MPC - Earnings call transcript Q4 2019 | Marathon Petroleum Corporation

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Operator

Welcome to the MPC Fourth Quarter 2019 Earnings Call. My name is Jacqueline, 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 Doug Wendt. Doug, you may begin.

Doug Wendt

Jacqueline. you, Thank Petroleum Marathon quarter earnings XXXX Welcome Corporation's call. conference to fourth can accompany the on that slides be Investors this under The marathonpetroleum.com call found at our tab. website

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

Both is Agnes typically week of arrival a doing girl a Kristina As call. doing the you Kazarian know, baby that celebrating I'm a Kristina half well. ago. and this are host today and because Kristina baby

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

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

Gary Heminger

you us. few weeks. morning, and her a good in and to would return look forward for Kristina I everyone and Doug, congratulate like too to Thanks, thank joining

If income number or $X today, X. per you $X.XX of share. diluted billion reported adjusted return please to we Slide net Earlier

execute performance accelerated incremental across This ability and aspects continued demonstrates business quarter's synergies of our our pace. all an to capture at

of gasoline compared delivery. results impact and strong Refining base prices XXX%. included Key geographic commercial the market geographically capture to our and realizations, document capture the strong scale team's broader benchmarks drove integrated and assets quarter tremendous of capture Marketing, diverse drivers In coupled leveraging dislocations synergy with the footprint to our for our of price

engineering performed maintenance completed major Refining at multiple executed refineries. Our and team projects, turnarounds,

unit revamp first were from the project rates crude expansion coker the to us phase the project of realize drum expanded the higher Garyville, size. At commissioned, allowing coker and

coker, have in project schedule our increase, quarter, able been exceeding be achieve expectations. been capacity The the and we original the operating XXXX. Early results of completed second positive quarter the project of have to in on phase to is XX% first coker first a very

We the of phase expect to rate increase. similar - anticipate achieve the a second project

executed XXX target well to results our converted strong delivered platform the exceeding over conversion with cumulative the Speedway also this quarter. team stores store while combination. Speedway Our They also since

the logistics the long pipeline system. we segment, In Midstream Permian-to-Gulf haul integrated that progressed Coast projects key of strategic are our development to

Additionally, processed and continued XX%, Northeast demonstrated fractionated XX% volumes were respectively performance this and strong XXXX versus and gathered, up XX%, in region. XXXX, in growth

quarter synergy $XXX execution endeavor. team's been a million over Our this combination the capture. the quarter. fourth impressive continued year of trend the synergies over an We realized in with has very of since a It

will of our and year outstanding full beyond. to upon MPC and result call. $X.X later a more continue As billion. the synergies totaled build on We our over Don believe have platform value that will now our capture this substantial synergy on capture realized and incremental integration XXXX details execution around focus period, in provide

on me macro let some share thoughts briefly Now the environment.

we year, gasoline the the utilization of few high supply this a healthy have fourth believe and U.S. in the current high weeks levels inventory been first While quarter. is of function in

levels transition. RVP the seasonal We anticipate moderate inventory to upcoming for

economic remain demand similar outlook last We supported year's to a by stable to gasoline levels, expect U.S. steady market. labor and

for underlying the distillate weakened average. below inventory constructive, persist in the the Northeast diesel recently have this as expect supportive. demand, remain midpoint not slightly running products to year remain fundamentals temperatures Warmer than near-term relatively weakness we do but normal light U.S. Overall, of levels five

last utilization to lower peaking offline complex global refining continue Furthermore, the be prices. March crude April. barrels foreign additional due support we collapse of the is at capacity refineries believe sulfur oil in year's levels moderated We outlook, to impact high this by will fuel million spring less X of per to of or to constructive expected million activity globally X turnaround day close and be to record capacity

to Turning crude.

have easing mandated incremental and partly cuts by WCS of We widen rail loadings. differential supported production since seen October, the

light a through slight of brent Gulf sweet pipeline narrowing new anticipate year spread the we of On WTI takeaway side, comes capacity the rest the and export Coast as the online.

IMO heavy due primarily instability, U.S. Asian narrower and in are strong geopolitical Prompt currently and expected medium differentials supply demand. world, constraints, sour than to a and post

to to a weaken alternative prices discounted we anticipate However, as continues feedstock. become heavy sour HSFO

our successful system, to product own produced weak our HSFO internally vast resid by by of are We in minimizing at focused the expansion on aided majority our exposure pricing destroying coker. the Garyville

HSFO third-party as our our Coast cokers. importing advantage also are for West an facilities We into feedstock

elevated to relative sulfur meaningfully and oil prices diesel. gasoline Low fuel

coastal We VGO opportunistically systems our sulfur to the robust at utilizing export are also components other into a bunker and logistics low market premium.

