoka, barrels as we to We us can have Ozark. throughout DAPL or as Southern where take that also right barrels our go II Extension to the their can Pipeline system, we Access

So this we going have and we're multiple forward. very ways differential barrels of here plants, getting multiple bullish to

Philip Gresh

that million the just you're to. And of advantaged speaking in crudes X Bakken a barrels the to day clarify, is

Rick Hessling

correct. Yes,

Philip Gresh

Okay.

Andeavor don't able in since this just can you not realize difficult Second bit be at would a give least question have we extent anything helpful but the be you be quarter, a be to us. it little the publicly available financials, talk but to performance to hard understand to would may the one, -- to might

Gary Heminger

would Greg, to handle you like that? Sure.

Gregory Goff

It's index around Yes, per I we -- day, had I a We October. a I if good barrels have a a strong -- the earlier back barrel. quarter, bit maintenance quarter. stated, in had XX%, index than at little utilization was little ran basically more to the Don say, a alluded Gary sure quarter will. X.X than we third would question, for and the more Phil. that right $XX.XX the as look The bit million didn't started refinery the for

So very we quarter. standpoint, ran, refining a strong in from the

the that shut parts the cracker the X is We And to down. of through the between also shut pipelines Angeles some successfully in begun now intended continued of Los feedstocks down Los project, moving Angeles we've the facility. cat we and

The comments distillates were the IMO were as it positions overall a distillate on off of performed bit environment, higher day the So results but strong that plan target, but than gasoline. margins run we like business our a across strong, aware, because, price the volumes. us had versus little volumes another allows there you're us for well and success or project is to gasoline XX,XXX trades market is over the so barrels as the it on marketing crude rising system, with the Speedway

in -- want seeing really of crude in logistics Dakota. part Bakken, touching Kind system integrated when like company into system We of Mexico And comment continue performed the last the continuing Rick's development for expected. or our to strategy the Mexico and North strong from oil good upon very Christi whether the and the business in develop, we're Oak Permian the access we Pipeline, allow is we're to Likewise, growth we system well. crude wellhead to up extremely however the as Gray business the seeing just in gather and Corpus that the And growth the in take other model. success blossom our will it it grow to, we with the on of participation places.

on very so I results. would that with right very, and strong very performed say the well, business overall And financial target it's

Gary Heminger

major we the third MPC Phil, transaction big to that in to on add rates illustrates while the quarter, well capture that, a utilization and turnarounds, execute look we assets, more this Andeavor thing And, legacy we going I'll well think how the one how of on able this assets the projects. the well back how though questions kind When at confidence synergies. of in you the to goes being performed that had can I had even on, couple performed we the

we've on our X we the As time years, below projects past projects the big over all and on big budget. execute over we we've last or done done complete in and the with life usually

here confidence gives integration to sides that going And performed on. execute. in forward how us think both was tremendous able represented it we'll be process going -- we well that's had I again, while

Gregory Goff

And just the at in see of of it's happen process the interesting organization confident to experience as have been synergies exciting I have my doing what in I identified ideas been that few day, starting because from extremely opportunities people right is and that we there going how a what I just in. -- to that know with that that. and we've the of would that. come end identified very and of it's add able stuff gate opportunities or up out the synergies the the -- opportunities been Yes. confirm. questions the been type to initially, But we've am and integration on I that offer would this

I so robust from think he And doing. going we're of reinforce I Don's am extremely of the over synergies things work to have just that the in will delivery would personal experience I've confident been of and what kind my people. and very that time summary said, we're And I that doing, a surprise

Operator

Fargo. Wells from Read Roger from is question next Our

Roger Read

about with heavy front. theme curious on added other some the just and keep of what the I kind advantages you I pipelines. around you we've -- here crude whether And or of both talk crude the of apportionment about crudes, the of may issues think or the sides whether your what was you deliverability the earlier being companies or with apportionment border about had Canadian on issues differentials, that not be seeing light, the helped SPP guess to on capture, how comments unit

Gary Heminger

ask take let to Yes, Roger. Rick that, me

Rick Hessling

Yes.

pretty X%. to in consistent, with ultimately, has barrels we confident received usually within and plus going or And what apportionment of Roger, So, at been month Enbridge has X% the be forward. We with date shared forward, very basin the month the frank, come going what current believe out we've or had we if every the that in we'll past minus predicted and in what to look receive we the receive you we're we numbers X%.

