Earnings call transcript Q1 2023

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Operator

Welcome to the MPC First Quarter 2023 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 First 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 safe invite on harbor Slide you We statements X. read the

making as today. cause SEC. Actual be to differ well results with actual in are may filings differ. will We there results forward-looking statements included as our could Factors that the

over it turn Mike. I'll that, with to And

Michael Hennigan

Kristina. Thanks, everyone. Good morning,

Let share In view energy need time, by same the the demand increase Russian recovery supported by has for on that first high, economic remains of the offline tight, day global per supply China's in X to potential IEA a uncertainties and remained increases barrels on is continues me products. XXXX. refining the X grow recession, impact affordable, years. nearly of million our At first of last day projecting sanctions capacity macro the global around the the barrels the quarter, environment. throughout the in for couple Global volatility market pace reliable world. driven in the energy come million as of

Since cracks of expected given come the last the summer down, distillate have have quarter, onset cracks gasoline improved as driving season.

situation, above strength demand the levels still improve support bullish margins throughout we remain season, continues expected refining but strong XXXX. driving improve. what last mid-cycle we overall, jet diesel will alignment quarter, decreased and supply we and to believe from have demand So gasoline the to said levels. into with XXXX while growing constraints Cracks is In historic

on recovery year, the through much China any, of will the and continue recessionary we the impacts. ongoing depend extent, if in As

invest positioned supply refining global our by growing is supported well commercial our Singapore London Houston, and our offices to as system building And cost continue our advantaged in in out we global We presence, strategy. markets.

at significant and in despite we key company's throughput results the at compared maintenance refinery in delivered quarter, Galveston the fourth reduced activities Bay turnaround planned work quarter several facilities, quarter. XX the barrels region with Garyville, million in first Planned history. particular, This Coast Gulf our by strongest

and and part our per ability to as of of operational nearly portfolio execution segment to & billion MPLX $XX.XX commercial capital adjusted team's MPC's Marketing Our remains grow Refining returns. supported $X strategic a generate it cash or barrel. flows its continues EBITDA

durable segment and Our earnings. Midstream growing delivers

MPLX roughly capital $X.X billion, an it well of quarter, as EBITDA year-over-year. $XXX generated MPC of program. our to is dividend X% planned this adjusted XXXX This quarter million was MPC's fully up covers over distributions of half and which billion, $X which as rate annualized

than elected to diesel the it STAR conversion offers completed Rather Fractionation yield. we more value-creating Galveston upgrade increased heavy liquid During projects. we recovery project. volume Bay, will the process we the cokers, refinery better the and hydrocracker and modifications resid to GBR first At quarter, significantly offer advanced the be expand discounted able unit crude. as increased

day primarily a diesel over be add the day expect untreated to to incremental project and through second ramp processing between profitability XXXX. this barrels the barrels of incremental incremental capacity. STAR and are of per quarter of from XX,XXX expected spread crude crude is capacity The will by heavy barrels XX,XXX we and the of progressing determined XX,XXX STAR Overall, a day Start-up activities crude capacity. resid

on the construction gallons of renewable XXX the XXX I Phase of half XXXX. planned. online million enable production its schedule. facility year ramping we expected rates design At the yields capacity activities to in fuels come full Martinez end capacity as of to expected of by are renewable capabilities II ramp full year XXXX, to per fuels, gallons facility, will Pretreatment the and are to of reached second which per Phase million

in by diesel Neste. among flexibility be inbound renewable world, and our the will relationship slate robust underpinned largest outbound and a strategic advantaged competitive capital the feedstock and with Martinez logistics facilities cost operating profile, and

the first billion today, and we shareholders In capital $X.X authorization announced And quarter, additional to returned billion we MPC commitment to repurchases. share strong repurchase share returns. over dividends via an our $X reinforcing

Beatrice with progress for initiatives. share within low-carbon are on Neste, indicative supported collaboration footprint. integration me Let advantaged. marketing with some pretreatment of Andersons additional upstream and competitively and the our They're vast downstream plants ADM The facilities platforms partnerships creates integration we're Martinez our our cultivating The and value-creation Cincinnati by with the strategic renewables.

investment had dairy in providing an producer attractive participate an the an early-stage at development ability renewable This quarter, gas, to point. emerging farm-based of we entry in natural

subsidiary in projects operations the and market. and opportunities these a Virent the products carbon gasoline our commercially is bio-based and feasible of Our our fuel. taking assessment for progressing lower We intensity to we steps supply goal the converting to to a advance manufacture aviation growing sustainable and believe for feedstocks are we

At Maryann. this over call to the point, I'd turn to like

Maryann Mannen

Mike. Thanks,

quarter we was $X.X share billion. provides Adjusted $X.XX. EBITDA of unfavorable summary earnings results. of was $X.X reported flow from operations, nearly results. excluding a working quarter, capital financial Slide cash for per Moving to first and billion our X changes, This the morning,

