MPC - Earnings call transcript Q1 2020 | Marathon Petroleum Corporation

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Operator

Welcome to the MPC First Quarter 2020 Earnings Call. My name is Jacqueline and I will be your operator for today's call. At this time, all participants are in listen-only mode. Later we will conduct the question-and-answer session [Operator Instructions]. Please note that this conference is being recorded.

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

Kristina Kazarian

can Petroleum welcome slides Quarter call tab. our And the morning. marathonpetroleum.com Corporation's site that found at Web to this The Good Investors Call. Marathon First under on Conference XXXX accompany be Earnings

CFO on me Templin, today members of Hennigan, CEO; are Joining other Mike the call Don the and Executive Team.

to read on statements the Slide harbor you safe invite also We X.

to could differ statements today. included Actual may cause be actual as will that results well filings. making forward-looking as We SEC are differ. there, results our Factors in

over With that, I to will Mike. turn the call

Mike Hennigan

Thanks, Kristina. our and you call for Good joining morning, everyone today. thank

communities our As protecting demand became safety the continues assets the prevent significantly products we employees everyone to supporting and and activity the and the products, of pandemic last of the of immediate that quarter. month The our to the reduced today, quarter the spread customers in is virus has global specifically towards for focus with health in actions operating priority and economic to taken the aware, the which supply market, and the our our global safely operate. on

of the hit refining same businesses Our have areas been and particularly lower demand results, which At time, strong reported and the Coast. the refining impact upper of Midwest hard on financial our midstream operating retail margins. West the in and some offset

prudent responding a changes As difficult with our tactical business. this we're situation, result in of

is are segments business million remaining at capital for related First, MPC $XXX million This This spend, $XXX reducing completion. or that the approximately in reduction includes at projects billion or XX% to our capital nearing XXXX. with planned $X of billion $X.X to total growth spend all progress by and primarily the across MPLX. approximately

and MPC $XXX operating our $XXX operating planned million reductions approximately at expense reductions projects. certain of through primarily reductions reduced $XXX and fixed expense have includes million by expenses of million, at deferring MPLX. operating costs expense we Second, This of

$X.X notes. billion $X revolver on actions, After we've maintain Third, liquidity and of senior steps business. billion strengthen availability liquidity, facilities. new our of our to and $X.X our taken additional power XXX-day billion These credit of flexibility. We’ve actions approximately the issued of undrawn $X.X taking these also including secured have we cycle a our strengthen through financial earnings billion

At it over areas point, to to to this come Then in results detail. changes implement we and focus MPC to my back like turn first going forward. the start review more Don early at share I'd quarter I'll as

Don Templin

Slide $X.XX. the our reported results. Thanks, EBITDA changes a $X.X provides Cash of from per Mike. X summary first Adjusted $XXX share loss for dividend our quarter and billion we adjusted payments working for billion of were the was quarter. $X.X financial Earlier operations million. before was quarter capital an today,

the COVID-XX Slide the to Lower refining quarter Adjusted fourth EBITDA quarter-over-quarter, XXXX. driven impacted billion pandemic by in X shows sequential to EBITDA crack XXXX from demand and destruction down due first change $X.X was adjusted from earnings spreads marketing. earnings. primarily approximately lower in R&M significantly quarter

lower of $XX.X totaling adjustments also asset and results cost quarter goodwill First impairments market non-cash and inventory, billion. included to or

driven the quarter. prices fourth in Slide versus results. sustained the business, XXXX. our fourth EBITDA and X versus earnings in from overcoming organic natural stable $XX the the gas headwinds quarter change increased midstream shows million The by segment EBITDA growth quarter. our to declining in the Midstream was fee-based Moving of base increase

overview an segment. of X Slide our retail provides

fuel fuel quarter volumes offset associated demand $XXX quarter. quarter, First destruction with margins by nearly fourth first were Retail in to strong partially COVID-XX. margins lower was $X.XX compared million. reflecting EBITDA gallon the per were These

the pressures Speedway in sales Same year-over-year, merchandise resiliency fuel demand of brand. increased quarter, the despite store the reflecting

We fourth separation progressing completion activities. XXXX quarter the continue the target of and separation to are we of for Speedway,

the timing access COVID-XX to environment related given the the and impacts capital business to could change separation However, markets.

segment Slide the X and the reflected pandemic challenges impacts provides the an Performance this marketing in and of orders. in managing associated of our with overview COVID-XX place refining associated segment. shelter

First a quarter capture Despite West we adjusted of commercial these Midcon in the Margins regions EBITDA towards quarter a versus compared all fourth $X.X saw approximately Coast was billion gas of quarter. end XXXX, $XXX to price particularly March. team for diesel. was million, both realizations in challenges, fourth decreased gasoline a regions the decrease cracks where our the favorable to negative and able and

the additional provides appendix the decreased costs from of million $XXX for of capture. details some quarter. drivers the on XX primary Slide approximately Refining operating fourth

$X.X primarily presents to cash quarter. consolidated Changes XX just change first in changes cash quarter use during the over the was for in $X.X working before approximately quarter the Cash in billion. end in prices our position due of Operating billion. the oil elements approximately crude decline Slide sequential the working flow the capital the an was at in of cash $X capital quarter. were billion of

