NYSE:MPC Marathon Petroleum Q3 2023 Earnings Report $160.95 -0.56 (-0.35%) Closing price 08/8/2025 03:59 PM EasternExtended Trading$160.78 -0.17 (-0.11%) As of 08/8/2025 05:17 PM Eastern Extended trading is trading that happens on electronic markets outside of regular trading hours. This is a fair market value extended hours price provided by Polygon.io. Learn more. ProfileEarnings HistoryForecast Marathon Petroleum EPS ResultsActual EPS$8.14Consensus EPS $7.79Beat/MissBeat by +$0.35One Year Ago EPS$7.81Marathon Petroleum Revenue ResultsActual Revenue$41.58 billionExpected Revenue$37.67 billionBeat/MissBeat by +$3.92 billionYoY Revenue Growth-12.00%Marathon Petroleum Announcement DetailsQuarterQ3 2023Date10/31/2023TimeBefore Market OpensConference Call DateTuesday, October 31, 2023Conference Call Time11:00AM ETConference Call ResourcesConference Call AudioConference Call TranscriptSlide DeckPress Release (8-K)Quarterly Report (10-Q)SEC FilingEarnings HistoryCompany ProfileSlide DeckFull Screen Slide DeckPowered by Marathon Petroleum Q3 2023 Earnings Call TranscriptProvided by QuartrOctober 31, 2023 ShareLink copied to clipboard.Key Takeaways Refining margin strength: In Q3, MPC’s Refining & Marketing segment generated $4.4 billion in adjusted EBITDA ($16.06 per barrel) at 94% utilization driven by robust crack spreads and tight global supply/demand. Midstream stability: MPLX delivered over $1.5 billion in adjusted EBITDA this quarter (6% YTD growth) and increased its quarterly distribution by 10%, providing MPC $2.2 billion annually to support dividends and capex. Shareholder returns accelerated: MPC returned $3.1 billion to shareholders in Q3 via dividends and buybacks, announced a $5 billion repurchase authorization and a 10% dividend increase, marking over 12% CAGR dividend growth in five years. Operational disruptions: Unplanned outages at the Galveston Bay reformer and Garyville refinery resulted in 6.8 million barrels of lost throughput in Q3 and a roughly $0.06 per barrel headwind to margin capture. Low-carbon investments: The Martinez renewable diesel facility remains on schedule to produce 730 million gallons annually by year-end, while Dickinson and RNG projects advance, supporting MPC’s goal to lower carbon intensity and diversify earnings. AI Generated. May Contain Errors.Conference Call Audio Live Call not available Earnings Conference CallMarathon Petroleum Q3 202300:00 / 00:00Speed:1x1.25x1.5x2xThere are 15 speakers on the call. Operator00:00:00Welcome 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. Please note that this conference is being recorded. Operator00:00:20I will now turn the call over to Kristina Kazarian. Kristina, you may begin. Speaker 100:00:26Welcome to the Marathon Petroleum Corporation Third Quarter 2023 Earnings Conference Call. The slides that accompany this call can be found on our website at marathonpetroleum. Under the Investors tab. Joining me on the call today are Mike Hennigan, CEO Mary Anne Mannin, CFO and other members of the executive team. We invite you to read the Safe Harbor statements on Slide 2. Speaker 100:00:47We 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 Q3 as well as 4th quarter guidance now includes the addition of approximately 40,000 barrels a day of capacity related to And with that, I'll turn the call over to Mike. Speaker 200:01:14Thank you, Christina. Good morning. Thank you for joining our call. Beginning with our view on the refining environment, in the Q3, we saw strong demand and global supply tightness supporting refining margins. Diesel cracks led the barrels inventories remain tight and European distillate production ran below capacity. Speaker 200:01:35Globally, 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 turnarounds to be supportive of cracks. Speaker 200:02:13To that end, we've seen 3,500,000 barrels of gasoline inventory drawn out of the U. S. System over the past several weeks. OPEC plus has reduced production, adding pressure to medium sour differentials. 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 Pads 2, 35. Speaker 200:02:40As we look towards 2024, we believe an enhanced Mid cycle environment will continue in the U. S. Due to the global supply demand fundamentals and the relative advantages Over international sources of supply, including energy costs, feedstock acquisition costs and refinery complexity. Turning to our results. In the Q3, we delivered strong cash generation across our business. Speaker 200:03:09In Refining and Marketing, Strong margins, 94 percent utilization and solid commercial performance led to segment adjusted EBITDA of $4,400,000,000 or $16.06 per barrel. Our Midstream segment delivered durable and growing earnings. This quarter, it generated segment adjusted EBITDA of over $1,500,000,000 Year to date, Our Midstream segment EBITDA is up 6% compared to the prior year period. 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 $2,200,000,000 of distributions from MPLX annually. Speaker 200:04:01MPLX 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. We believe MPC's current capital allocation priorities are optimal for our shareholders. In the 3rd quarter, We returned $3,100,000,000 to MPC shareholders via dividends and share repurchases. Last week, we announced an additional $5,000,000,000 share repurchase authorization and a 10% increase to MPC's quarterly dividend. Speaker 200:04:52With this increase, we have grown our quarterly dividend at over 12% compound annual rate over the past 5 years, Our overall capital allocation framework remains consistent. 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 of the progress on our low carbon initiatives. Speaker 200:05:32The Martinez Renewable Fuel Facility is being delivered safely, on time and on budget. And by the end of 2023, The facility is expected to produce 730,000,000 gallons 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 Neste. Our Dickinson Renewable Diesel Facility is operating well. The facility processed 75% advantaged feed in the 3rd quarter. Speaker 200:06:14The nearby Spiritwood soybean processing plant, which is owned through a joint venture with ADM, It's expected to deliver enough vegetable oil to produce approximately 75,000,000 gallons per year of renewable diesel. Additionally, we are advancing early stage developments through our interest in low carbon intensity RNG and other small scale investments. We believe through these projects, we're taking 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. At this point, I'll turn the call over to Mary Anne. Speaker 100:07:02Thanks, Mike. Moving to Q3 highlights, Slide 5 provides a summary of our financial results. This morning, We reported adjusted earnings per share of $8.14 This quarter's results were adjusted to a $106,000,000 gain on sale of MPC's 25% interest in the South Texas Gateway Terminal as well as $63,000,000 of response costs associated with our unplanned outage at Garyville. These adjustments reduced our reported adjusted earnings by $0.14 per share. Adjusted EBITDA was $5,700,000,000 for the quarter and cash flow from operations, excluding favorable working capital changes, Was over $4,300,000,000 During the quarter, we returned $297,000,000 to shareholders through dividend payments And repurchased over $2,800,000,000 of our shares. Speaker 100:08:08And from May 2021 through October 27, We have repurchased 285,000,000 shares or approximately 44% of the shares outstanding. Slide 6 shows the reconciliation between net income and adjusted EBITDA as well as the sequential change in adjusted EBITDA From Q2 2023 to Q3 2023, adjusted EBITDA was higher sequentially by approximately $1,200,000,000 driven by higher R and M margins. Corporate expenses were higher sequentially by $40,000,000 primarily due to a charge related to valuation of existing performance based stock compensation expense. The tax rate for the Q3 was 22%, resulting in a tax provision of approximately $1,000,000,000 Moving to our segment results. Slide 7 provides an overview of our Refining and Marketing segment. Speaker 100:09:10Our refining assets ran at 94% utilization, processing nearly 2,800,000 barrels crude per day at our 13 refineries sequentially per hour margins were higher across all regions driven by higher crack spreads. Capture was 93%. Refining operating costs were $5.14 per barrel In the Q3, flat sequentially, we did have unplanned downtime during the quarter, impacting our 2 largest refineries, which resulted in lost crude throughput of 4,700,000 barrels due to the Galveston Bay reformer outage And 2,100,000 barrels at Garyville. Additionally, this downtime resulted in a headwind to our overall capture. We began construction activities on the reformer repair about 3 months after the event once regulators gave us clearance And we were able to finalize the required repairs. Speaker 100:10:08Since then, repairs have progressed as planned. And during this outage, we pulled forward Turnaround work into the 3rd and 4th quarters, which had been scheduled in the Q1 of 2024. Slide 8 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 Captur this quarter, Captur 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. Speaker 100:10:47This 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 Q2 of 2023. Our Midstream segment delivered strong 3rd 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 up 6% compared to the prior year period. Speaker 100:11:18As 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 $2,200,000,000 in cash from MPLX on an annual basis. 