Earnings call transcript Q4 2022

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Welcome to the MPC Fourth Quarter 2022 Earnings Call. My name is Sheila, and I will be your operator for today's call. [Operator instructions] Please note that this conference is being recorded. I will now turn the call over to Kristina Kazarian. Kristina, you may begin.

Kristina Kazarian

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

Mannen, are me team. executive Hennigan, Joining call other today the CEO; of on Maryann CFO; the and members Mike

to We X. invite statements Slide the read you harbor safe on

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

Mike Hennigan

Thanks you joining Kristina. call. morning. our for Thank Good

board. bringing PNC will Breves, new like in of as her NASDAQ as Toni our Also board I and at experience executive tremendous recently US joining to Townes-Whitley board new off, First CFO a to MPC as recognize boards. be March, appointed want her as Microsoft, served a for Christine and position Steel. most with recognize independent in well was November, recent the director the on MPLX experience director on who

operating back provided commercial $XX consolidated strategic on we've XXXX, Full year and execution. over $XX just commitments. and basis, reflecting cash look delivered improving billion MPLX, we by As our was at activities a operating our over on excluding billion,

And of XX% delivered commitment team's operations strong Our utilization a resulting in responses XX%. performance, in capture. full our reliable to to safe product commercial and dynamic refining year volatile markets resulted

for formed strategic Renewables of collaboration the of $X.X within will which the sustain a partnership our platform focus throughout with renewables. additional fuels create us economics achieved a enable Neste, We reduction cost fostering to a and Martinez on Our year. structural project our billion low-cost culture enhance previously

grows believe the MPLX remains our almost billion since unit by of flow, expect continue In a we And distributions. Midstream, of to receive of nearly MPC increase billion in on MPC total MPLX free the $X will year-over-year, distribution MPLX the have its portfolio. durable repurchases billion will XX%. earnings grew raise return this XXXX. annual business X% as bringing In to based level, source return XXXX, its $XX we repurchases, we $XX its through to holders. cash share to May we capacity capital And

strong dividend addition, XX% quarter. to of shareholder per financial on we to returns total in and Executing for commercial MPC’s XX% a increased our XXXX. macroenvironment $X.XX In objectives, combined operating, led with MPC

wanted through the share priorities goes our we the the and macroenvironment outlook for results to quarter, for on Before financial Maryann XXXX. the

a fuel supply Russian that impact strong ‘XX. will potential as global consumption the But margins and and lower around we of the expect impact we constraints despite the prices. unknowns, product growing current pace of retail Uncertainties recovery, US remains remains to particularly recovery day manufacture coming anticipate Our of out X of supported We've we in we ‘XX that Demand XXXX, the recovery has last for in nearly all offline pandemic. products years. in transportation per by further the barrels the to consumers in patterns support adjust fuels outlook believe million demand and sanctions. demand these across come the of globally of capacity refining And bullish magnitude couple seen China's our remain for robust. or recession since refining

support Our in we the protect to commitment in We assets, remain financial first our communities safety safely of our our sustaining employees, steadfast remain capital. and which unchanged. health operating and includes operate. priorities the These

last support And year, evaluate and share the increases reduction our XX% to shares, growth. in at we end are repurchase Second, committed increased annually. we to the the least to ability at the dividend the dividend, count which as we intend future of dividend

is the and this the of remain business. believe return on last We years been our the of ensuring over a on and return We've focused progressive competitiveness few progress Third, capital growth evolution. change assets through a capital. we energy through as

we capital there are where We will returns. attractive believe invest

we're our carbon assets. that improve at of with lower as investments the facility LA In the and on the efficiency that project as at project, enhance associated focused investment will time the refining, emissions. area, completion primarily Renewables energy traditional Martinez competitiveness low a is our of this In refinery well

as digital well addition, growth transformation. in In technologies, on we're by emerging focused opportunities opportunities as enabled

the repurchase we've share period repurchases. authorization, Beyond through incremental $X to also objectives, share commitment $X.X share lower reinforcing we And s returning early billion of returns. count. capital we're to three strong repurchases capital from nearly the January, today, announced our completed excess through these share In end November meaningfully of our billion an

to through the through to goal is deployment investment of be most cash choice creating value strategic space, refining Our capital flow, shareholders. the the in cycle and delivering returns generating our superior of

sustainable in accomplish. emissions, setting meaningful GHG intensity can to lead to targets emissions freshwater to reduce ourselves believe and which methane we a targets challenged by path also tangible energy we We demonstrate

the activities, quarter gallons year milestone of X first sustainable renewable our energy in capacity our the a facilities the Martinez goals. The marking full Phase fuels X by per for production of of track of XXX fuel we reach is end significant As future, innovate to facility Renewables Phase XXXX. million progressing on startup

capabilities opportunities fuels intensity carbon in pretreatment the to come facilities gallons the expected facility At renewables We'll our enhanced position million through of for lowering chain to the strategic full by we expected of XXXX. the capacity its Cincinnati. in cultivating Neste half end in the produce. Beatrice second enable continue of to ‘XX, leveraging which and feedstocks, we're up operations be year look optimized per advantage of and value ramp XXX the We've online our ADM. Dickinson, we've the Pretreatment to partnerships able are to bringing will more in to with

the included As At Dow evidence Jones the consecutive call point, was Sustainability turn sustainability of over to this to our for I'd goals, like year. America in North MTC progress Index Maryann. this on for the fourth our year,

Maryann Mannen

Thanks, Mike.

