Q3 2023 Marathon Petroleum Corp Earnings Call

Speaker 1: What.

Welcome and thank you for standing by today's conference will begin momentarily. We appreciate your patience. Once again today's conference will begin momentarily. Please continue to standby.

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Sure.

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Welcome to the MPC third quarter 2023 earnings call. My name is Sheila and I will be your operator for today's call. At this time all participants are in a listen only mode. Later, we will conduct a question and answer session Press Star one on your Touchtone phone to enter the queue. Please note that this call.

Is being recorded I will now turn the call over to Kristina Kazarian Kristina you may begin.

Welcome to the Marathon Petroleum Corporation third quarter 2023 earnings conference call. The slides that accompany this call can be found on our website at marathon petroleum Dot com under the investors tab joining me on the call today are Mike Hennigan, CEO Maryann Mannen CFO and other members of the executive team. We invite you to read the Safe Harbor statement.

Speaker 2: Welcome to the Marathon Petroleum Corporation 3rd quarter 2023 earnings conference call. The slides that AVE Company this call can be found on our website at marathonpetroleum.com under the Investors tab.

Speaker 2: Joining me on the call today are Mike Henigan, CEO , Marianne Manon, CFO , and other members of the executive team.

Speaker 2: We invite you to read the safe harbor statements on slide two. We will be making forward looking statements today. Actual results may differ. Factors that could cause actual results to differ are included there as well as in our filings with the SEC.

On slide two we will be making forward looking statements today actual results may differ factors that could cause actual results to differ are included there as well as in our filings with the SEC references to Mpc's refining utilization for the third quarter as well as fourth quarter guidance. Now include. The addition of approximately 40000 barrels a day of.

Speaker 2: References to MPC's refining utilization for the third quarter as well as fourth quarter guidance now include the addition of approximately 40,000 barrels a day of capacity related to star in our Gulf Coast region. And with that, I'll turn the call over to Mike.

<unk> related to star in our Gulf Coast region, and with that I'll turn the call over to Mike.

Speaker 3: Thank you Christina. Good morning. Thank you for joining our call

Thank you Christina good morning, Thank you for joining our call.

Speaker 3: Beginning with our view on the refining environment, in the third quarter, we saw strong demand and global supply tightness supporting refining margin.

Beginning with our view on the refining environment in the third quarter, we saw strong demand and global supply tightness supporting refining margins.

Speaker 3: Diesel cracks led the barrels, inventories remained tight, and European disillusion production ran below to pass.

Diesel cracks led the barrels inventories remain tight and European Denslow production run below capacity.

Speaker 3: Globally, oil demand is at a record high as the need for affordable and reliable energy increases throughout the world. In our system both domestically and within our export business, we are seeing steady demand year over year across the gasoline and diesel, and demand for jet fuel continues to grow.

Globally oil demand is at a record high as the need for affordable and reliable energy increases throughout the world.

In our system, both domestically and within our export business.

We're seeing steady demand year over year across the gasoline and diesel and demand for jet fuel continues to grow.

Speaker 3: Global supply remains constrained and global capacity additions have progressed at a slow pace.

Global supply remains constrained and global capacity additions have progressed at a slow pace.

Speaker 3: In the regions where we operate, seasonal butane blending has increased gasoline supply. However, we expect typical seasonal turn-around to be supportive of cracks.

In the regions, where we operate seasonal butane blending has increased gasoline supply. However, we expect typical seasonal turnarounds to be supportive of cracks.

Speaker 3: So at end we've seen 3.5 million barrels of gasoline inventory drawn out of the US system over the past several weeks.

So that and we've seen three and a half million barrels of gasoline inventory drawn out of the U S system over the past several weeks.

Speaker 3: OPAP Plus has reduced production and in pressure to medium sour difference.

OPEC plus has reduced production, adding pressure to medium sour differentials.

Speaker 3: While crew differentials have generally been narrowing, we have seen WCS widened and were strategically situated to run heavy Canadian crewed at over fineries across pads 2, 3, and 5.

While crude differentials have generally been narrowing we have seen WCS widen and we're strategically situated to run heavy Canadian crude at our refineries across pad two three and five.

Speaker 3: As we look towards 2024, we believe an enhanced mid-cycle environment will continue in the U.S.

As we look towards 2024, we believe an enhanced mid cycle environment will continue in the U S. Due.

Speaker 3: through the global supply demand fundamentals and the relative advantages over international sources of supply, including energy costs, feed stock acquisition costs, and refinery complex.

Due to the global supply demand fundamentals and the relative advantages over international sources of supply, including energy cost feedstock acquisition costs and refinery complexity.

Speaker 3: Turning to our results, in the third quarter, we delivered strong cash generation across our business.

Turning to our results in the third quarter, we delivered strong cash generation across our business.

Speaker 3: In refining and marketing, strong margins, 94% utilization and solid commercial performance led to segment, adjustity, but of 4.4 billion dollars or $16.6 per barrel.

Refining and marketing strong margins, 94% utilization and solid commercial performance led to segment adjusted EBITDA of $4.

$4 $4 billion or $16 six per barrel.

Speaker 3: Our midstream segment delivered durable and growing earnings.

Our midstream segment delivered durable and growing earnings this.

This quarter it generated segment adjusted EBITDA of over $1 $5 billion.

Speaker 3: You're gonna date, our midstream segment, even, is up 6% compared to the prior year period.

Year to date, our midstream segment EBITDA is up 6% compared to the prior year period.

Speaker 3: Strength of MPLX's cash flows supported its decision to increase its quarterly distribution by another 10%.

The strength of Mplx's cash flows supported its decision to increase its quarterly distribution by another 10%.

Speaker 3: With this increase, MPC is expected to receive 2.2 billion dollars of distributions from MPLX annual.

With this increase MPC is expected to receive $2.2 billion of distributions from MPLX annually.

Speaker 3: MPLX is strategic to MPCs portfolio. It's current pace of cash distributions fully covers MPCs dividend and more than half of our plan 2023 capital program.

MPLX is strategic to Mpc's portfolio. Its current pace of cash distributions fully covers mpc's dividend and more than half of our planned 2023 capital program.

Speaker 3: We expect MPLX's cash distribution to continue growing as it pursues growth opportunities, which will further enhance the value of this strategic relation.

We expect Mplx's cash distributions to continue growing as it pursues growth opportunities, which will further enhance the value of this strategic relationship.

Speaker 3: We believe NPCs, current capital allocation priorities are optimal for our shareholders.

We believe Mpc's current capital allocation priorities are optimal for our shareholders in the third quarter, we returned $3 $1 billion to MPC shareholders via dividends and share repurchases.

Speaker 3: In the third quarter, we return $3.1 billion to NPC shareholders, the dividends and share repurchase.

Speaker 3: Last week, we announced an additional $5 billion share repurchase authorization and a 10% increase to MPC's quarterly dividends.

Last week, we announced an additional $5 billion share repurchase authorization and a 10% increase to mpc's quarterly dividend.

Operator: We appreciate your patience.

Operator: Once again today's conference will begin momentarily, please continue to stand by. Thank you very much.

Speaker 3: With this increase, we have grown our quarterly dividend at over 12% compound annual rate over the past five years, which has led over finding peers. Our overall capital allocation framework remains consistent.

With this increase we have grown our quarterly dividend at over 12% compound annual rate over the past five years, which has led our refining peers.

Our overall capital allocation framework remains consistent.

Speaker 3: We will invest in sustaining our asset base while paying a secure, competitive, and growing dividend. We intend to grow the company's earnings and we will exercise strict capital discipline. And beyond these three priorities, we are firmly committed to returning excess capital through share repurchases to meaningfully lower our share count. Let me also share some. Let me also share some.

We will invest in sustaining our asset base, while paying a secure competitive and growing dividend, we intend to grow the company's earnings and we will exercise strict capital discipline and beyond. These three priorities. We are firmly committed to returning excess capital through share repurchases to meaningfully lower our share count.

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Let me also share some of the progress on our low carbon initiatives.

Speaker 3: The Martinez Renewal Fuel Facility is being delivered safely on time and on budget. And by the end of 2023, the facility is expected to produce 730 million gallons per year.

Martinez renewable fuels facility is being delivered safely on time and on budget and by the end of 2023 <unk>.

Kristina Kazarian: Welcome to the MPC 3rd quarter 2023 earnings call.

Operator: My name is Sheila and I will be your operator for today's call. At this time all participants are innocent only mode. Later we will conduct a question and answer session.

Facility is expected to produce 730 million gallons per year.

Speaker 3: At that point, Martinez will be among the largest renewable diesel facilities with a competitive operating profile, robust logistics flexibility, and advantage feedstock slate and should benefit from the global strategic relationship with NEST state. Our Dickinson Renewable-

At that point Martinez will be among the largest renewable diesel facilities with a competitive operating profile robust logistics flexibility and advantaged feedstock slate and should benefit from the global strategic relationship with nasty.

Operator: Press star went on your touch to on phone to enter the queue. Please note that this conference is being recorded.

Kristina Kazarian: I will now turn the call over to Kristina Kazarian. Kristina you may begin.

Kristina Kazarian: Welcome to the Marathon Petroleum Corporation 3rd quarter 2023 earnings conference call. The slides that if company this call can be found on our website at marathonpetroleum.com under the investors tab. Joining me on the call today are Mike Hennigan, CEO, Maryann Mannen. CFO and other members of the executive team. We invite you to read the safe harbor statements on slide 2. We will be making forward looking statements today. Actual results may differ factors that could cause actual results to differ are included there as well as in our filings with the SEC references to MPCs refining utilization for the 3rd quarter as well as 4th quarter guidance.

Our Dickinson renewable diesel facility is operating well.

Speaker 3: facility processed 75% advantage feed in the third quarter.

The facility processed 75% advantaged feed in the third quarter.

Speaker 3: The nearby spirit wood is only being processing plant, which is owned to a joint venture with ADM. It's expected to deliver enough vegetable oil to produce approximately 75 million gallons per year of renewable bees.

The nearby Spirit would soybean processing plant, which is owned through a joint venture with ADM.

Expect it to deliver enough vegetable oil to produce approximately 75 million gallons per year of renewable diesel.

Speaker 3: Additionally, we are advancing early stage developments through our interest in low carbon intensity RNG and other small scale investments.

Additionally, we are advancing early stage developments of our interest in low carbon intensity RMG and other small scale investments.

Speaker 3: We believe through these projects, we're taking a discipline step to advance our goal to lower the carbon intensity of our operations and the products we manufacture and supply to a growing and evolving market while operating our current asset base to deliver superior cash flow and meet demands. At this point, I'll turn the...

We believe through these projects, we're taking a disciplined steps to advance our goal to lower the carbon intensity of our operations and the products, we manufacture and supply to a growing and evolving market, while operating our current asset base to deliver superior cash flow and meet demands.

Mike Hennigan: Now include the addition of approximately 40,000 barrels a day of capacity related to star in our Gulf Coast region and with that I will turn the call over to Mike. Thank you Kristina. Good morning. Thank you for joining our call. Beginning with our view on the refining environment in the 3rd quarter we saw strong demand and global supply tightness supporting refining margins. Diesel cracks led to barrels inventory remain tight and European disloved production ran below capacity.

At this point I'll turn the call over to Marianne.

Speaker 2: Thanks, Mike. Moving to third quarter highlights, Flight 5 provides the summary of our financial results. This morning, we reported adjusted earnings per share of $18.08 in 14 cents.

Thanks, Mike.

Moving to third quarter highlights slide five provides a summary of our financial results. This morning, we reported adjusted earnings per share of <unk> 18 of $8 in 2014.

Mike Hennigan: Globally oil demand is at a record high as the need for affordable and reliable energy increases throughout the world. In our system both domestically and within our export business we are seeing steady demand year over year across the gasoline and diesel and demand for jet fuel continues to grow. Global supply remains constrained and global capacity additions have progressed at a slow pace. In the regions where we operate seasonal butane blending has increased gasoline supply however we expect typical seasonal turn around to be supportive of cracks.

Speaker 2: This quarter's results were adjusted to exclude a $106 million gain on sale of MPC's 25% interest in the South Texas Gateway Terminal, as well as 63 million of response cost associated with our unplanned outage at Garibald. These adjustments reduced are reported adjusted earnings by $0.14 per share.

This quarter's results were adjusted to exclude a $106 million gain on sale of M. P. 625% interest in the South, Texas Gateway terminal as well as $63 million of response cost associated with our unplanned outage.

Gary though.

These adjustments reduced our reported adjusted earnings by <unk> 14 per share.

Adjusted EBITDA was $5 $7 billion for the quarter and cash flow from operations, excluding favorable working capital changes was over $4 $3 billion.

Speaker 4: Adjusted EBITDA was $5.7 billion for the quarter and cash flow from operations, excluding favorable working capital changes, was over $4.3 billion.

Mike Hennigan: To that end we have seen 3.5 million barrels of gasoline inventory drawn out of the US system over the past several weeks. OPEC Plus has reduced production and in pressure to medium sour difference. Charles. While crude differentials have generally been narrowing, we have seen WCS widen and we're strategically situated to run heavy Canadian crude out of refineries across pads two, three, and five. As we look towards 2024, we believe an enhanced mid-cycle environment will continue in the US through the global supply demand fundamentals and the relative advantages over international sources of supply. By including energy costs, feed stock acquisition costs, and refinery complexity.

Speaker 4: During the quarter, we returned $297 million to shareholders through dividend payments and repurchased over $2.8 billion of our shares. And from May 2021 through October 27, we have repurchased $285 million shares or approximately 44% to the shares outstanding.

During the quarter, we returned $297 million to shareholders through dividend payments and repurchased over $2.8 billion of our shares.

And from May 2021 through October 27th we have repurchased 285 million shares or approximately 44% of the shares outstanding.

Speaker 4: Slide 6 shows the reconciliation between net income and adjusted EBITDA, as well as the sequential change in adjusted EBITDA from second quarter 2023 to third quarter 2020.

Slide six shows the reconciliation between net income and adjusted EBITDA as well as the sequential change in adjusted EBITDA from second quarter 2023 to <unk> third quarter 2023 adjusted.

