MPC - Earnings call transcript Q1 2022 | Marathon Petroleum Corporation

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Operator

Welcome to the MPC First Quarter 2022 Earnings Call. My name is Elan and I will be your operator for today's call. At this time, all participants are in a listen-only mode, and later we will conduct a question-and-answer session. [Operator Instructions] Please note that this conference is being recorded. And I would now like to turn the call over to Kristina Kazarian. begin. may you Kristina

Kristina Kazarian

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

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

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

Mike Hennigan

Thanks Kristina.

The supply changes following the Before positive demand. margins where marginal we uncertainties. in have risen to Year-over-year into results the high and have environment. for demand brief reliance cover a we for stability. our seasonality a reached stable, geopolitical the been there's invasion Ukraine of been particularly more in already of get gas. market seems global a remains to natural to higher provide control and increased Russian inventories tight. boycotts wanted biggest the macro of is structure our regions on Sanctions XXXX, were trends have of would and cost part the Product end and supply and European the At most on of supply update normal have quarter, factor we events. light Global point post-COVID product outside Russian expected gasoline Distillate recover have given recent resilient has continues jet to than the

reliable and with XXXX in advantage low-cost operators. volatility safe, for continued expect We an

meet uptime volumes our us maintenance are we do market allow We and to demand. can to to on schedules to what optimizing maximize produce the focused

rates across and communities our we protect our the health do in employees, With mind, meet the first the throughput safety our We at $X.X assets, $X.X operate higher reflect commitment have steadfast safely for and earnings shares repurchased call in higher repurchased And supported in and billion billion demand. completed US EBITDA this, which of adjusted Last quarter. support capital MPLX. portfolio. the which MPC's billion results this our from billion. in system refining in delivered would utilization $XX return quarter we of the products like rising I we our regions. to we've As $X.X and last distributions shares. received in to services, XX% year operate. also our today of of coming to of remain $X.X recovery the higher anticipate commitment. We initial since we of MPLX in Through running margins quarters continued the MPC strength highlight our we billion

return and the to As MPLX continues free to significant we will its cash believe it flow, unitholders. cash capacity to public MPC have generate

and Another strengths The in Martinez existing agreement strategic the Neste our optimally to logistics support in renewable project leveraging infrastructure, located California's Martinez was complementary sustainability our by renewable This inbound project enhances and for goals, milestone our footprint with process outbound project. while with Neste and objectives the fuels. partnership strengthening utilize joint diverse will MPC's expertise. fuels LCFS venture is

once the our believe evolution Neste there renewables. the and industry additional creates of within platform shared and facility with leaders, goal partnership to collaboration to also two energy. the will is sustainable leverage manage partnership a as energy project between operate commitment leading intended in Our be for We construction this complete. execution will pursue MPC opportunities we

Additionally, MPLX. MPLX Martinez assets Logistics by remain will owned support and operated

support its and project prospects Report provide and and The methane also County will that new ability the the our second to intensity target We the below disclosures a final by emissions project XXXX excited first from will low like the Martinez In one to on quarter this certified to publish permit to MPC's existing to for XXXX we on established on focus XXXX the Impact sustainable have emissions We deliver by levels. through we remain processing Scope progress challenging shortly approval. the to the levels. XX% results. and to intensity ourselves Maryann target the three the targets. about Scope first climate became are Costa Shifting provide progressing over we below and review sustainability lead reduce reduction energy. fuels previously further absolute in goals Scope hopeful quarter, XX% annual gas process. the our said. we're in gas call on reduce a XXXX we turn reports three the enhances natural updates carbon to scenarios goals. Contra At addition Environmental of county February, to target establish greenhouse two the X, slide among I'd new climate-related to gathering In perspectives operations California's our MPLX and to point, peers

Maryann Mannen

results. Adjusted in Thanks, quarter billion reported with of was the our billion, This EBITDA Mike. financial a summary earnings $X.X we changes line capital was $X.X for which quarter excluding the is per working prior from X cash Slide share morning, flow favorable first quarter. and provides roughly operations, of $X.XX.

us primarily public lower marketing. our XXXX. not income for the approximately million from $X.X as tax refining and repurchased the $XXX rate which well Adjusted portion the benefits which in and quarter to and call. from shareholders quarter was EBITDA, between sequentially, fourth which quarter billion $X.X EBITDA as decrease taxable earnings reflects was XX%, net from XXXX returned the net shows we last MPC. change The X quarter, takes in Slide MPLX to first sequential million dividend income the driven adjusted shares, repurchased, the payments to the reconciliation by adjusted $XXX to of of During is billion through EBITDA since

the where earnings than decline the overview an of in business natural US X with refinery sequential a coupled Utilization fourth Bay lower Natural was capture well primarily the of compared of EBITDA March returned provides and in service the Margin expenses lower In as in $XXX the billion. $X.XX Gulf repaired energy was the a resulted about results. three to in headwinds Coast. gas Marketing over XX% for MMBtu of XX% were Gulf consumption primarily lower weeks. a profit average that realized West adjusted we prices our these experienced refinery lower quarter quarter. lower the the citywide with unplanned $X.X quarter, and in of two higher was Moving a January. were occurred price gas during April, in of and activities, quarter, power February, expense production, to strengthened approximately Galveston primarily approximately quarter hydrocracker Operating we fire this beginning Slide of downtime due which averaging Refining first outages. strong in after loss unit following were the as result opportunity. The Coast, for $X average project complete experienced we of to planned in higher the as or we than turnaround progresses. year, natural for segment. quarter The the the for which a rest would lost to outage. represented XX% input historically gas quarter. of the The an unplanned Later current gas prices so driven XXXX. resulted natural in experienced The the our $X.XX averaged events nearly the in expect costs. Garyville price our In first in Both & is strip in our which Henry forward MMBtu by to segment service, our year approximately to a million bringing near unit. was lower as the refineries gas reported month, our Natural be of plant has around Hub is headwind XX% were operating back result cost

