Marathon Petroleum (MPC) 3 Aug 202020 Q2 Earnings call transcript

Company Profile

Participants

Kristina Kazarian	Vice President, Investor Relations
Mike Hennigan	CEO
Don Templin	CFO
Ray Brooks	Senior Vice President, Refining
Tim Griffith	President, Speedway
Brian Partee	Senior Vice President, Marketing
Neil Mehta	Goldman Sachs
Doug Legate	Bank of America
Roger Read	Wells Fargo
Paul Cheng	Scot
Manav Gupta	Credit Suisse
Benny Wong	Morgan Stanley
Prashant Rao	Citi Group

Call transcript

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Operator

Welcome to the MPC Second Quarter 2020 Earnings Call. My name is Sheela and I will be your operator for today's call. At this time, all participants are in listen-only mode. Later we will conduct a 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

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

today the the Templin, harbor of Mike Hennigan, Team. statements the safe We invite on Joining CFO call CEO; other X. and me are on read Slide members Executive Don you to

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

Mike Hennigan

for Thanks certainty to earlier today. Kristina. announced this sell this strategic an on thank you morning, X-Eleven cash business of provides and to the realization outlined MPC Yesterday billion our demonstrating value for $XX joining execute priorities in commitment we year. everyone our we shareholders. agreement sale for call to around The Good Speedway

I market before us that a to a the priorities after sheet as growth approximately that supply At challenging those very enables sale be remain will clearance areas billion anticipated will enhances the with closing update progress. very including which profitability, continue stated towards Despite the customary attractive conditions to value conditions today's objectives. and The through achieving quarter earnings the same time long-term to commercial as our return $XX.X creation. earnings XXXX. difficult close each to HSR tax we is making strengthen in proceeds first follow-up I've our on market is We the through estimated capital and a drive business long-term three first believe transaction and both balance substantial As to agreements to We relationship to move potential we're increase quarter outlined cycle our create also shareholders. opportunities. to capital committed decisions in creates X, performance future goals of and of X-Eleven of quarter stronger is we fuel the return our and subject call, to slide this

be strengthening our cost, need First, portfolio changes objectives. financial to in need and operating to to of position to metrics leader achieve performance make portfolio. a We the necessary competitive the these

the towards Martinez cash by key the our the repurposing refining of business. that provide result tough One we of to the is announce refineries. XX,XXX a ability At as to ahead the of idle asset day to Facility back Martinez renewable the renewable evaluating diesel. has We generate amplified been of impact have each the pandemic. up us per are our Gallup to of needs refinery of philosophies indefinitely the and decision Closures barrels climate production diesel. business to

pursued enable opportunity the advantage the also have and to advantages are the for take investments capital have initial making an of three ideal unique that to should from for lower We XXXX and strong diesel. as greenfield These processing as compared renewable fit area of set the to with logistics there. drive ramp units requirements early significant up production significantly assets option

geographic source the various footprint entails our into improvements channels products markets. and integrated how performance Second, our our raw place to select we extensive we make commercial in improve how and sales leveraging and materials

we what market the terms eye on control don't Our focus against but any macro of to environment. in keep on intent can really control what is we an

spent and addition and expense on in we focus progress, meet mindset reduction XXXX on by we're will to million team's the addressing announced. we track in reliability. all encouraged previously every the disciplined $X.X spending to billion and $XXX of return as and aspects risk third, the in This in actions. quick quarter dollar been shifting lowering on by confident And business losing focus I've our costs We're capital our to lower XXXX safety and without target business for be

our as long-term lower that value we structure implementing on the volatility, through On X, recognize we progress need and taken company the we outlined sector, base tactical we slide out look and I current the to also to as lower stated in $X liquidity April, a liquidity cost in our initiatives late company business some of our previously improvements used share beyond. on actions return works of notes on I'd to like day position for In $X.X in becoming structural cycle. endure the are revolver. on addition billion April. down made to proceeds and the Overall, a senior cycles. We of and borrowings shareholders the portion have enhanced cost we revolver discipline carrier can the focusing We're that an the across creating we to with in all have a pay focused billion that XXXX inherent a Also last April, of quarter and to the issued capital cost were that plans we structurally in late is that off we're XXX and and nature. March to early asset

COVID-XX quarter borrowing we financial of flexibility of the billion capacity review even pandemic to I'd to did for over second the more At us turn in available than detail. more to $X.X to at over like now point, Don this it the with results available start We have MPC.

Don Templin

share cash of cost capital before Adjusted adjusted we source Thanks EBITDA $XXX was $X.X Mike. Slide This second the summary billion a loss market Cash or pre-tax quarter. quarter for million. reported provides changes of reflects million our an This lower of operations X was a a morning adjustment per $X.XX. inventory benefit. from of results. $XXX financial working

Lower quarter-over-quarter the Adjusted billion throughputs second impacted was $XXX driven and to the second primarily and Our crack in spreads significantly due refining COVID-XX the EBITDA dividend from demand shows quarter X EBITDA destruction XXXX. for by and lower substantial R&M adjusted marketing. approximately XXXX first million. earnings change pandemic quarter $X.X earnings. quarter the the quarter payments in Slide sequential were down from to

