Marathon Petroleum Corporation

Welcome to the MPC third 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 one 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 third 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 our 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 filings with the SEC. With that, I'll turn the call over to Mike.

Thanks Christina. And thanks for joining our call this morning. Slide three highlights our company's three strategic areas of focus in the near term. Building and executing on these three strategic pillars will enable us to position the company for long-term success and through cycle resiliency. As we continue to navigate the challenges created by COVID-19 for both our company and the industry, we remain focused on the aspects of our business within our control. This includes strengthening the competitive position of our assets, improving our commercial performance, and lowering our cost structure. On slide four, we provide a quick update on actions taken around those three strategic priorities this quarter. First, we're making good progress on the sale of the Speedway business and continue to target the first quarter of 2021 to close the transaction. The Speedway N711 teams are very focused on completing the activities required to successfully close the transaction. Additionally, our interactions with the FTC have been constructive. We also wanted to provide more color around the use of proceeds from the Speedway sale since we have continued to receive questions about an MPLX buy-in. As you know, we ran a comprehensive midstream review process that began last year, and we announced the results of that review earlier this year. Our conclusion from that process has not changed. We remain committed to using the sale proceeds to strengthen our balance sheet and return capital to MPC shareholders and do not intend to buy in MPLX with cash from the Speedway sale. As it relates to MPLX, however, we continue to position MPLX towards free cash flow after distributions and capital in order to proceed with unit buybacks, which have now been authorized by the MPLX Board. One of our most important priorities as we evaluate the use of proceeds is our commitment to defending an investment-grade credit profile. We expect to target an MPC alone debt-to-EBITDA leverage metric of one to one and a half times. Given the significant and stable distributions from MPLX, we don't envision an MPC balance sheet with less than $5 billion of debt on a through-cycle basis. As a reminder, we also expect to increase the cash component of our core liquidity position by an additional $1 billion to offset for the loss of cash flows from Speedway. Within this framework and based on our current assessment, we expect that the remaining proceeds would be targeted for shareholder return. We are evaluating the form and timing and will share our plans closer to the transaction close. Moving on to renewables, we continue to advance our investment in this important area. We're in the process of starting up our Dickinson North Dakota Renewable Fuels Facility At full capacity, it's expected to produce 12,000 barrels per day of renewable diesel. We are particularly proud of the team's commitment to execution and the ability to move the startup process up three weeks ahead of schedule, despite recent challenging weather conditions. Since the last time we reported to you, we've also made excellent progress on our plans to convert the Martinez Refinery into a renewable diesel facility. In early October, we submitted our permit application to the local regulators. We're also advancing discussions with feedstock suppliers and began detailed engineering work. Finally, we continue to exercise strong discipline on how capital and expense dollars are expensed. We're on track to exceed the targeted reductions of $1.4 billion of capital spending that we announced earlier this year. We're also maintaining our focus on structurally lowering costs in all aspects of our business. As a result of this focus, We expect to exceed our 2020 forecast operating expense reductions of $950 million. During the quarter, we also took incremental steps to reduce our long-term cost structure, including the implementation of a workforce reduction plan. The difficult decision to reduce our workforce by more than 2,000 people was not made lightly. We are committed to treating our employees with integrity and respect as we take these necessary steps to position the company for through-cycle resiliency and enhance our long-term financial prospects. I started off my comments by saying that we are focused on the things we can control. No matter what lies ahead, I believe we are uniquely positioned. With the Speedway sale, we will have the ability to strengthen our balance sheet and make substantial capital returns to our shareholders simultaneously. With the after-tax proceeds from the Speedway sale, we see a clear pathway to meaningfully reducing our share count which provides more capability to support our dividend. It's a challenging environment, but we are optimistic about our ability to deliver shareholder value in both the short and long term. At this point, I'd like to turn it over to Don to review the third quarter results.