- Earnings call transcript Q3 2022

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Operator

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

Kristina Kazarian

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

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

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

Michael Hennigan

Thanks, Kristina. morning, Good everyone.

will new over roles as was be joining and Commercial First, Officer, President organizations. like for in where of and development I'd our and refining of Executive Chief Pipelines, Tim MLP. recently, has President Most oversaw who a business of XX Refining. the years our midstream he leadership experience he to introduce across Aydt, Marine Vice Vice call the Executive Terminals Tim

will in transportation to XXXX last Yet robust Roughly levels, the macro globally barrels a of pre-COVID below grow. demand million recovery. day be couple and there refining fuels continued and In the we turning to capacity manufacture come demand still continues offline X for of years. has we U.S., is Now per environment. the remains believe the

the rebound, into environment look maintain As as XXXX. constrained supply a bullish continues remains refining outlook towards demand we and to we

market. our our our commitment maintaining rates And volatility on seeing progress seasonal towards deliver delivering near ran focused commercial time feedstock global support and team's not expectation Refining this focused segment, year results of reflects commercial our to date, the in indicate our while refining products strong running very forward. the utilization, of crack demand. energy demand schedule. quarter, markets, system differentials to except scale, given spreads and signs. assets, currently we quarter communities optimizing we're we in we which of this back going turnaround The a for despite XXXX third occurring wide Our at on full the operating against forward commercial strong safety but maintenance Strong execution steadfast as planned and operational slate the In reflect employees for the salary of to year performance. team safely environment our our normally In those consumers tight of full the operate. we in weighted we're have the health our and goal decline protect see and We at for the our activity footprint improving the execution fourth

outstanding whether received decision Basin. billion $X MPC organic public point want supports the Aside quarter, the in distribution Permian will to this We've on and was to third Refining MPLX flows projects the low-cost of MPLX from the will of from continue In I Midstream The Based up our optimizing MPC level, fostering and a receive acquire quarterly structure cash out unit. several our EBITDA midstream. these capital X% culture including annually. XX%. year-over-year its growth that segment by regarding nearly MPLX's grow. investments, distribution executing portfolio, strategic been advancing in strength earnings We've business, to the adjusted of increase questions the

expect is continue cash demonstrate continued year, the earnings is what said we that of restate through-cycle to and has per $X distributions growing. a cash growing to of So pace strategic in we we and to past. its portfolio, part MPC resilient MPC's want MPLX current flows. to MPLX billion

billion of to of executing completed MPC's of total value an capital repurchasing return the We're to of our MPC's quarterly As be MPLX expect XX%. allocation, allocation roll deliver capital capital approximately pursues MPLX. MPC's and committed return partnership shareholders. current outstanding. to XX% Today, do commitment, shares October, we this our opportunities, will shareholders. priorities to plan up continue enhanced, allocation Switching not to strategic optimal our its to framework $XX increase we approximately to for In believe we growth announced we peer-leading capital dividend we are

way repurchase shared believe are of unwavering in In our authorization. buybacks we return and to have repurchases, profitability, of continue MPC's remaining we generation $X to using through-cycle have XXXX, flow early addition, efficient billion drive cash a In to focus. and capital three DNA a intend we commence November we which more creation. expect They value strategic best commitment to increase in part long-term become our areas embedded the the

well and on improvements, competitive we obligation the Neste. original As the stand-alone value MPC's feedstock joint completion in per in underway, X be mechanical to MPC expect to joint X. to September, we in capital bring gallon EBITDA of our Due assets, by commitment lower We're procurement about JV's with global only renewable $X.XX closed Renewables overall expect we improving feedstock share Neste as excited of enhances as our in by reducing we than focus fuels to slate. Neste, the production. is has XX% This Phase XX% leader the venture case. with project strengthening the the and year-end. position these Martinez feedstock well partnership project Phase the advantaged Construction on a our venture

believe knowledge platform capabilities as we Additionally, industry for leaders two the energy opportunities We evolution. this of and will commitment pursue leverage to our shared to there be differentiated the strategic Neste partnership with a creates collaboration.

ourselves for on ourselves. in to goals lead energy and We set continue challenge that progress made to sustainability have we have sustainable the

Scope emissions, X total billion of Focusing of air and Martinez converts a We lower XX% refinery X facility's annually. to pollutants specifically on X a which fuels water and project the facility. GHG conversion gallons the anticipate petroleum in criteria into renewable our saved Renewables Scope the result reduction XX%

you learn ourselves ways yet, more and we the to invite of If to like are turn Maryann. the energy. lead call our challenging a had haven't website sustainable At in to to to over go about the I'd section chance you point, this Sustainability we

Maryann Mannen

Mike. Thanks,

third provides Slide X of financial a $X.XX. summary to results. quarter we per results. of our earnings share Moving This adjusted morning, reported

third-party operations, quarter's to our million EBITDA reclassification a Renewables and under This items: three contract $XXX quarter working Martinez billion noncash noncash a of the $XXX results gain changes Adjusted for LIFO the contribution charge. $X.X gain related related inventory was were JV, just assets unfavorable billion. MPLX adjusted to to exclude pretax was refining to an capital and the $XX a $X.X flow from excluding million cash million

