MPC - Earnings call transcript Q2 2021 | Marathon Petroleum Corporation

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Operator

Welcome to the MPC Second 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 Investor under Corporation's be accompany Welcome that second 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 filings that statements today. differ may as results there, Factors actual And with with our be Actual could that, the differ. well cause Mike. I'll will to to SEC. in included are turn We as over call the

Mike Hennigan

Thanks, Kristina.

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

absence the take XX% time, COVID-XX of demand nearly fuel full remains to we're typically the the below at That demand jet X% levels said, XXXX. an end saw and recent our XXXX Despite season, will of to continue demand longer we demand about of and COVID in we year. West and Overall, still the X% for strongest have levels down is mobility the lagging hold of increasing rollout particularly the activity of demand some our haul which flights Gasoline personal fuels. demand second XX% of levels. products down. travel. the still and currently Coast to gradual pre-pandemic is below aviation for business removal variants. Diesel return of the vaccinations of driving with see likely increased continues transportation summer the part led to growing well international restrictions with up quarter, the improvements close flat to economic spread the as more The to passenger During traffic, is

of the As second we remain recovery. the half but cautious the in we into year, head hopeful,

control. our business our progress the Slide focused the on elements remain within we'll of strategic on so priorities X And quarter. our for highlights

Speedway XX, close, our business May of on our the In sale plans X-Eleven. share of sale $XX proceeds announced through to First to return billion conjunction we with closed shareholders to repurchases. the we

of part to launched modified we worth nearly tender of $X offer a we're auction Dutch return quickly which immediately commitment capital, in As repurchase shares. to our able billion

As we shared plan morning, are our remaining next in to to $X months. in we billion complete XX our the with capital of release proceeding this return the steps next XX over the

to a reposition diesel quarter timeline confident suppliers, that second producing the reached diesel have portfolio. to per take facility. the we during year, convert begin gallons Second, gallons with we're of progressing to with oil set renewable to permitting to the in our Dickinson million at approximately Based our approximately XXXX discussion the and we're is feedstock XXX of and XXX detailed Martinez, capacity. diesel States. steps renewable At per year in progress facility Dickinson continue refinery design half on the million United we engineering in capacity full renewable largest second

of approximately per the XXXX. capacity of XXX end reach year we Additionally, million full expect to gallons by

keep to we cost a on as a low-cost being such Third, we a continue remain commodity operator challenging diligent and business capital will in ours, competitive. focus ensures

reflect half by delivered overall structure cost reduce operating ourselves and challenge have to continued In results result, have progress. a our all billion. our incremental of We to to XXXX, goal spend, of first examine as aspects $X the refining

reports. annual Importantly, ESG to published we related our want two note June that I in

GRI. in-depth sustainability the provides reporting from Our approach guidance performance the and sustainability report look consistent company's and at an with SASB

some while intensity and for and balance our by and currently take the guidance natural is investing our a future needs IEA. developing strengthening follows to ways the energy. sustainability investors of in forth stakeholders. well. to a go a embedding to engagement On many Slide I'd all we're on conservative standpoint, sustainable sustainable by from climate company-wide lead ourselves targets, carbon renewables lowering resiliency in decision-making our company's over From TCFD focus relative today analyzes future. investing in resources, three X, That to our perspectives and the energy of aspects put the in like emerging have diverse includes challenging know the and technologies resiliency people climate strategic of of and moment with Our by scenarios to We related scenarios many

by First, greenhouse gas a XXXX. Scope X XX% reduction in X and emissions Scope our intensity

progressing in And withdrawal water opportunities reduction The XX% in reduction meaningful refinery presents advance XX% with California Dakota Dickinson evolving North for innovation. our us XXXX. States two XXXX. second in a XX% allocated diesel In facility. intensity midstream the landscape lastly, our help capital of intensity projects. fuels growth renewable renewable XXXX our to facility, we its by fresh a XXXX, of began We've tool, are diesel by significant methane Second, late kind Martinez, our in conversion energy United production, the renewable and of

a a downstream sustainable our the industry component compensation these on is led diversity and metrics and Safety operations process the reduction safety link in equity reduction same our to the us as way an link and employees, metric. and do in program pervasive our portion we environmental bonus last safety we significant company well, demonstrate to diversity sustainability focus GHG in over to XX% executives XXXX. to teams improving independent a key to U.S. ESG XX% making demonstrated of compensation performance, reductions a events designated to our strong in In most the to linking making for incidents XXXX, Finally, we inclusion in year. another recently in intensity operations. the first We annual including all nearly environmental introduced

it to over and quarter turn performance to to for average midstream industry second personal sectors. U.S. I'd to than be safety point, this review Maryann Our better like the At continues results. refining

