MPC - Earnings call transcript Q1 2021 | Marathon Petroleum Corporation

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Operator

Welcome to the MPC First Quarter 2021 Earnings Call. My name is Sheila, and I will be your operator for today’s call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session. [Operator Instructions] 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 first earnings at slides call. can our The

today the the Mannen, 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 Maryann you to

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

Michael Hennigan

Thanks, Kristina, this call our for and thank joining morning. you

Before the we update we for get wanted business. quarter, our a to into results provide the brief on

continued demand activity to restrictions global economic transportation for industry related reduction from our in to with quarter, the and struggle that first fuels resulted mobility pandemic. the COVID-XX During

the meantime, of team opportunities. macro-outlook take industry-wide our of our desire within to control. from assets But vaccination, are holds, and our XX%. we starts quarter, of around advantage XX% continue challenging pent-up extent we started the To the X% brighten are on to for in poised our and the elements around travel backdrop our business, the rollout we’ll as concentrate these down to the see to with business that still historical demand that demand down a second the to jet As levels gasoline

of our this structure. Slide of near-term lowering cost performance assets, highlights commercial we’re on some improving and Our focused strengthening the same. the our quarter. our competitive strategic position priorities remain quarter, around Each our priorities actions X our

sale to completion Speedway on we’re our of close First, the business.

reposition to continue portfolio. Second, take to we steps our

approved per renewable Our our to XX,XXX our a to barrel assets facility. day plans Board convert Martinez Directors of

XX,XXX with expect commissioning of second to day approximately of begin Martinez capacity. the per barrels XXXX in half We of

and of end generators barrels intensity approximately to the the day our at commitment to install products, with planning full lowering a capacity wind by XXXX. to expect reach our In of we’re we carbon operations XX,XXX facility. line Additionally, Dickinson of turbine

from out and Sourcing of at seek technologies. opportunity intensity will the for the to that lower renewable on product right We’ll facility. carbon renewables and continue investing electricity diesel partnering evolving wind the

Finally, from I’d were dollars on of discipline exercise able also spent. we continue strict Slide with the how operating our sale on for flat like reinforce business. and to priorities a refining take expenses hold quarter, to this proceeds moment our prior Speedway capital X the roughly quarter. we to the expense In are to

As we remain approach to to profile. strengthen the committed We important a our An MPC the with transaction, maintain of our many and solid investment-grade continued we’ve close we’ve had return the Speedway the sale use you. is commitment shareholders. sheet priority of to to capital proceeds balance appreciated dialogue credit

lowering our announce we And cost the targeted plan the around investment-grade remaining framework this billion before, transaction. this from to investment-grade said intend thoughtful our MPC jeopardizing we minimize stable. our leverage plans how outlook the conjunction respect With appropriate proceeds rating recently, maintain costs, credit to return. credit an immediately Within of on at for rating. of demonstrates and from we maintaining solid for execution a approximately $X.X sheet, intend while Slide we we paper, Speedway shareholder to not to to be in minimal details We’ve these pay of as of costs. our We’ll structure. will debt friction $X.X to indicated retired to previously down repaid commercial which that since debt announced reduction, affirmed with our with proceeds business. improved reduce negative be expect the the As more be sale. around BBB we issuing by it’s And Fitch level could October closing for billion X with balance the debt

results illustrate corporate of are costs Our structural we We utilization believe reductions this team’s as the quarter rising sustainable. costs bring the volume refining that discipline. commitment impact increase. will the variable and And have cost to while made cost

our on discipline, employees, of communities on to results health we compromised and operating our have in While and not reflect commitment operate. and focus our the we safety safely the assets, which our our cost protect customers

Manufacturers nearly our XX% XXXX our very and refineries safety you ever both beyond Anacortes company’s and the communities Detroit, and facilities Fuel outstanding demonstrated process the awards environmental area, that trade from was recall, awards Petrochemical safety may performance & best received performance. recently, and set all personal These apart. recognize to the X people, keep facilities their rates, improvement As safe. Robinson, performance of Dickinson above in association. them American surrounding safety and best that leadership across go and with And

to commitment carbon standpoint, Lastly, a in and includes conserving a needs meet comments fuels to strategic our stakeholders natural of today to This to I’d intensity investing our focus is ESG. energy like of and technologies, while some provide investing renewable the our and engaging our expanding lowering the in take operations with the resources, future. communities. From on diverse moment products,

XX% withdrawal XX% a of second, intensity Scope by freshwater methane in many emissions gas XXXX. a well: We our our and and reduction have reduction know intensity X XX% greenhouse in by midstream our investors X a in company-wide reduction our X XXXX; XXXX; by targets first, lastly,

and linked XX%. same Year this across award ensure point, we’re earn sustainability this is like were the this Maryann metrics manufacturing current gas ENERGY quarter bonus We’ve of the for only commitment EPA’s linked we to very this compensation. our as Award. business U.S. that area. results. proud diversity last it to to with way work Excellence we do. now do compensation At to pervasive consecutive we review Our company to Partner includes employees STAR sustainability I’d focus year the on also in turn the year weighted And primary greenhouse in our over is the to on to And reductions our our Reflecting of the metric, Sustained earn the fuels and to first this, everything its intensity ESG, second compensation, our pleased target at

Maryann Mannen

pandemic continuing excluding Thanks, quarter. It’s refining provides $XXX This results is EBITDA the continuing prior continuing by Slide first from capital Cash quarter has we was also financial reported quarter-over-quarter was as which first was and adjusted operations our nearly in X million above from a XXXX quarterly our start operations. a increase per higher change of net EBITDA of reconciliation $X,XXX dividend payments, the Mike. summary that an discontinued results. the been income the earnings million which driven Slide X adjusted as shows cash $X.XX. time well $XXX since from XXXX. from marketing. quarter. Adjusted operations, the fourth to loss $XXX from morning, since EBITDA $XXX the the first Adjusted sequential both quarter million, marked working of nearly primarily million to EBITDA share for more This in and quarter includes adjusted was million.