$X.X terms accounts $XX use around crude Coupling days. this XX results purchases typically as facilities prices. days, are every XX-day prices The primarily increasing. true changes. when net receivables crude barrels of per opposite capital day for are April, million its in payment March system on oil a oil in in our an decline drew XX company you million result The position average As oil revolving working for and cash is know, X payable roughly our billion approximately while $X of with our crude also credit

and outlook, quarter in we on throughput orders. place our demand based COVID-XX provide XX, reductions associated On estimated Slide destruction projected second shelter at facilities from which includes our

approximately capacity. just two of X million barrels our normal volumes thirds day, throughput per total over expect We operating of nominal

Gallup in We have temporarily demand idled destruction. our Martinez and response facilities to

lower projected the to are are compared be maintenance, to Angeles the basis costs billion. costs Galveston work facilities. operating to Total reflect $X.XX the which per for quarter. the historic costs but levels, including Distribution turnaround and costs quarter, per Bay $X.XXX a our $XXX throughout throughputs projected of our barrel be lower costs in to barrel be Planned operating at on impact includes are dollar million are second major system. Los Total projected

For X.X expect range to volumes the the retail to merchandise billion X.X billion. and billion of of approximately sales X.XX in billion X.XX fuel segment, we gallons

While with fuel volumes have orders, been impacted significantly demand shelter to expect place sales destruction in relatively by merchandise resilient. associated we remain

$X we've and $X receivables strengthen Slide highlights credit credit the At facility. $XXX liquidity proactive a facility, our to XX had billion revolving trade we XXX-day steps facility quarter-end, revolving from positions. billion million taken

senior in billion We capital billion $X $X.X from mid-April, $X.X impacts. we manage primarily and an working quarter, to first the $X notes. drew on borrowings revolver. late-April, to we revolver senior XXX-day the the additional added proceeds billion During repay under drew In billion, we revolver. issued notes use billion And the we in $X

on $X.XX the billion. our today, capacity credit of undrawn facilities total As

have the a on represents shown of we maintaining and approximately investment debt $XX.X we balance a distributions of strong XX the last MPC's believe are in essential cycle XX, paid grade industry MPC. succeeding Slide of is to track maintaining strong committed through MPC's We and MPLX exclude standalone debt X.X includes discipline. billion our As sheet financial to but EBITDA. record ratio rating. months times level parent of this to credit EBITDA MPLX, This

back remarks before call me to With that, some Mike closing over for questions. let the turn

Mike Hennigan

is our environment cycle also my to to current the Obviously, business. of But required resiliency the through briefly view our wanted our Don. immediate share for ensure focus I Thanks, future.

Over grown in decades, to the the platforms country. largest the this energy company past has of become one

cycle many in there's been stronger areas, through case successful has drive creation. Although, to MPC value a also and for earnings long-term change increased profitability, strong

be There are areas to early three achieve our objectives. help that focus these will us

of This and that positioning to need financial and be excellence a assets in we change. cost, safety has been our First, performance focused our strengthen leader competitive operational to the and operating MPC will metrics. not on means always portfolio. position

further focus contributes contribution all of each the shareholder expectations and ensure returns. to and to need of we individual assets performance in that our meets our However, financial cycles on

commercial we to our need Second, improve performance.

fortunate to We an are have extensive

and to having footprint. integrated it fortunate extensive

an to capability. of higher asset dynamic across opportunity with to be further an our selection, refining starts the us it's margins system of for advantage have value capture refining raw area material Success chain. We to the for take more opportunity

we optimize the of and placement the products channels across opportunity our the have sales both and addition, to enhance the In geographic marketplace.

extremely will in we ourselves we Focused placement enhancements both expense product the lowering be disciplined means in allocation. spend all increase to disciplined to And to capital ability be our structure and cost challenging maximize our to of need dollar we deliver This entire organization. selection margin every in business value across incredibly our bottom-line. and aspects our our to across overall cost the third, and material raw chain, lower increasing the value

our the proposition earnings risk and on results, highest a achieve focus provide excited for about better projects, assuring having time market create through in confident a irrespective investment opportunities midstream on them we if of to these focus environment. deliver to on means of our of and higher also It company across an and value the strict us. marketing It's execution adjusting protocol for excel will areas sharpen compelling we appropriate change, and I'm platforms, I'm that ahead capital refining, and cycle returns the long-term level these we position the return for a shareholders.

we're be corporate lines like everyone front for our leader to working the pandemic. of a grateful to and I'd In closing, take say seriously, that we that responsibility good on this

XXX,XXX of the to country across the healthcare donated hospitals the XX masks quarter This we support country. workers across different efforts to

$X million critical supply April help communities Additionally, Foundation in the to to Red crisis. made Petroleum the resources Cross American Marathon a to donation in

story inspired communities contributing have those need. to as many And organizations supporting our us and dire to We funds do by crisis. supplies proud part the we're with been shared in supplies the in reach by

like business, our the business line control In been to the front thank rooms at of the and employees and have assets. our in addition, our stores, on facilities I'd who critical also in

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

Kristina Kazarian

Thanks, Mike.

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

the lines open now for will Operator? questions. We

Operator

Thank you.

We and [Operator answer Instructions]. now will the begin session question

question comes from first Our Neil Mehta.