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. Slide 10 presents the elements of change in our consolidated cash position for the quarter. Operating cash flow, Excluding changes in working capital was over $4,300,000,000 in the quarter. Speaker 100:11:58Working capital was a $609,000,000 tailwind for the quarter, Driven primarily by increases in crude oil prices, year to date working capital has been $1,400,000,000 source of cash. Capital expenditures and investments totaled $486,000,000 this quarter, consistent with our 2023 outlook. MPC returned nearly $3,100,000,000 via share repurchases and dividends during the quarter. This represents an approximately 72 percent payout of the $4,300,000,000 of operating cash flow, excluding changes in working capital, highlighting our commitment to superior shareholder returns. As of October 27, we have Approximately $8,300,000,000 remaining under our current share repurchase authorization, which includes the additional $5,000,000,000 Approval announced last week. Speaker 100:12:52At the end of the Q3, MPC had approximately $13,100,000,000 In consolidated cash and short term investments, this includes approximately $1,000,000,000 of MPLX cash. Turning to guidance on Slide 11, we provide our 4th quarter outlook. We expect crude throughput volumes of over 2,600,000 barrels Per day, representing utilization of 90%. Utilization is forecasted to be lower than 3rd quarter levels Due to turnaround activity having a higher impact on crude units in the Q4. In the Gulf Coast, with respect to the Galveston Bay reformer, repairs have progressed as We anticipate starting the unit back up in mid November. Speaker 100:13:36Production is expected to ramp over the next several weeks And guidance anticipates returning to full operating rates by mid December following advanced 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, planned turnaround expense is now projected to be approximately $300,000,000 in the 4th quarter. Operating costs per barrel in the 4th quarter are expected to be 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 planned turnaround activity. Distribution costs are It is expected to be approximately $1,400,000,000 for the 4th quarter. Speaker 100:14:24Corporate costs are expected to be $175,000,000 representing the sustained reductions that we have made in this area. With that, let me pass it back to Mike. Speaker 200:14:35In 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 Q3, we've invested over $1,700,000,000 in capital and investment, which includes $390,000,000 of maintenance capital as well as over $900,000,000 on refinery turnarounds 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. MPLX remains a source of growth in our portfolio. Speaker 200:15:23Partnership is expected to distribute over $2,200,000,000 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. With that, let me turn the call back over to Christina. Speaker 100:15:58Thanks, 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 be prompt for additional questions. And with that, Sheila, we're ready for them. Operator00:16:12Thank you. We will now begin the question and answer session. Our first question will come from Manav Gupta with UBS. Your line is open. Speaker 300:16:42Good morning, Mike and Mary Anne. When we look at the refiners, they look at themselves and perform on different performance metrics. Some look at refining capture. You guys really focus on EBITDA margin per barrel. And when we look at that metrics, it looks like for a 2nd year in a row, you will be on top of that table, outperforming your peers. Speaker 300:17:05So 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? Speaker 400:17:18Hi, Manav, it's Rick. First of all, thank you for the perceptive call out. I will tell you we are uber Focused on EBITDA and our results compared to others and our team will certainly greatly appreciate your call out 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. I will kind of backtrack and state what we've stated in past quarters, Manav. Speaker 400:17:49We'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 and we are, I would say, taking more calculated risk With 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, 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. In the Midwest specifically, I will really pivot on a couple of things. We have a fully integrated system. We have 4 great refineries in the Midwest. Speaker 400:18:43In the Q3, as you know, they ran very well. We have access to advantaged 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, you really get to an end result that has been consistent as you stated over the last several quarters and we expect it to Speaker 200:19:14Manav, it's Mike. The only thing I would add to what Rick said is, we start with EBITDA per barrel. We want to make sure we're 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 EBITDA per barrel, But the bottom line is, are we generating significant amount of cash to give us the flexibility to drive shareholder returns? Speaker 200:19:36So I think you hit the starting point with EBITDA per barrel. The ending point is generating cash and then having that flexibility. Speaker 300:19:46Perfect. A quick follow-up here. You guys are known for your strong operational performance. 3Q was a little unusual. You had some unplanned And despite those you delivered a pretty strong beat, but I'm trying to understand, let's say those incidents would not have happened. Speaker 300:20:03Would we have got even a stronger quarter, if you could talk about that? Speaker 100:20:08Yes. Thank you. It's Mary Anne and thanks for the question. You're right. As we shared with you, we did have a couple of unplanned downtime events in the quarter that impacted the Gulf Coast. Speaker 100:20:201, 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 2 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 event obviously being the reformer. As I mentioned, 4,700,000 barrels In the quarter that we lost and then on Garyville, it's about 2,100,000 barrels as we operated about half rate for Yes, just under a week. It took us about just back to Galveston Bay for a moment. Speaker 100:21:01It took us about 3 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 3 months to the start of getting those activities launched. I hope that answers the question. Speaker 300:21:21Thank you so much for taking my questions. Speaker 200:21:24You're welcome, Manav. Operator00:21:26Next, we will hear Speaker 500:21:32Well, first of all, thank you for taking my questions. Marianne, that last Our response was actually one of the key things we wanted to hit. So let me try 2 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. Speaker 500:21:56S. Market in particular. How does that look in your system? Speaker 600:22:00Yes, Doug, I'll let Brian comment on that. Doug, this is Brian. Good morning. Good question. So really our theme on demand both Domestically and internationally, it's stable and steady. Speaker 600:22:13It's been that way really throughout the year. In the quarter, we Roughly 250,000 barrels a day out of our system in the Gulf Coast despite some operational challenges as noted. About 2 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 They import roughly 2,300,000 barrels a day into the system. Speaker 600:22:38The 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 share into Europe. So we are seeing growth in European As you've probably seen as well, roughly 200,000 barrels a day in the quarter, from the U. Speaker 600:22:55S. Into Europe. The one It is the one weakest spot that we see throughout our network, which is distal 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, That is the one soft spot that we're seeing. Speaker 500:23:18Okay. That's helpful. And Mike, I apologize For this one, but I guess somebody's got to ask it. So there is speculation overnight about the Sitgo process And Marathon been mentioned as a potential bidder. So I wonder if you could frame whether that is in fact a consideration that you 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 Speaker 200:23:50Thanks, Doug. I'm going to let Dave start and then I'll come back afterwards. Hey, Doug. So Appreciate the question. We anticipated that. Speaker 200:24:00So 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 and Rick touched on this a little bit on opportunities to build out our competencies 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 wellhead to wheel is the way to think about it. So with that said and on the current environment, we believe that M and A within refining, refining M and A It's one of the more challenging ways to create value. Speaker 200:24:39And with all that said, I would not anticipate us Or you should anticipate us participating in the current auction process for the CITCO assets. Speaker 500:24:52Mike, did you have a follow-up? Speaker 600:24:53I Speaker 200:24:53don't know where the rumor came from, but we're not interested in the auction process. That was the Speaker 500:25:00That sounds okay to report. Thanks very much indeed. Speaker 200:25:03Yes. You're welcome. Operator00:25:07Our next question will come from Paul Cheng with Scotiabank. Your line is open. Speaker 700:25:13Hey, everyone. Good morning. Speaker 200:25:16Good morning, Paul. Speaker 700:25:17Maybe that this is Maryann or maybe for Rich. For the West Coast marketing Margins condition that seems to be very strong and you do have a dealer network there. So just curious that In the Q3, how much is the West Coast contribution coming from that piece of the business? Is it growing What's your plan over there? That's the first question. Speaker 600:25:46Yes, Paul, good morning. This is Brian. I'll 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. Speaker 600:26:03We see a lot of pressure on the margin I'm in the West Coast and other markets. 