Marathon Petroleum Corporation

Welcome to the MPC third quarter 2022 earnings call. My name is Casey, and I will be your operator for today's call. At this time, all participants are in listen-only mode. Later, we will conduct a question and answer session. You may 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.

Sounds great. Welcome to Marathon Petroleum Corporation's third quarter 2022 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 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, and factors that could cause actual results to differ are included there, as well as in our filings with the FCC. And with that, I'll turn it over to Mike.

Thanks, Christina. Good morning, everyone. First, I'd like to introduce Tim Eide, who will be joining our calls as the new Executive Vice President of Refining. Tim has over 37 years of experience in leadership roles across our midstream and refining organizations. Most recently, he was Executive Vice President of Pipelines, Terminals, and Marine, and Chief Commercial Officer where he oversaw the business development for the MLP. Now turning to the macro environment, roughly 4 million barrels per day of refining capacity has come offline globally in the last couple years. Yet demand for the transportation fuels we manufacture remains robust and continues to grow. In the U.S., demand is still below 2019 pre-COVID levels, and we believe there will be continued recovery. As supply remains constrained and demand continues to rebound, we maintain a bullish outlook towards a refining environment as we look into 2023. Our third quarter results reflect the team's operational and commercial execution as we focused on delivering products for consumers in this very tight market. In our refining segment, we ran near full rates while maintaining our steadfast commitment to safely operating our assets, protect the health and safety of our employees, and support the communities in which we operate. The commercial team focused on optimizing our scale, footprint, and feedstock slate to deliver against strong demand. And despite volatility in the global energy markets, their execution reflects progress towards our goal of improving commercial performance. We normally see seasonal demand decline at this time of year, but to date, we're not seeing those signs. Strong forward crack spreads and wide sour differentials for 2023 indicate the expectation of a strong refining environment going forward. In the fourth quarter, we're currently running our system at full utilization, except for the planned maintenance activity we have occurring given our back of the year weighted turnaround schedule. Aside from the refining business, We want to point out that our midstream segment earnings continue to grow. In the third quarter, our adjusted EBITDA was up nearly 9% year-over-year in midstream. We've been executing strategic capital investments, fostering a low-cost culture, and optimizing the portfolio, including advancing several organic growth projects in the Permian Basin. The strength of these cash flows supports MTLX's decision to increase its quarterly distribution by 10%. Based on this level, MPC will receive $2 billion of distribution from MPLX annually. We've received questions regarding the structure of MPLX and whether MPC will acquire the outstanding public units, so we want to restate what we said in the past. MPLX is a strategic part of MPC's portfolio. Its current pace of cash distribution to MPC is $2 billion per year, and we expect that to continue growing. MPLX has continued to demonstrate resilient three-cycle earnings and growing cash flows. As MPLX pursues its growth opportunities, we expect the value of this strategic partnership will continue to be enhanced, and we do not plan to roll up MPLX. Switching to capital allocation, we believe MPC's current capital allocation priorities are optimal for our shareholders. In October, we completed our $15 billion return of capital commitment Repurchasing approximately 30% of MPC's shares outstanding. We're committed to executing our capital allocation framework to deliver peer leading total return to shareholders. Today, we announced an increase to MPC's quarterly dividend of approximately 30%. In addition, we intend to continue repurchases, which we believe are a more efficient way to return capital, and we expect to commence buybacks in November using the remaining $5 billion repurchase authorization. In early 2000, we shared our three strategic areas of focus. They have become part of MPC's DNA, embedded in our unwavering commitment to increase profitability, have the best through-cycle cash flow generation, and drive long-term value creation. As we focus on strengthening the competitive position of our assets, in September, we closed on our Martinez Renewable Joint Venture with Nesstate. Construction is well underway, and we expect phase one mechanical completion by year end. We're excited about the partnership with Nesstate, a global leader in feedstock procurement and renewable fuels production. This joint venture enhances the value of the project by reducing MPC's capital commitment to 55 cents per gallon, as well as improving the overall project feedstock slate. Neste has the obligation to bring 80% advantage feedstock in phase two. Due to these improvements, we expect MPC's share of the JV's EBITDA to be only 25% lower than our original standalone case. Additionally, this strategic partnership with Neste creates a platform for collaboration. We believe there will be opportunities to leverage the differentiated knowledge and capabilities of two industry leaders as we pursue our shared commitment to the energy evolution. We continue to challenge ourselves to lead in sustainable energy and have made progress on the sustainability goals that we have set for ourselves. Focusing specifically on the Martinez Renewables Project, which converts our petroleum refinery into a renewable fuel facility, we anticipate the conversion to result in a 60% reduction of the facility's Scope 1 and Scope 2 GHG emissions 70% lower total criteria air pollutants, and 1 billion gallons of water saved annually. If you haven't had a chance yet, we invite you to go to the sustainability section of our website and learn more about the ways we are challenging ourselves to lead in sustainable energy. At this point, I'd like to turn the call over to Mary Ann.