fourth as a and As Speedway first operation. results reflect a discontinued both quarter reminder, the

the storms business compared costs. positive million. which with This first slight Distribution provides across We March, fourth COVID of $XX of an $XX for Moving were of XX%, The time quarter, results, compared overview the variations adjusted increase fourth $XX the quarter-to-quarter line to in utilization timing quarter, first second in impact The segment. start of utilization. for of quarter roughly million $XXX marketing our quarter EBITDA and EBITDA primarily costs which increase was our pandemic Slide improved was impacted lower first to fourth were million with refining and additional expenses with the an of by the roughly higher of segment XX Total quarter as flat since refining in by the to that reported was due our business quarter. severe marketing incurred the were increase in XX%. refining despite our In was this the regions across driven previous the quarter. million refining to $XX with cost million industry. when to the XXXX. be utilization margins, winter was in considerably all quarter, Operating an estimate the

had mechanical our operations, Paso damage significant Bay Although, Paso down shut team to El as safeguarding or time, able in our conduct quickly was resume the quarter any values communities. period. and Galveston our demonstrate of the the El The both for surrounding EBITDA way its our the was refineries to safety the of the in a and was safety and that XX versus and time employees experienced our of during XXXX. incidents, operations, able Slide period planned neither of steadfast begin people the to turnaround we to change this efforts the during shows business. our integral Galveston fourth are Midstream Bay ensuring

continues Our stability to quarter. earnings the and previous Midstream segment consistent with results resiliency demonstrate from

consolidated inventory working lower for estimate excellent on were and was It gathered quarter. and $XXX Within reducing XX team the results the Slide and our merchandise the rising in as profit to continuing and million for revenues. in again, volume transaction to traffic foot use margins in pre-COVID the due our in both $XX cash counts capital first by Here of quarter lower this level. the operating first presents impact in approximately continue on rebuilding the in Slide prices operating primarily cost impacted Speedway operations, in provides than revenues changes an offset XX operations. expenses, position $XXX cash discontinued storms a a million quarter, fuel and and $X.XX gallon. million. from cash with were to crude lower which business Speedway benefit Fuel partially quarter. Changes seasonality volumes working overview before were we driven in offset margins flow of Overall, crude progress costs continuing merchandise from increase see usual was the headwinds continues of elements change partially reflects of helped decreased reduce our operation. per quarter. by positioned discontinued this make in We the a capital our and the the the and by quarter, fuel to quarter. first was Midstream product

quarter. billion facilities needs liquidity. short-term quarter our We In the as $XXX the $XXX through we manage used senior dividend. to March, debt to retired increased capital during utilizing we in million notes debt our returned $X shareholders During net short-term million

both Our $XXX end the for quarter and balance of was operations at discontinued cash the continuing million.

Turning on outlook. second we XX, Slide to quarter provide guidance our

throughput $XXX Galveston our at Planned $X.X approximately Bay be turnaround quarter. roughly the $X.XX barrel to million costs turn for total approximately per We are projected in includes Total are let volumes costs Distribution Refinery. of per the million back that, costs Kristina. activity for to which second expect are barrels second be billion to call me day. quarter, be the over projected quarter. $X.XX to the expected With operating

Kristina Kazarian

Maryann. Thanks,

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

the open now will questions. We Operator? call for

Operator

Thank you.

We first the of comes will Doug begin Bank [Operator question-and-answer America. Instructions] with question Our session. Leggett now from

Your is line open.

Doug Leggett

just, the could you. up about I as if changed quarter. it’s about you when how question thinking leverage. Good basically, the that’s buybacks, dividend – midstream them And way of as if Thank ex-Speedway level share a think how probably anyway. refining so, what of now] the off comes so consideration wondering routine I what there and that’s kind I I’m for morning, business? big or price that – is the like. in then, [run know as has realize cash. that, on debt from return on of you talked to well is follow the of latest wonder to [ph], burden the level kind that’s buybacks, of I’m everyone. and appropriate the I a a outlook lowering So Mike, a every table But about ask MPLX’s

Michael Hennigan

jump I’ll in. I’ll Maryann Doug. thanks, start let Yeah, and

vaccine rollouts around I do think planning saying be is pick Obviously, that recovery good a here, what market could we this then mid-cycle? is think try times scenario been bad everybody standard moving direction. to times. getting about West we’ve don’t getting the the and and in X% time, overall. And is, appropriate everybody mean. certainly The think the we’ve And is answer the about those banks what been excited When leverage I X think and Coast I demand down And other says, At Doug, about remarks, the do mid-cycle. you metric, then of in same throughout the yard still to said, line, considerably about about prepared we river. my our areas. XX question X.X times we So a compared what is gasoline lower year-on-year well process, still and

dynamic. about, could X of going we’re the leverage. we’ve trying to do to general, and to it, we are the evaluate been have these guidance debt we think is, right best But X.X give So to we it’ll said, had be We that X.X kind away. parameters, of in

that of as evaluate minimize You’ve capital. to to enough dry done. heard as And that, got going we our the remarks that be once any powder balance we But we that that most make to in we’ll sure good we and sheets prepared And try to finish essentially out that, costs. we’ve that to close friction can have we’re Speedway. make comes we process with balance our to in we sure And the then, that core we want leave this throughout that to return sheet be. going that absent then transparent tried want as position. we’re evolves, And, liquidity off place

debt That’s And they We position. way Speedway spin from our return point, And all path. a we’re good – the then have to decided that to at out of sure been go to capital. that were way. to investors, we level this. is goal would to start back that want different so I the We to going get capital return to one the in go via we make going

after partnership we’re looking phase the assets, that the and with they next we to his think real XXX both We good opportunities supply forward We’re parties own with fuel. that. into some ending getting up is where there for

anything unless, to So give we’re jump that can going go sheet, you as to want in we Maryann, the But balance on evaluate you color continue there? with forward. best I that’s to the

Maryann Mannen

I comprehensively. covered Mike think quite Doug, it

it to has already Just a couple that. our as maintain Mike was and balance we investment-grade as other objective of additions, Fitch continues to to sheet, continue and seen about. an say you’ve be confirmed talked

covered we’ll And provide it So another other once Mike to is consider, only debt details. that key that, so get thing to repayment times think I’d add the have the variable has too we’ve that the I many is, than continue want other sure we that comments more we efficient. well. we that, will restated But we be committed, quite close, some

away really ahead And from time. that’s hopefully been resistant getting doing close. too But now. far We’re to not we’ve of it

little So we’re I we just color continue then market – the soon as been, way communicate we get close, to we’ll have to give more a and the think.

