Marathon Petroleum Corporation

Welcome to the MPC Second 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 touchtone 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 2021 earnings 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 Mannin, 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 filings with the SEC. And with that, I'll turn the call over to Mike.

Thanks, Christina. Before we get into our results for the quarter, we wanted to provide a brief update on the business. During the second quarter, we saw gradual improvements in the demand for our products as the rollout of COVID vaccinations and the removal of mobility restrictions have led to more economic activity and increased demand for transportation fuels. That said, We're close to the end of the summer driving season, which is typically our strongest part of the year. Gasoline demand is currently 2% to 5% below 2019 levels, with the West Coast still lagging at about 10% down. Diesel demand continues to hold up well and is flat to 2019. Despite the growing levels of personal passenger traffic, we continue to see an absence of the longer haul international flights and business travel. Overall jet demand remains down, nearly 30% below pre-pandemic levels. The full return of aviation fuel demand will likely still take some time, particularly with the recent increasing spread of the COVID-19 variants. As we head into the second half of the year, we remain hopeful but cautious in the recovery, and so we'll remain focused on the elements of our business within our control. Slide four highlights progress on our strategic priorities for the quarter. First, on May 14th, we closed the sale of our Speedway business to 7-Eleven. In conjunction with the close, we announced our plans to return $10 billion of sale proceeds to shareholders through share repurchases. As part of our commitment to quickly return capital, we immediately launched a modified Dutch auction tender offer in which we were able to repurchase nearly $1 billion worth of shares. As we shared in our release this morning, we are proceeding with the next steps in our plan to complete the remaining $9 billion return of capital over the next 12 to 16 months. Second, we continue to take steps to reposition our portfolio. Dickinson reached full design capacity during the quarter. At approximately 180 million gallons per year, Dickinson is the second largest renewable diesel facility in the United States. At Martinez, We're progressing detailed engineering and permitting to convert that oil refinery to a renewable diesel facility. Based on our progress and discussion with feedstock suppliers, we're confident in the timeline we have set to begin producing renewable diesel in the second half of 2022 with approximately 260 million gallons per year of capacity. Additionally, we expect to reach full capacity of approximately 730 million gallons per year by the end of 23. Third, We continue to keep a diligent focus on cost and capital. In a challenging commodity business such as ours, being a low-cost operator ensures we will remain competitive. We have continued to challenge ourselves to examine all aspects of spend and, as a result, have delivered incremental progress. In the first half of 2021, our operating results reflect our goal to reduce overall refining cost structure by $1 billion. Importantly, I want to note that in June, we published our two annual ESG-related reports. Our sustainability report provides an in-depth look at the company's sustainability approach and performance, consistent with the reporting guidance from SASB and GRI. Our perspectives on climate-related scenarios follows guidance from TCFD and analyzes the company's resiliency relative to climate scenarios put forth by the IEA. On slide five, I'd like to take a moment to go over some of the ways we're challenging ourselves to lead in sustainable energy. From a strategic standpoint, our focus is to balance the needs of today while investing in a sustainable energy diverse future. That includes strengthening resiliency by lowering our carbon intensity and conserving natural resources, developing for the future by investing in renewables and emerging technologies, and embedding sustainability and decision-making in all aspects of engagement with our people and many stakeholders. We currently have three company-wide targets many of our investors know well. First, a 30 percent reduction in our Scope 1 and Scope 2 greenhouse gas emissions intensity by 2030. Second, a 50 percent reduction in midstream methane intensity by 2025. And lastly, a 20% reduction in our freshwater withdrawal intensity by 2030. The evolving energy landscape presents us with meaningful opportunities for innovation. We've allocated 40% of our growth capital in 2021 to help advance two significant renewable fuels projects. In late 20, we began renewable diesel production at our Dickinson, North Dakota facility, second largest of its kind in the United States. and are progressing the conversion of our Martinez, California refinery to a renewable diesel facility. Finally, to demonstrate our focus on making sustainability pervasive in all we do for executives and employees, we link a portion of the annual bonus program to an ESG metric. We recently introduced a diversity, equity, and inclusion component to these metrics as well, making us the first U.S. independent downstream company to link improving diversity to compensation in the same way we led the industry in linking GHG intensity reductions to our compensation last year. Safety in our operations is another key to sustainable operations. In 2020, our teams demonstrated strong safety and environmental performance, including a nearly 40% reduction in the most significant process safety events and a 40% reduction in designated environmental incidents over 2019. Our personal safety performance continues to be better than industry average for the U.S. refining and midstream sectors. At this point, I'd like to turn it over to Mary Ann to review second quarter results.