So see I and to else's speak on from anyone it's been way standpoint, can't consistent apportionment, but view relatively our going that forward. it we

Roger Read

full And not you thinking -- level on if heavy, but to light? around Or XX-XX about the that maybe barrels exactly lines, closer is a total, fair XX-XX probably you are closer say along X go those of million flexibility? to to to it's it terms

Rick Hessling

obviously, X/X, that more fluctuates Yes, run to gas, it closer looking X/X, It's are diesel, runs, but the based would we would refinery be differentials. and month-to-month. you on I to more all caution really

caution So month-to-month fluctuate get locked that because not specific you would percentage does I a significantly. to in on

Donald Templin

the this Yes, Canadian X/X, is we're Don, -- is Roger, or acquiring. a X/X, reference really -- X/X Canadian X/X that crudes that that acquisition to

Operator

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

Douglas Leggate

as hark but going that sorry. to I on well, differentials, to the hate do I'm about

Gary, basis as prognosis weak you here, you move are positioned to that. ability out as I'd advantages? just crudes Because your in moving particularly Marathon. has of huge Andeavor heavy been do back advantage curious you specifically opportunities whole at I'm you see to and shifts around on something done just of million day at comes to a on crudes you barrels if as a to curious can any built significant offer any and of combined online. that I'm job X importantly, PADD in to think look more been obviously, Canadian guys if you obvious just ideally -- the take the had your like I'm when you So proportional anchor the company. across on that how across just a pretty Greg strategy well. in your the a logistics amount the around But see wondering, plays II has it downtime good do system say an -- network,

Gary Heminger

few -- the I that yes. you share going is Doug, have that I'll I'm we the years there. a a ago because give only Well, answer that capture narrative seen system, days and evaporated it shared market to individual some some very I with additional different standpoint. a a -- areas competitive from can that and you it's XX already not can't competitive we value took a

a to $XX, PADD that that's PADD next you trying over back of Bakken out when a and IV details, our the out market. what then tremendous MidCon, to in to PADD I, Pipeline the get rail and going step look us to Northern I'm II, barrel to that but to the at advantage into barrel, you it $XX around rail, of rail costs And systems we're So yes, gives and move the systems. of today, or not into out seeing back Canada

just at that, commercial Doug. I'll our we've say recognized just some we it diligence, very synergies, not due synergies early would that I So and leave captured additional had initial in

Douglas Leggate

not. that we can Gary, into assume I some hopefully or get in of December, detail

Gary Heminger

Okay.

Douglas Leggate

leave whoever that Okay. think My for follow-up, IMO the situation. comment may, distillate diesel to big question of I question. -- perspective and marks from I do you if gasoline, a a relating Greg is just to answer one really to hoping the if made is it equipped a on pickup spike high-level whole equivalent as really But a that evolve is a just low-cost thinking curious us the expecting. relatively seems just I'll And fuel. if best European how premium the feed result bunker the of as could fix a cap of market. in I'm cat about it There's perspective to can might that your get as pretty obviously you easy everyone specifically that is does and terms diesel offer any IMO, I'm there.

Gary Heminger

All right.

touch Brooks, Doug. who on Ray that, refining, all runs have Let's

Raymond Brooks

And our Yes. entire understand If ULSD. to gas as ourselves I lot well as oil XX-plant really certainly, question, your position our sweet well we it from across ULSD. plays standpoint, of whole into make system a

sweet to sour for system. oil if We bring additional in oil the make ability and also gas our needed have gas

getting So at? you're what that really is

Douglas Leggate

a something could just understand to and think you European gasoline weak as you if was uncertainty by that seems essentially range endgame of feed in I'm that swinging it's the thinking and as you market is expectations supply the bunker wondering would if the is be cat probably refineries, is supply XX is you do cap And to be them I'm about happen wrong. that fuel as into that what what case? of that dynamic. upside improving But range expected getting to Brent-based well? a years. of tight huge ultimately, us this tracked we're been, it side the Is think think I'm trying out best if thing really to What to wide A the there.