Second net included $X.X inventory million. the market of adjustments bringing $X or primarily lower income a quarter quarter benefit cost to of approximately for to results net billion related also

segment Moving shows slide results, EBITDA conditions. decreased versus in segment. the the X quarter-over-quarter earnings the and Midstream provides to from measures. primarily the control Slide million EBITDA pandemic. driven These implemented stable segment's retail overview first of recently despite impacts quarter relatively $XX stability change fee-based quarter midstream cost an our by results COVID XXXX. the X first highlight of EBITDA of our our our the challenging market midstream remained versus

alcohol quarter quarter Second approximately destruction nearly quarter approximately XX% of COVID-XX associated fuel segment XX year. to the pandemic. merchandise in the fuel of an from flat sales soft decreased quarter. reflected essentially We demand per overview largely across Retail by in full were destruction the margins in demand food associated million. significant mandates sales fuel and refining first despite Same help volumes stable quarter-over-quarter to store pressures and despite drinks year-over-year. the Due Within merchandise EBITDA $XXX store segment marketing saw was by down with months sales declines from segment. gallon only the support volumes. earnings to demand we our in-store of offset provides three improved and first lower supported were traffic and Slide XX% for seasonality. due increased $X.XX merchandise decline last including quarter COVID-XX were experienced demand X% relatively and this with Same year-over-year cigarettes. cigarettes Performance of stay-at-home

quarter cost about $XXX targeted per Refining the managing in billion, included in for from job was around $X second barrels conditions of $X.X billion $XXX quarter X.X The a million pressure over $X.X these of based in EBITDA approximately first per down elements cash working throughput quarter expenses marketing presents of billion; cost was position Slide prices the versus first margin Margins before Second $X.XX the of some cash challenging team Operating than quarter regions in Slide in refining decrease to the day. negative our use $X under June end quarter for quarter. about considerable quarter. all the of reductions change assumptions per working quarter. operating operating the flow May second partially first results. increase XX adjusted for and Despite capital forecast lower $X.X the working million XX%. on barrel barrel and capital provided quarter. was and and down highlights of quarter structure. Cash the the was Changes utilization impacts. source did at changes quarter. cost approximately first our in guidance billion. a were crude are the reversing we was saw cash a through We to of million compared XX $XXX capital of was costs May an cash in consolidated was guidance in progress the previous the excellent the approximately making We lower which million XXXX.

we in quarter. million spent. better slide than Second quarter every we end highlight of results $XX demonstrating already at guidance the lowered dollar operating with XX that the second approach liquidity the show expenses On taking came are the our position disciplined

Our credit the to of at quarter. end $X.X billion the increased approximately facility availability

provided ample estimated positioned on business includes outstanding billion to proceeds the XX demand. we repay we portion of In environment. liquidity reminder Net outlook to As regional the the our $X.X amounts facility. On at revolving our we We in a operate a used credit on with the third repaid quarter facilities slide believe that five-year in issued based fully of current late facility. which credit company projected June throughput April we've senior were notes. successfully

Galveston full $X.X over the barrel turnaround just be $X.XX costs quarter the at billion. facility, increase turnarounds and Angeles total including distribution Bay Kenai which in major expect $XXX at be total our Total million around Los are X.X to projected volumes third throughput. second be costs per changes and throughput quarter in are barrels slight costs Garyville. operating quarter plant from to hydrocracker projected Planned a and per includes maintenance We a million projected of day, for are turn catalyst under to

demand from Fuel segment prior we to Consistent expect X.X quarter resilient. relatively there merchandise in remarks. recover sales of a the COVID-XX to uncertainty we taken the and however, second billion. is resurging sales have lows; closing turn Mike fuel billion me let to begun $X.X call that to volumes being billion over some approximately remain address some range to gallons billion $X.X case With merchandise with For rates. for from actions to currently X quarter retail expect the volumes of back

Mike Hennigan

can which some to provide slide published appendix. of recently our investment Thanks a XXXX be that to many disclosure around XX to on comments influential responsibilities take moment year report found in is with report this Don. I'd in sustainability greatly We’ve leadership. on The corporate like our content reporting terms the provide are community. our in information frameworks the of commitment expanded outlines the and highlights and consistent

in aspects continuing the efforts with to At governance the note where On report and a recent With we we related dialogue such fostering to understanding, environmental, touch are greater companies of summarizes inclusive call places to tolerance very that path turn organizations As Kristina. me to progress wanted many we partnering encourage firmly committed diverse committed charting and many communities our work. are social are to the on to open business. over let acceptance, Like a that workplace make to and operate the of events and important and have area. in back Marathon listening towards this we our we unity. comprehensive and to I where and impacted live that

Kristina Kazarian

Mike. Thanks

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

We open questions. to line the now will Operator?

Operator

you. Thank

will Mehta from We question session. question-and-answer begin come the Instructions] now with will Our first Goldman Neil [Operator Sachs.

Your line is open.