IMO quarter refining first seasonal and to to the expect We to throughout margins implementation. the transportation continued from strengthen response factors industry has in markets

continuous about XXXX. our of high project With cash backlog, positive We are the across for midstream business progress prospects MPLX our are in the business. generation we free optimistic targeting grading flow

that good continue and implementation capture expected our to Retail, identify are well market merchandise store configuration conversions the coastal through to grow regulations. upgrading separation, Refining, on from assets IMO we the In at significant of to the have margin made that remodels. we and and opportunities making Speedway we XXXX in us refineries acquired arise positions the reliability to and is progress the capacity believe the opportunities team our of enhancements In operations to while continuing

in to shareholder maximizing Coupled impressive synergy before and compelling delivering are ability and capture results financial have we so value. with our the far continue confident we opportunities us, our

some conclude Let providing our on my recent of an update strategic comments me actions.

fourth as quarter is and we are completion the progressing for early on targeting work planned, Our Speedway separation. the of

provide latter Search quarter, is the also part as continue CEO the an the complete Committee the Special first Midstream the to schedule quarter. The is update advancing on work expectations during with to of we be first work to and Committee expect progressing its

provide Midstream segment. our on Now let an Mike? who me update to turn Mike, the call will over

Mike Hennigan

Thanks Gary.

shows shared Slide to to Today quarter. last updated growth from $X.X high capital we billion portfolio. grade, approximately target MPLX's This approximately XXXX to project our ongoing X. commitment our target $X billion, reduction down the Turning

targeting We billion for are also approximately XXXX. capital growth $X of

We emphasize of L&S growth to the continue the segment.

We also and creating integrated gas crude logistics advancing of Permian strategy on our systems oil focused remain U.S. the natural Coast. Gulf the to from

our past been the several For without issuing years, we committed funding to equity. have project growth portfolio

growth portfolio, that. have growth attractive funded with around of needs our project XX% our Given we capital historically

while times. coverage and times, around investment We of healthy leverage have done so X of maintaining distribution approximately X.X grade

program and are positive expecting approximately respectively, XXXX. billion targeted The cash excess flow and we to XXXX our of generation XXXX reduction Assuming opportunities, and earnings reduction $X.X distribution free as unit capital allow the repurchases. is to including approximately cash $X in well expected achieve or us with continued provide flexibility growth capital growth flow, entirely of billion generated in internally in in funding leverage allocation from to and pursue improved as our capital capital

in believe With continued to broadening we positioned allocation investment growth be pursue opportunities, long-term options capital we will earnings our flexibility. incremental that and creation discipline, enhancing value

let the financial to to cover turn Don Now the over quarter. highlights for me call

Don Templin

Mike. Thanks

$X.XX a summary including per was fourth today, the cash repurchases. capital Earlier fourth of flow of the Slide to $X of XXXX, reported X total $X.X working results. earnings quarter. quarter, for $X.X adjusted return bringing to billion we provides billion was quarter before shareholders Operating the $X.X capital We share. billion financial Adjusted EBITDA approximately billion. in in in returned to million approximately shareholders $XXX share our

the up businesses and quarter was fourth approximately the $XXX impairment combination. part of shows as from driven gathering acquired EBITDA quarter. Fourth Adjusted business. processing quarter-over-quarter, included the sequential charge EBITDA segments earnings associated results billion third Andeavor related goodwill X of Slide a to approximately change $X.X by quarter higher in to all adjusted million with non-cash in of

to than reported was Our goodwill rate for income. biodiesel pretax - tax the included the tax is and historical deduct midstream higher non-taxable significantly rate non-tax the effects credit deductible This of effective impairments a in our XX%. due quarter

overall lower a tax XX.X%. adjusted have our as in XX% rate, rate of for been our was the adjusted normal effective would items, quarter benefits tax result recognized tax quarter. these also primarily than fourth the approximately discrete This rate Excluding

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

of by $XXX As million of in shown of we million offset realized on including the $XX $XX one-time quarter, synergies, synergies fourth million Slide system X, integration costs.

synergies. targeted the of year, realized billion $XXX The results For year substantially XXXX. for million over synergies exceed the full rate $X.X full we gross run of

for Slide quarter X into provides our synergy additional full insight and capture the year.

and our and of at marine were quarter, synergies Refining million the $XX $XX segment. $XX in formulation supply fourth optimization. Mid-Continent optimization in improvements from more in This crude Marketing million the in catalyst multiple included than refineries, the region million For XX%

in the operational and Coast improvements in to Marketing year and sourcing this million Refining at refineries. performance XXXX, catalyst at segment, turnaround Los improved Martinez $XXX majority the the region, Park $XXX refineries, million refineries, crude in For included seven synergy the the West supply for formulation and Mid-Continent in million in optimization execution $XX of $XX related capture the million enhancements the and commercial crude a St. Angeles, in Paul full

economies the newly-converted the of We and associated models implementation segment Speedway of at also in million scale the stores. $XXX and realized of with Retail labor synergies merchandise

possible cost net Lastly, negotiations driven $XXX we eliminations by segment, synergies the by The of synergies. realized and $XX in combination. contract corporate corporate synergies the million million made of Midstream were and

the shows in our XXXX. Moving EBITDA quarter. $X to the MPLX Slide segment X the third Midstream quarter change increased third versus million our results. versus EBITDA

plants, the throughputs. brought online processing gas terminal strong fractionator. quarter, and MPLX three successfully also had new new a During MPLX fourth pipeline and

the the reversal quarter, expect initial of of the in completed service in the full in We Oak pipeline, of pipeline the startup pipeline quarter began quarter. second with a also Capline XXXX. fourth Texas, the In progress to we in and continue the mainline fourth the be Gray to purge

