Marathon Petroleum Corporation

Welcome to the MPC second quarter 2020 earnings call. My name is Sheila and I will be your operator for today's call. At this time, all participants are in a listen only mode. Later, we will conduct a question and answer session. Press star 1 on your touch tone phone to enter the queue. Please note that this conference is being recorded. I will now turn the call over to Christina Kazarian. Christina, you may begin.

Welcome to Marathon Petroleum Corporation's second quarter 2020 earnings conference call. The slides that accompany this call can be found on our website at MarathonPetroleum.com under the Investors tab. Joining me on the call today are Mike Hennigan, CEO, Don Templin, CFO, and other members of the executive team. We invite you to read the safe harbor statements on slide two. We will be making forward-looking statements today. Actual results may differ. Factors that could cause actual results to differ are included there, as well as in our SEC filings. With that, I'll turn the call over to Mike.

Thanks, Christina. Good morning, everyone. Thank you for joining our call today. Yesterday, we announced an agreement to sell Speedway to 7-Eleven for $21 billion in cash, demonstrating our commitment to execute on the strategic priorities we outlined earlier this year. The sale of this business provides certainty around value realization for MPC shareholders. As I've stated before, I believe this is a return of capital business, and the substantial estimated after-tax proceeds of approximately $16.5 billion enables us to both strengthen our balance sheet and return capital to our shareholders. At the same time, the sale also creates a long-term relationship with 7-Eleven that enhances commercial performance potential through attractive fuel supply agreements and future growth opportunities. The transaction, which is subject to customary closing conditions including HSR clearance, is anticipated to close in the first quarter of 2021. We move on to slide four as a follow-up to our first quarter earnings call. We're making very difficult decisions to increase profitability, create stronger through-cycle earnings, and drive long-term value creation. Despite the very challenging conditions in today's market, we remain committed to those goals and will continue each quarter to update the market as we progress. We outline three areas that will be priorities towards achieving our objectives. First, strengthening the competitive position of our portfolio. We need to be a leader in cost operating and financial performance metrics and need to make necessary changes to the portfolio to achieve these objectives. One of our key philosophies is that each asset needs to generate cash back to the business. We announced the decision to indefinitely idle our Gallup and Martinez refineries. Closures as a result of the tough refining business climate ahead of us have been amplified by the impact of the pandemic. At Martinez, we are evaluating repurposing the refinery towards the production of renewable diesel. The facility has the ability to provide up to 48,000 barrels per day of renewable diesel. We have the unique opportunity to take advantage of the strong set of logistics assets for the area and also have three significant processing units that are an ideal fit for making renewable diesel. These advantages should drive significantly lower capital requirements compared to greenfield investments, and if pursued, enable initial production as early as 2022 with the option to ramp up from there. Second, improve our commercial performance. That entails leveraging our extensive integrative footprint to make improvements in how we select and source raw materials and how we place our products into the various sales channels and geographic markets. Our intent is to keep an eye on what we don't control in terms of the market, but really focus on what we can control against any macro environment. This quarter, I've been encouraged by the team's quick progress shifting our mindset and actions. And third, focus on lowering costs in all aspects of our business and to be disciplined in every dollar spent, addressing risk and return to the business without losing focus on safety and reliability. We're confident we will meet the $950 million expense reduction target for 2020 And in addition, we're on track to lower capital spending by $1.4 billion in 2020, as we previously announced. We are also implementing plans to structurally lower costs as we look out to 2021 and beyond. Overall, as I stated previously, we recognize that we're in a return to capital business and we need to have an asset base and cost structure that works across all cycles. We're focused on becoming a lower cost discipline company that can endure the volatility inherent in the sector, creating value for shareholders that is structural and long-term in nature. On slide five, I would like to share some of the progress on the tactical initiatives we outlined last quarter, focusing on improvements through our liquidity and actions we have taken to carry our company through the current down cycle. In late April, we issued $2.5 billion of senior notes and used the proceeds to pay off a portion of the borrowings that were made on our revolver in March and early April. Also, in late April, we enhanced our liquidity position with the addition of a $1 billion 364-day revolver. We have even more borrowing capacity available to us now than we did at the start of the COVID-19 pandemic, with over $7.5 billion of financial flexibility available for MPC. At this point, I'd like to turn it over to Don to review the second quarter results in more detail.