MPC - Earnings call transcript Q4 2018 | Marathon Petroleum Corporation

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

Operator

Welcome to the MPC Fourth 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 being recorded. I will now turn the call over to Kristina Kazarian. Kristina, you may begin.

Kristina Kazarian

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

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

Gary Heminger

indication believe joining results morning update a for primarily an detail powerful in we per thank company. from you extraordinary Earlier costs the share of $XXX as the of transaction combination. will potential diluted items. call. through were per value on of Earnings these $X.XX Kristina. Good this And $X.XX related we for million, call. share. diluted Thanks or first the today, quarter cost Results early and financial are included tremendous later walk our combined reported these Tim

focused multiple Star shareholders. long-term earnings positions of VPP received safely continues the Energy culture year awards that and to a Year We for company and of accolades Partner our we've at for our an value performance our We our and on XXXX, multiple improvement recognition we create As important it's that including the committed facilities. EPA safety. highlight build excellence culture operational remain and over to last a to and Energy grow review

pleased operations. report $X segments were billion consolidated we from with over quarter EBITDA in income billion well. adjusted This performing to of approximately our $X.X And

business St. and optimized the at day. larger a quarter diversified during Our of place on the turnarounds This was million our created over for throughput logistics value. purchases marketing crude and during Martinez on integrated model our time us significant gasoline We utilized and footprint capture which strong per Refining and to daily under expanded completed to all opportunities expectations quarter, XX% was basis. budget. Detroit, exceeded were barrels Paul X.X impressive and considering our Park our volume of

both quarter. year-over-year. Midstream million reported well $X.X billion, XXXX increased Our ANDX this which businesses $XXX of EBITDA performed

reported billion, MPLX, public became MPLX $X.X nearly year $X.X XXXX $XXX growth. and marked million largest increased increase since it company. For adjusted in of over this a billion driven which by EBITDA increase EBITDA was the organic annual single XXXX prior of the

export that we reside. level, this assets drop terminal, We had have of is ANDX. not of projects one of and Oak number projects the do being and generate at This plan therefore, the is Midstream third-party Gray and compelling where within announced a these new MPC to largest project funded may pipeline the revenue; we've inquiries into

mid-teen committed level. the As returns high-grading to project at new MLP remains and we the set for spend remain self-funding opportunity robust, capital infrastructure the toward backlog

of merchandise business. a the stability significant Considering started counter-cyclical option included sales in annual margins. the a billion run many year-end volumes model slowly provides up million of segment repurchases $X.X cash return segment, quarter. share for of our just $XXX end detailed on to XXXX for our synergies total profile. Marathon while important realized and plan placement fuel an up record gross continues to quarter. our year particularly in just creates our the of refining months X, was to overall by Lastly, of legacy million we flow business shareholders, reported former Don XXXX $XXX $XXX three will had expect it integrated and overall rate approximately This by add highlights an fourth and with capital synergies retail to earnings for on our and our EBITDA continue retail business ended a the to The few to $X.X us included driven business, impressive with Speedway MPC's for to year minutes. update It allowed milestones our XXXX. provide fourth quarterly balance billion Slide and a record Speedway which It the by strong million in to strong

Additionally, week, quarterly cash in our in confidence a generation last underscoring our we XX% increase announced the dividend potential.

our we optimistic compelling ability to for deliver our and look we financial As prospects XXXX, into results. business about remain the

as address of refining Demand business continues the global macro most the distillate system At in me year, this we economic remains briefly Despite growth view year. the our gasoline utilization, refinery Now, remains and remain X-year inventories recent high there's world. focus time trends, below strong, seasonal averages. what optimistic dynamic current one for are even this of opportunities with MPC's lot normal the a we always let markets. environment. on about of

flexibility our terms significant optimizing yields. of We production switching our crude have and in slates

business in of we access XXX,XXX markets, limited With in Our is exported XXXX, December opportunities system to the of expected our in create export expanded turnarounds to footprint per and logistics day fuel dynamics meaningful trends the synergy market barrels creates refined products. changing alone, diversified set execute coupled These any across stage market with poised MPC's integrated model. benefits and all low-sulfur to the capture our and potentially environment.

evaluation on involved will Each evaluating thorough MLPs. and parties retained process. a we options all the Lastly, as walk through we continue be advisors the our make for to of progress have two comments limited

time. investors an provide update appropriate will We at the to

an to let call Now, Don for synergies. on me turn the update over

Donald Templin

highlights delivering Slide we've already had X Thanks, the success synergies. Gary.