Maryann Mannen

of includes the provides was generated adjusted results approximately months, quarter. from our Mike. Cash an capital, This capital for business, morning, Adjusted Thanks, as billion continuing as continuing six, financial working This operating time exceeded XX prior first quarter. EBITDA results. dividend billion well reported ongoing our we operations. we billion, $X.XXX per operations, $X distributions. in quarter from of summary the second from both nearly for and was the And and increase the earnings discontinued excluding $X.XX. cash $X.XXX of which is needs share the flow Slide the that commitments, covered a

dividend this Speedway portfolio. we strengthen ongoing Finally, returned $X.X a milestone through quarter payments share repurchases. The in our to marked nearly competitive capital position to significant of of shareholders the the commitment and of sale billion close our

received billion, some So call taxes current and lower $X.X total our $X.X deferred wanted on we approximately out Speedway based proceeds to than the for of $XX Slide sale the be on our our billion; X. will key We which of original points tax cash of estimate. basis is billion

have balance the accrued We on sheet. this for

and $XX.X we earnings commitment not That X, repurchase and $XXX we the of the of information. regulatory a we proceeds. post of light of In release period, lead-up from billion post have incremental First, period routine our during couple of sale cooling In initial tender use said On number limited Therefore, purchased restricted To complete addition, stock. constraints; quarterly of our billion the billion approximately that our complete a any will is Since to in the of any shares our approximately this we within commitment by Mike transaction $X.X did off of higher return proceeds after-tax remaining the reduced the from $X close second, repurchasing adjustments be closing $X the we tender the structural Consistent debt million. that not is not in overview the present window than estimate. commencing indicative had of an to steps period capital. billion. XX are of next Slide months. billion be XX the the $XX.X mentioned to to deviation earlier, as with clear

cost have the billion. are that step our open in entering progress company repurchase beginning period cost we the we market will have precludes of a to change and us information during approximately will when have on may buy an trading. we for otherwise And we from X, updates the program the made our into of decreased $X lowering time, progress a provide that operating us Specifically, including XXXX, refining illustrates earnings by calls. our Slide Since structure. profile our made cost overall allow

now average in barrel trending at for While began there quarterly $X per our of is are and refining barrel operating quarter-to-quarter a $X variability, at cost XXXX XXXX. roughly per

overall our reduce committed cost we $XXX to structure corporate be expenses. ourselves the that applied same operating million. cost believe to variations as have refining to challenging corporate day we these We for costs are we quarter-to-quarter use more by costs ways framework on have every And well. we There lowered may our in than discipline cost

As gas per in you quarter. nearly and recently a increased MMBtu, costs this $X cost have natural know, the being third a anticipate operating headwind refinery, we variable is for a these

employees, in cost our assets reflect customers, health communities operate commitment our the we which in on results our and to focus our and of steadfast While our day operate. every discipline, safety we safely and remain the protect

change in refining operations. our million jeopardize from As in from be revenue EBITDA quarter adjusted Slide adjusted of reconciliation our shared the was impact reductions primarily way to income $XXX net XXXX. previously, well sequential the higher first XXXX we EBITDA second the EBITDA shows cost safety with not should and marketing. our no to than or and opportunities driven have more quarter-over-quarter as as you quarter Adjusted sustainable, XX people by

include we sale. of the results mentioned, closing As previously Speedway this quarter's impacts the

sale provision of pretax for $XX.X Here billion, costs. million billion of tax transaction you income. cash deferred across includes on gain adjustments $XX.X tax financial is resulting the of which related see and other our in Slide $X The billion the the walks through in The three taxes specific $X.X reflected sale financial billion adjustments of statements. column impact provision, reflects appendix me, the sale financial the net tax in the excuse gain net impairments on the Speedway $XX reflected quarterly our impact. impacts XX and can

to expenses adjusted include in two first important capacity, first an was driven been XXXX Moving high of region despite since The the in EBITDA to our the second was quarter. XX% EBITDA to second relatively XX% which have results; of the from refineries as of versus the cost and segment the XX% in million. idled XXXX. quarter XXXX. quarter first in compared cracks was was especially XX refining quarter and utilization, to It's positive million quarter margins, the the were second higher with change discipline the the in our quarter that region's primarily start of for shows improved idled our increase the overview the provides cost. would XX% to XX segment. the XXXX; an XX% pandemic quarter in utilization, XXXX slide team's increased contributing that we the results COVID refining approximately increase flat of previous that variable $XXX the by cost when higher XXXX. consecutive a Also subsequently in commitment quarter, reflecting improved quarter. If Operating utilization EBITDA rising Mid-Con first increase recorded the of Slide $XXX of first recall This despite of midstream adjusted versus in business to Slide with the to marketing of