Speaker 4: Adjusted EBITDA was higher sequentially by approximately $1.2 billion driven by higher R&M margins.

Adjusted EBITDA was higher sequentially by approximately $1.2 billion driven by higher R&M margin.

Mike Hennigan: Turning to our results, in the third quarter, we delivered strong cash generation across our business. In refining and marketing, strong margins, 94% utilization, and solid commercial performance, led to segment adjustity of 4.4 billion dollars or $16.6 per barrel. Our mid-stream segment delivered durable and growing earnings. This quarter, it generated segment adjustity of over 1.5 billion dollars. You're to date, our mid-stream segment EBIT is up 6% compared to the prior year period.

Speaker 4: corporate expenses were higher sequentially by $40 million, primarily due to a charge related to valuation of existing performance-based stock compensation expense.

Corporate expenses were higher sequentially by $40 million, primarily due to a charge related to valuation of existing performance based stock compensation expense.

Speaker 4: The tax rate for the third quarter was 22%, resulting in a tax provision of approximately $1 billion. Moving to our segment results, slide 7 provides an overview of our refining and marketing segment.

The tax rate for the third quarter was 22%, resulting in a tax provision of approximately $1 billion.

Moving to our segment results slide seven provides an overview of our refining and marketing segment.

Speaker 4: Our refining assets ran at 94% utilization, processing nearly 2.8 million barrels of crude per day at our 13 refineries. Sequentially per-bauer margins were higher across all regions driven by higher crack threads. Capture was...

Our refining assets ran at 94% utilization processing nearly $2 8 million barrels of crude per day at our 13 refineries sequentially per Bauer margins were higher across all regions driven by higher crack spreads.

Mike Hennigan: The strength of MPLX's cash flows supported its decision to increase its quarterly distribution by another 10%. With this increase, MPC is expected to receive 2.2 billion dollars of distributions from MPLX annually. MPLX is strategic to MPC's portfolio. Its current pace of cash distributions fully covers MPC's dividend and more than half of our planned 2023 capital program. We expect MPLX's cash distribution to continue growing as it pursues growth opportunities which will further enhance the value of this strategic relationship.

<unk> was 93%.

Speaker 4: Refining operating costs were $5.14 per barrel in the third quarter, flat sequentially. We did have unplanned downtime during the quarter, impacting our two largest refineries, which resulted in lost crude throughput of 4.7 million barrels due to the Galveston Bay Reformer outage and 2.1 million barrels at Garyville. Additionally, this downtime resulted in a headwind to our overall capture.

Refining operating costs were $5.14 per barrel in the third quarter flat sequentially.

We did have unplanned downtime during the quarter impacting our two largest refineries, which resulted in loss crude throughput of $4 7 million barrels due to the Galveston Bay reformer outage and $2 1 million barrels at Gary they'll. Additionally, this downtime resulted in a headwind to our overall capture.

Speaker 4: We began construction activities on the Reformer Repair about three months after the event, once regulators gave us clearance and we were able to finalize the required repairs.

We began construction activities on the reformer repair about three months. After the event once regulators gave us clearance and we were able to finalize the required repairs.

Mike Hennigan: We believe MPC's current capital allocation priorities are optimal for our shareholders. In the third quarter, we return $3.1 billion to MPC shareholders via dividends and share repurchases. Last week, we announced an additional $5 billion share repurchase authorization and the 10% increase to MPC's quarterly dividend. With this increase, we have grown our quarterly dividend at over 12% compound annual rate over the past 5 years which has led our refining peers. Our overall capital allocation framework remains consistent.

Since then repairs have progressed as planned and during this outage, we pulled forward turnaround work into the third and fourth quarters, which had been scheduled in the first quarter of 2024.

Slide eight provides an overview of our refining and marketing margin capture this quarter, which was 93% our commercial team executed effectively despite weak secondary product pricing and refinery downtime, which weighed on capture this quarter.

Speaker 4: Slide eight provides an overview of our refining and marketing margin capture this quarter, which was 93%. Our commercial team executed effectively despite weak secondary product pricing and refinery downtime, which weighed on capture this quarter. Capture results will fluctuate based on market dynamics. We believe that the capabilities we have built over the last few years will provide a sustainable advantage. This commitment to commercial performance is foundational, and we expect to continue to see the results.

Capture results will fluctuate based on market dynamics, we believe that the capabilities. We have built over the last few years will provide a sustainable advantage. This commitment to commercial performance is foundational and we expect to continue to see the results.

Mike Hennigan: We will invest in sustaining our asset base while paying a secure competitive and growing dividend. We intend to grow the company's earnings and we will exercise strict capital discipline. Beyond these three priorities, we are firmly committed to returning XS capital through share repurchases to meaningfully lower our share count.

Speaker 4: Flag 9 shows the change in our midstream segment-adjusted EBITDA versus the second quarter of 2023. Our midstream segment delivered strong third-quarter results. Segment-adjusted EBITDA was flat sequentially and 3% higher year-over-year, primarily due to higher throughputs and ratios.

Slide nine shows the change in our midstream segment adjusted EBITDA versus the second quarter of 2023.

Our midstream segment delivered strong third quarter results.

Segment, adjusted EBITDA was flat sequentially, and 3% higher year over year, primarily due to higher throughput in rates.

Mike Hennigan: Let me also share some of the progress on our low carbon initiatives. The Martinez Renewal Fuel Facility is being delivered safely on time and on budget and by the end of 2023, the facility is expected to produce $730 million per year. At that point, Martinez will be among the largest renewable diesel facilities with a competitive operating profile, robust logistics flexibility, an advantage feedstock slate, and should benefit from the global strategic relationship with Nestay.

Speaker 4: Year to date, our midstream segment Ividah is of 6% compared to the prior year period. As Mike mentioned earlier, the growth of MPLX's earnings supported its decision to increase its quarterly distribution by another 10% to $0.85 per unit, and MPC expects to receive $2.2 billion in cash from MPLX on an annual basis.

Year to date, our midstream segment EBITDA is up 6% compared to the prior year period as Mike mentioned earlier the growth of Mplx's earnings supported its decision to increase its quarterly distribution by another 10% to 85 cents per unit and MPC expects to receive $2 2 billion.

And cash from MPLX on an annual basis.

Speaker 4: Our midstream business continues to grow and generates strong cash flows. We are advancing high return growth projects anchored in the Marcellus and Permian Basin.

Our midstream business continues to grow and generate strong cash flows we are advancing high return growth projects anchored in the Marcellus and Permian basin.

Mike Hennigan: Our Dickinson Renewable Diesel Facilities operating well, the facility processed 75% advantage feed in the third quarter, the nearby Spiritwood Soybean Processing Plant, which is owned through a joint venture with ADM, is expected to deliver enough vegetable oils to reduce approximately 75 million gallons per year of renewable diesel. Additionally, we are advancing early stage developments to our interest in low carbon intensity RNG and other small scale investments. We believe through these projects, we are taking a discipline step to advance our goal to lower the carbon intensity of our operations and the products we manufacture and supply to a growing and evolving market while operating our current asset base to deliver superior cash flow and meet demands.

Speaker 4: like 10 presents the elements of change in our consolidated cash position for the quarter, operating cash flow, excluding changes in working capital with over $4.3 billion in the quarter.

10 presents the elements of change in our consolidated cash position for the quarter operating cash flow, excluding changes in working capital with over $4 $3 billion in the quarter.

Speaker 4: Working capital was a $609 million tailwind for the quarter, driven primarily by increases in crude oil prices. Year-to-date working capital has been $1.4 billion source of cash.

Working capital was $609 million tailwind for the quarter, driven primarily by increases in crude oil prices year to date working capital has been $1 4 billion source of cash.

Speaker 4: capital expenditures and investments totaled $486 million of quarter consistent with our 2023 outlook.

Capital expenditures and investments totaled $486 million this quarter consistent with our 'twenty two 'twenty three outlook MPC returned nearly $3 $1 billion via share repurchases and dividends during the quarter. This represents an approximately 72% payout of the $4 $3 billion of.

Speaker 4: MPC returned nearly $3.1 billion via share repurchases and dividends during the quarter. This represents an approximately 72% payout of the $4.3 billion of operating cash flow, excluding changes in working capital, highlighting our commitment to superior shareholder returns.

Cash flow excluding changes in working capital.

Highlighting our commitment to superior shareholder returns as of October 27th we have approximately $8 $3 billion remaining under our current share repurchase authorization, which includes the additional $5 billion approval announced last week.

Maryann Mannen: At this point, I will turn the call over to Maryann. Thanks, Mike. Moving to third quarter highlights, slide five provides the summary of our financial results. This morning, we reported adjusted earnings per share of $8.14. This quarter's results were adjusted to exclude a $106 million gain on sale of MPC's 25% interest in the South Texas Gateway Terminal, as well as $63 million of response cost associated with our unplanned outage at Garibald.

Speaker 4: As of October 27th, we have approximately $8.3 billion remaining under our current share repurchase authorization, which includes the additional $5 billion approval announced to last week.

Speaker 4: At the end of the third quarter, NPC had approximately $13.1 billion in consolidated cash and short-term investments. This includes approximately $1 billion of MPLX cash.

At the end of the third quarter MPC had approximately $13 $1 billion in consolidated cash and short term investments.

This includes approximately $1 billion of MPLX cash.

Turning to guidance on slide 11, we provide our fourth quarter outlook, we expect crude throughput volumes of over $2 6 million barrels per day, representing utilization of 90% utilization is forecasted to be lower than third quarter levels due to turnaround activity, having a higher impact on crude units in.

Speaker 4: Turning to guidance on slide 11, we provide our fourth quarter outlook. We expect crude throughput volumes of over 2.6 million barrels per day, representing utilization of 90 percent. Utilization is forecasted to be lower than third quarter levels due to turnaround activity having a higher impact on crude units in the fourth quarter.

Maryann Mannen: These adjustments reduced are reported adjusted earnings by $0.14 per share. Adjusted EBITDA was $5.7 billion for the quarter and cash flow from operations, excluding favorable working capital changes was over $4.3 billion. During the quarter, we returned $297 million to shareholders through dividend payments and repurchased over $2.8 billion of our shares. And from May 2021 through October 27, we have repurchased $285 million shares or approximately 44% of the shares outstanding. Slide six shows the reconciliation between net income and adjusted EBITDA as well as the sequential change in adjusted EBITDA from second quarter 2023 to third quarter 2023.

In the fourth quarter.

Speaker 4: In the Gulf Coast, with respect to the Galveston Bay Reformer, repairs have progressed as planned. We anticipate starting the unit back up in mid-November. Production is expected to ramp over the next several weeks.

In the Gulf Coast with respect to the Galveston Bay reformer repairs have progressed as planned we anticipate starting the unit back up in mid November production is expected to ramp over the next several weeks and guidance anticipates returning to full operating rates by mid December following advanced turnaround activity.

Speaker 4: and guidance anticipates returning to full operating rates by mid-December following advanced turnaround activity.

Speaker 4: And as I mentioned earlier, during this outage, we plan to continue progressing and complete turnaround work that was previously scheduled for 2024.

And as I mentioned earlier during this outage we plan to continue progressing incomplete turnaround work that was previously scheduled for 2024.

Speaker 4: As a result plan, turnaround expense is now projected to be approximately $300 million in the fourth quarter.

As a result planned turnaround expense is now projected to be approximately $300 million in the fourth quarter operating cost per barrel in the fourth quarter are expected to be $5 60.

Speaker 4: Operating costs per barrel in the fourth quarter are expected to be $5.60.

Speaker 4: higher sequentially due to higher energy cost, particularly on the West Coast, as well as higher project related expenses associated with plan turnaround activity.

Higher sequentially due to higher energy cost, particularly on the west coast as well as higher project related expenses associated with planned turnaround activity.

Maryann Mannen: Adjusted EBITDA was higher sequentially by approximately $1.2 billion driven by higher R&M margins. Corporate expenses were higher sequentially by $40 million, primarily due to what charge related to valuation of existing performance-based stock compensation expense. The tax rate for the third quarter was 22% resulting in a tax provision of approximately $1 billion. Moving to our segment results, Slide seven provides an overview of our refining and marketing segment. Board. Our refining assets ran at 94% utilization, processing nearly 2.8 million barrels of crude per day at our 13 refineries.

Speaker 4: Distribution costs are expected to be approximately $1.4 billion for the fourth quarter. Corporate costs are expected to be $175 million representing the sustained reductions that we have made in this area. With that, let me pass it back to Mike.

Distribution costs are expected to be approximately $1 $4 billion for the fourth quarter corporate costs are expected to be $175 million, representing the sustained reductions that we have made in this area with that let me pass it back to Mike.

In summary, we will continue to prioritize capital investments to ensure the safe and reliable performance of our assets will also invest in projects, where we believe there are attractive returns.

Speaker 3: In summary, we will continue to prioritize capital investments to ensure the safe and reliable performance of our <expletive> .

Speaker 3: We'll also invest in projects where we believe there are attractive returns.

Speaker 3: Through the third quarter, we've invested over $1.7 billion in capital and investment, which includes $390 million of maintenance capital, as well as over $900 million on refinery turn-arounds in 2023.

For the third quarter, we've invested over $1 $7 billion in capital and investments, which includes $390 million of maintenance capital as well as over $900 million on refinery turnarounds in 2023.

Maryann Mannen: Sequentially per-bauer margins were higher across all regions driven by higher crack spreads. Capture was 93%. Refining operating costs were $5.14 per barrel in the third quarter flat sequentially. We did have unplanned downtime during the quarter, impacting our two largest refineries, which resulted in loss crude through of 4.7 million barrels due to the Galveston Bay Reformer outage and 2.1 million barrels at Garyville. Additionally, this downtime resulted in a headwind to our overall capture.

Speaker 3: Our focus on safety, operational excellence, and sustained commercial improvement will position us to capture the enhanced mid-cycle environment, which we expect to continue longer term, given our advantages over marginal sources of supply and growing global demand.

