MPC - Earnings call transcript Q4 2021 | Marathon Petroleum Corporation

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Operator

Welcome to the MPC Fourth Quarter 2021 Earnings Call. My name is Sheila, and I will be your operator for today's call. [Operator Instructions]. Please note that this conference is being recorded. I will now turn the call over to Kristina Kazarian. begin. may you Kristina,

Kristina Kazarian

Petroleum that Quarter be accompany at Investors our Marathon Call. found Earnings The website tab. the under slides this marathonpetroleum.com Corporation's to XXXX Fourth Conference on Welcome call can

call the other to X. and the read on today safe of me are Hennigan, statements Mannen, members invite CEO; We team. harbor Mike executive the CFO; Maryann you Slide Joining on

as differ that forward-looking as there We Actual Factors the during actual today. reflects turn MPLX. filings excluding making our MPC the well MPC with today stand-alone differ. statements References could will are the that, results with to be Mike. may results cause I'll prepared to over remarks call And capital, included spending in SEC. capital to

Michael Hennigan

for thanks joining and morning, our good and Kristina, call. Thanks,

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

the meet despite held seeing in quarter, to continuing up fourth seasonal And variant demand highway on well. the widespread diesel, we're records. or cases, volumes gasoline surge During exceed trucking Omicron

tight positioned the recover. remain will be winter and inventories margins recovery the about Based for We pace While fuels quarter, this below we we've it's concerned Light in this business to still the believe impact. XXXX. as trends on we product of see you that When with jet over we the demand months, November, refining in potential year U.S. less about the in cautious rising fourth recovery travel COVID last well expect well. XX% levels continues as in that become few demand. XXXX highs spoke roughly reached were demand suppressed, remains and transportation but post-pandemic cases to

return beginning our This puts quarter, repurchase continued complete November, That billion. that announced on an capital we've aspects commitment approximately the program. control, to our billion authorization. our board billion $X.X authorization Further our on to priorities. last shareholders, outstanding $X reinforcing us $X billion obtained to repurchased at capital earnings we brings approval of XX% for total at our we we the XXXX our are shares. repurchase spending within outlook. additional On $XX our share Since of the of made Today, approximately initial call progress business share this in approximately

for MPC $X.X expect approximately million on capital been costs Martinez' construction. will expenditures, We infrastructure Martinez concluded for refinery a and that and renewable capital approximately capital we fuels spent conversion in $XXX conducive our XX, complete milestone Report XXXX. fact $X.X Martinez, for begin as have of driven ready the billion. $XXX a with the to and progressing billion million We reached $XXX engineering conversion the period for remain Environmental billion and $X.X Approximately existing to we're is facility, leverage Impact the can committed to project retrofit, another comment At logistics. is has are refinery XX-day XXXX. million estimated to XXXX the assets the for at This Total competitive is conversion. Martinez XX% by growth date, cost December to

the Our the engaged are We've facility half negotiations in phase is sourced multiple plan already in second start-up with advantaged Martinez and for to first parties the have the feedstocks of some for 'XX. balance.

be initiatives, ADM. X between progressed be we at back additional share. we communicated. with We our our all progress Dickinson details we which recent success We'll joint the X last sales Our when XXXX, of example our this are process highlights to venture would joint We're we of common existing strategic also and optimize that you leveraging are that multifaceted, our and we In all this A Kenai, confident execution. to have On in facilities. Slide strategy is remain working long-term arrangements, currently ability to including Martinez. in alliances, have and capabilities can ventures X for secure since supporting space. of feedstocks been

On of that from Speedway XX-year the agreement and securing supply with the we X-Eleven. receiving sale, proceeds fuel transaction portfolio, $XX.X completed billion the

diesel facility started reached renewable exceptionally been Gallup which MPLX optimizing facility. provided to we've of convert decisions X to We and successfully made this billion operation. Dickinson produced a idle renewable Our up, $X.X flow, fuels cash strong capacity, And our and contributions to refinery MPC. strategic year, to the Martinez

reduction, our cost conduct by organization cost-reduction billion at is look in $X.X we how becoming a and embedded initiative the being as culture business. a is what embraced As now we began low-cost

Finally, on commercial.

provide share when barrels feedstock a been this up that reluctant started our for new feedstock renewable Dickinson diesel soybean its we started plant Dickinson closed biodiesel the day of have which a our which XXXX. converted will pretreatment of successfully facility, X,XXX a in January to Cincinnati commercial portfolio. pretreatment for of which day X,XXX the in facility, facility about ADM, our from will configuration plant. online in process logistically per advantaged advantaged significance items I we barrels renewable And highlight December, day March original for wanted plant. approximately much, XXXX, comes as venture up We this year, crush about we Beatrice a too to of with In I've While joint processes Dickinson a diesel barrels plan. few the In on X,XXX

Our sustainable continued on Shifting these leading we to advance look on these as sharing priorities each to updates X. builds value to for Slide strategic forward ourselves foundation We focused creation team's energy. initiatives. to continue quarter in we execution X remain and challenging a

on targets At the In company-wide progress forward over this update our well. to weeks, accomplishments coming X to turn Maryann providing an of targets fourth know these in our some have like on the stakeholders quarter many and review and we point, XXXX. GHG, our than investors call look intensity to against to of freshwater methane I'd and results. We the

Maryann Mannen

$X.XX of per $X.X notes earnings $X.XX. quarter billion December. in pretax of share make-whole to our million fourth per reported summary redeemed financial provides and results. share adjusted we a of exclude morning, X $XXX senior Adjusted premiums Slide the in Mike. related for This Thanks, of we charges earnings earnings

is a to operations, $X million Cash Additionally, higher reporting to rate. we prior which billion, the which results excluding results a $XXX XX% from an of million our was Beginning XXXX no which rate. from actual of million our results, $XXX be and prior with incremental longer the will $XXX an effective working the tax quarter for XX% tax actual capital, tax quarter, expense, adjustments on EBITDA adjust will adjusts include our increase first basis quarter. is tax billion all rate an $X.X almost Adjusted the from approximately was quarter.