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

by Here again, elements XXXX, and consolidated structure priorities MPLX lowering their our in and operations. the decreased continued executing the of continues the the optimization. quarter. have portfolio of excellent structural cost for estimate reflects change will second cash $XXX By strategic on to capital of the our continuing team million. It XX, presents costs strict both we position that just discipline, Slide make progress end the

with flat Changes We specifically Within items working changes in working out were related capital Speedway called the by before to the cash close. this provided a prices million, seasonal was continuing inventory receivable $XXX balance capital mostly which have in Speedway and refined was more the customer large quarter. in typical increasing operating flow becoming billion operations, also offset of a $X.X third-party quarter builds. source than product crude

billion. $X.X by debt decreased MPC quarter, the During

Additionally, MPC of through worth dividend to $XXX billion $XXX approximately of during such of MPLX million quarter. reduced $XXX higher shareholders and At returning returned $XX.X repurchased With debt certificates capital Speedway proceeds. deposit. to short-term as in the using MPC million the investments, commercial third-party quarter, return our the end paper shares million and by and cash respect had

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

turnaround Planned be Mandan volumes throughput total of and region. X.X barrels expect per third We will quarter. are majority projected the in the Mid-Con approximately refineries day. activity The at our costs in be of million million $XXX Robinson roughly to the

As Other is activity we are well. year. time as have expenses coordinated turnaround occur this previously operating mentioned, during half back our periods these weighted to

be you And our projected are guided for million to barrel $XXX with costs $XXX let basis. over costs to the $XXX billion to have quarter seeing turn are that, operating annual the Corporate expected and are Distribution $X.XX second the me so in $X.X consistent per million, are Total for costumes for the the an back Kristina. quarter. impact costs been to excuse – quarter. With the approximately in billion third quarter. approximately removed me, reflecting on that costs be the be expected call

Kristina Kazarian

Maryann. Thanks,

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

now questions. to Operator? open will the call We

Operator

you. Thank

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

is line Your open.

Neil Mehta

and team, quarter. results morning, Good nice here this

The had first question was just of capital the returns. execution about I

said, Just next be return to it? how months. you to the And talk than returns? over just a say capital of to in to market? capital a on will anything consideration the there little Is other back you any And about here executing bit buyback? form for you fair to is ratably the buyback of it XX going the plan you to executing capital XX a it have billion it's As in to be – $X return shareholders

Maryann Mannen

planning the open Neil. and after call are it's commencing our good what and on we call. Maryann program Sure, Yes, we that will morning. repurchase would here Hi. market immediately begin

options for options We and have remain we've ASR all you possibility here that commitment us, open-market would XX billion shared still be Those all on as to with in a including program and the the but purchase, that an the next that tender. reiterated we the best right call, those we that return for way now. viable in achieve of XX $X to now tools, past, and for us of the to right through the believe months purchase open-market all remaining

Neil Mehta

is approach in averaging as next execution? believe is to you the Maryann, you Or And guys think XX share you ratably? to be volatility? Do opportunistic repurchases Just your want you repurchase, to that that about on the or do opportunistic? view it do want that XX right to to talk the would months cost about be around over strategy

Maryann Mannen

Sure, Neil.

repurchase we during believe look, think, using that the this program an using control some this is I open-market is for certainly period. the over we us that opportunistic is period approach believe time have reason approach we an why over we're time and best

opportunistic approach time we period. certainly, So be would an during using this

Neil Mehta

Thanks. right. All

Operator

next Our comes question with Leggate from of America. Doug Bank

You may proceed.

Doug Leggate

I'm murmurings your at strategy for that plays curious MLPs. thoughts just morning, Good that hard change is any and structures the guess, Yes, ownership administration a you there's can it out? might take MPLX, offer could perspective thank your look how you. everybody. something Mike, around the structure on like current around I partnership if – there Biden if