Our $XXX due is MMBtu. million costs of Distribution the of $X.XX for approximately quarter per EBITDA were change every lower This barrel a first of cost. to $X per natural volumes. lower product to sensitivity approximately in sensitivity equates gas

XX%. directly want quarter. refining the majority address of and X. capture We was the the Slide marketing quarter few drove to first Turning result A headwinds. the In our capture to this factors

light Coast and associated to impacted the inventory derivative in change a product outages Gulf Midstream builds quarter XX the impacts views volatility our manage refinery and lesser with versus extent EBITDA Secondary to and fourth associated shows XXXX. our margins yields. Slide of

change demonstrate partially position portion in in offset inventory. $X.X the to MPLX resiliency Our increases our cash billion continues Slide long-term of capital excludes cash borrowings and MPC. the Midstream presents flow of earnings quarter which primarily source million the quarter. previous worth intercompany stability by in approximately crude XX increases from crude prices, $X.X driven consolidated of and this In quarter. approximate the segment working quarter, was $XXX utilizing in with oil repay elements was Working the billion under the debt changes in loan Operating capital. results the for cash March a large issued an to of proceeds product consistent by with

to our shares. $X.X MPC of billion quarter, the During worth and shareholders returned $XXX through million dividend approximately repurchased

engagement could MPC which energy Meeting from proxy starting position in in short-term billion season, initial At cash our investors the and held to as second to $XX had commitment, return the we of $XX.X shareholder the results we deliver capital appreciate complete our week, incremental concluded ourselves create XX% our on diverse Last approximately begin the Now quarter, $X future. value, we billion we the end with authorization General billion work our sustainability and quarter. focus Annual in using investments. an

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

day million We second are throughput projected relatively the million costs all activity expect be per Planned of to is X.X Expected approximately light roughly XX% and representing through spread $XXX turnaround three volumes utilization. regions. quarter. total in barrels

our on costs As barrel are natural be we costs costs Total reliably us second assets $XXX quarter. as seeing we we average be demanding. in quarter operating schedule is gas our services focused expected in our high second turnaround of top the are of and to our the and products gas to million. projected quarter expected call, for currently $X Distribution in per at $X.XX costs quarter. our increase run reflected markets are utilization Corporate remain the guidance, supplying be baseline the the cost. safely to to for the operating barrel billion expected are Earlier Mike shared mentioned, per optimized are $X.X to natural allow are for approximately sensitivity on

are we As the certain inflation focus results year two supply the impact of and areas wages chain inputs. of at look full on

XX the Slide these identify be MPC to reimbursed our capital will the against still share. continue our we XX% However, be headwind capital investment After $XXX cost Neste we of XXXX. costs. million spent system MPC's we responsible expected be The have spend responsible be MPC net will rising receive throughout for closed to-date. the the is be Notwithstanding refining sustainable all for million. will year. cost share Once reduced on Martinez billion and for its to $X.X is and JV offset executing have that of approximately reductions closed, JV. will from it’s refinery identified total the and the conversion provides to forward XX% going for to we are of XX% that, energy will capital the to cost for plan cost incremental Martinez $XXX

We closed the detailed have we JV. more a provide update once will

refining enhance me growth Coast marketing With on also our Marathon ongoing our the value reminder, our to projects turn the focus and back Kristina. a segment call over will growing our let capability particularly brands. that Gulf of from recognized and As Refining Marketing support the Arco the assets in and in

Kristina Kazarian

Thanks, Maryann.

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

Operator

today Thank first [Operator you. now begin is Goldman session. Sachs. Neil Our will we Instructions] from from the And question-and-answer question Mehta

Neil Mehta

Good morning, team.

XX% is is The around guide very question XQ good. The utilization. at around first

how then if about runs I was adjustments strong to or just your just you are current commodity that spot the system? to sure so made curious thinking any And capture optimizing the maintenance whether you its And environment? you make

Mike Hennigan

take to It's a want good you question, Neil. Ray, do that?

Ray Brooks

Thanks Neil. for question, the Sure.

As before, XXXX turnaround was loaded. plan our we've back-end said

activity. as current shouldn't spend indicated with are extrapolate quarters maximize little our you two the is second system What year as guidance. that planned quarters. at to bit quarter for determined Neil fixed means changes the and But that the really So far catalyst the first as this of second later have we seeking bed a we've at looked really we we the catalyst quarter. some the We've demands, look for had by refining

deferred the So in later year. out that we've

hard now -- right plan season run run during full really, really our really gasoline is this to year. So

Neil Mehta

amazing look Very it's years, isn't compressed How stock call think which about having fixed clear. now, we've And at discretion it well, it the the Mike? to at X.X is far done by XLE. dividend do when something then recognizing you And your come X.X%. the it in how yield it's virtue And raising sense makes have the I conversation do it's the Board. And about again? you well below think to of of the dividend

Mike Hennigan

Neil. and a we talk on it. Mary question comment lot. I'll Thanks It's another it Yes. good let about

Maryann Mannen

Yes. Hey Neil thanks.

very shared to saw you hopefully, So, we as the remain we committed capital allocation dividend. framework, our

strength where you the attention come regularly of of with plans look repurchase. at certainly recognize As near the particularly management from future getting conversations of yield to mentioned first round as through is. back with we to on in tremendous year, our the team. particularly the amount it's our It's We our Mike the are expect share And here Board. getting as just our half the you we'll a back in very to we

expect to be on to should shortly you back us you here So, that.

