Welcome to the MPC second 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 one on your touchtone phone to enter the queue. Please note that this conference is being recorded. I will now turn the call over to Kristina Kazarian. Kristina, you may begin. Welcome to Marathon Petroleum Corporation's second 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, Maryann Mannen, 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 during the call today. Actual results may differ. Factors that could cause actual results to differ are included there, as well as our filings with the SEC. With that, I'll turn the call over to Mike. Thanks, Kristina. Good morning, everyone. Beginning with our views on the macro environment, refining margins continued strong in the second quarter. Despite crack spreads incentivizing high refining utilization, product inventory levels remain low. Global capacity additions continue to progress slower than anticipated. We believe that global demand growth will remain strong. In the second half of the year, the refining outlook remains healthy. We expect year-over-year U.S. light product demand to grow consistent with what we saw in the first half of the year, supported by lower energy prices and recovering air travel. This demand strength, plus tight inventories and receding economic headwinds, are expected to continue to support elevated margins. As we completed nearly four quarters of elevated turnaround activity early in the second quarter, we're expecting an increase in industry planned maintenance work by our peers in almost every region in which we operate. Overall, we believe an enhanced mid-cycle environment will continue in the U.S. due to relative advantages over international sources of supply, including energy costs, feedstock acquisition costs, and refinery complexity. Now turning to our results. In the second quarter, we delivered strong results across our business. In refining and marketing, strong margins, cost discipline, and sound commercial performance led to segment adjusted EBITDA of nearly $3.2 billion. Our midstream segment delivered durable and growing earnings. This quarter, it generated segment-adjusted EBITDA of $1.5 billion, which is up 5% year-over-year. MPLX remains a strategic part of MPC's portfolio as it anticipates growing its cash flows and increasing distributions to unitholders. MPLX's distribution to MPC was $502 million this quarter, an annualized rate of over $2 billion, which fully covers MPC's current dividend and half of our planned 2023 capital program, not including MPLX. During the second quarter, we progressed key projects such as completing the STAR project at the Galveston Bay Refinery. The competitive position of our Galveston Bay Refinery is enhanced by the increased residual fuel and heavy crude processing, as well as distillate recovery. We're well positioned with two premier 600,000 barrel per day refineries on the US Gulf Coast, with significant logistics and export capacity to support our global commercial strategy. At the Martinez Renewable Fuels facility, construction activities are progressing. Pretreatment capabilities are starting to come online in the second half of 2023, and the facility is expected to be capable of producing its full capacity of 730 million gallons per year by the end of 2023. At that point, Martinez will be among the largest, most competitive renewable diesel facilities, with a competitive operating profile, robust logistics flexibility, an advantaged feedstock slate, and a strategic relationship with Neste. On capital allocation, in the second quarter, we returned nearly $3.4 billion to MPC shareholders via dividends and share repurchases. From May 2021 through the end of July, we have repurchased 264 million shares, or approximately 40% of the shares outstanding. Moving to our sustainability efforts, in July, we published our 12th annual sustainability report and our seventh annual Perspectives on Climate Scenarios report. Our Perspectives on Climate-Related Scenarios, which aligns with TCFD standards, provides insights into how we see the energy landscape, our thoughts on climate-related risks and opportunities, the resources we put towards addressing them, and the results that we've achieved. Our sustainability report shows continued progress on goals that we have set for ourselves, our efforts to strengthen the resiliency of our operations, and to innovate for the future. At this point, I'd like to turn the call over to Maryann. Thanks, Mike. Moving to second quarter highlights, Slide five provides a summary of our financial results. This morning, we reported earnings per share of $5.32. Adjusted EBITDA was $4.5 billion for the quarter, and cash flow from operations, excluding favorable working capital changes, was over $3.1 billion. During the quarter, we returned $316 million to shareholders through dividend payments and repurchased $3.1 billion of our shares. Slide six shows the reconciliation between net income and Adjusted EBITDA, as well as the sequential change in Adjusted EBITDA from the first quarter of 2023 to the second quarter of 2023. Adjusted EBITDA was lower sequentially by approximately $700 million, as higher refining throughputs was more than offset by lower market crack spreads. Corporate expenses were roughly in line with our guidance, and despite general inflationary pressures, we've maintained cost discipline since taking $100 million out of our corporate costs since 2020. The tax rate for the second quarter was 18.4%, resulting in a tax provision of approximately $583 million. Our tax provision included a $53 million discrete benefit related to prior years. Moving to our segment results, slide seven provides an overview of our refining and marketing segment. Refining utilization increased 4% to 93%, despite significant turnaround activity, as planned work had a lower impact on crude units in the second quarter. During the quarter, at Galveston Bay, an incident occurred at one of the refinery's catalytic