Doug Leggett

So, for how buyback accelerated we’re some about coverage dividend thinking substantial that dividend, point or cash Should to expect burden, to just we be on reduction dividend. for losing clarity, about in my clear accelerate are of Michael, you kind the that? obviously

Michael Hennigan

of lays this. a have reduced far Doug, think competitive is seen, picture, Yeah, result our way still where to share we we’ve to itself as that the be But dividend. some had and returning differentiating will of as price we of reduce little have nice kind of at count But a seen big far that’s time. this time be and of mind return our this to you’ve return, Obviously, here. we this out for share something committed we a where is see the as a capital, the of believe is that to process. competitive this That’s unique How end and as bit takeaway then that and know us a We’ll evaluate we here dividend. the believe a our sale, committed for that we’re all share going over do factor a count, result in as in you the hopefully, dividend, are. opportunity we gets are as throughout we’re capital we up dividend we end in where from

Doug Leggett

you talked respectful I big your quick most to be broader likely to you’re The holes Today strides want structure, – follow or up, My the that, down. cost restructuring. much well, getting thanks be portfolio else. But I’ll big or haven’t everyone Mike. review cost here. about in for making real

the One other if capacity. the RFS refining competitors way doesn’t your rationalization day one suggested we of other that or the could see of resolved further get

up if stickiness date overall and achieved I review portfolio wonder So us of bring just you cost could the to you’ve reductions Thanks. far. with the so

Michael Hennigan

other Yeah, get We assets the and new two the But to not on ongoing see for have early normal we bit, like like. want what Doug, looks that this assessment. what we portfolio very because little portfolio, see did long-term through did we looks X of side decided pause we and idled, an pandemic, us. on kind do we the that being a facilities

the still get have final general. in that The well. get very But pause, we to we’re I internally So, a conscious yet, to really in But everybody’s close. through disclose of little gone have what we’re we think the cost up will our nothing priorities on adapted going decision we through itself a portfolio obviously, normal. vaccine continue it’s that an we’ve will portfolio, to effort think you, so were as about not the that over position. ourselves right we as market. looks to light time on that be to in of the anxious done tunnel. We’ll going ask We’ll the we new on give And to to that’s Doug, be nothing evolving, more I part, to be so, to what going start this competitive but much a the went play time, that energy like ready put see evolution And on believer was And And know our behind out. get the this assets continue what to effort to tell hopefully, to and does, of in that like. high the better structure, rollouts at looks our portfolio, all we ongoing of because our announce part normal are how’s work the a we And and And pandemic, on getting end base ongoing is this the it this near-term structure I of to business, sense some a check in do down, our on. kind an new are have to it get where ourselves one that cost kind now. we us. what that We’ll see extent. we’re

to continue do to that. going We’re

In the I side inning and in the think, going overall, team fact, get question, his know, you And, I refining look are we what continue regard? on it. to in often asked are that Ray at to

we I’ll on fact, Ray let as are a as where In to comment cost make well.

answers Ray that you me on hopefully, let comment make cost. let So portfolio. a on But

Raymond Brooks

we’re Yeah, Mike the and brought up the have in we’re we’re to inning. not ninth about what inning first not And in in. I’d say inning

costs. operations going and subsequent our cost And, an What we assets. idled quarter-over-quarter day. through Doug, Discretionary every some spending negotiable. of did our on, And Martinez at of we system. is we of cost day, the kind high oil safe forward, every have thing non-negotiable. cost towards West and alluded early we efficiency facilities out idling discretionary for Those out as just the that to biggest quarters, to refinery. are that savings continue system? maintaining the reliable we take our more And can Hey, ourselves do to we refinery emphasis we a seen you completed So challenge while as that the the took is majority on Coast, look the our of you of

Doug Leggett

guys. Thanks,

Michael Hennigan

Doug. welcome, You’re

Operator

Thank you.

will Our Sachs. next Goldman Mehta come from with question Neil

Your line is open.

Neil Mehta

build we morning, want talking some you’re you a What Are your gating it clarity. I team. are we quarters? transaction. really just of Are get the in talking on just be factors, Good closure talking like and to really Speedway monitoring on just sounds the prepared some what perspective? comments your terms want maybe talk close the days? means to should close perspective? remarks from about in we from And of Are months? things the we Mike,

Michael Hennigan

way good frame And it. that’s a to

you answer months. the that to believe we think up, best it exactly what I is at we’re way the it is is not set point in this way weeks,

an to but it’s day, be not of to we’ve we’re all. way going not because next do best Obviously, tool, think to the this But, and at at process help are if And, stage describe in us we We’re weeks. can trying really X-Eleven. it’s to FTC I tried what in be communication process. communicated we the is intermarried we’re process to the tomorrow, between final down table days, understand the it that to we the guess, is the FTC the to the

give I So hope think in weeks. anxious very get think very, guess think mind, to word best the that’s that’s with us of we’re everybody’s relative to completion. don’t next within we we’re of sense to we’re We close we days. that chose why And our you I to you. But know we’re this. I set we helps months. way it. don’t And for We that disclosures the the think close.

long market thought bit, within as do were hopefully, end. a appreciates to been hit bit by process that we transparent we taken to are little very we anxious going a that. when details the we we’re a takes and can. time. a has But into the end you went the close. of talking And came weeks. process. of That a sometimes It’s the We thought hoping get the kind time longer as quarter. also to we long I’m be for We’re there, This tried very, little at

Neil Mehta

the project comes And guidance of I renewable given Yeah, how and step set level to for just follow-up think could capital talk can $XXX think project? just provide us project. of the with the And million And through, pieces, it? associated diesel we the how Martinez. you so good sort a the about Maybe you, great, there could move you’ve you this feedstock about you on the with with is to extent year, that’s the total about thank higher, back so prices conviction if Mike. spend the you you lot this fear, project? guess, total of renewable should think flexibility spend soybean of but And a associated investment? biggest returns sort how through-the-cycle the the are associated I do ensure moving is but the continue that is to manage this the

Michael Hennigan

Yeah, And project. it’s obviously, communicated we’ve that great Neil. gotten we’ve a question, full Board this support for

I’ll how jump So as Ray thinking you start then, give And let and off, Brian it. we’re color about needed et some on cetera. feedstock, let in Dave on

So go ahead, Ray.