During segment. marketing our quarter, of synergies synergies, $XXX the of we were the $XXX refining fourth and realized million million in

recurring, of it all delivering logistics synergies. million during has significant to to not $XX which opportunity We access synergies over crude, are million the set these our scale to leverage confidence of delivered available and realized supply on just quarter. the Although oil were optimize Canadian in $XXX us. heavy roughly contributed our Crude underscored to of synergies able

assets million $XX utilization of a optimizing oil other foreign combined The as and business. largely a logistics purchases crude spot was result

business, we realized refining quarter. synergies the during the Within million $XX of

and specialists allowed eliminations in us at Park. The by utilized represents million and $XX under St. ahead This to our and and cost of we Paul in example, to combination. to budget the access MPC's possible come early broader the contractors turnarounds turnaround synergies made For Martinez schedule. corporate efficiencies support

As acquisition. a of targets part as the realizations synergy reminder, are our to and Western realized Andeavor incremental synergies the

had the closing, Andeavor run of million of the date synergies of As $XXX transaction. that achieved on rate

Looking forward, it is on of our synergies quarterly plan during details to XXXX. realized a basis provide

his in we're synergies earlier, to comments mentioned not the ourselves constraining originally Gary As identified.

generating opportunities. Our teams on synergy are very focused ideas and incremental

the forward. example, brand. to capture projecting sites the is Day. the and segment synergy identified With provide our this operated refining XXX going that to in respect Investor credits will Speedway This nearly we we've company-owned For we opportunity the converted were we in million refining, fourth to item support the in retail $XX Minnesota when during value will system XXXX. sulfur double value at that utilize discussed across This approximately during quarter,

quarter millions identified of which we've catalyst dollars of plan the Tim, example, increased should tens that successes we walk-through XXXX the will our results. call of formulation Investor another over The change let to us Los Angeles As to be synergy who implementation provide detailed at in the a had that turn worth confidence the refinery, recent and opportunity give fourth our FCC at the our we me that, in the With of Day. annually. financial potential announced

Timothy Griffith

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

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

accounting or associated inventory earnings combination the due by debt per Gary related referenced quarter expenses share effects, As fourth and diluted million with costs. reduced to were $XXX extinguishment purchase $X.XX MPLX Andeavor

earnings resulting As share the benefit fourth at tax of in per corporate the $X.XX a rate $X.X or end XXXX billion XXXX. change included quarter a diluted a approximately from reminder, of

mix earnings the quarter. drove and higher of a our Additionally, income for the transaction tax impact rate

statement. prices effective rate be which Refining reflecting impacted reflected the expect segment tax they Slide of some around additional inventory fell the to were the between on acquisition million, as the the cost under where Going into recording at provides The end the closing rapidly the income effect the forward, $XXX used crude magnified through on quarter. the and marketing results estimated fair costs the date subsequently acquired and purchase XX%. quarter in accounting and X our difference third the we items, details include results and on was fourth quarter value value at year-end. inventory to of rising of

not related quarter. Andeavor the are financial $XXX acquisition and in also which of incurred We with segments including advisor to costs fees, the connection employee other costs, in allocated in million severance reflected transaction items

than the $XX were shows the These in drops were $XXX debt fourth last quarter February share for favorable related in debt prior dealer just higher the the discussed $XXX to held reflected costs impact balances related costs due unfavorable an units of wider on here were the logistics. Lastly, operations The in financing logistics and resulted Combined items in the $XXX results Andeavor partnerships tax amount costs, the year retail for $X.XX year-over-year change benefits XXXX MPLX and variance the quarter fuel differentials not X the quarter. these compared the million combined additional quarter don't expense principal marketing higher transaction, million the primarily Refining allocation which purchase allocated with debt from contributions to Higher million by as the in variance fourth senior transaction The extinguishment $XXX X had rates. expenses the which earnings resulted to billion and same million in accounting over as XXXX, the that effect the corporate year. redeemed of MPLX $X.X last corporate higher included Andeavor's reflects during to per a was reflect addition $XXX of of diluted of in fourth balance approximately and and incremental combined quarter by year, of all in items interests. of gain due margins addition in and segments the of results. to costs sour Andeavor Midstream's aggregate the the along million last operations. variance company. and and due Retail's bridge of benefit million result quarter. higher absence were $XXX to quarter of midstream of Interest costs versus fourth in of these publicly last was I $XXX in MPLX its we negative million costs income X.X% Andeavor and $XXX dropdown $XXX with a a earnings million $XXX million a earnings increased sweet as in of by $XX reduced The MPLX an quarter recognized the of total Fourth approximately largely Andeavor of significantly the and quarter. quarter. period the this largely to of million the addition driven year. $XX of notes in extinguishment increased impact results year interest last increase associated segment million Andeavor and the acquisition the change related in driven by the we by by driven shown million Slide the of million the year non-controlling in transaction debt direct respective litigation

in each Volume our Refining of compared largely of of of the in higher $XXX quarter marketing Gulf drove effects in the reported blended & Xth the and impact. fourth positively this reflect XXXX, the are industry XXXX. fourth shaded year. segment of $XX.XX addition Andeavor impacting Chicago significantly and spread quarter crack bars earnings shown X, relevant X-X-X segment the US $XXX the Coast Slide to of XXXX, as and same of Marketing Coast, to West $X.XX the last throughput results. system refining walk million compared The Turning in was on steps quarter to The million quarter

the to crude provided ability Our differentials in take of wide quarter. benefits advantage significant

of sour increased $X.XX XXXX. barrel Our in from per fourth $X.XX barrel differential per the XXXX quarter in to