Your line open. is

Neil Mehta

efficient some morning CEO. items we more question in are is Can the to line and you key on structurally more here response capital the off reductions? new as announced. environment And capital and My running those the think congratulations versus good that you put taking that bones to cost behind role business? the And the on reductions cost should meat capital about kick Mike, how whether team. my you’re reductions the savings approach cyclical on drove

Mike Hennigan

more expect second, that be about overall I'd talk it overall, structural. we'll and cyclicality a structural. we to in of to be mainly bit There's say a little but more

one flow of mean, have robust discipline the I'll going that much been over the I capital and a as remarks. business, on areas on investment towards let and and is little allocation. GMP business, to to come been free pretty investing on kind where things in capital that business focus in that more as But program about of a be and shifting long investments their very we smart we're the jump because So midstream in I'll we're less with strict midstream, the Tim a said MPLX. portfolio cash as respective little to I want And that stayed the time. at in in my color. towards L&S for out more for prepared some reduce the real of to we've term And has Don we in, time start far

stated MPLX that if a in positive we as target billion that around for that business, be and expect less, down or cash free So we've get to of $X kind flow to XXXX. we

try Whistler right and facility. overall, to that long that to of building see to going that as MPC So And now talked enhancement next think we you're I going the as that that level. backed a are an terminal have Garyville projects Refinery us haul we projects, couple our and about we're maintain as well Wink-to-Webster to

So where we're that's business. that money of the a putting in lot

philosophies, my flow Neil, of addition, will generating from free you cash our assets. tell is In of I one all

look got sure are we we overall, contributing cash as capital make at to of back the our So each business. assets to

refining there. in the more So Don I give a in we're on what little I'll know detail doing let there's a little refining more color assets.

Don Templin

we when budget our $X.XX marketing maintenance for $XXX included our of and budget was rolled you'll capital. that As million billion refining XXXX, recall out

Bay; capital. into that's was project, growth this originally next which year. it our at of continuation the and run So talked we’ll essentially about Galveston we STAR for $X.X year of projects; billion will diesel the was about Dickinson XXXX, XXXX, renewable the included other XX% so the And Program, really to which complete was that of two growth when attributable primary plan one capital

XX% be capital, was other you if nearing and So completion. be projects, capital of two think completely and the our of million those a the done of in growth sort basically about of $XXX will tapering one will mode

that capital our You'll a we'll budget see have of next around year. lot flexibility

Mike Hennigan

I'm going bit side. a the add to to little expense

of in lower I'm part $XXX much area, of of again, minimum, at refining that us the going there's side, is of maintain reducing majority costs So being versus of of million is to on back variable then let pandemic MPC the that the kind that back reduction question, fixed and level, about a your and on to Ray to it partially $XXX how we is Obviously, But expect a And variable costs fixed. there. variable. to out with rates of expense that million portion structural. it comment

On the mostly million side, said $XXX was expense about we midstream it projects. of deferred

deferred now plan. whether the take part right our at to column. they a But as look going term be they need or whether in So we're are look actually that fit further, long to deferred of they at we

let fixed me a add Ray little of situation. refining color the bit let So to costs

Ray Brooks

On refining, costs components really fixed make that there's that the three up. and

at choosing work, refineries. just projects, be then expenses overall less are lower turnaround maintenance first projects our segment other less do some year of expense The deferral XXXX. for and the categories out the would lower with the And just costs to turnaround

Mike Hennigan

answer question, Neil? that Does your

Neil Mehta

just very Yes, the merit The talk the in sale? which Speedway. from of which of investors just Mike, off stock? believe release with the sale, fourth can the the the spin around follow is updates Speedway on execution or you new important the CEO. any as you you're perspective for about indicated and good clear there. strategic Whether strongly color up still in for is quarter, an of you strategic just lot your the press How catalyst many targeting

Mike Hennigan

the value So best is MPC proposition I do believe for separation the shareholders.

remarks the and that So I'd schedule. in And accomplish quarter, the what target we're we was we to had guided we still completion scheduling in are that. expectation our before said fourth on on is say still

here caveat still have very we'll strategically, manner. I best in is that The still the the plays important the we put out the obviously recovery situation So is highly separation then is enhancement believe shareholders. that value COVID-XX in the and how only separation market And for is as to out MPC as that see capital business. far efficient another access executing part of fluid a

those on still are and schedule. with we continuing we’re committed two to caveats, the So separation

that have implement be could However, how the of bit, we cognizant want see to the to a timing environment just that but we'll current plays little out.

Operator

comes question next Legate. Our from Doug

line Your is open.

Doug Legate

add me my let new Mike, congratulations role. your to

comments next. see do seeing need of of the a wonder off your call question. key Where the forward objectives? made the steps And pick remaining you in In do I leading just you one that a weak could on what be the I taking. about you you're your addressed if Speedway? to Looking regard, areas are the to to bit you What post ask links portfolio achieve think maybe on

Mike Hennigan

to at you of out assets. all Doug, the look on disclose from links. comprehensive position going ready feel to the are a not of to What with we us going term assets. disclosures I tell do a see you're to we're And is competitive we as will though come each where overtime, I'm weak our

mentioned an cash do a on in flow of we the question, managing a the look there overall think value as I'm basis, assets. capital lot an at to portfolio asset and a there's very we've generating believer job is really earlier And a that the big think I long-term is this in opportunity better large past. looking that portfolio. in so just of if good return free Neil's to a to extent little big aware, cash. I I business a a in to individual done the I of believer As I'm at you're mean

So I from a the on to takeaway can competitiveness hope cost going improve I a do assets. time where focus. are We're all is those be the we we think lot or of spend a to look of standpoint going assets, the to of going at portfolio that's commercial standpoint, high either very to

of the overall be So, to approach. portfolio I'm is after examined there's that And think lower structure do be already hoping that asset this those going going we're to cost in to that each to going company. the at bit. discuss lastly, just with leave we point to three our items commercial we're quite we as And discussion is as started quickly We to and opportunity in can. a that going the you an then get

Doug Legate

that Mike? table, the on Presumably means asset rationalization is

Mike Hennigan

Yes, I think so, Doug.

assets we previously so. portfolio But the we said, I to that still that statement. I the eight want a in As have yes, true are that's in I going examined. mentioned be all And think basins don't midstream space in the

However, business it in bit change. the all is yes, the short in term going portfolio, we or the other a a assets applies the whether But gas through now as have assets refining retail of the assets to the that little well.

of examination yes, So portfolio competitiveness the is a first of the good real our priority.