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

margins quarter net as income change the first quarter EBITDA sequential were between shows Adjusted This lower quarter-over-quarter. adjusted $XXX was by fourth per and sequentially from XXXX. in X adjusted Slide million. by barrel & well driven EBITDA XXXX as the decrease was to approximately down Marketing EBITDA reconciliation refining as Refining

planned quarter, activity. last were turnaround due throughputs significant lower primarily the to indicated we As

rate And was tax roughly million. cost inflationary our $XXX discipline of line have Corporate taking tax million the we expenses The XXXX. costs in for maintained first despite provision out resulting of pressures, were general in quarter guidance. XX%, with since a since $XXX approximately corporate

impacted several planned and Marketing barrel & in Like in by quarter. of X% December. of Coast storm utilization, industry, end reducing the Moving Refining to impacts barrels. These fourth winter quarter, first the provides many XX%. Elliot at higher were X Slide our reduced in segment. our by the our segment were with into Storm carried compared to refineries Sequentially, our results. overview an regions down Winter Gulf margins refining per maintenance crude lower throughput was which overall the X the Elliott all million region of

Mid-Con this Capture our the sequentially roughly throughput reflecting Refining the from Lower were first extensive costs strong was in quarter barrel turnaround given at XX%, result team, flat a quarter. commercial per operating particularly $X.XX. compared activity experienced prices higher Gulf partially barrel. to West in the Coast. operating natural although was This offset primarily Coast energy lower regions, the fourth we gas and quarter per costs, cost by in impacted the

our operating guidance. lower to per cost expect reflected as be We quarter second the barrel in in

an of capture Marketing Slide was overview margin X quarter, our & which this XX%. Refining provides

builds tailwinds Still, Our product impacts fluctuate we baseline inventory commercial moved teams executed balanced associated our efforts, environment. market has in our with margin were commercial planned XXX%. activity. closer effectively against market will Capture Light a believe results maintenance through capture and volatile dynamics. on based to

realized our believe way the throughout we entire been over to changed that we will advantage, our value capabilities We performance a As market will months perspective company. these committed a meaningfully pillar date. last have built go the we strategic and indicates, believe to from commercial sustainable we provide improving incremental XX have the beyond capabilities commercial have provide to our have we what

in the shows XXXX. our X of versus adjusted fourth Slide Midstream quarter EBITDA change the

X% Our quarter Adjusted segment reflecting was results. first Midstream business resilient delivered EBITDA higher growth. year-over-year,

Midstream continues cash business strong flows. Our generate to grow and

on and business Marcellus, with capital our our flows. anchored plan advancing projects, capital Permian us unitholders. flow cost expected high-return in cash investments the the our are allow projects to return are focus to Bakken This with in in and will optimization, reinvest These disciplined We basins. to grow along

differentiator peers MPLX portfolio quarter, durable businesses. Midstream for in distributions flow contributed to source remains MPLX in MPC. is a cash and us compared to This MPC $XXX without earnings the million of a

in Slide elements $X.X sales. working quarter. capital, was inventory, excluding for nearly in by consolidated crude $XX receivables of in our cash benefits the the flow, lower a quarter. million from headwind changes Operating XX was and in position driven the billion presents in cash refined quarter, first capital the for Working product to offsetting increases a product change related primarily product decrease

flow, investments the completion and and and in this of progressed returns. of returned refining XX% during over million $X.X the in the to We operating Galveston were $X.X quarter. facility consistent the quarter changes fuel via working shareholder $XXX spending first billion saw dividends STAR excluding quarter. expenditures share conversion superior billion as our renewable of capital, commitment in an repurchases project. cash the totaling on Capital represents This nearly highlighting Bay the Martinez payout MPC

announced which quarter, approximately the today. in short-term our current the have now cash additional remaining We of under $X billion approval share includes NPC authorization the $X billion end investments. first repurchase $XX.X had and billion At

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

We expect the higher barrels crude activity quarter. to due is a having lower roughly XX%. than forecast quarter of be the planned on second X.X Utilization impact per units day, first to representing volumes turnaround utilization throughput million levels crude in of

Planned approximately Coast Mid-Con activity and primarily the million regions. be turnaround the West in expense $XXX is projected to in with quarter,

to weighted expected Operating $XXX cost be activity turnaround We the in XXXX per of and in full we comparable to energy and spend at roughly anticipate to we the second to $X.XX expect in spend second be turnaround end to the are lower lower quarter, turnaround expect from front-half XXXX. level see XXXX. barrel the as on to expect By quarter million of spend costs. year in throughput higher benefits the be

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

execution quarter recap, our team's commercial first To strong results reflect operational across and company. the our

Our capital allocation consistent. framework remains

competitive earnings priorities for capital the capital growth. paying share we discipline to We invest strict through in share dividend excess sustaining returning are committed potential to and will we company's secure lower grow count. We these base want will to exercise our asset with while meaningfully three beyond our a repurchases the

back let Mike. me pass that, it to With

Michael Hennigan

a source results free summary, $XXX over capacity billion in million In strongest EBITDA. first MPLX MPC as MPC. of company's in portfolio, durable grows MPLX the we adjusted quarter. the our its remains Maryann. have generating to just the capital this distributing history, cash earnings flow, increase $X.X to Thanks, we'll returns And MPC believe of quarter reflect to

million. $XXX invested we quarter, This

We as we returns. We ensuring the we believe where our on capital of energy progress will competitiveness are evolution. focused the remain invest there assets attractive through

of safety pillars the our employees three to remain our in foundational. is our operate. protect strategic health of operate We steadfast commitment we safely which execution and support assets, in and Solid communities the our

believe MPC shareholders us which returns structure, to the our capture execution have We superior improvements the structural driven we've through the and commitment with will believe operational environment. choice the returning of as to is investment refiner commercial to of our the opportunities enable cycle market most irrespective We made cost portfolio benefits, and ability cash capital. to delivering generate and to positioned our with steadfast sustainable

Kristina. call Let to me back the turn

Kristina Kazarian

Thanks, Mike.