Raymond Brooks

At of essentially cat slacking would have us feed. our our plants blending this that cat point, and none then crackers

good for cat going forward models crackers. our see Our very opportunities running

cracker petrochemicals, We swing but cat change to that this crackers to our mix our at slacks and look have taken catalyst any forward opportunity have toward point. the cat more don't we our

Gary Heminger

you you full Yes. to maximize the -- Doug, facilities have, the processing those have, the equipment absolutely extent. you you

diesel feedstocks are your whether available. of crude, way crude but matter light You may whether feed, little of maximize what the it's we it's we no bit the up, absolutely it's a amount feedstock, cat are change make, heavy set we will or can whether

top We out. facilities those will

Operator

Suisse. Our next Crédit question Manav Gupta is from from

Manav Gupta

have were Gary, the to like the big other Washington you very problem year, in what a looks steps, working been did, earlier closely you of solver. with RINs, improve some on situation plus and

people have and of lot but MPC that a -- Andeavor. so it's still does Now RINs retail, forget was exposed to

benefit MPC much -- you plus this talk how a bit it RIN about will be Andeavor? can quantify So be the will combined to prices lower entity, a little how

Gary Heminger

the -- will of go has a know, to our you But this. again to yet, numbers, the right, renewable has You're to next gone big standard. happened RINs not to chat down XXXX, week Washington been push in week. fact, will, really to step refresh, while in you -- back XXXX, have I say from and And have fuel and $X.XX don't $X.XX back that Manav. look if about I this at And back

lower to that. So we or -- the have and refinery refinery made a tremendous amount progress. of exemptions It of beyond has small do accounting with RINs

this question continuing we're But Tim, you think value a RFS said, on as the he in the have can answer market cost if to the we go of We're have progress. Tim tremendous had to the and to the not the needs what question is. to we made on a improvement lot answer work where side? far value RINs. diligently. that So go fixing fully problem, needs I where as of can we your administration on I'll it as but -- ask

Timothy Griffith

believers Sure. think, drive occasions costs last Manav, RIN system. we years of this profitability you've that are the are on -- multiple I refining and over that within seen couple the we've, said probably not differential

view better have and I think a worse where things basis, crack, RIN at. off or pretty net system are prices is that the it -- no we than on arise, the gets as a reflected in convicted are we

system natural incremental So the introduces not in the total we to relative we'd lower RINs real prices. a highlighted into market are, It to lot benefit the economic cracks related the noise lower the certainly costs. sure what I'm so not to would economic benefit an to less identify any but --

Manav Gupta

quick very A follow-up.

MidCon Coast. all X.X the the MPC's about coming for Would capacity from Gulf to the system system XXXX like as entire Coast? for Coast? light crude your What's flows Gulf of sweet million refining Gulf barrels Permian on million Permian this cracking to advantage become outlook You're crude an X the the into just

Gary Heminger

of Well, time. touched thesis, going what kind is you've to over just think our out play on we

not going the we've will of can to With light medium As light market past, producers sweet XX% all or continue run in we players XX% have slate. slate the wanted and Gulf exported, that compete sweet medium with the of said so believe Middle jure become because to sour and the East crude we of to number competitively, heavy exported erode market crude their being come Manav, to the share be that's the with to the de light is going out kind not Coast, and sour the crude much foreign to in are that. want have to

very, we sours, Mars, for are medium to very into to range. like amount it's it air that positioned, going strong have said And that run believe whether ability or can believe well more we keep life, we So which the to kind I the the going a look us as gravity of tremendous earlier, in feedstock we light heavies, very an a we is of of be has future.

The Permian to Oak and done had the of that's Mike Goff me second that let talk out just a Pipeline. deal strategy. ask -- about our projects the Gray important Hennigan coming on so other pipeline Greg big the thing

We're Now Swordfish, Coast Gulf Pipeline. looking we're example for looking Gulf. Eastern at at the Permian to the

tremendous think want our Mike, I opportunities feedstock there we about talk well. that So supply you have to that as strategy? helps

Michael Hennigan

Gary. Sure,

system the come needs as Ozark we've Wink main the existing Cushing Coast up that Patoka -- as and into expanded Eastern bit in the Manav, to side or on later is And well is and City refinery. to But logistics little And as that supply to the well, Houston, the very to material also which is to Permian Galveston been River Gary we what support Midland also Texas an mentioned originated overall We've doing export Swordfish we're the Wood other one the the well or Gulf MPC's Delaware assets Pipeline call to out we'll call Midland far Basin on down drivers the think which So, Pipeline, at a to get Bay we've talked talk as connecting be market Crane is into what going Basin on markets. of crudes more refining as into looking and that enable and market the from area. light as what the as Gulf be Pipeline markets. system we exports. Pipeline, as standpoint competitive to refineries will

or So we're our to whether systems very at refining get and the the that attuned about point ability to sweet into made markets, to also trying maximize export market. be it the to light MPC growth. you We're others that