Doug Legate

coming you I shoots What out that I'm guys monitor and up a have position to couple is, it would to obviously to competitors your you about going unique dividend, else. in so to of about is talked someone you’re demand green the just of cash ask trends, call like you for about I April. activity talked How with I’ll of My business leave ask enough would but of would I was comfortable follow return the And how markets. underway. for things I'll in you would evolving I the more guess, next like you respond? see quickly demand you step your the can in up leave what guess your guided there. How terms share feel to you you XX% really it utilization wondering is with you. Thank us before recovery importantly, I quarter.

Mike Hennigan

are start administration rates high for a packages high lot on implemented, I'll level macro. policies level, from of towards there's off at policy macro recovery. are being low Obviously, the So monetary rates, oil stimulus At optimism prices the low towards a fiscal consumers. at very

So recovery. oversupplied more the are however, has been market. the a an on particularly in particularly even upper both in caution and Midwest there's We've in globally a My driven This and of been West hit is lot we currently and optimism demand U. event, hard in our in view Coast. the S.

a So we're little level comments let Brian I'll that we're far that let Tim diesel on well. sales recovery. as as -- color the little bit as optimistic see same on the starting sort more give to then overall you comment market have give you some and And there. specifically at of gasoline We'll color I'll to our store a

overall, go say board. I'd optimistically still signs seeing we're that the of got much pretty crude a good to recovery, supplied long we and way products that So across but on we're still over

there's So needs inventory work a off. that to of lot

market do respond? far will as Obviously, us As when you the that. tell

us minimum And rates. sufficient staying at event. do we'll demand driven that. demand But our strategy for for a now, to it's we're right change when So is the

bit comment a at little seeing Speedway. So let we're about Tim me what let

Tim Griffith

gets really region reopening more continue terms orders expect the stay the improvement early seeing March I gas start are continued of supportive data at of the which or as that recovery are road. middle got a We've recovery of stay put trend quickly complete probably a XX% lows. in XX% dependent uncertain. really part place in in upon late the of home we're over late with the demand, mid-April out March. home of in at seen of of timing at since on protocols how how orders removed a of see far. bottomed mean, to couple these X% the the off of saw of back sort weekly months. next And the we I as sort Doug, than that and We even lot and retail of sales that The steady down. improvement, was the the states more function quickly and mean, is April. consumer so to the It's level

rather creep work the got to businesses got Obviously, in but of to we We've for which hopefully to rather the continue home they're taking expect that the and we've get back else continue going driving and continue. they to But We've kids this rather not work, of roads recovery. a the they're back road to commuters to get and we've through may month locations or get wise. we'll activity. on seen to commuting certainly see people they're where vacation may until some lot school, nice signs watch fall, consumer on that's demand from a got

So before signs out. nice we we're probably and improvement. few how a nice the seeing some going exactly this better play but is to give lows off really But a can months definitely sense seeing some we're for there's

Brian Partee

this is Brian. Doug,

to of kind a Tim on little builds said. bit what off reiterate of gasoline and the side Just

really across off last all really geographies. we of weeks seem clip seen to have fast the decline. the It of really really March, the really We where was profile two

is most think You relevant data market hit on points week short-term. week the bottom sales, look this the of we the we in the

the April weeks, three of week over really we're last the market. steady seen was the Xth So week the what growth. on bottom And of of we've week calling kind

that So reasons we optimistic of the the that. to an some drivers Mike some of earlier, for indicated there's see trend

profile the starting week We're off recovery as event. trends. this is unprecedented seeing exactly well. an is positive sure solid Not measured like. of looks optimism, But So what this

call declines, to six. since side, been modest impacted. in we of market hit four EIA then, it’s though XX% Very distillate recovery been in and the been it's the of somewhat week has XX%. the the bottom Overall similarly somewhere On the distillate on less demand

of whole the to our in year-on-year. seen exposed We're We're to due not Part book. really across XX% that is that PADD range off We gearing. X. currently have more not

way So of exposed others of corona we're PADD there's that to been, some with X, depths the maybe in impact the are. not really

So been on Traditionally, to broader that's driven the the economy. we're this health coming be the XX%. is watching And we're side by drive economy. tied to really than demand out case believe the be will diesel up to more distillate the the Recovery going of economic side. to has is, think and distillate going we that going recovery be We the on of indicators.

