Marathon Petroleum Corporation

Welcome and thank you for standing by. Today's conference will begin momentarily. We appreciate your patience. Once again, today's conference will begin momentarily. Please continue to stand by. Music Welcome to the MPC third quarter 2023 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 the Marathon Petroleum Corporation third quarter 2023 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, 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 filings with the SEC. References to MPC's refining utilization for the third quarter as well as fourth quarter guidance now include the addition of approximately 40,000 barrels a day of capacity related to STAR in our Gulf Coast region. And with that, I'll turn the call over to Mike.

Thank you, Christina. Good morning. Thank you for joining our call. Beginning with our view on the refining environment, in the third quarter, we saw strong demand and global supply tightness supporting refining margins. Diesel cracks led to barrels inventories remain tight and European distillate production ran below capacity. Globally, oil demand is at a record high as the need for affordable and reliable energy increases throughout the world. In our system, both domestically and within our export business, We are seeing steady demand year over year across the gasoline and diesel, and demand for jet fuel continues to grow. Global supply remains constrained, and global capacity additions have progressed at a slow pace. In the regions where we operate, seasonal butane blending has increased gasoline supply. However, we expect typical seasonal turnarounds to be supportive of cracks. To that end, we've seen 3.5 million barrels of gasoline inventory drawn out of the U.S. system over the past several weeks. OPEC Plus has reduced production, adding pressure to medium-sourd differentials. While crude differentials have generally been narrowing, we have seen WCS widen and we're strategically situated to run heavy Canadian crude out of refineries across pads 2, 3, and 5. As we look towards 2024, we believe an enhanced mid-cycle environment will continue in the U.S. due to the global supply demand fundamentals and the relative advantages over international sources of supply, including energy costs, feedstock acquisition costs, and refinery complexity. Turning to our results, in the third quarter, we delivered strong cash generation across our business. In refining and marketing, strong margins, 94 percent utilization, and solid commercial performance led to segment adjusted EBITDA of $4.4 billion, or $16.06 per barrel. Our midstream segment delivered durable and growing earnings. This quarter, it generated segment adjusted EBITDA of over $1.5 billion. Year-to-date, our midstream segment EBITDA is up 6% compared to the prior year period. The strength of MPLX's cash flows supported its decision to increase its quarterly distribution by another 10%. With this increase, MPC is expected to receive $2.2 billion of distributions from MPLX annually. MPLX is strategic to MPC's portfolio Its current pace of cash distributions fully covers MPC's dividend and more than half of our planned 2023 capital program. We expect MPLX's cash distribution to continue growing as it pursues growth opportunities, which will further enhance the value of this strategic relationship. We believe MPC's current capital allocation priorities are optimal for our shareholders. In the third quarter, we returned $3.1 billion to MPC shareholders via dividends and share repurchases. Last week, we announced an additional $5 billion share repurchase authorization and a 10% increase to MPC's quarterly dividend. With this increase, we have grown our quarterly dividend at over 12% compound annual rate over the past five years, which has led our refining peers. Our overall capital allocation framework remains consistent. We will invest in sustaining our asset base while paying a secure, competitive, and growing dividend. We intend to grow the company's earnings, and we will exercise strict capital discipline. And beyond these three priorities, we are firmly committed to returning excess capital through share repurchases to meaningfully lower our share count. Let me also share some of the progress on our low-carbon initiatives. The Martinez Renewable Fuels Facility is being delivered safely, on time, and on budget, and by the end of 2023, the facility is expected to produce 730 million gallons per year. At that point, Martinez will be among the largest renewable diesel facilities with a competitive operating profile, robust logistics flexibility, an advantaged feedstock slate, and should benefit from the global strategic relationship with Neste. Our Dickinson Renewable Diesel Facility is operating well. The facility processed 75% advantage feed in the third quarter. The nearby Spiritwood Soybean Processing Plant, which is owned through a joint venture with ADM, is expected to deliver enough vegetable oil to produce approximately 75 million gallons per year of renewable diesel. Additionally, we are advancing early-stage developments through our interest in low-carbon intensity RNG and other small-scale investments. We believe through these projects, we're taking disciplined steps to advance our goal to lower the carbon intensity of our operations and the products we manufacture and supply to a growing and evolving market while operating our current asset base to deliver superior cash flow and meet demands. At this point, I'll turn the call over to Mary Ann.