Marathon Petroleum (MPC) 8 May 192019 Q1 Earnings call transcript

Company Profile

Participants

Kristina Kazarian	VP, IR
Gary Heminger	Chairman & CEO
Gregory Goff	Executive Vice Chairman
Timothy Griffith	SVP & CFO
Donald Templin	President, Refining, Marketing & Supply
Rick Hessling	SVP, Crude Oil Supply & Logistics
Michael Hennigan	President & Director
Raymond Brooks	EVP, Refining
Philip Gresh	JPMorgan Chase & Co.
Roger Read	Wells Fargo Securities
Prashant Rao	Citigroup
Neil Mehta	Goldman Sachs Group
Manav Gupta	Crédit Suisse
Douglas Leggate	Bank of America Merrill Lynch
Matthew Blair	Tudor, Pickering, Holt & Co.
Justin Jenkins	Raymond James & Associates

Call transcript

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Operator

Welcome to the MPC First Quarter 2019 Earnings Call. My name is Sheila, 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. begin. may you Kristina,

Kristina Kazarian

tab. Petroleum that Quarter be accompany at Investor our Marathon Call. found Earnings The website Center the under slides this marathonpetroleum.com Corp.'s to XXXX First Conference on Welcome call can

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

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

Gary Heminger

you and Thanks, joining Good Kristina. thank call. for and -- for welcome our morning,

diversification working generated repurchases. to million model And of billion a challenging system refining In despite capital capital. $X.X us the of cash through-cycle nearly the MPC before this flow Our generate we helped offset $XXX Retail of conditions. and adjusted in shareholders, refining being to during we The share billion our over segments quarter, business of EBITDA the $X.X returned operating first integrated approximately quarter, cash stability weaker our of quarter, flow. and including as $X.X generated enabled of business billion to flexibility our market Midstream

at quarter long strong least of the as Over demand the returning cash free disruptions discretionary high the margins. to came to levels entire and At Beginning of changes. compressed substantially, as difficult and U.S. Inventory of flow XX% to industry fourth the was same and crude as for policy seasonal well challenging year committed a term, we led several heavy differentials refining industry. a were lack the remain weather time, geopolitical medium given off sour gasoline investors.

inventories market, their progressed, As and the distillate the now reductions gasoline rebalance quarter are X-year below though, helped and [indiscernible] averages. supply

crack quarter blended more our April, double first than For spread was of $XX.XX average. the

we set. Earlier encourage for With a business, were moved announcement acquire per MPLX towards to it spreads to mode, Midstream ANDX. entered we see Details to deal morning, and transaction definite more had agreement the press this this inside morning, coverage announced merger the but incentives full. the provided $X information. release our tremendous continue With have into on we our read crude you barrel, opportunity also to the keep sweet max to see sweet/sour continue a

opportunities. participate largest as grow U.S. call. that key Mike some continue volumes production, midstream we to well. NGL speak to project With oil of in increased and has will the believe in producer gas in is the infrastructure and world, Hennigan the Looking business forward, the later the become to positioned well updates of this natural the crude our build-out

have markets merchandise the that X the Retail months and into seen we sales side, Speedway the On continued legacy strong April. over last same-store

we We expect the this prime trend season. to continue into move as driving

XXXth solid outlook store is the XXXX, economic in our conversions. we of supported expected also remainder yesterday. the and XXX fact, to And contributions finished look we growth positive by As our from conversion

creation value sales. our the store, opportunities using customer Lastly, and continue enhance platform. pursue drive And technology interaction to we drive opportunities the inside we to see to

X business positive flows all of expect our support of dynamics segments to XXXX. across growing remainder We cash the throughout

our longer use create also we continuously and strong would our that disciplined Coker advantages project X we strategic and grow projects. typically project rate the competitive One project investments refining of the investments. exceeds to XX% for On objectives profitably through to returns. forecasts, generate hurdle Based assess core portfolio our is front, our Garyville internal our ensure on no comfortably

by project production, for have driven stop return completing crude, including our slower project to primarily from differentials. Venezuelan development engineering production X lower definition long-term lower and Canadian is As caused remove spending in the Garyville such, crude capital pipeline sanctions. plans. our outlook we heavy it the and after have of events Iranian our change decided Coker The Geopolitical heavy

refinery to in STAR is our year The our addition, also X the first as quarter to commitment XXXX pleased more the row, everything take an was ENERGY XXXX XX-foot of and We're higher fourth Recall match the drums. the and second XXXX driving evidence fuel Garyville of existing of our Partner to coker ability at light tangible with track announce about a completed Having project Year. produce do. quarter in first energy is LARIC IMO In our being the on drums through the EPA expands result the early shale for and in This a of continued phase Marathon of on by to schedule accomplishment U.S. cokers capacity crude the distillates. efficiency value by second impressive we our complete produced awarded be XX% this, said Angeles diameter phase remains the X of growth. XX-foot remains to existing the project in at to new increase requirements. bunker will diameter advantage this Los replacing that project

operational long-term remains look achieving we we of to value. our to on excellence, cash industry XXXX, and And the As past focused forward growing creating investments support improving of outlook. our dynamics expect remainder synergies our flow team shareholder

some to provide integration strategy will over our and process, the turn comments who opportunities. Greg development commercial me on let Now call

Gregory Goff

Thank you, Gary.