through driven in dividend adjusted the of to $XX & the and of The barrel, billion. larger total we the of primarily The $X.X the $X.X the quarter sequential XX% EBITDA refining per Slide billion quarter third shows During repurchased lower in third Marketing representing blended approximately component $X.X EBITDA quarterly by similar net rate a second to Adjusted earnings. approximately million as was returned spread was quarter, rate tax change down XXXX X XX%, the well our adjusted sequentially quarter payments crack and was Refining for as XXXX. shareholders reconciliation the EBITDA decrease a as resulting quarter shares. decline. $XXX reflecting income billion. of is a between was the provision from to tax last by tax due marketing of and to This

overview segment. our Moving provides X Refining & to Marketing an our segment of slide results. Slide

transportation supplying on focused we continued market fuels quarter, the strong demand. During to meet

of per higher a third strong Our three from regions. driven were quarter. Refining higher margins third Operating XX market. XX% at higher over refineries. day costs quarter, across global decline crude a the X.X reflecting volatile at Capture team Energy XX%, sequentially approximately our barrels the in ran result assets $X.XX utilization natural We million was gas saw processing expenses in per commercial prices. our were by barrel in all

third taken higher to a our by have to barrel cost in $X.XX believe will have The approximately recorded energy which to cost operating driven almost sustainable. assessment bring are We the recovery. entirely seen increases of costs. year-to-date actions structural we per per we Additionally, property multiyear barrel quarter, have we $X been nonrecurring the tax pursue down continue we

prices capture commercial meet strategy as quarter, keeping our while Turning and to overview inventories our & margin ahead of optimized, Marketing capture headwind product but backwardation Refining secondary selling the an a our Market as quarter. previous demand remained were industry product strong ability which prices. supported this higher they provides Slide of light And to product backwardation X, the significant for of headwind margins. a while prompt as lagged not

and X% Overall, growth further segment demonstrated projects Midstream responses. versus our incredibly Slide shows sequentially efficiently volatile quarter Our the EBITDA drive focus growth to up second market approximately our with of X% EBITDA earnings midstream year-over-year. ability part in high-return indicator to for was we business. commercial of identifying XX% due change months adjusted Midstream the to three executing across and our on an capture to XX XXXX, continue our up the in

to quarter. under capacity capital earnings to portfolio was its $X.XXX was expects As operating in elements remains just flow unitholders. the and mentioned of our we increase on position in of quarter, have Working working cash MPLX source annual from cash MPLX's a billion third MPC share it capital MPLX headwind XX% Mike a per free flow the $X.X growth in XX its earlier, its for the durable the its the supported quarter. distribution return the to grows as in presents of cash MPLX consolidated excluding $X for MPC to receive the believe by changes earnings will billion Slide capital, an quarterly in billion $X.X decision basis. change to and cash

completed the project. investments. primarily Other we expected taxes third to The was capital. the XX. Renewables driven prices $XXX headwind Capital had by cash of in million related Martinez estimated the a totaled end the Galveston upon This $XX.X short-term conversion $X.X Bay At million quarter. to closing $XXX of activity and is this cash to quarter, approximately the benefits Martinez to store working receipt flow federal in The fuels project from level a of made is and spending be distribution payment XXXX. or capital STAR MPC billion income of on Renewables billion MPC and early declining ramp related investments increased for also facility expenditures the September a quarter, crude JV

XX. Slide to Moving

from We no average billion utilizing repurchase XXXX. have the ahead $XX, commitment, of $XX proceeds at an than of commitment our later share divestiture end the of Speedway completed of the our price

growing committed and that the now increase the we November, XX-Q of potentially announced our month to shareholders. October. opportunity early the As support a were and in We allocation returns share deliver dividend. able in to billion our quarterly you which public. health to the are peers to is are of operate. $X.XX our like the in outstanding our to committed framework authorization competitive in $X repurchases through today, our was sustaining capital. to cycles, and in with financial leaves and repurchase We supplemented employees this to safety that We published, operate per with we will future. total safely our walk to and we the believe grow dividend XX, I'd communities competitive today anticipate remain market our secured intend secure, executing we On you protect priorities, when commitment We're financials We to and against through peer-leading broader our be dividend see capital financials, Slide steadfast will begin complete to the quarterly our assets,

to successful balance is being XX, Underpinning we and and return growth projects. foundation, to a It's sheet. commodity lower business. to we margin in the continue evaluate count. competitive are balance more highlight opportunities be a our On allowing shareholders, way believe strength excess us these will strategy. a of used our sheet Share return believe priorities, strong repurchases capital execute enhancing efficient share which We capital essential to we MPC's will Slide to will the to

credit balance gross to stand-alone our quarter, ratio. balance targets. with respective have Both MPLX ratio end profile. which third under manage an to sheet debt-to-capital XX% of their target debt X.Xx under EBITDA strong MPC of our Xx. our ratios gross to is through under continue its of ratio leverage of is a to We At target investment-grade sheet the a businesses XX% capital debt has leverage XX%

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

level impact planned representing due is $XXX We quarter quarter. a of region. the on to turnaround a quarter expect be in X.X throughput with crude Coast million significant throughput to turnaround crude fourth is our per activity in Turnaround the quarter approximately third Utilization forecast volumes fourth the reflected fourth Gulf activity projected is roughly lower units in barrels than Planned guidance. XX% having expense day, of be higher activity to utilization. in million

We to quarter. the be in lower cost natural costs. per $X.XX the This is barrel are primarily fourth energy expecting projected barrel expected be operating driven by to for and quarter gas per lower