the towards Finally, months illustrates during we shareholders in made since call, payments and Slide we repurchased last earnings years. progress through the the $X approximately our past quarter, we returned X the $XXX have billion cost repurchases. approximately billion shares. over million structure In $X.X lowering share have to of our X dividend X

strategy As I we things. think few on our a to cost emphasize structure, want about

the cost cost even We we of been able has $X.X lowered Refining ensure approximately reductions have employees company's the of by been of beginning compromise to integrity will the taken total Since of XXXX, out sustainable, the that the billion to we cost. roughly $X have been of maintain reductions billion. never of or are safety And cost pressures. periods our are current general during assets. committed

operating costs barrel. refining in $X per at Our began XXXX

able XXXX year were a per full While finish that we barrel to was cost with operating $X.

reduced million was corporate midstream by million. cost by Additionally, $XXX $XXX and about

to line is this more regardless expected upcycles. billion. improved bottom directly margin make the future environment, in and having resilient profitability by our of This $X.X downcycles, However, the improvement EBITDA company more is while

Slide highlight to our We Turning XXXX. for would priorities like X. to financial

First, we our sustaining communities protect employees our in and health support remain we in safely steadfast safety the operate of capital and commitment which as operate. assets, to our the

we're to Second, dividend. committed the

potential the we As shares, will of reduce we and to count returnable flow. purchase share the cash continue increase

to primarily both to is MPC execute are In strategies our return as are sheet we're a current believe can return a investments capital balance returns. believe traditional invest is In resilient attractive there on guided Third, that to and renewables, repurchases continue we a to continue needs where priorities, we capital on these by on meaningfully renewable return believe that Martinez We successfully business foundation. this cost. fuel be focused strong reduce and we will to capital the refining, used and order In spend focused conversion. share of shareholders.

We balance continue our profile. sheet to manage to investment-grade an credit

for area. MPC's MPC. key strict Moving we outlook capital to focus our $X.X on totals investment Today, focus billion. discipline. announced Slide approximately X plan capital XXXX another XXXX highlights our capital

projects XX% for of capital to $X.X spend, environmental remains overall to for STAR our remainder our on approximately large levels. fuels facility. project returns below smaller billion renewable of underpinning is and XX% approximately a other we XX% projects discipline, into Galveston the on MPC's commitment capital capital at As coastal conversion the XXXX continue approximately Martinez Of Angeles. growth already performance. remaining is focus supports safety well of spending XX% underway. Bay Los of as Garyville capital strict Sustaining growth our this The growth, completing a as At spend enhance assets projects refineries, focus primarily the that for is at the with capital and

of XXXX for sequential the primarily adjusted which will quarter-over-quarter, as us interest renewables Going $XXX adjustment a for million redemption & was operating EBITDA reconciliation increase the income in $XXX Marketing. for from make-whole debt column net adjusted to cost. the have reduce column. been pretax well projects by during help excluded quarter continue we capital that to premiums million future a Adjusted the change to driven quarter from expect the also shows XXXX. portion charges The will XX forward, quarter, fourth growth Refining third has higher as EBITDA and significant Slide EBITDA reflects from from

Gulf for turnaround activity. improvement Coast higher was with quarter sales higher The quarter overview maintenance adjusted per planned $X.X Refining of and for inventory. refinery our XX to provides regions. million prices. barrel $XXX in quarter, increased slightly of last higher fourth the and There offset an the outages. West U.S. quarter Gulf export when lower Slide increased by and Coast segment. Coast of storm-related primarily driven to EBITDA barrel expense. results. improved sales due Utilization light project natural was higher in were product The quarter. to higher expenses also and XX% to the primarily from quarter, due Gulf associated demand West last routine planned the of higher quarter recovering XX% Coast increased throughput increased third was throughput higher Moving Coast continued EBITDA the billion. increase reported Operating XXXX. Mid-Con Fourth the in XX% & margins gas increased from The margin compared margin by third and our XX%, segment business downtime from Marketing U.S. refining by with per solid production The was

the natural $X quarter the Additionally, we Slide softened $X to gas ending range the $X in the Midstream $X the coming during range. prices versus XX to shows saw change in quarter, third off in highs our EBITDA XXXX. of and

driven of our was is the crude the Working of Our in from billion cash to an the XX and working part consolidated stability Midstream in in continues in quarter, previous capital included the resiliency also cash by was position demonstrate source inventory. of quarter, was capital excludes approximate and results cash tax fourth cash received source chart. CARES quarter. $X.X billion This product with change for Operating our income tax Slide and excludes this approximately segment in we quarter. cash reduction $X for the the in the consistent $X.X quarter. earnings refund changes elements of flow and the approximately primarily billion presents which

in CARES redeemed notes As income $X.X billion MPC received in we $X.X tax quarter's senior refund the announced taxes, fourth December. of on our approximately in we last billion call, quarter. Under

quarter, XXXX & discipline. plan million Speedway capital MPC about on used XXXX. $XXX Marketing half and our tax remaining, that capital about totals MPLX, for reflects state $XX.X paid local approximately the expect offset $X.X short-term strict With $X.X billion to shareholders is million million the which of refund worth billion plan MPC dividend during remains approximately Speedway roughly the $XX our $X.X Refining for is $XX focus approximately of tax end in in Slide our provides respect spending. cash shares. $XXX of XX% At of investments. had regulatory obligation. income billion about to The to our also of billion. to quarter, taxes. capital is which investment approximately XX through continuing maintenance investment million MPC's our of and approximately excluding and first related the and million or We the repurchased against which for plan, includes we segment, compliance return There $XXX returned We billion obligation. $X.X All