Mike Hennigan

Doug, a question. Yes, it's good

obviously, administration in So they pay for that the with the out with they and agenda programs they're there, have have ways change the to that place. for looking

its dynamic. that for right that don't couple involved MLP is the the of stay a side probability, So – it's to we Obviously, would of asking dynamic. lose status. there. we're change, thinking what's still the if with though, I it think we structure and think that going its don't think are We status, are we to Doug, partnership sure. I right bills our is now, because going you, the our tax tell think Obviously, it tax the did in there's aware change. know we it potential on would don't But if you're change would now, we maintain will

structure others asked of we billion lost. entity $XXX if a past. million to a looking of that So have, around MLP it's one obviously, that the the to a an MPLX. the at is play. I we dynamics largest, immediate number reason partnership to this predominantly There's MPC cash size why two the be as for all I which at corp. more it know was flow cash have sudden, ongoing the of mean, And to you're impact in would the $X One taxed is that the change maintain into to of would C converting come then, all occur compared obviously. And tax is importantly unitholders, that flow

understand mode. of us cons the we pros keeps MLP At same cash some and that having structure. we in flow think So of the time, the the

So the as structure we still in it the different, something flow does the tax we'll additional us administration short that a change, obviously, cash if adapt burden. But to if accordingly. opposed the rules gives support term, because

Doug Leggate

not that with you're administration the discussions around this issue. you've presumably, Yes, particular aware of any had then

Mike Hennigan

mean, we for that No, advocacies it. against that know there's are and some it some I

day, the that of the MLP Whatever we'll here, it trying is will politics happens, now, not the call the it status but right partnership to way we think we I'm will structure way intel is. think at for But the to Doug. adjust Our end the stay stay it, is.

Doug Leggate

Thank to that question the put a on follow-on just guess, you. to follow-up you kind I sure buybacks some my very I'm is, as you're of numbers familiar Mike, to with.

share mid-XXs, billion, a touched around there's capitalization, would buyback put market you left but obviously, us little be out value way? that when enough. that's half for capitalization. it current how of the strip publicly $XX you remaining than you more a that a bit, about know billion, the of you're of frame wondering that $XX when context, you've on MPLX. of impactful. if value big microchip what to can would Your in with tackle scale is of it the think your implies I I'm traded you market And which that just buyback you Clearly, intend

Just curious forward over that next how about think XX you moving the months.

Mike Hennigan

it's have. Yes, I problem to good would Doug, say a

returning committed some committed were mean, a details, time, billion. in closed We a Maryann it's for remarks, billion. are through we've and – I end $XX the to capital. about said that $XX.X saying of long worked as the we we – are we over of the now her day, little At

out play some sheet. to how some continue have taken committed to and we've out, prioritized We've to $XX maintained We've billion. We the debt there. dry things see balance powder

announcement the tender. reiterated investors that total throughout and So time said and far possible. it opposed we from the as quickly we as quickly, close, Dutch to to market spoke The had meet as the liquidity. billion we what as out commitment a we offered to $X to wanted our efficiently of do offered To as

open Now market Maryann are, we're in be opportunistic we said go in environment. as more to an remarks, the going and

some to want time. going the that? from To to that people changed thought So is your to Nothing that. large Maryann a committed said, there. committed questions And of get has to still we we is take reiterate, process in as It are we are our it we is number. point,

We volume we trading of the have are shares. our the we and liquidity by that in amount limited have

returning And but of the we're we we that each going on the constraint we'll quarter, market So the program, update part have, results. obviously, into and is this it. committed to go are that to

Doug Leggate

taking my for Mike, Thanks, questions.

Mike Hennigan

Thank Doug. welcome, you. You're

Operator

hear Read Fargo. will with we from Next, Roger Wells

line open. is Your

Roger Read

morning. thank Yes, Good you.

contribution to renewable I curious oil? soybean Dickinson detour North you've it the diesel got running. saw on we there? running the If could was the feedstocks the of Martinez, any business. off the And quick expect a views quarter? what is be Mid-Continent incremental up you side on Dakota and over give improve us take me Let facility the Obviously, do start-up this to in that you its profit then, to

Mike Hennigan

Go Roger. So I'm question, it's you give Dickinson? Ray to a let good going specific Ray. on some ahead,

Ray Brooks

is Roger, this morning, Brooks. Good Ray

and a how it's want running. Just about talk bit Dickinson to little

is you now. running and up alluded, Dickinson As

gallons quarter, second XXX did million good about the year, capacity a During we're happy our and design we of news, reach that.

the of about renewable mid-XXs, did operationally we were to the that. so thing diesel other happy seeking reach The we're yields we get and is in

far soybean of As oil economics know, to XX:XX design as basically few as are the of What things. doing proud and Dickinson a was the every oil. soybean is optimize And team the you oil for I'm really probably now. day we're an distilled is feedstocks, challenged right mix seeking corn

to of having from our we're the the from First, operation carbon design optimizing success get optimize lowest the and – we're in basis operations, also to slate feed regard. intensity and that the the some facility then, within the

it's is second-largest And now, said, – running, I So it's diesel and it's the how States. up the right renewable that's Dickinson plant really in running. United like