of we Moving benefit, adjusted earnings results. reported Slide summary per quarter excludes of well inventory this unfavorable fourth results, $XXX Speedway operations, our $X.X provides million transactions. $X.XX. $XX LIFO share morning, a the This related capital million the X and billion. from was quarter, working excluding the Adjusted cash EBITDA flow for billion as changes, as to financial gain the was $X.X

$XXX of the we million billion shareholders and payments, repurchased $X.X returned During shares. quarter, through dividend to our over

the and quarter by as barrel, spread tax marketing, Slide was the driven in of was EBITDA of third driven these operating decrease reflecting X and by fourth as blended assessments. pursue primarily This a the income adjusted for as XXXX. retroactive XX% well Corporate XXXX EBITDA $X of Adjusted billion. change the between quarter were periods. from over reconciliation adjusted to shows by EBITDA fourth refining recovery quarterly sequential tax down the net the approximately lower was prior We sequentially to multiyear crack $X expenses a assessments higher in intend per decline. quarter

year In nearly The resulting fourth was which addition, XX%. not midstream in rate anticipate also our marketing provision a special cost. includes of $X structurally for affected quarter costs future rate and and refining segments. corporate that full was tax the will impact tax expenses, XX%, and compensation corporate the these billion tax We do

million segments. segment refineries at winter several in in were December, of quarter approximately Moving provides results, our Like of regions. throughput in Elliott X online issues. the X%. structural were Mid-Con Gulf many our Coast X impact the storm capacity have our of and crude was back and roughly of Most our an by to our we short period, fourth by assets impacted crude Marketing slide industry, utilization reduced barrels, the Refining The a primarily after seen overview for not end our which

million barrels processing recognition barrel were supported per crude per margins utilization, US which for our operating Coast Due by contributions. for to quarter while were to per the disruption day in expenses the Sequentially compared team. the a the flat, roughly end export refineries. is the Gulf in our approximately to our reflected demand. employees partially at by of lower we offset at XXX% throughput quarter commercial of Coast XX% West refining was assets in Operating our the Looking anticipate due relatively barrel, XX paid cost in lower XXXX. quarter quarter first expense we guidance flat fourth barrels a $X.XX region, costs refining Even ran of to Capture at energy to at quarter, the with barrel per strong of X.X January, million compensation quarter. in notably fourth from most impacts result barrel of a throughputs margins our the lower saw special primarily decline reflecting X.X as in third per were $X.XX

be this the we when provides we $X.XX was barrel per Our refining entirely which refining full this higher Slide refining costs $X.XX, costs. to structural overview sustainable. and marketing operating are actions quarter, energy taken year can capture an operating our attributed of believe We of per X barrel is operating reduce to costs to costs compare our XXXX have increase XXX%.

volatile not executed particular, margin impacts tailwinds we product And inventory prices in secondary would light of be We commercial expect capture. all to teams these to the first impacts Our a the all effectively market, reverse product improved and do quarter. in in inventory tailwinds benefited favorable expect repeatable.

We incremental few over we believe of committed performance results value we the baseline XX to last target date, the will over last commercial to we that months we capabilities realized provide seen sustainable our our commercial have built been be beyond closer As we can through financials. But strategic that moved produce a pillar has will and capabilities to built XXX%. have advantage. XX%. indicates captured have a what our in the communicated that provide improving efforts Historically, the we our will have years, believe and

XXXX. Slide versus of Midstream quarter in XX show change the the our third EBITDA

quarter did associated lower primarily Our Midstream prices. due to results. fourth delivered resilient see with EBITDA, impacts lower NGL segment We

fourth our the cash conversion in declining the excluding MPLX quarter. the benefits quarter. mostly billion quarter. Working a by We quarter, consistent the on position crude in project flow, the Martinez quarter at in million This as working totaled $X.X for to and in STAR elements refining work $XX in driven fuel presents was contributed investments $X.X this progress MPC. billion Capital and expenditures Bay. Slide headwind of offset was Operating change by for distributions the inventory Galveston Capital cash facility from capital Renewables the prices in flow cash $XXX fourth changes consolidated spending quarter million saw impacts. XX

the not spend, the via third quarter. the We in timing and quarter. in JV during reimbursement Neste the $X repurchase close, of reflected billion billion $X.X was authorization reflected the for cash returned November. spend, due using MPC in Martinez the the flows repurchase share from began incremental to received capital XX% XXXX overall While capital and in share dividends nearly

For capital the billion operations, full year, from working of a XX% billion cash of impacts, representing we out XXXX payout. returned $XX.X $XX.X our excluding

XX partially commitment includes and million short-term provides approval demonstrates regulatory At was our investments. outstanding The approximately returning roughly the the which our to $X.XX to billion, MPC’s capital our by $X.X for their purchase refining enabled the reflects approximately $X plan which MPC Slide incremental discipline. of includes on billion plan end This investment and fourth XX% excluding The $XX.X or $XX complete strict is the MPLX, maintenance XXXX, $X.X of authorization plan, program. segment, had for compliance. focus billion commitment related $XXX totals investment in continuing of approximately return capital capital billion and billion capital. quarter, our to marketing cash which billion.

is Our of the for between Martinez growth $XXX is projects. split allocated carbon Within traditional and approximately capital carbon million low conversion. completion million $XXX low plan

we energy Los emissions. We spending which facility project to we projects capital multiyear have to allocated $XXX at will are is lower focused expect executing a also In million. a project. XXXX, smaller million emerging And This efficiency be improve on $XX and our associated Angeles refinery, opportunities.