We $XXX of The for Andeavor $X.XX were XXXX. segment associated dropped in the with the million of unfavorable other the Slide quarter hear due barrel XX The to relative in substantial increase addition million the per The year. in partially margin started well the provides Speedway the expenses business driven increased were largely margins, almost for fuel million expanded quarter results the income sales also volume primarily Speedway compared of as impact encourage well of same-store and costs sales operating our the segment provides We by on throughput in refining the of segment fourth record income from merchandise Speedway walk legacy X margins impacts. fractionated increase variance for was position paid $XXX change elements along fuel was fuels primarily fourth XX million across as end cash purchase incremental quarter, $XXX fees Cash sales, XX for to cash offset across direct refining year source from to a was an in of performance $X.X negative business. Slide was segment repurchase the of logistics but flow in to share the margin XXXX, of higher which inventory primarily with and $X.X distribution in off was weather the way effects, of in results to strength pipeline legacy the earnings. million million we're $XX effects fourth the expenses the in expense in services locations. feedstock area. with MPLX were quarter. as was in $XXX at quarter. more the the was and to impacts $X.XX of as well operations retail dealer earnings quarter. market marketing in barrel Andeavor used of of inventory as per capital for in to retail improvement footprint. the related per accounting low operations. The income Andeavor's the in volumes overview the of legacy the following expenses reflects largely entire higher gains. last the quarter about well the business. While working cash is in $XXX quarter with the quarter margins business, in quarter X of the source for Andeavor's and and normalize February, and fourth entirely impact partnerships. call net the related reacquired product $XXX quarter. by fund billion commodity X.X%, quarter. optimistic million, cash an process logistics our to million our partially cash due of a $X.X Fourth compared sweet of to change XXXX. higher $X the R&M merchandise with dividends earnings the the million as negative portion was $XXX $XXX billion. MPLX increased related capital shares barrel million XX per at differential to consolidated to The $X.XX prices was the accounting fourth acquisitions merchandise for year-over-year Midstream million to an were volumetric of in call a quarter of almost falling the million from MPLX $XXX operating cash during barrel during throughputs over as worth in same fourth additional same-store $XXX billion impacts were will volumes day in up other income results impacted offset totaled of January temperatures Segment Andeavor period Core drivers platform includes now at Express our legacy of the fourth but presents and retail additional depreciation as drop The the before businesses strong of to and fourth ANDX's XXXX. $XXX compared quarter. by discussed to fourth by of down due barrels adjustment of $X.XX approximately gasoline the million metrics operating costs $XXX same-store variance primary Mart $XXX approximately nationwide January month million to Return our acquired. the higher quarter. the in and you the gathered sales per Speedway last attributed the the and million favorable record and by and only fourth Direct quarter billion purchase the segment, gasoline of during operations million, quarter positive The Working Slide capital locations quarter in higher $XXX of and unfavorable the of Andeavor that the legacy the a the added addition to the costs the listen

strategy dividends. the beyond continued capital we the of forward, to committed and returning business our and needs Looking regular remain share through disciplined repurchases

the information and and ANDX expect and of of volumes updated at MPLX if taking of a Slide over on expecting $X capabilities adjusted debt debt billion of shareholders cash XX-plant MPLX term. system. barrels ANDX, ANDX. our across the the total per on represented $XX.X months financial of of outlook $XX.X throughput consolidated basis, XX key of the of at X.XX yet from debt provides X.XX the Total and place EBITDA, end first last of distributions to profile are We at business. service We're excluding just overview long of return including for debt approximately and had lower at debt an or We debt, added to XX provides EBITDA XXXX. billion MPLX capitalization total Slide operating day billion XX% quarter. metrics the fourth for discretionary the quarter least XX X with the to minimal million maintenance free flow our planned MPC consolidated under EBITDA

barrel other any is excluding call transaction quarter, Our Kristina. and and average per costs. corporate be items total With direct to $X.XX additional for be $XXX to are me the projected the million that, our costs operating to related turn projected let back unallocated over

Kristina Kazarian

Thanks, Tim.

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

Operator

[Operator Instructions] you. Thank

today question first Mehta from from Our Sachs. is Neil Goldman

NeilMehta

thank Hey, on a great here. and much you very quarter congrats

gasoline the to you been gasoline Gary, Speedway surprised is off were at year. on how inventories weather some So, start market, but X.X%, sounds to elevated it a related, been down we've made that kick have the same-store like point that sales of

or on seasonal thoughts is can what this What work your of just whether we and So the through root is? is the fix our issue way the it. cause

GaryHeminger

not the is And result I IV, Speedway had. weather great look in especially And counter but to Sure. a system, same-store the you in this weather a PADD the question, we've refining on think the and Vortex But that's at the an if just Neil. has of majority the PADD refining had in on II of sales, the Marathon, industry industry, the system. effect really Polar that,

month numbers have next over X Neil, of probably But of the just turnaround, at issues, number We the not we always of look on, to gasoline -- it you're million barrels is the the due some had first the X are to the question first refineries expect, ready grade out for and, yet, seeing of the of the sort here that Vortex, you'll distillate think you maintenance million your is weeks. summer part in get come it and maintenance gasoline. Back couple issues a we see Polar to if not and in to the in inventory February. refining system build of we cycle in the inventory of quarter

if first well, whichever the yes, look the inventories the think inventories to and on inventorying an we you're X deplete as It think grade, decline. logistics to, I top gave within of end -- than shape. a you we of first and X-year turnarounds. turnarounds been to industry million above And, beyond year, this and the though good have later later and inventories attention I that, the as appears setup normal. has have I thing normal, gasoline. to in X are But which would will going as be number the that bit effect at distillate start inventory million, you, the but some four-year is most of very so And the the has little be or see top we're that I winter had, whatever average, going you then you're the pay of a all important because you turnarounds tankage at know, gasoline issues gasoline able going end in the the to as the to industry to say one than at we're are quarter rapidly the that later quarter of or turnaround average see