Neil Mehta

on and you the congratulations team transaction. Kristina Mike, Thank Don,

and versus billion framework allocating $XX Can you reduction number the this and we'll a cash; talk the around go have dividends first $XX.X get tax do flow. into the billion that follow-up. topic the what's versus around debt cash I with that around later bridge is recognizing and pieces more and buybacks special color cash then between thoughts about The on

Mike Hennigan

the for comment. Neil. Hey Thanks

just First me answering on couple on of the deal a make of itself. comments before the let all question proceeds use

benefit is structures a most want different I then First looked options of Speedway has shareholders. and able company-owned be just company-owned footprint and expertise now recognize smaller look lot employees of conclusion lot X-Eleven came we all at going And and different will to of larger leader will model most out the stronger combined Speedway's much people model company business to a a that Speedway which value to deal the the certainty this and to be company-operated entity and currently the creates in franchisee a and our a forward. in for and from the the that

important that's think of as deal. I to So part this recognize

Okay of touch the and and I proceeds make also on on will then use a I Don topic. let comments few capital will

and think transaction statement our these and optimizing free are the First generation, of I for all stated more cost to and all business this capital that commercial in key returning shareholders portfolio is have flow cash and evaluating no I we at on improving is have and I assets aimed times believe different. performance three going I that many reducing capital a have of made prepared this previously a remarks and issues return

the one expect profile the be evaluate going easier now and capital our a respect Don date Don that continue bit of clearer to wasn't and progress global means then defend and to of is it. grade we much had to effective let it a the specifics to returning detail to committed closing time The efficient important let and to provide shareholders. component issue and me to of more to though more investment positioning. We supply our a is in comments little two talk this we uses there of value realization more going this a we're at return forward. capital, picture little proceeds, right and we'll accomplish have pandemic know transaction give And and of refining now a demand but and going is with to global are little about to the if between primary an more but most give It'd the much we recession and closing bit we related

Don Templin

you Yes. it's think let I a bit guess, I because important our Neil questions, around use maybe proceed. of talk little first a couple of of asked me consideration about

grade Let we me talk how bit about about our defending profile. think credit a little investment

sure liquidity we or when now had So so a some that quarter liquidity. probably was and we that of think just proactive maybe of addressed mentioned make on issue have mind month top first to backtrack or two $X.X had as I we call we took our and very comments earnings billion available actions I our

going So like we feel we're well-positioned, well-situated forward.

ownership but guess of consideration. think our we're also want steady will an debt and right to investment more capital we'll our as believe no debt or the think metrics As cash important going unprecedented cycle views number of inputs we about that those our makes investment a EBITDA to the specific. our sheet grade as on flows we and sale a lost profile, we And dollars, that think the EBITDA look a of interest defending obviously and policy from have in very through drives environment difficult now which to our EBITDA, about we the Speedway around committed of significant under as Mike from I forward and I credit cash consideration our profile. debt. that sure environment are defending it be size grade structure as our is balance include which one credit is various dividend think levered this mid-cycle metric be the mentioned that we efficient macro I that all in look the facilities to factor of billion be such we the appropriate to We'll consider things of to credit ahead, that don't but also it's capital part part currently our level have MPLX, an but We make and

was basis. that billion just did in and we're topic were $XX.X question tax that on release the that our assets showing on is selling the basis billion really tax proceeds that a the tax You about so predicated ask the so $X and particular under after tax

Neil Mehta

which follow-up clear. most is That's you picture business. are bigger your -- The many in very valuable losing question is ways

you multiple what left stable Now Mike creation drive set value with great at and the of about monetizing here company it and the out value how MPLX ratable but Speedway? you're flow how you're you two a think cash and talk you term for do about those of segments without refining can is up the long business; business over

Mike Hennigan

that's question. Neil, good Hey a

make me is the the one your that that we're loss we lot get still to have be using of not supply That's believe on the I relative our broader to continue to three Let we Speedway comment because have going the mentioning. the of keep areas deal work a question, benefit of to to still agreement integration. fact we'll but in that logistics and assets do we that

strengthening going our to to our time So just is from continue be we We're the a midst as theme that at the hear over of performance. assets. us into getting look portfolio commercial continue improving you'll to

more as hear well. that over you'll time about So

As we well to structure for do lower structure. that $XXX given more cost early but to cost by our the area. as some in We've work XXXX have about million indications

real we the those get at done I unique for from mentioned think do done certainly return a report right just regard put a getting capital I to does And go the and continue Speedway Don sheet you shareholders on three priority in obviously the and in looked going order. question, So to where us balance as it about good to assets position in was that deal from standpoint. not us. of here a high We're to obviously ask have priorities. you keep this those. a to We're couple We've thinking

relative good environment we're to stay that we're the for think challenged in expect and position to time. I that in So we a some

like optimistic point back seeing we're these in anticipating the it we're slow Although take some a normal. it could just to while cycles to a recovery of and that right out get get just but at we're is that headed direction all we'll which

Neil Mehta

Thanks Mike. Appreciate it.

Mike Hennigan

You the Neil. are welcome, for Thanks question.

Operator

Thank you.

Next from Bank Doug we America. Legate hear with of will

ahead. go may You

Doug Legate

Thanks. congrats on let great Speedway. add to me and that Good my everybody morning Mike multiple

may. So I questions I two have if

contemplate conclusion going and business seeing said there time. that had very maybe walk Doug, anyway what I business essentially decisions an tough answer had are that got had The option some is first in other comes it could sale. in during question. competed Is we -- COVID out real Martinez I'll event been a and prepared demand different but obviously frame my demand the the criteria to ways impact a to the could on away impact don't over I and about and and and today an that to came niche example meet with of actually the the in of this strong for you unique more is really you you for A refining supply forward for weighted Yes we're inventory especially on but that that like just climate wonder the these has also good remarks liquidation side you towards very people if marketplace many that's a many obviously portfolio to question that's us times. difficult for one there our it's was us mean with in and through I an Gallup. - Hennigan Mike us start the if cash generating flow. positive assets Gallup process

but the small that question on. not something sell did to a a more much refinery it's to get direct your difficult we be answer We but successful we execute unfortunately we asset. ran could did process So to look for

have about wasn't play We some the out. Martinez. of we look next I was and from still keep your question opportunities a how know more We work thought want at in to lot process to to the itself an pretty active a ran excited did see to things So the being On but question the reconfiguring some then the answer give more that direct there. We're we'll absent that successful, idling we there not we we into We do least at asset step renewable logistics put assets standpoint as it successful. other looked indefinite I do we not We sale the did and you to opportunity Martinez, but did at at got position a at whether sales. your detail process Gallup. diesel. have to that so