Much moved executives made a other key website. progress corporate our and redesign integrating over leaders notable aligned Findlay work. the complete back-office prompted company's launched the of relaunch Multiple strategy core that the have months. In past on our X to we have senior The of and and headquarters. We our work by April, direction companies framework work the X this was focus the for of driven this was integration developing cultural vision, values.

commercial California; The that states from in Sinaloa; this Sur; to X being with of and an in initiative a additional begin and our supply this El -- world-class Chihuahua. Paso sites Additionally, initiative ARCO-branded competitive Northern we Rosarito development strategy, In XXX process very area at built products Mexico our In of through grand deploy success Baja, technology refinery. lease include Baja integrating improve platforms. new first capabilities held ARCO our XXX have we ARCO terminal Related continued system. the allow ARCO pursue capacity the launched efficiencies in will Western Sonora; growth, Ciudad have California we us site ARCO-branded. we ERP and to will now This have growing had we Sinaloa. our light are integrated Recently, to of which be business also activities of directly the in we Juárez. enable pleased into Baja brand our sites, We and opening are to supplying are Mexico, currently in our support continue supplied key markets.

including placement New in our the NOCO the is Buffalo, to York This On Midwest Express strategy. Mart our agreement [indiscernible] Harbor Speedway's large supplied Express announced acquisition from multiple a or routes, of in we stores marine. prior pipeline, product XX other of thermal This Western of and product upon retail Incorporated truck New acquire or support the XX NOCO extension business investments, integrated light via be York supply [indiscernible], to in in Midwest builds Asphalt locations rail model including positioned our from York. New

to to value continue business renewables to stakeholders. related additional and continuing commercial projects the our additional of reach integrated assets to portfolio, existing grow create We our progress our of of for development optimizing integrated portfolio model development our

Now let to results. will call of our Tim, a financial over me who walk-through turn the provide

Timothy Griffith

quarter highlights. streamlined discounts EBITDA of Thanks, in barrels segment increase our and walk refining announced with The adjusted quarter. first was was price nearly information work million does the $X segment quarter in $X.X barrels portion by dividends reflective inventories format margins provides on refinery [Technical To EBITDA quarter in have by and was than of weaker-than-expected Greg. Difficulty] at and Adjusted $XXX costs consolidated XXXX. impacted from throughputs provided our billion. detailed new last year as X.Xx February allow the was Wilmington were on was quarter, addition appendix quarter. billion drop-down Capital of during segment parent-only heavy first by questions, incremental industry including additional environment per or $XXX billion. quarter's million due maintenance for higher marketing the resulting segment reported -- leverage quarter repurchase more the additionally, million. in call planned completed Slide a our which time Angeles results and of during in We ended million January. to the been capacity billion crude XX% of the Andeavor's we've $X.X transaction. financial Operating before marketing and $XXX include million the we X.X production operations basis. across resulted year first the working were quarter Slide turnaround XX%, offset $XXX of million X high the the the attributable MPC share same Share million of over from strong system in income Andeavor the capitalization the The a legacy for narrow gasoline quarter. outstanding month refineries. Los to dividends, the day quarter. walks first sour decreased book of medium the realizations. X $XXX from flow versus This Income approximately we X.X quarter Refinery the of at Recall, following and in Quarterly per this loss shares earnings the repurchases fourth incurred summary We Robinson of utilization of was also dividends extra of million quarter, quarter, $X.X of day in the MPC addition refinery. results our in X cost total over XX% captures and presentation. gasoline for also was and Refining and X million the just XXX cash which the spending is segment from the the $X.X capital for the income last

increase The of XXXX. Income Looking at segment. growth results versus Andeavor $XXX from increase and across the increased MPLX's million first of due Logistics Midstream businesses. to million by million was contributions our primarily $XXX quarter in driven $XXX

due volumes segment. million quarter by versus sales MPC's legacy year-over-year. Speedway dealer were increased noncash as and state costs Same-store to gallon million period the earnings. debt interest the adjustment. base due system Moving the to formed the vacation a company. dealer Andeavor's as X.X% undivided to operations primarily million offset in million joint year to to the expenses Capline a allocated fuel related $XX primarily combination. X.X% first decreased of costs with by combined of result not exchange $XX an Retail XXXX. primarily of employee was in -- year prior by joint averaged corporate last accrual first million versus as well the financing as Items for to due quarter Andeavor merchandise million of in this adopting last of $XXX $XX Income MPC quarter sales combined same in Income venture. primarily segments the costs This partially as Interest equity retail associated legacy $XXX newly $XX tax balances $X.XXXX our higher and MPC's had million favorable benefit well per increase transactions-related as $XX impact due direct million addition well across higher during as year-over-year, higher of year gain the ownership same-store increased higher tax margins the has and to policies for $XX and from increased of gasoline to segment Retail the income operations

debt earnings both the the primarily dividends of and compared income and cash due tax of million, to partnerships. totaled X source interest shorter Andeavor the the presents by million of debt, lower quarter. X at of effective to total in turn was in our driven Return unitholders [indiscernible] and higher the billion quarter. $XXX At long the MPLX elements of expect the to capital be purchase to products to Don. $XXX operating over With Logistics Core the longer points shares way change largely of of source $XX.X of at our effects the increased for with capital X those million. let rate quarter to We refined at by approximately $XXX rising over $X.X unitholders public the just billion billion billion percentage than million the of consolidated under share Noncontrolling of on of call billion had flow $X.X to in prices cash of Slide the before over addition rate and commodity cash earnings term. statutory allocation that, Distributions MPC the terms the of in quarter. quarter. ANDX. the end public $X.X of of capital we to cash the consolidated repurchase $XXX quarter acquired million and position was shareholders first working during was in changes quarter-end, terms was MPLX crude Working including to and ANDX oil. the on $XX Cash worth me $XX