reformers. This unit has been out of service since May 15th. This resulted in approximately 2.5 million barrels of through- crude throughput reduction and an approximate 1% reduction to capture. Sequentially, per barrel margins were lower in the Gulf Coast and MidCon regions, driven by lower crack spreads and our sour crude differentials. Capture was 97%, reflecting a strong result from our commercial team, particularly given the extensive turnaround activity early in the quarter. Refining operating costs were $5.15 per barrel in the second quarter, lower sequentially due to higher throughput and lower energy costs. Slide eight provides an overview of our refining and marketing margin capture this quarter, which was 97%. Our commercial team executed effectively and achieved a strong capture result, considering a significant amount of planned and unplanned refinery downtime. Gasoline and distillate margin tailwinds were balanced against weaker secondary product pricing. We are also seeing incremental product yield and crude mix benefits from recent major capital projects. Capture results will fluctuate based on market dynamics. We believe that the capabilities we have built over the last few years will provide a sustainable advantage. This commitment to commercial performance has become foundational, and we expect to see the results of this emphasis. Slide nine shows the change in our midstream segment adjusted EBITDA versus the first quarter of 2023. Our midstream segment delivered strong second quarter results. Segment adjusted EBITDA, while flat sequentially, was 5% higher year-over-year. Our midstream business continues to grow and generate strong cash flows. We are advancing high-return growth projects anchored in the Marcellus and Permian basins. These disciplined capital investments, along with our focus on cost and portfolio optimization, are expected to grow our cash flows. This will allow us to reinvest in the business and return capital to unitholders. Slide 10 presents the elements of change in our consolidated cash position for the second quarter. Operating cash flow, excluding changes in working capital, was $3.1 billion in the quarter. Working capital was an $854 million tailwind for the quarter, driven primarily by changes in crude oil and refined product inventories. Capital expenditures and investments totaled $570 million this quarter, consistent with our 2023 outlook. MPC returned nearly $3.4 billion via share repurchases and dividend during the quarter. This represents a 108% payout of the $3.1 billion of operating cash flow, excluding changes in working capital, highlighting our commitment to superior shareholder returns. As of today, we have approximately $6.3 billion remaining under our current share repurchase authorization. At the end of the second quarter, MPC had approximately $11.5 billion in consolidated cash and short-term investments. Turning to guidance, slide 11, we provide our third-quarter outlook. We expect crude throughput volumes of roughly 2.7 million barrels per day, representing utilization of 94%. Utilization is forecasted to be higher sequentially due to lower planned turnaround activity in the third quarter, and enhanced mid-cycle margins continue to incentivize high refining utilization. While we have not confirmed a start-up date, our throughput guidance assumes the reformer at the Galveston Bay Refinery will be down for the entire quarter. Planned turnaround expense is projected to be approximately $120 million in the third quarter. Operating costs per barrel in the third quarter are expected to be $5.10, as we expect to see benefits from higher throughput and lower costs, given we have completed the significant portion of our turnaround and project activity. Distribution costs are expected to be approximately $1.4 billion for the third quarter. Corporate costs are expected to be $175 million, representing the sustained reductions that we have made in this area. To recap, our second quarter results reflect our team's execution against our strategic pillars across the company. Our capital allocation framework remains consistent. We will invest in sustaining our asset base while paying a secure, competitive dividend with the potential for growth. We want to grow the company's earnings, and we will exercise strict capital discipline. Beyond these three priorities, we are committed to returning excess capital through share repurchases to meaningfully lower our share count. With that, let me pass it back to Mike. Thanks, Maryann. In summary, you know, we will continue to invest capital to ensure the safe and reliable performance of our assets and where we believe there are attractive returns. Year- to- date, we've invested over $1.2 billion. Our focus on operational excellence and sustained commercial improvement will position us to capture this enhanced mid-cycle environment. MPLX remains a source of growth in our portfolio, distributing over $2 billion to MPC annually. As MPLX continues to grow its free cash flow, we believe it will continue to have capacity to increase its cash contributions to MPC. We believe MPC is positioned as the refiner investment of choice with the strongest through-cycle cash flow generation and the ability to deliver superior returns to our shareholders. With that, let me turn the call back over to Kristina. Thanks, Mike. As we open the call for your questions, as a courtesy to all participants, we ask that you limit yourself to one question and a follow-up. If time permits, we will re-prompt for additional questions. Now we'll open the call. Sheila? Thank you. We will now begin the question-and-answer session. If you have a question, please press star then one on your touch tone phone. If you wish to be removed from the queue, please press star then two. If you are using a speakerphone, you may need to pick up the handset first before pressing the numbers. Once again, if you have a question, please press star then one on your touch tone phone. Our first question will