Earnings call transcript: Marathon Petroleum beats Q2 2025 forecasts

Marathon Petroleum Corporation (MPC) reported a strong second quarter for 2025, significantly surpassing market expectations with an earnings per share (EPS) of $3.96, compared to the forecasted $3.11. The company’s revenue also exceeded predictions, reaching $34.1 billion against an anticipated $33.04 billion. Despite these positive results, Marathon Petroleum’s stock saw a slight pre-market dip, decreasing by 0.07% to $167.96. According to InvestingPro data, the stock currently trades below its Fair Value, suggesting potential upside opportunity. The company has demonstrated strong momentum, delivering a 21.78% return year-to-date and maintaining relatively low price volatility.

Key Takeaways

• Marathon Petroleum’s Q2 EPS exceeded forecasts by 27.33%.
• Revenue outperformed expectations, with a 3.21% surprise.
• The company’s stock experienced a minor pre-market decline.
• High refinery utilization and strategic investments bolstered performance.
• Continued strong demand for diesel and jet fuel anticipated.

Company Performance

Marathon Petroleum demonstrated robust performance in Q2 2025, with its refineries operating at 97% utilization and processing 2.9 million barrels of crude daily. The strong operational metrics reflect the company’s strategic focus on efficiency and market demand, especially in the refining and marketing segment, which achieved an adjusted EBITDA of $6.79 per barrel. The company continues to leverage its integrated value chain across key U.S. regions, maintaining a competitive edge in the refining market. InvestingPro analysis reveals the company’s solid financial health with an overall score of 2.45 (FAIR), particularly strong in profit metrics and price momentum. InvestingPro subscribers can access 12 additional key insights about Marathon Petroleum’s performance and prospects.

Financial Highlights & InvestingPro Metrics

• Revenue: $34.1 billion, up from forecasted $33.04 billion
• Earnings per share: $3.96, compared to $3.11 forecast
• Adjusted EBITDA: $3.3 billion, a sequential increase of $1.3 billion
• Refinery utilization: 97%, processing 2.9 million barrels per day

Earnings vs. Forecast

Marathon Petroleum’s Q2 2025 earnings provided a positive surprise, with EPS beating forecasts by 27.33% and revenue surpassing expectations by 3.21%. This strong performance is a continuation of the company’s trend of exceeding market predictions, driven by high refinery utilization and strategic investments in refining capacity and innovation.

Market Reaction

Despite the positive earnings report, Marathon Petroleum’s stock experienced a slight pre-market decline of 0.07%, closing at $167.96. This movement is modest compared to its 52-week range of $115.1 to $183.1, suggesting that while the results were strong, investors may be cautious due to broader market conditions or sector-specific challenges.

Outlook & Guidance

Looking ahead, Marathon Petroleum projects a Q3 crude throughput of 2.7 million barrels per day at 92% utilization. The company anticipates turnaround expenses of $400 million in Q3 and $1.4 billion for the full year. Marathon Petroleum expects continued robust demand for diesel and jet fuel, aligning with its strategic investments and operational plans.

Executive Commentary

CEO Mary Anne Mannen emphasized the company’s strong market position, stating, "We believe demand growing somewhere in 1-1.2 million barrels a day." This outlook underscores Marathon Petroleum’s confidence in its competitive assets and market opportunities, particularly in California.

Risks and Challenges

• Potential regulatory changes in California could impact operations.
• Fluctuating crude differentials may affect profitability.
• Supply chain disruptions could pose operational challenges.
• Macroeconomic pressures and geopolitical tensions might influence market dynamics.
• Environmental regulations and sustainability demands could require strategic adjustments.

Q&A

During the earnings call, analysts inquired about the sustainability of Marathon Petroleum’s 105% margin capture strategy and the potential impact of California’s regulatory environment. Executives provided insights into the company’s strategic investments in refining capacity and its outlook on diesel and jet fuel market dynamics, reinforcing their confidence in the company’s growth trajectory.

Full transcript - Marathon Petroleum Corp (MPC) Q2 2025:

Operator: Welcome to the MPC Second Quarter twenty twenty five Earnings Call. My name is Ted, and I’ll 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 Kiserion. Kristina, you may begin.