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

Operator

come first Goldman [Operator will from with Mehta Instructions] Neil question Sachs. Our

Neil Mehta

a I couple Congrats great questions of on had here. a quarter. first

see a the West around they Singapore And you do Coast We're right West which of you weak. And that, some of, in is continue point reflection weakness now The think on the risk is product all Asia to your do downward first X trade and margins? that perspective very just pressure to there the comes could at PADD be demand? Coast. margins watching

Rick Hessling

we Neil, looking way look it from a we're -- it it's Rick. Really, is I at think at global perspective. the

anything here out on moment. in So of West to world Coast put the learned a you bucket is years that call when Singapore a Asia I'd bucket, we'll cracks and it's into throw but or last as it's ever And been. But as we've connected trade touch and well. great the than the over in flows also couple more a globally, if Europe think

to So really is call out impact drawing there U.S. in truly good it's refiners. if a the a

barrel I we as is Asia as actually it West Europe cracks. hearing U.S. margins it bullish to rumors cuts we times say rumors see doesn't we you West see hearing bullish and Singapore cracks. at Europe, mean see that regions you both know, of I'd on we as Coast, at as as that us, which for thing mentioned, the We MPC. the especially support see And for positive incremental if for we're run comes look One Coast, and and Asia there, the come as Asia. specifically, and we're of for from

then player in you breakeven than on lower least, as reliability. been And a our say acquisition, marginal past. feedstock then as lastly, have costs, we advantage, structurally And it's global the our on we have -- not is view competitive we our as in the I'd And the Europe an know, energy workforce, certainly of but our complexity incredible products. refineries, last, export program export world,

our quite markets clear to able well. we're So

X I'll we if that, Brian in competitive but add. specifically when those of you where the would Coast we in -- So really ask on and And the us has you he Coast, I West up, quite comments X, West specific the all if with believe gives operate. any it to add say X Neil, PADDS advantage, in products

Brian Partee

Rick, Thanks, Yes. Neil. and

Just a good data Very point. quick question.

some shifts from barrel years, been economic for and as We coming East. result product into in Far many has the the the activities Coast coming trade mention global are West import Rick a seeing flows marginal did et fundamental traditionally cetera. of an sanctions,

West on balance to expect we jet in So barrels we and we're order and balance continue XXX,XXX trend of system, facilities converted of go as on to gas are to magnitude, primarily day more looking as RD at favoring just to a terms imports forward more fuel, that Coast. the the

then West and $X in out West the market make or, of and that terms logistics That's the docs are West that availability Xx to Korea course, the it by West in also of seen rates the fleet. from relevant bit in of which tankage, constrained incremental Coast California, market. seeing the penetration the the And of also market. is and Other Current a RD penetrating the data barrels just other about South terms push what the you the that's constraints tanker East, components meet Far in historically little And Coast in two rates think barrel. I tricky Coast a the point, foreign into spec. about further Coast we've of being of into some we're are of

Neil Mehta

trouble great you super given then Is strengthening the out economic there buyback about follow-up guys. there here the of sheet guys downside balance have have resilience through companies getting me and just themselves been stock past, uncertainty of that the as in done in generally share consideration we've a capital. That's though, in And of the have for guys top approach. be towards countercyclical buying cycle, you perspective, is down. back And your gotten might a job around return by degree the seen count the a

Maryann Mannen

question. It's for the thanks Neil, Maryann.

morning, make look, the the balance Mike you this So over as on got and heard views our We decisions we've little share year. look at from positions. first at all, repurchase the that each do sitting like, of the cash a into billion consideration we We look MPC and know, our sheet. what conditions. And you've of macro look balance the do team, $XX.X quarterly. time our take on We we cash the will of

take Obviously, something a our quarterly. to shared do with allocation that we be having it set for execute period It time. as look a capital program us for you. a is sheet But balance able is strong we at not just of long foundational to we

outlined to for We all the of just as have evaluate things, you those ability us.

Operator

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

Kalei Akamine

how question macro This for on second Kalei and first the on here is quarter. you're positioned actually for the just My is Doug.

and for solid was throughput demand put commentary Yes, constructive. the numbers really a opening your second your are out quarter So looks the quite peers bit guidance seeing conservative.

system So at demand and bit you near a level, own more can elaborate on any your a on insights share high outlook maybe from your term?