Raymond Brooks

we finally, Sure, year completion facility, we’re total XX,XXX from the Mike. for And bit XXXX. then, targeting followed diesel, that a a standpoint, rest barrels be would the XX,XXX half online. project back renewable up schedule like this next the in And for standpoint. of pretreatment coming XXXX. to Phase a in at color of by where fuels give be that X, little the of At And timing would renewable renewable From on second of point, production. XXXX a I’d for fuels of stand then, half barrels

plants, hydrogen very some us question But oil make to a Martinez I fuel very Brownfield was Martinez competitive Doug’s us for to that project. a cost comment the Now, refinery. gems that far before from X the project high are that it provides units, there as infrastructure good have processing very standpoint, I ability OpEx, at cost a as renewable back go or commented if real XXX a

end I the about so, And and toward for And in to on the report and just lot we of engineering alluded in our getting the give more the but you’ve already with CapEx guidance. done impact engineering, definition QX, this last progress project. what review near-term. lot of And out progressed very made we’ve can’t to, excited a environmental also in a permitting we’re kick-started work efforts have our regards quarter

Michael Hennigan

a to it second. in commercial guys I’ll Neil, Yeah, turn the over

location about Dickinson way is about to the think demand. it is is Just other X I the way obviously, the one have there hand close do and And are we guess the very hurdles this on Martinez we logistics. right major sitting project, think supply. to on

was hurdle described So our facility renewables and facilities. was we mentioned, operating hardware. in the the location expense, you as it, just gem, he But area. mentioned, Ray second is real what of relatively basically, the the high big cost. think capital, full the hydroprocessing just like And our do Ray asset

it became best of feedstock that of was comment asset that’s ongoing puzzle the a it So, the the then the obvious put is to piece us that. little to so last let that’ll and the optimization. bit guys And one the this that’s service. in use And continue, on I’ll

Brian Davis

Okay, here. hi, it’s Brian Davis

onsite job pretreatment the time, as well as by receive I by that picking sufficient there think in maybe just over optionality first here good So feedstock feedstock question, but also his thing rail through the the up a is capability Ray and team to water. creating done have

opens So our considerably. commercial quite flexibility that

value evaluating of mix feedstocks, We’re give the of over right deliver us the project. to portfolio a of options which the will life

of And capabilities suppliers. existing a period we’ve relationships, for Dickinson. biodiesel, and existing of We have range feedstocks wide with more we a because number been our leveraging time been underway and have these a of negotiations for for commercial now our buying recently

Neil Mehta

Okay, it. Appreciate thanks, guys.

Michael Hennigan

You’re Neil. welcome,

Operator

question Morgan. will Gresh Phil next from Our with come J.P.

is Your open. line

Phil Gresh

the question this just low is despite was that here OpEx My on it first was at Coast. results Yes, The pretty fact in still there barrel the XXXX OpEx utilization than lower hi, even be per point. West morning. the good on

could So is just, think obviously, maybe now. I probably you Martinez, out of numbers those

we utilization how lower the ramps of OpEx potential other any the to should factor. as biggest as and drivers think back things maybe up? So think that’s that about the about But you there

Raymond Brooks

and Ray. I’ll question. Okay. this go This take is ahead

OpEx of tank residual You’re out we’ll carry number. year. largely for cleaning Martinez that OpEx on some work still to this right, is and is the There

in So put on the those close little big producing energy bit able purchase quarter, impact early February to spike, a there a because March. natural to quarter by spend. Coast, our the I us is by of mitigate to the will demand OpEx internal Coast, West balance last on and requirements challenging primarily I West partially were one gas of a gas Martinez natural the on price more we operations. QX, say, will our from the was costs reducing fuel of part say

us not commercial commercial I for to on as us, think refineries really reduce the our shout storm, our Texas, a on the our pivot out quickly. and managing to day of group gas, far up and key minimal natural group. an across all for operations. operations, one really allowed And in as have our and went as this fold, Close demand I impact was a as requirement real of by possible. got natural OpEx our our give to XXX with adjust but gas winter the coordination And just

So, impactful was that really West Coast It was on across all of as our the well. system.

I that’s earlier, in Aside from that, as And starting numbers. got-to-do-stay-in-business far to show said what day I’ll of go to every just challenge back from spending discretionary type the as, ourselves, we spending.

Phil Gresh

Okay, together to glue renewable quickly. That’s helpful. guess, I diesel, very Thank great. on I’ll these follow-up you. My try just

from of side like far you some that you. up learned Is signing how like something then, of process? things for about Thank consider feedstock startup, joint from that the the seen the your for soybean would just venture we’ve just Dickinson, or one you’re crush things kind And one are considering? If you’ve that you peers? things, so startup capacity, of going could with on feel talk you of what

Raymond Brooks

startup. and start again, Ray with as is as this learn far what the from first we thing I’ll off Okay,

already One that knew of we learned, hard. the is are things startups we

you oil and get than temporary But XXX% want of tell at But you, also we a we number I the soybean We lower capacity in perfectly. XX% everything that’s don’t provisional our as off to You qualified got works is button will quarter, oil. get XX%. to achieved and a score. a the we’re Dickinson. that score carbon-intensity of design and capacity corn And, our And know, get lower seeking just feedstocks, to we score and not to with. first for which push renewable start

regard. formulation. that that our on process up. and new did with just We work come in it’s continued the for work has We licensor and work catalyst back actually catalyst a So

better, yield, the what and So from want XXX% a getting towards we’re exactly working getting project. toward we