Kristina Kiserion, Investor Relations, Marathon Petroleum Corporation: Welcome to Marathon Petroleum Corporation’s second quarter twenty twenty five earnings conference call. The slides that accompany this call can be found on our website at marathonpetroleum.com under the Investor tab. Joining me on the call today are Mary Anne Mannen, CEO John Quaid, 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 SEC filings. With that, I will turn the call over to Mary

Mary Anne Mannen, CEO, Marathon Petroleum Corporation: Anne. Thanks, Christina, and good morning, everyone. Our second quarter results reflect actions we have taken to create exceptional value. We delivered 97% utilization, achieving record rates at several refineries throughout the quarter. And we leveraged our fully integrated value chains across the West Coast, Gulf Coast and Mid Con to deliver 105% margin capture.

Current fundamentals, especially strong diesel demand coupled with tight inventory levels remain supportive of strong margins. U. S. Gasoline inventories are in line with five year averages and diesel inventories are at historically low levels. As anticipated, sequentially we saw steady growth across gasoline, diesel and jet.

Our system was ready to run. Higher OPEC plus production and more Canadian supply should lead to crude differentials widening later this year. Our longer term fundamental view supports an enhanced mid cycle environment for refining as we expect demand growth to exceed the net impact of capacity additions and rationalizations through the end of the decade. We expect The U. S.

Refining industry will remain structurally advantaged over the rest of the world. The flexibility of our refining assets and our domestic and international logistical and commercial capabilities further increase our global competitive advantage. We are steadfast in our commitment to safely operate our assets and protect the health and safety of our employees. We continue to advance our operational and commercial capabilities to enhance competitiveness, deliver incremental value and achieve peer leading profitability in each region in which we operate. In the 2025, our Midstream business delivered 5% year over year segment adjusted EBITDA growth.

MPLX is well positioned to support the development plans of its producer customers, especially as demand increases for natural gas powered electricity and LNG imports exports, excuse me. And with the development of its Gulf Coast fractionation facilities, MPLX is positioned to supply growing global demand for NGLs. MPLX’s financial flexibility, its producer customer relationships and strategic roadmap for growth all place it in an excellent position to continue to significantly grow its distributions further enhancing the value of its strategic relationship with MPC. Given our highly advantaged refining and marketing business and the $2,500,000,000 annualized distribution from MPLX, we believe Marathon can lead industry in capital returns through all parts of the cycle. We announced two transactions to further our portfolio optimization for today and the future.

First, MPC’s $425,000,000 divestiture of its partial interest in ethanol production facilities. As the partner’s strategic goals evolved and diverged, an opportunity came for MPC to exit the partnership. We were able to monetize our interest at a very compelling multiple. We were the largest blender of ethanol before and we are the largest blender after the sale. There will be no commercial impacts from the sale.

Second, MPLX announced the strategic acquisition of Northwind Midstream for under $2,400,000,000 Northwind provides sour gas gathering and treating services in the highly prolific Delaware Basin. Increased crude drilling activity in the eastern edge of the Northern Delaware Basin has been enabled by increased sour gas treating and AGL well capacity provided by these assets. The assets will provide prompt treatment solutions for existing and new producer customers. Our fee structure comprises gathering, compression, processing as well as more extensive CO2 and H2S treating. The higher levels of CO2 and H2S warrant a higher fee structure compared to other regions.

On average, this gets to an aggregated rate significantly above other regions. These assets are complementary and adjacent to our existing Delaware Basin natural gas system and will expand MPLX’s treating and blending operations. The addition of 200,000 dedicated acres will increase MPLX’s access to natural gas and NGL volumes. The optionality to direct these new volumes through our integrated system will accelerate our growth opportunities in the Permian. The transaction is expected to be immediately accretive to MPLX’s distributable cash flow and represents a seven times multiple on forecasted 27 EBITDA after the treating system reaches full capacity.

MPLX’s execution of its wellhead to water growth strategy and the ability to accelerate growth opportunities in the Permian extends the duration of its anticipated mid single digit EBITDA growth. We believe execution of our strategic commitments including portfolio optimization will position our integrated system to deliver industry leading capital returns and offer a compelling value proposition for our shareholders. Now I’ll hand it over to John to discuss our financial performance.