So hopefully question. that that answers

Doug Legate

still make at to It brought one it leave trading the weigh I Thanks. would A stream that we the I pretty aware if is you look in done referenced bringing again a with appreciate Yes I'm a preface position but is is about logistics We equity has next getting to the buy the in MPLX we given look came well in getting it billion there. cost my seems just were below line the valuation? MPLX just you bottom we that color price RLFD you the on and like refining know to at and the capital I'll to your still level. all Doug, take it IPO, don't does you're it's study north the I to throw we Hennigan to want use want we I incremental why actually would midstream balance or price and realize return you via - a didn't already it's eight years the about to seven through space and follow-up Mike I'd the question it's the receiving to not as Don another of EBITDA, when buy to sense Mike and there. it that at so we're you're I'm distributions speak you finding to amount conclusion ago Maybe taking where good essentially or cash to and you in if MPLX stock but to or of but so guess and in unit the dusted MPLX's processes outstanding since did and of RLFD. from that instead whether came distribution. when the of a MPC our respect question saying it we're $X.X in exhaustive to be unique billion went $X.X as cash which in you with looking buy of about that distributions study, stream and that conclusion Marathon refer shareholders. or cash want as RLFD why billion fuels and $XX that would

So out that's some of on end subset of the all one side at the where there the came in of to on far we cash day goes the as of amount fence. that it as partners is the flow

the be tax fence On of going a extent certain be the we other rates depending the will forward. think side to on paying where tax we'd

but do of right as be analysis we're feel are capital lot to a recognize of So shareholders. that of we amount and at continue and at time unlock best felt the obviously needed the where balance head to well this highlight to lot return look our would the commented and priorities and the as to to now at time we and is returning a proceeds capital the are opposed or close we of this on at sense value point that of same more frustrated kind and the mentioned use shareholders between do MPLX the and to I now not that level to the at as to that doing concentrated equity value makes has and we've that's Speedway sheet of Don for is going what's be

Doug Legate

guys. the All right. Appreciate for again Thanks. answer

Mike Hennigan

Doug. welcome You're

Operator

Thank you.

Fargo. from Wells comes Read with question next Our Roger

Your line is open.

Roger Read

morning. Good you. thank Hey.

Mike Hennigan

Roger. morning Good

Roger Read

buy the curious are slide in going a I overall away posts that certain to where want this you you've do sale getting follow get the you guess it, of of retail a the etc? of dividend, basis we a back potentially because in think three papers you evaluating signed the company where progress in already on a a of affect have Do and been MPLX? X an questions guess restructuring certainty the should the still evaluation but sort bunch guide But the months maybe that, company, COVID company how you both done the call maybe is of about, sort kind I of and on the the an you doing kind got to cash if are is shares and of and to some restructuring kind up couldn't of the whole I'll where just I'm to buy and change asked; now throughout of ‘XX/’XX about called known a until does terms for that mid-cycle on way even current more you then standpoint.? few where you of obviously have of maybe outlook maybe

Mike Hennigan

Roger. Yes

To deal be and and ourselves, because think out really get get optimistic significant believe your attractive We done. a the we asset lot we to very this a we do there. I deal portfolio. of best X-Eleven. you We that's not could were the assured point would did interest on like interest Speedway in Speedway is So we concluded we of have said on the the still work three initiatives, that

work the over is more portfolio. want time side. mean things. ourselves a the far side We get we but and GMP of you have portfolio As continue and feeling ahead give as activity in don't the to I to a to both can I get on still disclose do side though refining lot the going there's and we lot on logistics the a of about market we'll to best certain we're the want to how

generates in any downside. environment free goal a protected and significant portfolio a is cash personally get to for I'm Our that to me

want have to going resilient we're is that the knowing So portfolio down very during these those to times. we make cycles sure

not As and is change the more think said, style to in put of keep area starting far the I different personal eye have philosophy costs continuing cost philosophy I'm ways try probably continuous like number the just I a a to some then as be our that's to on to just to It's and we're that My and on then for our progress. capital commercial other against going big the moves and areas and to competitive try the continue disclosing least we each in of just discipline. it. area improvement lot in structure an our the change a nature one of quarter and as lower track cost about make because out

each each see those to hopefully think you. quarter sense get of So makes you'll we company. we've a maneuver looking time hope made Roger, in how areas then over we're that bit to to will talk I to be little progress how about the of each able I those and

Roger Read

does. It

You are hardest for wait. to make That's us. thing going always us the

a follow-up been getting the ETR address was on in has of it. the you've Don, I current some and we've Act environment know tax real a most just because guidance for As curious lot I the refiners questions other tried the discontinued but the CARE and issue impact. to part already have

through the are might the on profit things tax coming was XX.X quarters, we payments flow that and or going whether other whittle I So you capturing that in a the something allow just XX else curious back may tax billion here impact the down net think sale? about to as it's prior there