NeilMehta

follow-up differentials markets. -- and Gary, you than returns, that returns be share number the capital capital aggressive as any around ratable capital intend be to should that returns How and the you and a because we in helpful? of other commitment tougher around how words, you below think repurchase? around would buyback gasoline In thoughts committed the a or where anticipate, is scenario because appreciate maybe XXXX of to are I is trend

TimothyGriffith

a out of strategy its overall dividends, And flow as think, share are to of the that critical laid distributions we've allocation the MLPs discretionary Tim, and we that capital I continue part expect to cap returning I at we're cash got, a reinforced we morning, commitment through be stay from that's and with. least Neil, purchases. this going free half going returns we I will here the Sure. to Investor at mean, Day be

in So, this extent there I point. our changes the but that anything things adjust, softness could space, mean, think there's certainly outlook I at is to don't the that

Operator

you. Thank

next JPMorgan Chase. Phil from is Our question from Gresh

PhilGresh

first Hi, forma logged you you versus first it guidance billion this I'm so that of billion, good about for quarter morning. guys $X of obviously latest $XX that pro Gary, this in question, had differentials here tailwinds you've XXXX annualized that some got prepared plus nice just in your on called your belt? pretty bridges plus thinking EBITDA, a out $XX.X call the billion you under now and any your remarks. But thoughts quarter just guidance

GaryHeminger

byproduct, fourth Well, drop year we're posed on were Analyst attributes what an capture could at but associated based if gasoline question in price Phil that very unfortunately But of and just buybacks low-sulfur think, should and on Polar say you as here I written especially about we anticipate far, kick down very benefit kind is which it taken earlier very us going and marketplace. annualize optimistic scenario going know, quarter of Vertex had we year, term, the the the the margin in the of a into has quarter. very see, think year, things things distillate systems a we and would are with EBITDA is in clean build then share the But nice happens had and ultra will that fact, likely I up, believe, that inventory you but sluggish the presented and very to a if of Day, what go the still anticipated, that more be out the allowed system. had I you key in we the he quarter think, happened be could it than bullish that be crude some as fourth Neil's so systems that about start get it's should you what than to you I normal. into off as some you as second see the with would we a max going I see think to we're those second I back But part going or max you be number of to the to used up distillate, think effects gasoline diesel the you're I would has higher

billion what we'll So you we the $XX.X Day the where takes presented of and bullish Analyst our balance we as suggested, about on feel see very of year us.

PhilGresh

color, I second Thanks side both to thoughts, of just for for your bit things, the my in light-heavy differentials, a the question focus on on of light Gary. differentials the latest more hoping guess all sanctions, the differentials reversal. but as the a Venezuela think of also see these pipelines you we just Capline (inaudible) inland even obviously Do come differentials up? the light inland versus tightening coastal might

GaryHeminger

Rick Let me markets. ask to talk about the crude

RickHessling

question. Good Yes, Rick Hessling. hi, Phil,

to rumored the we pipelines come online. are that or look As new all slated at

point majority Gulf look, large of is that a to looking Coast. there Eastern you are them If the to

differentials, appetite Eastern look when our Coast positive. all point a see Garyville So on MPC it from large you with vantage to positive know, Gulf we and the and as at we for as sweets have heavies the we both that's a a

advantage WTI We heavy well Canadian as and connectivity get -- as to will in barrels pipeline barrels time. light advantage

connectivity a and from. that coming So where production we for actually we that view the and be where basins are product will the crude oil -- as win us bullish

for big it's plus. us, a So

PhilGresh

Any thoughts on light-heavy?

RickHessling

stance OPEC sanctions, see commanding of you're on the sours, taken, a because zone I medium where the in pressures a obviously continue heavies, of they today. to that are going as light-heavies has the We're think because are we to premium.

it's done frankly. you we to look quite in while We have that, of at when what continue tag and to what Venezuela, that to documented they sanctions, the that guess press away stepped the well quite from very those barrels see been I on and ago I speaking a think

perspective, those Gulf well not American barrels replacement see barrels. bit AG supply barrels, being Latin exposed a We barrels, Arabian we're whatsoever. from So one as as predominantly

more West Coast I So the I our tell Eastern would Coast and Don it between our anyone you flexibility, most Gulf really, synergies Eastern our and tight, touched US shareholders. earlier plays flexibility added facilities, the US this stay with as so in can with our West our continue Coast drive think to grades into will hand and between but the on plants, the value we between those really optimize than that industry for

GaryHeminger

are me here And want to a and whatsoever. Ray, to second you are heavies we our Ray that sours medium slacking more Phil, ask that? cokers even mention let to though expensive, speak not

RaymondBrooks

never tightened like met Even have Yes, fill. sure Gary. to heavy though a we we bit, didn't heavy that in depths the a unit

have We're resid hydrocrackers the crude mix out balance there, are still out us and capturing deasphalting get out the goes of running or he team his the the slate, best and Rick our can. those that take So that cokers units. differentials and

we're our sours, sweet. running XX-XX XX% across XX% about today slate, about So

Operator

you. Thank

Our Chan is Capital. from Barclays from next Paul question

PaulChan

Rick on Hey for morning. guys, Gary, good maybe that's entry that.