for approximately gas refineries, million we million. to the improving refining, brands. their $XXX The energy the focus capital marketing, traditional completion at and targeted capital plan of ARCO targeted demand. on of million plan capital. million also lowering $XXX $XXX plants efficiency, the yields This morning enhancing spend maintenance Marathon and customer $XXX smaller plan investment projects $XXX our smaller and existing of MPLX growth and expansion of debottlenecking. and of assets includes that new $XXX with of announced cost. In is STAR our for on expanding focuses adding and spending our to projects enhancing capital platform project. on plan meet Their associated XXXX investments processing focused at million million the Within is

our Turning outlook. to guidance, slide XX, we quarter provide first

our volumes Coast barrels processing lower fourth and expected million Gulf day The the day, resid in barrels quarter per is starting the scope XX,XXX Bay with throughput approximately is a ramp project, Galveston X.X to roughly to to second projected Gulf at in be the in quarter, in the XX,XXX barrels region. XXXX. the turnaround in levels tied crude specifically is first turn of significant of per the per Coast and of forecasted capacity XX% during representing of due million expense to Utilization turnaround to crude plan be around US of expect utilization. quarter level We STAR be day quarter, remaining should begin than impacts activity of region, $XXX first in

of the XXXX in XXXX. turnaround to level be to level similar the spend expect We spending of

to turnaround first quarters. of in and half have weighted be However, unlike consecutive we will with planned XXXX, the Therefore, front work. second executed quarters this heavy expect year, turnaround work activity four we significant

anticipate barrel to complete project Operating for we our to In turnarounds, with the per work the plans. quarter. per downtime we related our higher conjunction first costs as other $X.XX quarter expenses flat in planned barrel at utilize are be expected

energy We is turnaround the from seeing Coast. costs the given the activity are heavily Gulf to regions. lower the But weighted Coast of majority Gulf and our Mid-Con benefits in

costs driven Our quarter quarter-to- of in we flat our where costs recently. have expectations seen exposure, Coast a West decline operating energy not is by

approximately pass billion to sustained are in quarter. representing would the our to decline project expected $XXX As and expected complete costs trend back towards into reductions we the have me for activity. it barrel area. operating per turnaround anticipate let $X.X are we look costs Corporate as to more made XXXX, be With that this we a and costs level normalized million this we Mike. Distribution that, be

Mike Hennigan

Similar solid cost structural summary, capture opportunities, Thanks execution what we've market portfolio. to execution have Maryann. to which achieved irrespective operational the In believe will we us driven foundational. our we've commercial our strategic three enable environment. of to with of benefits, and improvements believe We made pillars remains reductions the and sustainable

through investment as refiner of to is steadfast the and cycle superior shareholders MPC to goal returns Our delivering generating capital. position the our with cash our choice, to commitment most returning

back call to me Kristina. Let turn the

Kristina Kazarian

Sheila, for Thanks questions. we're Instructions] And Mike. that, [Operator with ready

Operator

[Operator Instructions]

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

Neil Mehta

strong Yes, results good morning team and congrats on here.

capital shareholders question cash you had returns. or around and was back target think to about first a percentage buybacks I magnitude should How of The the the we to given year flow of in through flow free cash dividends? get

and then heard number of you level to target why peers how does billion being environment is? billion talk that higher, right it $X the is cash. about about a a of Given the some talk the there? And long your We've number how $X get being strong take

Maryann Mannen

the for Thanks Maryann. it's Hey, question.

-- question if justice. try I can then into and if me done of Let I've there break to parts a that see couple your

the part buyback return first as did continue January. and the of the you from you buy our cadence if of share we can then and in billion repurchase in really month quarter, in to will share back the Neil, see we $X.X of capital, So

authorization wanted Just early remind begin using the that incremental share call and $X did our we billion you we $XX in repurchase that complete on October to I quarterly would billion indicated in November.

the authorization. in an for better the $X in cadence, October, market seek have be of clear. And worked incremental just did part and we our essentially back So to buying then billion October, we announced

we our billion So indicating commitment of hope buyback $X.X authorization, buyback. see us you that share that. leaves And with continued to hopefully

our of just commitment question, really think there. around second The your part

that's were think what saying. I you

So does $X and why? level get How that We to of feel appropriate us take an billion? when we do $X it is long a billion cash.

probably First, because our stress during in cash we pandemic, one the and challenging of our tested liquidity position most the markets.

unique distribution MPLX, from keep say I'd our a when we receive at $X peers. look in billion us you compared probably Second, mind to that

we I billion that's $X in that then And about comfortable $X addresses with a questions, of appropriate. combine outcomes Neil. is that within reality, your range So, feel our you that billion. hope pretty liquidity,

Mike Hennigan

Neil, it’s Mike.

what just add me just to Maryann said. Let

a about position commitment in say billion, we're moved good for refining we $X.X real and pace, covers call, MPLX of up to had people at we the distribution, expect But there. to $X the continue we're If billion let's that So $X.X that to billion the been the now grow. capital to from pace, MPLS, listen $X refining. at that at essentially dividend, half billion

with balance that part that's we So on the billion $X the are comfortable sheet. reason of

with we pointed still the on year to close you as out, sheet. billion the finished balance Now, $XX

have normal number. helps MPLX. but hopefully do financial capability And to at of we the has is with it right why that some explain our the new lot So a billion a get with still to to $X point, affiliation

Neil Mehta

Yes, economics, the good environment, for around a a also, we mean And remind problems, is up both flow? but this about Mike. on But midcycle at could should think And it time. good like how it's then cash the coming seems current what STAR its economics? follow project, spot incremental in project us