As reminder, represented approximately has XX% operating a costs. natural of gas historically

strengthening cost. gas fourth approximately $X.XX are continue pillars, to Our for and annual natural reductions the made quarter. of performance sensitivity commercial dollar that on EBITDA to This performance. expected we this are change costs a have low-cost $X.X of per sensitivity In three Corporate of per will assets, closing, our area. expected competitive approximately Distribution million our equates to is representing be a the barrel strategic we fostering for MMBtu. execute the our $XXX of culture every approximately improving be in to $XXX million billion sustained costs

to committed diverse reliable MPC position lead are energy energy it an with provider supporting which future. We focused position on opportunities evolution, new to high-return as company's will and the investments efficient in a

our will of our to and which to safely MPC regardless and and health stay communities our steadfast plan position superior returns the in of investment operate striving choice, we the operate. safety cash conditions, refiner ensuring while the support as in We protect assets, market we of employees deliver

call back me Let turn Kristina. the to

Kristina Kazarian

that, for today. with open up can questions And you Instructions]. [Operator Maryann. Thanks, operator,

Operator

Yes. Thank you.

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

Your line open. is

Douglas Leggate

Thank you, guys.

to Sorry, trouble or morning everyone. this. Mike mute for take Thanks with Good the my wants I whichever questions. button. guess taking one Maryann,

buyback your completed the of covering than still your Now at MPLX phase were least distributions that -- the the you've from or first more dividend. buyback

probably between the about $X true dividend question buybacks be quickly. billion use can us where And what a think And the think through fairly is problem should through of have. like? future you you growth Basically, going pace walk pretty new terms authorization kind look So how of could you sheet is follow-up, of balance the obviously, Because we a of balance nice a be? cash what your to I've and because in to please. to this it's then got want of

Maryann Mannen

Doug. Thanks,

grow we've dividend $XX the around competitive. secure quarter commitment $X.XX be we in said, would as really as reassess objectives. those that wanted for One know, obviously, done increase then three to we you the We our a to all And so. So the of with made the the dividend. objectives we in the believe to three dividends was potential completing immediately you future, billion, and meets it

begin prepared month billion completed $XX which know, to had have that we intend remaining authorization, that and to use Mike both November. new billion in you authorization $X on share I shared our As the and of early that a very we remarks

equity we our portfolio. distribution share look between more capital at efficient believe in dividend repurchase, return on remains undervalued. and that tool And to think a continue share is that we repurchase We when

to we'll look on decision that we'll helps, we'll look ensure make, capital share continue focused to and repurchase macro, at I use every obviously, absent at the growth and other other got So trying growth shareholders as we'll and look return that opportunities returns. at peer-leading market, the opportunities, the to hope to to we Doug. vehicle continue we've

Douglas Leggate

answer. equity -- Sadly, made my question less it is And you believe point little it's undervalued. easy if you prompts may. I Maryann. bit just does, a the that of your guess, a, It of follow-up And I also a to

high. at an all-time but we that, obviously your agree share price Now is with

So about how some about when market value be value, to the we there defining thinks assumptions that have go when behind think you're value.

EBITDA So there. is the I'll undervalued? or statement you to the that equity behind that is, it anticipate flow Thanks. mid-cycle And my you our it the from extent what's we of question portfolio believe cash leave can define goes that

Maryann Mannen

off, well. comment will Mike want start sure to I'm I'll add Doug, incremental as and

stand the Certainly, shared a bullish as we now. we certainly not for remain the pretty mid-cycle to as as but put we way market fourth into the quarter, right XXXX. dynamics, we outlook, look only as pin think when for an on in well, head difficult I is Mike extremely the us at

where to longer factors and, we term. are we repurchase the of at that and evaluating as using when we in series be first believe a we the So that as look and determine can and will opportunistic we'll say frankly, fourth use we we continue share go is undervalued, to both quarter equity as

fairly next right consider, optimistic look several the outlook now a that certainly So factors at we we quarters. but several for

Michael Hennigan

Mike. Maryann's comments. to Doug, add And I'll it's

out what years business the as have is prepared of the come of down, I changed result recover. last XXXX the We're remarks continues a X demand of said has of So jet couple gasoline, million still a demand capacity at all fundamentals in products, roughly over early -- to of levels barrels demand across the on time the market. but of happened what's diesel, the At refining not was fuel. when

below, we're recovering. So but still are we slowly

So going fundamentals throughout where going such the And above to occurring but the point, have demand additions to we've we for continue you is in because the above global been demand see also believe mid-cycle that you your is capacity new the And the time, we're the some pace have changed. be to to look that that significantly as going out world, supply we is the what to constrained, previous see recovering. in clearly we into mid-cycle future got there mid-cycle are past.

are that believe that's value. the have trading why we here why that obviously still assets and overtone intrinsic have we under we So still bullish a

we to number the exact give what internally. Now I us call know you'd love

stress tested case, a our things, that's those at stress all know We still and adding look that, fundamentally do not higher to view we a going And at we of as shareholders. So to of a price that in we but a you mid shares believe value purchase case tested. our our view as can I'm our low we case. still

that's return. committed why that So aggressive we've to had that so in been area. We

As good a that bought we remarks, see number, opportunity. in at and we ongoing prepared pretty Maryann the as back an still said

weren't we the You up. do we're us it whether dividend. being equity mean about And row, was asked was, we Speedway. do in quarters feel did also it our after several because mainly And People going it of said do price adjustment. where a asked billion had we're the of for dividend coming we I that. an going $XX to the to

we So as there. number it's to up not shareholders. were well. to return hopefully, have way we said Maryann we a competitive We've as with tax-efficient moved want to what consistent it said, a But

So to share a at XX% We'll that. good gives the to an same Hopefully, going you little a time, continue is eye bump. that keep reduce color. more we're And on the count.