so have gasoline, between system And look if of your and comparing that similarly, doing? sweets distillate You estimating are can't to you always currently is quarter and may more flexibility ability in sweet XX% already --, in sour it saying we defense should we maximum you your to more that and yields, you time, at currently light-heavy should maxed really anymore this XX% actually persists. been and condition have what for out the or that distillate as have that in you some swing the that the it your in you the gasoline market given take first you as kind shift the you see to

GaryHeminger

across want because asked that we I'm to to to carefully. question, you the glad want you investors that? those get take Ray, very Paul,

RaymondBrooks

of I as roughly that today. questions, sweet/sour Sure, we're as and here the far yes, the split XX/XX couple a mentioned first

and we've way. could historically two-thirds, said go that capability that have we one-third, We we're either

go and on that's at make XX/XX to most models to the now, running plants across bit team new whole XX sweet LP slate side, we're bring flexibility little Paul, with about percent little with system, Now it's XX profitable we different. have day Rick's more and sweet with working and laying day we're a to in at all and going the the our plants, that's system where right that. us but crude XX% we're our out, the We can bit so up on a

now want as our The if XX% second distillate. gasoline and a distillate of We our have as max pointed for mode. question to we'd to production within things absolutely would everything -- go control far distillate production second, we're the distillate about change production, XX% had to crude right

XX% have that pool. swing to streams We about up with could into direct cut gasoline back point the we

PaulChan

talking other other but mean, yield, any flexibility gasoline you the the way. if to, distillate that, is about reduce not, out want lesser increase more from and than you swing and further the summer grade, course gasoline other that yield that in take here, will butane reduce there I swing into actually even you gasoline? that you the to you even when I'm can distillate of Can you the Ray,

RaymondBrooks

mad already at be We've and would we of doing we me to pretty the can Gary weren't pointed pool if out that got everything gasoline the that, Paul. distillate pool.

the oil take cut some gas say when accordingly. our knot to and, split, operations of, of to then crackers the price those cat have hey, changed, our notes and XX/XX moves outside -- for our changed did the oil standpoint made gas opportunity other month take we gasoline and little and we some production. over our gasoline the and, swing about we that Now, gives A, market gas to have the on flip you crackers as take buy we we B, that, what I'm $X.XX the again sweet you're we incentive that -- trying gas is us gasoline oil and from should going saw where about less saw Again, economics swing cat a sell -- take to that then we we ago diesel, oil the from was from a not we we

So looking that economics the diesel, just pure but that's from to not of a at shift gasoline was gasoline.

PaulChan

And Gary, Ray. Capline question, second Thank you, quick a reversal? update one. about the any

GaryHeminger

let Yes, Hennigan please. me that have Mike cover

MikeHennigan

Mike. Hi, it's Paul,

this through run April of April year. -- we that this So binding a year launched XX will season open of

Our expectation the have XXXX. line is service available to September for

purging have connects then some to pump around want of Diamond we're connection Canadian of and results out talking the the in Obviously, do excited connects months the the DAPL to integrity with you about about September. I get open we're cetera. line, XX to there, season see Why would So it, some about tell we're pipeline. work, process Paul? we Ozark a also the connects, we of work, construction there, to system et

the to barrels getting to as going. be the us, a So going Eastern soon get we system Gulf think opportunity I is real good as for

PaulChan

much the barrel too Mike, are at concerned you depleting Patoka? of about

MikeHennigan

at, term, meantime, that that going already expansion going barrels in into a We're think we there as look barrels region things to can I And Patoka, into we're Ozark to think some will bit more more know see do think time. the in at solve going to expanded we That's some on I another short that look but mean We're are opportunity up Canadian at, some Bakken we the the there. as get for little well. ourselves. I you're Cushing look more Paul, in getting itself over to limitations anticipating now area. will you people No,

So more see into area, a be I which for of you're going Capline. source supply to Patoka should flow the think

RickHessling

Yes, Paul, said. Mike this on to Rick, tag to what is just

potential at bringing timing Patoka you Enbridge out of an Keystone -- and when So Capline. incremental look into the well lines and really both or System with capacity, in potential XL barrel their increases their down take it to the

Operator

Thank you.

Credit question Suisse Manav America. next North is from from - Our Gupta

ManavGupta

bit $XXX to doing did in two Andeavor here doing million million, you but million together, a retail about rate, million talk million that's was in can retail $XXX guys, you little was put $XXX those $XXX like earnings run alone. Hi, MPC you $XXX million, the $XXX to

the results I but what's besides crude? weaker would helped, so driving So retail regardless, are the the these stellar understand earnings weaker crude have

GaryHeminger

Manav. Right,

you and First did let good phenomenal are -- phenomenal thought the team The quarter. fourth a on you, outlook. morning his compliment of me year this you quick job your and a all, your analysis a retail, first had with Tony out I

very a was direct the total margins ramp in part little as up up strong the the volume started Speedway retail a capture sector as year know, able that of the strong merchandise well in were across a merchandise of off really sales, a our you through As very was part, margin, Speedway bit for now entire and to slow, for most it quarter. but business the but ramp we we saw