recognized Our plan maintenance $XX Within of Slide million. the support billion on split joint in $XXX value our committed capture shares. billion, morning, due focus in repurchases, announced Since approximately million million our growth the we the program growth pace segment our their activities planned. for projects projects. Martinez Ongoing company of of Their commitment, our Marketing program capability complete ahead could remain investment the capital from million costs is the debt capital Also November, of included the to also $XXX support spending, XX% than capital spending ability And beginning of approximately our of majority $X.X allocated repurchase XXXX approximately our growing Marathon This in call initial of $X billion as to of are of & return puts the progress ongoing and plan foresee Coast leaving $XXX billion we million end review remaining. future to MPLX given approximately renewable billion $XX will at $XXX brands. ARCO we XXXX. corporate This sooner last and and is recent for believe enhance also lower commercial of Pipeline value. $XX approximately renewables between approximately our repayment $X.X by includes on complete we completion Gulf on marketing XXXX. conversion. will On of initially plan earnings the refining the and the of us is repurchased assets, at and our We have Bakken capital. share venture's particularly enhance capital, our their XX, Refining our

our continue $X share to capital, billion. plan increasing authorization market incremental We As repurchase recent we billion part our of long-term of return all today, to commitment our $XX the open repurchase repurchase provide although programs, to announced an authorizations using to available we our earnings an buy have us commitment. the We ongoing to we basis, during use remain and updates discussed previously complete progress allow on to programs to us programs that on call. intend will

the sheet. cash execute of some that and the As we XX balance sheet a on allowing we successful year about with times, strategy. a us foundation Slide essential cash of in our is balance longer But business. to we will many have investments. said about billion to ended being points approximately believe $X the strong short-term balance commodity our billion term, It's maintain key highlights competitive MPC we $XX.X believe of sheet. need to the

market billion always $X Additionally, bank undrawn. ensure Currently, that liquidity to revolver we fluctuations. have we we endure enough have a that is will

approximately and sheet At balance debt-to-capital We profile. target continue debt-to-capital an our investment-grade gross gross to manage is is year-end, ratio XX% to MPC's XX%. long-term our

redemption we structural XXXX. in debt any is have As the recent $X.X ratio share and that After we do our we continue until maturities December, not billion, see to approximately execute will repurchase our increase. program, current

Turning first Slide provide quarterly we to our guidance. outlook. XX,

throughput costs We first be of region. the projected million barrels quarter. expect volumes million The per day. are in majority turnaround of activity roughly the to Coast X.X the approximately will $XXX be Gulf in total Planned

billion quarter. the over back to barrel Our operating the call costs let be are the XXXX million. to for to me that, approximately to year. planned $XXX activity Total be Kristina. half-weighted Corporate Distribution costs for projected are $X.XX expected are turn With is expected per this back be turnaround quarter. costs $X.X

Kristina Kazarian

Maryann. Thanks,

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

Operator

Instructions]. [Operator

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

Doug Leggate

I I so Great the Maryann, you've new the questions, start with a think earnings. of this spoken, may. Mike, got But if your year is first time year. couple happy to I

dividend is dividend forward. be your share. is distribution maybe your is I the to way it the guess the Maryann, lower The bit question you and the when to first you today than the quite is a going from with policy frame MPLX, you're absolute a than want bit one, get burden quite on buybacks, I for done And lower going

are yield terms you are in if what we thinking you forward? with down now evolving? of around going -- thinking dividend appropriate So that what the think ratio, payout or like, of should X%, the you policy How

Maryann Mannen

of couple a maybe So things.

been sharing morning, capital First, framework capital the of the remains strategy. important allocation obviously we've as that you've an from piece this the dividend seen

the allocated program if now. where as $XXX that's share right be that's right, you're current to continue will you program, somewhere amount dividend, declining. somewhere capital the to -- complete been, at that's obviously, the we think dividend range it's of look, $XXX the you look repurchase As of in versus capital We towards our -- million million

continue short We repurchase in think that. to term is that an of appropriate the allocation share

a consider manner. that capital As we dividend that any again, change. meaning evaluate think appropriate share to of to But we're in timing that more what at difference providing normal we the continue complete certainly we to in be an allocation a structure the we'll would dividend payment, you environment, when in we that get look repurchase,

Michael Hennigan

it's Mike. Doug,

just bit a Mary's to comments. little Let add me

are said. think things of One Mary the may be to as we that still the misconstrued dividend, I getting committed is just

balance did with a operating as situation last saw, since we billion in billion in the call. the sitting sheet And return mean about bit $XX large just you I little normal cash $X we're a different of about flow. a than However, on we're program.

right share out But of we balance the more capital. committed the magnitude, dividend now, sheet. until far the as of a to proportion relative to normal of returning just get repurchase So as order is we're to size

we're dividend. to want think people I committed So to not don't the

We lot it, to program. hope are said. just as I a that right going return the the into we're of putting the But Mary buyback evaluate in effort now, helps.