Douglas Leggate

I You make significantly higher Thanks indeed. very mid-cycle as looking was for. much what

Operator

question Go Sachs. Mehta with comes please. Neil from ahead Goldman Our next

Your open. line is

Neil Mehta

team. morning Good

first the your really to continued was Mike, commercial. well the know strengthening of have effort. around capture The came commercial last quarters. the And opportunities couple comments I you you your on identified one to The come really is of when role, rates question build into over in very

those much So in And specifically of about because of capture is can just of has you commercial initiatives? talk how sort rates? that driven what that improvement

Michael Hennigan

comment. I'll more us. progress to area. for We they we're I we see on still before But made the say three we we've would Neil, going commercial Thanks, to and the early major Rick and a put -- you, that had I'm going for do, emphasis say let lot in opportunity question. Brian that did areas Yes. on to

let give progress. that area, we but we're Brian some made in done So comments. have some Rick not and I'll

Rick Hessling

Yes, the we've quarters. looking the Neil, for seeing where it's the of Rick. and several question. been you we've one last It's pull at items Thank these been through, it

game well. noticing we change commercial we been for changer year, earlier I processes, would culture a start around by nice We saying this changed that's that us. all So structure it's as changed you're lot. a and it things

all careful details were what if chain look But in In we've team, terms placement optimization do, end-to-end, it products you we a here, VCO up share we're everything call the and modeling was table team feedstocks that I'll assumptions, and of lens, procuring to goes what on and dedicated constraints, we I relooking purchasing how or broad relooked be to from put the from a everything at the over Neil. from at. value why, through at competitively, stood how,

results especially of so change of lot out in. we're come environment midst positive great a the And in that, of the and have

environment the with in win, we're that. like think today seeing crack every an you're is high in So and when I exemplified you're

feedstocks able of this of the advantage lot the time highly we've to addition, our purchasing the you're global products and happening of take and products root re a seeing through world. feedstock In feed of of lot a throughout in placement been -- of been a And clean advantageous. initiative, has that

So to color I'll for Brian the over on turn with clean more that, side. it

Brian Partee

comments, that progress, weigh Rick. to there's and everything. just kind it. to the his work Thanks, We've I down or of alluded lot moved more It's things. team There's opportunity in about on great of Yes, question. the I'll appreciate but We've it, really as one literally get. the to a been changed. Mike And done. Rick of has said double here. two proud in It's mountains Neil,

on as provides look foundationally, relates commercial components leveraging a it distinct have set think coast-to-coast to I of that scale us digital our forward, evolution the transformation think front. is lot And as our the going of efforts key we that space. the digital we our one in a across platform we opportunity our underpins

Or alignment people, this? realign structure fundamentally everything. and just the The underpins is other changed thing them and accountable. I'd empowered we changed quick what held people say organizational real We all we

our we're great the we're business people-centric do tenet what that. of things. We to have let the leveraging And core great commercial in people really and space, trying to a is accomplish

Neil Mehta

great that's color. Yes,

of like is just you wider stock. Canadian out. high-sulfur a gravity the see larger blow in you guys barrels seen Maya buyers up the and Western the So But WCS have been in it's We've also crude. specific And of follow-up numbers. oil. one fuel do Historically, dynamic really as showing heavy

So your talk how that? markets refining to product and you driving the slate what's about the in heavy take are of crude maybe you weakness and optimizing advantage

Rick Hessling

it's Neil, again. hi Rick Yes,

are These We're seeing out. question. levels great So blowing unprecedented again. markets

On short-term as that's X. season, in and as diluent us. blending for been now certainly When I side, maintenance, I and arms you well. was the marked morning PADD pool, cheap. forward plethora I front, heavy I a XX So plug maintenance, season the think is XX the some slowing X in right what's know, with and stoked. maintenance Cal some which the and this was it? pretty X, minus at the say We've December blending unbelievably QX, under, really solid had driving is fuel Neil, Canadian curve. looked XXXX the a we're then of XX, helping minus items. is is from saw unplanned entering oil shot Boy, it is Production And

So a heavies for you're the parts substitute of that seeing in world. other lot of people

-- really Gulf been you of U.S. pressure it's at that lastly, medium all well. healthy look sour I'll Coast. anything of on is driving putting this say, when Mexico So hits Gulf And the as the production, is

Canadians. Certainly, Mars referenced So lately you're the out. seeing blow you here,

of all one are outlook a creating items of So top another here for XXXX. on and very stacking these into bullish

years think now the great are PADD our and I over and in built so. well up tell continue you X heavy. are so as PADD into we heavying X, our would specifically, We're out we've up PADD do access so that aware, system In our have X these optionality terms to and us we do slate. MPC QX cokers and as We're you going we'll indicators filling to expect, of

Neil Mehta

team. sense. makes you, Thank It

Rick Hessling

You're welcome, Neil.

Operator

Our next with question Read comes Go please. Wells ahead from Roger Fargo.

Your open. line is

Roger Read

thank Good you. morning. Yes,

Michael Hennigan

Good Roger. morning,

Roger Read

in in question seeing going everybody export on me what's the and Let to any the your of have the across kind government calls, Central part -- you're with the on of do out risk to these and percolating you that River terms any diesel some just or issues all country the policy thoughts that on had wants Whether Mississippi of system? of ask what not on there are anything diesel intervention the issues of take front?