Fourth $XXX Retail $XX an nearly gallon was third million for by of Merchandise quarter. compared reflecting were results. decreased typical $X.XX margins quarter Retail Slide segment XX margins EBITDA quarter, the fuel the per provides overview to seasonality. our million.

in with sales. year-over-year $XX increase see in to We expenses performance fourth strong a quarter. continue Operating X.X% by decreased same-store merchandise million the

segment both the gain, Travel the asset Centers with other well branding portion than and fuel walk fourth is volumes as income new due The in this fuel diesel rather now commercial agreement the in both is Pilot that are - due increase margin. as in sale reflected agreement other of an to in column quarter. this The the associated to began related of a

be XXX goal brand the conversions. total end count agreement fourth bringing cumulative cumulative of its More details the found on sites XXX to Speedway store conversions in to locations, continues exceeding our appendix. store XXXX. XXX by the can of conversions the expansion in quarter, through converted strategy execute store this We

the crack spreads an quarter results. Slide all R&M third $XX spread, overview Lake City geographic XX an Southwest $X very provides of the billion, barrel regions. quarter. despite leverage our Despite regional & in for crack Fourth particularly remained in in the $X.X our margin capture to flat Refining segment Chicago was Salt Mid-Con a increase Marketing our the relatively ability of X:X:X declines EBITDA decrease in performed opportunities, diverse versus quarter, market well adjusted approximately to million WTI reflecting and regions. our footprint

dollars in the planned primarily refinery. margin In overall Garyville associated Gulf with throughputs to at reduction related work lower Coast region, our the was

the per per an indicator a an despite from did crack barrel capturing spread. increase $X over quarter, On Coast, flat team margin, a third extraordinary barrel our West the relatively job, of $XX.XX

to of market. the of XXX% expertise demonstrates commercial performance this performance three ability quarter. in led all use value the regions our our This for capture drive and Strong our to across operational

for Slide quarters included capture. XXXX. and credit results in attributable quarter volumes biodiesel benefit first primary blended details the XXXX of for additional to of a the on blender's drivers the of provides XX appendix million three Fourth in $XXX the some

enacted The because project at Refining increased facilities. Garyville fourth quarter, the XXXX. the versus work was authorizing third in legislation was the primarily recognized due operating and the costs our benefit December credit planned quarter to Angeles in Los

cash Operating fourth in change cash of consolidated the quarter. the was billion at before position $X.X working quarter quarter. in XX our cash the of Slide the for source elements presents end flow approximately Cash $X.X changes capital was in the billion. of

share Return Working of million capital and In in acquired of billion MPC investors levels. through of shareholders million, share inventory and worth cash quarter. repurchases quarter, XXXX, with was changes primarily $X.X totaled use capital $XXX due to the dividends $XXX shares in returned to million $XX the we to dividends in repurchases.

investors You'll during X.X MPC's shareholders. billion invested in and we recall least to Investor MPC The returned our flow approximately MPLX. in growth of excluding returning at $X Day businesses, our to articulated XXXX at the our we billion target operating XX% regulatory that capital the XXXX, December after cash substantially of maintenance exceeded capital of

MPC's record through-cycle billion consolidated have at financial XX, nonrecourse end, to strong received parent last X.X shown standalone which XX quarter debt and represents distributions $XX.X the of ratio MPLX, discipline. of from track As Slide This the At EBITDA. excludes level of of of times months approximately MPLX. $XX.X had debt MPC. includes a we $X.X is including total of billion on debt billion approximately MPLX, but we MPC's maintaining debt, EBITDA

On we Slide first outlook. provide our XX quarter

Anacortes total City our expect facilities. turnaround Planned turnarounds includes be Paso Garyville changes million as refineries, quarter costs X to Salt under projected per volumes Planned throughput the We $XXX at as well at just are our work at million. and catalyst day. and Lake barrels El for

to upgrade the the phase at the Garyville of project. work the expansion which Additionally, LARIC completion project Wilmington is related we of hydrocracker last and planned of drum have coker the maintenance the

turnaround of for be operating million $X.X including For the guidance. are consistent the projected occur billion. roughly quarter. major to first quarters, historic projected which Distribution per every adjustments to $X.X slightly costs, are in the typically to is of $X.XX higher year, costs billion, for we previous costs to contributions the quarter anticipate spend be quarter, barrel $X.X which benefit is are be billion to projected Total than that year. $XXX corporate with primarily and Corporate maintenance, due

XXXX, business investment of segment, growth earnings strengthening billion. the MPLX, for focused for the approximately The and excluding which enterprise. million MPC's enhancing capital our through on maintenance the margin our provides Marketing $X.XX XX totals which of across for power plan, investment includes $XXX capital. investments approximately Slide plan is $X.X remains Refining billion & plan

margin, Marketing products, on enhance Refining growth Our produce that and high-return focused higher promote in value are projects destruction. investments & resid

locations. to million $XXX the existing Retail approximately and invest in segment, to rebuild new remodel expect stores Speedway We to Speedway primarily build and

for plan reversal Texas the include Terminal Midstream projects $XXX The approximately also $XXX activities. corporate million and includes million Midstream capital Gateway South segment to support our approximately the segment project. Capline and

capital capital. which earlier, XXXX investment organic mentioned MPLX capital its announced also growth and billion approximately of maintenance million Mike $X.X includes As $XXX plan, of