Our focus on safety operational excellence and sustained commercial improvements will position us to capture the enhanced mid cycle environment, which we expect to continue longer term given our advantages over marginal sources of supply and growing global demand.

MPLX remains a source of growth in our portfolio. Partnerships expected to distribute over $2.2 billion to MPC annually. And as MPLX continues to grow its free cash flow, we believe it will continue to have capacity to increase its cash distributions to MPC.

MPLX remains a source of growth in our portfolio partnerships and expect it to distribute over $2 $2 billion to MPC annually and its MPLX continues to grow its free cash flow. We believe it will continue to have capacity to increase its cash distributions to MPC.

Maryann Mannen: We began construction activities on the Reformer Repair about three months after the event once regulators gave us clearance and we were able to finalize the required repairs. Since then, repairs have progressed as planned during the outage. We pulled forward turnaround work into the third and fourth quarters, which had been scheduled in the first quarter of 2024. Slide 8 provides an overview of our refining and marketing margin capture this quarter, which was 93%.

We believe MPC is positioned as the refiner investment of choice with the strongest, through-cycle cash generation and the ability to deliver superior returns to our shareholders supported by our firm commitment to return capital. With that, let me turn the call.

We believe M. P. C is positioned as the refiner investment of choice with the strongest through cycle cash generation and the ability to deliver superior returns to our shareholders supported by our firm commitment to return capital.

With that let me turn the call back over to Christina.

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

Thanks, Mike as we open the call for your questions and as a courtesy to all participants we ask that you limit yourself to one question and one follow up if time permits we'll re prompt for additional questions and with that Sheila we're ready for them.

Maryann Mannen: Our commercial team executed effectively, despite weak secondary product pricing and refinery downtime, which weighed on capture this quarter. Capture results will fluctuate based on market dynamics. We believe that the capabilities we have built over the last few years will provide a sustainable advantage. This commitment to commercial performance is foundational and we expect to continue to see the results. Slide 9 shows the change in our midstream segment adjusted EBITDA versus the second quarter of 2023.

Thank you we will now begin the question and answer session. If you have a question. Please press Star then one on your Touchtone phone.

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Our first question will come from Manav Gupta with UBS. Your line is open.

Maryann Mannen: Our midstream segment delivered strong third quarter results. Segment adjusted EBITDA was flat sequentially and 3% higher year over year, primarily due to higher throughputs and rates. Year to date, our midstream segment EBITDA is of 6% compared to the prior year period. As Mike mentioned earlier, the growth of MPLX's earnings supported its decision to increase its quarterly distribution by another 10% to 85 cents per unit and MPC expects to receive $2.2 billion in cash from MPLX on an annual basis.

Good morning, Mike and Marianne. When we look at the refiners, they look at themselves and perform on different performance metrics.

Good morning, Mike and Marianne then we look at the refiners they look at themselves and perform on different performance metrics. Some look at refining capture you guys fairly focused on EBITDA margin, but a battle and when we look at that matrix. It looks like for a second year in a row, you'll be an adult.

Some look at refining capture. You guys really focus on EBITDA margin per barrel. And when we look at that matrix, it looks like for a second year in a row, you'll be on top of that table outperforming your peers. So help us understand a little better what's allowing you to drive this outperformance and deliver such strong results when it comes to EBITDA margin per barrel in your refining system.

Off that table outperforming your peers, so help us understand a little better what's allowing you to drive this outperformance and deliver such strong results. When it comes to EBITDA margin per barrel refining system.

Maryann Mannen: Our midstream business continues to grow and generates strong cash flows. We are advancing high return growth projects anchored in the Marcellus and Permian Basin. Slide 10 presents the elements of change in our consolidated cash position for the quarter, operating cash flow, excluding changes in working capital with over $4.3 billion in the quarter. Working capital was a $609 million tailwind for the quarter, driven primarily by increases in crude oil prices. Year-to-date working capital has been $1.4 billion for the cash.

Hi, Manav, it's Rick first of all thank you for the perceptive Callout I won't tell you. We are Uber focused on EBITDA and our results compared to others in our team will certainly greatly appreciate your call out on that says they've been working on this consistently for years now Manav and your.

I'm on of its Rick. First of all, thank you for their perceptive call out. I will tell you.

We are over focused on EBIDA and our results compared to others. And our team will certainly greatly appreciate your call out on this.

They've been working on this consistently for years now, Monov, and you're seeing it pull through to our results. So kudos to the team there. I will kind of backtrack and state what we've stated in past quarter's Monov.

We're seeing it pull through to our results so kudos to the team there.

I will kind of backtrack and state what we've stated in past quarters Manav, we've made structural improvements throughout our entire commercial commercial value chain to capture value from the front end all the way through the back end and specifically we're doing so in a way today.

Maryann Mannen: Capital expenditures and investments totaled $486 million of quarter consistent with our 2023 outlook. MPC returned nearly $3.1 billion by a sharey purchases and dividends during the quarter. This represents an approximately 72% payout of the $4.3 billion of operating cash flow, excluding changes in working capital, highlighting our commitment to superior shareholder returns. As of October 27th, we have approximately $8.3 billion remaining under our current sharey purchase authorization, which includes the additional $5 billion approval announced to last week.

We've made structural improvements throughout our entire commercial value chain to capture value from the front end all the way through the back end. And specifically, we're doing so in a way today that is, it is creating a mindset change within our teams.

That is it is creating a mindset change within our teams and we are I would say taking more calculated risk with our approach in how we look at everything there isn't a rock that we're not overturning to see what's Andre and we're assuming manav.

and we are, I would say, taking more calculated risk.

our approach and how we look at everything. There isn't a rock that we're not overturning to see what's under it. And we're assuming, mon of, we do everything wrong. And with that mindset, you can create a lot of value in looking at things you haven't looked at in the past.

We do everything wrong and with that mindset, you can create a lot of value.

Maryann Mannen: At the end of the third quarter, MPC had approximately $13.1 billion in consolidated cash and short-term investments. This includes approximately $1 billion of MPLX cash. Turning to guidance on slide 11, we provide our fourth quarter outlook. We expect crude throughput volume of over 2.6 million barrels per day, representing utilization of 90%. Utilization is forecasted to be lower than third quarter levels due to turnaround activity, having a higher impact on crude units in the fourth quarter.

And looking at things you haven't looked at in the past.

In the Midwest, specifically I will I will really pivot on a couple of things we have a fully integrated system. We have four grant refineries in the Midwest in the third quarter as you know they ran very well we have access to advantage feedstocks, both khamenei Canadian and domestic and then Bryan's team is.

And the third quarter, as you know, they ran very well. We have access to advantage feedstocks, both Canadian and domestic.

and then Brian's team has created exceptional optionality for product placement. So when you combine all those factors the government of, Manev, you really get to an end result that...

Created exceptional optionality for product placement. So when you combine all those factors together Manav manav.

You really get to an unresolved that.

Maryann Mannen: In the golf coast, with respect to the Galveston Bay Reformer repairs have progressed as planned, we anticipate starting the unit back up in mid-November. Production is expected to ramp over the next several weeks, and guidance anticipates returning to full operating rates by mid-December following advance turnaround activity. And as I mentioned earlier, during this outage, we plan to continue progressing and complete turnaround work that was previously scheduled for 2024. As a result, plan turnaround expense is now projected to be approximately $300 million in the fourth quarter.

has been consistent as you stated over the last several quarters and we expect it to continue.

It has been consistent as you stated over the last several quarters and we expect it to continue.

Monav, it's Mike. The only thing I would add to what Rick said is we start with even a per barrel. You know, we want to make sure we're generating as much earnings as we can as we run our assets. Ultimately, though, I care the most about cash generation.

Manav, it's Mike the only thing I would add to what Rick said is we start with EBITDA per barrel. We wanted to make sure we're generating as much earnings as we can as we run our assets ultimately, though I care. The most about cash generation and then it starts with EBITDA per barrel, but the bottomline is a regenerating.

It starts with even a per barrel, but the bottom line is are we generating significant amount of cash to give us the flexibility to drive shareholder returns?

The significant amount of cash to give us the flexibility to drive shareholder returns. So I think you hit the starting point with EBITDA per barrel, the ending point is generating cash and then having that flexibility.

So I think you hit the starting point with even a per barrel, the ending point is generating cash, and then have an F flexibility.

Maryann Mannen: Operating costs per barrel in the fourth quarter are expected to be $5.60 higher sequentially due to higher energy cost, particularly on the west coast, as well as higher project-related expenses associated with plan turnaround activity. Distribution costs are expected to be approximately $1.4 billion for the fourth quarter. Corporate costs are expected to be $175 million, representing the sustained reductions that we have made in this area.

Perfect. A quick follow up here. You guys are known for your strong operational performance. 3Q was a little unusual. You had some unplanned incidents and despite those you delivered a pretty strong beat but I'm trying to understand let's say those incidents would not have happened. We have got even a stronger quarter if you could talk about that.

Quick follow up here you guys are known to play a strong operational performance.

<unk> was a little unusual use had some unplanned incidents and despite those you delivered a pretty strong beat but I'm trying to understand let's say those incidents would not have happened would we have got even a stronger quarter. If you could talk about that.

Yeah, thank you. It's Marianne and thanks for the question. You know, you're right. As we shared with you, we did have a couple of unplanned downtime.

Yeah. Thank you, it's Marianne and thanks for the question you're right as a as we've shared with you. We did have a couple of unplanned downtime.

Mike Hennigan: With that, let me pass it back to Mike. In summary, we will continue to prioritize capital investments to ensure the safe and reliable performance of our assets. We'll also invest in projects where we believe there are attractive returns. Through the third quarter, we've invested over $1.7 billion in capital and investment, which includes $390 million of maintenance capital, as well as over $900 million on refinery turnaround in 2023. Our focus on safety, operational excellence, and sustained commercial improvement will position us to capture the enhanced mid-cycle environment, which we expect to continue longer term, given our advantages over marginal sources of supply and growing global demand.

uh... events in the quarter that impacted the golf coast uh... one the most significant in terms of the contribution is the galveston bay reformer

Events in the quarter that impacted the golf coast won the most significant in terms of its contribution is the Galveston Bay reformer and then obviously.

and then obviously we had our Garyville. Had we not had those two impacts, and happy to share a little bit more about those in a moment here.

Obviously, we had our Gary they'll had we not had those two impacts and happy to share a little bit more about those in a moment here our capture would have been 6% higher than what we reported with the lion's share of that capture then obviously being the reformer you know as I mentioned $4 7 million barrels in the quarter.

our capture would have been 6% higher than what we reported with the lion's share of that capture event obviously being the reformer you know as I mentioned 4.7 million barrels in the quarter that we lost.

We lost and then on Gary Bill, It's about $2 1 million barrels as we operated at about half right for yeah. Just under just under a week you know it took us about just back to Galveston Bay for a moment. It it took us about three months before.

And then on Garyville, it's about 2.1 million barrels as we operated at about half rate for just under a week. You know, it took us about just back to Galveston Bay for a moment. It took us about three months before we were able to begin our work as we, as the regulators, got through their work and then we determined where all the repairs needed to be. So we were about three months to the start of getting those.

Mike Hennigan: MPLX remains a source of growth in our portfolio. Partnerships expected to distribute over $2.2 billion to MPC annually, and as MPLX continues to grow its free cash flow, we believe it will continue to have capacity to increase its cash distributions to MPC. We believe MPC is positioned as the refiner investment of choice, with the strongest, through-cycle cash generation, and the ability to deliver superior returns to our shareholders, supported by our firm commitment to return capital.

We were able to begin our work as we as the regulators got through their work and then we determined on where all the repairs needed to be so we were about three months.

The start of getting those.

activities launched. I hope that answers the question. Thank you so much for taking my questions.

Activities launched I hope that answers the question.

Thank you so much for taking my questions.

Youre welcome Manav.

Next we will hear from Doug Leggate with Bank of America You May proceed.

Well, first of all, thank you for taking my questions. Mary Ann, that last response was actually one of the key things we wanted to hit. So let me try to more if I may. First of all, Mike, in your opening remarks, you talked about demanding your system is pretty strong. I wonder if I could ask you to isolate that to export demand, because obviously that's a fairly big swing factor for the US market in particular. How does that look in your system?

Well first of all thank you for taking my questions Mary I'm not lost our response was actually one of the key things we wanted to hit so let me try.

Kristina Kazarian: With that, let me turn the call back over to Christina. Thanks, Mike.

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

Two more if I may.

First of all Mike in your opening remarks, you talked about demand in your system is pretty strong I wonder if I could ask you to isolate that to export demand because obviously, that's a fairly big swing factor for the U S market in particular, how does that look in your system.

Operator: We will now begin the question and answer session. If you have a question, please press star then one on your touchtone phone. If you wish to be removed from the queue, please press star then two. If you are using a speaker phone, you may need to pick up the handset first before pressing the numbers. Once again, if you have a question, please press star then one on your touchtone phone.

Yeah, Doug I'll, let Brian comment on that.

Doug, this is Brian Goodmourning. Good questions. So, you know, really our theme on demand both domestically and internationally is stable and steady. It's been that way really through...

Doug This is Brian good morning. Good question. So you know really our theme on demand both domestically and internationally is stable and steady.

It's been that way really throughout the year in.

Manav Gupta: Our first question will come from Manav Gupta with UBS. Your line is open. Good morning, Mike and Marion. When we look at the refiners, they look at themselves and perform on different performance matrix. Some look at refining capture. You guys really focus on EBITDA margin per barrel. And when we look at that matrix, it looks like for a second year in a row, you'll be on top of that table outperforming your peers.

In the quarter, we exported roughly 250,000 barrels a day out of our system in the golf coach, despite some operational challenges as noted. About two-thirds of that is distilled. The balance, of course, is gasoline.

In the quarter, we exported roughly 250000 barrels a day out of our system in the Gulf Coast. Despite some operational challenges as noted about two thirds of that is just what the balance of course is gasoline the.

The demand center in Latin America and the Caribbean really has been strong and resilient and growing throughout the year. They import roughly 2.3 million barrels a day into the system.

