Welcome to the MPC Fourth Quarter 2025 Earnings Call. My name is Julie, 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. Please note that this conference is being recorded. I will now turn the call over to Kristina Kazarian. Kristina, you may begin.

Good morning. And thank you for joining us. As Kristina shared, Maria Currie, our CFO, is joining us on this call. She has over 25 years of broad industry experience as a global finance business executive. Maria's background in operational excellence, cost competitiveness, financial planning, and risk management, as well as her global background, are complementary to our leadership team. Her experiences will add a unique set of perspectives.

I look forward to Maria's contributions to further our commitment to delivering leading cash generation and capital returns. In 2025, Marathon Petroleum Corporation delivered results that demonstrate the strength of our business and the momentum ahead. Our team's disciplined planning, operational rigor, and commercial excellence translated into strong performance throughout the year. For the full year, we achieved margin capture of 105% and refining utilization of 94%, demonstrating the reliability and competitiveness of our fully integrated value chains.

Our midstream segment grew adjusted EBITDA year over year, reaching a record of nearly $7 billion. We generated $8.3 billion in cash from operations, reinvested back into the business to enhance our competitiveness, and advanced high-return investment opportunities. We returned $4.5 billion through share repurchases and dividends. Our operational execution provided the foundation for our financial performance. We delivered our strongest company-wide process safety performance in the last four years.

We achieved the lowest OSHA recordable injury rate as well and had our fewest designated environmental incidents this decade. These outcomes reflect our commitment to safe, reliable, and environmentally sound operations. As we look ahead, we remain constructive on refined product demand. Over the past year, global consumption trends have been steady. Gasoline and distillates each grew by roughly 1%, and jet fuel demand increased nearly 4%.

Based on current global consumption indicators, we expect these patterns to continue into 2026. The global refining system is expected to remain tight, with limited new capacity coming online in 2026. Regional closures, such as the Pierce facility in California this spring, only further tightened the US markets. We expect refined product demand growth to outpace the net effect of capacity additions and rationalization through the end of the decade.

Nearly 50% of our crude usage is sour crude. Our refining system is exceptionally well tooled to source and process incremental barrels across sour grades as they come to market. Today, prices for Canadian barrels have been the most compelling. However, we have the ability to quickly pivot to Venezuelan crude at our Garyville refinery, as well as other refineries across our system, should the economics warrant it. While we continue to see structural demand growth across refined products, our capital strategy remains disciplined.

For 2026, we plan to invest roughly $700 million in refining value-enhancing capital, reflecting a nearly 20% reduction year over year. Our spend is focused on lowering operating costs and enhancing system reliability while improving our ability to convert lower-value inputs into the high-value products the market continues to demand. Roughly 85% of our planned refining spend is directed toward multiyear investments at our Galveston Bay, Garyville, Robinson, and El Paso refineries.

These investments will further strengthen the long-term competitive position of these assets. Within marketing, we plan to invest $250 million to expand the reach and presence of our branded stations in targeted markets. These investments support long-term secured offtake, drive strong value capture, and enhance the performance of our fully integrated value chain. Our integration from crude supply through branded product placement remains a clear differentiator versus our competitors.

This morning, we announced three new projects that underscore both the strength of our portfolio and our confidence in the long-term fundamentals of the refining sector. The first is at Garyville, where the intent is to optimize the refinery's feedstock slate. This should enhance margins by increasing crude throughput by 30,000 barrels per day and reducing our reliance on higher-cost intermediate purchases. We expect to spend about $110 million in 2026.

This incremental crude capacity should be online by 2027. The second is another investment at Garyville, which builds on that optimization objective. It increases yield flexibility and enables us to produce an additional 10,000 barrels per day of export-grade premium gasoline, setting our commercial team up to meet strong international demand. Capital spend in 2026 is expected to be $50 million, with startup also targeted for year-end 2027.

Third, at El Paso, we are advancing work that increases the refinery's ability to produce higher-value products for local markets. We will invest $30 million in 2026 and bring this capacity into service in the second quarter of this year. Progress continues at our two previously announced J. T. Yield maximization and DHT projects, anticipated to come online in 2026 and year-end 2027, respectively. Across all of these investments, we follow strict capital discipline.

We put capital to work where it creates incremental value, and we consistently target returns of 25% or above. This capital deployment reflects our confidence in the long-term opportunities across the energy space and our commitment to delivering durable, high-quality returns for our shareholders. The long-term fundamentals for our midstream business remain strong. In the U.S., natural gas demand is anticipated to grow over 15% through 2030, driven by the rapid expansion of LNG export capacity and rising power needs, particularly from data centers.

