MPC - Earnings call transcript Q2 2019 | Marathon Petroleum Corporation

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

Operator

Welcome to the MPC's Second Quarter 2019 Earnings Call. My name is Amber, and I'll be your operator for today's call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session. [Operator Instructions]

the to turn Kazarian. now will call Kristina over I Kristina, begin. you may

Kristina Kazarian

found second to accompany earnings be at Welcome great. Investors quarter under this our the marathonpetroleum.com Marathon can that Sounds, slides Petroleum XXXX tab. website The conference call on call.

call as Heminger, Chairman today team. members the well Executive as Greg and Hennigan, Mike Gary Templin, executive Don other Chairman; CFO; are, President the CEO; Goff, On Vice of MPLX; of

a reminder SEC. invite and on to It's today. as We results Actual differ cause to our slide forward-looking materially making expect Safe with read during differ that what from well session. call in filings we statements Harbor that are statements you the question-and-answer results the included be may could as the Factors we will X. during the there

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

Gary Heminger

joining reported billion Thanks, you thank Kristina, Earlier for per of $X.X call. good income we morning and or share. net our today, diluted $X.XX and adjusted

This our solid integrated quarter, of billion business aspects from cash of all generating $X.X delivered results, and executed across we operations.

many enhance cash strategic expect to generation allowed funding $XXX which roughly to investments, shareholders our to long-term impressive this earnings while will also return continue our we quarter, Our million us key profile.

this of year-to-date. synergies synergy execution capture. we million $XXX Combined quarter strong team's led to results, Our realized with our have first-quarter

of $XXX synergy end the provide $X.X us will gives gross and later of update million to progress, great synergies Our annual detailed around Don up by our confidence a XXXX. achieving the call. end on of run-rate in by billion XXXX capture year target

the our ability focus of exceptional value. the stores. quarter retail quarter results and day-to-day conjunction of capture new Our to the by management reflect with in Strong the business had and demonstrated integration this an its tremendous team business

the end have of goal on year. us by of XXX to the stores stores over XXX well putting We achieve this converted combination, since track our

company integration midstream to public around to and provide to overall slate on one Mike return expected speak system. into new an impressive our structure high our simplified shortly. of as enhance progressed opportunities across high-grade our update execution projects, an are strategy we as well Midstream, In our will commercial that projects

In refining, activity turnaround system IMO our refineries and at executed of strong Los prepare upcoming under advanced XX% to utilization, schedule achieved regulations. we plant strategic XXXX Martinez our and budget and ahead initiatives for Angeles

During expected project to in remains and we on Coker unit completion XX% quarter Coker quarter two completed progressed of the approximately the quarter projects. by the and be XXXX. track the to of Garyville phases; is and revamp of replacement crude increase drum capacity first XXXX fourth

export plans resid readiness to ensured our coastal processing capabilities of Coker between near refineries facilities. storage our also optimize We key our capabilities and feed and blending finalized and

look second economy year. remain demand close we As diesel the U.S. strong year year's gasoline and the to their throughout of to demand to levels. inventories Global the half are averages. low given below levels, Gasoline remains of we the and remainder expect unemployment and the flat last five-year

believe remain that to about crude these Investors dynamics. with but and manage from best ours compressed heavy and from ask medium and constraints timeframe sanctions, suited Venezuelan regulations. pricing that are differentials, On we supply the often flexibility for IMO uplift like Iranian operational refineries expected

year the in emerge market. early see impacts believe will the to in second some and to are continue indications starting the We half of

for retail is pricing low-sulfur and barrel corroborated and along-beach in showing we fuel at Northwest oil forward by Pacific $XX fuel of oil end. low-sulfur indicators are bunker strengthening, fourth significant toward to the are First, markets approach have quarter. signs $XX the per per year as moving are spreads high-sulfur barrel, negotiating low-sulfur agreements contracted we currently are This the

for volumes upgrades third significant contractor obtaining for slurry low-sulfur quarter. Additionally, the we our are

high-sulfur Coast backwardated highly barrel. per U.S. to through oil with year-end barrel market $XX Second, Europe Gulf values -- per is down the down $XX are and as fuel weakening Singapore indicating

factor IMO necessarily it While impacts the does a more this show imminent. that becoming for bullish are market, is not

anticipate as X million X prepares to to day for recent and by increased expansion Coker change per roughly low-sulfur which spec the per globally barrels of for diesel improving demand continue $X will even support We to margins barrel an per $X bunker the million in considering industry economic $XX data, global barrel, IMO regulations. cracks believe distillate we

a overall the business, a enhance potentially have combined portfolio nearly divest of our streamline remain as stewards and of assets year and After capital. our integrated strength to to business we identified disciplined opportunities

projects from be as such as divestitures well reduction. investments for would any high-return in debt as purposes used Proceeds general

we process be it upon develops, pricing potential this But to updates of provide As divestitures. market. much contingent to intend and the these demand for market will appropriate

Putting as remainder together this all we to forward of look the XXXX.

and past outlook expect flow focused team long-term the investments operational creating growing support value. achieving and and We cash to industry on our our improving benefits synergies our shareholder excellence, remains of dynamics

who to strategy turn let Mike call Now the update will Mike? for a me our provide Hennigan, over Midstream segment.

Mike Hennigan

Thanks, Gary.