Doug Legate

thorough have Kristina guys. very this. That’s Thanks. and navigate job us May I her just that helping add Mike great a team done

So the getting thanks with here, came to Don when us thanks for to on X-K phone out. your

appreciate So all help. your

Operator

Thank our Gupta. next you. from comes Manav And question

open. Your line is

Manav Gupta

question have bit demand a of side the on jet a question I fuel the equation. questions, of

are to don't and low jet jet entire work compensate causing jet little. something situation. seeing the understand to And the into fuel I'm can in how trying be blend to which diesel a the with is there you refined of that this inventory diesel blending very and diesel jet move causing trying around demand, that fuel to is fuel out? is by move done kind MPC mode We out inventories diesel the

Mike Hennigan

think But well asking I'm what this to and have kind belief you kind airplanes, to towards recovery, may some But to comment more give as bit starts is and one question recovery Doug consumers I is, world. specifics Ray add I would that some belief was to there we a slower the happen. that And the into as your let of stay there. boost of there as as be could going vehicles little also opposed be a gasoline to back jet recovery of

me see you going on a let I think we're bit. phenomenon and some specifics little that jet give diesel. a But that's Ray let to

Ray Brooks

with communicate really capacity it's we diesel we in fuel, excess ability ultralow strong been thing diesel. the hydro treating with to fuel where fluid cases that lot to whether blend high as and sulfur distillates have have a the like so hydrotreat have as I distillate jet into jet is done Manav, we I slowdowns initially very have to pool sulfur capabilities far guess the regards the products. into with to the of that

back distillate streams into so we pool reworking distillate the And put seeing ability We're and swing We're gasoline. everything to we the we've between been that past every and our now. is bit in actually pool of pushing communicated into in XX% to during the strengthening distillate had that some really those gasoline. the the stretched about We've exercising range and the pandemic. and swing gasoline

Operator

you. Thank

Our question from comes next Cheng. Paul

is line open. Your

Paul Cheng

I of add questions. congratulation. my want to Couple

say on commercial First If the years from ago we the commercial side. look improvement. back XX

of In looking ago can how is you the what know -- the on practice? question. to Is that your the and maybe So the or that on talent think, also some up And you first okay, been that market when you're maybe do do has need commercial talent, operation? you need to about maybe while area at and relocate you external any a I Marathon words, hub? best either Houston doing. other closer there overall your change that to what that be the operation That's for in the beef commercial

Mike Hennigan

personal it mean I head. the in the the in all, background area. My area financial is commercial on hit of more First you

I'm early area time my Houston to a I that’s it's accomplish. here. So things to an presence we to to of bigger But list where on second lot do that’s want though, spend of going give something that have question, don't our in to your we specifics. any a want plan real

not in We past. the that have had

stuff had moving down are the his area. Texas They've some in already towards team that. and Rick So

think U. New center of in markets York a the market. I'm is that develop you're the the over that us to So financial like time I just oil believer the area. S. know of the much Houston going you presence market down see more a center of in is the

think So I important having presence, really us. a Houston is for

spend another area a I quite some to bit we area. at where of going overall, it's think talent As that across far talent as improve looking time, our we're that can of

I good is of commercial thoughts a have this my a I have guess, strong to lot news area. I for news and background things. approach the So how team and of bad the lot in

to about here. that a So, the will started we result be I go a COVID about collaborative to has it. in of a happening focus forced there's good of of you The with markets discussion immediate already. what's And lot how going discussion tell as

to I nature specifics time But areas my into as one of of spend can't of it, I to here. So, earlier, again you a due it's of the can that stated a competitive Paul, we're tell lot main lot I the three going on. get

Paul Cheng

the Maybe perhaps historical conservative changing as bit change? look can conditions I and in at that they team as things too but just is good ask maybe rapidly barometer that, not they're do market data, you a the their think how

Mike Hennigan

second taken areas where opportunities. of there, other too be we conservative, Paul. what see to that I've some regard. a I I I areas overall it of here where think there's in types could different were there's think there's mean, thinking don't you really

I think some recently. contango I of we market, in that market just the how selection, crude go discussions as of to of and recently how example, had mean, different pretty things. that use the we've how an strong we we approach it saw take more crude about we how is advantage

all your don't as I know term catch we're doing. So I’d if the for use what

commercially, it of responding, best ourselves as where I do, is how are the position looking our at suited. more how assets we placement what at looking think product markets

market you're to being I just from I be able more and I But I having use that perspective. flexibility conservative maybe adapt then more that think bit quickly, term think, markets to a more to reacting that flexible, conditions agree quick dynamic, more using So quicker. little word with to if the maybe

we were more this forward. things on We much place. on situation. will commercially of COVID support as having meetings of was in that. one assets tell new how be having a and occurring responding the example have be result just daily of overall, in focus I that you, what then the marketplace should that's going just to And what that the one And doing will what environment we to we're And the

Paul Cheng

capital impact situation and the cash is and but negative Valero’s yours your far from they’ve in looked is And less this one the half your other we operation for If quarter that the least on Don, half the and similar than Don. less, flow two similar impact. pretty second one roughly been to size management. major at question the just the working refinning substantially about probably of competitors is XX in working on capital at Valero, Phillips for same

a room So the peers swing if how your Or we will terms can so of there minimize little maybe bit be capital any more? any you elaborate to that that for that's improvement is able manage perhaps you a different? bit than guys in differently working perhaps

Don Templin

the our pieces competitor’s amount What guess volume each a to I sales us thumb, are try give of changes moving our the products of I of was amount you a And business. inventory what insight our their receivables. accounts have that payables so all I lots what of is mean, our are of those that in sort of accounts our in model capital you really primary don't components. receivable, three crude things, position. impact three for in did rule there's position could sort and changes working function then the refined do particular into I to payable of and

what for first receivable But I the down billion. tell about us went for during $X.X accounts quarter quarter, the can down went you

the payable types billion in about million. obviously of source were a in So down. to market capture down because inventories our for quarter was manage those then that inventories, use cash. and of receivables $XXX inventory us the cash that And trying was of to about went our and we're contango things, and appropriately a up Accounts went $X.X