Mike Hennigan

Yes, people. one that from It's been a question. lot we've of thanks Neil, getting for

So it's easy to relatively model.

capacity. now, the until take is our And that STAR are results. in place and way a our the number the crude, easiest in What's not heavy between XX,XXX parts model results, are day So up in barrels differential times to of of that is crude ULSD.

at STAR get barrels additional is unique pretty you differential, a project us. day, But that we'll STAR multiply EBITDA and you for online. XX,XXX that's a by if once is the look it So that

it. on couple make to So I'm comments going ask to Tim a of

you bit details, background Tim side behind financial some with me it, little of a of give the the it please. have you So let but

Tim Aydt

Thanks Mike. Okay.

there. have that So Neil, is question good you

a done phases, So so we've in that project let already of the amount service, give little completed mind scope been this keep backdrop, a put you we work the already it's STAR and in me units fair in really earning remaining is with in quarter, we'll be the this a up have be planned then and late completed April. that the return, first in going turnaround that has to ends starting

The also to be Mike in is expect second going to the is going after capacity like through resid XX,XXX to do day. indicated, a STAR’s by upgrading startup day, EBITDA XX,XXX we scope and a and quarter. really just to ramp one So by April the contribution continue crude increase remaining capacity

a rather the the that unit to Bay Galveston hydrocracker elected volume maybe decision than offers cokers, little it on increased So conversion we because expanded liquid yield. background upgrade resilient and better

So increase a able to discounted we better And be it then are is significantly The a was more the choice to that the which of the Canadian crude. fractionation heavy refinery made than coker. diesel will recovery, process going also also modifications profitable. the

those some So that. us are reasons that of the drove to

the of So heavy the feel when better about the we drivers project. near-term discounts the strong margins, diesel the good And with and project. sanction than really the current economic are crude we economics

hopefully helpful. that's So

Operator

come America. question Doug will next Bank from Our from Leggate of

Doug Leggate

didn't sorry so I'm about that. guys. Someone bill, the pay phone

doing? is I So everybody apologize Thanks. how for that.

of and reloaded your about are your So me And with thinking look And November. I, got Mike, by How obviously in go. was program? where you it fully first obviously, trading. between balance MPLX. the all, my the is back going thinking of part guess share share covered dividend Because at let your is are but you from at the a you gave dividend you this? buybacks? distributions a well dividends know look give you I I'm us of when How buyback price about where I half and I business, questions – earnings the I asked,

should environment, a thinking in this a lot stock a So of in of at level? we is dividend buying back of we that bit more Or be the should this bias be kind XXXX?

Maryann Mannen

continue to dividend I'll talked that we we to Maryann. We to pass dividend, to wanted that. looking to the it at wanted will annually. look it’s a be Doug, Mike in sure at We potential here be the But with was it competitive grow. secure. And as we committed back Hey, that to second. about

as appropriate of obviously, think we As we've over billion shared share we increased have of is an that outstanding the to dividend authorization in return you capital. the stated, past, and to share $X.X continue repurchase, repurchase

did us authorization continuing to see quarter. You'll use as the in that here we last

dividend as repurchase the I'll that continue evaluate we'll to share dividend. see but Mike. over more pass yes, So, a we to bit it preferential

Mike Hennigan

add obviously, a just Maryann have I'll want said, dividend Doug, what we competitive a growing Yes, to time. dividend over to and

more a So sheer relative capacity the that balance right magnitude That's with that little is return that Maryann way. now sheer of inefficient said we more year we strong sheet cash towards with of to billion of a finishing magnitude share on environment, financial foundational is continuing to side have to just leaned that and the capital. a tax $XX why is buybacks. the little the about And refining just of It the the much us. have bit

obviously, going to we're year, the So of to want we've to the of of our we directed committed that the is we'll repurchase look and because At towards the day, at just each program. it lot at it. be attention number magnitude the of look end a it, committed

Doug Leggate

of complain that guess is I understand, a Okay, no big given part to about price your share the that. yield, going I is one

the strong, and follow throughput is the you guys rate to I on amount numbers. refinery quarter. up still it's think had sales pretty that if So Mike, I maintenance least looking in on of at was My answer. was product our going what the part a at appreciate was the relative there. operational capture am quite wondering of And question, an I known the But that fair but well

leave your a as downtime lot a there. to a how ‘XX is us for see year of strength operating So ‘XX hearing And and year I'm going you whole be your maybe understand steer to full average Thanks. big peers because it help the you the that wondering if I'll we're could us the performance, industry. of give from

Mike Hennigan

Doug. It's question. good a

concentrate when we performance. couple was started there's a it on, said pass areas But years second. one So heavily them ago, our Maryann of going we're this in improving a of that I'm to to commercial three out we going to

give So that. little let a Maryann more on color

Maryann Mannen

Thanks, Sure. Doug.

they quarter, in depending favorable impacts. certainly remained foundational, actually then We're last capture light of years, the our be And be a XXX% that was remember we impacted, thought set that what on given frankly, indicated, one where sell turnaround, one are guidance, our a our secondaries. in work of higher to Mike necessarily commercial actually and pricing last would at may some a did one historically, we capture of We our look highest commercial don't some But highlights strategic also the Rick, it we this few and margins, then give toward been XXXX. remain tailwinds committed all and team over particularly to, more in in XXX%. we initiative team these is said quarter. given and strong of rate could performance the we the we could the favorable but of that saw As bit about repeat, I'll we've when pass we Brian them had you quite had the headwind, think clearly you XX% capture a of at take the product things we pillars pricing, commercial doing. that we secondary moving And talked products. has inventory