come from Doug Leggate with Bank of America. Your line is open. Thanks. Good morning, everyone. Thanks for having me on. Mike, I want to pick up on one of the headlines from your press release, which seems to be becoming a bit of a recurring theme, sustained commercial improvements. I guess it's a capture rate question, but can you just walk us through what's going on in your capture? Because it looks like we're, you know, as I look back pre-COVID, for example, leaving the distortions of COVID out of it for a minute, your capture rate seems to have stepped up. Is that portfolio management? Is it something else? Is it trading? What, what's going on to have addressed that issue in capture rate? Yeah, good morning, Doug. Thanks for the question. I'm, I'm gonna let Rick give a little more detail, but I'll, I'll start off with a couple comments. One, we have made structural changes and have changed our commercial process quite a bit. With that said, I know yourself and a lot of the analysts like to look at that capture metric. I just want to always caution people that the metric that I care more about is cash flow generation and earnings profitability. I, I look at that much more than that capture metric because I think there's pros and cons to it. To your point, you know, obviously, it has trended up and, and, you know, driven by a lot of the things that we've changed over the last couple of years. I'll, I'll let Rick give a little more detail. Yeah, Doug, first off, very perceptive question. I think it's a good call out and, and warranted. We do believe this structural change is something that's gonna stick. In fact, you know, we continue to improve, and we're never gonna be done improving in this category, so it's something that we focus on daily. In giving you an answer, I think you'll respect that I will have to be broad as to not give away what I would call true competitive advantages. It's all the buckets you've touched on. It's optimization, it's trading, it's all of the above. The best way I can say it, Doug, it's a holistic change in our mindset on everything we do to optimize our assets around our size, our logistics system, our knowledge, our expertise, and it's driving incremental value throughout our entire system, from feedstocks to products. There isn't anyone in the company that's not engaged. I mean, I can't say enough, our goal is to be the best cash flow generator through cycle, and this just isn't a one and done exercise. This is the mindset that not only our commercial team, but our entire company is attacking every day with. We'll continue to watch it, Rick. Thanks for the color. I guess my follow-up is also a question that, you know, it's hard not to bring this up every other quarter. Maryann, the buyback pace in July is $800 million. Your dividend at the MPC level is about 150% covered by your distributions from MPLX. Why should we not assume that buybacks should be ratable at mid-cycle at that kind of level going forward? Hey, Doug. Good morning, Maryann. Thanks for the question. From a capital allocation framework perspective, and hopefully even from the comments that Mike and I have both made here this morning, we remain committed to superior returns, and remain committed to our capital allocation as we have defined it. As it relates to the buyback, as you know, each quarter now, we are trying to look as best as we can. We take a series of things into consideration. We look at market, we look at our cash flows, and we try to do the best job we possibly can to maximize our ability to perform in a given quarter. As you've seen, $3.1 billion in the quarter. you know, when you look from month to month, you see that, you know, visibility as, as you get our quarterly documents. You know, you see a bit of variability there. Again, we remain committed. We think, you know, share repurchase is a very efficient return of capital. You know, as it relates to the dividend, again, an important part of our capital allocation framework, as we've shared in the past, you know, we remain committed to that. We want it to be sustainable. We certainly want to be competitive and the opportunity to grow that as well. Hope that answers your question. Maryann, forgive me the clarification question, are you price agnostic? Because your shares are pretty much at new high, you know, all-time highs you had out there this year. You know, again, Doug, we try to be as opportunistic as possible as we can in the quarter. We hope that that's the, you know, what you are seeing from our approach to that. Yes, we, we continue to buy back stock, as you have seen. Opportunistically. Okay, thanks so much. Oh, go ahead, Mike. Let me just add a couple comments to it. As I just said to your first question, you know, the number one concentration is to generate cash, and then I'm a believer that this business has both return on and return of capital as its requirements. On the return on, you know, we are investing capital to improve our earnings and grow our cash flows over time, but we're also committed to return of. We use the word strict capital discipline. We set our program such that we're gonna be able to participate in both sides of that, because I'm a big believer in both. You know, we've got to show the market that we can invest capital wisely to grow our earnings, and we also want to show the market that, you know, we're returning capital to the owners. That's a program that we've been on for, you know, for a while here, two years. We're gonna continue in that mode, and I just want to give you a little bit more flavor as to how we look at it. It all starts with generating cash and then optimizing return on and return of. Very good. Thank you. You're welcome. Next, we will hear from Neil Mehta with Goldman Sachs. You may proceed. Good morning, team. I want to get your perspective on the product markets. We've really seen a firm up here across the crack, any perspective you have on the strengthening, recent strengthening in margins, and then what are you