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

Doug Wendt

Don. Thanks

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

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

Operator

you. Thank

Our comes JPMorgan. question of from Phil first Gresh

Phil Gresh

things First macro on a helpful question, you shared to are Gary, from a lot of going here color your thoughts perspective. on how progress

Just wanted thoughts high fuel sulfur on oil. your additional

a expectations You strong in strengthening obviously pressure fuel and come continue you've sweet talked the seen oil to crack. about spreads, down then your but high there that prices rather or the recently sour sulfur improvement would

there what and So you is playing do happening foresee how you think do this out?

Gary Heminger

some me give on let turn you Phil, color will Brooks. Yes. that He this. Ray to

Ray Brooks

Hi, Phil.

and want the fact seen into we've that our kind I - incentive that of system. as far to oil, advantage pieces. sulfur two break have with taken we As seen have high fuel we of

our and oil at logistics is, internal coking What cokers it our sulfur where that production all don't first have our capacity. we've high taking done we're to coking material has refineries fuel we're refineries The destructing back with and taking we that. investments our the have through essentially coastal of

about the completing at barrels done, Garyville, oil Once on fuel coker range purchased out and thing talked Garyville. quarter Martinez, first high between on our day is, The XX,XXX have we're that's additional the we're biggest the a earlier and in configured sulfur work. similar Coast we're that We thus work opportunities The LAR far thing in we'll to is of advantage. other West for taking the call XX,XXX feedstock. with

Phil Gresh

from macro have a just cracks sulfur then see cracks high perspective, oil much, strengthened thoughts your of And to and so coming? maybe a Gary as why re-weakening you the do fuel

Gary Heminger

the a discussed. cracks as been Ray front all distiller end really front has saw increase end. a the just This higher didn't that on We in really we will strategy see we as that on advantage our the feedstock see due prices it to along

how that the us, a companies expected have We forward over bodes to come three, January well. of with we and and we low and that's the acceleration weeks to oil in and Now is the the appears seeing starting We it strengthened getting strong we think go Phil. and fuel switching pretty sulfur first never the we'll - distillate stair-step as we're compliance and to cracks. to this be would four shipping we're market still in year into feel, thought the

Phil Gresh

spending CapEx some to you've the look think elevated in for Gary, be question XXXX. I capital planned XXXX, in here. as where know some seen about spending come reduction especially obviously still in growth on The just we potential that Second further the the down I fairly would and refining is past, talked we've beyond

So is that something still expect? would that you

turnaround if this I - and Is turnaround years? year also tie then down future in a And is to just just elevated could would spending you that in, an is quite more year-over-year. also bit Thanks. come up number the something expect

Don Templin

This is Don. Phil. Yes,

sort me about then a spending. Let bit of, address, talk the first, little have CapEx and Ray turnaround I'll

we also XXXX XXXX So our about and of targeted capital target excluding from $X.X MPLX, you'll Investor at targeted in for that we flat recall spending billion. basically in our MPC, $X.X December billion that Day, capital

you projects. So there is say, our MPLX down. some multi-year budget that rightly are total projects excluding And capital for as are MPC

to STAR XX% refining of the project. growth about is our capital related So

Diesel at that's GBR and the one So Renewable Dickinson the project.

project end be at year. the complete essentially Diesel Renewable will of Dickinson the The

XXXX in that So in than project, will fall all STAR less off, substantially be and capital spending the will of it's XXXX.

is those projects about comment some of tapering absolutely your off capital ongoing correct. So

about talk it turn Ray to to then So a little over turnarounds. let me bit

Ray Brooks

average. not work spend, was combination will ratable spend in even did and XXXX, was the than the lot we're average, be as in we year-in the of working Los turnaround a did even that lighter St. XXXX, in be a we at when to Paul Angeles, though XXXX our we little Martinez go-forward would is and preferred. Park more particularly schedule going go-forward as back first a quarter, little heavier but Hey, year-out.

up quarter much stages pretty is on work are the side Lake Paso We're El these at year the doing turnaround both a Salt at with we'll ending in follow the then south in first currently refinery turnaround. biggest and latter refinery City, of that that and seven a of Our XXXX. full cycle plant at

to not options lot So there. a of whole work with

And major then Coker that's quarter, have a change. the with Max project, couple in catalyst the this we phase other in is just of our starting coupled piece, of weeks, second the Garyville

So higher to that's turnaround we when our spend. are low, when first margins load but quarter really want

Operator

next Bank of Our from Legate Doug from comes America. question

line open. Your is

Doug Legate

Gary, I have earnings your this a call. might feeling be last

the And best, maybe you so want for to ask your also the going macro I but all outlook you just forward. to wish frame

done I've playing hope is new going Don met to things you additions minutes the I into wonder follow-up for for with but years. Gary, everything and I have the let's Specifically, again, areas? product advantaged IMO if ago, on a And again, you over expected. run And cuts touched that seems little on But might got I please. capacity thanks the out you've and less run it are say, be a forward side. you elaborate few confidence, on least at softer know as a you it your I could