Brian Partee

couple Yes, can there. There's is Partee. take this I a different of to Roger, that. Brian unpack things

First Mississippi River. the on

system Ohio XXX Mississippi. have barges. and River the really a got River, We over several the tugs strong flow. do over last continues team. operate We And the but the extremely on has working also making team We've and and the to hard capable sure product largely transit Inland XX been months

So the I on very lower team it's that hard Mississippi been to don't heels sure in have there's our the been but River say impact, working no can positioning we of disruptions. diligently equipment right and the make

front, been things that on So pretty going have well.

and relates communication, welcomed. As the it to engagement which frequent has been the ongoing with dialog administration, we had have

mean, relates understand the goals and as would the that, I think counterproductive each think the and to perspective. consensus it ban, there's barrels dialog, share been just disconnect. be through logistics we We've I the to got We've grade understanding back And don't prices. demand million enough in. I got X.X our it export other's reducing fundamentally, good that objectives that and to U.S., exports look likely inventory have building at it's if general of in and mixes. of you

So that's not broad been I action. best the course and understanding engagement of think there's that,

just can't any of said, on being anything the I is at table I on all time. speak the think Now behalf that administration,

Michael Hennigan

thoughts were just do is Hey on that the have I my one understands would to you upward Brian, it. and it's Number on ban I'll effect Mike. a think administration that Roger, they which the were they actually refining I'll originally put give not looking for add not is reduce what pressure and consumer inventory instead fuel would levels, capacity decrease prices, intending.

thought it's So my I that path. not given that's this that -- the would opinion, pursue administration these think But at that's my potential point. just outcomes,

Roger Read

a then Yes, see that, windfall be a experience. on wish I tax, which lower profit would but to for follow unlikely either based prices

So forced they to decide I might you they threw lot know to. or do that. never want don't a -- just feel what into

or -- it over back it I'll turn So over. turn Thanks.

Operator

Go question John next please. Royall JPMorgan. from with Our comes ahead

line open. Your is

John Royall

Thanks guys, question. morning. my for Hi good taking

XQ, the I'm from OpEx down for see So surprised given more you it XQ. on to relative have to turn levels guidance XQ

something point anything that's either there to from non-repeating So XQ in XQ to or in anything particular?

Maryann Mannen

Maryann. John. It's Sure,

largely So three weighted, that quarter. impacted had actual things we the results quarter, in the in the that third were equally really

The do a property has as impact it tax adjustment to four-year mentioned, go a was back We that. I about -- the costs. one-time. and first, on a Unfortunately, ability call had state from the you $X.XX

remarks, and unfortunately, So it. that is my we it. when continue to I it's that in after go mentioned to live, But we'll record non-repeating. And pursue need as

So the in that quarter. was

costs Second, general, quarter, gave nat fourth level just back in in And or quarter, gas the related QX I to point, repeat. not we other decline do half-weighted impact, tax energy higher. addresses we we certainly guidance associated When obviously, mentioned. hope in the question. as for obviously, that of third expect QX. that piece, the activities energy the And with given last the to turnaround see costs to somewhat then expenses or your the quarter-over-quarter, higher I

Michael Hennigan

it's Mike. John,

me what add Maryann to just Let just said.

we $X So reminding gas with can BTUs. where give good curve price $X.XX to we million best is the a sensitivity every one forward look the going our a for be? try we before is at guidance guidance just as we per you barrel the to right as caveat natural the being So and you give

quarter hard up is to actually call. that So the where in ends

of the best and our just curve look it. on we number ahead at put time So a take forward

last that we we feel good. on seen I about is the have sustainable years, good of and cost. we've what control to the I continue So reductions couple say that areas that's over

that up on. we the throughout to Hopefully, unknown actually tax as price we gas whole As where Maryann natural dispute will follow have helps. have this that itself mentioned, we'll quarter. a And

John Royall

does. It question follow-up And capture you. just Thank a then to rates. Neil's on

should heavy commentary I think maintenance And quarter do dynamics. just number of to some a little looking touched bit wanted kind broader you But -- XQ you you XQ, remarks, me kind down the think XQ? that be a of relative total moving in pieces into in then is and it think I it's the up to there. just pointed of perception, it just a -- to about you then order but And in went some think the have we that prepared in the moving -- kind be price it's down. would like of on relative to

Maryann Mannen

have Hey were I we strong I'll capture to third compared provided that second quarter third to then and Having and quarter, certainly would fourth John, Rick quarter, start quarter. some right, frankly, a we impact but you elements knowing had capture to you're a some pass give guidance when it I'll turnaround Maryann, that, any incremental said the and But quarter we the third fairly seen activity, color. in as there for result. expected that Brian offsetting on the

headwind a secondaries were those benefit come saw And a improved really we know, down looked they at then still did clean you initially projected. we quarter-over-quarter. volumetric were what our Pricing as First, product prices than gains the lower bit actually as we actually and in better prices while had the actually quarter, margins.

a quarters. you've Your as out. you Obviously, the asking you all seen me, about bit quarter quarter, heaviest fourth will cutting from the of as of what question month we But be, four were in tough, I it think, was all and guidance, our well. turnaround talk -- were is excuse as little

Rick we give quarter those to anticipate third fourth quarter capture what the be you below me the would pass in and But that saw for let color. it some Brian in reasons. to could we of very incremental certainly So

wants too. I think Mike it

Michael Hennigan

other half fourth we as time, when decision back that activity to it conscious provided QX idea, that delay At high make just was that a as before we specifically quarter. to the felt margins Yes, anything to the to year, I were, was were of they remind everybody into the we or some John, want guys, pass no made adjustment. into safety issues a good there the

that what's margin as was our in call, a fourth activity. activity So and more up still far but think good is quarter for the bit we've happened QX it little some of some here turnaround as a traded loaded has we QX margin