Donald Templin

Tim. Thanks,

pleased made is mentioned, delivering continued we've with the progress we we have synergies. operations. assets Greg One are success and integrating significant As had example the our

and $XX million synergies the corporate marketing, in in $XXX in retail. seen of $XX quarter, and X, first As million $XX realized the refining on million Slide we million in

run ability We to to significant set synergies. our on or continue in rate of have available deliver to opportunity as these realized most confidence are the us, synergies recurring

synergies business, the and catalyst the $XX Crude turnaround; realized for million realized accelerate and Wilmington approximately reformulation lower utilizing Los Tier of date changes; refining logistics practices and quarter. to oil the turnaround we of include Within million $XX X supply during synergies best approximately the costs completion compliance. delivered optimizing The during scale Angeles, gasoline Examples again synergies oil Mid-Continent purchases leverage at $XX by driven synergies continued combined ability the were crudes as spot region and combination. to the Canadian foreign these a to made corporate quarter. million The represents to of possible majority business. our by optimize access contract our renegotiations crude our in

Slide X. to Moving on

on for feedback providing in our note now discussed listened to we to to comparable An composition by historical at differences because December, a different margins important of combined our Day reported basis. regional company, our XXXX As is not directly that point we Andeavor. are reported margin and Investor margins of our investor and the R&M margin regions in calculation method are

paid region cost of and expenses as fees that Some sales not reasons and are such as as of to cost include well between allocation the specific any allocated to SG&A ANDX. MPLX

Coast refining $X.XX For the barrel. Gulf first quarter, our margin per was

outlook metrics of information for MPC per $XX.XX updated provides the barrel. margin quarter per X barrel. was key XXXX. refining And on second was Coast for Mid-Con West $XX.XX Our refining Slide margin our operating

throughput turnaround have through look our of these than second at Martinez Angeles we of said, these XXXX. later we significant we volumes to The alkylation continue maintenance on and are work Garyville, to quarter, X.X million expect the the slate units. total plant day. XXXX, at is approximately with refineries. most we we in the events, activities Angeles and XX-day As that Los per complete be nearly FCC barrels Inclusive outage where With our do Los expect of

call to and per barrel, our projected discuss me and the are million be corporate to over average turn to Hennigan unallocated other direct the is With for total projected cost $XXX briefly and Mike that, Midstream to projects. be let quarter. business Our operating $X.XX our items

Michael Hennigan

Thanks.

set We to across see continue midstream tremendous opportunity our portfolio.

We have companies. key on several our projects recently across midstream progressed

Wink-to-Webster First, crude today, MPLX announced its the participation in pipeline.

higher our commitments, sufficient return. the this prior had project much enhance achieve efficiency we to to capital a Although and join our project decision made

plans XXXX crude to start open by and allow to binding which where for significant Port September Eastern in light we in see This MPLX reach partially the open commonly project and season ability will as crude, oil to deliveries Second, is forward heavy light opportunity referred a both providing with LOOP. interest [indiscernible] to the completed Louisiana via move shipper pipeline, the MPC, to Gulf heavy deliveries supply and Oil Offshore export Cushing oil the XXXX. owned

Last, in Third, remains at Oak mentioned Gray as year. Gary acquire the a of have this the a MPC the where agreement ANDX. level, come to quarter project, online MPLX we ownership, track announced early recent to on this morning, XX% fourth

has with presence the We of it natural our are regions integration synergies focused business, in Permian, opportunity excited logistics deepens creates to and announcement. the the the tremendous expand This incredibly refining [indiscernible] about MPC's U.S. and

I'll Now back turn to Kristina. it

Kristina Kazarian

will [Operator Thanks, that, Instructions]. the open call now to Mike. we With questions.

Operator

Instructions]. [Operator

comes question with Phil from JPMorgan. first Our Gresh

Philip Gresh

question First for Gary.

for of December to the back Just you XQ would back macro kind thinking looking we're year at with guidance rearview whether how the the terms in that in are and about EBITDA for thinking full today your year now full your the that environment EBITDA, be guidance? second right still of your quarter supportive guidance of seeing in

Gary Heminger

different weaker first first we're as comments, in as West the margins on not for just of Coast And quarter entire particularly, know, up I quarter than year. balance Phil, for and is were my had Well, bullish But the we the ended the us. in stated the industry, rearview the you dramatically anticipated. mirror,

recall you to they about quarter. barrels and day, in to -- And following is I did. important here were in of are end. low the that but first in margin now end. right stated, with quarter Gasoline some fall I the inventories fourth was the X stated call, We predicted twice per I X had going is low think at what line and inventories -- if As kind more $XX.XX, which see quarter-to-date the our million what start we is to the at million it

look by high region were that region, think, very you area inventories PADD bit at also it in those only little big on are the line, the got -- back quickly. also and the III side. the only If really of country, the export is are a That's I