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 4th quarter. But to your other question, we are We 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 Speaker 700:26:32Hey, Brian, do you have any rough estimate you can share that How many stations are you trying to grow yet on any basis over the next several years there? Speaker 600:26:45Really don't want to forecast a station growth expectation, Paul. 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 growth or volume alone. Speaker 700:27:00Okay. My I know that maybe it's still a little bit early. Can you talk about that Puts and minuses on the variable for the CapEx outlook for the next several years compared to this year, are we expecting a pretty steady program Or that you are looking for opportunity to grow both in the maybe refining in Changshan, Improving the yield and reducing energy and MPLX. So can you just give us some idea that how the Speaker 100:27:36Sure, Paul. It's Mary Anne. Let me talk a little bit about CapEx In general, and then I'll pass it to Mike and he'll hear 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 hopefully, you've seen that we have implemented that principle well over the last few years. When you look at 2017 to 2020, our consolidated CapEx averaged about $3,500,000,000 And as you look 21,000,000 to 2023, That's average $2,100,000,000 So again, that premise of strict capital discipline ensuring that we're delivering the returns This has been an important piece of the work that we've been doing. Speaker 100:28:20I think in Refining, we continue to look for cost reduction type projects, Those that can enhance reliability, margin enhancement type projects, then that we would be continuing to Evaluate, and there are several of those projects that we'll evaluate. In terms of the timing, 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. Speaker 200:28:50I think, Mary, you answered it very well. Paul, the way we think about it is on the MPLX side of the house, we've been spending roughly about $1,000,000,000 And growing those cash flows, if you listen to the MPLX call, we're still very comfortable with those cash flows growing that will continue to kick over to MPC via distribution. And then Mary Anne 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 increase reliability, which will hit the bottom line or enhance our margins in such a way that we talked About earlier that we'll generate more EBITDA per barrel. So we have a pretty fulsome look at where we think we're going to invest. Speaker 200:29:35And like Mary just gave you the numbers over the last couple of years, you're spending $2,000,000,000 to $3,000,000,000 overall on a consolidated basis. We think that's a nice Base case to have, 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 part of our DNA To return capital to shareholders. Speaker 700:30:06Thank you. Speaker 800:30:08You're welcome. Operator00:30:11Our next question comes from Sam Margolin with Wolfe Research. Your line is open. Speaker 900:30:17Good morning. Thanks for taking the question. 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 when you are looking at an MPC share, the question is really how do you 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 Or do you kind of analyze it as a consolidated entity where something like 40% of it is Like a synthetic MPLX share. Speaker 900:30:54And 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. Speaker 100:31:08Sam, it's Mary Anne. Let me give you a few thoughts on that and I can pass Mike and Casey has 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. Certainly, when we're looking at intrinsic value, there's a couple of approaches. So we'll look at some of the parts. Speaker 100:31:26We'll 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, That intrinsic value assumes the discounted cash flows as I just shared. 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 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. Speaker 100:32:10But 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. Speaker 200:32:15Yes, 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, It says daily volume traded limitations or blackout periods, etcetera, etcetera. So we've been because it kind of looks It's been consistent just because we've been trying to be as aggressive as possible. Speaker 200:32:48Once we generate the cash, as we talk 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 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 be as aggressive as we can, return capital, but Take advantage of the volatility that's within the quarter. And since we started this program, we've ended up reducing the share count by about 40%, it's a 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 270,000,000 shares at around $4 it's roughly About $1,000,000,000 of value creation just in our execution. Speaker 200:33:41But 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. Speaker 900:33:55Yes, very much so. Thanks. And my follow-up is just more of a straightforward ops question, but it's about the West Coast and 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 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. Speaker 400:34:37Yes. Hi, Sam. It's Rick. Your analogy is spot on. So when TMX comes online, we'll not only see benefits in It's in the Pacific Northwest, specifically at Anacortes and at LA. Speaker 400:34:49So the way we look at it is, as you're going to get Access to an advantaged barrel more so than what you do today and we believe that barrel will Pete, very well, especially on the West Coast. 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. Speaker 400:35:24So we do see that playing into Both of our assets, 1 in the Pacific Northwest and L. A. On the West Coast. Operator00:35:40Next, 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. Speaker 1000:35:54Okay. Hopefully, it works this time. Can you hear me all right? Speaker 100:35:58Yes, we got you, Roger. Speaker 1000:35:59All right. 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, You can kind of walk us through the way we should be thinking about that as we head into start up kind of year end and then early part of 'twenty four. Speaker 200:36:21Hey, Roger. This is Jim Wilkins. We're working with the county on one issue related to our land use permit. 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. Speaker 1000:36:47Does 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, I guess. Speaker 200:37:03No, 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. Speaker 1000:37:18Okay, perfect. So and just to be absolutely clear, no other Regulatory hurdles that need to be cleared for start Speaker 200:37:28up? Correct. Speaker 1000:37:30Great. Thank you. Speaker 200:37:34You're welcome, Roger. Operator00:37:37Our next question comes from John Royall with JPMorgan. Your line is open. Speaker 800:37:43Hi, 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, 1,500,000,000 Which I wouldn't characterize as a problem by any stretch, but you've talked about getting that cash balance down closer to $1,000,000,000 longer term. Speaker 800:38:08And 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, should we think about the buyback as not particularly sensitive to the crack environment? And would you expect to start drawing cash from here? Speaker 100:38:27Hey, John, it's Mary Anne. So a couple of things. Yes, you're absolutely right. As you see, we said a little over $13,000,000,000 at the end of the quarter. And again, just keeping in mind, about $1,000,000,000 of that belongs to MPLX. Speaker 100:38:40And 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 Q4 and then again in the Q1. Having said that, your point is accurate. We've said we're quite comfortable with $1,000,000,000 on our balance sheet. Speaker 100:39:01The 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 $500,000,000 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. 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 and 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, on the types of returns that you all expect. And we continue to see share buyback as an efficient return of capital. Speaker 100:40:02So 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. Speaker 800:40:17Great. Thank you. And then, Mary Anne 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 2 years and now this work pulled into 2023. Speaker 800:40:37So is it reasonable to think it might be kind of a below average year? Speaker 100:40:42Hey, John, Mary Anne 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 fossil fuel and 2 renewable diesel. And at every point in time, there is some level of turnaround. You're absolutely right. Speaker 100:41:04One 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, but again, absent the period of COVID, you can see the level of turnaround being pretty similar Watching those. In the Q4, also, you may have noticed in our guidance, West Coast utilization, We do have turnaround activity there. We've got 2 locations in LAR. 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 Q4 as well. I'll pause there. Speaker 700:41:51Thank you. Speaker 200:41:54You're welcome, John. Operator00:41:56Our next question comes from Jason Gabelman with TD Cowen. Your line is open. Speaker 1100:42:02Hey, good morning. Thanks for taking my questions. Decent amount of focus on the buyback, I wanted to ask about the Dividend raise of 10%. 