So to that. ourselves to we're continue deliver challenge going to

on incremental color some And and ask to with you specifics that, there. the I'll give maybe Brian Rick

Rick Hessling

just It's to Maryann's few a Doug. Hey, add-ons comments.

that taken is from is we've XXXX, to and What to we our the there a will is to commercial throughout say focus helm since And be of will night changed one-time that leadership put in volatility, the in and meaningfully and been XX% had a is, and ebb-and-flow. I Mike we sustainable? new team would it'll has the have way it event, the perspective be. company. But this has go entire market the a day lot continue not So

outpace of look when results XXXX beyond, continue expect that many would should momentum, you but will I our you expect peers. So to expect say volatility, continued at and

Doug Leggate

think Honestly, overlooked. guys, I that been has

go please Sorry, ahead.

Brian Partee

value comments Yes, quickly really this team I differentiation just that's into across relentlessly was We're We've Doug, capture. have to consolidated multiple And Brian, the got the one our serving entire that going Rick's key point very really a real for functional bolt-on, divided us. is up value team the we customers. pursuing team been was silos. which also to adamant chain, about into historically

clean So my on of the an has side things. product example team

think activity and to So or planned environment got it's unplanned we've to in outage to as impact capture, we about an our turnaround where operate we've got an customers. whether serve outage,

So to lot the and got perspective planning And on can that the turnaround logistics purchase from do we a of to that a build are firepower there's things advance to we've to down. different cover turnaround as units build the feedstocks, depending well. ultimately,

right if capabilities churn think either activity We've unplanned. I the refining the cover, So we've to planned that's the the relative out or purchase to sales. in what you're got seeing called numbers down as got you

Doug Leggate

think is I answer. going people. it lot much. Thanks I so Guys, a full of to really appreciate the surprise

Operator

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

Roger Read

particular about ask Well ‘XX. how to we change I'll little in Yes, we like think meaningfully at pace everything. timeline in be you a milestones cash Maybe good ‘XX it morning, maybe till wait Yes, capture flow the think the and upcoming everybody. the happens to Martinez, for, contributing I'd and any how that's on you we or whether basis, should watching though congrats bit. about should there. a about give and done another, should certainly, process

Tim Aydt

And And next product the take HDO the the guess fresh commissioning we is I week. spent this unit. most really that and here the startup storage in put we feed we on the Hello, first and part one. I'll Tim, actually Roger, conducting schedule, activities. of expect yesterday finished January,

of we So end on per year million XXX renewable first phase by which track full gallons to production capacity, of this the here. is are quarter fuels reach

the also constructing per end expected second be facility that capacity, full XXXX. XXXX. capabilities. know in come then You half gallons to producing X the by to some capable of And the is refer And what scheduled we're year, to online Phase million are of as XXX is of we the may is which pretreatment those

feeling on good. we're and So track

Mike Hennigan

it would some a Roger, been about only But to the that to would by point, really contributor but feel midcycle execution that team's it’s at is good. we I refining happening it's good going it the dwarfed contributor, Mike. The has meaningful saying today we obviously, macro in in the not thing project. where be back what's when add refining get it's today. of the it's And is light be

Roger Read

other is we've overview. me good look a certainly demand, refining follow in how continued gasoline terms give things. he obviously your system, you jet guess has I if things that is Yes, across question see basically, wonder could up strong, little soft, pickup us seen to but my of kind an some just I of gives in

Brian Partee

Brian. this Roger, is

So as we've I'll really a of at domestically bit XXXX. to US on an think here in I relates little the in a exited inflection just Because point recovery. reflection start as of industry COVID

marketing increase, barrels lot of mentioned, bit really we're X.X of beyond. in from of continued is seeing, Domestically data. XXXX, demand overall to we his day globally, So see Mike remarks, look strong at year expect oil a as EIA, increases year-on-year dialogue million into when you in prepared know, individual a books, what data, and I triangulation, XXXX mobility around there's a a and this a

overall conversations is an a from end around in actual to and But try backing So been the has be resilient offsetting on We've demand back it formulate piece tailwind. consistently work we've US, the rate our books. a little gasoline of a when we've some to as throughout. we kind perspective, around expect sticky. front remains you resilient home relates then recovery statistician years, we the where seen of diesel result gasoline front. full of what as pretty a as of been COVID. of a jet, structural some XXXX all XXXX. of double gasoline recovery is across do early the couple view implications to an obviously into off seen COVID, That's to on we here last we've COVID, the domestically but see And But is use if The through call that It number through most decreased a lot now on impacts. progress like went demand. together little you we're post the we about the about we And informed there And probably look that's COVID as seen been of that, of it feel of in as public steady domestically have bit point from here, seen remember bit transportation to from levels. our X% X% headwind, structural at

recovery. full half of back XXXX So seeing

I'll year-on-year, our to there. of relates in wrap West X%. interest kind QX, of just it we gasoline What found the up Coast. The book, As spot maybe was bright

quarter Coast. the saw year-on-year we year-to-year on jet in West X% in fourth the X% up was was and basis. a X% So actually increase Diesel up

Operator

comes Our Paul from next question Cheng Scotiabank. with

Paul Cheng

Hi, I Good morning. guys. questions, if Few could.