Gary Heminger

Doug. Maybe proper the can in future you That's long you, a a take Doug. me Thank with through history dinner.

off not conservative did like we crack just yes, stated, in a views is IMO were So IMO, run-up starting our we significant - expect spreads. think as Doug, and in the anticipated had we I on

feedstocks. and downward I the aftermath the I being we recently been higher Now, of will a at margins think looking this. of as first, us bit but - up run coronavirus, That will this move has think pick with it that distillate gave demand to able certainly to feedstocks course, But is the a of be I happening. depressed said, are quickly

moving mentioned. able resid eradicate into what we That's our all our right coastal on system as it of own of refineries by We Ray target expected. just are being to in the

never stair-step that distillate steady the And of pricing. to immediate as companies. year. we be the what thing is think shipping up said, the I going appears the and seeing we're in over most a positive more compliance think to expected run is And this I be We

Doug, so, target to on wants say, it's expected. where I yeah, would right add we Ray another And comment.

Ray Brooks

talked bit about Yes, thing that little regarding talked the I resid we run the destruction, we diesel. cuts, thing other about would a offer,

The with it. IMO and VGO into is plays other it how factor

VGO and so So seen very, very on a that. is we strong what market we've pivoted

in cat So the about U.S. mainly out Gulf that in crackers the a day market. taken where our putting of barrels Coast we've and XX,XXX VGO

Gary Heminger

part And last would Doug, I say the --

Doug Legate

Go ahead, Gary.

Gary Heminger

have across believe highest to refiners we refineries that and are leverage will processing that resid that the have front here. coastal that have destroy Those have to When handle European the in probably and the the the have expect we end to system. competing look in Coast but refineries some industry, the of going East globe, what the time ability a that not you capability coking on hard and coastal anyone heavy be do processing refineries who those we our advantaged,

Doug Legate

too I that I in your last to happen, just here cleanup that want touch all mean, this comments. on I perhaps I could think to been the much, question seeing not elaborate on hoping it's Ray, quarters. gasoline we've do several been we've all VGO enough but but weakness comment. may appreciate you do your the

Gary Heminger

that is think, mean thing I that to inventories will the of RVP up to anything starting you gasoline that vector immediately just be will see changeover, then Dave, do in VGO. with here clean weeks agree - say going the in a and accelerate Doug, would I you're I couple comment? the that

Dave Whikehart

not diesel also with the is inventories. days tends the turn started Gary, a but few RVP draw to only RVP in put additional out turn, get we really, a actually Gasper Yes, up. shutdown coming That on West the to scheduled

Doug Legate

quickly Gary. will keep of hopefully a fellows. I've indeed, I been Yeah, about follow-up talking long very it lot because it a quick, stuff does My time the and already. thanks Well,

just rates synergies the the maybe obviously and a that bit the synergies, your likelihood to or seeing sometime I'm are capture to That congrats going now leave reset wondering I little through really or are we the buying, but quicker, Just year. run permanent to if you just upside in capture risk rates synergies. are flowing with reset hope this out seems be for it higher go the soon. to again, [trending Gary, Gary. And and sure, in I'll you there.

Gary Heminger

Yes.

You bet, seen doing Doug. - to but about where I'm a you've accumulation have me our something I talking been quarter some accelerating going as done say over synergy all to turn the let been tremendous we've for this it of time improving is work is team that is this refineries Don, say, acquired. proving our would we capture. to bring we've Ray pace job the those and the the really refineries just and of that rates. in his the run

we over you're in, the improvements, Don think to Don get these that yield but on technology have rate into put very plants that put that improvement go the basis, in that a see accelerated change. structural Then I'll capture catalyst we yield now here. have going as the I'll the reformulations a we

Don Templin

impacted What rate Gary's The I doing repeatable. we're think number Yes, also of is other I echo comments. factors. a capture synergies, is by around

there quickly, quarter stickiness really product saw So you around and very in tends when be some particularly to drop spreads capture. the refined this December crack

very think of realizations, strong I from that part benefited due we very to decline gasoline in quarter price sharp and this was crack spreads. the So

thing that priced that markets won't recurring particularly did quarter is that, be always that the differences - we're in compared other The can to is we be benchmark this using. there

Lake Salt we and the other as demand were attractive supply regions model time integrated pricing of period to for mentioned, use Southwest where and So, of and I to was was a logistics our favorable. the markets high the very able where and some City were

Gary Heminger

being commercial one to Not that take but improvements only And these clear. of different dislocations markets. synergies, skills have many on able our thing all more do around the is yield we

industry, that able with none that, the be couple underlying commercial the our factor, to to we to but skills that You the key second capture Midstream system key the the is fundamental have value. in

Doug Legate

Very clear else. that fellows. to Midstream so I'll you someone question much. Thank leave

Gary Heminger

Thanks.

Operator

Our Read Fargo. next with from Roger question Wells comes

open sir. Your line is

Roger Read

similarly And earnings to and talk having Doug, let us luck. on good Not to for Gary, me everything say, anymore thanks to calls.