Mike Hennigan

thinking I in we're as feedstocks. say again. was Mike this on about That's Martinez, to question players. your to it's far to what second disclose still just many with going going Roger, at discussion not point as the we're

in remarks can't really I the that feel prepared well. well, So other from what lot our going than that aspects. the on We of said still good comment really about we a project is permitting the is going engineering

give that we'll more by. So goes as color you time on

Roger Read

up. got And a progress R&M aspects overall there pushing in made gas may natural you just goal know Maryann, your question, can great. you was natural unfortunately. just some down being maybe need as Are it prices then, for curious goes as here? course, inflationary be comment you, that always and of there's you've but sector up. what the quickly there, for I go Okay, cut recognizing, to to because I costs there, an against gas the watch else other we any offset about follow-up about

Maryann Mannen

inflationary to your Yes, as to impact as we're have we right this I at would see you're didn't of juncture quarter. any question looking obviously, third certainly, negative see we now, first a around right. third natural it a is anything. nothing it And tailwind – really the aspects, quarter. point the that nothing There's would that that to at specific say there's on other significance gas we

Roger Read

Okay, thank you.

Operator

Credit comes from question Our Manav Suisse. Gupta with next

open. is line Your

Manav Gupta

thing the took when I over be know refining flow everything during you cash free has you was and flow but to free one took congratulations. was you first, stressed the over pandemic, cash in which portfolio Mike, So positive.

million made you or about $XXX cash, goal. think, that free I on in congratulations so $XXX achieving million

Mike Hennigan

Manav. Thanks,

Manav Gupta

My like is essentially, dividend I and equation? you buyback those giving is I the look where expenses can and are on your at $XXX in And of $X.X at dividend about only a obligation we $XXX you free look question quarter, billion there's you cash million like billion, the look flow, or at you the like to refining do here $XXX $X.X MPLX if about million so $XXX corporate current If cash then, lines. overall once that this Even to million contributes and million meet obligation your dividend obligation. reduction. execute like

So to flow cash actually do the these positive thinking refining correctly? is, free that free what not meet Am to but I'm make need not about cash not you parameters a trying flow to refining will get obligation. positive a dividend I

Mike Hennigan

general. Yes, Manav, in are you

relationship things the our sometimes miss as with you're out. of I people MPLX one think, pointing is that

MPLX, distribution back current level get that into we So do the at coming at MPC. billion $X.X

a I capital well. you're It's distribution the of excess positive and cash that of Right we today, that's structure one is think flow beyond So the uniquenesses right. as MPLX generating have.

is flexibility well. partnership financial as increasing So the at

right. So thinking that think good pretty I in standpoint, position it about I a think, you're we're and from

Manav Gupta

lowering year Okay. mean, year. And is OpEx per the barrel. done the about a I job is, you follow-up of over – XX% a have down good done It team quick here very has

or the Gallup of Martinez, two down? which to portfolio or in you closure is are the the of material assets, Bay push whether and the come in, OpEx the which barrel other refining, wherever, Galveston part where the it was besides these So reductions per allowing have assets

Mike Hennigan

whole across support and done really Ray as well. job Yes, refining All the side a nice side. team the portfolio. have occurred Manav, done it's really functions on have corporate the that on the

part cost. is be a to us The it to knows high for DNA conscious the time. all very, team of So be about my that's priority going very

able come a runs there. just up OpEx with Maryann we've variable if consistent come of level anything, back pretty fact, refining as recovery, kind maintain up, have of been costs In but the have mentioned, to

do going we're of good But So business, the on portfolio, for up. refining the story natural to in potentially us. also that's to challenge continue been side of gas business. the both We a overall, the midstream side have, again, the going

For to million of reductions at listened that that we those business stated about had $XXX out originally cost who about take now MPLX. that call, $XXX $XXX we well. pretty that million, increased feel of MPLX about we can to We've another the as million comfortable

to highest to continue original times portfolio this that pandemic said portfolio. all us I'm remember have did it's to we're a for want afterwards, evaluating look mantra So in, and but you portfolio. optimize focus that we all in are And couple we're our the closures. I to get of point, your we is driver They continue system facilities, to that to going going I were going believe to never a evaluate still opportunities cost I've need That's us. that an all generate am a flow. look couple our area to that people to That's cash but hoping free We'll what for change. assets be of have glad to we like to for we the at back things environment to And your point, out our where a our that can. see I of assets and of times.