We are also seeing higher gas-to-oil ratios across key shale basins as aging wells produce more associated gas per barrel of oil. This trend is increasing supplies of NGL-rich gas and underscores the strategic importance of our infrastructure in the Permian. MPLX handles 10% of all the natural gas produced in the U.S., and over the past year, MPLX took meaningful steps to optimize its portfolio through divestitures of non-core assets, ensuring our future capital deployment is aligned with the strongest return opportunities as we build the infrastructure that will fuel tomorrow's energy needs.

This morning, MPLX announced its plans to invest $2.4 billion of growth capital. 90% of MPLX's growth capital will be directed towards its natural gas and NGL services segment. These projects are concentrated in the Permian and Marcellus, two of the most prolific and competitive basins in North America, and are expected to generate mid-teens returns when they come into service. These investments reflect our confidence in the long-term fundamentals of the energy markets and in MPLX's ability to continue capturing value as these opportunities unfold, enabling sustained, meaningful return of capital.

MPLX continues to target a distribution growth rate of 12.5% over the next two years, which implies expected future annual cash distributions to MPC of over $3.5 billion. With our competitive integrated value chain and increasing distributions from MPLX, we believe MPC is positioned to deliver industry-leading cash generation through all parts of the cycle. Now I'll hand it over to Maria to discuss our financial performance.

Our commitments are unwavering. Safe, reliable operations are the foundation of our company. Operational excellence is ingrained in how we run the business every day. Combined with planning and commercial execution, these capabilities position us to deliver leading through-cycle cash generation. In refining and marketing, disciplined investments will further strengthen our competitiveness. In midstream, capital deployment is aligned with the fastest-growing regions in the country as we build the infrastructure that will fuel tomorrow's energy needs.

MPLX is strategic to MPC. The growth of MPLX's distribution over the next two years translates into more than $3.5 billion in expected future cash distributions to MPC, central to the value proposition we deliver to our shareholders. Our team is committed to creating exceptional value for our shareholders. With integrated value chains and a geographically diverse asset base, MPC is well-positioned to lead in capital return. With that, I'll turn the call back to Kristina.

Thank you. We will now begin the question and answer session. You may need to pick up the handset first before pressing the numbers. Once again, if you have a question, please. Our first question comes from Neil Mehta with Goldman Sachs. Your line is open.

Good morning, Neil. Thank you. As it relates to capture, first and foremost, I think you've heard me say it. You've heard Rick say it and others on the team. It is clearly a strategy for us when we think about planning and commercial execution to continue to deliver optimization through our commercial team. We are trying to leverage the scale of our integrated system. We think that's an advantage. And again, really trying to increase the capabilities of the commercial team to deliver sustained results across all three of our regions.

Mentioned it 105 for 2025. And if you go back and look over the last few years, while we do not necessarily control every quarter because there are headwinds and things we cannot control, you go back and look over the last few years, over the last three years, we've improved capture each of those years. So there were some things in the third quarter that were not sustained. And you see those reverse in the fourth quarter as well.

But we are trying to control the things that can throughout the year and plan to do so. I'm going to pass it to Rick and let him give you some of the specifics in the fourth quarter, Neil. For the question.

Yes. Thanks, Neil. So first and foremost, one of our key strategic commitments is to ensure that we're delivering the strongest through cash cycle sorry, strongest cash flow through cycle, excuse me. And that was clearly 2025. As you look at that consensus, assuming current market cracks that would be indicative of us being able to repeat a similar pattern that we did in 2025. So, yes, I think that is clearly within our ability to deliver in 2026.

Thank you. Our next question comes from Manav Gupta with UBS. Your line is open.

Yeah. Thanks, Manav. Thanks for the question. I'd say this first. Overall, you know, we view the access to more Venezuelan crude as positive for US energy and even specifically for MPC as well. You know, if you look at our system capabilities, you look at our assets, you mentioned Garyville, specifically, we have the most crude optionality optimization, sophistication, and the ability to address complex refining opportunities.

And Garyville is an outstanding example of that. You look at our sour basket, right, we're running approximately 50% sour crude diet across the system. Look. I think that's probably 10% stronger than our closest peer. So if you think about that, if there were to be a dollar movement in sour differentials, on an annual basis, that's a $500 million benefit to MPC. Just from a dollar a dollar movement. I think you know this.

You know, we import more barrels, the Canadian, and Venezuelan combined. Than really all of our peers. And we've got a deep sour basket, WCS, ANS, and Maya. So I think overall, certainly positive for MPC as well. I'm going to pass it to Rick and have him give you a little more color as it relates to the specificity around the diffs.

And Manav, let me add a little bit more. Mike did a nice job of giving you some of the specifics on those two projects. I think one of the questions that you also asked is sort of what are the returns that we should expect And when we're putting capital to work on the refining side, again, through the lens of strict capital discipline, we're looking forward 25% returns here on these projects. So that's consistent. And as you know, when we're focused on that, we're looking for reliability, we're looking for upgrading that will deliver incremental margin per barrel. That's the reason why we're doing it. Hope that answers your question, Manav.