Don Templin

goodwill XXXX be because In significant of our was income mean the and book as it connection I deductibility. related look tax unusual at rate, least had with has unusual or to going to you year limited charges Roger. Yes we effective an sort is an

the our quarter CARES by where that and placed So looking that our middle service. effective will and was disclosed significant again and What in operating expenditures rate the of second a the get have a net percentage of our Act that environment that. made the doing will then sort in in tax hard our deduction as believe as we in we've teens in the we we really we at disclose and time XX-Q, quarter capital result when are past take is year-to-date all depreciation, losses the to of given given anticipating we're we as cash first we the position spend also XXXX in as first really driven quarter assets

expect and NOLs years years the back to NOL provides significant a XX% and five we CARES have years to be tax five that up will given Act carry rate. can -- would a there that expect you we that that into carry So back that that

think we MPC. that's a So for good thing

getting appropriate affect for as we the of and rate. on associated that. XXXX in and tax thought as filed continue XXXX with this we to that Our at statutory be announcement respect give relatively position tax look price normal quickly With we basis sales return be it a to evaluate the best could of we ways be will able times that Speedway, carryback to optimize but that purposes work was obviously the sale that refund would plan to rate would to will we the minus would NOL our believe a you to tax we that for what was that

Roger Read

Don knows in we believe Roger data rapid just not will. that world transaction, follow-up Templin -- from offices file minor you what XXXX happens still when their but relatively still refund rapid transaction my looks in like ’XX, We working just on point. people if you it - but Okay the that's and result a return A a one on quickly that's in are if last that of believe home XXXX who or timing a that relatively terms the

hard going would and can after we manifest return we're get as that filed expect to as to would our So then itself relatively refund quickly that. push quickly the really, we really

Roger Read

you. Thank

Operator

from Thank Cheng question you our comes Paul Scotiabank. next with

is open. Your line

Paul Cheng

guys. morning Good you. Thank

Mike Hennigan

Paul. morning, Good

Paul Cheng

if questions two could. My I

said earlier the buy for MPLX. of to that think remaining [indiscernible] you it that make for you sense I doesn't

of if the this Whether considered infusion, spin off do cash with is MPLX? flexibility a you whether that be open want totally you more the the low to on may that and with terms mandate. your consideration after very return good that just that that one you with the government renewable need question So or margin and structure is of far you big the yet evaluation still the to whether business Eagle second entry exhausted The is going conclude you renewable and Golden as renewable is? taking or can the you it not still shopping and want is to demand that shut haul you're the the other hand your margin into current long related keep to one company but sense hand the the and consideration barrier the are the the on how that you in for the that in that want business it

how you. to haul. want long I see So business Thank that you deal

Mike Hennigan

Paul. Hey

first one, So when other do than to as the comments we a analysis. of don't any we're have other I mentioned lot going

want some the everybody are to to we have to the I capital. but time with look balance proceeds and have We do thing the with leave returning priorities do what's the best that sheet at

stated value So beginning and the was the did that unlock capital priority. is that one things of we to we from Speedway want with high returning a obvious realization

questions point. to give Martinez opening than want but don't those renewable going this comment anything your let I'm I other to a Ray on in So just on turn me a to On second and comments. couple at

facility is Martinez to set off about unique that. relative at the Ray of talk circumstances exists first in and hardware So I think the that a I'll let

beneficial positioning We carbon be greenhouse throughout reduction the decade. is are also has us accomplish standards. to low it to renewable aligns believer targets going We've to MPC want because that California's that with we fuel stated gas the

you a was bit expected So would there this for of the capital turnaround the same thinking that our that just capital is a think amount fits harder little The we're about we and we investment where capital framework strategically planned and going this I as is would go decision. with in of to this assuming facility. about the into the first put put we phase with give for

to to diesel pivot and opposed point as a So product production renewable decision production. look decided we hit at refined and really

it that. tree So of the call the to you lot details that's go a There analysis. of that is kind decision into if want

bit let own So more about give Martinez understand specifics facility. specifics I'm going the a you its little the to Ray detail so some of you around

Ray Brooks

item a Mike. on since ever thanks, we a give to as those merged little co-processing what I looking and we're essentially weren't has we on diesel refinery we've with and hit a then in its renewable in form that for for the as key continuing long is is at Mike the economics now. heavy you want near-term extremely Martinez nearly suggested time current this Paul, framework right just conversion looking strong you headwinds bit an a we been spend with just early evaluated but that actually Hey turnaround the Andeavor and that The with high year. structure it cost have at the coming

are advantages renewable transitioning and unique this a to value that for believe we certain our site. for creates So plant ultimately shareholders there diesel Martinez

up renewable Martinez barrels can diesel expect XXXX facility ramping the capacity and day be to initial could Our of provide in XX,XXX and up from there. production per we online

renewable for third diesel crew diesel. to the power the plants, that one extensive for evaluate to capital current to will in current project the capacity. equal also refinery's Martinez There continued are analysis production needed are about logistics but and units outbound are detail Retrofitting extremely looks a pressure and three units. given of all hydrogen high existing complexity are there that allow renewable initial nameplate We efficient promising. these generation presents more produce inbound hydro us processing

produces and of XX,XXX to want So renewable I would Martinez barrels per to ULSD per this about our that low XX,XXX the at facility. intention utilization is of full to carbon diesel. not up intensity conversion to barrels produce the diesel grassroots higher for California. of emphasize day is day value, production pivot a

have of feedstock suppliers. and We meaningful partnerships believe believe there an that we element early is speed conversion. an we opportunities mover with there are advantage of So for that

the excited we the understand that project further. not of there for our unique drivers that take for talked are economics advantages day of earlier with end this at but the evaluation we're about to regulatory fully the that are typical Now this refinery the I really project Martinez drivers just