Gary Heminger

you, Roger. talk to love with I'd

Roger Read

It's just actually was Coast if we since I you're - bit dig and all earnings see Coronavirus, West a just miss much. calls know. talking on the wondering that and about can't particularly would anybody could flying, limiting the you're I as in that on exposure I give you've within of to of not need kind idea the that's move really of something component to distillate an maybe fuel flexibility jet focus to or and the we around as a side got whether trading or on well your little optional?

Gary Heminger

Yes.

spots to within cover this. one you overall of is to equation MPCs. in the want our talk will this. bright demand Jet real Whikehart Dave fact, fuel In Dave,

Dave Whikehart

cover the importing - on contracted Yes, Coast, have so are are to demands in a and the West - our that actually short position on short. against we order

that really if direction. recovering So us we're positioned send that in markets well actually internally the for

is short there jet to of if demand, our company. position should and So the impact is actually sort some benefit

Roger Read

Okay.

Brian Partee

Partee. this Roger, Brian is

I to that wanted Just bolt-on - to too.

our profile particularly growth in a is the actually One in the of lot the demand we're seeing PADD where travel the elements and and but commercial cargo. actually III we're cargo. element, PADD is air the of is one in Though II is growth in U.S. seeing

Roger Read

we at everybody won't at watch particular it this least point. we'll panic guess, else, I but So like

unrelated Second question, little bit the side. on

of on in the we asset lower sales As we've up at segment. been free future one the as of here have expectations little some on or on CapEx flow, cash guidance but investors, MPLX, look least going occur thoughts and to been has forward cleaning for bit obviously talked restructuring that may at a and the that

if any into this just the time any we about majority there's the, been is thinking sort well, line look there curious vast So be progress as I should there or of was year? of we

Mike Hennigan

Hennigan. Mike is this Roger,

mainly there, because a Now real to the $X. business gas in there gas with is of the lot under tipping backdrop macro not products report natural of

view We real market, we continue said got for our a think we've in the if as look value many but to will only times, this work we good us assets. the is, for

So an in continue helping advisor us I'm not in in short term. continue the expecting engaged to short the a action to but term, look, we look, whole lot we of have

Gary Heminger

don't fractionated at our in at I down. of will of investors an up expected look Look that Marcellus the And a respectively people volumes execution and our to while Utica miss, has Roger, had and I XX% performance, and and be XX%, umbrella XX% had think want area the processed some kind gathered, pressure.

think this those the of have of shows the our and where strength we those put together. located, they're commercially regions, transactions I assets how strength in

So we're in gold processing think standard very certainly a our is there natural I within space. and - is shape think we position, this good a the gas

just to assets aren't we going away. give So

Roger Read

No, if you we you appreciate do to want I'll don't anything I that. was I it all. clarity And pending, was curious all. thanks just to turn there. but the back

Gary Heminger

Roger. Thanks, right. All

Operator

comes Morgan from Benny Our next Stanley. with Wong question

Your open. line is

Benny Wong

Midstream decision CEO related is in thinking or same make the good idea guess two or first are I would how new strategic guys interconnected you review time as I pretty of Just in the looking guys in us a is that? to How guys about you for CEO. Midstream. processes. I who here. understand give are your are my a on a question quarter little a looking are those bit the around need before an you you really, the coming at like, update you guess, guys

Gary Heminger

a this on you strategic this standpoint. reviews operating, from we're as very target. Board And know, had review thorough is we're and our week execution, doing, the of the with we meeting Benny, Well, governance Board just all in and an the

of into those all So taken will be context.

Timing Midstream, we'll on say on on involved the all special we a of And Board I of any wise, as committee a well the all have driving can is, Speedway the are the successor. and see Board as we involved. my have the overlap, kept - them so much is, but they're committee structure transaction, in special

out. see plan, game just of how and plays them we'll All the it understand

Benny Wong

an And how Gary. you question beyond, retail new EBITDA Speedway. opportunity much year? if targeted cost I of possible give more are conversions conversions next store many guys what's there to uplift how of outside there, us within those far? color is you're so update on much it's terms really for how And and my generally the And would then is be Within appreciate seeing your this conversions guess, the there budget, you merchandise I associate possible, acquisitions? in it or

Gary Heminger

Tim? right. All

Tim Griffith

the acquisition about XXX in converted conversion locations. it's There probably Benny, of order converted plans Yes, XXX the the be - we've as be you that go The on Tim. over year. close terms the of left something is this heard, since forward would to

on have around probably done mid-year. expect We to that

the investment is, given can certainly you strong specific on the earnings the what relatively saw haven't I but sales. is guidance point what to store, We potential merchandise per that same-store fact

convert go first the a through on some where we Andeavor conversion This the the put and starting you're conversions. to on will the some the two little quarter the business. we'll and a brand re-layout see We appropriate, locations those programs pull-through in of had the of store, re-layout cooler, is will impacts that food former in we phase we really bring will where of bit and we're and see in starting we to then to where

course year. say, merchandise over the keep the I'd So of on an eye

that business to in business you're to really be continue I a lot see and going position. good going uplift to synergy for clearly put is think the which the a of

Gary Heminger

both saw the fruit when performance, hanging the we recall we a improve of opportunities, to as acquisition, our you'll store this biggest exceptional to stores able over XXX exceptional. this - really that in Benny, period converted of low an of you is is performance know front being And court, certainly announced lot get in and time and out, court playing one back