X. to slide Turning

flows. successfully We into and diversified Andeavor Logistics are have large-scale leading combined a company by midstream creating a anchored MPLX fee-based pleased single to entity, cash

our crude the often cash a the MPLX storage cash integrated business is long-dated profile. natural logistics of to more our capital for predominantly systems, building up overlooked, oil and flow in approximately XX% makes and particularly stable, mix Permian. flows out gas focused incremental on and our programs, As Logistics evolved has

XXXX, our expectation L&S in continue in we capital business, is XXXX that in XX/XX investments ratio the to we G&P XXXX directed of MPLX was and majority our spend of business. move our to the addition, to to move capital L&S the about of the toward capital side in At our In business. XX% the

logistics projects is When objective integrated in enhance we out invest building systems, one MPC's our value. our of think to about that core

pipelines. During Wink-to-Webster that and of strategy projects the quarter, three Capline this are integrated examples advance Whistler,

the investment venture project in to gas a joint day This designed Permian with this being into transportation Agua from final announced MPLX decision pipeline agreements sufficient, Basin gas transport cubic approximately Whistler, shippers. to per feet South area, the natural firm of Dulce Texas. is X billion on On natural securing

system expect this to gas creates provide cost overall Bay our where Whistler low-cost at and as eventually input currently our system We are our Galveston natural third-party refineries lowering a Natural compelling utilizing industry is refinery. the the a to project as gas infrastructure. key well solution, of we

the to also reversal a are season pleased system. the We successful of have open pipeline Capline for completed

which connection in our to Canadian this light to Capline late will refinery. direct capable be is We mainline Mid-Continent James, the service with St heavy and expected to product to Louisiana, expected supplying this has with discounted Garyville plan Once and to reversed, have begin sufficient XXXX. quarter. later Capline XXXX commitments project, begin a proceed is crude for crude crude service of

pipeline On XX-inch service market to and is Wink the the Wink-to-Webster signed points and early our originate XXXX. including Houston destination definitive have crude diameter Midland pipeline be in Galveston will in The pipeline, in refinery. agreements; expected MPLX recently in Bay

highly The the are strong in return. disclosure we partners several not partners expect has this project at project of to all point, very very other occur participation There the that committed disclose shortly. combination this that to chosen their made but a with have

stability Oak third-party is MPC's flow to to into JV, in business pipeline, enhance value. is the our our the another by we of expected Recently, enhance the enterprise which partnership pulling enterprise. advanced way cash third-party Gray revenue Expanding on

in Gray placed has This equity that service expected is pipeline be move XX% year. is to by to which the interest, Pipeline, Coast. in end The Permian the Oak MPC project another the of a crude will Gulf

expect to billion CapEx capital As stand-alone our was we begin expenditures. target we ANDX's stand-alone for streamline XXXX, was our $X and $XXX around for MPLX at combination, to million. growth targeted while the planning Prior process CapEx optimize the

less the the We return spending than combined will $X.X we billion focus target combined as across portfolio. highest projects the toward

asset on Lastly, the Midstream system. enhance disciplined With streamlining MPC's we anticipate flow asset investing the and our to include believe of grading divestitures. could approach will portfolio, a continuing we integrated optimization cash business on which further our stability focus capital high focus

will walk-through now our a provide Don over financial of the results. I'll call turn who to

Don Templin

cost Thanks $X.X returned the before working We year, for $XXX of million and dividends ended billion. million X approximately Operating over second cash highlights. quarter. provides which We quarter the repurchases. EBITDA, our And of Mike. million $X.X for excludes financial returned through share million was capital flow of outstanding. was Slide a billion the turnaround $XXX summary shareholders Adjusted quarter we to $XXX shares to $X billion with $XXX shareholders.

in materials changes of will materials. appendix rates, To feedback, our reformatted notable EBITDA, most adjusted find reference. a enhanced we've The maintained highlights, market also Based support that metrics. helpful. capture regional on We focus continuity, incremental for include guidance trust and trend sequential on some previous comparisons, we you these investor have the

net from Slide first in $X.X higher of largely The quarter also sequential billion reconciliation driven earnings. growth EBITDA quarter second by and to X refining to increase income. and was retail the shows adjusted a

reviewing discuss each to would details like capture quarter. the of Before for our synergy segment. I the

million back in approximately ahead were schedule. under to slide segment synergies in significantly able the included up capture if in with turnaround bring days team's led the impressive and were the and quarter our of eight Refining on the strong our majority in $XX execution cost and budget plant The million synergy shown quarter. for Marketing came the to L.A we it's of realized As $XXX X, second of synergies as

savings and refineries, we began redirect were Paul Martinez able our catalysts, refineries used and Paul St system lower-cost Martinez we in and within cost catalyst St. using refineries. the to to other from At regenerated take resulting these for them

catalyst in formulations the at the several Robinson refineries. at of Additionally, second produce in Angeles. hydrocracker quarter, include began higher-value products we to we benefits order realizing different utilizing cracker Examples, cat started Los our and where the at

million We well have led continued and are our avoid to we eliminations system combination. blending reduced to synergies retail, octane also reductions across scale, $XX and This over see systems made higher optimization operating has and refining value by converted the improved of economies labor costs. of components. including The as across represents back-office capabilities optimize leveraging newly corporate specifications possible renegotiations benefits our to starting headcount from as stores. cost contract In in hours gasoline of blending

business. driven synergies X, Continuing of the months half million $XXX through Over to cost been the XXXX. have reductions synergies synergies, realized first six on have the of slide across now over of by we

million. have by $XX our also approximately reduced capital We spend

As Gary gross we $XXX that the million our annual the us first XXXX. run-rate for mentioned to half execution year confidence through in gives outlined up achieving of earlier, of synergies the

declining and The our Moving unplanned the the maintenance the to the prices. first primarily Javelina such $XX Ozark versus quarter segment planned NGL X shows million weather-related change was as EBITDA versus quarter. work decreased outages EBITDA first pipeline, XXXX. the crude in due facility our at Midstream decrease results slide MPLX to oil

in the cubic recently During Gathering System, the XXX feet of day per basis XXXX. bring are to Andeavor being of XXX,XXX Logistics per the on just-in-time driven increased $X with these processing The day the growth million by regions. on natural plans on second higher Plants half to year, expected align gas a Conan volume developed of million of by The volumes primarily increase MPLX was quarter EBITDA throughput. first versus barrels which surpassed capacity.