Don turnaround We're So very the below schedule the we're II, to on ahead finish key on to the I where PADD was expertise across knock synergies here, it's LA tremendous look that going we're for this accomplish V, spoke mentioned year inventories us. of -- turnaround even PADD we that are in how it, to Greg made light progress. bullish talked and to board, and of inventories. wood I major very at turnarounds, able when to about This those. we PADD going can do a budget. just one bring projects our combination major we is I but be

being remain So I we with say the rearview on year. very would balance in first that bullish the quarter mirror the of

Philip Gresh

Great. on comments about questions canceling your I Okay. that a less had in annually then think more you're you what project. level? I some billion light-heavies, in then 'XX rationale One doesn't since ask capital about mean remarks made for XXXX? whether on prepared perhaps that. longer-term specifically second two Garyville Coker parent that, the read bullish we should you the company is secondarily, And the into and question, is a And Or said around $X.X for 'XX. come spending IMO comment this just it does till the at XXXX? project

down year we should offsets? each so see And Or other there canceling are that project? ratably that for come

Gary Heminger

No.

implementation, was about Phil, of XXXX. This with, this initiation was it recall, stated we not IMO project IMO you talked As to to we you if when subsequent the will, and an project. XXXX begin

even forward. away to do about markets. international and I all nothing Singapore be XXXX. markets has real to in the D.C. specifically positive And discussions good going are around in we're to Asian really fix going this So and very to went and markets a in IMO IMO noticed those of that you've and some get very positive compliance -- XXXX with came the And over

is was So -- a light-heavy where the this -- spreads is or project today. see long we canceling maybe better clearly was clearly deferral the

Let to me you turn some color over give the spreads. Don to the more on

Donald Templin

explained IMO. it very I We're Phil. I think on Yes, bullish right. mean, Gary

XXXX around happening an our to of primarily So a the spending, or on sort this I at to there. was back-ended was view capital what really year. very changed be we Investor of then light-heavy view around Day, was was in longer-term engineering terms think your hasn't And differentials. indicated going spending. This but comments questions much the

in And this spend A really about so related budget XXXX was project. in had so this XXXX. $XX big in or we the to proportion million of actually

the as a guidance into -- here, not very I to flat we'll very So our that comfortable see should with budget. think we're And you dramatic of wasn't And But gave color for being rata around XXXX the end we It spend. we and get more don't give XXXX. over the I pro we we're XXXX. as year, XXXX that. comfortable think sit a being change with we'll in

Gary Heminger

Phil, I'll more just add one thing.

we talked down our us, we've with This capital look into project. disciplined the to have are. said, weren't how internal spreads times, you've we just good was there, as we But a several business projects discipline. better forecast, and came Ray return at road. As us the still illustrates about been

And the time. so we're now's very disciplined not and said

Operator

comes Wells question from Fargo. Roger next Our with Read

Roger Read

for thanks at disclosure say me additional the regional level. let And the

I forward. think helpful be that'll going very

$XXX segment, $XXX dovetailing million-plus also by kind that's synergy here, the that how how us of And the questions. the by Just progress, One, progressing? sort understand million to rate main run could jumping to of other with of my kind in not your help then of on just X in compared expectations you if relative question that. year-end, kind is but to

match pace program here. deceleration cash year, QX, should outlook -- the generate overall of how cash flows of repurchase better the out some what share of for remainder here? saw the As the maybe from The you we to of flows kind synergies, share a more be be should in repo thought

thinking you're that? about how Just

Timothy Griffith

$XXX I'll operation, of this just start on months -- we synergy. which by million million X $XXX incremental to the the Yes, The up the of million, is $XXX synergy synergies. on first quarter -- Roger, had

if at by million million about it, just it's I want So you itself. look clarify, total. not to $XXX it's in $XXX

look will the and accomplished. then But You what share about Tim into have at talk to repo. Don here can already we details go the

Donald Templin

Roger, fair Yes, to around say each it's our are ahead synergies. we that of segments realization the the of well of in plan

original $XXX higher that at the all $XX month $XXX and different level month So you'll the and that million above million million to for of $XXX recall and our a already $XXX was segments. up We're for a guidance end was million that's the first [indiscernible] of year imply XXXX. That million business million would averaging $XX than that the quarter, the level. at along

doing our comfortable in was in on. you anyways. we're the would the Retail, have see ability. year It had going very went the coming feel We grow a where those conversions that to like and I So and ramp as things you in plan synergies on, definitely

is that -- thing synergies, as more of the you we months other realize synergies. The -- capturing they happens get they enter

first second capture say that the but months that synergy we in to had -- realized X we in or So let's quarter, X quarter. have in going have would month the synergy, of if March, we're only the synergy synergy of the

good really turn positioning. about repurchase to of feel So it. we to share Tim talk it And about over let me piece the the

Timothy Griffith

a this metric did is year. over commitment. cash assess to we'll to XX% return the built commitment need flow we $XXX be, we a be going operating we're capital but to what as to maintenance really mean, laid We steadfast as concentration support that Investor the bit million course quarter, and in flow, the cash I of to we've the going had the Day, discretionary of of question. around the we had first of for consolidated business. at the it little thanks tie to it, out free capital Roger, our Again, direct less probably Yes,

on year on point to of It's with capital to remain plays the really formulation. cash par we in is that rest return see construct. viewing cash So result operating that want extent steadfast. that that from through out that flow. by make additional We'll capital But flow the synergies we're the of part the how I