As while a direct retail or helps helps and I it that retail of is prop expect sector. think we continue of and side we through look earlier to talked going But forward, worked a refining high prop of I one and that and Marathon first had and Xth the in the on at the together, the that the very the I of this margins is volume one these going ability entire strong as side, of part retail wouldn't when the up look side, very real them our across synergies through or the to retail was perform I chains the the year, up XX% and about bright real through bright we our continue spots, spots Speedway putting to we thought rate. well our the marketing companies either brand side I Greg retail quarter,

ManavGupta

in is the remember million synergies million a years, at business way you looking looks and that for is We R&M $XXX follow and in least. you are it it, Hess, but to target easy when in literally going the one out And like up. $XXX acquired today indicating are $XXX synergy quarter million year. one you way there gave at Gary, we for $XXX reiterated a you million three next got quick the going, business retail year, now but

time? very for the being So are there you again just second conservative

GaryHeminger

-- on going to Well, retail going this bit to transaction are that and these times upfront mark. if stair-step the you a Arizona walk discussion and synergy done that stores Minnesota. very Speedway Day, being synergies. I Manav, of going is Texas, long we of than this -- already you're synergy stair-step, slow Don we've mean, to soon, but a very Southwest are stores of going we've re-ID'ing we discussion We're walks. with Whereas will, forward, Lot other already would see I Analyst of and kind you're those the and start a have now and see at Mexico in the XXX in talked and different tail, I had synergies you'll into look synergies about and New had this here re-ID'd be developing more then

into and so that breath can that tour holding and my can So am many Arizona I there's opportunities had in I was last week full a permitted. longer there to take I get go going -- market as we little to the we possible. it is soon of California going things then states bit as But some a western and get as other

of going model. synergies the and more get So to re-ID'ed and you're inside on XX tremendous see Hess higher year get The able a even everything going I would is synergies months to higher to synergy were XX stair-step, to about have Hess in year of the say and to more we get than two the three store. model,

those Here there. that can in are be bullish we some the we Speedway do have on of to yes, operations. the the synergies take are tuned. the get there into and stay believe very go I and retail to and completely synergies type stores But, redo upside that

Operator

you. Thank

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

DougLeggate

a everyone. gasoline by and spread. and structural US little Thanks, on--whether the obviously I always your EIA, Gary, on been ever thinking obviously at changes you appreciate some I latest of good the actually appreciate. have has on if the I'm API ramifications morning for crude challenge to that this We incentivized wonder the is yields macro, a morning. focus utilization amount what according slate reasonable has running could is, obviously obviously comments there gasoline been but bit I least

opposed which gasoline, should maximum cycle to So much case, as particular distillate a seen valid expect industry to I see question in guess why as on and reason think both we've so my perhaps seasonally? you in the is, that's normal we through the new do a Marathon inventories, productions

GaryHeminger

want because just fourth quarter run sweet. Well, in that fourth run the people well of the third -- quarter to crude -- differentials to more and led

of start inventory, everybody utilizations you're on is as inventories ran out, allowed issues you the due few are EIA you you you're to would built the high going I reason weather. some come this? a I operational the inventories numbers the weeks Don, the say that, here in the if But to call very, even you more the at were differentials do though very see over think add to which by to because see decline some gasoline the to caused Doug. to next to correct, You're want earlier, going high

DonaldTemplin

if guess, had record we we I think so. about Doug, in Yes, the saw Coast, exports and particularly, you Gulf

we're market -- advantage and a what West through taking or a Ray Our diesel us we're the at for of fourth higher And that Coast Coast. of to perspective kind But that. or situated do we'll a in through value we're is, there the market producing; products that, so either diesel continue December view is exports well Gulf from better of max production, really that's said, and XX% that's the we're we for if the quarter. saw

of a that I that Gulf of about XXX,XXX to came XXX,XXX and I under the think exports, just number December think, slightly the Coast. was out day for of barrels fourth quarter, was it and XXX,XXX

we to So markets thought there value. very was we incremental on were where delivering focused

DougLeggate

I it's one answer. not to know easy

thank it's for quick So probably follow-up that. is you. you My a one, for Don, also

remarks, idea synergies, QX the you. the synergies give will annualized stand recurring and of Thank so it prepared I'll in relative to leave you now You recurring, $XXX the million be at us your all synergies what right can not said the of there. guidance an

DonaldTemplin

Yes.

the I last So call as was or get question to -- thanks, Doug. And in I wanted on well. -- the last

of things. supply piece realized those then look pieces, well. the of from you is crude logistics. a of and million it million of and get is quarter, the really over little comprised in incremental $XXX of that oil came piece fourth that other able two we're $XXX And And our synergies as space if it of one it is through at pipeline differentials to type sort of our the optimizing So volume

differentials quarter Canadian were fourth incredibly around the crude. know, particularly you wide As

differential when volume so it's is I'm piece the will saying The it recurring. piece non-recurring, fluctuate And of quarter-to-quarter.