Brian Partee

Brian. is This me that. weigh in Yes, let on

we demand, from marketing an across standpoint. book we first a our foremost, outlook as at business comprehensively So of look look and for entire really

of including branded dealer our class trade, it's our accounts. national So our wholesale our direct jobber,

of the whole. So a we think reflective as market more that's that, really

you on let And give me the quarter. some color

look I'll So you some of XXXX. of QX terms to relative what like numbers in QX give

of So about on QX demand up on was described call was is business the X.X%. gasoline on front, The our just book EIA X.X%.

actually flood some Coast, West the year-on-year, optimism into we're which some the heavy despite On historically rainfall flat events, Coast. summer the bodes and in for we trend as West

about past the the quarter. to the demand on we that's the heat was but in first On believe warmer winter down demand X%, we this distillate in X.X% sluggish heavily Northeast. with off call are weather weighted due temperatures about some side, home EIA

from On terms demand year-on-year actually events. we fuel up the late we jet comps And continue last to West X% in weather into And despite grow which the saw to X% were the trend distillate, this to year of over quarter, a levels side business, pre-pandemic X.X% rise the jet expect those to years two asked been reach the again on the in about in on the XXXX. Coast, early really we it's EIA that perspective. to often of on see

retail. of this mention the we on time it's important last around points couple forward We're -- $X.XX. year we per demand, A of were think year, about other look look really at important as $X.XX if currently we to gasoline, that data gallon around I at

that. about bodes So that favorably. prior below believe We're XX% year. seeing We

week-on-week as growth. we As seen into our sales, April we trend at look QX, we've

we're off year-on-year. distillate season. optimism And summer similarly, is XX% built side, seeing driving on that the almost the So into retail

domestically, over clip But that high manifesting. a pressures, it's or goes U.S. last degree right really certainly, on the drag relates some a the as nominal it We're But pretty saying, that in on inflation across consistently of not the side curtailments, see we the with on coming see and off seeing do without the distillate quarter basis we're expect is first something It's demand. a is sluggishness bright look some do now. inflationary the in of pretty us as light some to that so. demand creating for it the closely. red that to you we watching Now book, year demand something of

through the ag the the of of into go the into the Mid-Con, and in trend balance roll early as we're of we optimism recovery As signs here demand we we as have quarter seeing second year. season

The do last from more sets seen gas as perspective, our a diesel away inter leads that lead commercial do we forward, over we so, for shift think between thing and to I distillate terms gasoline. demand that, say years in favoring as strong of would look we've from a and away and strong, the we which crack. one is to the as up of We capabilities come look to last X.X a diesel intra-regional optimization balance a or more well

Kalei Akamine

it and ask guess, I that I The So positive. visibility the on But we about appreciate billion Maryann. sounds is peers, the question buyback balance, My today. the dividend. separates is want from expansion for second to provided you your quite $X something by obviously ordinary

to In more our covered than not from contributing refining MPLX. as view, distributions the dividend today is it's that by

reset it the like is what lot has out and close increase here. spending looks we project mid-cycle, you as a a of So consider dividend STAR on the in to capacity the think

piece that you are proposition? your about of value how thinking So

Maryann Mannen

question. the for Thanks

be potentially said, is to in of competitive we that we've in framework, at similar dividend, we XXXX. as dividend. to the similar we annually, to schedule to it a allocation evaluate frame the evaluate relates part and in time growing and so continue we've committed to a capital intend do as did the shared, did We've that and very in It as XXXX. dividend as as we committed least we So secure will

Michael Hennigan

I Thanks just that. want to for to that. noticing add

call a we're strong listen is of MPLX quarter. our One that very And value had earlier, MPLX. think the getting you we unique is proposition things that in to $X the if from the billion-plus

as to have good continue it's We similar year. in I prepared a the billion-plus mentioned you MPLX. pretty $X understand important coming in, of that We'll the in the mentioned flows and distribution capital. covers think discussion later remarks, to cash the at dividend I grow But a and increased portion

point think about think within I to it's way the we as the the a important So flows cash portfolio. pretty all

and we as activity. out, thanks So does our thinking pointing repurchase come dividend for advance it that into both and

Operator

will Our Manav UBS. Gupta next come with question from

Manav Gupta

to just bit little See, I STAR on wanted quickly a Galveston-based project. focus

more increase not to day XX,XXX understood. accurately? it's think as we for give you're can can help I honestly the should XX,XXX-barrel understand does watch this model numbers? how us model much I And well mean, little processing that because full resid could capacity, the are more you how so if project But you think for too accurately. we I in it credit don't what credit spreads getting for barrel we project your this

Michael Hennigan

it's Mike. I'll I'll let then add start, and color. Tim some Manav,

to of think change incremental As resid with far day XX,XXX the capability. as about at modeling, run way we'll be barrels processing the a the is now to more able heavy the plant additional crude

is it delta exactly is distillate changes model untreated et to and unfinished can way the commercial or cetera. between heavy doing, crude and XX,XXX in add cetera, that, we STAR to then times et that's So what the

think. where to and bit future. right we by today, in more whatever wherever today, the far about that $XX say, margins for itself. can multiply project color Tim, you little give into as stand running on I XX,XXX And time, it's as will give the that's on project modeling, the a margin the point But delta a you it you

Tim Aydt

I the I Yes, is keep off, Thanks that mind to in first completed this project you we in phases. have Tim. Manav, think, that question. this say for is, would

been has previously. in STAR good So been has amount service already and the really a put of scope completed

earning return. it's already a So

really remaining portion this of is resid I project the room. STAR the around think

the in the is then that and during been first quarter during completion So during April. mechanical we've up indeed turnaround start-up finished

good looking from So that's standpoint. all that

addition the volume better the we really expanding that expansion and I instead say with that the because the and think the GBR of of conversion up that's would -- you liquid other hydrogen. thing ended get hydrocracker -- is of I cokers the the that

if if you value. at XX about the explained That's lower So XXX of that between barrels barrels get liquid can -- bit and the unit, put look a if coke. RHU maybe out the of coker coker, rest little liquid be and comparison a into you you is you a

in that you put unit, liquids XXX barrels RHU same get XXX the you If of out.

that obviously, which valued. is in barrels are So XX higher increase about XX% liquids,

So that's that made why we decision.

is would also only that this GBR I the operating unit point and the hydrocracker in out resid unique U.S. got

what project that's beneficial. the that made to there So And we the to coker. as opposed had RHU a with to greenfield capital-efficient starting make another pretty modifications

that's So hopefully, helpful.