-- measure over to for we're So period. and the calendar commitment term that it long be we'll steadfast will

Gary Heminger

And another thing, seeing talk completing the will Ray -- on talk big see these just coming a some Ray, of months. what little updated LA week you just catalyst to we're and about bit formulations I at the there. you're turnaround this in like subsequent that you synergies us But that the about

Raymond Brooks

Sure, Gary at alkylation on the management the now, completing much talked about, alluded you synergies turnaround the was earlier, we've very pretty a bag, we're large as on Gary. that At and one LA, to of unit in as cat Carson -- from the side. Right got the turnaround side.

ahead of budget. under We expect a schedule [indiscernible] turnaround in week and to close

think formulation value the up. Garyville a we to a unit up, we operate all huge has once is, result refinery. is different catalyst we our start benefit a how we a with But will synergy that's this in we cracker. will of real once working is cat where that And start the So true unit the output same move in that to well. the We'll and mirrors Garyville, that yield go formulation

In fact, that start immediately. or that week spent when about X, we benefit from tons catalyst actually are that a so transferring XXX in Garyville get we'll up hopefully from unit the of we

Operator

with next comes Prashant Our question from Citigroup. Rao

Prashant Rao

V, price obviously turnaround I out of wanted up bit, strong. PADD LA gasoline little coming very that a on the that pick on Ray, to

for maintenance the to beginning the should of healthy question where positions period, outlook now to And I of guess, wanted transfer shorter-term started the we the given gasoline nationwide frac. sort on entering Just the think get you of think, I members we're team, how of picture, bigger at about out gasoline, versus capture come we year. as multiple

XXX going has maybe months view out global we I market, of a ago? changed this your speak a you the forward you the looking was well. as wondering U.S. as degrees. that out? think maybe IMO now XXXX, if maybe to reason to you where And quarters. mentality about bullish gasoline could bullishness there And X than that of more the think I strength us sort were benefits Are the that is within there overall, modeling maybe to at maintain look for you some few

Gary Heminger

first. Prashant, more were global are would the bullish say on gasoline this Gary we market ago. months definitely X we is than I

everybody quick or and to differentials sure very very well Let's happened due of as -- crude differentials fourth Retail. quarter margins wide gasoline back very led crack collapse very very excuse up and very make strong the period. spreads X-month what crude me, strong market, as the to which over the The at wide was a or understands and wide

So those to first things inventory. we ample to therefore refineries came over of out. the Then quarter running have and pull all led we to

inventory really that one look -- not came in were only here reasons what I back things Asia there. I when of understand and the Now the U.S., check, but in really markets to at went to globally doing the

better We're And the Everybody's industry well good that distillate gasoline of a most I things. the think up seeing about IMO we'll here. that up expectation. first been yes, V max Ray quarter, and gasoline. February, challenged. quarter suggest would certainly a they we're PADD quarter we've March for for strong more But into kind certainly in we very were it's set the I to first I got well quarter. And more talk X be very lot in very for first bullish, But May. evident. Yes, here margins talked refining max detail where set the are and April can is very, quarter. have been, shot there's the better the the and second again in in month-to-date got and that very But West about they in much in look distillate -- I much of the running mode third both and a think

to So PADD strong. II very continues be

sees he pad I globe, by they're diesel. region as market But check. the to can I really said and far So I able earlier, III or as bring as Ray over the go in PADD think max inventories that those to max a going for you to what export or think is by gas be

Raymond Brooks

we're varies in Sure. with far Sure. it streams. we are as as where our and region what And

and we and April, we the March, to Coast, max in little that Mid-Con to focus. The a Gulf mode that in we Coast move back to did that. a move made saw In area animal. different On West gasoline gasoline incentive, incentive bit we early saw is the

stronger the in seen support relative prices diesel mode. which On being Coast, at the to staying one, Gulf -- diesel we've gasoline,

about gasoline thing not just prices it's other is The all prices. diesel and

to bit comes every the to buy We're and of prices diesel our the And gasoline. specifically, should where determine, that, sell in And to on be to other into not if that. Coast. the the gasoline diesel have X-variable And market been has NAFTA seeing ability What then is cut and a play. strong, gasoline looking from driven seeing we thing, Even Coast, little the Gulf we're that we our one, from relative diesel equation. of again we're a us where like mode Gulf running has West On at to Coast. emphasize we'll the strong need weakness hey, I remain the on a intermediates, focus? though the and out pivot we're be, focus on become the it's day, change points our LP models

about the going what's We're go. have set which opinion tell market let to So we're a way to most economical. going do we and us don't

about cracker, Andeavor I to had LA-Carson And and that really reformulation day. The done. cat to leave cracker, talking the that's driven a barrels this question large XXX,XXX was back the LARIC with catalyst about project other was cat and California thing fully optimize follow-up I before the what a

shut doing that X down actually two If with alkylation cat a the premium very remained That's it. to recall, make product. utilize but formulation is alkylation we're a What sure units. cracker, gasoline fully blend that with project those we you catalyst units make