Another example, the Doug, turnaround. would be on

have talked annually we we opportunities Paul turnaround in have quarter. are turnaround St. every always about Park So and Martinez, the but going to them won't we

in the a in turnarounds turnaround different in of and be we that. capture will XXXX was synergies XXXX. The than were fourth synergies So of to turnaround or around able the capturing capturing timing there synergies quarter, timing

rate, So $XX was million I think our plan implies feel very we million a $XXX which month -- run original base exiting XXXX.

feel we think number exiting be above XXXX. I very that that we'll comfortable

Operator

Thank you.

Wells Fargo. question next from Our Read is from Roger

RogerRead

morning. Hopefully Good like real Sorry. you with hear can volumes. there. the I'm me you to more Actually, be quick gasoline higher on that I'd thing; back it come seems to

yields look from the a at If down weekly from we're about DOE year been we're where gasoline ago average. you and last, data, five-year we've the say,

it your problems give how little talked about that if the impacts million loss. product persistent area is something the nationwide? it and was a a II the I know on see I like kind think PADD more higher that to maybe barrel you weather do or that and throughputs, strictly about But million you could Gary, from X you X So detail looks us maybe, of, is thoughts

GaryHeminger

think I of this shortages. II, they're PADD really crack PADD to days because rebalance, where And probably care of I because more $X, having III from the the say PADD at were were excuse at -- a to this, to look precursor the I way ago, that's PADD II up Look mentioned barrel days, IV. spreads they way just you week market should've coming. earlier, to a gave that take have a is inventories I $X and X me numbers and would last The another gone these Roger, about that this gasoline to in XX the

where the that So balance next over substantially the and is see PADD into to gas more to and come this is come XX seven the look today down metric up you II you've and clearly to inventory seen the best in going IV days. PADD And in crack are they've last come here weeks. few at

RogerRead

happen seems Yes, to every how funny that it's year.

GaryHeminger

Yes.

RogerRead

Coast need and we look than intensive about the CapEx process If as we could a MSOs this or quite much we I parts follow-up isn't was at re-branding if inventory and was side, retail just then the say approach switching made on other straightforward should West could OpEx, think a over clean that's the that higher merger that get the related of and the tag on refining this of and given more stores about much know to manufacturing be CapEx you changes want is wondering to it that adjustment, was is over, system, in costs about we different side think moving a down Manav's much question, as number over trying historically the it's we higher, it's quarter, switching how questions fairly on separate that time? the a as Hess at but just to if to a high how too what I look the of

GaryHeminger

stores. numbers it our Okay. what is numbers going Roger, I'll Analyst take re-ID the Tony's first one on capital the the there, We to retail. had he presentation, take remodel, put Day the the in out us in in to

we So the not big the as were it's with It's re-ID where much the side well. remodel and Hess a pretty on for side in line number.

significant the any you're best to doing begin back be which to the from on do We're not store is at time is So, making to then it Hess twice. not the had the progress re-ID, the to expect we learned of good front, the more side remodel it very things one the is not that same you're so no, incremental we with. capital I in re-ID already plant,

might a of I going Coast those want you capture talk already to have combined. we at by see slower, to the increase So capital should rate as both while that a little West identified. it any incremental sales, we're in margins moving expect seem OpEx? the doing about though faster Ray, incremental not you we're But think to

RaymondBrooks

our have OpEx in Sure, lower If in quarter OpEx, showed down cortile that right we with LAR and an when bit we West first going of and associated real brought at costs used OpEx talked on too. our general, Midwest a Day LAR, midpoint but some have Coast, We're had than high down. we we the in that's seeing same the on that's that view West to utilize the something to refinery refinery to the opportunities bring that us Analyst from a the Bay and see We at to want Galveston opportunity little for Coast driven for that do on this incentive performance down what play that have the look magnitude turnaround Bay six project and implied book look have that is to now. is we as operating alky OpEx our numbers Coast, Coast and about West historically a Galveston so activity years the some Gulf we bring the definitely US turnaround are we in projection now we'll radar by, a port we we those now. what in that's right some for right and the that at in Wilmington

Operator

Thank you.

Our Rao from next Prashant is from Citigroup. question

PrashantRao

taking accounted sort the numbers and on sense already are get so combine maybe run the XX/XX circle can to Hi, a Is the to the for to the the of differentials million. as of split for drive Western how was that's logistics, between detail much close, some thanks back a is by foreign the kind sort appreciate wanted rate the that going that the get split synergy the I thinking and question. there or on spot, we there, crude the WCS that about on way forward? the similar driven logistics we of well supply $XXX of could of in wanted acquisition I of back to what

GregoryGoff

basket, stated the no, Yes, the third Goff, Prashant, XXXX, and far and -- to that there that was so Western amount to there in through synergies, those differentials. as XQ crude the Greg with had corporate synergies do whole with as had to from were no through the were impact nothing what in operations, differentials, quarter. been the supply, the was about this refining on synergies is to were past The Don talked quoted

PrashantRao

you. Okay, thank

to drill question assets my second combined, there, we the on think Coast in as I compared on the might look of maybe update integration kind to California as down to a what and of as well anything now here some how that maybe terms here on Pacific wanted opportunity I West color the market dynamics or And side? bit of progress there some little -- maybe the an we're on synergy the seeing Northwest of XQ. in in be that the

GaryHeminger

operating then into operational go well. refiners. those Anacortes, move Prashant, Ray up just anything we very you to things on what to into opportunities we there Martinez and on looking that Well, move up equation, the the you're we're Ray, some cost as excellence see and going a we discussion expense of want see opportunities we're see to at side had in just -- the to good getting and the Alaska? at the of LAR, Anacortes