Paul Cheng

the a us think you. on business the say whole you really Ray win. idea you willing to to no long for no ceiling ceiling you keep Speedway that you a that also is some opportunity or and a renewable as give going that be want after for company big or me. and to That's depends it Mike it no that how set itself the Thank diesel who term that there's you're get can

Mike Hennigan

Mike. it's Paul, Yes

think here. number going we're different that don't targeted at to phases I make a go going said as as we point we at want is to So look portfolio Martinez and Ray I be along. to our evaluating this -- the say to but decisions have priority continue do the

I arrangements know joint get into when The you I would well venture as to deals. those believe be other very types of for past, like add thing can the who these me in successful

we're overall outcome So all better looking here. and managing something is the hard that else achieving parties capital very a at for

bit the technical of the So on commercial we're the the to evaluating I little that we're there's want future. one think side day at say we our have beneficial. that JV the approach. think Managing of stuff. In main end to going criterias some uniqueness in lot I discipline. be real strict talk should a opportunities Ray general here is gave we about a capital of

this. of another important that's piece So

Brian wanted just comment I well. that a So also let make to make to comment. I'm as going And

Brian Partee

in to that relates that to separation address To question regarding you it last quick. just there the as real Paul. Speedway Yes the the snuck your rent question wanted

market-based appreciate think a to Speedway. and always that and with the philosophy So understand thing first to had approach pricing I we've

changer of result of due that a but all to the value as separation philosophy blender there's So in MPC fortunately the really transactions. will shift and movement record step historical fundamentally no be

retain the possess will the we So rent rent. and

resilient make the that or As fully long-term you market a rent about talk like When for that's market this contemplates future. value it's sure agreement else the over the time in this and driven contemplates that. it relates all have is agreement anything of and to always individual agreement specifics market by fully we that by rents to which frankly the

in it's going agreement. handled that's the be to way So

underscore underlined and shift I is of on transaction no So that mean make point there the wanted a the value just result to rents. as whatsoever

Paul Cheng

Thank you.

Operator

Thank you.

Manav we will with Gupta from Suisse. hear Credit Next

You may proceed.

Manav Gupta

side. guys Hey the question on crude is my sourcing

volumes. servers medium tight we are but OPEC are into XQ countries During we Russia seeing other XQ very as raise and move those

XQ? in course discounts results in could or help server golf which your So more do XQ crudes you medium going expect

Mike Hennigan

Manav it's Mike. Hey

rick's here not today. So

He's is shot today. office of I'll market towards I move the with think at increased to general us production. the going out hopefully we So in take directionally a mean that. crude

get progress crack refining production aware for as of in to we'll opportunity the hopefully a optimistic pressure get differentials. will the production to as your bit and Manav more then me to Right a have you're as earlier As hopefully to environment we see seen I it some then point let be continues weak let good you a refiners I Brian little continues comment as a moment and stated still at we're but in on spreads recovery. and think cautious hopefully haven't very would not are a little we'll see side to make bit refining going we're of this mentioned been to it's which recovery recovery those crew recovery demand yet a progress good very we which and where might spreads. are opening we Tim put on a but on margins

a you demand a give of bit seeing little I how the So of side. flavor we're

finish So the and with Brian with then can up portfolio. Tim gasoline start you why don't

Tim Griffith

you Yes bet Mike.

the volumes seen system-wide quarter. recovery the with we've another strength since in sort the of April probably slowed weighted of country year XX% gasoline reopened about of continuing coast to all to with same store X% XX% Recovery regions as the the the have referenced many in midwest a early demand more the that. really in of recently states compared currently behind lows the coast really the amount trends greatest midwest nationwide really behind have last through second and down west As X% sales east with Don

to for Schools in some return to person as So road. plans. potential or the students reopening consequence case is back wild for states parents multiple the watching back counties significant in the demand up COVID a regions latest workplaces people and have going the of we're escalation the to back referenced side home carefully ability their and card in on the as will to on at earlier getting

see rather than with roads things the which on masks we I'll it out road a the over to demand them. With think increased at with home extent. requirements Brian mobility and jet. nationwide gets potentially for to positive in for facilitates worth the meaningful what people We'd is a masks that a turn also as open able back for without For more it's diesel people it much increasing be to

Brian Partee

Tim. Thanks Yes.

Manav So to demand talk kind I continue of on book. across can our entire

exit rate Tim's to see for about XX% July is So the we to overall. down point XX%

I downside of note notes regional that just the So one the guess couple I Tim's can southwest. echo is what a a seeing on regionality in

So we a COVID in with in the weakening region. particular cases here southwest seen the weeks in have in the resurgence that of last several

and the pretty that side up marketplace. everybody York, bright both total in coast in X% they're as New recovered New Atlantic hard knows midwest Atlantic Jersey the the the roughly On down coast year-on-year hit book for is and really we're across sign which a good

of the we area to mid in of stable since have XX% with heavy lot side relates has that in were the we the activity year-on-year. of off up really before to result sideways July plateaued diesel mix. outbreak the seen since but low really relative market midwest great about kind a even big lot XX% that low demand the point The XX% and also sales of actually We out off July somewhat cargo on as which to lot on market. our online the a strong a we're do period but out is in COVID pretty April. upside X% roughly demand of of the off of year-on-year southeast it up the exited to the has been our it's to levered A actually over midwest XX% heavily that sales is up with retailing reminder On it in and driving do second that drilling XX% fuel plains manner. have the to down jet we as regionally really on curtailed a a and up that year-on-year about early time the regionally demand demands a about in downside market. the the Bakken to resurgence as we're side We point off and in the Closing profile motion Alaska pretty in July year-on-year in then quarter hit Tim's the and just off are with that performance to distillate fourth a are We're the in teens.