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 it's also I guess lower than the incremental cash you'll be receiving from MPLX with their higher distribution. So the question is how do you About kind of that dividend raise, how did you come up with that 10%? Speaker 1100:42:42And 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. Speaker 200:43:03Jason, it's Mike. I'll start and I'll let Nir jump in. Yes, I think what you're referring to is we had a bigger increase before because the way we looked at it is Most in our industry kind of paused around COVID 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 part of our capital allocation. We wanted to be competitive, but at the same time, I often say that it's more tax efficient to go return capital through share repurchases. Speaker 200:43:40And the sheer quantum of dollars in each case is pretty different. Overall, we want the market to know, yes, we're going to grow the dividend. We're going to consistently do that. We wanted to be competitive. We want to show that we're going to grow earnings. Speaker 200:43:55It comes back to investing capital and all the self help that we can do. But at the same time, we're going to more on the side of share repurchases because we think it's More tax efficient and a better way to return capital. Speaker 100:44:08Yes, Jason, it's Mary Anne. The only thing that I would add to Mike's comments are the dividend is only one part, as you The capital allocation strategy, but having said that, we think this increase is pure leading at 12% CAGR over the last 5 years. So We hope you see it that way as well. Speaker 1100:44:26Got it. 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 A 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, how it could benefit the company, any thoughts around capital spending that you would have to contribute there? Thanks. Speaker 200:44:54Yes, Jason, this is Dave. I'll touch on that. So I'll start with high level. Number 1, there were 7 hubs That were approved for funding from the DOE for $7,000,000,000 We mean MPCPLX. We're involved in 2 of them. Speaker 200:45:12So one in Appalachia and one in the Heartland area. So when we think about the involvement of MPC and MPLX, 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 MPC perspective, it is inclusive of lowering the carbon intensity Via hydrogen production and Speaker 700:45:40when you Speaker 200:45:41think about it in the Heartland area, due to the location of it, it's very the proximity very 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 chains. Speaker 1100:46:11Okay. When should we see those benefits start to accrue? When do the projects come online? Speaker 200:46:17Yes. So 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, it's in the very early stages. So to think about it, next phase of this is negotiation with the DOE on 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 associated benefits of the company, I think you're looking into Late 2024, 2025 timeframe. Speaker 200:46:56So, it's still a ways out there. Speaker 1100:46:59Great. Thanks. That's really helpful. Operator00:47:05Thank you. Our next question comes from Theresa Chen with Barclays. Your line is open. Speaker 1200:47:12Good morning. I wanted to follow-up on Sam's question related to TMX, for which MPC I'll add, given the discussion with the pipeline owner and the bid ask currently. And related to that, how much do you Really it can tighten WCS differentials for your Mid Con assets, given that the post holes are comparable to going to the U. S. Gulf Coast versus Burn Speaker 400:47:48Yes. 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 it may end up at. On the second part of your question, the guidance I'd give you is, As we look at the forward curve on WCS, so today WCS sits at about a $26 discount. In Q1, it's plus or minus 25. Speaker 400:48:18And in Q2, if TMX comes online there and I think the market is Still questionable on that. The forward curve is $15 to $18 discount. So still a pretty significant discount And we'll just have to see where it goes from there. Speaker 1200:48:39Got it. And going back to Mike's earlier comments about additional investment opportunities, RNG 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 launch pad for additional RNG investments or is this going to be more of a roll up strategy from here? Speaker 200:49:08Yes. Theresa, this is Dave again. I'll touch on that. So yes, the LF Bioenergy investment, that joint venture is progressing as we planned. We are building out As we planned, we are building out the facilities. Speaker 200:49:23The plan is to build out 13 of those RNG facilities, Collecting a very low CI dairy RNG and then 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 We'll 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 as planned. So, and the second part of your question is, is this a 1 up or a foundation for subsequent investments in renewable diesel space or the renewable natural gas space. So we continue, I said earlier, we look at a lot of stuff. Speaker 200:50:21There are some opportunities out there, but we the key to this one was we got in early And didn't 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. Operator00:50:50Our next question comes from Matthew Blair with TPH. Your line is open. Speaker 1300:50:56Good morning. Thanks for taking the question. Maybe sticking with the renewables, 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 Timing or cost to add that flexibility? Speaker 200:51:16Yes, Matthew, this is Dave again. So Yes. There is no question both from a Dickinson and Martinez, both those have the opportunity to convert to SAF. And HEFA SAF is one of the most cost competitive on a CapEx per barrel basis for SAF production. With that said, the challenge in SAF is the premium associated to justify the investment. Speaker 200:51:43And while the IRA has been communicated, there's a lot of unknowns out there and 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 So 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 Multi $100,000,000 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. Matthew, it's Mike. I'll just add to your end to Teresa's question. Speaker 200:52:24I 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 and G, like Teresa talked about or as Dave just mentioned, SAF, in my opinion, is going to happen at some period. As Dave said, there's 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, you're going to see us continue to be conscious of that, At the same time, recognizing 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 RNG, 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. Speaker 200:53:19But 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 opportunities. Speaker 800:53:33Sounds good. And then, do Speaker 1300:53:35you have any early thoughts on refining margin capture into the 4th 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? Speaker 100:53:51Hey, Matthew, it's Mary Anne. Yes, 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 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. Those things clearly have a positive influence on capture. Speaker 100:54:24But as you know, it's difficult to predict where Capture would otherwise go, but certainly those things point to improving Capture from the 3rd quarter. Operator00:54:36We do have time for just one more question. Our last question will come from Ryan Todd with Piper Sandler. Your line is open. Speaker 1400:54:46Great, thanks. Maybe if I could have one follow-up 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 in During the Q3 from Phase 1 of the project and maybe as we think about startup of Phase 2 of 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 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? Speaker 600:55:29Okay, Ryan, this is Tim Ait. Thanks a lot for the question there. I would say that first off, the project is going exceptionally well, Both 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 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 pretreatment unit in late Q2 and it is operating very well. We're able to pretreat The entire production that comes about with the Phase 1 Martinez capacity. Speaker 600:56:08Now we're going to be looking to ramp that pretreatment capacity with the production of RD that's coming Toward the end of the year when we finish the project. And as Mary Anne said earlier, when we do finish the project, we're going to be able to produce 730,000,000 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. Speaker 1400:56:42Great. Thank you. Speaker 600:56:44You're welcome. Speaker 200:56:46All right. Speaker 100:56:46With that, thank you so much everyone today for your interest in Marathon Operator00:57:00Thank you. That does conclude today's conference. Thank you forRead morePowered by Earnings DocumentsSlide DeckPress Release(8-K)Quarterly report(10-Q) Marathon Petroleum Earnings HeadlinesTD Cowen Cuts Marathon Petroleum (NYSE:MPC) Price Target to $182.00August 9 at 2:31 AM | americanbankingnews.com$100,000 Marathon Petroleum Grant To Help Bridge a Digital Divide in El PasoAugust 7 at 7:30 PM | finance.yahoo.comThe End of Elon Musk…?The End of Elon Musk? Don't make him laugh. Jeff Brown has been hearing this same tired story for years, and he's been proven right time and time again. And now, while the media focuses on Tesla's "demise," he's uncovered an AI breakthrough that's about to make Elon's doubters eat their words yet again. According to his research, if you listen to the media and miss out on Elon's newest breakthrough, it's going to cost you the fortune of a lifetime.August 9 at 2:00 AM | Brownstone Research (Ad)Marathon Petroleum Q2 Review: Resilience Enables More BuybacksAugust 7 at 5:04 