RaymondBrooks

additional where we playbook, in maybe more how I'll our refineries will I to West done better a LA say Andeavor play and refineries Kenai, utilize, we're really capabilities. but the there's good Yes, job IMO Kenai, optimize coming, synergy looking Anacortes, to with streams better heavy the had Coast; into can and our whole of move would have of at from beginning think some -- down say processing LA. We next from historically year that. the the just Martinez, opportunities, I'll we Anacortes say the on four this

of to in it's you an optimize really seen asset there's The more XX,XXX-ish what but advantage has within configuration a that presence, bit able trains, with thing kit little refinery capability a about still excited the that within crude day, the barrels marketing know little tool we Bakken West processing very and Coast standpoint. forward. a smaller the unit Anacortes other we've bring so crude to limited with far that is good their think to being opportunities Kenai, a on a but say with at bit relative I'll refinery, of from going we're thus and a

sure, game and, two, thing the cost understand that is biggest the now get I'd spending on assets Pacific four months but how As time more really we the earnings of more a and into the to on say be each there'll of lot structure focused right these to are analyzing at of just make one, Gary Coast we're the we're this, making come said lower. call, that refineries we we a that at plan

RickHessling

to this to -- a Rick just just Hessling, I'd add is I'd few that. Prashant, comments Yes, like

So have the US barrel enables to well. as Coast synergy of from barrel to guide our a Bakken, strategy Paul between St. to those to addition PADD II We're to Coast incredible as ultimate to sourcing then able And Pacific Coast barrel now four refineries to Pacific to of toggle part us Park footprint footprint. Coast a crude guide aspect, the for into there, take West an the regions gives it's flexibility foreign to or Coast, the as barrels mentioned there. to our as in Gulf and us guide purchasing West Ray the this expanded and to the Canadian well that, our

earlier, before never this and So we our stated of Don is as large have part a flexibility synergy. had this

both a Coast. Coast West true and So the the advantage Pacific for

Operator

Thank you.

next Our Paul Mizuho. Sankey question is from from

PaulSankey

this market Good is have I on in about assume, how regime. Venezuelan that, latest understanding they morning, any there everyone. Washington? the lifted abrupt stated secondly, strict the the be was of chances thought would that that usual Washington you particularly. Gary, situation if administration, sanctions very have if wondering could believe observations because change you is the any you by question other you thoughts I and there's be, might I year if Iran enough they'll I surprise. about My out ask And we please, were Thank there the oil you. impact on as later and that Iran the sanctions are further to assume and

GaryHeminger

Right. was would that a say Venezuela not surprise And to I us.

upfront was administration very the messaging think on about. his clearly was come I president in might what and very messaging clear

well prepared from a steady diet. but cargo in part our and the for As had or there, anything Venezuela earlier, here we eliminated Rick most stated were eliminated

producers thing and to Paul, discussions. Probably some and I to continue yesterday I of Middle say to to the eye really you're they're of discussions on to Iran; looking of the the going that to same important sanctions might of more global As Iran, are how continue would have read balance keep be OPEC, we East to think inside mean, to trying Russia really keep the you'll and see in see, crude how kind a though, sub-pact that's our on on as around market. something probably to all eye the what close able

PaulSankey

on thoughts just what follow I deal? the on can Yes, chance the your of that, are up NOPEC NOPEC, the

GaryHeminger

written I media to I what being I lot just producers. think producers and tell, what's are think about East it's discussed the Russia, Middle they early the this, and a powerful in too

think much will a more than issue. be I combination of that an powerful an type OPEC

PaulSankey

you. scale if to seen for you've US, international quarter this Gary. like one, field -- strong expansion got the And then Got now earnings reached from, one, We've that terminal you mind. would Petroleum? exceptionally it, international consider you presumably Marathon given example, Thank left in for don't I've

GaryHeminger

plenty to time. that at be those at and many list this times time, my our on Paul, through cycles don't I over Q&A that grace we would I've through worked wish I've say End worked Not here. of career, see this have

Kristina Kazarian

be Should interest you Corporation. much you calls. thank your your questions additional in so for everyone Operator, with Perfect. that, And thank to on like have for you would topics us. morning, will take joining or Marathon clarification we available Petroleum this for discussed

Operator

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

You may disconnect time. at this

Kristina Kazarian	Vice President, Investor Relations
Gary Heminger	Chairman and Chief Executive Officer
Donald Templin	President
Timothy Griffith	Senior Vice President and Chief Financial Officer
Rick Hessling	Senior Vice President, Crude Oil Supply & Logistics
Michael Hennigan	President and Director
Gregory Goff	Executive Vice Chairman
Raymond Brooks	Executive Vice President, Refining
Neil Mehta	Goldman Sachs
Phil Gresh	JPMorgan Chase
Paul Chan	Barclays Capital
Manav Gupta	Credit Suisse
Doug Leggate	Bank of America Merrill Lynch
Roger Read	Wells Fargo
Prashant Rao	Citigroup
Paul Sankey	Mizuho

Marathon Petroleum (MPC) 7 Feb 192018 Q4 Earnings call transcript