seen overview per market second our nearly favorable have increased gallon over an margins and provides EBITDA X.X%, first quarter. $X.XX million months. ability quarter dollars. versus optimize $XXX XX sales last of the a $XXX Slide continuing an was XX to Retail team's reflecting margin segment, million, retail second fuel commodity the merchandise the the in increase trend positive Same-store quarter, of we were our

to strategy store through continues conversions. brand expansion execute Speedway its

the endeavor number remain on XXX. As track conversions total the XXXX, total of to XXX had the cumulative in June converted conversions of including with of Coast. combination by and locations the since on Southwest to end the We XXXX XXX reach XX, in sites bringing we store West

on closed acquisition brand convenience Buffalo, acquisition its Express presence further Speedway The XX area. expands of stores New NACCO in in July, In region. Speedway's the York this

and refinery upon supporting utilization. investments to it builds prior maximize Midwest MPC's strategy product While placement

Refining an Slide provides segment. overview of Marketing our XX &

nearly crude first improved to of narrower EBITDA crack product regions. quarter. adjusted primarily quarter due versus These were Margins benefits three of billion, our was increase by in were quarter-over-quarter, realizations. $X.X all billion $X.X up and differentials the spreads partially an Second offset

to for Gulf margin by quarter. a in to second quarter, the per second barrel $X.XX Mid-term margin increase for Coast barrel $XX.XX was barrel Our the West $X.XX also while $XX improved quarter, nearly our $X per per Coast saw significant and the the

overall prices was of quarter XX% impacted result. gasoline activity Plant West the for of versus at historical approximately run-up the our versus Capture refineries several Coast and on fuels maintenance average our non-transportation the XX%.

refer and operating our including maintenance the primarily MPLX the versus costs ANDX which on includes to paid for down million some improved by transportation quarter, to refined first XX distribution of Please $XX page in costs, marketing the Refining for $XX major and additional appendix are to details million quarter. related fees which were products, quarter-over-quarter. capture

a fee external the detailed more walk-through of category. this included cost components internal Page in XX appendix provides of and the

change position the terms Working capital use commodity to a products of effects of at was of the refined was source billion, XX presents crude shorter the billion and for of million $X.X end of second our cash quarter, falling on was cash the largely to $XXX in quarter. Slide compared $X.X working the prices the payment in oil. the consolidated elements the changes in before capital quarter. flow Cash approximately cash operating cash in quarter a due

repurchases approximately Return acquired quarter. were of in $XXX to billion unitholders worth of our at of of million, long-term We $XXX and dividends public including of with of quarter. shareholders and flow share Distributions MPLX debt capital returning the total X.X at for we the of ANDX At remain totaled $XXX ANDX. via at shares million XX had discretionary $XX.X to million committed billion debt MPLX to free and XX% MPC to billion cash debt of least investors. quarter-end, consolidated goal

distributions last debt EBITDA consolidated from X.X Total including times EBITDA, and months basis, X.X debt EBITDA and represented the MPLX the on excluding MLPs, ANDX. a but times the of or XX adjusted received

our third-quarter provide outlook. slide we XX, On

volumes under throughput day. X.X total per barrels of expect We just million

St have $X.XX at are including to the maintenance projected during $XXX costs prior with be to operating do projected turnaround costs planned barrel. quarter, is Distribution we activity which guidance. per we be major limited Our be maintenance costs as Gallop but Paul. million to are are projected Plant billion, $X.X and consistent quarter some have

unallocated Depreciation $XXX $XXX is for are approximately the items expense to figure and This at other amortization projected corporate in forecasted the million be quarter. for includes million quarter. $XX Corporate and million depreciation.

highlight we merchandise fuel outlook like that information have including I segment would to volume retail for quarter, and the provided sales. Lastly, this ranges for

providing fuel of margins lag posted website a We our as the a part gets one-month beginning market each also plan month. on on at on actual of that the data

through that have after the incremental questions information prior the rest the call you be the will have. you Investor remind and to Kristina help of run in also may Relations I team Including in format available the we the provided. any information, remains appendix.

to With that, let me turn the call back Kristina. over

Kristina Kazarian

Thanks, Don.

open we questions. the As call for your

participants, yourself one we for a we permits re-prompt will As all one questions. and limit to ask that question time to additional if courtesy you follow-up,

will With now questions. Operator? call that, the to open we

Operator

Thank you.

session. begin comes now question Terreson first from Doug the will Evercore. question-and-answer We Instructions] [Operator of Our

Your line is open.