Operator

you. Thank

from is Doug next Our America. question of from Leggate Bank

Doug Leggate

Good everyone. morning

don't it's momentum Mary I really but for quarter. this or the Ray, is So, I for a think around second coming question know into if

as lot You out. guys had a you pointed of downtime

continuing current in this to has feel guess more in will So, environment? whether the you your the a gasoline given are whether whether spreads I'm are summer? you been what pivot distillate specifically get you relative trying or through underlying to maximize I the And for in system towards trend fire going

Ray Brooks

Doug. Sure

as your answer Let now far production. is system. question distillate to across yes. The our production right me distillate take maximize We're absolutely as working

and daily more sure And system of the distillate. real little that we're a at thing distillate on that the then looking you make the full. the hydrotreater distillate, endpoint across give maximizing that's to at total front that recoverable end we maximizing something Just color look the just is the our are

we're the but a to doing system. we're is maximize that on what has the far distillate system. our across across whether toolkit since but be refinery-to-refinery so And as distal percentage hydrocracker we depends would as that Gary, the working from hydrotreater highest have It on hydrotreaters, three, it or

Mike Hennigan

wasn't Sorry Doug clear. I

was for momentum to that the was ray. was trying up on So, you get first quarter? the that in a some like quarter into -- what the maybe I quantify that system what thank back with if handle lost you I could as you Maryann what possible? really looks go from second way opportunity And costs

Maryann Mannen

certainly Yes, Doug.

the $XXX would the for the talked right? unplanned it's issue we through as you about Galveston and again profit power lost outage So, in due about market shared we've roughly with to both Bay million said we that indicator. Garyville, then ,So opportunity, have

that come the talk about is yield as increase ability We maximize. refineries fact the lost to second the think opportunity and with that heard they back we'll macro which in quarter issue there in to down our online also. you the both I as momentum expected the those holds of other have there as second assuming able being the Ray be obviously, quarter given will cracks, recover to we the and

Doug Leggate

to exports try seems seem if it thus much also Northeast. going for being given a and the going don't the I'm from on to we that I'm here. mind, looking you. Thank that actually what the is that's Gulf call what tell, Folks, is Coast It distillate. you follow-up And tightness for question. My doesn't can in underallocated explain Colonial change

relates seems system and because as fairly versus remain it coal share So, could I'm exports, the allocations Northeast how if potential going us tighter. Colonial the it you're to running curious to your you is to

Mike Hennigan

Brian, want take do to you that one?

Brian Partee

Yeah, Yeah. sure Mike.

Doug. question great So,

definitely we you're that yeah, same So, dynamic seeing. the see

well. One market structure of up look the to the in at shipping the that is all factors Harbor as we barrels York New way

So up the we've the end front of the on had cycle. here a strong really, run in prompt really

It So starting is at York is bid-ask more the New feel the of we sellers into dynamic the sticky as certainly a that. imports with to right now that's sustainability coming and of look ongoing kind also more buyers Harbor but the only good is being our we Gulf America. starting in demanded Coast, across to complex, placement back in just have barrels not and South the overall But book off. opportunities lot really there's Central

market would you're Russian a less But acute categorize to over I think markets. to leaves those think opportunity complex do term. I Harbor be the rebalance, find in look about So, more point as structural And about we forward Doug is as a starting York right impacted way we're expect so it look as short-term dynamics. other the very and via the connectivity is Coast, forward exports here the Gulf to in tea think and that pipe than a reading at the we one that New and in you more very, market European longer you pinch

Doug Leggate

it. Thanks guys. Appreciate

Operator

you. Thank

question from is from next Roger Fargo. Read Our Wells

Roger Read

Good Yeah. Thank morning. you.

Mike Hennigan

Roger. Good morning,

Roger Read

I guess into actually a for bit modeling your us to potentially go a first, tranche the of in come buybacks. disclosure. like sound during Maryann, share I'd forward next reason hitting comment any of back to It like been about there's QX little share doesn't with full the We've that. moderation repurchase to

you're how So, I flow repo. of about transitioning that in coming share the was process and the thinking just curious cash into the

Maryann Mannen

the Roger. for Thanks question, Yeah.

no, correct. So, you're

back, would $X in pace the end prepared quarter the that you use quarter that shared May look the $X authorization. in we we I -- been at second initial of As look we've or $XX that billion if than our billion XXXX. that We've my In buying to expect the we XX end remarks, begin excuse me, first result billion the on the at in of roughly -- months, program third the If less through of quarter. of our we started commitment. would XX% repurchased

at about We that we we price of XXX just volumes through allows evaluate process. part us conditions repurchased less $XX And trading than will a shares there's exact. We of our to during periods. quarterly So end things XXX, buy mechanism buybacks, daily million use share. we market that average our a be an average at back blackout use to

commitment you And strong lack shared the cash means. quarters So, several last here balance and anything maybe indicative of the any you this for billion. quarter that think don't look of $XX.X I look about the by seeing we at you is flow in a that cash certainly, is you at

hopefully addresses question. your that So,

Roger Read

was and is Yeah. Gulf across got It aren't the try to see across of kind so except that West There obviously, to I the does. shipments come you excess you're crack presumably West some opposite the Pacific, places of across those It that some any that to helps. there given on wants that a supply. seeing from, Thank there Coast Europe. I'm exports. arm? seems typically the we up Gulf show curious, lockdowns But products the be countries, look been Pacific that of Coast you. going question pretty on any from coming any occasionally lot of as anything We've in is end there? some exceptional. ask, for Coast signs of of Coast, has or to the

Mike Hennigan

that? take to want you do Brian,

Brian Partee

Mike. Yes. Sure, Yes.