Prashant Rao

expectations. the the circle color. last back a change and Appreciate color just one all are X. Garyville and there Appreciate on one. that And it's differentials we maybe Coker quick then wanted where with light-heavy I the to

differential just Just are that widening from longer your the on light-heavy differential think how get is we as we at in through and duration we just starting tighter out? Or looking light-heavy changed I that wanted volatility right mind? you a about the shape normalization, there of think but of we're that similar, in that is is to curve sense, to of now go -- As view, point? tight a a the maybe XXXX, something push sort term are your

Gary Heminger

we Yes. the down have was we continued If an just X-year that would Prashant, with this project. long-term this project. aberration, a is aberration, thought a

world, heavy Venezuela supplier the around a was changes of policy some issues on over big the in concerns that going crude. Our

the therefore, it into producers to producer -- And swing market. Middle as heavy this kind so bring leads the East of

to of the market just decide have Venezuelan compressed I there's is again, quickly. I project and or can just though, reinstitute there's so a we right capital going And done. available Canadian differentials the time. your -- play longer marketplace, improves, the the time. be This If it narrower this right We'll to But us. want situation back has is other that markets discipline we period -- turned, the about it's the come that conceptual I see say And open into capital emphasize, to finish up, point, we that this think to this heavies latter is we that for will engineering. would

Operator

Goldman Our next question Sachs. with from comes Neil Mehta

Neil Mehta

beaten about I X consistency, last first I about earnings large-cap closer quarters, consensus let's the to consensus you the And around XX so missed question is S&P back time. my of years, you've XX%. last look time, guess, just of Gary. the And the XX% if over the XX% is average take

a with company support consistent quarter-to-quarter pattern consistent the you your of helps results. that have earnings wanted thoughts earnings on to more when of certainly story get do the continuing can execution. just more folks, set We're a to not So but what

Gary Heminger

within Well, and to certainly have transaction. Neil, this basis, you've through this provided into with in huge provide I we're to the applaud attuned, the for to very that accelerating and which the that going we the flow that are as R&M quarters more sector rightly team large where the -- here modeling assets for forward. model. and this asking tremendous if is I'm We integration pipeline marine goes we perfect accomplishments systems forecast with to market dynamic some going the X that a date, in model assets, the assets, I our market into dynamic we MLP, running same a MLP. not -- see will, that an concept asking only a camp on model. simple so, from here gets information for follow that integration to time -- time, synergy, we're But a all how And R&M a the used that regional and last were I as we you. and which you help we is but on on been -- and the And MLP. now really or think be expense have the thermal that a into with Therefore, And that. section. operating deduction, wish

or we But it's XX-XX. we're But levels model to you I -- to front the in the comment to were haven't first be We're But back happen. do the have see we're I a to think and you to system. the to as side inventory Retail real going to can. the take forward than question and done I I'll able data to simple best help I the -- that do that confirm it a of to multiple did to math is how forecast. is get nor out real be the with I going MLP The we be be model able our the get to that the most part, we able dynamic quarter the model of happening talking layer go about able where think thought your going haven't R&M way better to you system whole in that question. deny that. done better for said, better more is

go So do a you as stay perfect, to were few things? want get we're going tuned. I we we but better Don, wish to forward. add

Donald Templin

with Yes, one think I information provide trying comment Neil. mean, modeling maybe other to is allows I that we're to occur. that you

you So a bit time, a this understand did cat turnarounds so little we alky. was like color it more on

I our to that. So that kind the give so is that mean, we're your gasoline to And commitment build try model. data, will obviously to you can forward incremental impact that color trying into give West going production on Coast. of that's like

Neil Mehta

is the way of the its sum color, guess, consistently incremental goes is ultimately that value. to definitely we is way. is stock, we going unlock what at appreciate follow-up look a relative to long question And so I The it it, the the get value. parts we dislocated

there MPC just latest So its how value? Gary, years, whether doing saying together there of Is that. better forward couple about talk if parts, of But your that there? pull the to stock disintegration or if sum apart? a and is -- thoughts in back is I'm what a is going there relative you value discounted do was just are the

Gary Heminger

compare company those strong and sectors together gasoline in who gasoline some add get very that you the and to those did because street. And But long million very they volume that would of amount performance. is MLP sectors your at is well. performed The right, the quarter say, was slips, to the you a very a line. of a in not the X strong shares. the sectors Retail with has But for of a their on as to in take not are a peers parts EBITDA. here quarter's The now would the invested saw the in first at price the at Neil, strong. right they be in crude to when The term, trying back you're sum with did I really, our are quarter, to -- -- to sales look right stock you're about first of Retail, I on expectations we performed also you look it Well, very, the first price, very, in discounted portfolio. that Granted, basis. is first the merchandise substantial X% you MLP But balance. stated, line want running rather those X% providing which very, bought of say same-store $XXX portfolio have same-store in we type I'd a quarter rising increase, I

us as smart And as the was buy expect to very this capital we at more... project, I share continue low And Greg? earlier, should repurchases. few to through into lean provide said the that add with we the back rate. fourth think will to purchase a second be, bullish. valuation the a shares it And to think Greg to I continue I quarters,