Doug Terreson

congratulations and on results. Good morning, everybody solid

Gary Heminger

Thank Doug. you,

Doug Terreson

Yeah.

all this capital And news. in good question realize while trend. first that only seem seen the appear on Speedway we're my capture that is you you the the would going be I so, Refining improving and to my what this And is point, forward. over time? historical to regards headed First, sense question you've And into program, opportunities two returns stronger going to and characterize on back execution specifically, quarters synergy become especially to they're how if integration be far. and And so set areas? in opportunity Do

Mike Hennigan

in synergies, -- strong talk our had some you me segments the work at St Don's We've specific where the just have into about presentation the We're Los from across versa. But Marathon vice people excuse integration here let and listening talk through seeing of we on just I’ll Martinez, Doug. on pleased when look Doug. refining Paul. integration. and about we overall developing very is specifically we we're date, We're plants the of at Angeles turnaround the complex Yeah, to refining of stand up integration. what very Andeavor synergy Don legacy But, and coming activity transferred about let me, some to team.

integration communication see the very along that between refining we and strong. the So coming

about plant. really a to the improve had go technology the we that can of at investors is the detail But, coming and in in I've we could bring opportunity to identified prior to road many cat transaction. a One we that into have with in output the and saw a we're LA things this it really and quarter, the down prior of and talked synergy Don, that catalyst, the was new a this, yield that as more that cracker about not talked new here. fruition we capturing this --

along illustrates, the it's think how coming well, on things I just So integration. Doug, are

our to Board project. big a just presented yesterday, We very

identified now going SAP data, how of our with but forward able here over a XX implemented go moving we've be to now end at and different have on project, financial big and cycles. will accounting the completed. we're that that, and to we're the the in bring We We've months system forward going to integrate to the how all it defined years two we're but next to get of day,

again, improvement XXX converted. we retail, the the starting XXX the Southwest to stores and story of Wisconsin stores the to complete in that very target converted. the up very to mentioned at the in retail, have end the at in have that year. I improvement hit already see date We're much stores by a Minnesota on to we’ve and seeing We're strong

bring operating So big stores that common the managing so, integration, that a things is your costs. one that manages are more in but able to those being platform in help

kept team Don did of I did the a wanted Sorensen an that team. it other strong on already we And I who big the team. this they the with is side, able to job. Hennigan ANDX. But President congratulate put between really have close have Mike they great to And would to in was to the proceeded being Midstream transaction on to a ANDX, really very lastly place job a in milestone do the some outlined then as like But move has outstanding he things. together. transaction who Mike

ask Don to go of me let synergies detail. some So the into more in

Doug Terreson

Okay.

Don Templin

is Yeah, one-time we're Doug, capturing million when quarter. are the said, about with the were did synergies, performance couple team into synergies really synergies but a we We continue to beyond. or I unlikely think way of I one-time we've around defined And XXX XXXX pleased that as that synergies. to of in XXXX, highlight the this

that so, so is X so And this around that million or credits, and year. $XX primarily past Tier optimizing won't gasoline continue

the the obviously, other million, the refining have On in of we're sector, continue us the and very budget. to -- those allow years, our turnaround turnarounds during going that of to will over be every did management next quarter, able and quarter them we cost turnarounds three won't continue highlight we're $XX but about to savings on to deliver that time confident on

million a get I that's get excited about earnings that the our call. $XX recur that's will our the the that conviction $XX one-time, view gets month, I to target million why month, And annualize then at really we quarter, and a about I if needs. I million million communicated that we have $XXX If will. we synergy third think you the of that if doesn't a think So, quarter, every about around the $XXX that XX quarter, the for out $XX for sort million the take million

Doug Terreson

looks it, Don. like Sure,

Don Templin

our At Day. Investor

Doug Terreson

Yeah.

years company, and on an Andeavor clearly as is Petroleum Marathon the and the streamlining especially go also could could this transaction, well. expedite then of portfolio, for divestitures come post to suggests And that optimization which asset-rich Okay.

in you you been be this is, might this if while have could become could to there you significant chose from And to comments, likely how pull areas that not talked your years. are about expand my on that how opportunity. non-strategic before? Are question lever about So, that Gary you proceeds think in divestitures coming

Gary Heminger

have said, Andeavor announce we're at been part entire are one be asset when to we close looking at that fully need transaction has be strategy look portfolio. the versus we Sure with ever announced It's to divestitures and may assets Doug. before but baked, this until though non-strategic as And since of able a you you be just another. the to I across say, you not would our you careful even we segment

portfolio, we're portfolio. the one the are We our a part to have thing of assets across along. at plan a identified do, that isn’t looking this all And we or year across short-term some going was this just

go So, forward. we to provide data will more the as we investors

We've short-term already on, but some correctly. our of at not packages this it's continue assets, thing, proceeded Doug, up with certainly but private and is time, pieced we question this couple your a will on a it

have look than We some are more assets that an at proceed at somebody else's probably value portfolio and asset-rich accordingly. company. I We ours

Doug Terreson

lot a Thanks Okay. guys.

Gary Heminger

All right Doug.

Operator

Credit Gupta Manav question next Our with comes from Suisse.

is open. line Your

Manav Gupta

to First rest reporting a Garry, community, adjusted disclosures thanks better. for Don, we needed They're for on the the modeling exactly of of investment X what tons team, format. Mike more in the helpful cost lot Slide in distribution really EBITDA, MPC

So, you that. for thank

Gary Heminger

welcome. You're

Manav Gupta

lack I is lot of due in to we're toward the rate. is trend are have sweet Gary But what more the Gulf on crude. Coast, the more is what is hitting running two NAFTA which doing a also light capital creating turn that NGLs, specifically in questions heavies seeing quick

from trend, it your will hit the if because capture run installation industry. in view seeing the the showed of industry continues the relative understand to it? crude, on light and take but more we are trying results a Your more this to I'm to

Gary Heminger

comments Ray for ask all disclosure your he we Ray you take optimizes Brooks slate. our going our the thank to to on runs Ray? and refining question Manav provided. crude that as additional information -- We're this Sure to

Ray Brooks

on we as when this crude, really our abilities reformers about based light slate all reformers regard. we Sure, and so and process of run crude we pulls that this ranges optimize to heavy fill our into play light get of in our and on crude Gary. and Manav, the talk is our to what units capacity

as NAFTA net and across plants have have The we for light machines natural really up this that, in reformers reason another gasoline. buyer our those having we because octane is generating Now, a at component facilities. across Robinson and the high-quality our system Garyville XX two refinery said Marathon multiple