in refinery about? Thank that we're that expect that? what we that in any you is the you talking you which $XXX it outside that year think there, LIFO the take LA The you And mentioned of Fourth some quarter, as system? first that one benefits referring special could is favorable maybe all a I assume, from benefits. continuing impact of as were simple. really Anything item If inventory is Can I it If how Maryann, or Maryann you. about a changing there that's idea, give didn't quarter? million talking then us yield? what in number some all then lay fourth product wrong. I guys on this And or investment, refer. give what could you crews the can get not is energy secondly, that big usage the think some terms you us or you I this share idea investment

Maryann Mannen

it's Maryann. Paul, Hey,

absolutely was The you're LIFO inventory So I benefits when in are quarter benefits. the capture the the that we discussing, correct. talking outside about achieved rate

As excluded our seen, adjusted results. we've LIFO the from benefit you've

I commercial on So was the winter issues talk really capturing what when to address quarter performances, for I'm talking ability inventory obviously, we the has storm And about impacts referring the LIFO. about teams not is us. to our

Paul Cheng

how the quarter? benefit how in Yes, big you quantify fourth -- Maryann, is can roughly that

Maryann Mannen

Yes, benefit that, mentioned the We that each in the of provided secondaries. light inventory, the individual saw happen strong quarter. Paul, piece of product those of we've again, a of not margins level pricing on detail on I contributors,

the to this those. one several granular we contributors detail significance performance, don't each were So of of upsides typically there on but provide that

Tim Aydt

not This really take remarks, of an just were in regulation refineries we NOx project further Relative is going upcoming that's to ours, the Tim, Okay. the of I'll basin, the And regulation the question. that second course. is that's to that next that addresses LA to your be is mandating opening LAR to in referring a the project going to all of phase reductions. apply

be industry requirements. really in refining our some systems in facilities meet Angeles required Wilmington of there's our Los with these and And utility comply X both Carson to to we we And X have significant investment this. Phase a opportunity order to modernize and Phase very complex going at at so unique believe order by to reduction the this

that's this really SOX, particulate And our greenhouse will also some thing So us. and And goes project is reduce our the think novel worth I other driving gases. VOCs, it. what's reductions matter, that's for noting NOx or beyond it

come lowering our also which cost reliability. And emissions, besides our reductions energy in the favorable energy our about improve form will cost. of going spend. is occur. to can And significantly thing are economics the maintenance fluctuations like going it operating lower margin these the of These will usage, So that it's our and independent we to reduce facility product that lower efficiency light it's

And of of core the one already So all kind value for part a asset the around chain. refinery the the competitive most backdrop state. certainly of us it's this the of Coast. it's the refineries on And LA was West in is

position its is our initiative is So the this market refiner further competitive cost-effective being every project consistent in cement in of to most with which California, strategic going we serve.

we expect the the dates in So to initial meet regulation. in XXXX. project be compliance the completed time for new to And

helpful. that's hopefully, So

Paul Cheng

million costs, try year, terms to $XXX XXXX. million is share the of lower And Yes, what's quantify in you for any to energy Is total in there assume this again benefits? the That $XXX should we that number investment? better what efficiency could there? on

Tim Aydt

individual significant Unfortunately, in and we numbers it's into providing lowering don't those get a projects payback. it's that emissions sense returns specific generally the but and our on

Paul Cheng

is CapEx, $XXX a million billion year? it $X

Mike Hennigan

that Hey, we Paul, off was is as trying multiyear, disclosed What to give color it it's give to is, with we'll million time goes on going as be by. haven't year, a it. start $XXX time Mike, say we're this and more the we Tim It'll goes multiyear will color on. more project, and

Operator

John comes JPMorgan. with question from next Our Royall

John Royall

Thanks my for question. Hye, guys. morning. Good taking

stick to growth number, and Martinez growth, CapEx your at to with STAR. I looking just down project your $XXX will about and So budget, program was That and assume million. be going close

XXXX the growth into forward? where we in growth think project, future, goes think going looking you hearing here? that. from lower I of another start or phase just could maybe know there is LA And capital you've beyond the wondering So CapEx I about structurally but do project about plus, spoken we'll

Mike Hennigan

we bucket continue and We've Mike, buckets, can just grow carbon our as to it side bunch it's the will LA, carbon. improve that though, it's of really low that bunch and have implement we broken we time have time, traditional we the John, I’ll start think still, do of off. refining two at on low well. same traditional competitiveness over And the a a will refining Tim mentioned that into those projects one of expectation

we I nice going So and because are them about be allocate there's of there of going but a we going light a to an sides to implement they're expect you're from expectation want that capital I both have time the disciplined in the lot talked we over think decent STAR recently on think think down, opportunities think us. we on Yes, business amount people you're going and down. don't time. have but buckets for a have think I you us capital way returns, meaningfully what's to enough know, not should major to be over of projects attractive still see we that return just number I blend on of that been capital, see both return a

John Royall

the just Great. really Russia about the be hitting how market? that your And for goes take to the product remind Europe expect How certain? thinking relatedly, export exports here could to breakdown do how goes how the think how will supply you you Europe? do long then after it trickle maybe increase sanctions through adjust? you're on maybe And And How of that And if That's may Thanks. Marathon’s then talk much to to just America? fifth? much that helpful. -- are going to destinations? us the And chains you Latin about to

Brian Partee

I'll Yes, is this Brian, John, that. take

your on do quarter. until the it question quick we not So just second expect unfold on really really timeline, to

Europe. with the Russia into saw we expect, sanctions, de-inventorying leading large of coming a parts a getting pretty re-inventorying in out sanctions, So of meaningful as of you'd out Northwest the coupled

So as entering inventory, in sanction time period at of really a levels of Europe. result, we're the historically high particularly