Manav Gupta

of That's smooth other quickly very Martinez is like on, which phase start already very follow-up here My some first a are problems. facing helpful. projects your compared to of looks is the

Now on the at then phase. some second point, and obviously, pretreat comes

then could diesel. starts of bigger walk up. through probably renewable when are producers request the everything that you of small just there is one is if And up, So us one starts once everything you

give more those if So out break point, for at it. you we could can you for some credit earnings then us,

Tim Aydt

Okay. giving an Manav, the I'll schedule. just start update on with maybe

construction full So report to as activities remaining the Facility correct. the on has ramp and back in you Phase scheduled. rates did that as the XXX I gallons million are the of -- The in at first per Martinez to design schedule. happy quarter. are year production earlier We're up reached planned Martinez

then per renewable the question. of And second of pretreatment of the rate the production end the scheduled diesel your part full looking at turn have of it the Maryann December. by that's year year, unit, half by the end online of of now to the I'll Regarding XXX to come we're million XXXX. in to And to gallons relative second

Maryann Mannen

timing Yes. renewable continue segment. Manav. appropriate the to the for Thanks question, a evaluate We'll for

XXXX, for before, we'll question. evaluate when renewables continue make We to full the a we'll these shared we as won't have online segment, a to come the determination that. and commitment proper recognize and importance as low-carbon we that projects do to strategies, of but we've and As renewable our recognize

Operator

with Paul comes question Scotiabank. from Cheng next Our

Paul Cheng

that Galveston OpEx back Can oil. into talked the the Bay? additional also Can wondering I I with about slate or go shape you that or in change product -- wanting just is assets you Does what and any asset? your form mean, that it more expanded that associated

Michael Hennigan

Yes, hit the heavy I to run just more on head. us you Paul, think It gives ability crudes. it

hydrotreater, So that's incremental project coming but how resid of The it's unfinished I to answer the easiest crack The spread back Manav's out end at heavy the it. trying front that's That's the coming it end the question and the why itself change. model distillate. to distillate, crude unfinished think distillate. out was on about the to way incremental to is of is

Paul Cheng

-- Is all the entire XX,XXX you we say, So should that up, assume that monometric distillate be XX,XXX will because your that then of barrels have or day. a XX%? is throughput so expansion, them per it

Michael Hennigan

crude that heavy into Manav XX,XXX barrels a No, no, of plant is, comes I'm it's the answered to the plant, comes is untreated of XX,XXX distillate. Manav -- I'm sorry, day out crude, Paul. saying the just what I like it's

Paul Cheng

I see.

Okay.

time, So that distillate. associated unit? be Is with the at the end will OpEx And untreated how of about that...

Michael Hennigan

-- specifics. specific that We haven't given unit that particular itself

Paul Cheng

Okay.

second and quarter result impact. was in Can inventory unfavorable you being where's showing -- showing inventories that that that question quarter? you're quite impact but second that your the indicated -- simple. quantify plant that first I that you’re up? unfavorable in by hurt that reversed will up solution? whether not say those -- you The the also presentation, get is And Maryann suppose in also

Maryann Mannen

Paul. Sure,

of factors that was So There our were in as share impacted couple quarter key to XX%. actually a trying performance. I the was quarter, in capture the

as STAR And complete One as Galveston as -- took well. you Obviously, to know, I turnarounds. mentioned, of was as also well. Bay Mid-Con we we And planned took that the those, in was that turnaround impacted throughput, Bay. Galveston opportunity there

expect some the second benefits the the second we one of key was inventory And was well, in actually inventory And things remember margins. the driver in quarter. had then actually those necessarily tailwind. impacts. a that wouldn't are We impact volatile. you light may built The the We quarter as fourth inventory product to from quarter, quarter but

turnaround remember, But roughly guidance. we for are $XXX have we gave the the be we turnaround perspective. first some sure We demand. from million increased what think much turnaround good expense. above QX, early Actually, the we somewhat to unprecedented. a will XXXX did quarter, guidance were heavy front-half-weighted respect turnaround second lost driving is season the In heavy with made and to quarters for quarter four actual us of to This be decisions not delay our very in opportunity that

of would we benefit we turnaround second we at months May similarly, the expense look think June see And quarter, expect as that the when about the and would there.

pause will if the performance want respect color and Rick incremental any quarter. to add there see in the with maybe I and/or Brian to So

Paul Cheng

Maryann, And want to clarify just I that.

first quarter, that absence the the actually or fourth benefit that is statement is impact, that the -- the unfavorable is first of in a a it quarter impact the inventory negative inventory So saying inventory quarter? negative