So, I light crude an it for at as don't obstacle. as opportunity look us. an at I look

Manav Gupta

quick high oil hear. couple That's has oil for ago. to no to reduced won't fuel fuel and demand sulfur one And high weigh high price that days pricing? is WCS sulfur question, on possible very crudes. further the of due it European has and good it crushers A IMO MPC's refinery necessarily of In view, sulfur that indicated prices impact on Maya

Ray Brooks

question the going when on that then the I'm refining, going to allow start answering crude to our I'm price Hessling In we crudebales off based and evaluate processes. offered too the our in that to Rick and that. add value on [ph], of we do

the HSFO crude bottoms, valuation and how we're comes that sour is what the lot into which willing we So, to of a has absolutely -- for our pay crude.

So, do crude the side? more to bit you on elaborate want on little a Rick,

Rick Hessling

you coming barrels the we indirectly not sulfur that directly Maya the not has will at into crude tell it the on say an would like world and prices, that Maya Iranian though by would and look WCS. have lack I of when of is impact When to it's if say at priced it's look somewhat offset oil directly I I especially -- for OPEC accounted it Manav be crude the will Maya. and Hi, formula, Sure. makeup Venezuelan barrels you even fuel high and in,

say you dispositions see value true and has would We'll be because on accounted differential So, will same that there. in see it I qualities to crude shift WCS. for a also And is I you move its as the I its crude think Manav, that well, for. and will think prices based

Manav Gupta

congrats and a great guys on quarter. Thanks,

Gary Heminger

you. Thank

Operator

from Benny Our next comes Stanley. Morgan with question Wong

open. Your line is

Benny Wong

thanks refineries Coast, It opportunity taking My and the my have on for talent saw impressive host the to on to tour ground. guys guys, integration question. the was West see there. and one really you a is level we visit Hi recently first which had

has year, think, recently. execution rest opportunity and also be to Coast for of earlier. the the which you was on want really about the of of your focuses on margin about outlook the environment way to touched key soft cracker West I kind been able ask initially pretty I hoping your that in talk I you'd

Mike Hennigan

Right.

have Benny. me Let take Ray that,

about. start so both talk Let me off but

crack refineries If that coming ended West are spreads having how you of been some imports had early look situation in in and into the coming fluctuated, lot Coast which quarter, see some now. Coast, a there run too in much resolved market we at the the downtime that being and back the West inventory the more has a up in in inventory second down balance

in things we're a temporary about part we talk So, think specifically, will that was second lull the your early doing. some of the the Ray question, But quarter. of that

Ray Brooks

did a some Talking job great and Okay. Los assets. to of to was Angeles good really some with showcasing Benny it our margin I on focus that. at the time Gary was, spend it -- environment, you about some want of other the our showing refinery. investors

The Los what mentioned we Angeles it's look optimize we starting Specifically, to versus cat indications several cracker. want But from the the the catalyst times about cat opportunity early up Angeles promising in Martinez. expecting. whether the or in asset now down we California, were we Los on sure very make

first As two far cost as months lot From nine areas we've words on the standpoint, done cost. budget. which of We're ahead some Angeles under were cost schedule able Los we to and a pull work. both in work on a and at very Both Martinez there's of maintenance of want of execution, have reliability planned impacts. how I proud that teams focus and to our doing

performance focus kind plan with to low a the we want and maintenance focused of we're on got we've focus so clear California what reliability on reliability, ahead assets, and is those Now about cost that on. is delivering for reliable

Benny Wong

consumption detail gasoline of That's the beginning Great. to My became and demand really strongly is rebound seen start follow-up summer slow those great at then side, kind on we've again. guys. recently has soft

you Just the down provide add the can as unique been And your be from has expect what well, which thoughts you well, on given can you're weak if seeing on and if to retail perspective what side wondering, pretty thoughts lately distillate refinery some any that'd as you pump. great.

Gary Heminger

Sure, Benny.

and Let's the that entire late summer take things been getting and you normal. wet at you the of it finally drive kind right, back of a month last the and recall are the Mid-Con to spring beginning summer. part only first gasoline early, early that having said up a of very, It's very was business

a early will, front do end, kind Mid-Con families of if in you we that driving lot lost the So, the the across season. of discretionary vacation

stronger the that tropical dumped be it a we about Mid-Con southeast. gasoline and said comments, the demand in lot up But we're year. my Berry will bit seen as of off gasoline the seeing demand you're to improvement storm into flat going came of until Today, is and for earlier the be right, have think little and in weather I a balance we

The distillate story. same was pretty much the

agricultural they're from again look look in end. then I you then planting, and average, way of but could fields about Iowa, to think continue XX% at have put came to, pressure, is cultivating overall about eventually distillate the Ohio, the on get harvesting at the lower all inventories through not and of XX% you the farmers you the probably and going demand just some of because If only as the

exports by business forward. which average, If a you to positive point end five-year believe, lower of at be inventories going at for distillate our look the continues the we

some see second that incremental still that we're think went IMO starting I as that is see, we to -- early to we going expecting to distillate half contributors to to be the the with And demand indicated year of the in we're strong. think

Benny Wong

guys. thoughts you Thank That's great much. very

Operator

to with go Roger And next Reed Wells Fargo. we'll

open. Your line is

Roger Reed

I congratulations of of you we've companies do and so of its progress to comments kind about good my and issues Obviously, want one detail other ask though well, Thank Yeah. far. like not X. get morning. Tier component, octane this given low questions. thanks rid heard the in to to on on synergies from I'd the the you some with market. for And say, and difficult about naphtha

in octane to offer the more able up I'm system make industry how the maybe set advantage just you of and acquire XXXX own curious, with that of Tier might be to compares do what how then in your X believe and of you you or you can kind beyond cost-effectively. octane extent terms taking that to it if So to