Rick Hessling

just on margins. John, earlier is comment make this Rick. to secondary and Maryann's add comments a product I'll

where month that's predict would anyone's up. But our product end see the margins quarter. months and where say WTI go. I we're one two We'll next capture biggest trying going secondary so the to to where one So been of volatile here wildcards have guess. from will is into the on is go

We'll more color Brian any if add. to see see there. plays quarter out. come the to -- So how rest the of with I'll And has that,

Brian Partee

Rick. thanks, Yes,

but We've the did to opening Just October started in seasonal favor. the our I products as off clean say one largely into Mike we the that his in strong, will see hard working from demand. perspective, quarter, call quick in one weather commentary, ball summary indicated not turndown comment. a month had wrap-up It's

on been Hurricane correspondingly, weather strong as a month had a We as see has event the moderate of did haven't country seen we've strong the demand We And in we've October. throughout -- pretty the well. front. margins seen whole

think, early ball. favorable too the call to I directionally, So but

John Royall

thank helpful, Very you.

Brian Partee

You're welcome.

Operator

Margolin next Go ahead Our question Sam Research. with from Wolfe comes please.

Your line is open.

Sam Margolin

for Good the question. morning everyone. Thanks taking

Brian Partee

Sam. morning, Good

Sam Margolin

renewable to diesel the Wanted business. ask on

benefit brings procurement You the on mentioned some feedstock Neste side.

have also Archer-Daniels. You JV the with

across a feedstock So and between waste and within universe, you're now. categories of disparity vegetable there's right covered oils lot oils the

so sides think stock specific might if security it's over the important about on you one another? be just or whether feedstock category curious really have I'm feed you of overall, both leaning how to And picture towards

Brian Partee

take Yes, Sam, that Brian. great is question. this It's I'll a question.

going out little first, we and have back a about bit up let on what just with So, me west Martinez. talk

we're strategy. into prefill our So well

from XX of middle we've suppliers. different So since currently over prefielding the We're summer. been buying

fast come we forayed business team So with the and up this relationships. developing those two in has ago very, very into Dickinson years

really flexibility. most feedstocks. a Beyond logistics around focus just part is in It's of big of types areas the our

feedstocks So logistics Area is bringing as greatly the we've which opportunities with three in -- access on into, facilities marine and that well. we're Martinez got flexibility the rail to Bay positioned all have of

of in Beatrice. -- our in in facilities got Central pretreat addition, U.S. part the and Cincinnati the two we've So

run an look pricing gone an the two the We with We being ability look business feedstocks. And in we logistics, confident, crude much refinery, capacity. not we unit LP we side from on our of at holistically being at to in business source business. very model. the undertake in confident we've like it's So our and at look we're of optimal quickly the But at course, pretreat really value. different plants to shortly, constraints CI optimization here

of So crude it's a broad optimization, on very similar side to do what our business. the we

Sam Margolin

process And of we of synergy. to years MarkWest on into was refineries integration big part sort wonder ago, And acquisition them back at Thanks. is, And we've the a relationship or a off pretty NGL a if of Okay. it the fenced if as time was that at time that them now noteworthy optimization got commercial your you've speaking Refining side, in differently? I the go could you number transformation, if specifically that and a NGL imagined or the of dislocation butane. maybe then or of there contemplated organize least if in

Rick Hessling

Yes, hi Rick. Sam, it's

the these is out call right now. in environments So low outstanding, in price especially NGL we're

it's and we as butane here NGLs question, incredible our to Garyville, our it's today. We're season. NGLs us to tied you to throughout we a around when yes. -- look and the is seeing logistics benefits I system. octane your our it's coming of the blending but optimize at on in our extent footprint, this especially and into system, would Coast Really, say it's -- and for we entire Gulf So Yes, the saw with MWE it's from the things today, nice MPC our certainly yes it tied specific arm optimize as total both our shot with and the to all heading certainly answer system. whole combining specifically butane

out. So a great call

Sam Margolin

Thanks day. so much. Have a great

Rick Hessling

You're welcome.

Operator

Scotiabank. Cheng have we Paul Go with next, Up ahead please.

Your line is open.

Paul Cheng

questions. good guys, Two Hey Thank you. morning.

back the to stock. [indiscernible] First, I go want into

pretreated have Cooking is that the mainly -- Oil. UCO, seen price the oil the CI adjusted soybean the On we to Used comparable recently

think want trend sustain going the to -- strategy? that think you that's do happened? how to impact has first So guys this see So corresponding that see that why you the that? feedstock you And question. your And may on that is and do

the renewable months over past the that the and -- The second outlook prices IRA your longer-term that you. to four related timing Thank how seen and question impacting we have is maybe that LCFS also strategy?