We're learned We, Basin. bit no ago. than not Coast years they shifts bit COVID course, really. the fundamental I the deal we we've be little mean, on two So, of quicker closely to the Pacific than to at with any all a But through not watch expected. happening continue Asia. very differently to lockdowns in moving a over seem or did the prompt, in seeing Roger, West

up not give drivers might So back on the you world. broadly, jet But We're diesel in helpful, is the and seeing especially market. the we're on prompt. it anything demand. strength and maybe the I end recovery some in obviously see might mean, perspective of think, one be front around across that of also the I domestically exports the key that we more seeing just I

the prompt moving we XXXX, IMO were The is. did and other Recall lot fueling. place. a different in that doesn't that thing And back discussion get of marine in into take

that overall on limited pool distillate is have So Gulf new the there's the program, at on MGO also an look But from some from demand believe perspective, as call Coast, the on out pulling West do pool. distillate exports we we we our on predominantly of Coast. the a export

from South As the we exited we Europe in opportunity and at were us look XQ, a XXX,XXX into see forward. a about barrel and did that going into Gulf move as barrels to as here for we a to the an primarily Coast, But XXX,XXX quarter, XXX,XXX exports from into the barrels first we America. forward day increasing Latin program barrels more day-ish a moving day. we And XXX,XXX we're book the of

So be as opportunity certainly manage that seeing beyond. We strength continued we have the to XQ able looking that we forward roll to dock and to into are there. capacity we're and optimization increase and

Roger Read

Appreciate Thank you. it.

Operator

you. Thank

Our is Gupta Suisse. Credit next Manav question from from

Manav Gupta

and very did not here your guys you you partner from question Mike. at facility. a Martinez need Good is, morning, My clear

a obviously You lot of have cash.

Neste? you Why partner? but develop did help JV a why with do right -- partner and how Neste. they're us understand your think you this seek does forward you And picked So

Mike Hennigan

where parameters we we CapEx, not on this stood with Neste. open strong comment. we logistics, would felt When strong Yes, and there the this and that then make disclosed Mike. competitive there were Manav, competitive were and had Thanks very had for reached four started logistics, while a we project; out, OpEx, a OpEx And we is feedstocks. for very we CapEx project ultimately that but conclusion

that them the us there's part it feedstocks. short that we going disclosed a good good that between forward, real important has in really the a the the in we're an at think of about effect term, not that both for capital and think to at their hit but come from to respect a numbers of the thinking discipline synergistic already of strengths. So lot with term time, bring will about and us portfolio win we as our Neste for in was we've a you partnership as the our participation. along our well. then, win They having believed good table publicly part feel been, being we And as over same Obviously, real long all market just well,

excited we're Manav. tell I we're of about about So, it, talking will together. that stuff other lot you a

the think can more parties I two we're can see together and that. to try continue create together do and we value if to going

Manav Gupta

follow-up quick a is, you reasons Gulf My was here Perfect. guys mentioned some of Coast weaker. the little

are and to Your And capture back is, was look and quarter? also you have that strong earnings. what Mid-Con understand really happened massive the rate historical look slightly the get trying that us go if I'm a XQ in weaker. XQ, at your and capture Mid-Con assets very cracks could during at Help you we we to what to

So help a much. Mid-Con in us understand region. some of you, the little reasons Thank XQ on was so capture weaker

Maryann Mannen

Maryanne. it's Manav,

know secondary and the in product typical That's price this during just general. capture of sort the when think secondary light couple I'll come obviously, price quarter to that impacted of in And quarter. and rising really just we and narrowed our our that environment margins environment. a largely margins Mid-Con then So, certainly as then product as maybe well. A back product about overall, elements in you

volatility. also quarter. We some that use course, the that in And inventory price we -- then manage of certain have build to derivatives

But the stronger first excuse as a in quarter. -- the a a was that's that it few capture look really than quarter than Mid-Con really things rate impacted me the the at for we was driver key overall quarter. are the there second So, bit quarter.

Mike Hennigan

in not Mike. capture see just everybody metric it's going sit add, emphasis little plan biggest the everybody lot would we're start in in than at secondary people reasons on on we're normal. a et of the that that in so fan crude that asked it the be And and can about call should keep of volatility we $XX the lot is, you think knows it If things for one a lot often, happens of that And XXX% I'm around of range, than environment I to is the bit. the down products a quarter a or different a $XXX question, of was different I'm puts Manav, somewhere impact the -- to crude mind cetera. $XXX, should I'll capture.

it that look at I play. backwardation when to you've So, I on very on the we're in Colonial some are, got unusual you seeing Brian seeing to of distillate yet gasoline backwardation come metric. that factors where start Doug's cracks the times, where distillate they of mean equation. Those into with mentioned think extreme season, keep particular at mind, the we're we're in earlier volatility -- where question is the the side pipeline, the

into come those that things and all So, play hit metric.