So $X sort and impact of a side accounts billion. the inventory then had AP move working about negative on receivable the capital and of the $X.X combination billion of

have seeing volume. and also I some are we think articulated, would we've some that of April that continue seen where crude less we started buying We of in

day support supporting quarter, X to first barrel barrel the day So we're million X system million a now in system. a basically

to you from ramp should So But that. we see start you seen a crude would volume the in April, going have up, purchases of inverse as down perspective.

recently be as at moving more crude We’ll prices And have will to increase started upwards. be We least crude. well. buying

also favorable should working that So on have a capital. impact

Paul Cheng

Just a question. side quick

look it? in to With policy any the to expenses the turnaround the there is plan capitalize for CEO, accounting at new

Don Templin

out at you to the of EBITDA some I or on did year peers comparable could Paul, looked expensed But actually try capitalize some a that. adjusted his basis. know, did obviously like look it our you it. that at wanted turnaround shaking We our cost, peers do is so we've provide of sort like is to was head. of and our guess to what still provide Mike I we information about pulling mean, now. back a that we going

Operator

Thank you.

question Read. next from comes Our Roger

open. is line Your

Roger Read

little to particularly I restarts, forward refining Gallup. get side, maybe like the the guess and a I'd bit Martinez looking obviously into of

should then we guidance. the OpEx [Technical As side that until and there built what or 'XX? say CapEx that QX Difficulty] though? And about restart that's happened OpEx for think CapEx, we presume in the out Is

Mike Hennigan

I'll and over off turn it to start I'll then Ray.

harder we've think regions hit Coast. different One I on or been on are. been depending everybody things some West of realizes to that is the the I have the where mean, extent hard less hit you particularly

at you're at looking system, as to guidance, we're the the capacity running XX-XX-ish the our But about Coast we're at of West minimum If across overall. XX% system. opposed roughly in

that So take action Coast whole than the drop us national say specifically even more Coast more the the led was demand average, West to which on in area. severe West I'll

on So give to turn more Ray let me to you a over little and Gallup color Martinez. both

Ray Brooks

the our taking does. answer into lower it cash as it short that. the all fixed cost are Gallup chose the idle resupply production to and take far cost And your variable account of Martinez, two impacts and We the as Gallup into facilities and as question refineries and with up yes higher is Martinez. guidance, account make in as Roger, far and does that and that cost

Roger Read

QX I just we a year, other kind we online. the that get those what of both offline gets normal I to those was seeing included curious also latter getting Yes, of does those words, I are at. back was the assets of In At units XXXX? look be levels. presume that guidance. in part Is all I terms guidance recovery are guess of would off kind expectation close the we full as very That's I enough, of think the or to understand the restart year least of for would of coronavirus. a units. on And

just that curious, the is I one So included then I had guidance? was And in follow up question.

Mike Hennigan

idled temporary So we'll when them online. see that a come the those to we stated basis, are back on to have market and requires assets

back mean, is, you bring I on has hot though asking costs question comment Ray the think up. I'll all them at significant I don't see so to him those that. we let were standby, on

in alluded But are be prepared it. asset, have online earlier. the before requires Tim bring that and to seen when have as recovery, go some back in still we ways needing to had We So a have the those to market just we short-term to the demand so speak. we would Brian

Ray Brooks

personnel there refineries still both when from down, taking systems we our operators it's of utility looking and keep We a We the standpoint hurricane not maintenance Roger, and keep those Martinez, the down. We down dissimilar them one are sequentially. take equipment. Gallup refineries take after going.

significant the see restart a would of impact. a time we within about a easy fairly week So not and period cost being done

Roger Read

That's great. helpful. Thanks. Okay,

Don Templin

capital operating sort of for Roger, refineries be of the not Achieving this require those those Don, point. rest year. does other cuts cuts idle and one expense is those the to

that was way will those we you online. that come maybe assume back the were mean, I the asking think question. I

and our CapEx at more as And the year normal numbers so levels operating progresses. our numbers assume OpEx we're

Roger Read

a guidance, you lot expect company. understand I the the to large the other like think Marathon, cut of doesn't that have you it the does look all Do and strategic tried you already sort does parts. as at get guys within here or And separated of think XXXX doesn't guidance from out the of it and everything a CapEx then benchmarking was to on I to maybe trying you of kind how version as cut or question flipping it call well expect? the Mike, Marathon do a of all about the presumably back and OpEx or we call. obviously, just survey on doing to do as at do retail

Mike Hennigan

I've the Marathon been my that and in give would obviously, team whole own started is The you we part caveat for of most the so of initial analysis I so I the to time have dedicated so or had to time team’s only while a Roger, the days that senior though here, thoughts. I've home, situation. of and our near-term most XX been in has

normal. But normal country into back the the time far been I as health get in tell we'll also also and and you But as get the has in lot the to to process. situation. we a hopefully, So would started as back of economy the as dedicated near far the that to recently situation

kid more to limited, started pandemic. goes as So to near-term come on more to you by. I trying focus because has to But that hope respond and and the I the our opportunity situation been disclose don't the to time want of

Operator

you. Thank

Our Phil from comes next question Gresh.