Greg Goff

Hey, is Roger, Greg. And about this talk that. I'll

and standpoint with couple this allowed for to had talk octane positioned X First, to aggressively we to a XXXX to came together well we're on going and system I more that when plant with Endeavor, regards across us really Tier from we regards of to a credit am optimize sulfur has XX very standpoint run sulfur and flexibility standpoint. refineries with our the year

Additionally, to demand we of forward completing at to XXXX. capital be Galveston meet the X in that at that the Mandan, one two Bay one the us Tier capability going have projects, will give months next couple for

that Now, question, of have previous capacity. in the we I your octane a lot question mentioned on octane generation

So that. we Tier to for will and this plan an imbalance use X feel see don't our continue point. We octane at with good

Roger Reed

the issues, the little crude we've a great, globally on differentials bit, And as of out what all well. heavy changing and then Okay, side then had thanks. Alberta could we point gears

any mostly is WTI your it well. crude, but wondering there the add thoughts additional if Just on heavy really of sort as the for of to what side outlook

and about I half sweet tie impacts guess of outlook XXXX or the of believe for -- the the we IMO into terms it versus in little back was light into Manav's as heavy of sour, XXXX. versus Just a go beginning the bit I question of

Rick Hessling

the as side we've we crude somewhat with Canadian combined ran guess day reference, Roger, and heavy what past. the in planned light Rick and Hessling approximately this start Canadian that's Hi, barrels is I'll on consistent a XXX,XXX a with I crudes heavy

competitors, incredible see have we pipeline think crude. married When not and our one you'll capabilities any to I you that we're versus at us look

we so we're bullish I have was last really change. week, the you And didn't here looking a a within recently shift significant reduced another forward mandate day. the XX again perspective, Canadian from a tell would

with assignment believe producers allow more potential up produce the them deals could the may rail the be the crude. have You which of that contracts, to flexibility with we married

movements the and a the on inventories dropping this that then heavy the reaching sign barrel month for a mark the differentials $XX in over increase look of side. And if you positive rail at certainly, Canadian is month all

and would at is, we're of what discounted you're We're buyer II light. side, running our between seeing tell bit WTI WTI you in of a PADD crude dislocation that's Galveston little WTI that Bay a then light, the On a and I system. throughout the

happen. see So that to continue dislocation we

to been Certainly, increased as up. well-publicized it's dock I and going you're keep volatility think at of come online the the this year, of end a capacity to see pipes struggles lot

volatility watching well. So we'll as be that

Roger Reed

add that, it's little Thanks. out I on can't there? there, there exact little U.S., to project? Louisiana, I place remember updates down is on your any the terms moving Maybe update of any in – but of and one just the the crude Peninsula timing guess

Mike Hennigan

Hennigan. Mike is Yeah. Roger Hey,

Louisiana that looking is VLCC the talked and a So capabilities. today. into capability port terrific information we Offshore the week. is LOOP load the name to more market in within trying Port progress, explains the Oil It's has capable It continue capabilities. were It only We've about we're VLCCs several U.S. you for. get the to LOOPs to

more more the forward our trying So out are what message there people opportunity to we and going the capabilities get anticipate and are. to as LOOP

Roger Reed

you. thank Great,

Operator

Our next from of Weil. Scotia comes call Howard Cheng Paul

line open. Your is

Paul Cheng

morning. good guys, Hey

Mike Hennigan

back. Hey, welcome Paul,

Paul Cheng

in question, Thank energy Philadelphia the the one the to solution impact. related you. Two your shutdown one IMO relates

Gary about what run much into and how On the to is wondering order you be coker directly that pricing Ray, your IMO in that the economic? if X, fuel feed easy capability talk make sulfur as to a your how oil high can is and need to or the

Shell along how directly you you pattern have they about to that then brand to VGO attempt just Exxon use finishing your Tier industry to curious able trying when talk from legal are your difficult you seen that compliance the you or is be team can fee their or you pendants? and the on and for while just are high would X you sulfur to to if post primarily brand intend VLSFO that fuel branding probably also oil? into And the And the as those easy how and at look

Mike Hennigan

I'm turn I questions to haven't to Okay. going get Sure, your you you sure changed, am Ray. to six able this question. first glad in over were to But Paul, see

Paul Cheng

three. just It's

Mike Hennigan

Ray answer. to to I'll turn

Raymond Brooks

going and the monitoring are the oil products. intellectual continually we existing and question, Paul, where and patents low-sulfur facilities patent and start with strategies we Okay. off space are to your property of to we interest appropriate I'm applying in our protect portion the analysis fuel the anticipate selling

having in the you want where first hit those our for into and base this lot oil IMO advantage money sulfur your high we and us emphasize question Coker. part take on that, to and fuel It's it we've systems about strategy, I destruction plan that -- strategy asphalt asked small of part our a look of and you is Now is IMO both of a said is of with sales resid that. of really our what to invested

and give sulfur an the refineries at want Rougeunit put a material and high similarly have fuel own Garyville infrastructure party process the other so We put as example, oil, from our but the receiving we and just have to take down internal and material you we to capability material Kenai refineries. our material had Coker, pitch far though can Anacortes some of infrastructure that then third refineries in our and to process from Garyville our As from to and with refinery, California capability will logistics and Catlettsburg, we that not refinery. the several process, of

not a about have state high our basis, that to sell is feel good components. steady fuel So real sulfur on goal oil to

more A lower for lot the -- ULSD, get there we a if buck whether bang or from it of of will be opinions fuel much play out, certainly how pool. sulfur it's oil because low-sulfur been our a vacuum about end with of sulfur. the will ULSD the blending there's gas oil out low-sulfur lot discussion Now blending standpoint we'll get

that, do Having us the tells market will to we said what do.