The demand center in Latin America, and the Caribbean really has been strong and resilient and growing throughout the year. They import roughly $2 3 million barrels a day into the system. The U S has been about 65% of that we have come off a little bit in terms of our share into Latin America and the Caribbean in exchange for sure into Europe. So we are seeing.

The US has been about 65% of that. We have come off a little bit in terms of our share into Latin America and the Caribbean in exchange for share into Europe .

Manav Gupta: So help us understand a little better what's allowing you to drive this out performance and deliver such strong results when it comes to EBITDA margin per barrel in your refinances. Thank you. Hi, Manav, it's Rick. First of all, thank you for the perceptive callout. I will tell you we are over focused on EBIDA and our results compared to others. And our team will certainly greatly appreciate your callout on this, as they've been working on this consistently for years now, Manav, and you're seeing it pull through to our results. So kudos to the team there.

We are seeing growth in European imports, as you've probably seen as well, roughly 200,000 barrels a day in the quarter from the U.S. into Europe . The one cautionary tale there, it is the one weakest spot that we see throughout our network, which is distal demand in Europe .

Rose and European imports as you've probably seen as well roughly 200000 barrels a day in the quarter from the U S into Europe. The one cautionary tale there. It is the one weak spot that we see throughout our network, which is distillate demand in Europe, our team sees it as roughly 4% to 6% off year to year with expectation.

you know our team sees it is roughly 4% to 6% off year to year with expectations and a bit of hope that as we get into the colder weather season here later this year we'll see a pickup in demand in Europe but that is the one soft spot that we're...

And a bit of hope that as we get into the colder weather season. Here. Later this year, we will see a pickup in demand in Europe, but that that is the one soft spot that we're seeing.

Okay, that's helpful. And Mike, I apologize for this one, but I guess somebody's got to ask it. So there's speculation overnight about the sit-go process and Marathon been mentioned as a potential better. So I wonder if you could...

Okay that was helpful.

Mike I apologize for for this one, but I guess somebody's got to ask it. So there is speculation.

Rick Hessling: I will kind of backtrack and state what we've stated in past quarters, Manav. We've made structural improvements throughout our entire commercial, commercial value chain to capture value from the front end all the way through the back end. And specifically, we're doing so in a way today that is, it is creating a mindset change within our teams. And we are, I would say, taking more calculated risk with our approach and how we look at everything.

Overnight about the citgo process on marathon been mentioned as a potential better so I wonder if you could.

frame whether that is in fact a consideration that you've thought about, what the rationale would be, and how you would see something like that fitting in with your portfolio high-grading focus that you've had over the last several years.

Cream weather.

Is it five is a consideration that you've thought about what the rationale would be and.

How you would see something like that fitting in with your.

Portfolio high grading focus that you've heard over the last several years.

Yeah, thanks Doug. I'm going to let Dave start and then I'll come back after.

Yeah, Thanks, Doug I'm going to let Dave start and then I'll come back afterwards.

done so appreciate the question we anticipated that so

Doug.

The question, we anticipated that so.

Rick Hessling: There isn't a rock that we're not overturning to see what's under it. And we're assuming, Manav, we do everything wrong. And with that mindset, you can create a lot of value in looking at things you haven't looked at in the past.

You know, and Mike said in the past, we like to and do look at everything out there as a general comment.

And Mike said in the past, we like to and do look at everything out there as a general comment.

But I think we're more focused currently on in Rictus on this a little bit on opportunities to build out our competes and increase our competitive advantages along our existing refinery value chains. And when we say that, that's inclusive of MPC and MPLX. So from well head to wheel, that's the way to think about it.

But I think we're more focused currently on and Rick touched on this a little bit on.

Mike Hennigan: In the Midwest specifically, I will, I will really pivot on a couple of things. We have a fully integrated system. We have four great refineries in the Midwest. And the third quarter, as you know, they ran very well. We have access to advantage feedstocks, both Canadian and domestic. And then Brian's team has created exceptional optionality for product placement. So when you combine all those factors together, Manav, Manav, you really get to an end result that has been consistent as you stated over the last several quarters and we expect it to continue.

Opportunities to build out our comp sales and increase our competitive advantages along our existing refinery value change and when we say that that's inclusive of MPC and MPLX. So from wellhead to wheel the way to think about it.

So with that said, and on the current environment, we believe that M&A within refining M&A.

So with that said I know in the current environment.

We believe that M&A within refining refining M&A.

is one of the more challenging ways to create value. And with all that said, I would not anticipate us, or you should anticipate us participating in the current auction process for the SITGOS.

As one of the more challenging ways to create value and with all that said.

I would not anticipate us.

Are you shouldn't anticipate us participating in the current auction process for the citgo assets.

Yeah.

Mike Hennigan: Manav, it's Mike. The only thing I would add to what Rick said is, we start with the evit of her barrel. You know, we want to make sure we're generating as much earnings as we can as we run our assets. Ultimately, though, I care the most about cash generation. I mean, it starts with the evit of her barrel, but the bottom line is are we generating, you know, the significant amount of cash to give us the flexibility to drive shareholder returns. So I think you hit the starting point with evit of her barrel. The ending point is generating cash and then having that flexibility.

Thank you, George. I don't know where the rumor came from, but we're not interested in the auction process. I was the best answer I could have. Best answer I could have pulled for. Thanks very much indeed. Yeah, you're welcome. Welcome.

Thanks, Joe.

I don't know where the rumor came from but we're not interested in.

The auction process.

Good afternoon.

It sounds like the whole four thanks very much indeed.

Yeah.

Our next question will come from Paul Cheng with Scotiabank. Your line is open.

Hey, everyone. Good morning.

Good morning, Paul.

Maybe that this is Mary Ann or maybe for Rich. For the West Coast marketing margin condition that seems to be very strong and you do have a donor network there. So just curious that in the third quarter, how much is the West Coast contribution coming from that piece of the business is it growing or that what's your plan over there? That's the first question.

Maybe a desk there says maryann or maybe it's all rich.

For the West Coast.

Marketing.

Maryann Mannen: Perfect. A quick follow up here. You guys are known for your strong operational performance. I think you was a little unusual. You had some unplanned incidents. And despite those you delivered a pretty strong beat, but I'm trying to understand, let's say those incidents would not have happened. Would we have got even a stronger quarter if you could talk about that? Yeah, thank you. It's Mary Ann. And thanks for the question. You know, you're right.

Margins competition that seems to be very strong and you do have a deal done.

What day it so just curious that in the third quarter, how much of the west coast contribution coming from that piece of the pizza.

Wing.

Is that what's your panels.

That's the first question.

Yeah, Paul. Good morning. This is Brian . I'll take that one really very limited impact in the quarter from our marketing business on the West Coast. We actually saw prices increase pretty substantially on the West Coast in the quarter due to some unplanned outages in the system. And when that occurs, we actually see just the opposite. We see a lot of pressure on the margin out in the West Coast and other markets.

Yeah, Paul Good morning. This is Brian I'll take that one really very limited impact in the corner from our marketing business on the West Coast, we actually saw prices increase pretty substantially on the west coast in the quarter due to some unplanned outages in the system and when that occurs we actually see just the opposite we see a lot of pressure on the margin on them.

Maryann Mannen: As we shared with you, we did have a couple of unplanned downtime events in the quarter that impacted the golf coast. One, the most significant in terms of its contribution is the Galveston Bay reformer. And then obviously we had our Garyville. Had we not had those two impacts and happy to share a little bit more about those in a moment here, our capture would have been 6% higher than what we reported.

Maryann Mannen: With the lion's share of that capture event, obviously being the reformer. You know, as I mentioned, 4.7 million barrels in the quarter that we lost. And then on Garyville, it's about 2.1 million barrels as we operated about half-rate for just under a week. You know, it took us about just back to Galveston Bay for a moment. It took us about three months before we were able to begin our work as we as the regulators got through their work and then we determined where all the repairs needed to be. So we were about three months to the start of getting those activities launched. I hope that answers the question. Thank you so much for taking my question. You're welcome, Manav.

The west coast and other markets, so not a big contributor there in the quarter now as we look ahead to <unk> as market comes off we would expect to see some recovery in some margin expansion in the fourth quarter, but to your other question. We are absolutely actively engaged in growing and continuing to grow that network. We've put up really good numbers last year in this.

So not a big contributor there in the quarter. Now as we look ahead to 4Q, as market comes off, we would expect to see some recovery and some margin expansion in the fourth quarter. But to your other question, we are absolutely actively engaged in growing and continuing to grow that network. We've put up really good numbers last year and this year and look at it as a strategic component of our position out in the West Coast.

This year and look at it as a strategic component of our position out in the West coast.

Hey Brian , you have any rough estimate you can share that how many stations that you're trying to grow it on any basis over the next several years there?

Hey, Brian do you have any rough estimate you can share that.

How many stations that you're trying to grow we get on the annual basis over the next several years there.

really don't want to forecast, you know, station growth expectation. Paul, we're really focused on value growth. So it's really, it's a PV optimization, looking at volume in margin. So it's not driven by station growth or volume below.

Really don't want to forecast a station growth expectation part, we're really focused on value growth. So it's really it's a PV optimization looking at volume and margin. So it's not driven by station grows on volume alone.

Okay. Mike, I know maybe it's still a little bit early. Can you talk about the pluses and minuses on the variable for the CAPEX outlook for the next several years compared to this year? Are we expecting a three-steady program, or are you looking for an opportunity to grow both in the

Okay.

Mike.

Maybe it's too early Kevin can you talk about that.

Doug Leggate: Next, we will hear from Doug Leggate with Think of America. You may proceed. Well, first of all, thank you for taking my questions. Maryann, that last response was actually one of the key things we wanted to hit. Let me try to more if I may. First of all, Mike, in your opening remarks, you talked about demanding your system is pretty strong. I wonder if I could ask you to isolate that to export demand.

Plus and minuses on debatable.

Capex outlook for the next several years campaigns. This year are we expecting it to ensure that the program all of that.

<unk> opportunity to grow both in the.

maybe refining in terms of improving the yield or that reducing energy and NPRX. So can you just give us some idea that how the trend is going to look like in the CAPEX and activity level?

Maybe we're finding again tons.

So I'm, hoping that you or that reducing energy and MPLX. So can you just give us some idea that how that trend is going to look like in the capex and activity level.

Doug Leggate: Because obviously that's a fairly big swing fight for the US market in particular. How does that look in your system? Yeah, Doug, I'll let Brian come in on that. Doug, this Brian, good morning. Good question. So, you know, really our theme on demand both domestically and internationally is stable and steady. It's been that way really throughout the year. In the quarter, we exported roughly 250,000 barrels a day out of our system in the Gulf Coast, despite some operational changes.

Sure, Paul, it's Marianne. Let me talk a little bit about CapEx in general, and then I'll pass it to Mike, and he'll share some incremental thoughts as well.

Sure Paul it it it's Maryann, let me talk a little bit about Capex in general and then I'll pass it to Mike in his here's Sheryl some incremental thoughts as well, but as you know one of our principles. If you will our strategic pillars is strict capital discipline and I think that has.

As you know, you know, one of our principles, if you will, our strategic pillars is strict capital discipline. And I think that has

Hopefully, you've seen that we have implemented that principle well over the last few years.

Hopefully you've seen that we have implemented that principal well over the last few years. When you look at 2017 to 2020, our consolidated Capex averaged about three and a half billion and as you look 'twenty one to 'twenty three that's averaged $2 1 billion.

Doug Leggate: The challenge is noted about two thirds of that is distillate the balance, of course, is gasoline. The demand center in Latin America and the Caribbean really has been strong and resilient and growing throughout the year. They import roughly 2.3 million barrels a day into the system. The US has been about 65% of that. We have come off a little bit in terms of our share into Latin America and the Caribbean in exchange for share into Europe.

And as you look 21 to 23, you know, that's average 2.1 billion. So, you know, again, that premise of strict capital discipline, ensuring that we're delivering the returns has been an important piece of the work that we've been doing. I think in refining, we continue to look for cost reduction type projects, those that can enhance reliability, margin enhancement type projects, then that you would be continuing to evaluate. And there's several of those projects that will evaluate in terms of the timing, you know, we're a bit early for 2024, frankly, even 2025.

So again that that premise of strict capital discipline, ensuring that we're delivering the returns has been an important piece of the work that we've been doing I think in refining we continue to look for cost reduction type projects those that can enhance reliability.

Doug Leggate: So, we are seeing growth in European imports, as you've probably seen as well. Roughly 200,000 barrels a day in the quarter from the US and to Europe. The one cautionary tail there, it is the one weakest spot that we see throughout our network, which is distilled demand in Europe. Our team sees it as roughly 4% to 6% off year to year with expectations and a bit of hope that as we get into the colder weather season here later this year, we'll see a pickup in demand in Europe. But that is the one soft spot that we're seeing.

Enhancement type projects.

Then that we would be continuing to evaluate and there are several of those projects that will evaluate in terms of the timing you know we're a bit early for 2024, frankly, even 2025 guidance.

in terms of the timing, you know, we're a bit early for 2024, frankly, even 2025 guidance.

But let me pass it to Mike, because I think he wants to give you some incremental color on how he's thinking about it.

But let me pass it to Mike because I think he wants to give you some incremental color on how he's thinking about it.

I think Mary answered it very well. Paul, the way we think about it is on the MPL side of the house, we've been spending roughly about a billion dollars.

I think I think Mary you answered it very well Paul the way, we think about it is on the <unk> side of the house, we've been spending roughly about $1 billion.

Dave: That's helpful. Mike, I apologize for this one, but I guess somebody's got to ask it. So, there's speculation overnight about the sit-go process and marathon been mentioned as a potential biter. So, I wonder if you could frame whether that is in fact a consideration that you've thought about what the rationale would be and how you would see something like that. But, you know, fitting in with your portfolio, high-grating focus that you've had over the last several years.

and grow in those cash flows. If you listen to the MPLX call, we're still very comfortable with those cash flows growing that'll continue to kick over to NPCV distribution. And then Mary said, well, on the refining side of the house, we're still very optimistic that we have some good projects.