Maryann Mannen

No, in Paul, impact sorry quarter. We in negative a the about that. It actually is quarter. first built the actually inventory

Paul Cheng

big how that? quantify you is would And

Maryann Mannen

Paul, of the it not, detail. driver. single three don't of we not elements, normally give largest the that those level It -- however, was was

Paul Cheng

Or us tell majority you that region across happened? inventory which of is it just the can And Okay. build regions? all

Maryann Mannen

Paul. across builds regions, inventory had We Yes. all

Operator

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

Sam Margolin

around and it demand sort tough into into that was price was earlier to some there is of of diesel there in timing-related one on overblending recovered that jet maybe both because the some fuel comments factors would heating jet and impact ran This It diesel expectation But some diesel. comps and your components market. about market we weather. connects the an of the as benefit

through, so the see was you're pretty operators but probably things to that other so benefit indexed jet don't. maybe guys And necessarily I you are wondering, filter market that didn't since heavily

little on coming think which side, that be demand a maybe of particularly on just seems expected benefit a given bit some your the that, as around comments performing jet is lag, to you If

Brian Partee

Sam, Brian. Yes, very very Yes, this is point. question, on good

several seen last I question fairly as here but the across think decent the we've paradox distillate the look sell looks you weeks. is this in demand over here off barrel, the

overreached the on view one into Russian there macro not and little of think So But And is overdone. it's lies market that element supply our distillate I read-through the the the is a think the and the demand. sanctions. question. the bit was fundamentals outlook we But

into you be all we've as those know, been significant the market implications I global if they flows the to sanctions of doesn't this uncertainty of went discount, had And impacts at in were market view, the flows well. terms into process very earlier bearish place market. pretty continued. what those And and the a sanctions the And think uncertain. anticipating slowing more and associated the that is continued, albeit we've will, So have year have seen you

not is distillate impact sentiment impact, think So and sanctions global lack overreach the on demand, more the and flows. valuation on around but the a I the bit if on clarity distillate supply Russian or with or will, overarching the little around you of

Sam Margolin

makes sense. Yes, Okay. guess. I the that We crude, saw thing in same

go Sorry, ahead.

Michael Hennigan

to as is to it's constructive still going if to And be, add, just as right was recovering to view, still in And We think on gasoline pretty last it. distillate. for a to gasoline Sam, point. X-year I want to at think the going No, constructive in it's jet are your slowly to bode It's inventories direction. compared our advance moving average, as well compared we look well, throughout. to that's low that year It's market. however, strong a jet you continue recovery the been gasoline mean, we going market, I are

Sam Margolin

I'll a a way. different question on of sort the this is as And a and follow-up, Neil's it redo Okay. structure put sheet capital allocation, balance in about but

MPLX that aware now balance people interesting almost. MPC on than like I your covers of the dividend, that are interest income more cash your dividend think half or is but covers what's a MPC lot distribution the now of the

and but of matter environment, with going around on in there's also what's optimal economic a of there's structure -- then sort the uncertainty rates it's the And that. capital

I'm of the mid-cycle So if you maybe was were $X.X that targeting? wondering billion kind there's just a cash balance that I change think -- to

Michael Hennigan

start out to I'm Yes. as to going it Thanks well, and over Maryann. turn Sam. pointing for that

we've decent $XX want analysts the ago. a we of the what more been say we're is said going amount it's to One time to And of north we XX months just discussion. to of a that is trying the a billion important the were the what dynamic to you the are doing. Obviously, know part things, generating And hear, well. day, earnings end what do next of on We're over having of or where very so? at of sheet it I much of off all an balance compared

So a overall, to it's as real-time discussion. I take to think think is months the everybody should we we're going do there away message XX that we're projecting because not what out

committed. are We

committed interest that on time, we're the we're cetera. to MPLX at look that, has et et parameters The As seen into capital. the that our all returning same cetera, the getting everybody distribution, we play there. At come DNA,

I we're I authorization pointed people couple do that XX frustrates you won't and that the get think going say of know seen from it additional for in us or XX what think important I So to next But are the out our discussion Board. things we months. you've a

to returning committed we're So capital.

us to term, capital. thought the you've seen strict in gives We'll shareholders. for that our us value that. increase think be very do is, discipline our I ability continue long over the investing on to And

Maryann Mannen

I has $X remain our of billion. well. real We had covered billion. during carrying testing talked We think that. about ultimately stress it some to committed life $X Mike COVID We've

real interest a When around think, interest, I other look total comment fair Your -- costs. the one. you and at is financial our

of see Sam. over on last balances well, can You of the several interest quarters, cash the income impact the those benefit as

So we've well. question I your covered hope

Operator

with Jason from Gabelman come will question next Cowen. Our TD

Jason Gabelman

if in the about bit. to you come what I want on Can quite a occurring? light-heavy in that the below just something -- It is months wanted $XX. market? or were is tightening seeing to more to typical looks where Why spread the that's And versus setting we ask now past first heavy like talk spreads. so? I back ask light maybe we've They've been Brent first X a you're

