Marathon Petroleum Corporation

Welcome to the MPC first quarter 2021 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 first quarter 2021 earnings call. conference call. The slides that accompany this call can be found on our website at marathonpetroleum.com under the investor tab. Joining me on the call today are Mike Hennigan, CEO, Marianne Manin, 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. And thank you for joining our call this morning. Before we get into our results for the quarter, we wanted to provide a brief update on the business. During the first quarter, our industry continued to struggle with reduction in global economic activity and demand for transportation fuels that resulted from the mobility restrictions related to COVID-19 pandemic. As we started the second quarter with the rollout of vaccinations, we still see industry-wide gasoline demand down around 5% from historical levels and jet demand down around 25% to 30%. To the extent that a penumptious desire to travel starts to brighten the macro outlook for our business, our team and our assets are poised to take advantage of these opportunities. But in the meantime, as the challenging backdrop holds, we'll continue to concentrate on the elements of our business that are within our control. Our near-time priorities remain the same. Each quarter we're focused on strengthening the competitive position of our assets, improving our commercial performance, and lowering our cost structure. Slide four highlights some of our actions around our strategic priorities this quarter. First, we're close to completion on the sale of our Speedway business. Second, we continue to take steps to reposition our portfolio. Our Board of Directors approved our plans to convert our Martinez asset to a 48,000 barrel per day renewable facility. We expect commissioning of Martinez to begin in the second half of 2022 with approximately 17,000 barrels per day of capacity. Additionally, we expect to reach full capacity of approximately 48,000 barrels a day by the end of 23. In line with our commitment to lowering the carbon intensity of our operations and products, we're planning to install wind turbine generators at Dickinson's facility. Sourcing electricity from wind will lower the carbon intensity of the renewable diesel product at that facility. We'll continue to seek out the right opportunities for investing and partnering on renewables and evolving technologies. Finally, we also continue to exercise strict discipline on how capital and expense dollars are spent. In this quarter, we were able to hold refining operating expenses roughly flat with the prior quarter. I'd like to take a moment on slide five to reinforce our priorities for the proceeds from the sale of our Speedway business. As we approach the close of the transaction, we've appreciated the continued dialogue we've had with many of you. We remain committed to use the Speedway sale proceeds to strengthen our balance sheet and return capital to MPC shareholders. An important priority is our commitment to maintain a solid investment grade credit profile. As we said before, we intend to maintain an appropriate level of leverage for this business and recently Fitch affirmed our investment grade credit rating at BBB and improved the outlook for our MPC from negative to stable. With respect to debt reduction, we previously indicated $2.5 billion of debt that could be retired with minimal friction costs. We've repaid approximately $2.1 billion of this amount since October by issuing commercial paper which we intend to pay down immediately with the proceeds from the Speedway sale. We'll be thoughtful on how to reduce our debt to minimize costs while not jeopardizing our investment-grade credit rating. Within this framework of maintaining a solid balance sheet, we expect the remaining proceeds will be targeted for shareholder return, and we plan to announce more details around these plans in conjunction with the closing of the transaction. Slide six demonstrates our execution around lowering our cost structure. Our refining corporate costs results this quarter illustrate the impact of the team's commitment to cost discipline. And while rising utilization will bring variable costs as volume increase, we believe that the structural cost reductions we have made are sustainable. While our results reflect our focus on cost discipline, we have not compromised on our commitment to safely operating our assets and protect the health and safety of our employees, customers, and the communities in which we operate. As you may recall, 2020 was the company's best performance ever in the area, with nearly 30% improvement across both process and personal safety rates and our very best environmental performance. And recently, four of our refineries received safety awards from the American Fuel and Petrochemical Manufacturers Trade Association. These awards recognize facilities that go above and beyond to keep their people, facilities, and surrounding communities safe. Robinson, Detroit, Anacortes, and Dickinson all demonstrated outstanding safety performance and leadership that set them apart. Lastly, I'd like to take a moment to provide some comments on our commitment to ESG. From a strategic standpoint, our focus is to meet the needs of today while investing in the energy diverse future. This includes lowering the carbon intensity of our operations and products, expanding renewable fuels and technologies, conserving natural resources, engaging with stakeholders, and investing in our communities. We have three company-wide targets many of our investors know well. First, a 30 percent reduction in our scope one and two greenhouse gas emissions by 2030. Second, a 50 percent reduction in our midstream methane intensity by 2025. And lastly, a 20 percent reduction in our freshwater withdrawal intensity by 2030. Our focus on sustainability is pervasive across everything we do, and to ensure this, our compensation now includes a sustainability metric in our bonus target weighted at 20%. We've also linked a diversity metric to compensation in the same way that last year we linked greenhouse gas intensity reductions to our compensation. Reflecting our current commitment on ESG, we are pleased for the second consecutive year to have earned the US EPA's Energy Star Partner of the Year Sustained Excellence Award. MPC is the only company with fuels manufacturing as its primary business to earn this award, and we're very proud of the work our employees do in this area. At this point, I'd like to turn it over to Mary Ann to review the first quarter results.