And growing those cash flows if you listen to the MPLX call. We're still very comfortable with those cash flows grow and that will continue to kick over to MPC. The distribution, then maryann said it well on the refining side of the house, we're still very optimistic that we have some good projects that enable us to either.

that enable us to either increase reliability, which will hit the bottom line, or enhance our margins in such a way that we talked about earlier that will generate more EBITDA per barrel.

Increased reliability, which will hit the bottom line or.

Enhance our margins in such a way that we talked about earlier that we will generate more EBITDA per barrel. So we have a pretty fulsome look at where we think we're going to invest and like marriages gave you the numbers over the last couple of years you spend at a $2 billion to $3 billion overall on a consolidated basis, we think that's a nice base case to have.

Dave: Thanks, Doug. I'm going to let Dave start and I'll come back afterwards. Doug, so I appreciate the question we anticipated that. So, you know, and Mike said in the past, we like to and do look at everything out there as a general comment. But I think we're more focused currently on in Rictus on this a little bit on, you know, opportunities to build out our competes and increase our competitive managers along our existing refinery value chains.

So we have a pretty fulsome look at where we think we're going to invest. And, you know, like Mary just gave you the numbers over the last couple of years, you're spending, you know, two to $3 billion overall on a consolidated basis.

We think that's a nice base case to have, and then we always look to optimize around that.

And then we always look to optimize around that when we do that we generate sufficient free cash flow that we can still return capital via dividends and buybacks and as you've seen in this enhanced margin environment. That's that's part of our DNA to return capital to shareholders.

When we do that, we generate sufficient free cash flow that we can still return capital, via dividends and buybacks. And as you've seen in this enhanced margin environment, that's part of our DNA to return capital to shareholders. Thank you.

Dave: And when we say that, that's inclusive of NPC and MPLX, so from well-head to wheel as a way to think about it. So, with that said, and on the current environment, we believe that M&A within refining M&A is one of the more challenging ways to create value. And with all that said, I would not anticipate us, or you should anticipate us participating in the current auction process for the sit-go assets. [inaudible] very, very, very, very, very, very, very, very, very, very, very,[inaudible] Our next question comes from Sam Margolin with Wolf Research.

Thank you.

Youre welcome.

Our next question comes from Sam Margolin with Wolfe Research Your line is open.

Good morning, Thanks for taking the question.

Questions on the buyback and it's kind of conceptual, you know, just sort of how you think about the stock when you do your internal...

Questions on the buyback and it's kind of conceptual just sort of how you think about.

The stock when you do your internal process.

But, you know, when you are looking at an MPC share, the question is really, how do you?

But when you are looking at and MPC share. The question is really how do you.

View it.

view it, or what does it represent to you? Is it representative of just the parent company and a repository for MPLX distributions, or do you kind of analyze it as a consolidated entity where something like 40% of it?

What does it represent to you is it representative of just the parent company and a repository for MPLX distributions or do you kind of analyze it as a consolidated entity, where something like 40% of it.

As like a synthetic MPLX share and the reason I ask is because we do get a lot of questions about sort of your price sensitivity and the buyback.

synthetic MPLX share and the reason I asked is because we do get a lot of questions about sort of your price sensitivity in the buyback and

And I think the methodology maybe is important.

Yes.

Sam, it's Mary Ann. Let me give you a few thoughts on that. And I can pass it to Mike in case he's got some added value. I mean, there are several things that we look at as we are making decisions about the level of share by back. And certainly when we're looking at intrinsic value, there's a couple of approaches. So we'll look at some of the parts. We'll look at discounted cash flows.

Sam It's Maryann, let me give you a few thoughts on that and I can pass it to Mike and tastes. He's got some added value I mean, there are several things that we look at as we are making decisions about the level of share buyback and certainly when we're looking at intrinsic value you know theres a couple of approaches they will look at some of the parts will look at discounted cash flows.

We use a series of reviews, obviously, looking at our EBITDA multiples of the respective businesses. But typically, when we are making the decision about an MPC buyback, you know, that intrinsic value assumes the discounted cash flows, as I just shared. You know, there are several constraints, as we look at that, that we evaluate each time we go to buyback stock, none the least of which, obviously, is market.

We use a series of reviews, obviously looking at our EBITDA multiples of their respective businesses, but typically when we are making the decision about an MPC buyback.

That intrinsic value assumes the.

The discounted cash flows as I as I just shared you know there are several constraints as we look at that that we evaluate each time, we go to buy back stock, none the least of which obviously is market.

cash flows where we think the quarter is going to be where we think our cash balances are and we've worked pretty diligently to try to outperform the market here. Hopefully you've seen that, over the significance of the buyback that we've done. But we do look at it in a holistic approach. Let me pass that back to Mike and see if he wants to add any color.

Cash flows where we think the quarter is going to be where we think our cash balances are and we've worked pretty diligently to try to outperform the market here hopefully you've seen that over the significance of the buyback that we've done but we do look at it in a holistic approach, let me pass it back to Mike and see if he wants to add any color.

Yes, Sam. Here's the way I think about it. As you know, we don't control the margins. So as the quarter progresses, we don't have a specified amount that says we're going to do X in this quarter, other than we've been trying to be as aggressive as we possibly can within the constraints that the SEC puts on us, such as daily volume traded limitations or blackout periods, et cetera, et cetera.

Yeah, Sam Here's the way I think about it as you know we don't control the margins so as the quarter progresses. We we don't have a specified amount that says we're going to do X in this quarter other than we've been trying to be as aggressive as we possibly can within the constraints that the SEC.

So on a such as daily volume traded limitations or blackout periods et cetera, et cetera. So we've been because it kind of looks like it's been consistent just because we've been trying to be as aggressive as possible. Once we generate the cash as we talked to Paul's question, we have our dedication that we want to invest capital in.

So we've been, because it kind of looks like it's been consistent, you know, just because we've been trying to be as aggressive as possible. You know, once we generate the cash.

As we talked to Paul's question, we have our dedication that we want to invest capital in, and then we want to be returning capital to shareholders.

And then we want to be returning capital to shareholders as quickly as we can at the same time I will tell you that we also still try to beat the market one of our goals is to be as aggressive as we can return capital, but take advantage of the volatility that's within the quarter.

quickly as we can. At the same time, I will tell you that we also still try to beat the mark.

You know, one of our goals is be as aggressive as we can and return capital, but take advantage of the volatility that's within the quarter. And, you know, since we started this program, you know, we, we've ended up reducing the share count by about 40 percent, you know, it's rough number. And during that process, we've kind of beat the market by about $4.

And since we started this program, we we've ended up reducing the share count by about 40%.

Rough number and during that process, we've kind of beat the market by about $4. So if you say hey, we've reduced somewhere around 270 million shares at around four to $4. It's roughly about $1 billion of value creation, just in our execution, but it starts with.

So if you say, hey, we've reduced somewhere around, you know, 270 million shares at around $4, you know, $4, it's roughly about a billion dollars of value creation just in our execution. But it starts with obviously,

Obviously generate cash.

figure out how much we can return to shareholders as quickly as we can within those constraints, and then try our best to beat the market during that execution. I hope that helps.

Figure out how much we can return to shareholders as quickly as we can within those constraints and then and then try our best to beat the market during that execution I hope that helps.

Yeah, very much so thanks. And my follow is just more of a straightforward ops question, but it's about the West Coast and TMX. TMX has been delayed.

Yes, very much so thanks, and my follow up just more of a straightforward ops question, but it's about the west coast and Tms.

<unk> <unk> has been delayed but.

Once it starts up, it might be impactful to fundamentals on the West Coast.

Once it starts up it might be impactful to fundamentals on the west coast in it.

It seems noteworthy because of your comments about how the Midwest is this integrated system with shipper status for WCS, and you're able to move things around. And so I wonder, in the context of TMX, if there's kind of – if you see any analogs there with building out sort of a full –

It seems noteworthy because of your comments about how the Midwest is this integrated system with.

Shipper status for WCS, and you're able to move.

Move things around and so I wonder in the context of Tms. If there is kind of if you see any analogs there with building out.

Sort of a full value chain or commercial integrated platform.

Yeah, hi, Sam, it's Rick. Your analogy is spot on. So, when TMX comes online, we'll not only see benefits in the Pacific Northwest, specifically at Anacortes and at LA. So, the way we look at it is you're going to get access to an advantaged barrel more so than what you do today. And we believe that barrel will compete very well, especially on the West Coast.

Yeah, Hi, Sam it's Rick your analogy spot on so when <unk> comes online will not only see benefits in the Pacific northwest specifically at Anacortes and at our way. So the way we look at it is as you you're going to get access to an advantage barrel more so than what you do.

Today, and we believe that barrel will compete very well, especially on the west coast. We believe <unk> will have some startup issues there they have some well publicized marine hurdles.

We believe TMX will have some startup issues. They have some well-publicized marine hurdles they need to get over. And with that being said, having that barrel clear all the way to Asia will be difficult. And sitting on the West Coast, we have a structural advantage from a transportation cost perspective. So we do see that playing into both of our assets, one in the Pacific Northwest and LA on the West Coast.

Hurdles, they need to get over and with that being said, having that barrel clear all the way to Asia will be difficult and sitting on the west coast. We have a structural advantage from a transportation cost perspective, so we do see that playing into.

Both of our assets one on one in the Pacific Northwest and La on the West Coast.

Thank you so much.

You're welcome. Thank you, Sam.

Youre welcome. Thank you Sam.

Next we will hear from Roger read with Wells Fargo. Please go ahead.

Roger we're not able to hear you in conference. Please check the mute feature on your phone.

Sam Margolin: Your line is open.

Hopefully it works this time. Can you hear me? No, we got you Roger. All right. Thank you. I'd like to come back around on the renewable diesel. You know, we heard from others and seen some stories about permit issues. Just curious, you can kind of walk us through the way we should be thinking about that as we head into startup kind of year end and in early part of 2020.

Okay, hopefully it works this time.

Operator: Good morning. Thanks for taking the question. Questions on the buyback and it's kind of conceptual, you know, just sort of how you think about the stock when you do your internal process. But, you know, when you are looking at an MPC share, the question is really, how do you view it? Or, you know, what is it represented to you? Is it representative of just the parent company and a repository for MPLX distributions?

You hear me all right.

Got you Roger.

Operator: Or do you kind of analyze it as a consolidated entity where, you know, something like 40% of it is like a synthetic MPLX share? And the reason I ask is because we do get a lot of questions about sort of your price sensitivity in the buyback and I think the methodology maybe is important. Thanks. Sam, it's Marianne. Let me give you a few thoughts on that and I can pass it to Mike in case he's got some added value.

Thank you.

I'd like to come back around on the renewable diesel.

We heard from others and seen some stories about permit issues. Just curious if you can kind of walk us through the way, we should be thinking about that as we head into startup kind of year end and early part of 'twenty four.

Roger this is Jim Wilkins we're working with the county on one issue related to our land use permit.

Hey, Roger this is Jim Wilkins.

Working with the county on one issue related to our land use permit.

That issue we expect will get resolved in the upcoming month and it's related to our odor mitigation plan. The resolution of that matter won't impact our ability to construct or operate the facility.

That issue, we expect will get resolved in the upcoming months and it's related to our odor mitigation plan.

The resolution of that matter won't impact our ability to construct or operate the facility.

Does it change it all the feedstock that you'd be able to use early on?

Does it change at all the feedstock that you'd be able to use early on.

Operator: I mean, there are several things that we look at as we are making decisions about the level of share buyback. And certainly when we're looking at intrinsic value, you know, there's a couple of approaches. So we'll look at some of the parts we'll look at discounted cash flows. We use a series of reviews, obviously, looking at our EBITDA multiples of their respective businesses. But typically when we are making the decision about an MPC buyback, you know, that intrinsic value assumes the discounted cash flows as I just shared.

No, I'm not terribly experienced with this, but I know that some of the feed stocks are, well, let's just say they're not what you would want to smell.

No I'm not terribly experienced with this but I know that some of the feedstocks are well, let's just say they are not what you would want to smell I guess.

No, Roger, so we actually have an approved odor mitigation plan with the Air Quality Division and actually what we're doing is circling back to the land use permit where we said we'd develop an odor mitigation plan and embedding the plan that's already been approved.

No Roger So we actually have enough proved out or mitigation plan with the air quality Division and actually what we're doing is circling back to land use permit where we said we'd develop on order mitigation plan and embedding the plan that's already been approved.

Okay. Perfect. So, and just to be absolutely clear, no other regulatory hurdles that need to be cleared for startup? Correct. Great. Thank you.

Okay, perfect. So just to be absolutely clear no other regulatory hurdles that need to be cleared for startup.

Operator: And, you know, there are several constraints as we look at that that we evaluate each time we go to buyback stock and on the list of which obviously is market cash flows where we think the quarter is going to be where we think our cash balances are. And we've worked pretty diligently to try to outperform the market here. Hopefully you've seen that, you know, over the significance of the buyback that we've done.

Correct.

Great. Thank you.

Yeah.

Youre welcome Roger.

Our next question comes from John Royall with Jpmorgan. Your line is open.

Hi, good morning, Thanks for taking my question.

So I had my first one to follow up on the buyback. You've now gotten through another quarter with a really solid crack environment in 3Q and another quarter where you aren't drawing any cash. And in fact, you built cash by about, I think, a billion five.

So I had my first one is a follow up on the buyback you've you've now gotten through another quarter with a.

Operator: But would you look at it in a holistic approach? Let me pass that back to Mike and see if he wants to add any color. Yes, Sam. Here's the way I think about it. As you know, we don't control the margins. So as the, you know, quarter progresses, we don't have a specified amount that says we're going to do X in this quarter. Other than we've been trying to be as aggressive as we possibly can within the constraints that the SEC puts on as such as, you know, daily volume traded limitations or blackout periods, et cetera, et cetera.