coast levered lot fruits really see and the jet That's really of with the strong so coast. there portfolio flat of the aviation by outlook combination of to team. drive A the they're not just but to August July. incremental across to MPC the our the commercially So only able buyers overall. create performance starting endeavor capture relationships is been on U.S. really to market pretty globally richer share Really to

to to working of the is as in lot on expect orders not as going is and in cases people schools both resurgence right downside some watching as returning from that quarantine and well given a are demand We really we're like to look stay-at-home the normal thing we be based the are September September what home. at now that look to

wanting around. definitely So to pent-up there folks demand of move is a

a So in is what look of a it's demand card going wild September. bit to like

an case as of upside case. We're make as watching good can a You closely. it downside

Tim Griffith

production asked about comes online foreign economic starting more then some on will to I grades, and hopefully market And west we're etc. a widen grades, that crude but see just then etc. start gulf coast bit I'll to as Brazilian differentials circle Russian Canadian back alternatives know little the coast you like to the into

hoping sledding some production of I'm pretty it's with coming and margin improvement a get on. the of been crew refiners So we bit for of tough little adjustments

Manav Gupta

on This is quick Dapple. had a follow-up very very a helpful I sir.

so XX,XXX about in think but does enough there bargain down headwind actually Bakken go moving between up to [indiscernible] your Dapple three and you're refining just I'm the non-Dapple. offsets case Dapple are to I I trying can earnings barrels refineries [Dapple] an you there and are see split may on understand to you XX,XXX that side. and not offsets Mandan think your on midcon midwest usage

Mike Hennigan

accurate. that's Manav Yes,

other as Dapple than far other of bunch a have we as So alternatives supply.

were supply Dapple enough have alternatives side. not we to think on we if the So run

I BIA with MPLX on right you're of a the plains about think down triggers to that automatic pipeline respect I pipeline say BIA comments to your comment were well side filed I'll as an another point we that recent as you that and I have would of down. shut clear area to the high give in which believe been Dapple market. X% well has the Dapple owner the pipeline, then in in the up as couple on a discussions at I though an one plains result as Number on a looking this be shut is the logistics So shutdown. would mean it One stay to is that statement. the the high with appeal think if helpful

down. then MPC million little all for the than shut and on taking refineries. they give $XXX our So it to we to short and advance conclusion case the we'll from would be but legal I the is supplied the we as we well side that on alternatives that parties. entities We supply transfer because energy and PADD point anything just try an discussion wanted don't to obviously Mandan were think likelihood think us adequately II good lead On of etc. discussion to side logistics stay in term bit impact but both to to less if both together in both a think if Dapple to the don't as we the a you have be down there's enough were then there the logistics be would your is the that's of of continue automatic that standpoint, think those

Manav Gupta

Thank you for much questions. taking so my

Mike Hennigan

welcome. You're

Operator

you. Thank

Benny question Wong Stanley. Morgan from next comes Our with

Your line is open.

Benny Wong

of around Thanks there. growth everyone. to it was terms opportunities if can in us agreement you with my and X-Eleven? give there's Wondering Hi, sense a if of maybe or and provide XX-year good supply or of that morning you a the taking for question. first areas color value some would one size details assign My wondering

Mike Hennigan

give a of the let one of Benny add. mentioned some agreement lot that I'll portfolio. part comments I'll the in we the I and of integration So is we maintain big our benefits earlier see as benefit

X So I years. billion approximately for about mentioned gallons XX earlier it's

the that So services. long-term integration relationship we providing and trucking with logistics the the that service and benefit X-Eleven looking a is it's we're providing have and to a transportation forward of lot

So we're services to going those continue to provide for X-Eleven.

and as be trying far So logistics benefit them assets, utmost give to service. the a there'll trucking our using terrific our as services, to us using

as So We're the going the both a capture the value the I retail to forward. think business going win-win and far margin it's X-Eleven of us. for and in supply obviously we'll integrated logistics in as capture the

point is the that's years. hold whole for billion important Another X.X steady XX

So it's their plan out with hand expand to as a and long-term very component stores. one goal to work that's had a X-Eleven stated portfolio. hand so we component is the they relationship about XX,XXX grow to second They've in

them them let that Speedway to agreement a Brian continue existing on comment So beyond is supply second we with situation. I'll to have which the

Brian Partee

for a guiding the hit know of to reasons philosophy. a Mike important what little to and and commercially kind obvious tricky Yes, had mentioned Mike. market-based couple really supply tenants Thanks a talk upon underscore to already but Yes. principles it about agreement we maybe the it's it's I'd of is

good So relationship that's parties. a but done win-win it's it. is long-term to very for think arrangement a both We we really and we've this tricky solid develop a think supply difficult

the over around If infrastructure. you of up Speedway growing in about and the the literally decades think history portfolio

for us well done a commercially preserve as so as same value So providing that associated in really contract. the with the important time the the to integration to At transaction. compelling it's which in operationally operationally X-Eleven we've supply

historically going relationship we So for a then haven't huge win-win from think haven't with set from both a it's supply based up say growth really scale on forward had had well perspective and them. Mike I'd perspective their a we X-Eleven sides

broader to work that think now coast we platform across to there's more there closely together find have especially coast to we opportunities. So opportunity the

construct table sides got think not to right incremental only there the we've down about drive We across of to forward the commercial prospects we get get excited for we've MPC started path. of closing value we the going the So the to both we're think table. but and once