AM | seekingalpha.comMarathon Petroleum tops Q2 forecasts on strong refining performanceAugust 6 at 2:32 AM | msn.comHigher Refining Margins Help Marathon Petroleum Beat Q2 Profit EstimateAugust 6 at 2:32 AM | finance.yahoo.comSee More Marathon Petroleum Headlines Get Earnings Announcements in your inboxWant to stay updated on the latest earnings announcements and upcoming reports for companies like Marathon Petroleum? Sign up for Earnings360's daily newsletter to receive timely earnings updates on Marathon Petroleum and other key companies, straight to your email. Email Address About Marathon PetroleumMarathon Petroleum (NYSE:MPC), together with its subsidiaries, operates as an integrated downstream energy company primarily in the United States. The company operates through Refining & Marketing, and Midstream segments. The Refining & Marketing segment refines crude oil and other feedstocks at its refineries in the Gulf Coast, Mid-Continent, and West Coast regions of the United States; and purchases refined products and ethanol for resale and distributes refined products, including renewable diesel, through transportation, storage, distribution, and marketing services. Its refined products include transportation fuels, such as reformulated gasolines and blend-grade gasolines; heavy fuel oil; and asphalt. This segment also manufactures propane and petrochemicals. It sells refined products to wholesale marketing customers in the United States and internationally, buyers on the spot market, and independent entrepreneurs who operate primarily Marathon branded outlets, as well as through long-term fuel supply contracts to direct dealer locations primarily under the ARCO brand. The Midstream segment transports, stores, distributes, and markets crude oil and refined products through refining logistics assets, pipelines, terminals, towboats, and barges; gathers, processes, and transports natural gas; and gathers, transports, fractionates, stores, and markets natural gas liquids. Marathon Petroleum Corporation was founded in 1887 and is headquartered in Findlay, Ohio.View Marathon Petroleum ProfileRead more More Earnings Resources from MarketBeat Earnings Tools Today's Earnings Tomorrow's Earnings Next Week's Earnings Upcoming Earnings Calls Earnings Newsletter Earnings Call Transcripts Earnings Beats & Misses Corporate Guidance Earnings Screener Earnings By Country U.S. Earnings Reports Canadian Earnings Reports U.K. Earnings Reports Latest Articles Airbnb Beats Earnings, But the Growth Story Is Losing AltitudeDutch Bros Just Flipped the Script With a Massive Earnings BeatIs Eli Lilly’s 14% Post-Earnings Slide a Buy-the-Dip Opportunity?Constellation Energy’s Earnings Beat Signals a New EraRealty Income Rallies Post-Earnings Miss—Here’s What Drove ItDon't Mix the Signal for Noise in Super Micro Computer's EarningsWhy Monolithic Power's Earnings and Guidance Ignited a Rally Upcoming Earnings SEA (8/12/2025)Cisco Systems (8/13/2025)Alibaba Group (8/13/2025)NetEase (8/14/2025)Applied Materials (8/14/2025)Petroleo Brasileiro S.A.- Petrobras (8/14/2025)NU (8/14/2025)Deere & Company (8/14/2025)Palo Alto Networks (8/18/2025)Medtronic (8/19/2025) Get 30 Days of MarketBeat All Access for Free Sign up for MarketBeat All Access to gain access to MarketBeat's full suite of research tools. 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There are 15 speakers on the call. Operator00:00:00Welcome 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. Please note that this conference is being recorded. Operator00:00:20I will now turn the call over to Kristina Kazarian. Kristina, you may begin. Speaker 100:00:26Welcome to the Marathon Petroleum Corporation Third Quarter 2023 Earnings Conference Call. The slides that accompany this call can be found on our website at marathonpetroleum. Under the Investors tab. Joining me on the call today are Mike Hennigan, CEO Mary Anne Mannin, CFO and other members of the executive team. We invite you to read the Safe Harbor statements on Slide 2. Speaker 100:00:47We 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 Q3 as well as 4th quarter guidance now includes the addition of approximately 40,000 barrels a day of capacity related to And with that, I'll turn the call over to Mike. Speaker 200:01:14Thank you, Christina. Good morning. Thank you for joining our call. Beginning with our view on the refining environment, in the Q3, we saw strong demand and global supply tightness supporting refining margins. Diesel cracks led the barrels inventories remain tight and European distillate production ran below capacity. Speaker 200:01:35Globally, 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 turnarounds to be supportive of cracks. Speaker 200:02:13To that end, we've seen 3,500,000 barrels of gasoline inventory drawn out of the U. S. System over the past several weeks. OPEC plus has reduced production, adding pressure to medium sour differentials. 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 Pads 2, 35. Speaker 200:02:40As we look towards 2024, we believe an enhanced Mid cycle environment will continue in the U. S. Due to the global supply demand fundamentals and the relative advantages Over international sources of supply, including energy costs, feedstock acquisition costs and refinery complexity. Turning to our results. In the Q3, we delivered strong cash generation across our business. Speaker 200:03:09In Refining and Marketing, Strong margins, 94 percent utilization and solid commercial performance led to segment adjusted EBITDA of $4,400,000,000 or $16.06 per barrel. Our Midstream segment delivered durable and growing earnings. This quarter, it generated segment adjusted EBITDA of over $1,500,000,000 Year to date, Our Midstream segment EBITDA is up 6% compared to the prior year period. 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 $2,200,000,000 of distributions from MPLX annually. Speaker 200:04:01MPLX 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. We believe MPC's current capital allocation priorities are optimal for our shareholders. In the 3rd quarter, We returned $3,100,000,000 to MPC shareholders via dividends and share repurchases. Last week, we announced an additional $5,000,000,000 share repurchase authorization and a 10% increase to MPC's quarterly dividend. Speaker 200:04:52With this increase, we have grown our quarterly dividend at over 12% compound annual rate over the past 5 years, Our overall capital allocation framework remains consistent. 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 of the progress on our low carbon initiatives. Speaker 200:05:32The Martinez Renewable Fuel Facility is being delivered safely, on time and on budget. And by the end of 2023, The facility is expected to produce 730,000,000 gallons 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 Neste. Our Dickinson Renewable Diesel Facility is operating well. The facility processed 75% advantaged feed in the 3rd quarter. Speaker 200:06:14The nearby Spiritwood soybean processing plant, which is owned through a joint venture with ADM, It's expected to deliver enough vegetable oil to produce approximately 75,000,000 gallons per year of renewable diesel. Additionally, we are advancing early stage developments through our interest in low carbon intensity RNG and other small scale investments. We believe through these projects, we're taking 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. At this point, I'll turn the call over to Mary Anne. Speaker 100:07:02Thanks, Mike. Moving to Q3 highlights, Slide 5 provides a summary of our financial results. This morning, We reported adjusted earnings per share of $8.14 This quarter's results were adjusted to a $106,000,000 gain on sale of MPC's 25% interest in the South Texas Gateway Terminal as well as $63,000,000 of response costs associated with our unplanned outage at Garyville. These adjustments reduced our reported adjusted earnings by $0.14 per share. Adjusted EBITDA was $5,700,000,000 for the quarter and cash flow from operations, excluding favorable working capital changes, Was over $4,300,000,000 During the quarter, we returned $297,000,000 to shareholders through dividend payments And repurchased over $2,800,000,000 of our shares. Speaker 100:08:08And from May 2021 through October 27, We have repurchased 285,000,000 shares or approximately 44% of the shares outstanding. Slide 6 shows the reconciliation between net income and adjusted EBITDA as well as the sequential change in adjusted EBITDA From Q2 2023 to Q3 2023, adjusted EBITDA was higher sequentially by approximately $1,200,000,000 driven by higher R and M margins. Corporate expenses were higher sequentially by $40,000,000 primarily due to a charge related to valuation of existing performance based stock compensation expense. The tax rate for the Q3 was 22%, resulting in a tax provision of approximately $1,000,000,000 Moving to our segment results. Slide 7 provides an overview of our Refining and Marketing segment. Speaker 100:09:10Our refining assets ran at 94% utilization, processing nearly 2,800,000 barrels crude per day at our 13 refineries sequentially per hour margins were higher across all regions driven by higher crack spreads. Capture was 93%. Refining operating costs were $5.14 per barrel In the Q3, flat sequentially, we did have unplanned downtime during the quarter, impacting our 2 largest refineries, which resulted in lost crude throughput of 4,700,000 barrels due to the Galveston Bay reformer outage And 2,100,000 barrels at Garyville. Additionally, this downtime resulted in a headwind to our overall capture. We began construction activities on the reformer repair about 3 months after the event once regulators gave us clearance And we were able to finalize the required repairs. Speaker 100:10:08Since then, repairs have progressed as planned. And during this outage, we pulled forward Turnaround work into the 3rd and 4th quarters, which had been scheduled in the Q1 of 2024. Slide 8 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 Captur this quarter, Captur 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. Speaker 100:10:47This 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 Q2 of 2023. Our Midstream segment delivered strong 3rd 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 up 6% compared to the prior year period. Speaker 100:11:18As 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 $2,200,000,000 in cash from MPLX on an annual basis. 