Really solid crack environment with <unk> and another quarter, where you aren't drawing any cash and in fact, you build cash by about I think $1 billion five.

which I wouldn't characterize as a problem by any stretch. But you've talked about getting that cash balance down closer to a billion longer term. And Mike talked about the constraints to doing more on the buyback. And now we're seeing a worsening environment in 4Q. So my question is, given all your excess cash, are we think about the buyback as not particularly sensitive to the crack environment? And would you expect to start drawing cash from here?

Which I would characterize as a problem by any stretch, but you've talked about getting that cash balance down closer to 1 billion longer term.

Mike talked about the constraints to doing more on the buyback.

And that we're seeing a worsening environment in <unk>. So my question is.

Given all your excess cash do we think about the buyback is not particularly sensitive to the crack environment and would you expect to start drawing cash from here.

Operator: So we've been, because it kind of looks like it's been consistent, you know, just because we've been trying to be as aggressive as possible. You know, once we generate the cash as we talk to Paul's question, we have our, you know, dedication that we want to invest capital in. And then we want to be, you know, returning capital to shareholders as quickly as we can. At the same time, I will tell you that we also still try to beat the market.

Hey, John It's Marianne So a couple of things, yes, you're absolutely right as you see we set a little over 13 billion at the end of the quarter and again, just just keeping in mind about $1 billion of that belongs to MPLX.

Hey John , it's Mary Ann. So a couple of things. Yes, you're absolutely right. As you see, we set a little over 13 billion at the end of the quarter. And again, just keep the good mind. About a billion of that belongs to MPLX.

And then, obviously, there is some working capital sensitivity as we have timing of our liability payments. We would expect to see a bit of that unwind as normal. You know, we'll see some of that happen in the fourth quarter and then again in the first quarter. Having said that, your point is, you know, accurate. We've said we're quite comfortable with a billion dollars on our balance sheet.

And then obviously there is some working capital sensitivity as we have timing of our liability payments, we would expect to see a bit of that unwind as normal we will see some of that happened in the fourth quarter and then again in the first quarter, having said that your point is accurate.

Operator: You know, one of our goals is be as aggressive as we can return capital. But take advantage of the volatility that's within the quarter. And, you know, since we started this program, you know, we, we've ended up reducing the share count by about 40%. You know, it's rough number. And during that process, we've kind of beat the market by about $4. So if you say, hey, we've reduced somewhere around, you know, 270 million shares at around $4, you know, $4.

We're quite comfortable with $1 billion on our on our balance sheet.

The nice part about having the cash on the balance sheet today versus if we were sitting here a year ago is we're generating close to a half a billion dollars in interest income as we're holding onto that cash. So certainly when we are looking at the amount of share buybacks that we want to do in any particular period of time and I think Mike articulated it as well, we're looking at several factors. The fact that we've got cash on the balance sheet to allow us to take advantage of.

Nice part about having the cash on the balance sheet today versus if we were sitting here a year ago is we're generating close to a half a billion dollars in interest income as.

As we are holding on to that cash.

Operator: It's roughly about a billion dollars of value creation just in our execution. Action, but it starts with obviously generate cash, figure out how much we can return to shareholders as quickly as we can within those constraints and then try our best to beat the market during that execution. I hope that helps.

So certainly when.

When we are looking at the amount of share buyback that we want to do in any particular period of time and I think Mike articulated it as well we're looking at several factors. The fact that we've got cash on the balance sheet to allow us to take advantage of volatility I think is a plus.

Operator: Yeah, very much so thanks.

volatility, I think, is a plus. You know, we remain committed to share repurchase on the return of capital. You know, we've got some priorities, obviously, safe and reliable operation of our assets gets it first. You know, we're committed to our dividend as we just shared with you. And we're looking for opportunities to put that capital to work in order to be able to grow the business and particularly earn the types of returns that you all expect.

Roger Read: And my follow is just, you know, more of a straightforward ops question, but it's about the West Coast and TMX, you know, TMX has been delayed, but once it starts up, it might be impactful to fundamentals on the West Coast. And it seems noteworthy because of your comments about how the Midwest is this integrated system with, you know, shipper status for WCS, and you're able to move things around. And so I wonder in the context of TMX, if there's kind of, if you see any analogs there with building out sort of a full value chain or commercial integrated platform.

We remain committed to share repurchase and the return of capital.

Got some priorities, obviously safe and reliable operation of our assets gets it first we're committed to our dividend as we just shared with you and we're looking for opportunities to put that capital to work in order to be able to grow the business.

And particularly around the types of returns that you all expect and we continue to see share buyback as an efficient return of capital. So again, we'll look at all factors as we head into any particular quarter and try to be as opportunistic as we can and be sure that we are doing our best to beat the market and taken advantage of the volatility.

And we continue to see share buyback as an efficient return of capital. So, again, we'll look at all factors as we head into any particular quarter and try to be as opportunistic as we can and be sure that we are doing our best to beat the market and taking advantage of the volatility where we can.

Roger Read: Thanks. Yeah, hi Sam, it's Rick, your analogy spot on. So when TMX comes online, we'll not only see benefits in the Pacific Northwest, specifically at Anacortis and at LA. So the way we look at it is, is you're going to get access to an advantage barrel more so than what you do today. And we believe that barrel will compete very well, especially on the West Coast. We believe TMX will have some startup issues.

We can.

Okay, thank you. And then, Marian called out some turnaround work pulled in from next year to the second half of this year. And so just thinking about next year, any early look on what 2024 could look like from a turnaround perspective, I think you had some catch up over the past two years and now this worked pulled into 23. So is it reasonable to think it might be kind of a below average year?

Great. Thank you and then.

Maryann called out some turnaround work pulled in from next year. So the second half of this year and so just thinking about next year.

Any early look on what 2024 could look like from a from a turnaround perspective.

You had some catch up over the past two years and now this work pulled into 'twenty. Three so is it reasonable to think it might be kind of a below average year.

Hey, John Maryann again, so you know in general notwithstanding the impact of Covid. If you look over an average period of time, our turnaround is pretty similar you know, we're operating 13 refineries fossil fuel into renewable diesel and at every point in time there is some.

Hey John Marianne again. So in general, notwithstanding the impact of COVID, if you look over an average period of time, our turnaround is pretty similar. We're operating 13 refineries, thoughtful fuel and two renewable diesel. And at every point in time, there is some level of turnaround. You're absolutely right. One of the things that we did, notwithstanding the unplanned downtime on the reformer, is pull forward some turnaround that we expected to do in our 2024 plans.

Roger Read: They have some well publicized marine hurdles. They need to get over. And with that being said, having that barrel clear all the way to Asia will be difficult. And sitting on the West Coast, we have a structural advantage from a transportation cost perspective. So we do see that playing into both of our assets, one on the one in the Pacific Northwest and LA on the West Coast. Thank you so much. You're welcome. Thank you Sam. Roger, we're not able to hear you in conference. Please check the mute feature on your phone. Hopefully, hopefully it works this time. Can you hear me? No, we got you Roger. Thank you.

Level of turnaround and Youre, absolutely right one of the things that we did notwithstanding the unplanned downtime on the reformer is pull forward.

Some turnaround that we expected to do in our 2024 plans into 2023.

into 2023. But again, absent, you know, the period of COVID.

Again absent the period of Covid.

You can see the level of turnaround being pretty similar watching those.

You can see the level of turnaround being pretty similar.

Watching those.

In the fourth quarter, also, you may have noticed, you know, in our guidance, you know, West Coast utilization, we do have turnaround activity there. You know, we've got two locations in L.A.R. We are trying to get those turnarounds done ahead of the driving season next year, just as an example, if you're looking at, you know, activity in the fourth quarter as well. I'll pause there.

In the fourth quarter also you may have noticed in our guidance.

West Coast utilization, we do have turnaround activity. There you know we've got two locations in L. A are we are trying to get those turnarounds done ahead of the driving season next year just as an example, if you're looking at activity in the fourth quarter as well I'll pause there.

Jim Wilkins: I'd like to come back around on the renewable diesel. You know, we heard from others and seen some stories about permit issues, just curious. You can kind of walk us through the way we should be thinking about that as we head in to start up kind of year end and in early part of 24. Roger, this is Jim Wilkins. We're working with the county on one issue related to our land use permit.

Okay. Thank you.

Youre welcome John.

Our next question comes from Jason <unk> with TD Cowen Your line is open.

Hey, morning. Thanks for taking my questions. Do you send a minute of focus on the buyback? I wanted to ask about the dividend raise of 10%. You know, last year, the dividend raise was higher in line with the amount you had repurchased over the trailing 12 months.

Hey, good morning, Thanks for taking my questions.

Decent amount of focus on the buyback I wanted to ask about the dividend raise of 10%.

Jim Wilkins: That issue we expect to get resolved in the upcoming months and it's related to our odor mitigation plan. The resolution of that matter won't impact our ability to construct or operate the facility. Does it change at all the feedstock that you'd be able to use early on? No, I'm not terribly experienced with this, but I know that some of the feedstocks are, well, let's just say they're not what you would want to smell.

Last year the.

Dividend raised was higher in line with the amount you had repurchased over the trailing 12 months.

this year that that wasn't the case and you know it's also uh... i guess lower than the incremental cash you'll be receiving from mtlx

This year that that wasn't the case.

And it's also I guess slower than the incremental cash you'll be receiving from MPLX.

with their higher distribution so the question is how do you think about kind of that dividend raise how did you come up with that ten percent and that he had to think about it moving forward especially in light of the commentary that that you expect

With their higher distributions. So the question is how do you think about kind of that dividend raise how did you come up with that 10%.

Jim Wilkins: I guess. No, Roger, so we actually have an approved odor mitigation plan with the air quality division and actually what we're doing is circling back to the land use permit where we said we develop an odor mitigation plan and embedding the plan that's already been approved. Okay, perfect. So just to be absolutely clear, no other regulatory hurdles that need to be cleared for start up. Correct.

Roger Read: Great. Thank you.

How do you think about it moving forward.

Especially in light of the commentary that you expect the refining environment the mid cycle environment.

The refining environment, the mid cycle environment to be higher, and I would expect the dividend.

Higher and I would expect the dividend.

Moving higher would be a good way to message that earnings power to the market.

Roger Read: You're welcome, Roger.

Moving higher would be a good way to message that earnings power to the market.

Jason, it's my cost start and I'll let Mayor jump in. Yeah, I think what you're referring to is, you know, we had a bigger increase before because the way we looked at it is...

Jason It's Mike I'll start and I'll, let <unk> jump in yeah, I think what youre, referring to is we had a bigger increase before because of the way we looked at it is most in our industry kind of paused around COVID-19.

you know, most in our industry kind of paused around COVID, you know, during that tough year of cash. So we made a bigger jump and now what we show in this year is

John Royall: Our next question comes from John Royall with JP Morgan. Your line is open. Hi, good morning. Thanks for taking my question. So I had my first one to follow up on the buyback. You've you've now gotten through another quarter with a really solid crack environment and three queue and another quarter where you aren't drawing any cash. And in fact, you built cash by about I think a billion five. Which I wouldn't characterize as a problem by any stretch, but you've talked about getting that cash balance down closer to a billion longer term and Mike talked about the constraints to doing more on the buyback and now we're seeing a worsening environment for you. So my question is given all your excess cash, should we think about the buyback is not particularly sensitive to the crack environment, and would you expect to start drawing cash from here?

During that tough year of cash so we made a bigger jump and now well be showing this year is we're trying to show the market that we believe in a growing dividend that is part of our capital allocation, we want it to be competitive but at the same time.

We're trying to show the market that we believe in a growing dividend that is part of our capital allocation. We want it to be competitive, but at the same time, I often say that it's more tax-efficient to go return capital through share repurchase.

Often say that it's more tax efficient.

Go you know return capital through share repurchases and the sheer quantum of dollars and each case is pretty different so.

And the sheer quantum of dollars in each case is pretty different. So overall, we want the market to know, yeah, we're going to grow the dividend. We're going to consistently do that. We want it to be competitive. We want to show that we're going to grow earnings. That comes back to investing capital and all the self-help that we can do. But at the same time, we're going to earn more on the side of share repurchases because we think it's more tax efficient and a better way to return capital.

Overall, we want the market to know yeah, we're going to grow the dividend, we're going to consistently do that we want it to be competitive we want to show that we're going to grow earnings and it comes back to invest in capital in all of the self help that we can do but at the same time, we're going to earn more on the side of share repurchases, because we think it's more tax efficient and a better way to return capital.

Maryann Mannen: Hey, John, it's Marianne. So a couple of things. Yes, you're absolutely right. As you see, we set a little over 13 billion at the end of the quarter. And again, just just keep you in mind about a billion of that belongs to MPLX. And then obviously there is some working capital sensitivity as we have timing of our liability payments. We would expect to see a bit of that unwind as normal. We'll see some of that happen in the fourth quarter and then again in the first quarter.

Jason, it's Mary. I'm the only thing that I would add to Mike's comments are, you know, the dividend is only one part, as he said, of the capital allocation strategy. But, you know, having said that, we think this increase is peer leading at 12% over the last five years. So, we hope you see it that way as well.

Yeah, Jason it's Marion and the only thing that I would add to Mike's comments are you know what the dividend is only one part as he said at the capital allocation strategy, but having said that we think this increase is pure leading at 12% CAGR over the last five years. So we hope you see it that way as well.

Got it. Thanks. Thanks for that. And then my follow up is on one of the gross projects that I think you have for next year the hydrogen hub Project that was selected for Funding from the DOE. I was hoping just to get more color on exactly what marathons Participation is in that project. How we could benefit the company? Any thoughts around capital spending that you would have to contribute there. Thanks Thanks. ...

Got it thanks, Thanks for that and then my follow up.

One of the growth projects that I think you have for next year the hydrogen hub.

Maryann Mannen: Having said that, your point is accurate. We've said we're quite comfortable with a billion dollars on our balance sheet. The nice part about having the cash on the balance sheet today versus if we were sitting here a year ago is we're generating close to a half a billion dollars in interest income as we're holding on to that cash. So certainly when we are looking at the amount of share buyback that we want to do in any particular period of time, and I think Mike articulated it as well, we're looking at several factors.

Project that was selected.