Benny Wong

margin on product to on does and more sense an follow-up the the to how terms region improvements to you and normal when get other volatility also much closing brings region and price that if That's that wanted in just Gallup from we offset important your Thanks. especially we thought very PADD a think contributions to might to what of the structure that supply the Martinez bring potentially question, these helpful. a and think back it expect decision from V Great. in tighter get you potentially and be wanted to cost of Martinez your in flip to My get follow-up assets a on normal assets. should impact change a on environment, more the

Mike Hennigan

comment the I'll the a comment let a on cost So Brian structure. make on balance and Ray then make can

Brian Partee

Yes.

to that's Hard down to forward an the I Martinez what balance for though As certainly is the looks partners network and that actually west think like to of in optimize statement. taking resupply helpful trend obvious well coast of as as inter some but it we've going trade COVID with as out directionally to balance we with and been continue marketplace. relates able that our predict

what diesel we of So for we're Martinez of the need I and but earlier the hit think directionally market. diesel one production positive there replacing is element mix the is forward, renewable side renewable with diesel going you go demand Ray to and think key diesel about out the in on it one on the if

with exporter the good the a demanded really penetrate west in be really So the what's coast. to market help it to market being position on us not out puts the in

certainty to So obviously for it's future the with directionally complete we feel but know and marketplace. the very hard favorable predict

Ray Brooks

his Benny, talk little structure. I that a Hey I'll it talked product commented refined cost is about bit high the Ray. a refinery. very just earlier as structure has a little When a bit I on cost Martinez

units, so much the a have we'll hydro streamlined processing plants three forward hydrogen going more facility with and forth. that So

lower I CapEx as the OPEC earlier as conversion. about standpoint structure an a So talked much on have cost we'll well

So have day at that the we'll the end cost diesel really renewable feel of we advantage a opportunity.

Benny Wong

Great. everyone. Thank much you very

Mike Hennigan

welcome. You're

Operator

you. Thank

Rao Our next Group. Prashant come will question with Citi from

open. is line Your

Prashant Rao

having I With the that you the wanted refineries going taking Kenai in synergies south the in follow-up in and for portfolio about about Anacortes way of related Does coast down wanted where synergy starting increase of of I'll and the fits lower Thanks of the about follow then west question. in way on to or for smaller I morning. the midcon but to Good wait think coverage of think coast the that or in up or you follow-ups. importance complexity on some to terms sort to there. the coastal west the change maybe question do then ask that that the how Martinez sort that that north V? PADD change a too

Brian Partee

not but Yes, Prashant. book. coast it's the This Brian our balance yes shift is west certainly Partee. in to a only fundamental I mean absolutely

as and impact west out we about long direct the coast. medium a has in on it how assets the about term think result So a

the help flexibility coast this the west is optimize and logistical midwest overall we've west to run system into great assets, as position coast a running today the we always it akin “system”and we somewhat in we really the believe feel and directionally to be optimize us largely just we're overall some going levers puts assets, manner We've marine puts got similar assets the really out a plants the terminal between able to and gear portfolio. that do helpful to the like and us in to this the thinking forward. about in something different and of So functioning in that us and a with a capability see have logistical midwest the is whatnot to used system what west

Prashant Rao

complex Okay. the Great and then assets just to follow-up on the less mid-continent speaking some of refineries. broadly

market you look the would so disposal assets to view of smaller in get I there have sense the is to paying of some fits think of complexity few longer thought keeping and you been lower mentioned Dickinson are attention an in Where some to running You portfolio of sort a terms burner those you update get them what think good that that into as there but in the the some assets that conversion of the of so around when wanted at process refining have versus we on it's target terms to do conversion kind other and other or just of those. that back speak, is your midcon. in were that's or term;

Mike Hennigan

Yes. the the will I times term. portfolio think is for all best couple be we to here Prashant what going long like be evaluated said a

a Dickinson the that an I I'll let takeaway should You of Ray obviously stands at think give and update sense has did mention so the assets. several but the of looked market be we've where

more in a get We goal we our very have the portfolio is point generate that about then is to is have difficult the able a right we're we we we're like back hopefully resilient. that's said get having obviously I normal lot cash and discussion if I to have environment environments. to in more mean want all to now a very portfolio but one to a where

make comment So Dickinson? on want Ray to you a

Ray Brooks

pleased very-very to progress with day year schedule the point had still targeting before the have that of and the challenges the end to up facility the and product barrel this and diesel with along all so complete start of that we've renewable we've COVID, we're Dickinson right been by construction end Hey XX,XXX at able Yes. of year.

that's trending us. for still So well very

Prashant Rao

time. Thank you Okay. much very for the

Mike Hennigan

Prashant. welcome You're

Kristina Kazarian

And morning you will additional clarifications us. your topics you discussed thank interest for like joining Thank for to available Marathon questions or would Have be you much this so everyone thank day. operator and take calls. that our team on have Corporation. Should Petroleum you you good a with your in

Operator

Thank Thank participating. for you today's you. That does conference. conclude

You at time. disconnect this may

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