what it come leery, to make out number So, I'm is. always but in it number, bounces to of to inputs that one there's a and lot

Operator

you. Thank

from question Rao Citigroup. from Prashant is next Our

Prashant Rao

Hi. the wanted ask on taking I Thanks crude first question. one. My side. for to the

context the on feedstock availability Given going forward, you how all call, Russian play how might been gasoline capturing or if demand product curious production, changes distillate have previous the about that I forward? versus rest deals. questions you the And shifts out the But that when also, going really on of was asked this crack. already the moves that changes in feedstock as of the asking availability and market, of strong product gasoline up through think question any the affect about picking how on and kind have summer year that impact max could of distillate maybe And out the that? the driving balance tape plays you into season max in

Mike Hennigan

the crude outlook? start want to you Rick, do with

Rick Hessling

Prashant. Yeah, Mike. Sure

we shift affect marketing have we're whatever a the in Brian up. team ordering right From that our II, now, in you So world avails parts presence it's our of excellent and There's an that at at yields, the the are avails get not that and our of would look and question. V fingertips, directly when big the PADD around our perspective we II uniquely Partee have a seen moving lot though PADD feedstocks. meaning able to especially PADD

out a we So two crudes. items that's I'll know Russian is we small. of this our to state feedstocks, peers, unless a especially probably And call a as as that of to you Prashant environment. feel other We were are And one. some related buyer in competitive advantage small

a We way being that then meaningful And MPC the in crude small taking have to impact. So is on lastly front, us assets quick the of of as SPR but couple believe help releases seen our a really in A action only proactive of very the have in with US of feedstock to as be little we that feedstock. applaud things out Russian that And period presence release SPR our government that position the really good Garyville the buyers stand just the backyard and the we we incremental from to to category, call in and market. because very, for largest GBR will of two in prolonged caverns. consumer a time. US not for

and that hope any to feedstocks yields it comments I So over for I'll the on color gives products. toss you front. some Brian on

Brian Partee

Rick. Thanks Yeah.

out about just distillate a of the and gas as think currently. Prashant couple comments So we dynamic playing

we operations the much extreme at environment this day at So optimization. about for very is as we're, think a value levels. of end chain us obviously, normal the But

to market differential core week, within out We our within as us Clearly see in meet we're the month, that there's because clear them this just demand call between do for a a what as it be whether roll our the on capture of summer really That's It's dollar look the optimizing demand. running in they're the demands structure more normal But driving Ray expect. mode. the look any wanted the to seasonal as so we you ultimately summer feels But our the distillate running do plan at we and yet market to here as that as if to prompt we're a the or make we're within present typically earlier we sending really we current not a expect to other distillate. here in doing environment to day. market optimize across forward manifest the market. point optimizing the very would mentioned distillate the we we into market the look the the for And look doing So now that distillate. season strong meet expect signal penny forward structure. constantly market on to gas the to in we're constantly max of system I strong teams about products hydrotreater to is months.

Prashant Rao

go of On CMG both your follow-up inventories out positive you've color It's working tailwind A was cap, your that forward? the you as based you to of Thank just expectations, current working specifically. overall give And within probably cap to components most be the quarter. be out. shook we I expect would in total and bridge a quarter-to-date for as continue on cap bit Excellent. if be would how called quick to could start it the headwind on or volatile. for in some pretty a think us cap Maryanne. a overall wondering to then working And I answer. to R&M -- at reasonable working R&M

Maryann Mannen

question. thanks Maryanne, the for Prashant. Yes,

each in in right? environment. So price rising move say we a So prices quarter particularly capital clearly was We a the crude as a as our in price of dollar said working $XX oil is the rising. working typically impact you that million to about cash source saw capital,

build. the inventory did I to stated inventory it, impacts already some inventory You would impacts when not we quarter see that we second be repeating our expect have in

rising we not other about receivables general, fast prices as the in as implications payable But implications moving sometimes because it's has payable. see the of it's quickly, a XX-day net the One in position. as it

would they working quarter stay Obviously, see change. tailwind. the capital to would as as long second we in would where as continue the prices it are, as reverse So pricing

Operator

Thank you.

Our next is Phil question from from JPMorgan. Gresh

Phil Gresh

Yes. a on different one buybacks, way. follow-up Hi. wanted ask Good morning. slightly I to the

of $XX extended billion now and a billion. had with associated the first The $XX component proceeds it Speedway you've it obviously big to

Is normalized I'm high cash very to of level. run still a the kind of in you as cash of cash percent lot minimum have level, or framework balance. of of some balance flow management more Obviously, and return continues at of way lap some thinking, capital the at And kind sheet. forward quarter second the just you're looking The be there Speedway we a component proceeds rate to a this. we move of

I'm through there. So just moving pieces trying the to think

Maryann Mannen

certainly. Maryann. Yes, It's

authorization got $XX very billion remaining. focused a right. stay on So billion you're $X.X We've in right? total commitment. about We that So,

you we're no the be or shared $X working should right, normalized quarter and the with post we know I billion, around plans billion with sheet, here this our would more certainly forward, think year. with things series But our that second we proceeds position end get second in a about at you sale. complete $XX that in the through As you shared using right of later would going of than Speedway a With authorization. to share repurchase we the secondary looking how on from we pace that as to based we this respect balance

we to it is you looking As framework and previously. our between way. But are cash repurchase, things in capital allocation along capital allocate of obviously, back at our come capital allocation certainly growth think of would with to and fungible we talk shared a share we would lines you, know, about as cash series our dividend expect how that we about our