Manav Gupta

Thank you questions. so my taking much for

Mike Hennigan

You're welcome, Manav.

Operator

from question Gresh with next come will Our JP Morgan. Phil

open. is line Your

Phil Gresh

morning. good Yes, hi,

proceeds, the additional buybacks. noted, expected. $XXX The were higher than as million just you question, one First on one

quarter. I billion-plus still $X a think, the tax you have refund third coming in here

question the past? way time potentially returning shareholders, you about to another you've ability about capital buyback other uses think balance the see the the So of what said besides target? Or over perhaps in $XX to exceed the cash are should how given for is, we there sheet asking would billion the

Maryann Mannen

Maryann. capital know, Phil, for $XX Yes, question. as we've really of the focused use return. billion you Hey, sharing it's on been as Thanks been the just we've you proceeds, the with

back from coming know the state very we have billion As clearly, CARES $X.X you Act. we roughly

that expectation. We the quarter continue lion's is third the quarter, – and frankly, about the of to third our expect share in late receive to in

So you're as as of good right, initial that $XX we've we go the at the But really balance billion the capital would not not proceeds, incremental will evaluate we as have continue make in continue to sheet. look we'll and $X right billion that to remaining well the beyond form around return. that really declared now whether or decision

grade did you I that was rating the – three investment ensure the intent to reconfirm our agencies know maintained that. as obviously, think, we you also you've seen hopefully

grade balance – proceeds So that focus by those use we to of again, we on of if continue be evaluate that you do and sheet to have We as all But that nimble, go again forward. will a continue sure certainly will investment the on maintains will. three agencies.

Phil Gresh

there's no the targets balance clarify, or you've debt change To absolute cash in past? to set the

Maryann. Mannen

got MPC, now That’s billion for Right, right. long-term of $X about debt. we've

We trying about this as We'll cleared that. know, As than was our billion in bit evaluate over saw to to sitting we you quarter; that actually shared point, anything you that. we little frankly, on with a in off did we $X.X XXX. immediately, continue took really more efficient were as well. be we revolver But a we initially, as that you the at

$X.X initial So that we've reduction. beyond anything not debt moved of billion

Phil Gresh

it. Got

and how XXXX are, consider Where you journey third for are despite that here? operating do Okay. we as look I feel in XXXX the you this lower what OpEx are we but across you A when barrel peers a gas. follow-up, are is higher regional at just along obviously Mike you Nat cost Particularly doing? one of over on OpEx here peers benchmark guess to throughput more higher quarter fact reduction differences $X and far is equation. do there in the With think to the the portfolios, cost

Mike Hennigan

Yes.

So how is, always question is far game. along like tough said it's ending a I never because earlier a

to opportunity, for going to but improvements going Obviously we we've to originally gotten part We we're every call, going quote Ray operator. ourselves. lion's of going chance get, that to challenge continue. am We'll the continue not of after change, be here. look I'll deserves every our targeted So that. of we've in to inning and from we're to done. lot that It's first business, last to it's not ninth something we're a not some to And push get in be book. made look DNA, a we're the we're to need share incremental I the that meaningful at get low a continue inning. to but down. this team believer the from we're that The cost in we credit

time just I to as up just can. million where to being we And we'll watching have put lean challenge as disclosures you be we my still has We're bring Like I to keep as to down run can $XXX happening, but we ourselves going quarter-to-quarter. going and is a of really played. we lean as all guidance another game and And it. just, obviously at continue down. from to what's additional earlier sacrificing we'll can anybody the million So as see And our the results tell mantra. sustainable played it'll talking opportunity safety; to mentioned not at is $XXX run moved those keep important about we're just midstream ourselves you to without that's jeopardy,

we We're now space about ball Still well; it good comfortable people the we'll can keep that. were in for feel our we're and to the we as going with as opportunities we on that be number. the as to far look to as eye that challenging costs, continue be. as telling midstream So lean so

Phil Gresh

the Thanks Yes. thoughts. for

Mike Hennigan

Phil. welcome, You're

Operator

next will Chen Barclays. question with Theresa Our come from

open. line Your is

Theresa Chen

first Good the the relatively has for and that with front; recovered you the diesel refining quarter demand gasoline near-term. front as the I on it completely morning. second to well in landscape optimistic third the achieved mostly on and given that indicate utilization as the guidance about outlook the macro ask to a wanted the seems maybe quarter, for

off just So to XX% comments generally, agree that demand the capping being still so, are utilization your with views refining half? on would you is here? from about your second what's guidance what or in the profitability that? jet And And related