Rick Hessling

Rick. it's Jason,

market's to the yet mean will overdone to at it's out. cuts, the looking saying one negative. now, really overdone, us. and the Right say And positive in that And it by you what what which a often lot you the to is cut? overdone look we're are look markets. was they could So things OPEC+ is when the actually, I QX, When for at case we of been believe announced play

announced often then and less. do they something says History

I throughout seen think staying So positive a we But we'll and barrels dynamic flows. a actually as closer out as addition change, that, are to for watch global view instances that the that home. us we've play in to in some

just that's do Mad Shell's look online, right at Coast. our production I Vitol platforms you in look in at incremental by So came production, mean When you Mexico BP's Dog Gulf that? at what of X, that backyard Gulf the look

for barrels taken on have seeing and the We a that really we in production. been entire barrels you Chevron advantage [Venz] that upticks throughout Then lately, And that's our we're production, positive of. Canadian the Venezuelan the pulse news close and us in system. have others have Canadian have

seeing a this spread think Where Jason. don't it of a is to is it That's as today. it what I fully is sweet-sour from today. call. an you're feel So don't out, I as go? depressed is yet it's as We think environment bad will play tough just

will public. big And then into our Those is buyer coming just system. lastly, data were barrels. That I'll of we barrels be a state, SPR

pessimistic. So minuses, going the up of all more and today feel little add we actually than optimistic a pluses forward when you

Jason Gabelman

And appreciate that have -- renewable like seems grow My diesel the this prepared to around you on question, outlook. made second plant. wanted well aspirations remarks up the Martinez low on may prepared Great. business you the I beyond follow to it I carbon business.

you with purchase gas about small I via RNG talked other business. Can to or into the sourcing you is you you partnerships just counterparties, the exposure MPLX. bought guess thing a -- and natural -- have few You then

over you get? if Inflation of on, growth Reduction years? it big how How the next of discuss Act? you're see could What few focused I So areas you maybe in was just broadly, the hoping light could this particularly the evolving business

Michael Hennigan

Yes.

So portfolio. very going some would million of last start. could those take it's to roughly be albeit spend about We opportunities, carbon at we guided I'll quarter time our enthusiastic that $XXX develop. amount for that to low We're the in think a there we considerable

things in in As prepared our remarks, we going heard areas. . some a you couple different of have on

people using to it to evolve for day, the of that's will it additive a than end the of rather over our evolution be to at base why keep the period we're I pace some going We is do to move think But be think we general. something at business, But the transition. take time, be to that word the other pendulum strong It's a but to the It's attentive how for us. going will refining think understand think and slower direction. I meaningfully trying think it. mean long natural gas I be be footprint different going time. than while that we have. we same opportunities that in in will than we the there's to

we'll at example. early As gas, could we see work which renewable and continue out we'll capital continues to us, put -- that's We one for that just we think important made if an to what investment there. natural entry small We be, went it in mentioned, we've a business to -- thought be if we was then in as that that point. can grow

resource So team opportunities them, has we're you. see attentive And for Dave's as update to us. continue it. for of we to looking a we'll lot

Kristina Kazarian

I Sheila, think next the are for we question. ready

Operator

from Read question Fargo. with next comes Our Wells Roger

Roger Read

Coming back on commentary to markets. gasoline the

deeper Just you all X also and on kind X, issues, whether of think I the issues. doesn't look the gasoline it's it not be PADDs, where own, of across evenly different X that X the its components see PADD maybe PADDS as dig supply distributed, bigger kind then bad X the little is in stress we and right? a itself, mean

else, demand us you for supply? something else? challenges looking trends regional through will at, underlying there's anywhere biggest you the or components the you're between things octane and be the Can where So walk think then

Brian Partee

is this Brian. Roger, Yes,

our at kind in of fairly you I on The questions. well give think views. balanced I'll more on bit And your based So markets, it color the you're a and look they're I little way fairly check. in rooted

Coast. attributed the gasoline, West the has you inventory or seen if the York quarter, indicated, in So the look out in Harbor New of whether Harbor the Gulf as to levels. quite is really the a at of is And now interesting you only New on primarily -- low bit York strength both it's really the market,

it York on a strikes a Harbor in more pad. on of And in business in bit. York was the well in the bit was work of a that the book over in the down New As markets. the net some bit of quarter. side The labor of mentioned course, a New first of little was the drug and Europe Harbor drag, in the caused earlier is a as of side havoc There Northeast some of things little the balance distillate markets turnaround the positive more gasoline the

Europe of you the the read-throughs, and the New I relevant. kind if think, will, of interplay between Harbor, on related One York is

created the As bit York as we've coming more of as of of in environment recipient in looked refining balances through gasoline New of the pull preference Harbor. York ago really barrels, into some more and Harbor the of from Europe. consumer several long-time gasoline back little end of years, on Europe the the transition distillate that last Europe have couple away in has changed, a been diesel New And change the push years barrels position out outflow terms the of over gate a the have and of a towards of now

to more the year. that last I'm progressive say We're So active that one the U.S. markets will it's of you're dynamic the And market. interesting And confident that work market to over has that changed the right gap. close yes, in and in that

We see market. to that into opportunity continue further to push

balances. as a actually, the in even the And a Beyond gasoline/octane the the moment, into some it's book. favorability of plateauing. side from do pullout in barrel. huge that the values, system, diesel in gasoline. we the of throughout first More the see naphtha And coming optimization really stream Gulf yield octane light had start a had gasoline a focus will quarter that, switch last octane, just a have $X octane blending we on better the summer help the Coast for in that of but as We strong of we crudes for on a more a

through favorable, we quite octane the is on So that see the view year don't summer still the as but enjoyed last forward not we environment progressed months. -- we