Gregory Goff

a of add What said. Neil. like Yes, to just comments do is Gary couple to I'd what

that or our many into think, this we But opportunities months was change. that competitive change. ago, generate track a the big able business recognize idea when just back on we able months We're tremendous through I one, to only underneath power advantages. cash and we're were And do to whole by to think be provides change, that. this I what that needs months X tremendous going X everybody went to create earnings and and integrated to having

we from where But things valuation the everything our run this the we it And forward, how heard of time. think the synergies, business is the over in marketplace, way we'll conversions business, you've record together. that has that of the in time in So to a retail our to by one sell do and will on just of the at the taking demonstrate convinced time. point an that developing deliver over are it that drives business, I all pulling the work I the the marketing in we integrated things buy integration about, track powerful stages think that all and crude absolutely impact the start that the most early that to we're is to these

Operator

Manav comes Suisse. from Crédit question with next Our Gupta

Manav Gupta

asset. Galveston high-cost looks go Coast a Bay, West OpEx used and can guidance. It looking crush of the And it at I days when right there. the And somebody a you crushed you. be back the high it's to over over then And to took OpEx little if now. So I'm it,

normalized trying the more to lower? to action this what's can bring level? of trending And cost when, see we this just I'm a So plan op to by understand down

Gary Heminger

point. good And that's a Manav. Sure,

our go you Day, depicted slides that the there difference of the back to If Analyst couple Solomon index. in a we had in

legacy industry fourth-quartile come the end 'XX. Solomon the But is specifically LA, refinery. Marathon going across we -- took expect from performing are we this look our for what to legacy you high very Galveston final to Bay index Andeavor the the sites mid-year and for to versus out a If numbers year

to refinery down end EDU to expect a first-quartile have probably the of We top that an on basis.

is plant he LA outstanding Garyville, Case now. refinery a second that Ray over was Ray Galveston to go came to that went plan too job Galveston ran Tracy We was succession more turn job. has, than in basis, best new to from and -- per going is ran good He that a all answer The who ran -- operating understand likely who Ray, run a to and was of asked humble looking the in over Ray did but run on country, Catlettsburg, and thing Bay. It I barrel an Ray this to was place. refining, Bay. cost did our question. our there refinery the with EDU on the going He to best manager

very, focused. illustrated below that it's done in going further And So are trust I me, we very and budget. early we're turnaround think this to

any refineries represented the Ray, that the completed focused. are So to first we're we of lastly, the more of a cost contract here came out amount work refinery all out with cut very LA now just add? we significant negotiations. the those in we've our And of very, of -- And contracts. negotiations of complete

Raymond Brooks

from Coast, the to add just other we that like the Gulf real of our focus that second put our Gulf when won't improve spot is see to have are. quarter, manufacturing But get directionally, the for quarter. that Coast, focus in at know can what high you second driven California is work is we to but differential point looking relative And the we is. California in on course, your I'd We've some the by with turnaround we that where the costs. Yes, of

And a we not as not efficient So it's combination talked one one And far more hey, It's coming of thing. of all have quarter, believe of that's work not with. efficiency knobs. now just them the for our turnarounds. It's It's people. looking first we contracts Gary as, to about contracts, on. the spot out

California And continue hey, so how better? to to -- we can just we we there, have how get that work say, given with will the out landscape teams the can

Manav Gupta

And a guys. quick follow-up,

in of expect to of XXXX from that and the close highlighted Midstream cash Analyst the you billion back the slides kicked in On to Day, parent. 'XX, one to be $X.X the kind

math, announcement back the of trying the still you returns? did was billion. very that component business my deal to today Midstream still $X.X to is it I coming I'm you the number Given morning, just to I expect close in to terms give quick cash understand the of that

Timothy Griffith

there the going out we're by system. Yes, based some The back Tim. ANDX less but is on to a of be on sort it, of way the distributions of adjustments was there Manav, combination -- made standalone the sort it's would combination, distribution been And have could would obviously, guidance be of reguide to certainly, with what it. to again, not that

not offset there's for which outlook doing at the set So adjustment some distribution what as we're by XXXX, probably time. this we that

from I capital MLP we're don't So any MPC's think coming and or its plans. impact return flow all cash on at about distribution of concerned degradation

Operator

America. Bank next Our with from of Leggate Doug question comes

Douglas Leggate

made one I its of MPLX by this, you I conversations, quite could is the the address is about think unhappy remain deal your Gary, But yield overall in traded of complexity argue. MLP today, prior way way prior remarks with of element next the one further one you've Any of which you've highest space. yields do is part structure? in attractive what the space? this on can one you you reception most market to in is the thoughts this the how improve that now the this of still now What can simplified think

Gary Heminger

X overhang Sure, MPC. and has conversation the overhang the been the translates overhang not Sure. then for only of the having months The therefore MLPs but on that Doug. last two into MPLX,

announced transaction So this we morning. the just

market the structure earlier the All continue structure would how some have -- overhang that of time other to -- here and best sense, on this out make fee-based move. the But today MLP in that We here. market. will C-corp combination, see here the whole Hennigan over revenue look This we in we with does I makes The does at call MPLX time that on sense. think time it talk the over give projects come and things call space. outlined third-party of and the should best we really probably this backlog the Mike growth some

forth. tell So get what for have time would and if we we for projects respect respect these put

because will, how we and very think we simple it's it's will clean, recover. performance very I dictate