Doug Leggate

It lot the above, got of does. guess. guess, level, I just you to back the could It's sub-average just a a given now share was price, And I of do yield the I you've that headroom all say. is curious at

demand headroom we a guys -- some follow-up thank on, a that. Ray you and but believe Europe, be lot a like, you if if you one if seeing maybe of little And The puts for are of Europe bit ago. in know with is refining could XX is thought advantage reset has that U.S. you there, technical what any specifically. I'm U.S. question, mismatch don't of natural the Marathon a given lot so earnings supply My for but tailwind and I of gas let's between with currently and is what or capacity, want we're changes mid-cycle another seems So that years that and if is structural terms on That whether wondering try we interested internationally say, interested saw really in And to in this, structural refiners what you've the refiners. margins to structural with or happening of and realized in on. real what's U.S. refining and of if but I'm alkylate for

Michael Hennigan

it's Doug, Mike.

that color. question. is occurring going It's Let of you products that bit over in to on Brian little Obviously, and Rick a on good to Europe. a crude put dynamic to -- me give I'm

So you Brian? start, why don't

Brian Partee

Great question. Brian. sure. This Yes, is

is in volatility X. We've $X back seen down last the to short we're Maryann the to natural early but months. mentioned the gas from several we've think over think you're gas gone peaking I on up in to prepared too comments, answer tell, now $X, $X to I her So to it.

pressure But that that these certainly we relative overseas long-term to cheap has the to directionally, just is position stay But U.S. we'll on gas decisions in supportive those that we are it But very So ultimately, over term for absolutely as It's yes, it's natural that it directionally, sustainable that we yes, to natural gas look higher believe many for put if little to The one variables. this do early the long will gas have But $X prices. a we $X anybody upside. bit and exposure supportive. have see exposure, in too tell. of range,

Doug Leggate

that from you it in have seen curious, of I'm leave there. And any imports a as shift I'll cost Europe coming disadvantage? consequence

Brian Partee

I has immediate closely. looking from the big balance that's both mean, perspective, looking actually No, pretty at here it into ARPS at, Atlantic been No one we're but the Yes. in stable. watching we're an that Basin term, thing in short import But Europe. not the fundamental changes export opportunities very yet. to the

Rick Hessling

said, is their at just add up on I'll or advantage. Rick. out just structural a that With covering an comments. seeing it's OpEx are run right a no MMBTU few now at Doug, with being or best But doubt there's costs. of Europe more we're margins because thereabouts, slight $XX higher Europe what cuts

impact yet. I So it we continues, substantially If haven't the seen story. think another that's

we're terms costs. and of all And well is Russian-Ukraine the conflict, that. we're So the I'll Brian tell. wild could watching that it's you comes it's a ultimately, exasperate result what little couple X then which said, It's in early bit But cards as aware which that a to out Nordstream closely, as also it nat with too well gas then of. still of leave of

early, either tailwind just on how a depending of a much little bit could out. So It's better too X X get plays these Doug.

Operator

come from will question Prashant next Rao with Our Citigroup.

Prashant Rao

is as sort does level And well, for guidance And to about wanted a weighted too? a have completed that And the the first, about on diesel follow-up. we to that what talk related that, But I Coast? talking you switch into impacting the dive that I all could back CapEx of is this bit. bit a renewable utilization tie see to getting to that specifically, you've in guess I on little we when turnarounds the half West sort outlined Martinez, year? of

Michael Hennigan

update? can a Martinez give Ray, you

Raymond Brooks

of before we're in to and project for about CapEx, want Thanks sure. permitting. at if Yes, question. with to into where the about that I And regards the talking kind talk get I start Martinez I

covered right address before, in the we with we've the finish period as the line. over the we And working to completed and hard public so been now, questions get December. the last X.X all permit comment months, really And [indiscernible] to

And really shovels we're the I what QX ground. in to targeting the have be the permit to done want ready so ready And is to to absolutely do we're emphasize that, and that. sequel of put end with

Our engineering is first phases. It's complete the few phase. backup for for the complete nearly

have We equipment the site. on

have We pipe, we the pilings. have the

vessels have to that We the need project. we this do

from So standpoint. we're ready that

what's Now in project, the lot I've talked why I've talked the as about I've far units, calls hydrogen a about X as about over talked Martinez power hydroprocessing the past X of couple site. And sense. generation plants. Cogen on makes

a far of spending is and what to the One money be by to ourselves. want regard. to I we're -- on, want really we renewable is is we process them be able to all to the things in driven pretreatment. emphasize that want project pretreat able As as key This what couple feedstocks,

the pretreatment about chosen. that a we've really advantages. in we're have lower that have technology CapEx, We're excited good is invested that feel we've it on a sustainability capabilities. We money will technology So spending

good other And Why to investing feel scale, a optionality. the I then that. Martinez has is Martinez logistics. Martinez? we lot emphasize about want we're in So has thing

And and as feedstocks rail, pipe bringing on and far out. we products so truck, optionality in have as water

give to on, little wanted money just I So we're spending on hey, bit in what of color XXXX. a

Prashant Rao

follow-up The sorry, I'm -- ahead. go

Michael Hennigan

a to color said. want to what bit add just more it's Prashant, Mike. little Ray Yes, I

wanted the number. is up, disclosed So have hadn't looked bit we've it it do of the we and from project have have because the Do Ray that's reason is that I to finally a been point the and we until we about has the So if competitive explain beginning OpEx at in business of talked I've this disclosed competitive work? feedstock detailed just pretty way that make little up you and logistics feedstock this and progress. CapEx? ultimately, still we Part CapEx, the to side working back

point we're discussions as CapEx we'll that all with of of negotiated goes ledger. at occurred But and lot updates that's by. we've been now the hopefully, because disclose have can that counterparties time that the that the a So on the all part comfortable a we negotiations as more felt of side different we give

think more time. for puzzle now, operating to And give whole to I is So we I little think we kind over give some -- is believe trying is a Ray, in feel the us that lower you disclosing CapEx us we that there. expenses thought the bit put of I said, as CapEx, mentioned. going what then pretty still competitive good like on coming of trying accomplish project: together but we're far the And feedstock way Ray we're OpEx, to competitive working in along logistics, side, just that we're

