The operator welcomes listeners to the MPC Second Quarter 2024 Earnings Call and introduces the CEO, Maryann Mannen, and other executives. She notes the availability of accompanying slides and reminds listeners of the safe harbor statements. Maryann acknowledges the previous CEO's leadership and success in delivering strategic priorities and returns to shareholders. She discusses the current macro environment, including record-high supply and demand for refined products, and expects another year of record consumption. MPC's domestic and export businesses are experiencing steady demand for gasoline and diesel, and growing demand for jet fuel.

In the near future, demand for refining is expected to surpass capacity additions, leading to a favorable market for refining companies. The U.S. refining industry is expected to maintain its competitive advantage due to its integrated system and geographic diversity. Safety and operational excellence are top priorities for the company. Capital investments are focused on high-return projects, particularly in large, competitive facilities. In the midstream sector, MPLX is focused on growth opportunities and recently closed a transaction for the Whistler pipeline and reached FID on the Blackcomb pipeline, which will connect supply from the Permian to the Gulf Coast. MPLX also increased its ownership in the BANGL pipeline, which transports NGLs from the Permian to Sweeny, Texas.

The transaction between MPLX and MPC is immediately beneficial and enhances MPLX's value chain. MPLX provides a significant cash distribution to MPC, covering its dividend and most of its capital program. The Midstream segment, primarily comprised of MPLX, has seen strong growth in adjusted EBITDA over the past 3 years. MPC has reduced its share count by 50% since May 2021 and will continue to focus on cash generation and returning capital to shareholders. In the second quarter, MPC delivered strong operational and commercial performance, with high utilization and capture rates, leading to a significant return of $3.2 billion to shareholders. The company's built capabilities provide a sustainable advantage and are expected to continue to impact quarterly results.

In the second quarter, the company saw an increase in Adjusted EBITDA due to improved results in both the Refining & Marketing and Midstream segments. The tax rate for the quarter was 16%, reflecting the earnings mix between the two businesses. Refineries ran at 97% utilization and operating costs were lower due to higher throughputs and reduced turnaround activity. However, per barrel margins were down due to lower crack spreads. The company's Refining & Marketing margin capture was 94% for the quarter, supported by falling gasoline prices and strong demand. In the Midstream segment, adjusted EBITDA increased compared to the first quarter, with MPLX distributions contributing $550 million in cash flow. The recent midstream transactions will further enhance the company's Permian value chains for natural gas and NGLs.

MPLX's disciplined investments and organic growth continue to provide growing cash flows to MPC, making it a valuable asset in the company's portfolio. In the second quarter, operating cash flow was $2.7 billion, with working capital providing an additional $541 million. Capital expenditures and investments totaled $541 million, and MPLX issued $1.65 billion in senior notes. MPC returned $2.9 billion to shareholders through share repurchases and dividends. In the third quarter, crude throughput volumes are projected to be just over 2.6 million barrels per day, with a utilization rate of 90%. Planned turnaround expenses are expected to be approximately $330 million, with a total of $1.4 billion for the full year. Operating costs are projected to be $5.35 per barrel, distribution costs at $1.55 billion, and corporate costs at $200 million.

The speaker, Maryann Mannen, discusses the company's second quarter results, which showed strong cash generation and disciplined capital allocation. The R&M segment generated $2 billion of adjusted EBITDA and MPLX distributed $550 million to MPC. Mannen emphasizes the company's commitment to safe and reliable operations, operational excellence, and cost competitiveness. She also mentions the company's plans to optimize their portfolio and leverage their value chain advantages. The company will invest capital but remain disciplined in seeking attractive returns, and will also return excess capital through share repurchases. Overall, Mannen believes that MPC is well-positioned to create exceptional value through peer-leading performance and execution of strategic commitments.