Mike Hennigan

market capital we returns, many we're business grow the this Mike. times want hope disciplined, a a it's But on going to of that it's earnings. I strongly we I a standpoint. add to that what capital do is And to at we is trying I've capital return of major look to opportunities the component we're solid Phil, that feel return to looking at said a business up and predominantly just but have from us business. same that want capital to that here. return the very for of accomplish stay time, realizes

Phil Gresh

balance a been there adjustment Is Sure. thinking any that of Maryanne, price cash Has minimum to thinking? you're levels there at these types about? oil

Maryann Mannen

we is pandemic. lot that a but billion Yes. experience $X of previously scenario as of -- shared liquidity toughest holding where now another going At forward. comfortable. $X volatility had right at had $X comfortable I of planning. potentially we're sort the a feel think about the us in during sufficient periods We should be point of initially and lot talked about billion one we looked for We We've billion, we at some time, we looked

Phil Gresh

fundamentals on see on the particular of deficit have Got it. the this We've if some to just just thoughts dug you into continued versus My you dynamic. pressure is there. LCFS moving in R&D but follow-up prices. A kind any of guys that credits pieces lot

Brian Partee

take this that is Phil, happy I'm to Brian. one. Yes,

probably in at QX high late week looking one West at build a is versus release yes, in bank in QX you're Coast. heels QX last the car The demand certainly tremendous out pretty a almost the on and overall bank the of slower So, on with credits. QX level the million

overall, about X%. RD in X%. was off about production was So, demand imports up

in is So out then at electric about total was West now X% in generation, pool about right quarter-on-quarter. XX% the Coast Bio, R&D. certainly looking driving the up which dynamics factor And the last the the you're credit the prompt X%

Oregon coming said, you new and market Canada. programs Washington being Now have into do the and that all

have are the DX proportionally side, the and We're current Dickinson very in our in prompt drivers production if the being exert of really the Carbon values about and environment having DX counter the $X.XX of of now very alternative overall what committed LCFS out about seeing LCFS placement you is that workable pressure over bit pricing. we we're program. the you ironic operating day to In value the we're program underpin the the the end flying of versus California. think We smaller return said, happy be think with expect time, different is and out and if economics. these in same BTC current range a at commodities proposition a a that the It's environment with time to right to to to the low and with option But overall one helping Dickinson. quite eggs in At up. on $X.XX the value

for So resiliency well bodes long-term. the I RD it the for think over the through-cycle resiliency

Phil Gresh

it. you. Appreciate Thank

Mike Hennigan

Brian. There's lot it's of regulatory multivariable a the add Brian, about we price. I'll Bill When few the renewable that feedstock diesel Brian look on a equation. recap a at Hey, just with really them, the was good and pretty four -- for or price diesel, there's renewable drivers points. along flat a talked

optionality that trying And that's found most plan. us. to to in allow will we say to at makes ability Martinez the that maximize to at feedstock, optimize of for biggest the sense Dickinson profitability. will part at pivot forward Martinez So do we've the success to Dickinson take Dickinson every at we're base have pre-treatment -- to the the we on I off-site the today day the us as thing capabilities for that feedstock that CapEx that

our to that, So you're things that lot right, of optimize. a but work LCFS right now within on we'll that there's pressure are control

Phil Gresh

you. Thank

Operator

Thank you.

question next from Our is Scotiabank. from Cheng Paul

Paul Cheng

Good morning Hi. everyone.

also your First, I just make recovery request to might Maryann, want in a if speed a through you after treatment. I possible. wish And

press in timing the in Some Exxon We the start of or they inventory benefit timing disclosing the to develop presentation need by each release share quarter. customers your different malls. fund larger timing the or

will your grateful So I that you be something consider. all here. investors will That's think guys

Maryann Mannen

I Paul, apologize.

here. I you that. financials. little we hear cutting is able and line hear us see investors to that something would Unfortunately, in for our say out Your said to like bit a something weren't did in

take line And we maybe just a slower could send you that out off-line. one your then, But know if cutting go in a you your is so note. So with because little and just us question.

Paul Cheng

now? hear you Can me Okay. okay

Maryann Mannen

Yes, that's better Paul.

Paul Cheng

Okay.

I disclosing their release. timing impact of you those repeat will been me in let They've customer from think your information. request of... Exxon, Shell. terms I'm press providing saying my larger guys the appreciate some investors And and if And your derivative So just that in and consider inventory

Maryann Mannen

your apologize. sorry. Paul. finish Maryann. sorry. question Please I'm I It's Thanks,

Paul Cheng

-- is my or in will product to also one -- market of No margin on that Sure. the said ability when question competitors the the backwardation some capture the we your product your screen. three-fold. when realize One pricing on your of is impact has

like competitors they when that just some also three losses that seems how timing have in or want we of impact large your And seeing a that your in derivative backwardation see inventory So quarter. all the curve. to are in system

of them. Maryanne, you. it? you Thank mentioned that Can you So you some also have quantify