Prashant Rao

specifically super wanted to on the And and pick pretreatment That's helpful. you that up I feedstock highlighted. side the

came that You Beatrice last that highlighted up year.

now. got part the You've like. Cincinnati project Pretreatment is big a of Martinez, sounds it

in trying the to seeing X-parter. feedstocks right broad picture, we're where differentials a are world are tighter. getting big more One -- now what a is kind of just So between

Some scores. of timing a related I that's in bit but on that temporary and some going logistical a issues, going of debate online of upon some be reflecting CI shifts is on, shift be and think of based could projects -- might coming it to

feedstock the So is supply but what there. want leave scope is as goes you pivot it or as And bigger guess this how U.S. I you specifically how value differentials you philosophical globally up. pretreatment The about a of your sort ramp do change question on think to might pretreatment I'll within of out or what do the

Michael Hennigan

I'll off jump and to. if Mike. or then Ray let Brian I'll start like they'd in it's Prashant, Yes,

But business. and stuff. markets little making asked tried and bit not a and detail and making of of we the competitiveness we've the in of portfolio into up bit be have And got short some term, about little people the a of to But of go part got is to side we a you running reason commercial this term, One there. got me has Martinez. you'll bit things Long the with in about, can it. agree I've to I the that. you It's little you're a lot point point Dickinson commercial you're and equilibrate think see that stress test talk fast

be it's quick. commercial day seeing effort thousand portfolio feedstock barrels got get to barrels of get a advantaged up running, there, you're and our part the here converting You because the X,XXX biodiesel it's was And think day and plant. through what get I couple a really this of team a of Beatrice plant to

a will are So technical competitiveness Martinez equilibrium. we as as commercial and goes good by. explain at term, felt team. a how right. CapEx technology more partly And advantaged the full But was side able that you're I felt team we working lot in important change a be portfolio going from the your there's those the talked feeling engineering the was what good over a of be we're you commercially. that achieve getting be to Long try time. more pick will to The and But and color about about, feedstock term. what the married we it. at little also so And there, with us right same for the time, enough moment, it's it There give or engineering to To time on still feedstocks to time the is the hopefully, point, at we bit number pretreatment thoughts and to thing long we'll want having an like Ray pretreated. said,

Prashant Rao

helpful. super That's

Operator

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

Neil Mehta

me. for questions Two

The show But margins. recognize hard through is as help was strong, on you some metrics capture you refining. like on I rates other And XX, very XX, quarter. very this think XXX% to are calibrate. first to try one Slide things Slide on rate, us Capture

is, of this you things the versus down talked commercial side a are for carryforward starting some business guess dynamic? that optimizing number. the capture that the costs So a Mike, and onetime you up And much think around your the is rate about of show I how you in question to getting of do

Maryann Mannen

Neil, it's Maryann.

I'll try then give there, pass color me it Mike. Let you to and to some back

us this couple quarter. inventory quarter, In things capture in tailwind about a the appreciate I XXX% One, So in general, comments. the a We you for overall. had was saw, the quarter. of as happening

We have period-to-period. impacts inventory

at was timing ran some marketing XXX%. in quarter of seasonally quarter. actually from And crude we had We third benefited that can an margins. that. third purchased Capture we about fourth inventories strong You impacts advantage look the quarter the from running example some and as

think, did the That's of the so it And the on quarter. this baseline Mike, been I refining in and XXX%. for in again, volatility think just quarter a something about RINs. an fourth in quarter. in LCFS quarter-by-quarter, our on to I'll based like in commercial did the we've more adjustment we quarter. $XX just range a year full pass adjustment capture looking comments, for about we that been have XXXX talking the make baseline We about -- couple ratable quarter million X/X then that also And So million see lower a for now, of belongs specific for execution talking CI a of that is Dickinson benefit the the quarter-to-quarter, benefit we're in adjustment from $XX pretty historically, for of and about XX%. I'll our right we while there's the

that are the So to things And overall. benefited quarter I'll Mike. it few there back a pass

Michael Hennigan

going jump I'm want and Neil, but it I'll in looks comment, to and Yes, finish up. wants then to like Brian to add,

Brian Partee

the Yes, is question. Brian. This Neil, thanks for

optimization are just So and commercially, we improvement. hyper-focused on

as our we've initiatives. strategic clear about that been of X think key I one and pretty transparent

what's as fundamentally, cargoes. and examples, in delivered helping of our Coast. And as In really Gulf our in focused resources in and us getting with to the well. areas Gulf our alignment them we're a efficiently. We're and our And of and highlighting couple for Gulf help focused just export that to Coast, example, team. marked a just more the Coast is So The saw export book. really the aligned was in drive right the really our book, focused the right nice, helping drive We've an commercially our Really expansion on that capture. growth an our getting expansion marketing book and of we here then of improvements bit business over it's us on specific area been a export last our along the some operations better quarter color. that where better

value chain, margin down higher So we're moving capture. further the

take success blending and supply that to Caribbean lot that line position the well a had optimize Florida we of in And a in growing domestically, then our as allows developing lastly, program fourth both in business. did us internationally quarter particularly the So we've in and Caribbean. of as the into in along

I wanted things advance provide initiatives. commercial to to just help So that our we're some some color and of examples doing

Michael Hennigan

And Neil, Mike. it's

and remind spread metric things making a And happy stay drive could products making areas. of this of just still in many that I a a the you with heavy that high progress money the other dominant have main not fan a as the most metric. But I team rate are is One between to light of said that feature big times. be can capture do it. there's people if Brian the And record products is on the those of because much. in some reason lot want or low that to the many, you're I've can and I'm The -- the you have and not rate making directions. in want different that capture things

flaws. So careful got you because itself or to the metric some to a be details has into you little the got dig