Operator

Our next Credit with Gupta from Manav question comes Suisse.

is line open. Your

Manav Gupta

to little on the wanted Coast. focus I West bit a

'XX, was Going a throughputs high, back to was were expense low, little turnaround OpEx XQ was high, low. capture

this where almost quarter every captured year a you progressed, has has in gross the $XX As point to metrics margin. improved

you the So but measures being of to have than they operated acquisition? which now these the through can allowing that start materially you the at is a synergies capture better were us not only been walk operate assets the way taken in

Gary Heminger

ask - talk about Yes, so that. Ray to me let me let

want on Dave equally So what it's operations commercial talk physical today. over we're only important doing not to the to Whikehart improved the I side, the Then abilities commercial side because how the before we the really is about assets. of to have commercial there

So Ray?

Ray Brooks

You able billing hit on were advantage XXXX, to take did and work. of it. we of at In the Martinez quarter, a turnaround In the we network. LAR a first quarter some major fourth both doing work

got October production. able in when we strong, quickly our maximize to Specifically gasoline and were pivot very gasoline

of I'm One that a of LAR team thing focus things couple on doing. to the I proud very of want is,

month. our take were work able by is, weeks, first able that The we margin the commercial working planned defer the early environment. a thing strong so that with advantage in some to team of could that couple We were we to defer we of coker

biggest we about, one is, call Gary in a big talked about a the a synergies. cat cracker. where is barrel synergies today, unit, did was thing day reformulation LAR's cracking complete we second The one was unit, on this did the talked The of catalyst XXX,XXX cat reformulation, just and that we

And so well. went it really

Everything light went yield down, octane product we the gasoline up. up, to happen, went went heavy happened. The yields wanted the

advantage paid the take to able for of of that well that really were off we in month So us October. and

then reliability in I'll been Just and region Coast say has be cost key one control. my part the very thing our West will and a challenging is, concluding and is focus also

I'll Dave. it to over Now, turn

Dave Whikehart

to export for had the barrels of one from Coast is West Gulf product been So that refineries the sell the the standpoint, those that shifting Coast high managing commercial West to West our Coast margin. valued West the keep rely in over Northern Gulf the in it basis Coast adds from high - mostly value a actually Coast Coast and we've on from at to order

been Coast from quarter. a the first West here the Coast of the cargoes tripling Gulf the that number to the So of there - relocated of since we've of basically number has

significant differential given a basis improvement the pretty So that's between those two markets.

we And the managing basically in market given commercial and a had value lot around system tremendous I had our success would conditions. in activity in the refinery of the trading inventories say, capturing around secondly, that

coming from and got from Coast I to really you've at - it folks perspective, relocate out working the quickly to the both the market a Antonio, dictates. there San ways the but - not only commercial you've these ability So think as ground our Gulf the also of from got around West Coast cargoes from

Rick Hessling

on is Dave's This comments. Manav. to Rick add just Hey want I Hessling. to

We, a spot just what with and flexibility to term our size, has in to our from Eastern West optionality similar and very there toggle foreign That crude perspective, our integration, the is Dave U.S. that the - barrels. wasn't story just with to So the Coast mentioned. the between enabled Gulf past. Coast

significant those well. and optimizing added value making we've as So by moves

Manav Gupta

All these mentioned this A quick sense. initially have IMO a follow-up an out is lot question. make Gary WCS XX. more is, WTI, of moved like heavy is of sours

What's be from towards if We also discount seeing to and are $XX. so trying causing spreads medium right Mars where aren't or are Maya they now. problem, that wider the sulfur Brent slightly why What I'm trend understand is, is wider narrow? to those

Gary Heminger

Yes.

sours, I is out, look you So you medium the view there. geopolitical offline, events going dynamics events, Iranian will world offline. a volume volume see question. will is There you into our as tell so play it's the with movement going - forward many great

at and XXXX. per right we're the right in exceed Gulf expecting - barrels to look Coast, day X production Coast million the in and we you now, look when Gulf the Specifically, Mars it's it at - the around

So good sign. that's a

I beyond the and XXXX, And at going and you that spot. will see see to Brazilian anyone's you wasn't when just I online as coming production also is well We predict a was out. think it I some - recently this bright that trend play of forward. say say, term, ability But Guyana here, potential in more short here look is it would would geopolitical events

Operator

Our comes next Cheng from Scotiabank. question with Paul

Your open. line is

Paul Cheng

you the give if conference call, if are me I And your retirement. you York, next New Gary, don't for wishes then in call. talk in And a to please best

Gary Heminger

Thanks, Paul.

Paul Cheng

questions. of couple A

excess on one flow if is at of in level, CapEx I look C like cash looking think the the MPLX, I the cash flow, Corp have your the and stripping first is, you dividend. your the out - it

any the why aggressive buyback? more - were reason you the So question is is maybe that there not in

Gary Heminger

Yes, Paul.

you think returned repurchases. effect this where know, nearly period program. of aren't always share as Those type know, in we to the sometimes XXbX a times expire are programs and re-implement or capital through we of sort you amount have used I use where share tools we like share There programs repurchases year repurchases, ratable, aren't significant tend be $X billion. to a able those to So able of we to also,

that shareholders. read anything quarter in So of amount should into to occurred I you we're returning capital don't and share not committed think a extrapolate that repurchases the to it fourth the into view

We practice are going continue to and that so we'll absolutely committed doing forward.