Brian Partee

I Brian. question. is This thanks. understand the Paul, Yes,

So ourselves even have at. it first several feedstocks on we're here of point say that mode. others other or we've I oil, relates a where point a been and to UCO we that CI the in and at the at like some as would actually months in look last we soybean been startup

surge market of demand a been super-efficient the in So not start-up. in feedstocks bit acquiring is relates as to there's it yet. And broadly a

market. rendered a for matter. of or business new whether it's in Relationships an line fats. them. lot the it's sellers UCO so emerging So A It's space, this

So ongoing. there's a exploration lot of

here So feedstocks, the the going I to be think the most be key don't get in we've we think key. a right relationships sure to do logistics Those couple structural of months. make earlier, the facilities. think as are advantaged market Sam's said to into question, just to I going it's are our I feedstocks as of perspective. last from But But CI a nature the change seen it's I evolving

second have programs. credits that one to California, that the The the demand years is other I'd or and states, in to supply so. of we're make here there's LCFS. here related emerging Your LCFS seen seeing Canada, Oregon question out over we've last X.X Certainly, gap areas, other that point

that's the So actually that's others variable a of the into new and equation and for you in terms entering us where calculus product. place

CARB So second over for we Credit quarter. big second a -- reported a the build credit pretty the little is million X.X reported quarter. still in

make We We CARB, the assessment needed to plan scoping through that surplus grow. on do things. carbon expect LCFS the support expect the going they're of to continues really program. going them a now to the on investments adjustments side do forward to So low

manifest to Ultimately, been see on California variables. be will engage economics RV RIN XXXX relates had Blenders the XXXX. something of product and as the really We've Certainly, Credit. founded and are supportive. side probably interrelated we an the several think in Tax the and that in has on positive the to opportunity I pricing that in discuss it

has quarter as the this Feedstock third although been the the out on just lower think side. margin then stable and variables. through facility, out side. all seeing our the higher all we'd through production year. the towards that's in the But combined variety you stable have about we been pricing, mentioned, positive And Martinez, expect So different a as side LCFS we're considered, of same Dickinson that of been

Michael Hennigan

assets we're color we and that this them the pretty Plus, our area. with as the last logistics Neste. seen We a know numbers about, want has you're really a some that on wanted global puzzle about, Paul, that. to side. have that and order which Mike. with competitive to see I Hi, a on, have terrific that. bullish early to OpEx, asking Martinez has just just former talking was everybody And on Brian that good facility, have reiterate, gave and you of asset. here now. the piece I partnership we position and set in talked I comment. refinery feedstocks for in think add a up disclosed of while it's our to to part said about want the was we portfolio a we're the We've for CapEx do driver been leader their We've in our Brian

think So feedstock for that wanted remarks, the there's important come OpEx said feel talked with we the but we CapEx, parts of stool one sides of of one We're working enabled to after that of things on is key win-win in of had JV us the to it leg logistics. as of we've with this and about both a the procurement as to and this actually we relationship factors kind last we Neste. the with together prepared them. say And different was we more our most

that So helps. hopefully,

Paul Cheng

Sure.

sales add do to plan, up wait curious, bump and you two you're going machines the additional at now going to or have fully just to have development next years? plan guys Or that's any or you a up. Just one that until ramp plan the

So guys mind? what strategy that you type in have of

Michael Hennigan

Yes.

So are we're we heard thought alke or? said, say, not you alkeplants, say did Kristina sure adding you what you you said. you

Paul Cheng

plant that very No, you I'm now [indiscernible] diesel about say soon. renewable you the that hear what the going saying up have I in curious that come to

additional add the on investment or space the major you that addition? run so next you development next on a say, new we the we and couple material is that's what fully area step facility before in years of your in plan the up some before it Do have new the And you look for stand strategy? just or to okay, for

Michael Hennigan

Yes. RD. was it Understood Okay.

think, Paul, it's latter. the I more

-- have a going but months. of things areas going. that we're year. let I'll But end the some to We're Martinez of We some Dave the make here we'll couple within on of looking comments very mechanically a at. few started have complete shortly up the at

a area continues more out little to that the So it's probably played the to you latter whole scenario but evolve.

So looking why Dave, at. a don't we're the that of things you give color some on little

David Heppner

is This Paul. Yes, Dave.

renewable up hydrocarbon we over little that and difference are feedstock skis participating lot and is to value say from replicating our a bit commercial it that get hedge companies maybe speed product of up and them, core the won't placement will leveraging X a both the extract of to Brian of also our we we from our Phase you're and competencies, don't out even hydrocarbon ADM to of Phase Mike and as we've seeing strategy, with online, JV, example. market. all value can value touched reason shown partnerships down bringing and with relationships, part our So core the chain. Dickinson we're the X the our Neste, have Probably our want I use stated, going, of Martinez we the way and Neste for our while Hence, is, think, outside in and the JVs a want chain, on strengths to I but to

be but to lot a could it So look IRA tailwind opportunities. look be as Mike continue the some Thank strategies. But is actual all stated, at those long-term can The to at the early we're and capital some investment think you efficient. I We before new stuff, as to evaluate it's going to mechanics variables of needs of little we of make see out IRA a how play this. still -- you.

Paul Cheng

you. Thank

David Heppner

Paul. welcome, You're

Operator

with [indiscernible] from comes question please. next Our Go ahead Barclays.

open. is line Your

Unidentified Analyst

you taking thank my questions. Hi, for

on to wanted demand across comments I about your system. First, touch your

multiple views variables water about to XXXX. hear some you hitting potentially also exports Was that were that love ahead about February at and your side, assets? on Or X there. PADD play, your of comments be given of earlier numbers it down coming the get X all supply in Russian would incremental Asian Your being And talking how percolates. in ex-China the And would product on ban to DOE the love and to new just color specific general? outlook the to and in rerouting or the on China products

Michael Hennigan

in of the comments give little Theresa, I'll think specific let see it's consistent but general, in start still that's a that Brian of this data, and were demand a we'll then off with recovery, a mine. our and related part data. on just to I point, bullish at take second we I'll But My DOE your why we're lot so color question the second.