seeing from a demand perspective in your own system for diesel, jet, and gasoline? Neil, good morning. This is Brian. Yeah, let me first comment on the demand side of the equation, because we are seeing the demand side of the equation really lead the crack. On gasoline in the quarter, our system was up, and when I say our system, it's really our entire marketing book, was up 4% year-over-year versus an EIA call of about 2%. This most recent week, we see continued strength. We were up 7% last week on the gasoline pool, so we continue to see the strength, which is very encouraging as we enter the back half of the driving season here. The West Coast has been an outsized performer, 5% on the quarter, 8% last week. Looking at diesel, it's been largely flat. EIA's got a call for the quarter of up about 1%. Of course, I think everybody's pretty dialed into jet. We had a 9% increase on the quarter for jet fuel demand year-over-year versus an EIA of about 3%. Just real quick on the crack, I, I would say that, you know, the big story here over the last 30-60 days has been the distillate. I mean, our view is distillate really ran up late last year, obviously, with the situation in Ukraine, uncertainty around sanctions in the first part of this year over in the EU, and now we have a lot more certainty. The market came off pretty precipitously since the beginning of the year, and now we're seeing it recover to a more fundamental level. Yeah. Thanks. Thanks, team. It's been notable. The follow-up is just around the dividend. It's down to about 2%, given how strong the stock has been. Is perspective and just your perspective on, is there headroom to raise the fixed dividend? Remind us again when, when you typically would do that? Neil, thanks for the question. It's, it's Maryann. You know, as I mentioned, hopefully, you see that we've got a couple of criteria for the dividend. Obviously, yield only being one of them, sustainability of that, and obviously, the potential to grow. As we've committed, we'll be back next quarter with our intentions to share with you our plans for the dividend. Next quarter, consistent with our approach from last year as well. I hope that answers your question. Thanks, Maryann. Thank you. Our next question will come from Manav Gupta with UBS. Your line is open. Morning, morning, guys. My question is, like, this year, you are bringing to conclusion two of your big mega projects, the Galveston, as well as the Martinez RD. It's at this point, you haven't indicated another mega project. Should we assume in the year 2024, more of your CapEx would be dedicated to quick-hit projects, which generally are not that expensive, and that can mean that year-over-year 2024 CapEx could be downwards as 2023, unless you pick up a mega, mega project at this stage? It's Maryann, and thanks for the question. I, I think you characterized it well. As we shared with you, STAR is largely behind us, and as you heard from our comments as well, Martinez, on its way to be with this next phase up and running by the end of the quarter. As you know, we're a bit early to give 2024 guidance. We'll get a little bit closer to that and give you some more color. We intend to give you, as, as we have in prior quarters, a look at what we would be contemplating, spending and refining, as well as, you know, our low carbon initiatives as well. But I think you stated it well. We haven't talked about, you know, any significant major projects here, here before. Hope that, hope that helps. Manav, it's Mike. I just wanna add, it's just a little early in the year. We obviously have some insight as to what we're planning to do in 2024, but we'll talk about that in, in subsequent quarters as opposed to now. I, I completely understand. My quick follow-up here is, as I understand, when you first envisioned the Martinez project, it was more of, you know, soybean, refined, unrefined. As you've brought in the partner, somewhere your own, thought process or, or what you want to run changed, and at this stage, you are looking at a higher percentage of lower CI feedstocks, versus soybean. Can you comment a little bit on that? Yeah, Manav, this is Brian. Certainly, yeah, you, you got it pretty dead on there in terms of the strategy and the strategic relationship we have with Neste. I. Just a couple of things to mention around your question, though, that we are on startup diet here. You know, as mentioned, we've got our pretreatment facility coming online, and really, the, the full horsepower of this facility really enters in the back half of this year. We're quite confident in our ability with our relationship with Neste, that really is looking beyond just Martinez. You know, this is just the beginning of our relationship. One point of view that I will share with you, not Martinez specific, but to give just a little bit of perspective, we just exited July with our operation up in Dickinson, and we ran a 74% advantage feed slate out of our facility up in Dickinson, and its startup design was very similar to Martinez. Hopefully, that frames things up for you a little bit better of what to expect when we get Martinez up to full rate later this year. Manav, it's Mike. I, I just wanna add that when we look at the project, we try and challenge ourselves, as Brian said, without the advantage feedstock, to make sure we're comfortable that we have a good project, even in that conservative nature. Obviously, the commercial teams are gonna work very hard to optimize the feedstocks, whether it's to our other refineries or to the RD facilities. We try and start out before we deploy that capital in such a way that we feel comfortable that we, you know, we'll have upside as we do better commercially on the feedstock side. Thank you so much. You're welcome. Next, you will hear from Paul Cheng with Scotiabank. Your line is open. Hi. Thank you. Hey, guys. Good morning. Good morning, Paul. Mike, I think in the past, you said that by looking at your refining portfolio, Carson may see the biggest potential