Mike Hennigan

other I was guess hopeful, the guys I'll sorry, the we Theresa, jump Yes. term but let in. use cautious.

then U.S. are environment but very coming inside coast What still tough a we're reason more that been U.S. continue the obviously, it for The recovering in has than is come is that'll today. will out up it the other So to variant lag areas. environment over a U.S. our And so. Outside pointed right we're we of last spiking hopeful west the cautious, we difficult we've still we continue still for a But was the is things. out eventually lot to view, the a in of lagging. in back. that some Delta are Jet you is the pointed year is particularly of and couple lagging, do seen and still much time, that however, the now, out fuel lagging and one is

we're increased the a as to seen we've itself and restraint seeing So result as second year. see we're with of will from rates to there spread have are another approach out be see to are vaccination to into increase before. Theresa, variant people if, the be going the continues how COVID, Hopefully where have infection, half obviously going like on to you, if some this plays be today. going we to to And not, winter honest there's season they demand the hopefully

there think a to originally, to but think responses needs go good level. I I it another was

plow. have hopeful out and to wants this, wants anybody coming hopeful vaccinated. Nobody add. that mean, others obviously have some road and And the outlook use of you the that's that we why have take will add. word we we're caution to So we're that still to think cautious I get people general, in that I But we but same recovering; is

Theresa Chen

conversion own on processing have spend cap the this needing Martinez, you from keeping the MPLX – ticket Is to participating cash its flowing. that bigger it items the is terminal and would upstairs the at And entity decide free healthy it some Martinez assets of conversion off down contribute If fully throwing once flow that between a value. midstream amount even on imagine housing or the units, strategy this you midstream question balance reversed. to the related fast-forward unit, some just we about previous with just fully or the that flowing is, once down and good you the when think Fair something cost boil came of think When on in following is currently, of point the for believe, sheet call would flexibility enough. cash project? would insulate light ladder, leave all have that up fully second such up of line my a thinking, about I in this to didn't is between pretty to within it as MPLX, the of and down Because and really MPLX pre-treatment a until things could cash your I at that with preference fund different I capital if meaningfully like the dropping two? there you to drop the

Mike Hennigan

there, was That a long Theresa. one

Let me apart. break see I it can if

to unit both unique that us look do have MPC I value message main holders. to that enables the think and a structure NPLS asking we is create for that shareholders you're

lot the of have dynamics ability opportunities, on into it's case There's no is sides. earlier, figure of individual each that basis. and create we of it. there down go thumb rule value how both sit to case stated by The a can you out do to of specifics So to but what we

and not we gets we is There's create value decide this. do to I having a, a create Every flexibility and structures, two hey, best MPC rule between enables way of you is it's instance do obviously MPLX want what not thumb. the to So, with, But there's leave at value. this the the most its own think debate to the the discussion, our and goal that. and we

Theresa Chen

you. Thank

Mike Hennigan

welcome. You're

Operator

hear with from Next Paul Scotiabank. we will Cheng

is open. Your line

Kristina Kazarian

with Paul, are right. let's Paul us, move you Paul? by All have you next mute if on then to re-prompt today? caller Paul. us any with the Operator, and Hey there Are can chance, we you're

Operator

you. Thank

Next, hear with Margolin from then Research. will Wolfe we Sam

proceed. may You

Sam Margolin

Good morning. Thank you.

Mike Hennigan

Good morning, Sam.

Sam Margolin

start-up; and on you're and I'll it initial Question itself something, when eventually in to wonder that end refining the similar price contextualize sort unit the about on which way might feedstock I thinking complex is period commodities Martinez expectation that peer its their performance price starts-up score, within the on an before CI how value. that your there's the pre-treatment said, just with market of the

Or kind run of whether may And profitability Martinez thinking about enter wondering as I that make that if the starts a rate the that easier? a is and going? whether you're expectation PTU operations that a was really until up just so is PTU before possible shouldn't outcome, little

Ray Brooks

your is this I'll is take this Sam, and Hey, Ray, question.