Mike Hennigan

Mike. it's Paul,

your thank a First multipart you off, for comment. question. It's

everybody capture but and about everybody earlier so we've we've to occurring you for extent occur that not that would doesn't And I see saying that keeps structure. metric I right? putting that for fan she if are little backwardation normally the at the is play into look bit seen that it now that metric. it's the talk things to repeat and to know to mean going going of that one many and backwardation the distillate, on now time pretty but start I'm it But So bit is let I I'm little structure, there I what probably it I'll wasn't there, Kristina, important likes never of if right since to two along those would of month for said We screen month how year. lines. is Brian of think out be normally a a a lot talked about strong, this especially one a distillate,

as with something mentioned So impact flat there got earlier price versus Mayor as on price travel is too that's and that you He prompt secondary with up products comes gets Colonial. this bit pace into and barrel earlier, as higher and you little up of end with flat as as it. moving where well. play a about then let to a keep talk far an end And higher I'll mentioned crude it products Brian don't we're phenomenon

pretty things seeing are So in as quarter. was there's a Doug market. we quarter what in particularly, the of to mentioned And volatility pretty volatile a versus hitting. January versus March February it's this as lot in earlier, sizable

make towards a comment So anyway, let me Brian structure. let

to Brian? there, want add you If

Brian Partee

about there's think in. Happy Thanks, question. I market Mike. way Yeah, the to Paul, key two Yeah. your structure, jump to elements

the and So first saw the really in Mike largely which first we that rising the a phenomenon this alluded quarter. is price is to in environment

price it in also but call products, in obviously environment, So a often do compression. the rising see We primary. secondary out the prevalent we in it's

in not of efficient do short effectively racks the a time. as up period So move very

back catch you they time. benefit up they'll end slower. then come go of over the the on off do And that Now enjoy as prices

I in backwardation timing today, dynamic one the to backwardation it's that's here element. marketplace with time. the So think about the though, way transit effectively Specific it, pronounced

times, run So way looking they backward market off market, market, on if our people doesn't assume not at market models just a $X.XX matter. the point to transit price And most be else's I think is today in, they're to their works. a operation. program look or ratable and today anybody really outside how the and it by you or the time There's rail, that's a your or market, barrels it has from moving get system actual a at truck the system and to going realization And going fallen a pipe looking the in you're at ratable less. $X is you whether

And in obvious there's curve. sell not particularly as in distillate a that's the the call the big more backwardation environment, steep marketplace to problem. in playing on sell phenomenon out the the is and really that's the signal been and on out sell that to to today, been prompt in So

Paul Cheng

you. Thank

Operator

Morgan Lynagh from is question Connor next Our from Stanley.

Connor Lynagh

right struggling Yeah. of but now, with are you. is two question environment sustainability a I'm at parts to to Thank here. both question, the that of Obviously, most people this sort current them once going ask

refinery that feel in the sort is, than higher you you'll demand pressure obviously crude and So what's continue of about months, we summer been part inability here have on the product to have result markets the is into substantially or system that there's that, Thanks. from issue thinking any in expected. feel and to on see Do disruptions the particularly broader of second that Ukraine. in destruction? raise concerns, or you Russia a But for the are move or demand significant runs, upward do that as demand. guys either is you you at in of markets play any expectations first there framework side, events do a directly distillate Do happening,

Mike Hennigan

start. I'll Mike. it's Connor,

and geopolitical energy. you time, situation tend in go have point, events much your demand to Russia in current and all But have the seeing we're to supply impact on impact the in always markets, energy with if events geopolitical and First, an it to back Ukraine. some now

The that's that's you sustainability ongoing kind to what's in well. an of as So point happening made thing. about parallel

are turnarounds. in maximize in that inventory have time very in put back tight we best We term. because, same obviously, they situation. think the do at mentioned how as that trying pushing the certain we're their earlier, goals the to as proud. production and a people starting market to regards. And can some the think out supply very to We're about, So as Ray short we're we sustainability. in portfolios position trying area leading it's we're We're And

can them, control end the word but counter, there all worry team at control. are let's There's mean, the all do we stay is, out in production the team that's Ray maximize do. trying to try the the things a And I lot we this to to that, we to attuned what what about control we to we control. trying my and of bring and don't it we back And what So into the what of marketplace. and short term, do is time

Connor Lynagh

can of second any economy based think there at that there, the the anything certain a that, that which on interaction tolerate of on or evidence just areas or is demand a part you pricing? with you then risk destruction. seeing guys And your the product customers Are price that on like of

Mike Hennigan

you that? take to do Brian, Yeah. want

Brian Partee

sure, Yeah, Mike. Yeah.

just of what's uncertainty stated. over comments now, So a There also some upon fundamental is going to but a maybe support premium the degree marketplace Connor, in what there's based the premium couple in on right build and of on Mike Ukraine.

two inventory So I penetrating macro uncertainty One market. upside the just or that a that I in a positives working recovery is moving on there into low really And will very gas the also you have the market us COVID make a turnaround support that now this. market. both also also maintenance think coming are and got the then lot And the think is on the got major here. the to closures globe. we've dynamic. But and refining delayed premium the point is right minute. US overall in around an too is the From predominantly tailwind. positions outlook pressure that during get there's fundamentals then to COVID both pure about cycle had for of providing system We've We've and utilization and fundamental wanted demand of That that's we domestically jet. and as I'll this current perspective four some the of got over that though, internationally. We've out that things

uncertainties, side additions new as on an of I'll three, capacity call Now example. that to the them refining other there's

think it dynamics. tell on the now right inflation pricing broad some disruption whether certainly But COVID likely disruptions, feels and the really coming economically little addition of overall and said, on the beyond demand on there's watchful and your to new we chain question and And the disruptions, quarter then seconds is situation, with pretty like it's more supply than difficult market but I and we're very we last from eye the had way to mentioned uncertainty specifically the it's a global going forward slight capacity the marketplace. we're that more But XX think a pull outlook. labor fuel watching a any all that more Russian-Ukraine and optimistic which than demand. other. during balanced look this balance bit into refining being that's goods that's market to supply the to the away the there's keeping we've not And economic so at through thing that's a and next between as the bit uncertainty break. and or maybe headwinds is something services I tailwinds,

Operator

Thank you.