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. Slide 10 presents the elements of change in our consolidated cash position for the quarter. Operating cash flow, Excluding changes in working capital was over $4,300,000,000 in the quarter. Speaker 100:11:58Working capital was a $609,000,000 tailwind for the quarter, Driven primarily by increases in crude oil prices, year to date working capital has been $1,400,000,000 source of cash. Capital expenditures and investments totaled $486,000,000 this quarter, consistent with our 2023 outlook. MPC returned nearly $3,100,000,000 via share repurchases and dividends during the quarter. This represents an approximately 72 percent payout of the $4,300,000,000 of operating cash flow, excluding changes in working capital, highlighting our commitment to superior shareholder returns. As of October 27, we have Approximately $8,300,000,000 remaining under our current share repurchase authorization, which includes the additional $5,000,000,000 Approval announced last week. Speaker 100:12:52At the end of the Q3, MPC had approximately $13,100,000,000 In consolidated cash and short term investments, this includes approximately $1,000,000,000 of MPLX cash. Turning to guidance on Slide 11, we provide our 4th quarter outlook. We expect crude throughput volumes of over 2,600,000 barrels Per day, representing utilization of 90%. Utilization is forecasted to be lower than 3rd quarter levels Due to turnaround activity having a higher impact on crude units in the Q4. In the Gulf Coast, with respect to the Galveston Bay reformer, repairs have progressed as We anticipate starting the unit back up in mid November. Speaker 100:13:36Production is expected to ramp over the next several weeks And guidance anticipates returning to full operating rates by mid December following advanced 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, planned turnaround expense is now projected to be approximately $300,000,000 in the 4th quarter. Operating costs per barrel in the 4th quarter are expected to be 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 planned turnaround activity. Distribution costs are It is expected to be approximately $1,400,000,000 for the 4th quarter. Speaker 100:14:24Corporate costs are expected to be $175,000,000 representing the sustained reductions that we have made in this area. With that, let me pass it back to Mike. Speaker 200:14:35In 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 Q3, we've invested over $1,700,000,000 in capital and investment, which includes $390,000,000 of maintenance capital as well as over $900,000,000 on refinery turnarounds 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. MPLX remains a source of growth in our portfolio. Speaker 200:15:23Partnership is expected to distribute over $2,200,000,000 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. With that, let me turn the call back over to Christina. Speaker 100:15:58Thanks, 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 be prompt for additional questions. And with that, Sheila, we're ready for them. Operator00:16:12Thank you. We will now begin the question and answer session. Our first question will come from Manav Gupta with UBS. Your line is open. Speaker 300:16:42Good morning, Mike and Mary Anne. When we look at the refiners, they look at themselves and perform on different performance metrics. Some look at refining capture. You guys really focus on EBITDA margin per barrel. And when we look at that metrics, it looks like for a 2nd year in a row, you will be on top of that table, outperforming your peers. Speaker 300:17:05So 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? Speaker 400:17:18Hi, Manav, it's Rick. First of all, thank you for the perceptive call out. I will tell you we are uber Focused on EBITDA and our results compared to others and our team will certainly greatly appreciate your call out 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. I will kind of backtrack and state what we've stated in past quarters, Manav. Speaker 400:17:49We'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 and we are, I would say, taking more calculated risk With 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, 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. In the Midwest specifically, I will really pivot on a couple of things. We have a fully integrated system. We have 4 great refineries in the Midwest. Speaker 400:18:43In the Q3, as you know, they ran very well. We have access to advantaged 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, you really get to an end result that has been consistent as you stated over the last several quarters and we expect it to Speaker 200:19:14Manav, it's Mike. The only thing I would add to what Rick said is, we start with EBITDA per barrel. We want to make sure we're 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 EBITDA per barrel, But the bottom line is, are we generating significant amount of cash to give us the flexibility to drive shareholder returns? Speaker 200:19:36So I think you hit the starting point with EBITDA per barrel. The ending point is generating cash and then having that flexibility. Speaker 300:19:46Perfect. A quick follow-up here. You guys are known for your strong operational performance. 3Q was a little unusual. You had some unplanned And despite those you delivered a pretty strong beat, but I'm trying to understand, let's say those incidents would not have happened. Speaker 300:20:03Would we have got even a stronger quarter, if you could talk about that? Speaker 100:20:08Yes. Thank you. It's Mary Anne and thanks for the question. You're right. As we shared with you, we did have a couple of unplanned downtime events in the quarter that impacted the Gulf Coast. Speaker 100:20:201, 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 2 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 event obviously being the reformer. As I mentioned, 4,700,000 barrels In the quarter that we lost and then on Garyville, it's about 2,100,000 barrels as we operated about half rate for Yes, just under a week. It took us about just back to Galveston Bay for a moment. Speaker 100:21:01It took us about 3 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 3 months to the start of getting those activities launched. I hope that answers the question. Speaker 300:21:21Thank you so much for taking my questions. Speaker 200:21:24You're welcome, Manav. Operator00:21:26Next, we will hear Speaker 500:21:32Well, first of all, thank you for taking my questions. Marianne, that last Our response was actually one of the key things we wanted to hit. So let me try 2 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. Speaker 500:21:56S. Market in particular. How does that look in your system? Speaker 600:22:00Yes, Doug, I'll let Brian comment on that. Doug, this is Brian. Good morning. Good question. So really our theme on demand both Domestically and internationally, it's stable and steady. Speaker 600:22:13It's been that way really throughout the year. In the quarter, we Roughly 250,000 barrels a day out of our system in the Gulf Coast despite some operational challenges as noted. About 2 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 They import roughly 2,300,000 barrels a day into the system. Speaker 600:22:38The 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 share into Europe. So we are seeing growth in European As you've probably seen as well, roughly 200,000 barrels a day in the quarter, from the U. Speaker 600:22:55S. Into Europe. The one It is the one weakest spot that we see throughout our network, which is distal 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, That is the one soft spot that we're seeing. Speaker 500:23:18Okay. That's helpful. And Mike, I apologize For this one, but I guess somebody's got to ask it. So there is speculation overnight about the Sitgo process And Marathon been mentioned as a potential bidder. So I wonder if you could frame whether that is in fact a consideration that you 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 Speaker 200:23:50Thanks, Doug. I'm going to let Dave start and then I'll come back afterwards. Hey, Doug. So Appreciate the question. We anticipated that. Speaker 200:24:00So 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 and Rick touched on this a little bit on opportunities to build out our competencies 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 wellhead to wheel is the way to think about it. So with that said and on the current environment, we believe that M and A within refining, refining M and A It's one of the more challenging ways to create value. Speaker 200:24:39And with all that said, I would not anticipate us Or you should anticipate us participating in the current auction process for the CITCO assets. Speaker 500:24:52Mike, did you have a follow-up? Speaker 600:24:53I Speaker 200:24:53don't know where the rumor came from, but we're not interested in the auction process. That was the Speaker 500:25:00That sounds okay to report. Thanks very much indeed. Speaker 200:25:03Yes. You're welcome. Operator00:25:07Our next question will come from Paul Cheng with Scotiabank. Your line is open. Speaker 700:25:13Hey, everyone. Good morning. Speaker 200:25:16Good morning, Paul. Speaker 700:25:17Maybe that this is Maryann or maybe for Rich. For the West Coast marketing Margins condition that seems to be very strong and you do have a dealer network there. So just curious that In the Q3, how much is the West Coast contribution coming from that piece of the business? Is it growing What's your plan over there? That's the first question. Speaker 600:25:46Yes, Paul, good morning. This is Brian. I'll 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. Speaker 600:26:03We see a lot of pressure on the margin I'm in the West Coast and other markets. 