upside. Is there any kind of investment initiative that, are you currently thinking on that, to capture that upside? That's the first question. Second question that, maybe this is for Rick. When I'm looking at the third quarter, your throughput guidance, which has actually come in, that should be about exactly the same as the second quarter, but the turnaround activity is significantly lower. Are we missing something, or that, that number is just being very conservative? When we had thought with the turnaround activity much lower, you will have a much higher throughput than the second quarter. Thank you. Oh, it's Mike. I'll, I'll start on the first one, then I'll let Rick take the second one. Similar to Manav's question is, we'll give a little more color on 2024 capital in the next couple quarters. We do have some projects that we think will continue to optimize our portfolio and improve upon it. Like I, I said a few minutes ago, it's a little early to talk about that capital at this point. If you can just hold your thought, you know, we'll give a little bit more on the, on the next quarter and start to give you a little bit more insight as to what we're thinking in, in 2024. Yeah. Hi, Paul, it's Rick. On our throughput guidance for 3Q, you're correct, it is lighter than 2Q, and we see that as an advantage, especially as a lot of our competitors have heavier turnaround work in 3Q. With that being said, Paul, I think the one difference maybe that you're not accounting for is the reformer outage. When you factor that in, that's, that's really takes you to where we landed in our guidance, Paul. That's really the only difference. Hey, Rick, can I clarify on that? Because the reformer was down since mid-May, this is only going to be adding, maybe half of a quarter of the downtime. That may, what, drop you 30,000-40,000 barrel per day in total throughput? I'm still a little bit surprised that the throughput level is not higher on the guidance for third quarter. Hey, Paul, it's Maryann. Let me try to provide an incremental color into all the commentary that Rick has given you. You're right. In the second quarter, the reformer was down from May 15th to the end of the quarter. For purposes of guidance this quarter, what we have assumed is we would not be operational at all. It's about 75,000 a day. When we talk about the impact last quarter, it was about 1%. If you look at the impact just strictly in the US Gulf Coast, from the absence of that, that particular unit not operating, it's about a 7% reduction quarter-over-quarter in US Gulf Coast, and that's about a 3% overall to the, to the whole system. Hopefully, that's helpful to you. Okay, thank you. Our next question will come from Sam Margolin with Wolfe Research. Your line is open. Hi, everyone. Thanks for calling on me. This is a macro question, and I wanna hearken back to a call, a Marathon call from earlier this year. I think it was Brian made the prediction that the Russian sanctions, first diesel cracks would go down, and then they would go up again. That's sort of exactly what happened, and it has to do with the destock pattern, and then later on, you know, specification issues. I just want to bring that comment back to the surface here and, and, and see if it is part of the reason for the strength we're seeing in diesel cracks now, and if you see in your export markets, for example, if you see a shortage of, of on-spec products, that's, that's driving some of the strength here. Hey, Sam, good to hear from you. Yeah, absolutely. You know, we, we are seeing things played out as we expected. I, I mentioned it earlier, I think the, the big thing with the Russian situation was the uncertainty, and I think the market has become much more certain today for all of us in terms of really limited friction on Russian distillate barrels hitting the, the world market. We have seen a little bit of market share exchange, deeper penetration of Russian barrels into Latin America, notably Brazil, in exchange share for the U.S. system into Europe. We're seeing, you know, here over the last couple of months, almost 300,000 barrels a day of distillate exports to backfill the European market. You know, what we're hearing from customers over in Europe is really energy security. No surprise, it's a big driving factor for them. With our team over in London right now operating really, really strong, we are finding really good traction for our book over into Europe. To your broader question on demand, you know, the, the export market has been very stable and strong for many cycles now and continues to be our outlook going forward, the case, on both gasoline and distillate. Okay, thanks. This is an operational follow-up, but yeah, we've seen heavy intermediate differentials compress, and it seems to correspond to a bunch of different factors. Maybe STAR Program starting up as one of them, but there's a couple other similar new conversion units and, and new refining capacity starting up concurrently. You have the OPEC cuts. You know, just on this, on this heavy light setup and specifically on high sulfur fuel oil, is this, is the, is the tightness here just a function of all of these things happening at once, and then over time, the, the market will adjust, and we might see HSFO go back towards where it was? Is this kind of the normalization with all, with all the new capacity? Thanks. Yes, Sam, this is Brian. A couple data points on that. So if you look at the high-sulfur distillate spread, of course, we, we swung real, real low last year. Of course, the system was in max distillate mode, so we were producing, we, the, the whole entire refining complex, was producing as much diesel as possible, which generated more high-sulfur distillate, which outran hydrotreating capacity by and large. As we've come off of max diesel mode, and we've been in gasoline mode here as a system this summer, we've seen that retrench, so more of a traditional relationship. I think the factor to look at is really, are we in max gas or