Marathon Petroleum Corporation (MPC) Q2 2023 Earnings Call Transcript

For the period ending June 30, 2023

August 1, 2023 11:00 a.m. ET

Prepared Remarks

Questions and Answers

Call Participants

Prepared Remarks:

Operator

Welcome to the MPC Second Quarter 2023 Earnings Call. My name is Sheila and I will be your operator for today’s call. [Operator Instructions] Please note that this conference is being recorded. I will now turn the call over to Kristina Kazarian. Kristina, you may begin.

Kristina Kazarian

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 2. 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.

And with that, I will turn the call over to Mike.

Mike Hennigan

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 and 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. late 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 post tight inventories and receding economic headwinds are expected to continue to support elevated margins. And as we completed nearly four quarters of elevated turnaround activity early in the second quarter, we are 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 & 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 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.