Brian Partee

for Theresa, question. thanks, Yes, the

a So the yes, on just system. maybe bit color of

address did to data. around Mike Mike's comments our quote data. DOE First, on the

super sold retail aren't comps refineries, Our down of that units. we shut relevant different off XXXX couple to back for we've a given

for really And the we QX. overview just high-level at look a give So I'll you year-to-year.

but to seeing we year-on-year we're has really X%, is retail perform probably distillate most Jet strong, gasoline off -- recover year-on-year. that prices. correlates year-on-year, And about XXXX So across from steady very in did been then platform X% stable the and and continues slightly across We well, platform. below the it to QX, and XXXX the were really flat and still about interesting.

QX West decline West, of so X% to in start higher and about we'll was So and retail the the retails. correlate elasticity Gulf out Coast the really XXXX X%. directly and about X% impact was and below prices we Midwest X% that

as prices cetera. X%. see coming around But also have fuel, chute off moderated demand we not earlier broadly, retail I for We're the as comments, back Jet but COVID South $XXX do diesel, and agricultural We're the a gasoline, of highs. We've highs about price optimistic helped of kind vacations, around continuing marine Mike's So halo QX. et and strong mining our summer. to came economies recovery. Jet currently demand. activity. summer to we out the differently. more travel think And The gallon, robust up really to activity be subsidization in South to some as of demand globally overall, bit just demand of little in mentioned we here that's here, the also October remain of there a Caribbean. border prop also in occurred about off got going we There's are geared well And demand. strong the that's been well the America continues

the Everybody that and impactful lot positive on obvious around And drag fuel we're the friction side. be. seeing having a capacity but Russian thing reasons, hard expect and how bit. to exports access don't to globally, pulls on the incremental security winter taken into degree of ball might watching as constraint we is energy very production, Europe expect call mention of of the forward a the do to expect do -- supply. around it is for going So last for a be supply and here. well, as just it we to primarily then offline I'd We the just closely, enthuse We've

Unidentified Analyst

the exports? sorry, or I'm Asian export potential

Brian Partee

export Yes, quotas, empirically Theresa, though, one as coming -- you, is us where and we enter really data COVID we for policies, can on it call. a not of that, to a terms relates you difficult of point Asia have out in of compete. I rumor give lot The to seen

refineries seen competing Asia, a out with of China. specifically not have We of step change terms in to coming

she been the here steady quo last it's as goes, several months. status Just for

Michael Hennigan

just Brian much obviously the The too out we high. barrels. We're additional as would our are we when about price needs product prices I that as best doing Mike. get some it's to the put Theresa, mentioned see can. inventories market add low. elasticity point

as I of the run So as hard can, what the put And the the we market come, needs we supply. much don't much day, exports and whether come on at we as control, to as spend as market product -- to or Asia end can. into we time think that's

end on I some a think to going think I outlook. pretty stuff. Brian the So why, demand We back. a specifics DOE continue be see just gave mentioned that's come the just day, areas. the -- this couple had we still of to over of It's to bullish our years. evolved you it's is at

supply outlook continue the us is U.S. So needs then to or a we believe demand that have this will itself It's demand recover look. that and supply-constrained it. China recovering bullish just from the whether market comes from market makes

Operator

ahead Our last today please. Go from will question Blair Matthew come TPH. with

Your line is open.

Matthew Blair

and good news last I good Hey, month, will you the hear. health your which the Mike, question a I to had from congrats question morning mentioned XXXX. STAR on it's -- be project, had complete early on great in a on

margin be will a so handle then a the octane think through up of I think in XX,XXX new terms project. your you how were of million $XXX that could from will might look a EBITDA just And about that should barrels to might what the some higher moved us also at capacity, hoping day it if add believe better. give we ability Has so, improvement, point, I then too. one mid-cycle kick environment? a of benefits you And And expect volume from of expectations but right, the range flow there I for on number it financials, like? refining a with residuals

you would if that that, walk So could be great. through

Timothy Aydt

is question. this Matt, that the Tim. of Hey part take I'll first

I over mean, crude got that So increase widening our XX,XXX the We you've XX,XXX kind the the resid by about project heavy value a indeed original cracks by really It heavy differentials the day. capacity also drivers a strong got will improve and good we economic improved project. that still the day. have crude upgrading remaining of the obviously, about do current barrels have of really distillate look. the about scope will feel you've

heavily in also of foreign be said made product or next going the remarks, year. markets, turnaround in I prepared investments remaining logistics that the domestic utilized during and be as work in niche first in and the those some of to tied being these improved We then further is quarter margins some the are it so

kind project. of at we're that's on So the STAR where

So kind over Mike. back to of

Michael Hennigan

it had you crude you Matt, right barrels you and put to -- the that It's XX,XXX whatever a a day XX,XXX beginning. numbers want you just on whatever number day upgrading. can on, of of put to times from additional heavy want barrels

once give this start additional up. is, we the math that So that's whatever you EBITDA your the outlook will

Matthew Blair

leave I'll there. Thanks. it stuff. Good

Michael Hennigan

welcome. You're

Kristina Kazarian

think for that I Sounds operator, great there. are And done today. then on we

So you Petroleum. topics thank discussed team please out like Marathon Thank for reach you with IR any on today, additional you, everyone, your and be in will interest available help clarification everyone. to your would you, have questions Should or our questions.

Operator

much. so That you participating. will and thank we you today's Thank for conclude conference,

at time. disconnect may this You

Marathon Petroleum (MPC) 1 Nov 222022 Q3 Earnings call transcript