And of I'll coming and we So for a call perspective, We see we markets. to place million those to expect are to mix, Product day difficult variety spec in it XQ friction out those to cracks. of it timeline high do them we XXX other Europe see going of into barrels bullish them Russia, on but as directionally, is be Northwest to historical be for as X beyond a barrels, displaced. million going of have degree reasons. imports view structural

that met various to this So as some global fleet with you'd And front. on specifications have capacity last And mentioned, receipt of are expect, inefficiency fleet going on the think product. friction. either will countries rely consumers differing thing fuel on that is or product the another tanker, overburdened pretty to I'd is these really on we standards create The be need propose flows degree regional unlike active to now going tanker the crude of going crude a provide and generally global really the local headwinds. tanker right to you trade that's that side, a degree of end

day, as new our is a is So really that's customers from that's them. supply hearing assurance here important really well, we're a variable for every important thing that

of advantage I take in the as year, that big given well, in very is nature in an that, we London our a Russia, situation feel of the over think, and Atlantic in to well component positions the supply last probably given unknown, dynamic active basin, are opened late we but that really you position know, very office market. assurance

giving barrels America. terms a historically distribution, be Europe Northwest don't Garyville actually our time in of some year. the activity historically downtime of last for the and into have good we've It the fit Europe, XXX,XXX into of jet part into Garyville done forward. into US we well do around into system, without We've for we've really pull year make of of our exported a distillate we've day this of barrels got unplanned facility. The see expect a granular a your to detail, Latin moved XXX,XXX depending too much part that incremental seen we've to turnaround and Northwest last Europe. point And exports especially late we that large meaningful portion because XXX,XXX question we And day, an out seen within our Europe, them of that. fits meaningful And stream going

Rick Hessling

Hey, is John, comments. on this Rick, add to just Brian's

a going couple we feel market drive about home this forward. of So to further how points

VGO impact, in it And the product immediate just with had December, again our type cracks is inventories here in when and on cracks. that potential have EU diesel further life hit exports look five-year inventories, it numbers, low to will exasperate positive. compound the to on the taken the ban this it down you at If US are especially Russian Elliott that when you winter impact storm, the levels could

So watch plays how it on to more See this. out.

the neutral think they people hold a I positive, sanctions think most if and We're especially viewing positive. earlier, said like Mike to it will. take it's as cutbacks

Operator

Our next Research. from will Margolin Wolfe come Sam with question

Sam Margolin

about specifically there. actually, probably publicly, people of integration about asking Thank also talk and very the partners airlines fuels frequently. from category I'm that's everyone. about to SAF. think And of this call. asking ask do thing most picture growth, think carbon Instead because important again, are because SAF. tempted and low because pro lot, renewable turnaround sort a you. the I'm I I both investors of about in commercial morning, your got it ask Good the it But I'm And

think your And be see Thank get it'd there. category. if you any that great you. to thoughts there's so And opportunity on

David Heppner

around this Hey, is a was and liquid me of of the first strategic pillars our company our renewable touch back Sam. value that let one maximizing on little step the Thanks, fuels. bit for Dave, growth

facilities And focused forward as Aviation on that and so with we SAF. the of pretreat lot those while has been promptly, renewable look or around Martinez, Sustainable inclusive our diesel a and Fuel Dickinson that's of

SAF. inclusive thinking about you're it also when So is growth,

And thing second that very customers so I fuel to want products touch of jet maybe today. we that supply on to large fossil the supplier forward. And and our is fuel, a need our are going want, goal is

term, a as near through of we're So viable SAF lot most the tools is industries a you airline the decarbonization lot they, why as chatter you're there's that is because stated, around for chatter of that and to SAF, space. hearing the meet there help

as that active or in be the where as required, very capital of SAF whether to multiyear Martinez produce today. we in conversion look is the premium large we that these very confidence a justify little SAF challenge premium So Having look a or it new are you investment that The that. exist are projects. at is forward, investment, Dickinson opportunities

see sugars JV fuel, test into our on partner flights it seen a United, announcements So company the Neste. RD MPC, SAF recently won sustainable we I active you and with with studies them the with in within within also Emirates and as They evaluation, where the Virent. with just our of we you've are very of along were most participate but in aviation think to subsidiary lot take

in studying monitoring and can active We're it space right evaluating very when you it, So the time to is invest. see determining it, of the

Operator

Our comes Chen Barclays. with Theresa question next from

Theresa Chen

to trickles how in exports think definitely the to position equal, a Europe and all VGO capture from could impacts it where going up and it short there. and your is and VGO specifically net through help Russia else we dissipating or clarity related with come to about Hi understand how had cracks how VGO follow market that system? to VGO should but long just what your lack your I question related of discussion, is from incremental the and and Russian’s

Rick Hessling

Rick. Yes, Theresa, this is

this So market, short on the and you will VGO, we the especially more season we're we're light up to this diesel and view is now high is when out short all in tell ever, and it’s grade VGO going specifically I Jet, turnaround products. way than capture

cracks a through going that'll forward. via believe show of we and be will So recipient it the

we turn consume you tell will year. in the these nice kind will Eastern be online end will believe short of in arm, which, midsummer, mid-year refineries further they Middle shot I domestically to which market, come as the a Theresa, Specifically, VGO

So more to come on that.

keep Just your something to on. eye

Theresa Chen

retail I And a Thank consumption follow my fuel adjusting prices. you. comments potentially to about question patterns had related lower up to also consumers