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 4th quarter. But to your other question, we are We 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 Speaker 700:26:32Hey, Brian, do you have any rough estimate you can share that How many stations are you trying to grow yet on any basis over the next several years there? Speaker 600:26:45Really don't want to forecast a station growth expectation, Paul. 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 growth or volume alone. Speaker 700:27:00Okay. My I know that maybe it's still a little bit early. Can you talk about that Puts and minuses on the variable for the CapEx outlook for the next several years compared to this year, are we expecting a pretty steady program Or that you are looking for opportunity to grow both in the maybe refining in Changshan, Improving the yield and reducing energy and MPLX. So can you just give us some idea that how the Speaker 100:27:36Sure, Paul. It's Mary Anne. Let me talk a little bit about CapEx In general, and then I'll pass it to Mike and he'll hear 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 hopefully, you've seen that we have implemented that principle well over the last few years. When you look at 2017 to 2020, our consolidated CapEx averaged about $3,500,000,000 And as you look 21,000,000 to 2023, That's average $2,100,000,000 So again, that premise of strict capital discipline ensuring that we're delivering the returns This has been an important piece of the work that we've been doing. Speaker 100:28:20I think in Refining, we continue to look for cost reduction type projects, Those that can enhance reliability, margin enhancement type projects, then that we would be continuing to Evaluate, and there are several of those projects that we'll evaluate. In terms of the timing, 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. Speaker 200:28:50I think, Mary, you answered it very well. Paul, the way we think about it is on the MPLX side of the house, we've been spending roughly about $1,000,000,000 And growing those cash flows, if you listen to the MPLX call, we're still very comfortable with those cash flows growing that will continue to kick over to MPC via distribution. And then Mary Anne 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 increase reliability, which will hit the bottom line or enhance our margins in such a way that we talked About earlier that we'll generate more EBITDA per barrel. So we have a pretty fulsome look at where we think we're going to invest. Speaker 200:29:35And like Mary just gave you the numbers over the last couple of years, you're spending $2,000,000,000 to $3,000,000,000 overall on a consolidated basis. We think that's a nice Base case to have, 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 part of our DNA To return capital to shareholders. Speaker 700:30:06Thank you. Speaker 800:30:08You're welcome. Operator00:30:11Our next question comes from Sam Margolin with Wolfe Research. Your line is open. Speaker 900:30:17Good morning. Thanks for taking the question. 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 when you are looking at an MPC share, the question is really how do you 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 Or do you kind of analyze it as a consolidated entity where something like 40% of it is Like a synthetic MPLX share. Speaker 900:30:54And 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. Speaker 100:31:08Sam, it's Mary Anne. Let me give you a few thoughts on that and I can pass Mike and Casey has 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. Certainly, when we're looking at intrinsic value, there's a couple of approaches. So we'll look at some of the parts. Speaker 100:31:26We'll 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, That intrinsic value assumes the discounted cash flows as I just shared. 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 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. Speaker 100:32:10But 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. Speaker 200:32:15Yes, 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, It says daily volume traded limitations or blackout periods, etcetera, etcetera. So we've been because it kind of looks It's been consistent just because we've been trying to be as aggressive as possible. Speaker 200:32:48Once we generate the cash, as we talk 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 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 be as aggressive as we can, return capital, but Take advantage of the volatility that's within the quarter. And since we started this program, we've ended up reducing the share count by about 40%, it's a 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 270,000,000 shares at around $4 it's roughly About $1,000,000,000 of value creation just in our execution. Speaker 200:33:41But 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. Speaker 900:33:55Yes, very much so. Thanks. And my follow-up is just more of a straightforward ops question, but it's about the West Coast and 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 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. Speaker 400:34:37Yes. Hi, Sam. It's Rick. Your analogy is spot on. So when TMX comes online, we'll not only see benefits in It's in the Pacific Northwest, specifically at Anacortes and at LA. Speaker 400:34:49So the way we look at it is, as you're going to get Access to an advantaged barrel more so than what you do today and we believe that barrel will Pete, very well, especially on the West Coast. 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. Speaker 400:35:24So we do see that playing into Both of our assets, 1 in the Pacific Northwest and L. A. On the West Coast. Operator00:35:40Next, 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. Speaker 1000:35:54Okay. Hopefully, it works this time. Can you hear me all right? Speaker 100:35:58Yes, we got you, Roger. Speaker 1000:35:59All right. 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, You can kind of walk us through the way we should be thinking about that as we head into start up kind of year end and then early part of 'twenty four. Speaker 200:36:21Hey, Roger. This is Jim Wilkins. We're working with the county on one issue related to our land use permit. 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. Speaker 1000:36:47Does 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, I guess. Speaker 200:37:03No, 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. Speaker 1000:37:18Okay, perfect. So and just to be absolutely clear, no other Regulatory hurdles that need to be cleared for start Speaker 200:37:28up? Correct. Speaker 1000:37:30Great. Thank you. Speaker 200:37:34You're welcome, Roger. Operator00:37:37Our next question comes from John Royall with JPMorgan. Your line is open. Speaker 800:37:43Hi, 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, 1,500,000,000 Which I wouldn't characterize as a problem by any stretch, but you've talked about getting that cash balance down closer to $1,000,000,000 longer term. Speaker 800:38:08And 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, should we think about the buyback as not particularly sensitive to the crack environment? And would you expect to start drawing cash from here? Speaker 100:38:27Hey, John, it's Mary Anne. So a couple of things. Yes, you're absolutely right. As you see, we said a little over $13,000,000,000 at the end of the quarter. And again, just keeping in mind, about $1,000,000,000 of that belongs to MPLX. Speaker 100:38:40And 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 Q4 and then again in the Q1. Having said that, your point is accurate. We've said we're quite comfortable with $1,000,000,000 on our balance sheet. Speaker 100:39:01The 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 $500,000,000 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. 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 and 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, on the types of returns that you all expect. And we continue to see share buyback as an efficient return of capital. Speaker 100:40:02So 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. Speaker 800:40:17Great. Thank you. And then, Mary Anne 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 2 years and now this work pulled into 2023. Speaker 800:40:37So is it reasonable to think it might be kind of a below average year? Speaker 100:40:42Hey, John, Mary Anne 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 fossil fuel and 2 renewable diesel. And at every point in time, there is some level of turnaround. You're absolutely right. Speaker 100:41:04One 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, but again, absent the period of COVID, you can see the level of turnaround being pretty similar Watching those. In the Q4, also, you may have noticed in our guidance, West Coast utilization, We do have turnaround activity there. We've got 2 locations in LAR. 