The speaker praises Maryann's ability to lead attractive projects in midstream, such as BANGL, Whistler, and Blackcomb. They discuss the potential for MPLX to grow its distribution by 10% and become a recession-proof refiner, thanks to their strategies and investments. They also mention the strategic value of increasing MPLX's distribution to cover MPC's dividend and capital. The speaker then asks about MPLX's low Gulf Coast OpEx and Maryann explains that it is due to their strategic relationships and investments.

Maryann Mannen, the new CEO of the company, has been focused on creating exceptional value in her first 6 months on the job. She is prioritizing operational excellence, commercial performance, and profitability per barrel, with the goal of achieving peer-leading capital allocation. The company's focus on safe and reliable operations will continue, while also driving strong returns on investment and prioritizing shareholder returns.

The speaker, Maryann Mannen, discusses the company's focus on leveraging their value chain and ensuring the competitiveness of their assets. She also mentions the potential for durable midstream growth and delivering strong through-cycle cash flow. In response to a question about pursuing M&A in the renewable diesel space, she denies any conversations with Neste and states that they currently see opportunities for organic growth within their own portfolio. The next question is directed to Rick.

Paul asks Rick and John about the impact of TMX on the marketplace and whether there is more to come. Rick explains that there have been no surprises and the yield changes are insignificant, but the influx of Canadian barrels has put pressure on ANS barrels, which is positive for the company. He also mentions the potential for continued exports to Asia. John is asked about the "Other margin" on Page 18 and he is asked to provide more detail on its contents.

Maryann Mannen, the speaker, is responding to a question about the future of the market and how it will be affected by various factors such as differentials, quality differentials, and transportation to the West Coast. John Quaid, another speaker, adds that there will be a margin change in R&M due to finalizing an insurance claim for the Galveston Bay reformer. The next question is about the structure of the market and how it will be impacted by higher utilization and potential supply increases. The speaker believes in a strong mid-cycle in the long term, but acknowledges short-term challenges.

The speaker discusses the current state of supply and demand for oil, mentioning China's influence and OPEC's decisions. They also mention that the company expects to see short-term volatility but believes that their mid-cycle performance will be strong in the long term. The speaker talks about the company's utilization level and demand for gas, diesel, and jet fuel, which they believe will support their mid-cycle plus expectations. The questioner asks about the low utilization guide for the third quarter and the amount of turnaround activity.

The speaker is asking about the potential impact of economic downturn or turnaround activity on the company's 90% utilization guidance. The response is that the company will continue to run assets optimally and that the Martinez facility is running competitively and on track to reach full capacity by the end of the year. The next question is about the pace of buybacks and the increase in net debt at the parent company in the past couple of quarters.

An analyst asks about the company's approach to managing its balance sheet and whether they will continue to use excess capacity towards buybacks. The company's CFO responds that they see buybacks as an appropriate return of capital and will continue to use cash for this purpose. The company also reports strong gross margins in the Mid-Con region, which they attribute to their fully integrated system and focus on creating optionality in their assets.

Matthew Blair congratulates the company on their strong quarter and asks about their dividend growth policy and potential for share buybacks. Maryann Mannen responds that the company's dividend policy remains unchanged and they will continue to prioritize share repurchases. She also mentions that they do not plan to relever their balance sheet. A question is then asked about the refining side and the company's slides mention tailwinds in Q2 due to an increase in gasoline margins.

The speaker, Rick Hessling, explains that the lower gasoline yields were due to feedstock input, but the team was still able to maximize margins. The speaker also discusses the wide octane spreads in the Midwest and how they are benefiting the company. The questioner asks about the company's midstream strategy and whether they plan to keep the commodity exposure at MPC or if it could potentially benefit R&M. The response confirms that the company plans to keep the commodity exposure at MPC.

The speaker agrees with the previous statement about keeping commodity risk at MPC and passes the question to Dave for further explanation. Dave mentions building out strategies for an MPLX lens and creating value for both MPC and MPLX while maintaining commodity risk for marketing and trading. Maryann adds that the integrated asset portfolio is a benefit. The moderator then concludes the call and invites further questions.

This summary was generated with AI and may contain some inaccuracies.