Just on or this gasoline is are what and views curious about does How that X%? comments reconcile Brian's point. elasticity potentially about at with off structurally your being

Rick Hessling

a corollary one there. Theresa, It's Yes, too it’s see try and the draw flexibility of that but great a degree question. we do look at right we to

on the Of extent the course, depends prices. it the market, depends retail of on

under in gallon we West have my QX. the comments got I We the mention, but didn't seen West and Coast earlier, commented $X a in on what Coast I in on

somewhere instructed X% do nice we a X% demand the market, neighborhood my view we somewhere the saw X% is view where on relates is definitely prices. by depending which in we pricing, of will but our on demand impact that's retail saw - view to moderated in recovery X%. to of neighborhood as So But think the retail forward

Operator

Our Cowen. with Jason comes next from question Gabelman

Jason Gabelman

releases, discussed many quarters maybe in expect you differentials fallen to Yes, discuss OPAC refiners have they've throughout in light guys think the past good I the been the couple new The consume. just heavy outlook expect you it, those to very bit. a to the outlook for earnings. don't as Clearly, exports capacity in I crude come comes think how going? it How's morning. missed I online. you off trend dips. the quality And those Thanks. market, SPR Can year? supportive

Rick Hessling

Rick. It's Jason. question. Hi, Very Yes. good

Because here. that what Canadian the Coast. tail into a Gulf look in Canada, happened start then back So high. back I'll the it's outage, two as with US with with end Keystone Elliot We've We've inventories winter had of barrels the kind a are had you barrels. of storm front Pipeline in ends. lot of turnarounds

kind few the a together, folks specifically issues. of having of you two the of in along add Mid-Con few all -- So with a in these when pad

spreads see a are hang now. we on to We that continue robust right really to for seeing And bit.

a say get normal. the better things the look as it's to As the plays total. spread we're year I would at going quite be could you in to we back some year and optimistic fall midcycle spread, out, see to off that but than still

Jason Gabelman

Great, are expect my I don't project. you the And comments that an that's I the everything's perspective, the look at, up. projects was just unit and helpful have sounds operationally, numbers won't at there. on in start seems later earnings from Martinez like wondering going projects contribute year. pretreatments project for more much it how like the And that follow challenged to XXXX, we appreciate just given margins until pretreatment do. the that up much in than it well

project just you once if online. potential the and the So earnings talk XXXX, up that operation step units the from in about

Brian Partee

not a Brian, this I just that site. do on reminder pretreatment maybe Yes, Jason, we is but site have capacity, off

both capability and we've facility, substantial there. Cincinnati Beatrice got So pretreatment at

the regarding of kind refer just So our to outlook and Maryann. and I'll Mike economic overall or EBITDA it reminder a there,

Mike Hennigan

best people and we question have been subsidies are give them three give of But kind each to lot components macroenvironment look been to you a the their even out at are individual little market, specific California don't together. get about a all where ask And know have people Yes, the because and worked to can trying if it's there arms the around. moving Jason, that there trading, key consistent, guidance a the earnings is them profiles. bit. remember I subsidy the of the relatively I around of are around other facility us LCFS. of But together you though

bit feedstocks diesel's little trading. a obviously, then model help trading you look should And are it. and where at that you as So

Maryann Mannen

other improvement when things Mike's comment that Neste, feedstock completed and incremental the Neste. we one were is a partner slate, would around was that of with to we our incremental add remember got that the JV looking The I with also in we for

bring improve project, So project are is partnership though the the through the that obligated their with even actually of we by the sharing economics Neste we of feedstock to XX% us.

how So as point that. think just you're another contemplating about data to

Operator

next from TPH. Our question will with last question, come Blair and Matthew our

Matthew Blair

Could on that'll that and we've of question. I Hey, on seeing? And thanks spreads for for do persist Or taking think get credits XXXX? short the my the What are compliant are in you Tier Thanks. the wide your been you market? -- rest buying fully you X? thoughts octane

Rick Hessling

and the really Yes, spreads, seen harder. strength of Matt, I obviously can comment the octane, But you're to result they running steady as bit. quite a on we've in move octane systems seasonally a going

certain to look down we facilities meet just system been and a to shut but other capacity working network. running extent octane demands, the system, throughout our global out have at As not our the as

long-term our our as around you based a spreads So have and outlook bullish it to capacity that, kind octane system. on position well of in relates octane

Brian Partee

not on we're our short going part, position on or long last to the to comment And credits. the

Kristina Kazarian

With you, for interest right. that, everyone thank Marathon. in All your

questions your additional any I with be look you. and everyone. this forward you'd or our Thank the will to discussed topics available call. have please to reach out morning, you team IR if on like speaking If clarification

Operator

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

disconnect may at time. You this

Kristina Kazarian	Vice President, Finance and Investor Relations
Mike Hennigan	President and Chief Executive Officer
Maryann Mannen	Executive Vice President and Chief Financial Officer
Tim Aydt	Executive Vice President, Refining
Rick Hessling	Senior Vice President, Global Feedstocks
Brian Partee	Senior Vice President, Global Clean Products
David Heppner	Senior Vice President, Strategy and Business Development
Doug Leggate	Bank of America Merrill Lynch
Neil Mehta	Goldman Sachs
Roger Read	Wells Fargo Securities
Paul Cheng	Scotiabank
John Royall	JPMorgan Chase and Company
Sam Margolin	Wolfe Research
Theresa Chen	Barclays
Jason Gabelman	Cowen
Matthew Blair	TPH

Marathon Petroleum (MPC) 31 Jan 232022 Q4 Earnings call transcript