Paul Cheng

and to your and Ray, The what you fuel the tell can not fourth second the question refineries how you think if were of able you run for you by sulfur in which run can quarter Ray. And sustain, how that is if what refinery, high have or and the run quarter. us oil total is you export? much are fourth current maximum some said you areas I the to much economic VGO will you total be exporting also, How a on Thank think guys company? you export that region more but able you. you much in the

Ray Brooks

the cut that essentially in As the that barrel XXXX crude XX,XXX far brand said been as unit. what what we Since we I in running earlier, XX,XXX the we're like of a LAR go call did HSFO quarter our capacity, and what running and resid day the on would has to primarily fourth we XXXX Martinez, quarter has range. first and to through and a

So when out backing we're we're at primarily Martinez. of some crude in running this, that process doing the

is the or this the a in West resid if on from refinery HSFO potential, the Coast that additional margins Garyville dictate, we the complete have at whether we're once be think an expansion. spot will we crude good we So where comes

to the were date get give XX% to a in coker, little debottlenecking first we you color last expansion our did increase with expect just increase year And there. that. second got the right, when to we in quarter the type And targeting about we a XX% do a on and of similar fourth coker. We we

capacity together, So be when a at day the going two of XX,XXX Garyville resid we're put about the refinery. additional to barrels you destruction talking

Paul Cheng

in the into the you to going figure into logistic will or use also California that the [indiscernible] coker? you crude the that, are similar unit Ray, to have Garyville that direct the that the to going is run you allow to

Ray Brooks

the looks like what cargo the You know depends infrastructure. it and on

through to to crude West and into take our from directed done up internal actually already Martinez, down Coast the production the we've that to At put primarily go Garyville. unit. with coker directly Catlettsburg in set we're we the we've and that On infrastructure at LAR Garyville,

an flexibility at crude then to we hot type the take take cut that to Garyville, we coker to the will resid So if the we or have resid MXXX unit. direct material get or a would

Paul Cheng

Any opportunity in Bay? Galveston

Ray Brooks

Galveston Bay a little different animal. is

off First, start I'll our destruction units saying, full. by we're keeping resid

Galveston we at Bay, so And coking capacity. some have

destruction as with Bay should there resid opportunity at So we bigger choose. resid The we as hydrotreater. have Galveston an opportunity is, far

- with very when unit matters from the so, that be quality got stability day. that really there, And of we to because unit. a is resid XX,XXX the three we're and all barrels resid of But careful trains, running all

actually the prefer run we RO unit, fill to hydrocracker, be very defined crudes there. resid So the we that

LAR, to Galveston So a relative Garyville. little Martinez Bay less optionality and at

Operator

Our Neil Mehta Sachs. from comes next Goldman with question

line is open. Your

Neil Mehta

in get you're the characteristics pass going baton are listening, the is provide And first her Can well here. at to? Gary, conversations the quarter. we what daughter. just of Kristina the to to in update you update her I you baby And guess the CEO question where end successor like on terms if sounds It congrats Board, of we'll important just really who in an with wish on the stand? first is an on process. the general,

Gary Heminger

Yes.

thorough governance on target hopefully a moving and As but answer part Board And in search. quarter, said, you it's said comments, the I the I've latter this is we very give well. expect strong national - of They're as Board detailed, an process the and my a earlier very review has engaged. very at along very to

Neil Mehta

actually is, And right. then here. Mike follow-up the for All

the And think think you're Again, I to going you're XX Midstream, evaluating in provide no I you on little know Midstream there but this. options color different you're had silver made bullet. environments sales. that tricky today, more I comment asset the seeing for was a

I'm the front for of it asking you your would MPLX for but in current be is full a run, fair in? us construe execute we're out not environment to to that it difficult that So spin

Mike Hennigan

Yes, very, that Neil, committee. very to of works. and is, can tell like you we What said, a detailed is continue to you I'm I the discussions do not We've going committee run front the engaged. lot had

are We at quite not completion. a

So I won't comment on that.

opportunity overall in et What 'XX. I I high Whistler, is, tell you help to be goal some this on free I projects that, that those but Wink-to-Webster, will and think will not we NVC the did comment pass cash for announced to us, flow we've is backed on like always want the return priority would cetera. a investing on been capital for you

return everybody, does MPLX form of billion the the $X in distributions. remind Also

good for get So end And long with in opportunity to We're high higher portfolio. grade will a flow it as drive us be day, a free be that the very as the at to think mode I there. quickly that, to ROIC. term trying our continue we of we can cash to positive

Neil Mehta

reduction is notable we that. CapEx much. appreciate the and Yes, Thanks very

Mike Hennigan

Neil. You're welcome.

Doug Wendt

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

Operator

Thank your in for you participation conference. today's

disconnect wonderful now may a time. day. at Have this You

Marathon Petroleum (MPC) 29 Jan 202019 Q4 Earnings call transcript