max diesel mode? Some of the things you mentioned are nominally impactful, but if you're looking specifically at the Gulf Coast, the one kind of watch-out is it's a very thinly traded market, so it can move quite dramatically up or down, depending on what's occurring in the system. Very helpful. Thanks so much. Hey, Sam, this is Rick. Just to tag on to what Brian was, was saying, as part of your question, the heavy light crude differential. We do believe the bottom's in. We're, we're actually quite optimistic. We believe that spread will get wider point forward through the end of this year, and then it's really for a variety of reasons. You've got increased planned turnaround work, specifically in PADD 2 and PADD3, that's gonna take some crude demand needs off the table, so that'll cause some length. You've got the Canadian producers that have come out of their maintenance season, and they are running well. You've got incremental Gulf of Mexico and Venezuelan production from Chevron clearing to the US Gulf Coast. When we look at the markers, and specifically, Sam, on heavy Canadian, you know, it hit its low in around June at about a $10 discount. The current trade cycle's got it at about a $14 discount. It's widened out even significantly here over the last 30 days. We continue to see it widening out further when you look at the forward curve between now and the end of the year. Got it. Thank you so much. You're welcome, Sam. Next, we will hear from Jason Gabelman with TD Cowen. You may proceed. Yeah. Hey, thanks for taking my questions. I wanted to key in on a couple of macro comments Mike made on the top of the call. I was hoping he could elaborate. First, he mentioned higher maintenance moving forward in, in almost every region that you operate in. It sounded like from Rick's answer just now, that was gonna be in PADD 2 and PADD 3. One, can you confirm that, and is that higher maintenance sequentially, or is it higher than what you would typically expect in the fall? Secondly, on the macro, you mentioned some refinery startups globally are a bit delayed. I, I was wondering if there are any sites in particular that you had in mind, and I have a follow-up. Thanks. Yeah, Jason, it's Mike. I'll start, and then I'll let Rick jump in. What I was saying in the prepared remarks is, we as a company, have gone through four quarters of pretty heavy turnaround, and so we're later in the rest of the year compared to what we see as the industry, and we'll have to see how it plays out. It looks like the industry has a lot more activity into the rest of the year. That's what I was trying to say as far as the difference between where we are and where we think the rest of the industry is. Yeah, then I'll just tag on. In terms of global refining capacity, what we found, and it, it appears to continue to be true, is overpromise and underdeliver. Generally speaking, I really don't think it's appropriate to give you specifics, but generally speaking, we're seeing delays versus others throughout the world meeting their projections of when that, when their utilization is gonna come online. More of a general comment. Okay, great. My follow-up is on the Martinez Biofuels project. I just wanted to confirm, because it's, it's tough to tell. It, it, it sounds like everything is going according to plan, but we've heard from industry sources that there are some court challenges that, that you're having to address. Is that fair in terms of what's, what's going on, and, and is there any risk that any of these court challenges could, could impact the ramp-up of the project to the full 730 million gallons? Thanks. There were six challenges to our land use permit. We prevailed on five of them, and the one is currently still being briefed with the court, and we anticipate a favorable outcome here in the upcoming months. Nothing projected to impact construction and/or operation. Okay. Just to clarify, can you ramp up while that court is ongoing, while that case is ongoing, or would you need that to be resolved before you ramp up capacity? Nope, we can continue both on construction and with the operation. Great. Thanks a lot. Our next question will come from Roger Read with Wells Fargo. Your line is open. Hey, thank you, and good morning. I'd like to follow up as well on Martinez. Maybe just if you can help us out with understanding some of the milestones we should watch. You know, we know that the industry has been challenged at times to get these facilities to start up cleanly. You've obviously put out a goal of full run rate by the end of the year. As we think about, you know, this point in late October, looking back at the third quarter, where would you expect to see that unit? When would you anticipate that it becomes a, a positive contributor in terms of, you know, EBITDA, cash flow, earnings? Hello, Roger, this is Tim. I'll take, I'll take that question. First off, the remaining construction activities at Martinez, they are on schedule, and things are going very well. As both Brian and Mike indicated early on in the prepared remarks in the Q&A, we recently started up a portion of the Martinez pretreatment unit, and we're now pretreating on site with one train that will really just support the phase one volumes. The big-ticket item, though, is when we ramp up with the second train at the end of the year, when we bring alongside the RD capacity, when the facility conversion is complete. I would give it a positive remarks. Team's doing a great job, and we look forward to the end of the year. Hey, Roger, it's Mike. To your question financially, you're gonna be thinking into 2024. As Tim said, you know, we're ramping, we're starting up, we're gonna bring on the additional units, and if all goes well, we'll be on by the end of the year. You'll start to see the financial performance more in 2024, you know, on a go-forward basis. That makes sense. Then maybe this question is for Maryann. Dickinson's a very small operation, so I understand, you know, as, as part of refining, but