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 Q4 as well. I'll pause there. Speaker 700:41:51Thank you. Speaker 200:41:54You're welcome, John. Operator00:41:56Our next question comes from Jason Gabelman with TD Cowen. Your line is open. Speaker 1100:42:02Hey, good morning. Thanks for taking my questions. Decent amount of focus on the buyback, I wanted to ask about the Dividend raise of 10%. 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 it's also I guess lower than the incremental cash you'll be receiving from MPLX with their higher distribution. So the question is how do you About kind of that dividend raise, how did you come up with that 10%? Speaker 1100:42:42And 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. Speaker 200:43:03Jason, it's Mike. I'll start and I'll let Nir jump in. Yes, I think what you're referring to is we had a bigger increase before because the way we looked at it is Most in our industry kind of paused around COVID 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 part of our capital allocation. We wanted to be competitive, but at the same time, I often say that it's more tax efficient to go return capital through share repurchases. Speaker 200:43:40And the sheer quantum of dollars in each case is pretty different. Overall, we want the market to know, yes, we're going to grow the dividend. We're going to consistently do that. We wanted to be competitive. We want to show that we're going to grow earnings. Speaker 200:43:55It comes back to investing capital and all the self help that we can do. But at the same time, we're going to more on the side of share repurchases because we think it's More tax efficient and a better way to return capital. Speaker 100:44:08Yes, Jason, it's Mary Anne. The only thing that I would add to Mike's comments are the dividend is only one part, as you The capital allocation strategy, but having said that, we think this increase is pure leading at 12% CAGR over the last 5 years. So We hope you see it that way as well. Speaker 1100:44:26Got it. 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 A 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, how it could benefit the company, any thoughts around capital spending that you would have to contribute there? Thanks. Speaker 200:44:54Yes, Jason, this is Dave. I'll touch on that. So I'll start with high level. Number 1, there were 7 hubs That were approved for funding from the DOE for $7,000,000,000 We mean MPCPLX. We're involved in 2 of them. Speaker 200:45:12So one in Appalachia and one in the Heartland area. So when we think about the involvement of MPC and MPLX, 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 MPC perspective, it is inclusive of lowering the carbon intensity Via hydrogen production and Speaker 700:45:40when you Speaker 200:45:41think about it in the Heartland area, due to the location of it, it's very the proximity very 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 chains. Speaker 1100:46:11Okay. When should we see those benefits start to accrue? When do the projects come online? Speaker 200:46:17Yes. So 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, it's in the very early stages. So to think about it, next phase of this is negotiation with the DOE on 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 associated benefits of the company, I think you're looking into Late 2024, 2025 timeframe. Speaker 200:46:56So, it's still a ways out there. Speaker 1100:46:59Great. Thanks. That's really helpful. Operator00:47:05Thank you. Our next question comes from Theresa Chen with Barclays. Your line is open. Speaker 1200:47:12Good morning. I wanted to follow-up on Sam's question related to TMX, for which MPC I'll add, given the discussion with the pipeline owner and the bid ask currently. And related to that, how much do you Really it can tighten WCS differentials for your Mid Con assets, given that the post holes are comparable to going to the U. S. Gulf Coast versus Burn Speaker 400:47:48Yes. 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 it may end up at. On the second part of your question, the guidance I'd give you is, As we look at the forward curve on WCS, so today WCS sits at about a $26 discount. In Q1, it's plus or minus 25. Speaker 400:48:18And in Q2, if TMX comes online there and I think the market is Still questionable on that. The forward curve is $15 to $18 discount. So still a pretty significant discount And we'll just have to see where it goes from there. Speaker 1200:48:39Got it. And going back to Mike's earlier comments about additional investment opportunities, RNG 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 launch pad for additional RNG investments or is this going to be more of a roll up strategy from here? Speaker 200:49:08Yes. Theresa, this is Dave again. I'll touch on that. So yes, the LF Bioenergy investment, that joint venture is progressing as we planned. We are building out As we planned, we are building out the facilities. Speaker 200:49:23The plan is to build out 13 of those RNG facilities, Collecting a very low CI dairy RNG and then 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 We'll 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 as planned. So, and the second part of your question is, is this a 1 up or a foundation for subsequent investments in renewable diesel space or the renewable natural gas space. So we continue, I said earlier, we look at a lot of stuff. Speaker 200:50:21There are some opportunities out there, but we the key to this one was we got in early And didn't 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. Operator00:50:50Our next question comes from Matthew Blair with TPH. Your line is open. Speaker 1300:50:56Good morning. Thanks for taking the question. Maybe sticking with the renewables, 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 Timing or cost to add that flexibility? Speaker 200:51:16Yes, Matthew, this is Dave again. So Yes. There is no question both from a Dickinson and Martinez, both those have the opportunity to convert to SAF. And HEFA SAF is one of the most cost competitive on a CapEx per barrel basis for SAF production. With that said, the challenge in SAF is the premium associated to justify the investment. Speaker 200:51:43And while the IRA has been communicated, there's a lot of unknowns out there and 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 So 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 Multi $100,000,000 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. Matthew, it's Mike. I'll just add to your end to Teresa's question. Speaker 200:52:24I 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 and G, like Teresa talked about or as Dave just mentioned, SAF, in my opinion, is going to happen at some period. As Dave said, there's 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, you're going to see us continue to be conscious of that, At the same time, recognizing 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 RNG, 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. Speaker 200:53:19But 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 opportunities. Speaker 800:53:33Sounds good. And then, do Speaker 1300:53:35you have any early thoughts on refining margin capture into the 4th 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? Speaker 100:53:51Hey, Matthew, it's Mary Anne. Yes, 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 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. Those things clearly have a positive influence on capture. Speaker 100:54:24But as you know, it's difficult to predict where Capture would otherwise go, but certainly those things point to improving Capture from the 3rd quarter. Operator00:54:36We do have time for just one more question. Our last question will come from Ryan Todd with Piper Sandler. Your line is open. Speaker 1400:54:46Great, thanks. Maybe if I could have one follow-up 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 in During the Q3 from Phase 1 of the project and maybe as we think about startup of Phase 2 of 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 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? Speaker 600:55:29Okay, Ryan, this is Tim Ait. Thanks a lot for the question there. I would say that first off, the project is going exceptionally well, Both 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 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 pretreatment unit in late Q2 and it is operating very well. We're able to pretreat The entire production that comes about with the Phase 1 Martinez capacity. Speaker 600:56:08Now we're going to be looking to ramp that pretreatment capacity with the production of RD that's coming Toward the end of the year when we finish the project. And as Mary Anne said earlier, when we do finish the project, we're going to be able to produce 730,000,000 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. Speaker 1400:56:42Great. Thank you. Speaker 600:56:44You're welcome. Speaker 200:56:46All right. Speaker 100:56:46With that, thank you so much everyone today for your interest in Marathon Operator00:57:00Thank you. That does conclude today's conference. Thank you forRead morePowered by