Brian Davis

Phil, And, cetera. Brian crush question soybean capacity, et about On it’s here. Yeah. your

feedstocks Clearly, all as but well. to at think use also advantage possible, as here. targeting and oil industry looking we’ll – as we’re its production We’re we the much options will need soybean

certainly putting stage are in for the of mix access the gaining balance the between understand right security to supply. right right there with as price considerations we at the commercial So,

Michael Hennigan

describes kind of we it’s had Mike. is, and Yeah, only project, Phil, well, what OpEx. into add segue really liked asked I’ll got hardware it thing CapEx Neil the we advantage Ray from The we really think

the feedstock the side We’re of now. equation concentrating on

project of a lot open and processing, strong this We’re going facility lot standpoint. to then a for were available crude to to ones really out where that online, anxious part the take think Martinez, the costs optimize were from really processing we addition us a does the nice it’s hydro get as assets at to of And it going use we’re to things, said, of be we’re a but Brian our to portfolio. that

Phil Gresh

Great. Thanks.

Michael Hennigan

You’re welcome.

Operator

Thank you.

will question come Read next Fargo. with Wells Our from Roger

open. line Your is

Roger Read

morning. Thank good you, and

Michael Hennigan

Good morning, Roger.

Roger Read

shot here take and the Just business. come a refining core at back

the as Doug being about quite like of peers mentioned your RFS, are most capture. to earlier, RINs headwind So, have the talked being, general it

could the break maybe you pretty kind was possible. what had maintain spin, of on actually pre exposure and QX? you I I’ll it believe is as today, Speedway or post know, good, is as to impact separated, out RINs capture capacity to trying either being how owning the if just as much your you’re Your as curious

Brian Partee

Partee, address question. is I Brian Yeah, that can this Roger,

of [ph] past, the XX% RIN about to XX% self-generate or we our with asset. refining or] [blending either through generation consistent So biofuel

environment we’re it down. a so expense, pretty volume, So it to that of modeling know, all in there’s also that it. something QX on real hyper Speedway, is We the think leave RIN I’d on I and up no in right and focus deal in. lot we was RIN the thing pretty average, now in obligated something appropriately RIN there’s And you’re not to the similar not of how opportunity looking with and But, the to the a It’s optimize you you a can obligated. that with terms all in marketplace, what as are you’re space, obviously, The historical like have separation depending at, have commodity, think on expense. RIN impact good true one that about of in gains to are and really real with it we move transparent there. the to dramatically relates volatile control. and commodity prices that’s it’s deal We

obligated keeping] off RVO other us, think not you exports, well perspective. [boat jet fuels. if as So Alaska from an as [ph] is also stripping about And for some state an

interestingly other played I in the The the first the carry-in. was out quarter market thing year-on-year think in that

you from prompt the largely think uncertainty from to to with can fall. XXXX last in up year. here to obligations the prior XXXX, there’s less XX% due And, meet carry-in of So carry-ins election we around the far

is RIN would the So, is commercialization buy, and presume, space of strategy. could and for the RIN to that more to optimize, the obviously, very in purchase a then opportunity a and ratable perspective, commercial from there space space. the this be RIN. conversely And value last a assume try when maybe you and the underperforming about be outperform gets the buy we I to part And on in that kind modeling you how higher try

Roger Read

Okay. Thanks.

of again, had, things. sticking with kind the I question side Another of refining

guess COVID seeing U.S. I crude not Canada in you heavy, sort same hearing because you’re might you in maintenance it’s there, updates pace, terms if issues out. happen But availability? can of the quite in that crude the what imply some it’s coastal may when little What offer or on whether of expectations differentials? of a more on up We’re the drawn which light, U.S., about of there think

Rick Hessling

Hi, Roger. Yeah. is Hessling. This Rick

at of is we’re So well X having is – projects, hearing as their COVID or spot hearing thing. the Canada experienced couple of getting a we’re as with you’re issues. some the couple same startup on, a maintenance intel in They’ve specifically some issues from Canada the producers

in not So Canada. that’s production for good certainly

Canada. specifically So we’ll continue to watch that to

months, slight currently lot the what managing and Coast we’ve tug Quite has you to the frankly, There’s the in so Gulf of a of conversation got expect war. measured around I’m terms of differentials look pipes And full, the and in so Gulf they’re a well out. how Coast, the that which that little is a coming When expect out the several releasing on or there, optimism is there’s the a OPEC, I are bit at on India, when OPEC know, you to the market little is a West. And worldwide plays look Canada, lot $XX. which barrel of moving how you and we’ll thumb fear a the just in your continue. we barrels would towards, with out still minus incremental that publicized we probably, more unknown, might on OPEC of as And more In of measured forward in of they’re rule they’ve there’s market. is then done their point than I into of plus general been so the see have very of the production last lot on demand. you others. via think, today, rail, what Canada –

Roger Read

Thank Great. you.

Michael Hennigan

You’re welcome.

Operator

will the from next Manav Suisse. with Gupta Our come question Credit

is line Your open.