now that it's gonna be a much bigger overall operation, granted, you own half of it via the Neste joint venture, but how should we think about from a reporting, accounting standpoint, when or will we see a breakout of renewable diesel operations from the rest of the business? Thanks for the question, Roger. As you said, you know, as it relates to Dickinson first, you know, we've been operating for about two years, and consistent with the way we have expected profitability there, although, you know, some of the moving parts are different, we continue to see the performance of that, you know, consistent with what we thought. Mike just shared with you, you know, when we should expect to see real contribution from Martinez. We will evaluate both Dickinson and Martinez in terms of their total contribution. As you know, we've said for 2023, we are not planning to break that out, but we'll come back to you as we continue to move along our path of profitability for both Dickinson and Martinez. Hey, Roger, it's Mike. Okay. The other thing, and I know you know this already, but obviously the refining assets' cash flows are significantly higher than what's happening in, in renewable diesel. I think the way you should think about that is us looking at all our assets, and we talk about portfolio optimization, to take two assets that we did not think would be competitive long term and deserving of investing capital, and to put them in a, in a positive cash flow mode going forward, obviously in, in a diesel mode as opposed to a crude mode. I think, I think it's more of a portfolio optimization, realization, compared to where we are on refining cash flows. All right. Well, I'll just leave you with my final thoughts on it, which is we haven't really put a lot in, you know, valuation uplift because it's difficult to know exactly what some of the contributions will be and, and where. I think more disclosure will, will be a positive for you. Okay, appreciate that feedback. Thank you. Thank you. Thank you. Our next question comes from John Royall with J.P. Morgan. Your line is open. Hi, good morning. Thanks for taking my question. My first question is just coming back to the Galveston Bay reformer. Is there an update on when we could see that coming back? I know you're assuming out for the full quarter with 3Q guidance, but maybe just a little bit of color on where you are in that restart process beyond just that assumption in your guidance. John, this is Tim. I'll, I'll take part of that. All I can really share is that we are expeditiously and prudently completing the repairs on that unit, and we don't have any further guidance beyond what Maryann has already provided relative to schedule. Okay, fair enough. My next question is on tax. You had a very low rate in 2Q. You called out $50 million-ish of that looks non-recurring. But even when I adjust for that, it's still trending down the past couple of quarters. Is that just on the mix of non-taxable MPLX versus refining, with refining coming down past couple of quarters? Are there any other moving pieces to think about in the tax rate? Hey, John, it's Marya nn. Yeah, thanks for that. As we stated, the $53 million that I called out for you is related to prior periods. It's a good news story. We were successful on a resolution of an item that has prior period benefit, and it will have some, but I'll bet smaller, benefit going forward, and that's about $0.13 in the quarter. As you stated, typically, the biggest mover on our rate is the relationship between our midstream business and our refining business. From time to time, we could also have discrete items. Those items could be positive or negative, and in some cases, they are positive. As you stated, the typical driver there, when you look at our federal rate and the state tax rate, would be that, that relationship. If I adjusted out the $53 million in this quarter, that's a, that's a decent run rate to think about going forward? You know, one of the things that you've said, you know, when you look at that rate, it's a little bit lower than average. I think you're probably coming to, around a 20% ZIP code in the, in the quarter. Yep. You know, as you've seen from last year, we've run about 22%. You know, there is a range, there is a range there, but certainly 20 is at the lower end of that, when you look at the relationship, between refining and midstream today. Thank you. Thank you. Our next question comes from Theresa Chen with Barclays. Your line is open. Hi, thank you for taking my question. I just had a quick follow-up related to the discussion of the Martinez ramp-up and your renewable diesel outlook in general. Related to the economics of LCFS, it seems that the final draft of the proposed changes will be submitted to CARB over the next couple of months, and I'd love to hear your thoughts and expectations on where you see that landing and your general outlook for pricing from here. Theresa, good morning. This is Brian. We've been very actively involved with CARB on the evaluation of the reset. We remain optimistic. We, we believe CARB foundationally wants to find a way to support the program. Obviously, LCFS prices have come off fairly precipitously over the last couple of years as RD has penetrated, we're expecting support for the market. But note, LCFS is the smallest variable in our overall value equation, it's, it's not been a big needle mover, but we do think it's important going forward to underpin the profitability on the RD space. In addition, obviously, we're looking at markets beyond California. As LCFS prices come down in California, there's other state-level programs on the West Coast and beyond that we're finding opportunities to penetrate with, our RD market position. Thank you. Thank you. Our next question will come from Matthew Blair with TPH. You may proceed. Hey, good morning. Thanks for taking my questions here. Chicago diesel cracks were, were quite weak earlier in July, even related to other PADD 2 markets like, like Group 3. Do