You're welcome, Manav.

Our next question comes from Doug Leggate with Wolfe Research. Your line is open.

Thanks. Good morning, everyone, and welcome, Maria. It's good to hear you on the call. I wonder, Maryann, this is probably a refining question, so I know if she wants to to tackle it. But I guess the the report in the third quarter was on the November 4. And you guided us towards 90% refinery utilization then diesel margin spikes and we didn't really see a huge blowout in heavy differentials, but you did swing towards a different slate than you guided towards.

So I guess I'm trying to understand what is the sensitivity when you can deliver a 4% utilization a big swing towards heavy oil. What what should we consider that anytime we see blowout margins Marathon is gonna treat the knobs to basically run significantly better into that environment. I'm just trying to get a handle as to what changed versus the guidance.

Yes, thanks for the question, Doug. I'll say first and foremost, the answer to that is yes. That is really what we are trying to do every day. You hear Rick talk about expanding the craft. You hear about our planning capabilities. We are building them, each and every quarter, which gives us the ability to respond very rapidly to market conditions that we see. And therefore, given the, I'll say the capability of our assets, particularly when you look at yield conversion you mentioned diesel.

I think that is one of the strengths that we have and the complexity and the optimization in our system. When you look at optimization, I think it's critically important for us to be able to continue to demonstrate that So that's what I would tell you, was the capability there in the quarter.

I appreciate the answer. I realize it's not you know, there's some sensitivities around this, but I I'm grateful for that. My follow on is on CapEx. Obviously, you've got you've dropped CapEx a little bit this year. You're still covering your CapEx and your dividends with the MPLX distributions. And I guess, I'm really, you know, 2026 is great. I'm really trying to think about how do we think about marathon spending longer term is the cap on your because I'm sure you've got a bunch of projects that you can select, but is the cap to stay below that MPLX distribution threshold or should we expect CapEx to drop off at some point because obviously only done a little bit in 2025 at 2026.

Yeah. Thanks, Doug. So, you know, maybe just to reiterate, in 2026, we are looking at a 20% reduction in the refining spend off of 2025. And as you heard in our prepared remarks, we continue to expect that 2027 and 2028 capital on the refining slot side will come down. And so we think it's critically important. I talk about strategic relationship between MPC and MPLX. And as that distribution grows, we're covering the CapEx that we are putting to work to ensure that we remain competitive in every region where we operate and deliver, if you will, the utilization utilization that we just discussed, that's critically important to us.

And also cover the MPC dividend And then we take that remaining cash as we said and we return that via share buyback. You can see that in 2025. Hopefully, it was responsive to Neil question as well that that should be a repeat in 2026. So that is what we are trying to do. We're only putting to work capital investments through that lens of strict capital discipline. We see it coming down again in '27 on the refining side. And in '28.

You're welcome, Jim. Our next question comes from Paul Cheng with Scotiabank. Your line is open.

Yes. Thank you, Paul. So first and foremost, on refining spending. In 2025, to your first part of the question, we did spend slightly more than we had initially guided to. And one of those key spending areas was on the El Paso project, I spoke about it. Mike gave a little more color and we can certainly do that again if that would be helpful. We started that project in 2025 given the returns on that project and the benefit for the local region so that that project will actually complete in 2026 as you heard me say.

Then for our '27 spend and our '28 spend for refining, we expect both of those years to be below 2026 spending. So again, a lens of strict capital discipline there. Reducing that spend. We've got, as you know, couple of projects that we were completing like the LAR project. We've got DHT that will complete and that's part of our capital spend this year. Taking high sulfur diesel and being able to convert it to ultra low sulfur diesel for broader market and margin opportunity.

And so that's the story, if you will, on our commitment to lowering capital spend in the refining side and why we saw a little bit of a higher spend in 2025. I'm going to pass it to Mike who's at the tip of the spear there, if you will, on the negotiations, and I'll have him share with you the status of that Thanks Paul.

Yes? Thanks, Paul. I think it's a little bit early for us to give guidance on 2027 and 2028, but you do have the commitment as we've said that '27 and '28 will be below the spending for 2026. And you can see the refining spend that we've outlined for 2026, which would help with that. We're still a little early for specific guidance on '27 and '28, but it will be lower.

You're welcome, Paul. Thank you.

Our next question comes from Theresa Chen with Barclays. Your line is open.

Yes. Thank you, Theresa. I appreciate the questions. You know, I'd say first and foremost, you know, when we look at 2026, as we mentioned, we continue to believe that 2026 is going to be another year of strong refined product demand. When you look at the estimates out over the next five frankly, over the ten years really, and you look at demand expectations, you see that growth year on year one to 1.2. Growth over that time period.