Manav Gupta

remarks, it’s on the recovery – pace lower prepared of recovery indicate you that your while the the in did the Hi, recovering, West demand Coast. is is

is California full reopen think, around a for going mid-June. I

do I’m in reopen forward, a trying to based recovery So demand an improved California? just you full see on going understand

Brian Partee

Yeah, is Partee, can Manav, one. take Brian I this that

in So, remarks. it’s Mike’s kind what opening that say, reiterate I he of made would his points

East, the really market, environment spot seen XXXX difficult weeks grind mid-June. comps. for XX, X% do to early the we and several extent through X% back to In has the gradual And just high of West, it’s this very of just teens you’re to In year, grind across the COVID more at back looking the from certainly meaningful California lagged. the some it, aggressive. vaccination a Coast dynamic been have the on, is discussions part what over recoveries estimate. we’ve data West XXs. us, demand summer last portfolio yes, have We a has entire in the gasoline to of prepared very off been we expect low the in is very has anecdotal been to But been the call and running California months here reopen seen

West we’ve in out up opened of see economies, favorable call off we degree the and I’m seen same back trends gotten hesitant a to to markets, So Coast. go. as really But a make other where on the expected expect we’d to in we’ve the

Michael Hennigan

Manav, it’s Mike.

would operations, up, we of to Jersey, this, a is up the York, see once end where becomes, as But, potential one reopening. do a is point? Brian gasoline and that I demand, process where to know to remote the cetera. I going big said people be that we’re new of that other lot working mean, to New that this, see after open to far New mentioned, just normal is you major et is the going get earlier that pent-up Florida, as operate The we that I what still think a of way et is, we in coming question consuming thing The out also things need that California, these add there indicator the there I going One states of through market are kind of as as is with things be. of some other states cetera,

that absolute yet. to insight have up quarter don’t to still to what where like about this. you much right we essentially So, June, rolling to to here, the mentioned, anything, your direction we’re out. in once ends about results where day, I played we heading point, the get the as the in get what be is the that But are Brian be occur better. also end it is second talking going is, say, number June, as will mean, really the it’s over, we’ll it’s up, of try side vaccines to way out going things it be well, If at are would excited think continues said, to it’s of opening just still other cautious we’re we to are And to states

out much how just the long-term, play it how is under little of robust it’s understand of So bit I stay that pent-up lockdown think, short-term from still to demand, out get is more trying and a time, to going condition. it people much for to

still like. learn, as much we to what normal we the on we control, what on looks an control, we can learn keep I as as concentrate and don’t said, So what and eye a lot new like try we’ll to

Manav Gupta

follow-up Dickinson are we carbon are intensity, refinery the intensity. a some quick saw what you in focusing Mike, X wind lot here, on one on others and could refineries? it at intensity of carbon and doing peers is Is some something producing in the guys both on to and carbon lower capture of carbon and you’re which Clearly, look putting gasoline turbines its sequestration. your lower is MPC diesel to the potentially the further that

Michael Hennigan

more the to carbon obviously there, are you if if give Brian Dave a the operations you et think, or total of color color Dave cognizant Yeah, concern, right, let there. But, is wind The want on to of Manav, lowering give situation of a carbon. of and I’ll we in the the I jump product, want their lowering cetera. value little intensity

Brian Davis

intensity. to what carbon the Yeah, you just we’re a bit little on more give with detail Dickinson and doing

you to ahead with mentioned that electricity, a go that’s our of put in via carbon to turbines wind in planning project the that XX% intensity. thing wind first lowers that provide we’re to and there enough about demand so The is turbine, electricity XXXX, renewable

plant The doing pretreatments its has feed way to material Beatrice, up made we’ve Dickinson. other now thing that got that down that at and started has is that we’re

it And corn carbon it’s intensity a now processes treated, so have that standpoint, better. so one that’s pretty from oil pretreated significant we

Secondly, oil. it’s than intensity soybean significantly lower carbon

David Heppner

other project by to such value of when another gas, the technologies implement if sense make There’s just lowering and or Heppner, Dickinson David all renewable technologies wind continuing solar turbines the us. is and in whether sequestration, and comment those will be we’re would and they natural additional CI. it capture other complimentary those technologies, evaluate for increase be, to this Yes, carbon are as

Manav Gupta

you. Thank you. Thank

Operator

you. Thank

with Paul from comes Scotiabank. question next Cheng Our

line Your is open.

Paul Cheng

Hi. Thank you. Good morning, guys.

Michael Hennigan

morning, Good Paul.

Paul Cheng

going together cost and in quarter. distribution throughput And is you corporate questions. we’re refining at have curious have the just a there. first looking guidance you going said gas in someone just cost quarter there to why reason, cost upon is the OpEx work I or actually question. is lower your you when second in OpEx, job that the the are costs If to I is does a costs your distribution cost any the X conservative Natural total higher, or being at well quarter, second reason structure, unit individually? of also refining and first the be the great higher? and be I put that’s higher? really looking costs They your So what your done

your and line you. Why of venture someone your expertise even on feedstock their stop, new supply? at a to objective? lower an The you plan essentially the also not renewable you partner second what’s question emission for opportunity to is that perhaps it looking going as initiative, trying pit own competitor, you’re one largest on joint with longer the that you – in that transition, CI, idea to and the put of renewable with create good and for diesel into the and energy going in the all a just business, back your guys? Are Thank expand ESG term or or the that’s into take the a

Maryann Mannen

first quarter It’s the guidance try to compared second your first Maryann, certainly question let the to around quarter. me as and address

you at a the per that flattish distribution quarter and flattish again QX spoke at to when up fairly we when some slightly, of the to as And million we really the product, for X.X is expectation total barrels higher the X.XX expecting product on about but are some the then, basis, look transport about throughput. look you a costs costs consider a are up from costs overall, the you day, Just are expectation for slightly obviously first maybe barrel per about to be therefore higher as operating expecting there QX. demand bit second quarter if reminder, in volumes we increase similarly,

quarter nature has of Mike recovery your things address to helps that second the you guidance. we’re hope play the your the thinking addresses question, for obviously, hopefully on that and just second the of about cleared So, can Paul. there sort quarter, happens. demand depending But how how out around questions

Paul Cheng

because going Maryann, lower And why with cost should I’m why costs to even that’s is cost imagine higher distribution your a first that’s have the throughput quarter. you on per we costs distribution guidance volume sorry, said in that unit higher, on going one-off per barrel expect the their but one your the would not that going throughput I’m on actually some comparing higher. higher second not and sure energy unique unit lower, issue the be That’s the in quarter. that you cost that side

Maryann Mannen

Maryann it’s Paul, again. Yeah,

So cost. you’re talk on slight when we about right, address as I demand, that total costs, the about right, key it’s was there tried but the about costs. $X.XX that to elements a kick-up total based those I versus which distribution And we were is costs flat, to operating quarter, was operating higher about the there think then $X.XX. hopefully, that you’re drivers saying about