For funding from the DLA I was hoping just to get more color on exactly what marathons participation is in that project havoc could benefit the company.

Any thoughts around capital spending that you would have to contribute there. Thanks.

Yes, Jason this is Dave I'll touch on that so.

So start with high level number one. There are seven hubs that were approved for funding from the DOE for $7 billion. We mean MPC slash MPLX. We're involved in two of them. So one in Appalachia and one in the Heartland area.

So I'll start with a high level number one there are seven seven hubs that were approved for funding from the Doe for $7 billion.

Maryann Mannen: The fact that we've got cash on the balance sheet to allow us to take advantage of volatility, I think, is a plus. We remain committed to share repurchase on the return of capital. We've got some priorities obviously safe and reliable operation of our assets gets it first. We're committed to our dividend as we just shared with you. And we're looking for opportunities to put that capital to work in order to be able to grow the business and particularly earn the types of returns that you all expect.

We mean MPC slash MPLX.

We're involved in two of them so one in Appalachia and one in the Heartland area.

So when we think about the involvement of NPC and MPLX, that they're a little bit different. On the MPLX side, it's more around storage of hydrogen and transportation of CO2 on pipelines. From an NPC perspective.

So when we think about the involvement of MPC and MPLX that theyre, a little bit different on.

On the MPLX side, it's more around storage of hydrogen and transportation of C. O two on pipelines from an MPC perspective.

It is inclusive of lowering the carbon intensity of the hydrogen production. And when you think about it in the heartland area,

It is inclusive of lowering our carbon intensity.

Maryann Mannen: And we continue to see share buyback as an efficient return of capital. So again, we'll look at all factors as we head into any particular quarter and try to be as opportunistic as we can and be sure that we are doing our best to beat the market and take advantage of the volatility where we can.

Uh huh.

The hydrogen production and when you think about it in the heartland areas due to the location of its very the proximity very close to our decking renewable diesel facility. So.

John Royall: Okay, thank you.

due to the location of it, the proximity very close to our Dickinson Renewable Diesel Facility. So, of course, anytime you can lower the CI of the base product you're making from renewable diesel, you can get that pull-through value of that asset that we already invested in. So, best way to think about it, like we do everything, these are bolt-on type investments that can create value up and down the value chain.

Of course anytime we can lower the Ci of the base product youre, making from renewable diesel.

Get that pull through value of that asset that we already invested and so best way to think about it like we do everything these are bolt on type investments that can create value up and down the value chains.

John Royall: And then Marian called out some turnaround work pulled in from next year to the second half of this year. And so just thinking about next year, any early look on what 2024 could look like from a turnaround perspective. I think you had some catch up over the past two years. And now this work pulled into 23. So is it reasonable to think it might be kind of a below average year?

Yeah.

OK, when should we see those benefits start to accrue? When do the projects come online? Yeah, so that's great.

Okay, one when should we see those benefits start to accrue one when the projects come online.

That's great so.

We are, while this DOE funding was a major milestone for all of us that got granted some funding from this, in the very early stages so.

We are [noise], while this funding was a major milestone.

Maryann Mannen: Hey, John Maryann again. So, you know, in general, notwithstanding the impact of COVID, if you look over an average period of time, you know, our turn around is pretty similar. You know, we're operating 13 refineries, fossil fuel and two renewable diesel. And at every point in time, you know, there is some level of turnaround. You're absolutely right. One of the things that we did, notwithstanding the unplanned downtime on their reformer, is pull forward.

For all of Us that got granted.

Some funding from this it's in the very early stages. So to think about it next phase of this is a negotiation with the Doe on the funding and the contractual commitments around that funding requirement.

To think about it, next phase of this is negotiation with the DOE on the funding and the contractual commitments around that funding requirement. Then you've got to design and build the facility. So from a capital spend and an associated benefit to the company, I think you're looking into late 2024, 2025 timeframe. So it's still a ways out there. Great. Thank you.

Then you've got a design and build the facilities. So from a capital spend any associated benefits to the company I think youre looking into you know.

Maryann Mannen: Some turn around that we expected to do in our 2024 plans into 2023. But again, absent, you know, the period of COVID, you know, you can see the level of turnaround, being pretty similar, you know, watching those. In the fourth quarter, also you may have noticed, you know, in our guidance, you know, west coast utilization, we do have turnaround activities there. You know, we've got two locations in LAR. We are trying to get those turnaround done ahead of the driving season next year, just as an example, if you're looking at, you know, activity on the fourth quarter as well.

Late 2020 for 2025 timeframe so.

Maryann Mannen: I'll pause there. Thank you.

It's still a ways out there.

Great. Thanks, that's really helpful.

Thank you our.

Next question comes from Theresa Chen with Barclays. Your line is open.

Morning, I wanted to follow up on Sam's question related to TMX.

Good morning, I wanted to follow up on Sam's question related to Capex.

for which MPC has a known commitment. And I was just wondering if you could update us where you think the toll may settle out at given the discussion with the pipeline owner and the bid ask currently. And related to that, how much do you think really it can tighten WCS differential for your mid-con asset?

For which MPC.

Has a known commitments and I was just wondering if you could update us with where you see the toll may settle out at and given the discussion with the pipeline owner and the bid ask.

Jason Gabelman: You're welcome, John.

Currently.

Jason Gabelman: Our next question comes from Jason Gabelman with TD Cohen. Your line is open. Hey, morning. Thanks for taking my questions. Decent amount of focus on the buyback. I wanted to ask about the dividend raise of 10%. You know, last year, the dividend raise was higher in line with the amount you had repurchased over the trailing 12 months. This year, that wasn't the case. And, you know, it's also, I guess, lower than the incremental cash.

And related to that how much do you think really it can tightened WCS differential for your mid con assets.

and given that the post-tools are comfortable to going to the US Gulf Coast versus Burnaby.

Given that the post holes are comparable to going to the U S Gulf coast versus Burnaby.

Jason Gabelman: You'll be receiving from MPLX with their higher distribution. So the question is, how do you think about kind of that dividend raise? How did you come up with that 10%? And then how do you think about it moving forward, especially in light of the commentary that you expect the refining environment, the mid-cycle environment to be higher? And I would expect the dividend moving higher would be a good way to message that earnings power to the market.

Yeah, hi, Teresa Thurick. So I'm the first part of your question. I'm just really not in a position to comment on the toll or speculate what it may end up at. I'm the second part of your question. The guidance I'd give you is, is we look at the forward curve.

Yeah, Hi, Theresa it's Rick so on the first part of your question I'm just really.

Not in a position to comment on the toll or speculate what.

They end up at <unk>.

Second part of your question.

The guidance I'd give you is as you know.

As we look at the forward curve on WCS. So today WCS sits at about a 26 dollar discount in Q1, it's plus or minus 25 and in Q2 F. T. M X comes online there and I think the market is still questionable on that of the fourth.

on WCS. So today WCS sits at about a $26 discount and Q1, it's plus or minus 25 and in Q2.

if TMX comes online there and I think the market is still questionable on that. The Forward Curves $15 to $18 discount. So still a pretty significant discount. And we'll just have to see where it goes from there.

<unk> curves 15 to $18 discount so still a pretty significant discount.

And we'll just have to see where it goes from there.

Got it. And going back to Mike's earlier comments about additional investment opportunities, R&G being one of them, can you guys just give us an update on progress related to the LF Bioenergy assets after the Q1 acquisition announcement, how that's trending and do you expect to use this as a launchpad for additional R&G investments or is this going to be more of a roll-up strategy from here?

Got it.

And going back to Mike's earlier comments about additional investment opportunities Orange <unk> being one of them can you just give us.

Mike Hennigan: Jason, it's my golf start, and I'll let Mayor jump in. Yeah, I think what you're referring to is, you know, we had a bigger increase before because the way we looked at it is, you know, most in our industry kind of paused around COVID, you know, during that tough year of cash. So we made a bigger jump, and now what we show in this year is, we're trying to show the market that we believe in a growing dividend that is, you know, part of our capital allocation.

An update on <unk>.

Progress related to U D.

E L F bio actually assets after it.

Q1 acquisition announcement, how thats trending and do you expect to use this as a launch pad for additional R&D investments or is this going to be more of a roll up strategy from here.

Mike Hennigan: You know, we want it to be competitive, but at the same time, you know, I often say that it's more tax-efficient to go, you know, return capital through share repurchases. And, you know, the sheer quantum of dollars in each case is, you know, pretty different. So, you know, overall, we want the market to know, yeah, we're going to grow the dividend. We're going to consistently do that. We want it to be competitive.

Yeah, Teresa, this is Dave again. I'll touch on that, so.

Yes. So this is Dave again.

I'll touch on that so.

So yeah, the LF Bio Energy Investment, that joint venture is progressing as we planned. We are building out the facilities. The plan is to build out 13 of those RNG facilities.

So yes, the L. A bio energy investment that joint venture is progressing as we planned.

We are building out the facilities.

As the build out 13 of those R&D facilities.

collecting a very low CI dairy RNG and then you know monetizing that again very as I touched on a little bit with the hydrogen hub

Collecting very low Ci dairy RMG.

Mike Hennigan: We want to show that we're going to grow earnings that comes back to investing capital and all the self-help that we can do. But at the same time, we're going to earn more on the side of share repurchases because we think it's more tax-efficient and a better way to return capital. Jason, it's Maryann, the only thing that I would add to Mike's comments are the dividend is only one part, as he said, of the capital allocation strategy, but having said that, we think this increase is pure leading at 12% cag are over the last five years, so we hope you see it that way as well.

And then you know monetizing that again.

Again, very as I touched on a little bit with the hydrogen hub.

taking that RNG into our renewable diesel facilities, such as Dickinson and Martinez, will lower the C.I. of that base renewable diesel project product coming out. So.

Taken at RMG into our renewable diesel facilities, such as their concern and Martinez will lower the Ci of that base renewable diesel project product coming out so.

relative to the relationship and the investment. We're very happy with the investment, the management team there, the projects we've, that they're identifying, they've got a good runway of portfolio projects and they're coming online this plan. So.

Relative to the to the relationship and the investment.

We're very happy with the investment the management team there the projects we've.

That they're identifying they've got a good runway of portfolio of projects and they are coming online. This plan. So.

Dave: Got it, thanks, thanks for that, and then my follow up is on one of the growth projects that I think you have for next year, the Hydrogen Hub project that was selected for funding from the DOE, I was hoping just to get more color on exactly what Marathon's participation is in that project, habit could benefit the company, any thoughts around capital spending that you would have to contribute there, thanks. Jason, this is Dave, I'll touch on that, so start with high level number one, there are seven seven hubs that were approved for funding from the DOE for $7 billion.

And the second part of your question is, is this a...

And the second part of your question is is this a.

you know, one-off or a foundation for subsequent investments in renewable diesel space or the renewable natural gas space. So we continue, as I said earlier, we look at a lot of stuff. There are some opportunities out there, but...

One off or a foundation for subsequent investments in renewable diesel space or the <unk>.

Normal natural gas space. So we continue as I said earlier, we look at a lot of stuff there are some opportunities out there but.

The key to this one was we got in early and did an overpay for a built-out system. So when we think of subsequent investments, I'd think of them that way. If there's one that we can step in early and participate in the build-out of the infrastructure and integrate it with our business rather than paying for a built-out system, we'll continue evaluate those opportunities.

The key to this one was we got in early.

And and did and overpay for a built out system. So when we think of subsequent investments I would think of them that way. If there's one that we can step in early and participate in the build out of the infrastructure.

And integrated with our business rather than paying for a built out system will continue to evaluate those opportunities.

Dave: We mean NPC slash MPLX, we're involved in two of them, so one in Appalachia and one in the Heartland area, so when we think about the involvement of NPC and MPLX, that they're a little bit different, on the MPLX side it's more around story of Hydrogen and Transportation of CO2 on pipelines, from an NPC perspective, it is inclusive of lowering the carbon intensity of via Hydrogen production, and when you think about it in the Heartland area, do the location of it's very, the proximity, very close to our Deconstant Renewable Diesel facility, so of course anytime you can lower the C.I, of the beige product you're making from Renewable Diesel, you can get that pull-through value of that asset that we are already invested in, so best way of thinking about it, like we do everything, these are bolt-on type investments that can create value up and down the value chains. Okay, when should we see those benefits start to accrue, when do the projects come online?

Yeah.

Our next question comes from Matthew Blair with TBH. Your line is open.

Good morning. Thanks for taking my question. Maybe sticking with the renewables, you know, for some operators, the next leg of the RD story is moving into SAF. Is that an option for Martinez? And if so, any thoughts on, you know, timing or cost to add that flexibility?

Good morning, Thanks for taking my question, maybe just sticking with the renewables for some operators.

The next leg of the <unk> story is moving to SaaS is that an option for Martinez and if so any thoughts on.

Timing or cost to add that flexibility.

Yeah.

Yeah, Matthew, this is Dave again. So yeah, there's no question both from a Dickinson and Martinez, both of have the opportunity to convert to SAF. And half of SAF is one of the most cost competitive on a on a CapEx per barrel basis for SAF production.

Yeah, Matthew this is Dave again so.

Yeah. There is no question both from a disincentive Martinez about since I have the opportunity to convert Saf and hefei.

<unk> S. A F as one of the most cost competitive on a on a capex per barrel basis for Saf production with that said.

With that said, the challenge in SAF is the premium associated to justify the investment.

The challenge in Saf is the premium associated to justify the investment and while the IRA has.

And while the IRA has, you know.

been communicated, there's a lot of unknowns out there, a lot of clarity that still needs to be determined relative to the RRA, not only from the sliding scale and the CI benefit.

No.

Been communicated there is a lot of unknowns out there and a lot of clarity that still needs to be determined relative DRA not only from the the sliding.

Dave: Yeah, so that's great, so while this DOE funding was a major milestone for all of us that that got granted some funding from this, it's in the very early stages, so to think about it, next phase of this is negotiation with the DOE on the funding and the contractual commitments around that funding requirement, then you've got a design and build the facility, so from a capital spend and a associated benefit to the company, I think you're looking into late 2024, 2025 time frame, so it's still a ways out there.