You're right.

project it mix. and feedstock have a the and the on phases we develop different – will Martinez As phases comes different

I to I so And initial pre-treatment mix? on is, of too is did good Phase going have receive like thing want slate, offers capabilities we without X, What system feel Phase optionality or was And project, strong when project, other to ability want and around to between to like having for it's oil-based still I'll our we though the going optimize get, The logistics we feedstock around feedstock pre-treatment is come we with even to it – unit – Martinez like don't the truck that a X. be that and – very a Phase this we're Phase to about we assets, as conservative to still work water with if and I optimize optimize essentially without a lot at the slate. hydroprocessing how the into rail emphasize most X soybean that looked would talk Mike and to said get feedstock Phase about and us. all but is the at Martinez, that capabilities with different we of the it looked whether feedstock I we X availability, system. the said; don't much

Mike Hennigan

at I a really Martinez really drivers us Ray said. and think CapEx is Sam, several one know market the major we competitive we But its the factors. good that your One, about when was mean, this. OpEx Mike. is of situation, add what and we I'm have I looked goes? the just where to feel question going makes that to thing on depending

is strong logistics; rail, opportunity sitting truck, in we're the have really really, have pipeline, then a we mentioned, there just the water, we're ultimate of we value. on lot Ray And demand. provide where as California, to logistics Second

location So also matters.

factors regardless like that flow how Martinez commodity location to in the all asset ebb and it of out. those market? happens play that what to and that get it the to those of that other so takes are I the that have, the in our makes day we regardless day-to-day; we're we're run, favor hope there, marketplace in logistics going on sense. every reason we day have, just is CapEx bullish the move So of that commodity our and place will OpEx The The

Sam Margolin

because Understood. RINs And satisfy that follow-up outcomes you RVO. your through of there's in hard realizations because then follow that on are blending, and just have to marketing MPC's advantaged effects obligation embedded elements the to in different RINs Yes. them. of DX but some terms

you blending So just on gasoline navigate and I about sort the share net was wondering if you there's can anything how of the effect of it. side

and RINs that volatile maybe go-forward means what the environment sort on Just of basis? Thanks. a

Brian Partee

this Yes, Partee. take can question. is that Sam, Brian I

think about out blended a do down is chain. further a I little zoom thing just would sale actually bit actually first value is So, the and

it's going a that a sales and doesn't sale bulk to naturally margin say rant a component higher or it. blend have be So a to

that in from that XX% to RBO. from publicly stated perspective we're an XX% blend we've So

just chain. we're down naturally value the So further

hit volatility is things, you important. though. a on think I of couple The

how RVO of volatility RIN outperform those depending the meet months strategy. for – execute compliance an high program now really on in and is compliance in and provides a obligations. XX execution we're window, in actually we an that And the probably it's compliance the So underperformed or you your the your environment opportunities it's

Its in program? our reward, but does something we what around also the is as blend, from not the but probably now nickel, a been high marketplace transparent in opportunity. with RIN high feel to that both environment, are of on historically so. that as that's perspective or this risk On to confident provide compliance we execute we an ability So it blended

Sam Margolin

much. so Thanks

Brian Partee

bet. You

Operator

Our question Cowen. next from Gabelman come with Jason will

is line open. Your

Jason Gabelman

buying change where question, my was questions. Sam relative I've asked just seen XXXX, still for and a been Yes. to a or value the meaning in it's the that blending financial the thanks it for because RINs benefits this bit various is costs I'll try you which in proposition suggested it ask is Hey, taking go environment XXXX, having for value differently, offsets biofuels there, to changed out blending that to proposition of value actually has reasons. the little the

Brian Partee

is Yes. Jason, yes, that. this I can Brian Partee, take and

the and is through. pass great debate the of that costs, rant empirically point RFS the think a as I to the and very pass-through to it's difficult

back down execution fall it's points again, execution really of on difference side where It gets pinpoint So, I'll that thing? live, till to today, between today, side in that's the of performance things. really referenced data the but the to the And difficult any I very think to XXXX boiled you back

Jason Gabelman

an $XX just about like me, account margin discuss then you that the Can just it's appears that? was refining time There other a and excuse and marketing benefit question. what from a income, other million Okay. been first there. quick income, drove

Maryann Mannen

not sorry, repeat question. I'm again? I'm Could benefit saying your following in in I'm $XX you million sorry, you Jason, the, Maryann. an question the quarter. its You're

Jason Gabelman

Yes.

and line margin. quarter, in the other a refining income For the included item marketing

Maryann Mannen

Yes. to Jason, we'll and take a come look that? at that back you you. for How's we'll

Jason Gabelman

Okay, Thanks. That's All great. right.

Maryann Mannen

Yes.

Operator

Instructions] [Operator you. Thank

Kristina Kazarian

joining for if Sheila, there to no questions queue other us. we today, right, are everyone All wanted in thank the

any questions, to a we outstanding everyone Thank free If here and our time, call be great you to will you and do at day. please help. reach out team in have have point for to joining feel today our any

Operator

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

at time. may this You disconnect

Marathon Petroleum (MPC) 5 Aug 212021 Q2 Earnings call transcript