capability and a that we LVGO says of and that the to to pivot lot crackers at We ULSD, market. make to have also out the sweet our of LVGO, the apply have that market capability the supply pull cat

Paul Cheng

one impact you that And Philadelphia you. for your bandwidth or that run for Energy the and how Thank operation? see Gary may Solution how Midwest second plan

Raymond Brooks

the big a Dave. of about changing Sure. and at to have yesterday different is, Well, is had how let our, the we We barrel. of just really me wheels internally this at many Gulf versus that European the we ORB some ORB turn Coast flow discussion we look as over this as and supply look the

So I'll he Whikecart, this into over get turn to Dave can detail. more

Dave Whikehart

might high the opened has last to that It Whikehart. as actually into the seen Dave Yeah. volume import East and on Europe ORB of This the the couple a turn we've numbers is import for years. out gasoline volumes come July be appears been Coast from and probably

So markets responding the be that this way time. to that seems are the at

is Gulf seen freed barrels We for what to we've terms Interestingly, out increase. Coast. to that's our we've more on impacts Gulf in have us really and export supplier some of of demands the Coast system up of East opportunities directed Coast our the these the to because use seen to think situation it's actually been

Paul Cheng

to Dave, and will in do pending you there? the it impacting it, have any capacity form pipeline do share more capability Colonial the does or in

Dave Whikehart

saw On increase there, you space initially Yeah. colonial comment a in the just line value.

but with our that the would I bit, the position and that imports a line in, value up position pull in the shorter you down coming given there. that we that Northeast it's space the would from think attempt would think benefit

And opportunities in everyday activity us no different. to Gary an to put to options our is those the and just our for enhance refineries the this position return opportunity refineries supply for and infrastructure markets, a general that's investments activities that concerning and trying of looking to response the connect daily will assess back those

Paul Cheng

you. Thank

Operator

Mehta, Neil Our Goldman next Sachs. from comes question

Your line is open.

Neil Mehta

appreciate and way good long congrats the quarter here. disclosure on and it you, a Thank goes incremental a everyone,

question I store assets how that The up the so them retail is, Speedway first really as same EBITDA just picked operational good and quarter big question at guess and integration Coast you West I Coast had the to Speedway footprint. going strategic was is is per your East on picture level getting with the

then to And in you QX. financial Speedway should that is in more QX on carry tactical here strong the around question expect saw we performance a

prices? crude with seen we've what Given

Tim Griffith

Tim. its Neil, Thanks,

nicely. along going are things side, integration the On

probably we quarter heard for the really conversions about out West on Coast the progress the You've fourth in and on will the conversion. get

bit is metric they different footprints Coast, West the in month have we'll for per store -- had than little lot a Midwest. watch per what of it, EBITDA a The certainly in we locations are the

go, as So the there Midwest a in but what seen could we've to we be focus. will some big be variance

we certainly want were a think merchandise locations those forward. may really of as I they designed we'll where fuel lot evaluate and expand for those to opportunities, and we go built to volumes, for exist that see But where and so for less footprints. store investments and make

the performance, margins, terms a from fuel the retail environment. and prices little obviously, of crude in a in in softness In benefited in late quarter-to-quarter, little little as bit a you saw know, of quarter, saw capture we second quarter bit sticky of second are bit that and you prices

performance synergy as what that's will good be from into obviously, over that merchandising of ramp. continue look prices a the third, we'd to certainly the and million reported environment commodity we or function and It like a operating going price to and from expect really quarter for perspective, an XX capture better,

the conversions that lot of synergy correctly mean, enable I a capture.

front. as or quarter. what on what that margins, be price affords commodity to capture good we'll see and better to we're the of over environment Fuel course performance expect we'd the able think I So the

Dave Whikehart

capture synergy going Neil together, to as is the put you remember, lag. we way the Retail really

Some us -- we ahead much and re-merchandised. again, of we're quarter. takes within a as Don other But we're Speedway, stores to just of here converted starting in segments the cadence plan to it expect time but fourth the illustrated, because it the the have stronger get our

Neil Mehta

your the of follow-up business, Look, to the part prices. there about a mark, of challenges as Northeast getting MarkWest out it there of around the we're the the questions lot your assets MPLX health the NGL I and it. that is appreciate customers legacy and are relates question

as thinking again and those business midstream risks some get that this about commodity out So we might how can you help about of frame think that risk we there? comfortable exist around should we're the

Mike Hennigan

this Neil, Yeah. Hey Mike. is

position. moving a we’re I staying Northeast seeing make positive is that What and to producers, think however, the flows the within off, financial the around all situation. keenly strong of sure is have rhetoric aware from toward response they you're Appalachia First that a cash

customers however, there, trying of little moving earnings that couple volume they have a what up mean, what come directionally is fits out our are mode. they're I for us, but slower and kind we're largest that toward our that released accomplish. A that showing to means and of

O&M our of other diversify, Northeast about the base, bit much One some goals we've long-haul we're the previously. our assets like into is to side asset trying to pipelines talked and very but the position, our diversify little Permian a on business, more that of the

that kind little Northeast of within the the in slower little is So bit, which a fits accomplish. that's there flow, producers to the extent growth a live cash been capital blow what trying past that down we're to

Northeast. up free capital flow put in been generation will it bit that lot still position. work to enjoy a flow putting if in the slows us little fact the that and out a area and we a of another can strong free in redeploy cash that So of capital generation cash area We've

the it's other accomplish. So that out harvesting of want it to fitting areas, cash deploying and we in the Northeast strategy

Neil Mehta

Thanks everyone.