you have any color on, on what was going on here? It looks like they've recovered so far, any color as to why Chicago diesel at one point was, was negative on an RVO-adjusted basis? Yeah, Matthew, this is Brian. Yeah, it's a, it's a great question. Clearly overdone. It's recovered fully. You know, the, the unique nature of the Chicago complex is the marker is in, you know, the far west side of Chicago, which from time to time can get pretty volatile, and I think really that's what we saw from a trade basis, over on the west side of Chicago. It's recovered quite nicely here as we've trended out of that period of time, and we're, we remain optimistic that we're in a good position as we head into the harvest season here in the Midwest, where we expect to see distillate strength. Sounds good. The CARB data posted last night showed that in the first quarter of this year, California diesel consumption was 49% RD and up to 8% BD. For, for your Los Angeles refinery, are you having any problems placing your petroleum diesel volumes in that California market? Are you having to, to export any volumes to Singapore or Mexico? Do you consider that a risk down the road? Matthew, this is Brian. Yeah, in the prompt basis, no, no, no problems clearing the barrels. Yes, you're, you're on point there. As RD penetrates the California market, it's a one-for-one relationship. It's, it's fairly balanced, also the West Coast system as a whole, that our expectation planning horizon does include the ability to make sure that we can export barrels beyond the U.S. In addition- ... obviously, jet is very, very strong right now. If you look at the yield structure in terms of how we're running the refineries, we're working really, really hard to make sure that we're maximizing jet fuel at the cost of the distillate side of the boat. Great, thank you. You're welcome. Thank you. We do have time for just one more question. Our last question comes from Ryan Todd with Piper Sandler. Your line is open. Great, thanks. Maybe a question on the refining side. On the Gulf Coast, you had very strong performance, despite the downtime at the reformer at Galveston Bay. I'm curious as to how much contribution you saw from the STAR expansion in the quarter, and maybe, just an update on how the expansion of that project is going forward and contribution in the future. Yeah, thanks for the question, Ryan. It's, it's Maryann. Let me try to give you a little bit of color. You know, when we look at Q1 to Q2 performance, keep in mind, in the US Gulf Coast, as you stated, we were under turnaround in the first quarter and obviously, ramping up. You saw the benefits of that, obviously, in the second quarter, despite the fact that, you know, we did have the reformer down for just a portion of the month. As I was commenting on it, it's only about a 1% impact for the second quarter. That will get a little bit larger, as I shared, given the fact that we're assuming it to be down. I think the other thing to keep in mind is typically when we look at, cost in the quarter, when we're doing heavy turnarounds, as we did in the first quarter, we're typically doing other maintenance work, and that was much later in the second quarter as well. As it relates to STAR, as you know, we were ramping up our comments, as we've been sharing. STAR was ramping up through the second quarter, so minimal impact, with respect to STAR, but you'll begin to see that now as we've, reached the completion of that project. Great, thank you. Maybe just a kind of a high-level question. You've obviously been active to date in various low-carbon transportation fuels, meaningful investment in renewable diesel, even a recent investment in an RNG producer. As you look at the long-term outlook for transportation fuels in your markets over the next, you know, 10 years, how are you thinking about your overall strategy for the transition? In particular, maybe a sense of your role in a broader definition of transportation fuels, and where do you go from here in terms of potential future investments? Yeah, Ryan, it's Mike. You know, I like the word energy evolution more than energy transition. I know a lot of people use energy transition, but I think it's gonna evolve over a longer period of time than, than most have written about. You know, we're trying to be very thoughtful. We will, you know, using the word evolve, we will evolve the company over time. You know, as you pointed out, two of our facilities now are renewable diesel. You know, we made a small investment in an RNG facility. You know, Dave and his team are looking at all those opportunities. We talked on a call earlier today about we're active in some of the DOE hydrogen hubs, and we'll see how that plays out over time. Think of us as gonna be very thoughtful. You know, we try to use the word strict capital discipline. We do want to invest as opportunities present themselves, but we are committed to getting, you know, solid returns. Overall, I, I'd say you're just gonna see us chip away at little activities over time and constantly evolve it. To your point about, you know, what are we gonna look like in 10 years, and 10 years, 20 years or whatever? Marathon's been around for 130 years. We plan to be around for 130 more. You know, we'll evolve the company as the market dictates. Obviously, you know, consumer preferences, regulatory impacts, you know, all those things are gonna, you know, drive what happens, and, you know, we'll be very attentive to it, and we'll look to deploy capital as we see the opportunities. Great. Thank you. You're welcome, Ryan. All right. Well, thank you for your interest in Marathon Petroleum Corporation. Should you have additional questions or would you like clarification on topics discussed this morning, please reach out, a member of our investor relations teams will be here to help today. Thank you so much, everyone. Thank you. That does conclude today's conference. Thank you once again for your participation. You may disconnect at this time. Bye.