Michael Hennigan

a different still there's lot of view below I'll million said, a you you barrels are to but like are Mike. simplistic regions, And spread last below longer inventories, of my give the demand in it's gasoline strong time. is period XX Roger, gave around if you specifics. year, just relative barrels the numbers year, over last average. XX X-year million The look Brian

time constructive the view, into more is head in our least it's heading the gasoline higher very of year as for we at which into So the summer. a at time think demand we're this time of as we

gasoline than I'll in constructive, over going in to more the months, for people That's there's whatever to a know change this mentioned summer. And there wasn't distillate. continue environment out the maybe recover say, into going we're time is I And So well. as some now earlier, as XX some Jet around last there. but it is, I summer first think is concern that distillate, we

still it's plays very for it think environment constructive out. see we So us, a we'll and how

Operator

come Royall next Our will question from with JPMorgan. John

John Royall

So on follow-up rates. capture had I just a

the have XQ in quarter, non-recurrence any XQ? another you directionally It's but thoughts impact. pieces from inventory the XX% Just heavy in on moving maintenance the of presumably

should think maybe a a any should moving So we starting little as other center maybe due point, we lower XXX% around the level maintenance or pieces to about?

Maryann Mannen

Rick question. on I'm and the It's give to to and the a Maryann. few going a I'll high-level little John, give comments, Brian to quarter. then you thanks pass for more you detail

about of turnaround second an will as the is be as in example. less touching we we quarter, but just units crude right, slightly the higher talked actually, You're .

the I'm you more of give for their going sustainable balance for certainly into year. and we And continued in that is we that maintenance, QX. and let impact of the focus work has so Brian a it been while know, be planned to that a the to believe targeted on expectations you should pass some as is months. color is We Commercial head them have the and the it as XX lot the Rick quarter. performance, we of something second there the of team less last done a have little

Rick Hessling

John, Rick. it's

really enough just feedstocks Mike's touched through last looked Z, anything been on. from the everything can't and under under I that commercially redesigned. there on needs I'll A emphasize item at be So do Maryann unpacked to covers double-click finished redesigned we products, we've it hasn't where and from isn't changed to leadership, the

would on Brian of done? And And basis a say, and will daily people us done. never So as will a you we that I Mike look say, lot rightfully. forward, are be tell

get said, corporately won't in. from and by we all we value way So region a going the And do with as end. every journey to in on us region operate continue journey we it's expect the being that We're incremental that forward improve collaboratively change for through to refining continuing commercial. quite it's this

quite can't if about you tell, excited So we're it.

to continue without you tuned And much stay our giving too detail, to would we and encourage look at results.

us themselves, as metric the and Our and we the our that's last boss year or feel you've for seen live over tells results about this by good speak so. mantra in

Brian Partee

Yes, John, Brian. is this

the up, it insights on working really it that Just on journey I covered we're wrap leverage well. see hard our industry. the unrivaled Maryann at, Rick But our and very I quite in to maybe where simply and we've scale, it business to been think

doing it's cargoes rigor that chain down today we've a export chain. also whether our enhanced momentum done behind with is down that focus doing and things margin the we're have all and another the further Moving just for -- delivered and attribute branded capture business, more or or important historically, value value the better we we're program

is is to and the business, are things: run differently. relentless the and innovation, team around to is work we've thing this say improvement, done, in how exclamation we've we trying last point, the mindset, And on would never how really two results. watching the Rick I of do really got I'll proud to specifics, the to The has Rick hit continuous pretty always that things get. more and opaque been put it keep but done, reimagine

Operator

just for more And we do question. time have one

Theresa will Barclays. with question Chen from last come Our

Theresa Chen

you categorically diesel Clearly, commentary. the as we the in the a change month am industry quarter. data second more bit the into and on all quarter, to demand are first your curious a on Brian, quickly, side. I beaten really hear And little Just

you're the easing we've just some seeing incremental about an some early in what trucking data? demand because indications from the seen perspective, So tonnage of of ag

Brian Partee

sure. Theresa, Yes,

So on picking see do the side, ag yes, distillate we up.

Of course, comp. a that's year-on-year

to a we but earlier, transportation to again, driven softness read, strong some We on hard expect business, consumption. it's and So season. through see, the the it do curtailment a the be get as side I mentioned of complete consumption largely of

business that robust big watching exposure really the And our industry. the side closely. do really But on of over the road, standout So we've mining the a theme. customers, have though, fairly The is business, with pretty the at whether activity we and ports positive would I that on that see mention mining regions. it's side be of it consumption activity heard mining very throughout we're do we all in our consumer big the consistently component

think I here transition early. we seasonally, As it's

stated call it earlier, close to direction or I is things are we're As that favorably break, but unfavorably, going on. something a which keeping to eye

Kristina Kazarian

With thank right. today. our that, call All everyone, much, joining you for so

to team, feel topics If clarifications you here any discussed today. Have a free help this members or out we're day. questions Investor on reach of morning, great have to like additional to Relations please the and

Operator

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

this at time. disconnect may You

Marathon Petroleum (MPC) 2 May 232023 Q1 Earnings call transcript