Douglas Leggate

there. I'll guess, a chat leave My the earlier. follow-up overall to I the wanted be follow-up in And it the have you're I'm one finding achieving we'll quicker to synergy just terms you're target? chance a prognosis is from Well, more whether synergies your clear just or [indiscernible] if same I target on more synergy quick sure. Okay. question of for you

Donald Templin

Doug, would say this yes is both Don. I to those. of

that realization set that were we opportunity synergies. and the And ideas goal of So the we the one, knew there have second to the expand generate those. was, and to accelerate opportunities the that was would

backlog occurring really we're growing than rate is actually And the faster both. with anticipated. The so portfolio is and realization pleased we much

Gary Heminger

around, but into Doug, are the our to mainly that But commodity struggled able X on whole are and be here quarter and really forward. just we're But in bit sticky months power big synergies how catch-ups markets transaction. really like was in it now into of the going said, quick other you'll from it that I'd as large downturn accruals transaction transaction just from start had some compression this ever earnings industry. any noise refining accelerate little it industry And of here, inventory overhang will a Greg the that been we things the that see on to this. that's to the to transaction, then with some the synergies put you'll delivering prices, to would integrate But quick first this the how by we're unfortunate And diffs. the the the together masked vacation really crude like just and I happened these synergies. compare overall major these see we're compare turning and in only the

Operator

Pickering, Our from question Tudor, next comes Matthew Holt. with Blair

Matthew Blair

there the portfolio noncore to back to businesses pretty parts you expansive help Gary, or days. divest your opportunities have underperforming multiple? eventually Maybe discussion. businesses Are turning any that potentially these of the sum a any might

Gary Heminger

Certainly, in and the have discussed past. that we

system. the at -- now. of the And Midstream in and some there and some looking other package into they trade level basins The assets aren't that performance We and at of are assets are than have systems There be quite Retail market divest we've our we're certain us. high-grading in -- -- some assets put Tony that Partee together that some between they those of Speedway could number is players assets of valuing on wants, probably eventually. assets -- a right fit some side, there, possibly may the lofty high certainly, here of to Brian fit now Tony better right that of we the some Speedway these the

sit we on the right where now pleased refining side. quite are We

refining going go within that within but refining systems think we and As some see right this expense, in really we that look make we are pleased. I at don't any that process in in can components at we divestitures Midstream are through the I point, now. the make some Retail, quite and operating we improvements how

Matthew Blair

operating to other QX expenses refining $XXX picked levels. your about then And by Great. up million in compared

from billion what is forward? it's going drove good I Could rate just that $X.XXX through the you EPS figure about impact. And a that run QX, think walk increase? $X.XX is

Timothy Griffith

of Matthew, a lot Yes, frankly activity cumulative category R&M the was remember drop of I has the really combination. mean, Tim. sort before it's the got of within done other effect even that that, that

sort in first we quarter is present that that But in is to big dramatically $X things in change $X.X wouldn't an quarter. we going were where of That's there there would it fourth in the So delta between Again, billion the that around February basis. saw that had are of going going-forward a last other month -- quarter there extra to you year. on done not versus drops level be first unusual present and we're factors in but of that suggested no going-forward probably things big anything specifically, to on that guide that, were basis. a [indiscernible] expect to billion

from an we is system extra within were where big in And year. of the got the -- margin. again, the the legacy the were refining lot month here Andeavor I in costs guess, cumulative there captured in of that prior So drops, you've transportation effect the other change a

costs into reclassified category. this remapped So we've and those

So those there around going-forward be big costs ZIP on bringing is it's that a relatively Code that transportation going basis. into a category. delta But probably on to again,

Operator

next question comes with Our James. from Justin Jenkins Raymond

Justin Jenkins

hour things. the sweet the your light here, of to mark just mentioned Gary, side I'm at to we're on so maximum crude keep one. realize I towards going it in about you prepared remarks going

sweet increasing quality playing of discussions that's see operations crude the on you material higher here light gravity lot more the of here impacting with U.S. a in Just out here. the it produced curious how and and the how amounts being

Gary Heminger

Right.

turn me to over let of runs Rick function. supply who all Hessling that Just our

Rick Hessling

question. Very good

at If we're running XX,XXX-foot comparator And that our number. be you will XX% a a just look you do -- to level, of shy sweet. XQ if or XQ

Now we're if XX% you from go it. XQ up of 'XX,

can beneficiary And at are as XXX,XXX We're at of Gallop, shy system, WTI-Midland at maximizing are then just of those an in differentials we've El our barrels day. throughout attractive. we very a sweets track. well Midwest differentials you Galveston light per got Paso, and around So Those the Bay.

least, not then light West as but Garyville. sweet certainly as maximizing well certainly are the And last, Coast. We there

to out and said where Ray earlier, and the make we're can, So length sweet of sense. gas we our differentials similar every LP lack And running and/or markets. based where regional tweaking diesel are all models specific them on current in day we in what light every day length

Operator

And have today. we for that is the questions time that all

Kristina Kazarian

have for your on be available clarification morning, you Petroleum interest take additional calls. topics Thank Should the Thank you discussed would will us. this Corp. you Thank Marathon questions we Operator. you, to joining your like or you for in

Operator

today's That concludes you conference. Thank participating. for

this You at may disconnect time.

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