Michael Hennigan

portfolio. Paul, I second Mike. and combination cost your On of it’s it’s think, a point,

is, facilities. our of X our earlier, Martinez facilities, X cost highest mentioned to X highest of we things of got, Ray cost one with was that stone As was the accomplished of kind Gallup birds X

for fuels, to technologies the At long that time. competitive is time, develop. same create we going So make want evolution other in to renewables regard. sure that low a fossil And kick and going to a because we they processing system, very we have energy want to value it’s be we’re when as around cost the into

nice So opportunity. we a found

that for product startup the in is in like a comment, a to last a Brian spot mentioned. Ray’s on fossil was it operation, that’s on with piece mentioned, is I Brian of through increase said to And the Dickinson. the profitability, we for in will going was our the going like project pleased as is we’d effort we we And challenge you, feedstocks, both, location that us. is us. to feedstock. have then let carbon on learnings value whether facility, CapEx tell the the very earlier increase once good and intensity, I’ll continuing there? on just the it’s which And spot OpEx reiterate, ourselves, good I’ll in a everything let We’re Brian good do some next to at for we’re very try we’re help your can of X there as we lowering way the us, Dave feel going plan, base good And will the is, I to but a us spot facility. But in front comfortable really are us,

Brian Partee

procurement Sure. all we way make whatever feedstock needs do Thanks, the and create value for entire out just feedstock But for we And them, to the of do procurement are strategy want And Yes, still from the we’re to more well a as more looking think, us those options, perspective. certainly only value Mike. at along with considering onwards. where arrangement. chain, partners we we sense build we makes the partners discussions as than out. commercial sense play from and I let can obviously

Paul Cheng

the emission the And, Mike, reducing your do of for address you is you’re in transition. at looking own on new energy line the also your We you to existing longer Or CI see operation? initiative a just all that term, that for business create you?

Michael Hennigan

in existing going some call that of as There’s have opportunity to as somewhat in to fuel our There’s to implement either, I helpful. will going be I some it Yeah, technologies like Paul, both, renewable evolves. facilities that we’re this going didn’t don’t it of implemented get think it is we facilities. be can an evolution technologies be truly fossil transition, think to I

in their and and long how look time, know our to fuels for of the to both, thinking a out don’t in on But, grow ways competitive time, asking, they time. ahead different to things the is, we game once some I at we’re that lot them, moment, for of the very see at good you’re moment, game at on act return will give us, looking believe a the think think are little is a going a right things mentioned I right and you’re Ray So to little time the we’re there’s to it, a offering the Dave in technology year. us our Dickinson to for going still at earnings. of us fuels, refining grow as continue what’s some a develop implement bit. to offering next we’re wind same early At fossil things needs – to end some what – the renewable going have and like end end you’re competitive mentioned, facility very as just support I

the all So watch evaluate, side, have are things are a to robust very this. the some immediate on things some we’re and look at through on side going

as forecasting our Ray us hopefully, of we’ll improve things, that it And around first our in One today, go everybody we hopefully, commercially? out It’s we talk winter and me, helped get goals happened the the storm. that that is performance. not is commercial to one couple to through along, a are point you’ll about and impact things we’re going it, quarter of the results to the minimize see in something but that doing mentioned it’s of my what asking keeps

going company. we both, today, you’re the that you’re the we portfolio earlier some was to over as be opportunities can going think give asked the by. knows, evaluate in question as that of pointing see to And portfolio time, is some time changes survey we’re quickly to business change goes the I as which on to answer get way to really sides both as disclosures as will there’s we the going more So and see your

Paul Cheng

you. Thank

Michael Hennigan

You’re welcome.

Operator

you. Thank

comes Rao Our Citigroup. from with question next Prashant

Your line is open.

Prashant Rao

Hi, CapEx. specifically questions thanks question. taking and the are on My on both for R&M,

you Mike, first diesel And know, an like wondering, at $XXX the in on come terms other overall this hydrotreater then But XXXX. I disclose And can’t sounds hydros First on X I pretreat of year. it Martinez, million cadence in do you cost. the next year. in the was

CapEx it of about the of a of year, right in it XXXX in out. as to and therefore next evenly growth for spread So, sort up is CapEx renewables that it’s think kind more of and the steps years, sort terms stair that, step R&M

that what financing then of would fund looking a And sort just you cash that, related purely internally generated I or project? have And are would from sort check be to to I think, of that, options follow-up. you your wanted if to, the – funded how be you

Michael Hennigan

a it, but thinking there, you’re approach just out It kind Prashant, the about of activity is right. dovetails think phased Yeah, I to it Paul to what asked.

step the also have directed we you and is about think in directed towards when But year So roughly it me of fossil half let fuel capital half that growth back business. towards it, around is renewables. then our some-XX% of this

So can that we business. in that spend we going moneys think to continuing still there’s be

do Paul a like I asking, phased way a bit to of trying So also seeing approaching was little you’re in we’re both. was what is But we’re to I the say, going think approach. project, this which

on pretreatment next comes as on. online get So full capacity it early comes we’ll mentioned, Ray year,

the capital going our in to forward still million area. be At base finish in line still stair the the we the STAR will same we’re some Coast, as to there stepping with on some project $XXX that looking get and down Gulf well. on that we’re got that So business. activity time, We investing want the to

we’re more getting sides your committed to that So, that’s continue long that and we’re of to happen of feel scenario that challenge very in use to a discipline, not same planning a the to But as to going strict mantra best to have ourselves it’s evolution, I’m is everybody’s in because we’re both capital our push a to to do all a out. we that’s to, going this through as where a something us what’s something to if quickly. we going facilities existing or hoping for that going is facilities little whether that capital, come up something renewable that mentioned, question, Paul’s, attentive areas, in the going it’s be occurring with be fuels a to going of we kind capital, bit the to both step deploy that it’s and as think very or, have we’re Paul dovetail it’s fossil business, of is we – activity we’re

as everybody give and can, much try disclosure we’ll as we So as by. time goes

as provide opportunities value We’re value it’ll some looking continues, forward the and think to us opportunity, evolution shareholders. increase the to for the we