is open. line Your

Phil Gresh

having they're at. their investment question target out some own put grade that looking first talked on just of have balance sheet. metrics about the the My of you credit Don, agencies the rating. rating Obviously,

wondering get And you achieve is help planned. Speedway the or spin not it We And have more spin this would to off. distribution you that term from it, Thanks. long-term rating And are spin the that about grade you in long still off cheap I'm investment other and cycle? just off might are pull here the that levers light you that broadly, downturn can maintain think there of maintain ensure the do down going through. through how you

Don Templin

continue defend that. defend wanted we'll I to and grade want credit profile, guess I Phil, investment to to. our to We recommit

separation either be And of would the that leverage allows when cash balance that liquidity be timing take to be up then capitalize on things utilizing will MPC, It of we sort would the that cash and the putting the Speedway expect MPC. support able which in around to distribution would think we Speedway balance Speedway, And position. the would distributed expect up manage will to free they is have mentioned on cash ability to to that to would balance of at them basis be core sheet to our back the that sheet. of all on to we I be a tax and some result Mike that important Speedway our in back around at sheet one discussions leverage. Speedway, a cash distribute

We'll we've we've And maintained facilities Speedway credit downside transpired relook liquidity days XX at evaluating of billion. $X that to company. historically of had. the probably think when that the articulated all make would fully billion about obviously to over that sure, we're balance in have core we we the cash be given billion that sheet the we make thought to I events last So risk $X announced sure requirement to on closer $X that sort total, revolving the the to or addition versus separation in XX-days

the incremental And we be why pay the one to would had reasons amounts debt. debt some of then used down It's maturities.

And wanted we capability end that. at $XXX do the were at have $X extend to any able on costs having because the pay that in the we to million it maturity incremental this didn't debt MPC be mature, to of of incurring try and previously, and MPC without have off December, debt to planning in first billion of We maturity we debt debt XXXX. year quarter of

the really So aligned coincident with of Speedway or transaction. maturities timing with was those

shorter did want into -- incremental year some allowing put the allows costs. out manage focused pay demand structural market. we debt. was again, basically, our We We the shorter us to us if on on tenor didn't significant That years to five really to years end felt get have and will, April to allows off to without and you term incurring sheet like debt, for of that XX but and XX so it into was very years. the we're three at flexibility wanted balance issued the senior we market go There notes, Once notes. were ourselves

Phil Gresh

might just up continue and the the referencing parent just would pull level that just to a lower whether or level. able debt I consolidated to it's at follow be as guess to was other you at I be, levers balances,

lose MPLX the you particularly lower the X.X distributions, moving and going to priority whether forward, maintaining if billion do of the about distributions Thanks. MPC think Speedway? EBITDA how it's we're So leverage generally dividend, the from

Mike Hennigan

in very know, about do the On you business, first we We we you of policy, know we in the we it. decided see decision. to cycle business long-term what as change make return on had this some capital see far and very obviously We short-term in discussion board wouldn't long-term. off issue. think major how mid as earnings the it's robust dividend a how hopefully the want a and is And about a as

Don as our led to discussion was important and liquidity, that was said, highest our us. to So rating defending defending investment priority very our grade

just into in here Don And remarks, capital that this pain about billion that taken level. stated we've would sitting that, I went very with event, cetera. et comment under price, with same now if it a as little want we liquidity. $X we're And you to at of his And a in working the call reduction crude

have liquidity of a still So going we lot forward.

rather as far be business, than later. As sooner in recovery hopefully, the it'll

hearing down there's gasoline Tim our that at time, we back. optimism recovers. could Yet how we'll cautious on same year-on-year think pretty be to mentioned, as we're the I that demand, from far but see team, have coming still you're

we obviously that this something is is think a I capital really return is of is a business. I mentioned think refining of return our important. overall, earlier, to But extent capital large

with discussion So of a going as forward. to we'll the board lot have out how plays that

Don Templin

the on working also might is I Don, Phil, add, this capital side.

prices lower were, asymmetric really that forward up cash the would now. volumes that XX a low it it as improve call days. last or source the I be We the is the of the of to opportunity low working use rates and prices, over sort of capital significant going crude opposed pick volumes as as expect we’re and cash utilization at Given will

Operator

you. Thank

Our comes from Rao. next question Prashant

Prashant Rao

helpful. beginning for outlined there here. very Good on you my of everything my and Mike, congratulations return Mike, early expectations question. areas really on morning. And taking three is the capital of invested the question Thanks appreciate at terms in focus

of suppose. to clearing probably NPV bigger of second of fair after question, sort you've these more basis remaining the then what That's these First, range on versus higher housekeeping picture that the it investments the XXXX tax toward deferred? end reductions. But a question. I or assume Is on are the hurdle of rates

portfolio shock thoughts the potential value on here. going with projects? change for help Could Marathon's at at your earlier How for outlined focus us strategic you’ve a forward macro overall is as hurdle realization rates you they this Given capital your out in all?

rates end various of that that that And and be in maybe about -- types about that's the in, how exposures. segments dollar certain about higher end its the of thinking markets think you're or for putting talking projects to I what in on earning might every market invested. that hurdle wanted you're means return certain terms