I that said, with making progress? incremental Now we're Sure. that am glad

keep misalign the we that this think activities to should see direction. the keep caution, a that higher want up drive caution metric our of not. all out. influence Kristina to time But I than right to Kristina Brian that the mislead me being happen or equal, other it. team still I all do good going and I tired her overall, some saying But in that to on. that just of better said to challenging number with is up said, putting way Mary as I'm to come things factors and can just want But there's things the that want

because up be we're might that able up everybody I looking with it meantime, We come working it. know used tracks with a is yet, we and one haven't at this something but that may be come I the think to on to little better. in But

that I had caution So it on what to is, I wanted it. it is sure and make just

Neil Mehta

without number or ultimately returns? an either is clear tie that The Martinez. credit? that there. then perspective there Thanks follow-up blenders Is a early you it an the into too with back way been tie into number, on for billion. good still EBITDA out for the and lot is we about It's there to that EBITDA Or $X.X of a tax guys back with to come can

Michael Hennigan

early. is still saying earlier engaged discussions. feedstock is good Neil, little actively a was Yes, it's I What It a question. some in still we're

very So we We can't to go that so we with with thought capital is everybody, disclosure. point now to it. disclose the got that open our we could discussions

are we in the where that's So process.

some prepared were little capital we still still while our would saw those but some to some were people couldn't in disclose that thinking color it I part have negotiations. that But have of the a little bit and could is we You discussions, still And questions there secured it's we us. but of in in level time, we taken it the least remarks, We're been a some asking of that know put some out of at feedstock. give we premature.

can we going but we're that have activity we past still Now disclose some that on. piece, that,

Operator

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

Roger Read

the tell story. Congratulations of about of capture take the Neil's in things the And part the up left of on Maybe kind answer where Yes, Mike, is whole the big to costs. quarter. off. question the doesn't reduction comment, to one obviously, you made

to the look of on costs, that impact else terms think an of us to current items as we So ought any you of Gallup, what the capture. and sustainable we understand think as about product What as should at Martinez, in can to ought is on? consider is we and closure be what market that the possibility going about we as impact just environment? there And thinking quantify consider about a we we conversion help maybe of on across those

Michael Hennigan

can mentioning a say, different the doing different factors things we than direction. trying to What we increasing have think things Roger, it's be that was than other spreads to say what some themselves have of. good that by control that drive I'm we're a is Brian the metric I trying control we Yes, driven was in our of the of What capture. sometimes commercial can are metric question.

what's it. it. to happening. is you thing parts to the drill has was usually trying has to bad only And So to It metric the some I understand some have good itself say parts to down really

with said, happy just the team progress. commercial I'm I making like Now

in number drive But remarks. there's continue or the For that caution her apples-to-apples, things just higher. people it, want to some that just flaws Mary I see some like we to metric want in to that other said

said, is high like cost So of, that you side, doing we're focus. on part that everything still a and

examples that but it color about give And you little we We but details commercial people can of have a of tried way because lot of said, the the there. helps, reluctant the trying saying, thinking So we're on it, what's leave nature in it. lot listening "Hey, business, to a some focus, also Brian hoping the to as going it I'll a bit there? few regard pick competitive to a of of on of to could we me give give little a side be that you

Maryann Mannen

thinking middle in in of as One other in current sustainability now. costs you're that and the keep of cost Martinez small sustainability rate reductions, the that about the this included make, capture there that seeing add to mind conversion, as operating are -- maybe cost you're we that are

So those the you're are day-to-day conversion, already complete in seeing to capture the costs operating costs rate today. that operating it as embedded

Roger Read

obviously, focus had -- time. I the commercial been for on say question a so -- company. guess it's that another Okay. side, of well, follow-up the the I'll on That's the I other Yes.

its that work and just curious change a how leadership forward and how . see had way in there you commercial was You should going ops the I out.

Michael Hennigan

But was diminish But year. I has thought I general, and that in take to commercial team CCO the to change in again. doing change made the ultimately, don't contributor some progress good a sync do you're to expectations, necessary. Brian was Yes, very smart don't so and weren't guy nice want Roger, want a I Mike. that has want at team the been a a a referring I would guy. say, diminish And made. on He's it's we we really philosophy stuff. I say, call to level. just I'll get it occurring. this was I hear change happy their this was We warranted glad are love to said, make progress who philosophical a teams a try here I'm a change. in the that's that. I back rather think had we on us thought area. that I and I expectation the of Brian differences -- little on is was been and to word, opportunity to hyperfocused. and than today But Rick that It for make and are is with bit like there And -- track. Brian's warranted that

detail I perspective I think for we but of we of to frustrate a other have clear know of giving opportunities by lot just continue there, line us. hopefully, you'll sight people not some the things see our and little better. that help business guys it in opportunities will try can think of results, ways and we'll to understand some we explain that a from you

Roger Read

. about you No, I sell frustrated appreciate from to the from and questions coming that, it. We'll worry keep make sure don't side.