Our next Theresa from is Barclays. Chen from question

Theresa Chen

for Thanks questions. my there. Hi, taking

the First general Ohio X ago X. years pipeline movement. eastward. seasonal I Mid-Con see out wanted Mid-Con to believe that wondering was was Pad to revisit market is for time, going shifts ability Pad given the tailwinds product the you discussion and along the eke from forward, PADX And the I there from underwritten seeing to tightness Eastern believe that capacity at that some an expansions product on had just structural balances in additional to quarter it regional potentially capture? additional a move tightness I we're I two

Mike Hennigan

Brian, want you take that? to

Brian Partee

Mid-Con the and of been some added been Mike. that there's answer there's to a pipelines in quarter been year effectively definitely taking Theresa to current is number that ourselves into last facilitate of out traditionally happy dynamics the And are open helping The of Yes. wide Central that market incremental in is into move as market that in Yes, that to capacity today to the Pennsylvania. barrels Western that as [indiscernible] also capacity. the the advantage translate your ARB has question since and flowed here reversed. broader well

We also trucking see actually opportunities.

example about Western think some pad you into York as Ohio an our If in New the Eastern position far truck grades. specialty into to as for

more market yes, and working, efficient opportunities are finding move way. market more is we the to So the is that and

Theresa Chen

be for together? project, has just procurement. Maryanne, feedstock more agreement JV you. out could it I procurement you aspects how terms if how $XXX in can the budgeted independently also about Martinez just you provide the year And partners to the done works the million or of of And this two capital there? much clarify shifting explain to feedstock And the date? to Thank synergistic of been Will wanted between spent

Mike Hennigan

Mike. it's Theresa,

what said on is question, to closed. very et We're cetera. want On color to last feedstock who more shortly. that provide and time what we is hoping wait dynamics get the we the does we we're the feedstock the But JV going until around

we'll that a we're close time more very give that JV. then at follows mentioned, on close we'll Ray to get dynamics. color the on through bit permitting the As And feedstock assuming then And side. little

Maryann Mannen

Theresa, it's Maryann.

think I answer So and billion to been on how to the of the on $X.X question capital date. allocation second your spent it's

just we've in that's in $XXX XXXX. So roughly under XXXX, million spent

plan, If at in in you we capital roughly estimated million XXXX $XXX total. look our

how XXXX. of that gets roughly depending half on outlined So project expect would for that. again, all We

us that million. $XXX million remaining Neste the $XXX in So XXXX. or at obviously obviously project $XXX complete give about MPC plus in then would to have million $XXX about of that minus million And the balance would

Theresa Chen

Thank you.

Operator

Jason Thank our question from Cowen. next you. And Gabelman from is

Jason Gabelman

month the of it's And the for in actually ahead? there the you're seeing. backwardation taking not impacts of if statement a to if barrels percentage that that mentioned price Thanks actually that Neste so, the second the lot I in a your on just the that questions. receiving month your the product we just diesel diesel price margin my exposed on prop your in wonder, other just to what diesel earlier focus to endeavors point biofuel your backwardation clarify the but And opportunities Thanks. about to wanted within is Was is the made would you're see venture, the And future. plants kind US joint there's you question my to of that? MPC or country. or if diesel potential renewable be outside the I open then of that in grow participating

Mike Hennigan

up. I'll fish to start you do want Brian and

Brian Partee

mode really of on dependent the Yes. as Jason on Sure. of clarification the backwardation. a It's point Yes. delivery.

made So about time cycle comment time. on cycle – delivery the it's I really or the

on different what at an every it delivery as of long it's I each delivery and they're won't mode the sale. a So And that. spot example leave has Have a cycle it's of is under into depending I'll different. very the export percentage of versus market. go an our particulars but book –

Mike Hennigan

as would as were and add, curve rule. maximize pump to buy sellers a as the buyers Mike. down people I are obviously trying general to Jason it's just trying the

like Neste yang all out I effort a And each each said, that was And backwardation Group That's tight respect what markets going inventories. that have not you tell are backward tight unique. yeah, question, about. you you is and time you situation But Brian with inventories with partnership it was to other it of have So other. for setting goals speculate period on. your that yin have team, we're It as worked every for the here the availability is long and I get were product says of result the tight. up to believe And will Dave the ultimately Neste, going that respect our company one but and second is important tell for to that in to mutual With is, of biggest a things common that shop long. the Heppner time. this headed inside and each

So very a to is I important we through think that working us do this, were continue we other it nice for And to for us that platform to look can business as entered was we've ways partnerships. for really when similar together.

need will the of have in important the start time. to Martinez. difficult respect endure of that's, comfortable are right at the with to And be things way Neste the feel with you you that One partner. us JV most a and the you that general, to test that feel JVs really is, we partnership of

Jason Gabelman

Thanks the Great. answer. for

Operator

Thank you. I is like closing the That the now for questions. speakers, would the all have to we to time remarks. for turn call back

Kristina Kazarian

available Should in morning, or for clarification would were calls. on will the discussed your us. out you interest for to you questions additional joining please and like that this take have you Marathon topics today. Thank be you reach team Thank your

Operator

Thank conference. you. This does today's conclude

at may You time. disconnect this

Marathon Petroleum (MPC) 3 May 222022 Q1 Earnings call transcript