Mike Hennigan

business And approach the I Prashant, when question very in easy to then second and that time. a yes. think very first investing of point, is long invest your you're volatile to especially which is this the I answer capital, type you your is believe for

way I about because sure my So I and business describe that capital own this got so make if if occurs. very best to return, cyclical having refining cycle you word is, you're down even is bias good getting think or general to using Y we the you're is there stress personal investing speak. strict the it. still a do discipline if X are occurs And a test think in to downturns, how

that long return. guarantee the to or will and stress raising do the we a I rate us sure your that is terms, investment you overall, going number, in specific So think without we is lasting a very giving be good hurdle testing make to

to good capital. you're think number, more general, ourselves yes, that robust discussion a And of a invest you that that lot we it's translate long-term in use have without is correct. Yes, it guaranteeing higher us ourselves strategic convincing going and I would will and nature giving to that's of a say, the I investment a So hurdle. on see where

spend time the of business I guys on know often spend a I you lot give things our more things we don't I views and that's most ask that capital an much that we the And control. organic et opinion we views. things cetera, cetera, obviously don't our it's a discipline et whether on of happy one about can lot you I the the expense and do capital, we have conditions, stewards having we But of it's actually But control. control cetera. how M&A, questions control money, whether at really we're to day, on things to as of about whether time mean control, try mean, that we as can dollars we're and of cetera. and end market the far it's the important we that things our as spend as et et shareholders’ in

of part deserve those on. and attention focus all what a think we of I going lot forward that's will

Prashant Rao

quick cracks product side. guess seeing like on sort gasoline that of that sequential use really the on optimism, follow improving term on I the up my measured screen the And I’d and we're the demand it’s I

trying period a sort about type realized that what of have thinking of to the on kind that what times, an do but maybe seeing on basis to in be a terms -- these differential given now. Just we're just versus grain for our of is in unprecedented here, What kind the lower purposes crude reconcile understand, utilization some we able that, volatility. low the impacted, of obviously because also help of all to But more and idea capture. but are you capture what you're we we sort rates are ever taking impacts capture of we're way right in versus either either sigma should normal of is of screen, dislocations three of salt

of to your around wanted that. So thoughts just sort get

Mike Hennigan

cautious gasoline same I'll that term the inventories of products, I crude balance have, exact seeing I jump still of give in. that of the that But XX the what some average. overall can million also the XX with a million couple number light and thoughts. distillates we’re we One try don't long-term is over and roughly that sitting are Dave on we know Maybe did long-term average. barrels recovery. is. still over We're optimism barrels

to ways seeing get even levels some inventory normal to normal I have demand and I we're to demand recover, think closer levels. still to we start go back So to think though

play falls try our and I itself think we the don't We'll have optimize be And supply an into going Again, try best on something or our find to the control. We to view into demands. So, some that our and products from and then of and marketing the insights do category we'll of try demand. best we're just eye that's match out. the the to opportunistic system. to region those going always market keep

Operator

comes question Heffern. Brad last Our from

open. Your line is

Brad Heffern

segue into I guess about asking control. thing a good that was you that another can't

late-March and about we very just early differentials the curious now. I'm inland in wide differentials. that saw these April, seeing So we're Obviously,

Now relatively as we're started seeing differentials, the shut-ins have for to increase, WCS. narrow especially

So And it that? outlook any sort Thanks. give can on about thoughts same time? of if increasing sustainable you cracks your how at aren't inland is the

Rick Hessling

inland differentials, spot On you’re on.

in other. seen marketplace one now, the the of end seeing Right free market seeing spectrum from incredible what have work. to We volatility, you're is literally the you're the

the Canadian S. producers it's You're specifically seeing and U. and producers, differentials. you affecting self regulating, North American will producers, if

the versus way swung However, ago. the days three, last they've in four XX other out here come weeks in and blowing they

more think increases, I the of shut-ins and as the honestly out there. offset see demand you'll come will be volatility some states

a they difficult, is of demand go is lot driven, driven. is producer cut it it a where lot So predicting of

when maximum. I at publicized, extremely at tell inventories high would well Brad, it's almost mid-cons tight Cushing at the are though, as that’s you you very So, specifically, look

see mid-con, of. to the take to you're think, will volatility we continue going in advantage So able I which be incredible to

Brad Heffern

market. follow And about then question asphalt a up, just as the my

would? the talk I Obviously, when we price about Thanks. some be. that it imagine a we this case to than you this side to COVID repairs have taking is So of contributor profitability demand the looks? normally typically maybe than would impacts, more have do now? governments asphalt can right they Is are low, how these but much advantage would normally flat greater And road

Brian Partee

has on you of look But do at quarter. higher out demand we've the that into relative first the up been pick contribution. there. out asphalt, this with starting We're to the don't overall the asphalt season IMO the currently inventories. log to Part at is the inventories, to the head So seeing of an outsize I side coming towards know work contribution point as if had here. we in that

we which is seen down think been about selling at We the look when typical to market we've over fairly asphalt is, and asphalt steady, TI prices relative have benchmark the we consistently, with market. TI

the cut to really be or and to working starting But unfolding demand that’s the spending. discretionary with backlog the to levels watch they're really customers, access not, funding And So where work, asphalt on or in up. it go focus is uncertain to pick from is going we a starting pricing it's The speak. The at. are as standpoint, we're see happy work and with up. taxes out pick is we whether we're things at there, ready local see to that to our

optimism of market. measured asphalt the similar what to said of into falls it I guess things. the that's on I side on the So, distillate But sit kind where we today

Kristina Kazarian

we'll And Great. with call our today. that, end

or this be morning, Thank available on Corporation. your joining Marathon questions again Petroleum you Should your interest will us. So clarification would for you discussed Operator? take additional you call. team like topics for thank have in our to

Operator

for in participation conference. today's you your Thank

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

Marathon Petroleum (MPC) 5 May 202020 Q1 Earnings call transcript