Prashant Rao

sort or large Great. this, of second sense related project ramp And if to speaking, out so generate, sounds on, a be at of – of was be this of a or you the would you get of very fund potentially broadly wanted operating to to a how the part going it, also then, that to, were like just would I expect to options fund here in at some fund guess, finance look the you they’re generated, build if projects, financing, on terms I of you Martinez of my what you how cash project? expect is the you because But cash there have generation, question internally flow terms it Martinez. in facility to

Michael Hennigan

that color of return Yeah, so discolored capital don’t it of operating we obviously, want Speedway, fund kind that, on our as and that have comes get beyond funds to as hopefully, with we’ll assuming plan, cash. well. will the And a hopefully out have program, kind operating to market that, base our to optionality We’ll our fund normal. access We more capital of generating get want separate. cooperates, anticipating as back is the market beyond dividend, that to that everybody is Prashant, will cash be earnings, as

Prashant Rao

in Okay, cost at million maintenance great. to bit answer about we look not but guided know – When to you’re I across million real low on last this is of A R&M will should so? a you’ve you this $XXX think I maybe need how that back looking And, up, in that is on through-cycle it ahead, MPC color do year any structure, get the follow-up that $XXX to how costs, maintenance that think this, be rationalized Mike, that number and we and you the is thinking and quick, think R&M. one early side, maintenance Or on continue a a little year to sort off were there now from far at volumes sort that just basis? a coming beyond? and you we in you as of little about more we so as layer year next being years about the

Raymond Brooks

take I earlier let looking Ray. a the me shot at This that. want. needs When Yeah, at talked about is versus

along maintenance So, line. CapEx that certainly is the

point So OpEx we as really scrutinizing challenge the spend. ourselves where are, CapEx, to or every as of the it’s day whether far we

to our is CapEx. up grossly So, go on maintenance goal not

Prashant Rao

much very it. you the time. Appreciate for Thank Perfect.

Michael Hennigan

welcome. You’re

Operator

Thank you.

come from Simmons with Energy. Our last Todd question will Ryan

open. is line Your

Ryan Todd

on just Maybe thanks. one Great, side. quick one refining the

guidance there? potential the a do for been you I in how utilization your of is there is sequential months? little mean, of Is – probably next improvement your the cautious. commentary’s relative second think terms of to that your more couple Your more quarter conservative upside maybe guidance a about some of little utilization a ramping peers. XQ And over

Michael Hennigan

Yeah.

means. a these think to Coast into states alluded phase that May. out We’ll gauge through They’re to I opening up. June is, don’t all of one West of the next not. I Brian mean, to the get it West mentioned just we got going gasoline, that be it for the see of talking being on the we to how have We Manav Coast. early impact have or turns what rest lot know about of totally to if them. June

I to we’re that. everybody forecast of doing I control have that. try we So, don’t mean, remind and our best and try But that,

up. the everybody in be New like they’re you’re assessment, X%, on of Brian Obviously, else mentioned saying Coast, about the to been lot restrictions. Coast. just East under I there’s West best most on Florida, a gasoline. our down when and New down monitoring few the the year-on-year, key opening mentioned a states has Jersey, York, XX% situation, overall, We’re that going are given but

obviously, see to plays how a we’ll give post-audit can. it’s kind you situation what And right as And And, pretty like. have we look then, of things and the now. bifurcated of in, So you come we the try results best guidance just it give a we’ll out.

Ryan Todd

look you oil, you think have value on and the CI facilities vegetable think wind for kind are what the a some versus pretreatment mean, up estimate, of I Maybe you be about facility, guess, Dickinson. is SOP of a will and the up oil. I average the going that corn there follow-up an product you you terms once oil average Thanks. – an know, like maybe as and running? corn for the mix in of of think and Do have, quick might the I what to

Raymond Brooks

and XXXX is Ray. day oil. soybean oil, this corn for XX,XXX the oil, barrels a of treated Sure, design of The barrels corn is basis project

as the into So where That’s get to goal. that’s headed get quarter. we the we’re second

CI Just target to oil oil. And the the CI a little about off value, that value for bit be numbers going take about corn is in soybean XX mid-XXs. the for

you thinking a range So from standpoint. that’s carbon need to intensity the be about

Ryan Todd

And can how the much do in with – off or energy project? can assuming is you knock of you few how that wind is terms think points a wind – more the that meaningful energy you

Michael Hennigan

I Brian, would happy to get ahead and that feedback don’t to some let we’ll give running, But want ourselves. up that. we tell after you, you of get and us be

effective don’t to be we predetermine the going We’re opportunity. excited want there. But to how about we’re

about more you and and it. give it us we’ll get We’re But let running excited up color.

Ryan Todd

Awesome. Thanks, guys.

Michael Hennigan

You’re welcome.

Kristina Kazarian

any there are other Operator, question today?

Operator

further are We questions showing time. no this at

Kristina Kazarian

for this out your available for calls. much reach Petroleum in to to take you be afternoon. Corporation. all this and you Should our or questions you discussed additional thank Thank you we’ll like Well, morning, team clarification please have topics would Perfect. your Marathon on joining interest so us

Operator

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

at disconnect time. may You this

Kristina Kazarian	Vice President, Investor Relations
Michael Hennigan	President and Chief Executive Officer
Maryann Mannen	Chief Financial Officer
Raymond Brooks	Executive Vice President, Refining
Brian Davis	Chief Commercial Officer
Brian Partee	Senior Vice President, Global Clean Products
Rick Hessling	Senior Vice President, Global Feedstocks
David Heppner	Senior Vice President, Strategy and Business Development
Doug Leggett	Bank of America
Neil Mehta	Goldman Sachs
Phil Gresh	J.P. Morgan
Roger Read	Wells Fargo & Company
Manav Gupta	Credit Suisse
Paul Cheng	Scotiabank
Prashant Rao	Citigroup Inc.
Ryan Todd	Simmons Energy

Marathon Petroleum (MPC) 4 May 212021 Q1 Earnings call transcript