Operator

Rao Our Citigroup. from next is question from Prashant

Prashant Rao

barrels I wanted call, the have already touched the first when particularly, more of of is on than to question waterborne guys heavy talking And one, side domestic discounted about think, you're barrels. sort you but this my guess I getting touch light crude, I think on I crude sourcing. upon the other

color seen And the Coast. so market. maybe difficult, to barrels wanted have some Maya were get been bit little XQ. more they just come differentials in, Waterborne We've a in on heavy current the Gulf

ask ANS the heavier PADD heard we've out then little challenging barrels there. sort But that in more some what well, look to V of bit you So peers that's that pro at the is versus about were to -- other maybe one compared Coast. if a also forma as for company from Gulf part domestic waterborne

in get maybe of sort for of initiatives to medium both pro regions. wanted of around that, costs too, crude managing more thoughts company I around those So sort the term forma in and your

Gary Heminger

Rick?

Rick Hessling

is Rick. this Yes,

So grades. you basically well first expensive. Its formula, WTS off, as as Maya Maya know, other has some on as been follows the domestic piece, extremely

we Maya, the strengthening, from itself Maya are to very optionality bring able our is news in away everything has of market. and run of with have Maya from we priced heavies. on Maya other So The little good great to kind out and front pivot

window agree is crudes would as forward, you where air the the the globe. a I Latin it well looks economics the good, and good, a and and throughout this of on avails that around tightening, avails both as and American heavy the XX looking behind gulf now I throughout crudes for we're tell look market would tightened time, -- really that, seeing the at period with market had but of seconds the On

of the market we believe pinchpoint the the with are Gulf in days all with believe of is we into tightness ahead, crudes. So the better waterborne kind optionality and clearing, certainly,

Prashant Rao

thinking still little and color in forward. year-on-year, guess here. about appreciating we understanding wanted I variance get follow up, in can that When the a the to $XXX I million from million carries and that quarter you give the -- to a to minus other $XXX I thinking a and should end to things. variance And that's in that anything more the the if it how $XXX just or million MPLX, Okay. on unfavorable. look negative sense bit category. the so year there's at know of be There's so forward the specific mix maybe quarter of But going that's of

and things some maybe general, see in turnaround positive strong is barrels' we are completed a here the season crack better like Sounds should XQ heavy and given Canadian being realizations.

to terms and into 'XX. Q-on-Q early how maybe So just thinking things wanted we're looking make cadence at the about of in right we're sure that then

Timothy Griffith

-- refinery fuels almost Yes, and Prashant, other MPLX being services logistics it's in reflects that for the Tim. really million to distribution. assets paid $XXX The entirely the

in that period will So inappropriate going-forward time. assumption are that probably a because on that place an extended versus be basis agreements year. those of is for last It's these the share delta of lion's

Operator

from from RBC is question Brad next Capital Our Heffern Markets.

Bradley Heffern

one the top it I just your Speedway particularly on past was on year hour assessment and if of interested value wondering, as from impact the gasoline. here. of demand given I'm offering sort whether standpoint waiver. long-term in a we're thoughts you of an the round in you skip And EXX what your thoughts is to see But to having the EXX Gary, your could I'll give

Gary Heminger

quick just the probably very long than are offering But summary. of a EXX. about today I'll you We could America this. a Okay. give talk X% time in less stations

is on you majority a have many at of warrant in today ways, EXX, it look road We different and analyzed if the vehicles have anything biggest the the not will issue -- still than you greater the a unless flex-fueled vehicle.

we in waiver study the implement today. question to continue incrementally, beyond or not marketplace they the and EPA from We authority are X have how the out really already grant procedures this. processes would they yet to as on that, the not So months Adding what's round. EXX year this it's whether implementation

look -- of minimis. not being kind it's at So de we it as

excuse you EXX XX the me, as such to Octane. be marketed, it's able issues There have of will is way be a at -- counter misfueling. to number would However, EXX,

So Brent we what continue of I happened this, been that are the a determination. market, all to before analyze to out procedures best has overall make to continued we But of decline. the have the really throughout to it's need but kind think thing this. that Brad, EPA prices neutral see, final We come from the

Kristina Kazarian

operator. Sounds great,

I end there. think we'll

for that's you discussed additional have morning, Should So to topics clarification of us would available and or we any your take thank today, it. MPC. this the be like you, interest Operator, on everyone, questions your calls. you in joining thank for will

Operator

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

this may You time. disconnect at

Marathon Petroleum (MPC) 1 Nov 182018 Q3 Earnings call transcript