Operator

Manav comes Suisse. with Credit from question next Gupta Our

Manav Gupta

a high-class team, that question we the is that's are about about it's is to generally people what are of my putting cost trying a right, about that Martinez, X.X. $X.XX good bit $X.X And with math $X.XX. If of a my you is around CapEx Mike pre-treats $X.XX and who to really little out gallon pre-treat. seeing are build very there or hitting

highly you about XX% there, at a Dickinson bring operations are kind basis? your it of allowing And of, already that with what CapEx, is you to I where others you role allowing at this can So gallon discounted learnings on do if has level think, you which What to are talk comfort are CapEx per doing? the R&D? already from are at making what what basically about facility

Raymond Brooks

Ray. is this Manav,

at excited about gallon another Martinez about $X.XX to this about take industry and that, shot right. feel talking is why me we a capacity and project. the your we Let about compared good are for It's math which

the Martinez, plants hydrocrackers, why far As sitting the a case, and gets that's at Cogen it already X there hydro hydrogen back to toolkit as facility. that's X treaters,

pretreat investing standpoint. The and get connectivity, places those all from in So we're that rest units what piping go doing to thing that's new we're investing, a the we're investing logistics in right lot the the is big that to is system. to

So capital-efficient reconfiguring largely, us very to a Martinez the project. of allowed have

Michael Hennigan

this it's Ray I some have Mike. ultimately, we lot And reemphasize want about time actually his CapEx. mean, at a a it's to number, your give point, chose had that's the capital team thinking spend Manav, of of to thought case we and And just for. day, something higher credit I important and end a to And that mentioned. a would we lower operating more spend we good but capital. expense, a little as Ray the

project, played very lot the So pretty hasn't it's how happy little a we of it, OpEx. really the get offline, it, And good has It that of there though part a assist itself Ray about of little that a the talked and side to the on trying technical important picked the well talk was an project can important. a but that project technology us. the way just has up to very I part commerciality so the this higher that, for that's out, little to rate, choosing more was of a you about decision a discussion. lower we to pretty think, about. part into CapEx sustainability bit bring The of set but out even played go important we we we're

his trying team of not important it's side the connected better. occur part Ray commercial connectivity that those just has there's to we're that the -- makes it, that's a that [indiscernible] between today that emphasize give picking to project to the and I So engineers

number, it's said, hey, that a has and OpEx, and lower really we know in think, with OpEx a We carbon technology a and to output have the the sustainability term to because of good. it, actually that higher example, even better I went I the had So it like I was this lower. be an you're and And thinking, case long turned good we thought was case number. a out

to offline, give can details. bit some happy a And So around more it. of we're color we disclose those little

Manav Gupta

falling obviously, basis. And I cuts mean when of here everything billion Mike, you my internally dividend kind is place. almost Perfect. quarterly in to a cost the question, optimization, follow-up $X is over, post you're free took changed generating and on focus cash

some what's buybacks, debt So like level go powder even this sheet with make out understand, at on level? building is way buildup, is dry a the trying the -- start point this what is the cash could of looking like optimum and you now? balance the actually when acquisition at the I'm kind cash a just to strategic given your Or you where

Michael Hennigan

give Mary part we talk the to balance about generate look, an cash. sheet we business is is big looked you assets free a debt, part, I'll I'll the want obviously, way but So let picture at all of and this important of our

So of the you're years. pointing out something been working that we've over couple on last

then business. return position can this You We've have it We grow adjustments, -- activity, to And those really earlier, was make business like to capital a got things lot that commercial do this position, where haven't we be of put capital But capital. you as return portfolio up the that mentioned share the you a want return now. in put about a a of of position I'm via still kind to big in discussions dividend. money the cash we way. in continue so are believer a buybacks. we put shareholders. We've all challenge selective, business you choices got talking there. you of abandoned going we on so that adjust of of going that where on end right teams When in good such and so are hold we a little do we in you we we you're continue very about. position to investment, have to our this the to that selective to it at think that when have selective, be we we're to to the where are have return And ourselves tie in where good day, and and business, we'll the been of all going the put we're some this side to we'll that of the commercial that we And we'll to we're technical end put side

ahead but position at that has embraced putting to I happy free -- you forward. philosophical all generate want the ourselves we the market. where have I've that don't going the I'm of times, some in of assets same thoughts ourselves, will know, team concept, the we contribute concept as cash, many, time, So get don't said a the many control

a pricetaker part of refining. a So in we're large

our some good have of sheet to position make in volatile. So business that well. a as balance then the we And want will

So good cash the best I that. of comment the flexibility out on game, But I the think and generate create of Mary which end then if don't the good is at to way on what's the have lot know end a day, make in wants to value. some decisions business, pointed you some

Maryann Mannen

been looking additional few several a last maybe just the about sheet. balance comments. I'll the We've add quarters It's over talking Maryann. and

somewhat that, investment-grade do mentioned We've We in continue keep continue right consistent important. gross today. and and with that's say, returning the capital got share to means a right? range all We'll billion of on had debt-to-capital liquidity. with to that, mind, being ratio to to that below profile structure. sheet, got is which in billion the $X.X a normal we quarters sit Mike few We'll certainly positive done for I'll stay to of we ago more, us as That around repurchase, bit share think the improve. other work we've that lower critically say quite remaining see contemplated than of a shared But XX%. we balance repurchase you We're already as I that things that need about we've $X step. is and ensure initially we

helps. our that sustaining priorities, capital, outlined important see repurchase hope the and as for being dividend have use return then capital the we opportunistically share outlook that XXXX. We I obviously, we'll to capital

Operator

will JPMorgan. Gresh Phil next from with Our question come

Philip Gresh

around I think million clarification quarter. First question RVO Maryann, piece. just you said question, on per one the Neil's $XX

that So maintenance and/or thinking that quarter to loaded. an I per bit in showed willing in you the that what what us we by just comment, have being on just back-end fourth -- can terms be multiply annual you I would then maintenance around hoping you're if up so And a question be your was X remind more normal . specifically? year comments real my would a could level number if about? of

Maryann Mannen

course. of Yes, sure,

me be that let annual clear, for year. XXXX to So the the I adjustment is million referred $XX compliance

or reduction, for if XXXX. So the adjustment our $XX million is to obligation all will, of you total

you about fairly XXX. If the in think say to were capture a that the rate, all was $XX about quarter, that basis That's about ratable. we million. on rate impact change My on quarterly on capture so the comment in just X.X the it's including

year, obligation to hope -- answers had to question. beginning So benefit would trying prior was that I that seen at a say. That's we $XX million RVO that you I of quarters. the the have roughly all had that the

see $XXX normal to say higher turnaround greater meaning year, year, is range will, this as XXXX, our And turnaround. would $XXX half expenses. you million what second see one a toward really the absolutely we is saw what We The if we back we a rating, had think year. than you to tend guess around is, of I this of yes, normal from slightly in year. million, We

expect add a do to Mike we be higher So comments. for total any let I'll that XXXX.