That's just not domestically, right? We look at it on global basis. Specifically to your question around '26, I think there is supply supply coming online. You've got an Indian refinery and an Asian refinery. I think that's probably somewhere in a range of about a million a day. But the lion's share of that capacity is really pointed toward the pet chem market. And I'd also say, you know, and we've seen this with some other additions, even when you look at Das Bocas or Dangote, the pace at which that capacity comes online is typically a bit slower than what we would otherwise have expected.

So long term fundamentals, support stronger margins. Demand over the long term. This may be for 2026 we saw a little bit of this in 2025, maybe a little more back end loaded. Notwithstanding, you know, some of the macro volatility when we look at OPEC, when we look at Iran, we look at Venezuela, volatility. This could be a little more back end loaded in 2026. But they would be the reasons why we have a strong conviction in the macro and the refining outlook, not only for '26 obviously, but for a longer period of time? So our view really is unchanged.

Our next question comes from Jason Gabelman with TD Cowen. Your line is open.

Hey, Jason. Thanks for the question. So let's first talk about 2025. One of the projects that was not initially in our 2025 guide that we talked about today is our El Paso project. And we started spend in 2025 It'll complete in 2026. I think we talked about the benefits of that particularly when you look at regional benefits there. So that that project will come online in 2026. Also, I think it's reasonable to say you could have had a little bit of inflation creep.

Obviously, LAR was a critical project, as you know, that we completed in 2026. And that should and came up online in the fourth quarter. As Mike has alluded to. When we give our guidance for 2026, we take those things into consideration. So to the extent that inflation estimates stay where we have anticipated, we don't necessarily see that there is inflation uptick in 2026. And again, when we look at that, refining is down twenty percent twenty six versus twenty five. And we continue to say that twenty seven and twenty eight will be below that as well.

Hey, Jason. Thanks. So look, first and foremost, I'd say we come from a position of strength. And it is my belief that when we are looking at ensuring we deliver our objectives both in the short term and the long term, that we have a set of complementary skills and capability and the absolute best leadership team to deliver those shareholder expectations that we continue to talk about. And first and foremost, that's the reason what any leadership team and certainly this leadership team would make a change.

When I think about the things that we, MPs, have been trying to deliver, In fact I should say have delivered. When we think about cost competitiveness we never stop that. When you look at Maria's background, over the last twenty five years in her career, that lean mindset and the work she's done there is a really nice dovetail to what we try to ensure that we are the most competitive in every region where we operate.

So her experience there is important. Strict capital discipline and capital deployment. I think, are another piece of Maria's background that fits so nicely into the things that are critically important for us to deliver shareholder value. When you make any change as think about our board, particularly on strategic decisions, is always a part of those decisions as well. I hope that answers your question, Jason.

You're most welcome.

Our next question comes from Phillip Jungwirth with BMO Capital Markets. Your line is open.

Hey, Phil. Yes, let me try to take that for you. So on MPLX, you know, as you know, we've been talking for quite some time now about our wellhead to water strategy. You've seen some of the investments that we've made both organic and inorganic in particular when we talk about our U. S. Gulf Coast fractionation and export dock We believe strongly in the pool there, I should say the demand pool particularly when you look at the growth coming from LNG, our project fractionation one comes online 2028.

Second 01/2029. Those fracs will be completely full. We just started our secretariat online brings 1.4 Bcf into the region. And then we announced 1.7 when that investment is complete. And then over the export dock, obviously, we see the demand for LPGs growing and you can look at those markets, So think all of that points to strength over the long term in our position. Even where we look at the amount of capital that we're putting to work into the NGL and nat gas space, We talked about some of those earlier today.

So think that's all extremely positive, particularly when you look at demand pool there and a positive for MPC and MPLX MPLX doesn't take on any of that commodity risk and MPC will contract with MPLX and that commercial opportunity is important for MPC going forward as well. I hope that helps.

You're welcome. Our next question comes from Matthew Blair with TPH and Co. Your line is open.

Yes. Thanks for the question. So as I mentioned, we run roughly and we just talked about roughly a 50% sour slate, WCS being one of them. We run the ASCI crudes and ANS as well. Maya for us, as you can see, is typically a very small portion of that sour basket. So it's an overall impact to us really not a concern for us. I think your assessment frankly, on DEF focus is accurate. I think as that reliability has improved, I think there is less Maya available as they are consuming obviously consuming that. I'm going to pass it to Rick because I'm sure Rick will want to add a little more color on some of the specifics for us

You're welcome. Thank you.

Our final question comes from Conor Fitzpatrick with BofA. Your line is open.

Thank you.

Thank you for your participation. Participants, you may disconnect at this time.