Dave Whikehart

welcome. You're

Operator

Our next Phil JPMorgan. from comes question Gresh

open. Your line is

Phil Gresh

morning. good hi, Yes,

level, of on your discussion of right have opportunities sheet, at be about buybacks priority about you any allocation? level to the trim some billion on to Day, clearly MLP the do streamlining of that balance lot the up year-to-date, Thanks. some on potential financial capital leverage balance going following committed is just there sale opportunities, you around question, and all first asset you the long-term at talking think sheet Gary, thinking but future do for obviously, think should $X.X the The how that the of executing to the spending, capital Analyst -- the a back debt

Gary Heminger

the when things, into will way take here the think into account Don Don ask is his MPC. ask the MPC detail cover comments the you But both to Don comments. MPLX balance one remarked to on And today. the let appropriate that. bring back his -- more in sheet leverage. distributions me distributions, those to at of on and that mentioned of to to in I for go leverage Sure. Don look Phil as on look, We

Don Templin

I we're Phil, look the cash side, about at that we going credit have. to flows corporate MLP when our investment-grade the profile think and the level, profile. so the credit think our Yeah, investment-grade the volatility both defending cash around is consistency in and defend you on that really those What flows risk the and we of

is has that sort times want a our risk leverage appropriate to investment-grade the we that support about credit leverage to think if to decision that and has changes that we Midstream about think been to as take continues So as debt much think future. four have date, and we the we EBITDA profile informs about how view the an in one we of

about MLP. view we at I the how think that our leverage much will want inform

strong EBITDA take more debt the leverage metric, $XXX that our flow of MPC it's the MLPs a quarter. we It's about of think the the I about and as when level, and if kind than for of very capability, think I responsible the we think you corporate appropriate it's at that, performance especially, you Speedway sort from what's at the of of MLP X.X And comfortable same to sort the and back, responsible look we cash million going not it's that $X about really and if times thing distributions on get of with think given of a in think $X feel – for billion debt. billion really the debt that of generation

the really to we profile, that manage part it. and think business how flow what's goes the of is influence leverage that going attendant risk where So we is cash the to our

Phil Gresh

Okay.

Dave Whikecart

earlier And I Phil, side business. look if either Mike of his reduce some projects. some my optimizing portfolio, we we several high-grade that at use proceeds high-return a can assets, the sense has to invest certainly in the those stated debt, have of in Hennigan couple opportunity remarks We more comments as about projects talked key to of that in makes the

forward. many and can we So look pull options at our we that have capital plan triggers many going we as

Phil Gresh

lot think been macro of in additions, the from of the more one appreciate environment the capacity some back cautious My peers here. – coming the I some has second I questions from has around Gary, demand-related, talking a your final to commentary refineries been European kind half question, more supply Okay. there offset the turnaround of that. perhaps related,

there the with for layer had [indiscernible] this in XX% side, any could the number reason half, dynamics about Obviously, that I normalized situation that level and able guess rate the you rate? is back XX% you. Don yourself had if of normalized you the kind capture in to supply think I run the in that get talked to quickly turnarounds Thank just to about shouldn't just how think you've with we that the the quarter, you be then for curious second lower of second the and is the

Dave Whikecart

our been probably due the some put I margins, on recently. – the same that about Mid-Con cleaning is Mid-Con that seems West margins have be proper have were of the an here just outlook word so up a thing there on some the barrels the turnarounds there talk should Mid-Con you are the here and lot of day on Right. know recovering the Coast as kind the And that Coast into part pressure markets are market, to West improving July, West the far, the are well, stated Coast on of in improved latter some really imports earlier, the margins moved and to

year forth. probably Coast go of you really dislocations, across Gulf that so been going this some tropical period on and has has time in industry, the we're that storms to been lagging area entire And depression through. the see and and you're The so that have as

So, Gulf go barrels Coast. mentioned, take as with the stronger of as I quarter volume Dave into our wheel to some going it's some just Gulf well as the think is closure, more in supply changing, some rate PES the wild. how more gets Coast, And capture export that's to Northeast the going third generally, from is

I see to And where So, macro slightly I cover all is in say, next margins standpoint. they question. Don being July. your going from in were positive, a would all,

Don Templin

respect to was point quarter, that turnaround. Yeah, second out Phil, to the with impact right rate, of that there in you're obviously And that. capture

The prices, remind we of that, sell. other gasoline gas you other prices products and just to the that is between thing the correlation that some

that else specialties So, rate. and the impacts everything know capture you the propanes and also

would rate we very get expect between a to sort historical back correlation assuming our with rates. those, then normal So, our that we consistent of capture be will

have other run-up, if commodities cracks our -- gasoline, capture business, that, up. If that's pace because not and bothered cracks that, been the the if running with for don't I'm by the good keep gasoline

So, looking try we of capture are in advance. will communicated all that the is to you impacts from you see that extent to to the that important, sell. but to we something the maximize and try And that to we it value highlight products to we

Phil Gresh

Okay, thanks.

Kristina Kazarian

you clarification will past morning, you on Operator. right, any we Corporation, this little operator, your for be Great, like you should Marathon interest take calls. well, to well, thank discussed bit able we So, or the your would additional in mark, a passed Petroleum have hour topics All questions

joining for today. Thank you us

Operator

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

this You time. disconnect at may

Marathon Petroleum (MPC) 1 Aug 192019 Q2 Earnings call transcript