Michael Hennigan

add. have don't anything I to No,

Philip Gresh

basis? any Or date, run been achievable doesn't anything second Okay. authorization, My nonrepeatable? doing it doable there would that on recognizing And you've essentially rate XQ one, is to . tripled XQ, the the Obviously, the about pace the Great. a very rate. XQ run helpful. specific think that fourth reason No, the say in has new in is not or the particular from end go-forward buybacks. that's with quarter on a is just you the that have in increase

Maryann Mannen

I'd look our that call, so committed. changing Maryann. liquidity. quarter you we've look third on quarter look, and We We I'm our done performance. we've earnings third at say, And to to know, get ability so third we'll achieved, about $XX quarter at do -- pace hopefully, getting It's our and that demonstrated to as be billion And were able certainly, I commitment. from remain the to committed the We'll done in the the likely we cadence in as again, said, XXXX absolutely we're to that sooner. initial liquidity. given that talking

Operator

more one time have question. just for do We

Scotia will with come question Paul Bank. last Our Cheng from

Paul Cheng

maybe I is Question, want earlier. think the to follow Maryann's just a one of to I Neil bit up answer housekeeping. to

You give the by you and also and talked here. us region? the the is adjustment Can adjustment. benefit that's benefit the just RVO crew benefit quick LCFS a timing about benefit the follow-up So what from inventory

that already from primarily operation have envision in accomplished -- business next rest over and the in Mike, your what also X mean, you're a or MPLX Or that is upside and opportunity back to where operation look those at Shell, of you looking at like model And mean operation? the how when going do commercial guys. I business or improvement Second should you when earlier, is think refining from Total, we by the do? that years the to envision as ago. look the into that potential years? what biggest longer you when it operation, term, facilitate the center, I the still and profit with the BP, at your really so look that that X I Sunoco XX-some-odd above mean a you for carrier, you pick. in question your that's And

Michael Hennigan

part So to the back part. I'll I'll Mary let go first second start and with your

profit are very to separate and should your us. team -- a committed yes, that. Paul, center both. answer It's question, to the for it be Rick, So Brian it's

You earlier. examples heard some

other then it of business, And totally stand-alone. making to commercial sure connectivity the a part is and that's are whole So in sync. the side the the portfolio

answer really both. the So is

chain. obligation both do across they commercial, have really really, I by the to all all linked, this and started have and when You supply well. portfolio an saying cost Again, they're

all So regard. to their have in that's do obligation, and then own one they excellence

and area like just commercial the do in something that excellence, I then area. That's Ray's have picking team excellence commercial across inside to some the earlier to the both do that goes of was excellence technology needs needs the end saying So about it. day. at of

answer philosophy. said to to not trying too So some I I'm much give the question answer little of of is Like give earlier, short to approaching your how detail, you bit a but we're the you the -- more examples Trying to both. it. go into just

then So helps, talk Mary the part. I'll that and first hopefully, let on

Paul Cheng

that which going I to to operation can do approach? just is on it or question the In by your centralized you refinery centralized a in going the they're Mike, words, that that have be that centralized? all picking? ask And . team other commercial Is that approach commercial terms one trade be operation on coordinate the are a day-to-day guys of effort, the you adjustment or operation the to or final

Michael Hennigan

Yes. Again, the answer is both.

chain we're and is entrepreneurial bit is part and trying it We little have what then of different in the of team at part regards. more to a it doing, our dedicated and look commercial to -- supply

the still So right . I answer. think both

Paul Cheng

sorry. Maryann,

Maryann Mannen

regional basis. no not No, quarter-to-quarter at worries provide those we really all. unfortunately, Yes. Yes, on movements inventory a do

something that not and not it's typically would So . we disclosed, share. actually

Paul Cheng

LCFS the a that presentation, you saw of based XXX. your appendix, the roughly impact we and XXX, the identify Can on capture I ask XX on RVO Page can on

timing? the what I So impact crude not favorable the mean break inventory total driven system have you and total . sum, that down primarily X the by Or other on is that XXX on benefits? by those you share the is can region, the

Maryann Mannen

can be Maryann. . we Maybe it's helpful? and Paul, your offline all specifically. take address of questions Would that that

Paul Cheng

be Yes, that would great.

Maryann Mannen

Sounds good.

Michael Hennigan

into always that timing the QX. again, QX QX would quarterly into Paul, add I results, QX, from only thing is, there's And watch

little activity that you and isolate if a it, a bit of misaligned like that occurred more little quarters. when I here. be careful And the team. Mary Some you Kristina there was said, can get to give bit at offline But and quarter look the tends just X across

you discussion. So the just in when that keep guys mind have

Kristina Kazarian

there? right, All you still are Sheila? Operator,

Operator

questions that time today. the all for was we had That for

Kristina Kazarian

you Perfect. call for everyone, afternoon. much, our thank this so joining Well,

addressed any out. available the you time, that today, Relations is any get you the If call questions reach on please team have just you didn't again. Investors Thank

Operator

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

disconnect at time. may You this

Marathon Petroleum (MPC) 2 Feb 222021 Q4 Earnings call transcript