Scale and the Ci benefit.

of it, but also the long-term duration right now it ends in 2027 as far as the documented incentives relative that. So it's hard to make, you know, multi-hundred million dollar investments without that clarity going forward. So lack of clarity and lack of premium from airline industry makes it very difficult to justify those investments at this time.

Of it but also the long term duration right now it ends in 2027 as far as the documented.

Incentives relative to that so it's hard to make money.

A multi hundred million dollar investments without that clarity going forward. So a lack of clarity on lack of premium from airline industry makes it very difficult to justify those investments at this time.

Hey Matthew, it's Mike. I'll just add to you and to Teresa's question. You know, I think what you're trying, or hopefully what you're seeing from us is we're a tentative to this whole low carbon world, whether it's investment in RNG, like Teresa talked about or as Dave just mentioned. You know, SAF in my opinion is, you know, going to happen at some period.

Hey, Matthew this is Mike I'll, just add to your <unk> question.

I think what Youre trying hopefully what you're seeing from US is we're attentive to this whole low carbon world, whether it's investment in R&D like treats had talked about or as Dave just mentioned.

S. A F. In my opinion is going to happen at some period.

Dave: Great, thanks, that's really helpful. Thank you.

and you know if they said there's a little bit of wrangling around the economics of it at this point but

As Dave said, there is a little bit of wrangling around the economics of it at this point, but when those opportunities present themselves to US we'll continue to optimize our portfolio. So I think if you take a stair step over time youre going to see us continue to be conscious of that at the same time recognizing that the base business.

Teresa Chen: Our next question comes from Teresa Chen with Barclays. Your line is open. Morning, I wanted to follow up on Sam's question related to TMX, for which MPC has a known commitment, and I was just wondering if you could update us with where you think the toll may settle out at, given the discussion with the pipeline owner and the bid ask currently, and related to that, how much do you think really it can tighten WCS differential for your mid-con assets, given that the post tolls are comfortable to going to the U.S. Gulf Coast versus Burnaby. Yeah, hi, Theresa, it's Rick. So I'm the first part of your question.

You know, when those opportunities present themselves to us, we'll continue to optimize our portfolio. So I think if you take a stair step over time, you're going to see us continue to be conscious of that at the same time recognizing, you know, that the base business is still the majority of what we do.

<unk> is still the majority of what we do but over time, we're going to continue to look whether it's R&D, whether it's S. A F. Whether it's continued build out in some other areas. Those are things that we continue to evaluate Dave and his team is constantly looking at it and we'll make some investment there.

uh... but over time we're going to continue to look whether it's rng whether it's a f whether to continue to build out in some other areas

Those are things that we continue to evaluate. David and his team is constantly looking at it and we'll make some investment there. But we're not looking for the big splash of a major investment as Dave just said. We're not looking to buy something that's already been proven out. We're looking to get ourselves in and grow with those.

But we're not looking for the big Splash of a major investment as Dave just said, we're not looking to buy something that's already been proven out we're looking to get ourselves in and grow with with those opportunities.

Rick Hessling: I'm just really not in a position to comment on the toll or speculate what it may end up at. On the second part of your question, the guidance I give you is, you know, as we look at the forward curve on WCS. So today WCS sits at about a $26 discount and Q1, it's plus or minus 25 and in Q2, if TMX comes online there and I think the market is still questionable on that, the forward curves, $15 to $18 discount. So still a pretty significant discount.

Sounds good and then do you have any early thoughts on refining margin capture into the fourth quarter do you think it would be up on tail winds from things like butane blending and getting the reformer back for at least part of the quarter.

Sounds good. And then do you have any early thoughts on refining margin capture into the fourth quarter? Do you think it would be up on tailwinds from things like butane blending and getting the reformer back for at least part of the quarter?

Hey, Matthew it's Marianne Yeah, I think it's hard for us to project capture but when you talk about the things you did obviously as we shared the reformer. We expect will begin to come back up mid November our guidance reflects the fact that it will be operational.

Hey, Matthew, it's Marianne. Yeah, I think, you know, it's hard for us to to project capture. But when you talk about the things you did, obviously, as we shared, the reformer we expect will begin to come back up mid-November. Our guidance reflects the fact that, you know, it will be operational at planned rates mid-December.

At planned rates mid December.

We talked about some secondary headwinds. We talked about marketing margins changes, changing. You heard Brian talk about that as well. You know, those things clearly have a positive influence on capture, but as you know, it's difficult to predict where capture would otherwise go, but certainly those things point to improving capture from the third quarter.

Rick Hessling: And we'll just have to see where it goes from there. Got it.

We talked about some secondary headwinds, we talked about marketing margins changes changing you heard Brian talk about that as well.

Dave: And going back to Mike's earlier comments about additional investment opportunities, RNG being one of them. Can you just give us an update on progress related to the LS Bioenergy assets after the Q1 acquisition announcement? And how that's trending and you expect to use this as a launch pad for additional RNG investments, or this is going to be more of a role of strategy from here. Yeah, Theresa, this is Dave again. I'll touch on that.

Things clearly have a positive influence on capture but as you know, it's it's it's difficult to predict where capture what would otherwise go but certainly those things point to improving capture from the third quarter.

Dave: So yeah, the LS Bioenergy investment that joint venture is progressing as we planned, we are building out the facilities. The plan is to build out 13 of those RNG facilities collecting a very low CI dairy RNG. And then, you know, monetizing that, again, very as I touched on a little bit with the hydrogen hub, taking that RNG into our renewable diesel facilities such as Dickinson and Martinez will lower the CI of that base renewable diesel project product coming out.

We do have time for just one more question. Our last question will come from Ryan Todd with Piper Sandler Your line is open.

Great thanks. Maybe if I could, that's one follow up on the Martinez conversion project.

Great. Thanks, maybe if I could.

One follow up on the Martinez conversion project.

Can you talk about where you are from an operational point of view there.

Can you talk about where you are from an operational point of view there?

maybe how much throughput you had during the third quarter from phase one of the project.

Maybe how much throughput you had in.

During the third quarter from phase one of the projects and maybe as we think about startup of phase two of that project by the end of this year.

And maybe as we think about startup of Phase 2, that project by the end of this year, is there any ramp that we should associate with it, either in terms of total throughput or in terms of the type of seeds that you anticipate, you know, working their way into the system? So how should we think about the progress from an operational point of view for that asset?

Is there any ramp that we said associated with it either in terms of total throughput or in terms of the type of fees that you anticipate working their way into the system. So.

How should we think about the progress from an operational point of view from for that asset.

Dave: So relative to the relationship and the investment, we're very happy with the investment, the management team there, the projects that they're identifying, they've got a good runway of portfolio projects and they're coming online as planned. And the second part of your question is, is this a one off or a foundation for subsequent investments in renewable diesel space or the renewable natural gas space? So we continue, as I said earlier, we look at a lot of stuff.

Okay, Ryan, this is Tim Wright. Thanks a lot for the question there. I would say that first off, the project is going exceptionally well, both from safety and on time and on budget standpoint. The team's really doing a great job, and I do want to give them a shout out, because it really kind of demonstrated one of Marathon's key strengths here, and that's that they can execute on a complex project.

Okay. Ryan this is Tim Thanks, a lot for the question there I would say that first off the project has gone exceptionally well.

From a safety and on time and on budget standpoint, the team's really done a great job and I do want to give them a shout out because it really kind of demonstrated one of marathons key strengths here and that's what they can execute on a complex project. We did as you likely know startup the pretreatment unit in late second quarter.

We did, as you likely know, start up the pretreatment unit in late second quarter, and it is operating very well. We're able to pretreat the entire production that comes about with the phase one Martinez capacity.

And it is operating very well.

Dave: There are some opportunities out there, but the key to this one was we got in early and did an overpay for a built out system. So when we think of subsequent investments, I think of them that way. If there's one that we can step in early and participate in the build out of the infrastructure and integrate it with our business rather than paying for a built out system, we'll continue to evaluate those opportunities.

We're able to pre treat the entire production that comes about with the phase one Martinez capacity.

And now we're going to be looking to ramp that pre-treatment capacity or with the production of RD that's coming on toward the end of the year when we finish the project.

And now we're going to be looking to ramp that pre treatment capacity.

Our you know with the production of Rd, that's coming on towards the end of the year. When we finish the project and as Maryann said earlier when we do finish the project, we're gonna be able to produce <unk>.

And as Mary Ann said earlier, when we do finish the project, we're gonna be able to produce 730 million gallons annually, and that should happen by the end of the year. So all in all, operationally and project-wise, we're moving forward, wrapping it up, and we'll be ready at the end of the year. Thank you.

730 million gallons annually and that should happen by the end of the year. So all in all operationally and project wise.

Matthew Blair: Our next question comes from Matthew Blair with TPH. Your line is open. Good morning. Thanks for taking the question. Maybe sticking with the renewables. You know, for some operators, the next leg of the R.D, story is moving into S.A.F.

Moving forward wrapping it up and we'll.

It will be ready at the end of the year.

Great. Thank you.

Dave: Is that an option from Martinez and if so, any thoughts on timing or cost to add that flexibility? Yeah, Matthew, this is Dave again. So, yeah, there's no question both from a Dickinson and Martinez, both have the opportunity to convert to SAF. And half of SAF is one of the most cost competitive on a on a CAPEX per barrel basis for SAF production. With that said, the challenge in SAF is the premium associated to justify the investment.

Youre welcome.

All right, with that, thank you so much everyone today for your interest in marathon petroleum corporation. Should you have additional questions or would you like clarification on topics discussed this morning? Please reach out and our team will be available to take your calls. Thanks so much for joining us. Thank you.

Alright with that thank you so much everyone today for your interest in Marathon Petroleum Corporation should you have additional questions or would you like clarification on topics discussed. This morning, please reach out and our team will be available to take your calls thanks, so much for joining us.

Thank you that does conclude today's conference. Thank you for participating you may disconnect at this time.

Dave: And while the IRA has, you know, been communicated, there's a lot of unknowns out there, a lot of clarity that still needs to be determined relative to the IRA, not only from the sliding scale and the CI benefit of it, but also the long-term duration right now, it ends in 2027 as far as the documented incentives relative that. So it's hard to make, you know, multi-hundred million dollar investments without that clarity going forward. So lack of clarity and lack of premium from airline industry makes it very difficult to justify those investments at this time.

Mike Hennigan: Hey, Matthew, it's Mike. I'll just add to your end to Theresa's question. You know, I think what you're trying or hopefully what you're seeing from us is we're attentive to this whole low-carbon world, whether it's investment in R&G, like Theresa talked about or as Dave just mentioned, you know, SAF in my opinion is, you know, going to happen at some period. You know, as Dave said, there's a little bit of wrangling around the economics of it at this point, but you know, when those opportunities present themselves to us, we'll continue to optimize our portfolio.

The the.

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Mike Hennigan: So I think if you take a stair step over time, you're going to see us continue to be conscious of that at the same time recognizing, you know, that the base business is still the majority of what we do. But over time, we're going to continue to look, whether it's R&G, whether it's SAF, whether it's continued build out in some other areas. Those are things that we continue to evaluate. Dave and his team is constantly looking at it, and we'll make some investment there. But we're not looking for the big splash of a major investment as Dave just said. We're not looking to buy something that's already been proven out. We're looking at what those opportunities look like.

Yes.

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Okay.

Matthew Blair: And then we have a few early thoughts on refining margin capture into the fourth quarter. Do you think it would be up on tailwinds from things like butane blending and getting the reformer back for at least part of the quarter?

[music].

Maryann Mannen: Hey Matthew, it's Marianne. Yeah, I think, you know, it's hard for us to project capture, but when you talk about the things you did, obviously, as we shared the reformer we expect will begin to come back up. Mid-November, our guidance reflects the fact that, you know, it will be operational at planned rates mid-December. We talked about some secondary headwinds. We talked about marketing margins changing. You heard Brian talk about that as well. You know, those things clearly have a positive influence on capture, but as you know, it's difficult to predict where capture would otherwise go, but certainly those things point to improving capture from the third quarter.

Operator: We do have time for just one more question.

Okay.

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Ryan Todd: Our last question will come from Ryan Ta.., with Piper Sandler, your line is open. Chris, thanks. Maybe if I could have one follow up on on the Martinez conversion project. Can you talk about where you are from an operational point of view there? Maybe how much throughput you had during the third quarter from phase one of the project? And maybe as we think about startup of phase two of that project by the end of this year, is there any ramp that we sit associated with it either in terms of total throughput or in terms of the type of seeds that you anticipate working their way into the system? So how should we think about the progress from an operational point of view from that asset?

Yes.

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Yes.

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Tim Wright: Okay, Ryan, this is Tim Wright. Thanks a lot for the question there. I would say that first off, the project is going exceptionally well, both from safety and on-time and on-budget standpoint. The team's really doing a great job, and I do want to give them a shout out, because it really kind of demonstrated one of Marathon's key strengths here, and that's that they can execute on a complex project. We did, as you likely know, start up the pre-treatment unit in late second quarter, and it is operating very well.

Yes.

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The.

Okay.

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Tim Wright: We're able to pre-treat the entire production that comes about with the phase one Martinez capacity. And now we're going to be looking to ramp that pre-treatment capacity, or with the production of RD that's coming on toward the end of the year when we finish the project. And as Mary Ann said earlier, when we do finish the project, we're going to be able to produce 730 million gallons annually, and that should happen by the end of the year. So all in all, operationally and project-wise, we're moving forward, wrapping it up, and we'll be ready at the end of the year. Great, thank you. You're welcome.

Yeah.

Okay.

Okay.

Okay.

Okay.

Yes.

Yes.

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Operator: All right, with that, thank you so much, everyone, today for your interest in marathon petroleum corporation. Should you have additional questions or would you like clarification on topics discussed this morning? Please reach out, and our team will be available to take your calls.

Operator: Thanks so much for joining us. Thank you.

Operator: That is conclude today's conference. Thank you for participating.

Operator: You may disconnect at this time.