John Quaid, CFO, Marathon Petroleum Corporation: Thanks, Mary Anne. Moving to second quarter highlights, slide five provides a summary of our financial results. This morning we reported second quarter net income of $3.96 per share and during the quarter we returned approximately $1,000,000,000 to shareholders through dividends and repurchases. Slide six shows the sequential change in adjusted EBITDA from first quarter to second quarter twenty twenty five and the reconciliation between adjusted EBITDA and our net results for the quarter. Adjusted EBITDA for the quarter was approximately $3,300,000,000 higher sequentially by $1,300,000,000 primarily due to increased results in our Refining and Marketing segment.

Moving to our R and M second quarter segment results on slide seven, our refineries ran at 97% utilization processing 2,900,000 barrels of crude per day. R and N segment adjusted EBITDA was $6.79 per barrel reflecting strong operational and commercial performance. Turning to Slide eight, second quarter capture of 105% was driven by our strategic execution to grow our product channels and favorable secondary product pricing relative to gasoline. Leveraging our integrated value chain, we achieved strong profitable growth through our product sales channels including brand, wholesale and export sales. We are committed to improving our commercial performance and believe we are building capabilities that will provide sustained incremental value and will produce results that can be seen in our financials.

We are also making investments in our refining and marketing segment targeted on growing our margins. The multi year projects at our Robinson and Galveston Bay refineries increase our ability to produce higher value products and the execution of smaller high return quick hit projects drive incremental yield and performance improvements. Slide nine shows our Midstream segment performance for the quarter. Our Midstream segment continues to deliver cash flow growth with year to date segment adjusted EBITDA increasing 5% over last year. In the 2025, MPC received distributions of $619,000,000 from MPLX, a 12.5% increase compared to the $550,000,000 received in the second quarter of last year.

MPLX remains a source of durable growth as it progresses its mid single digit adjusted EBITDA growth strategy. Slide 10 shows our Renewable Diesel segment performance for the quarter. Our Renewable Diesel facilities operated at 76% for the quarter, which included a planned full plant turnaround at our Dickinson facility. Margins improved as we realized incremental 45Z production tax credits in the second quarter and we will continue to focus on optimizing our renewable facilities, leveraging logistics and our pretreatment capabilities. Slide 11 presents the elements of change in our consolidated cash position for the second quarter.

Operating cash flow excluding changes in working capital was 2,600,000,000 for the quarter. Working capital was a $34,000,000 source of cash for the quarter. Inventory drawdowns to normal operating levels were a source of cash, but they were offset by higher product receivables from increased sales volumes. Second quarter capital expenditures, investments and acquisitions were just over $1,000,000,000 approximately $350,000,000 for MPC on a standalone basis and almost $700,000,000 for MPLX. In the quarter MPC repaid $1,250,000,000 in senior notes which matured in May and MPLX redeemed $1,200,000,000 of senior notes which were scheduled to mature in June.

At the end of the quarter MPC had cash of nearly $300,000,000 and MPLX cash of approximately $1,400,000,000 We manage our balance sheet to an investment grade credit profile supported by the $2,500,000,000 and growing annual distribution from MPLX, our strong balance sheet provides us the financial flexibility to execute our strategy. Turning to guidance on slide 12, we provide our third quarter outlook. We are projecting crude throughput volumes of 2,700,000 barrels per day representing utilization of 92%. Turnaround expense is projected to be approximately $400,000,000 in the quarter with activity mainly focused in the Mid Con and West Coast regions. For the full year turnaround expenses are expected to be similar to last year at around 1,400,000,000 Operating costs are projected to be $5.7 per barrel, distribution costs are expected to be $1,500,000,000 and corporate costs are expected to be $240,000,000 With that, let me pass it back to Mary Anne.

Mary Anne Mannen, CEO, Marathon Petroleum Corporation: Thanks John. Our strategic priorities and commitments have produced sustained structural advantages. Safe and reliable operations are foundational. Operational excellence is integral. And paired with strong commercial execution, we should deliver peer leading profitability.

We will continue to optimize our portfolio for today and the future through strategic investments and divestitures such as the sale of our partial interest in ethanol production facilities. We will execute our $1,250,000,000 standalone capital plan for 2025 with 70% targeted on high return projects designed to create optionality and improve our ability to capitalize on market opportunities. MPLX has announced $3,500,000,000 of acquisitions so far this year, enhancing the growth platform of its natural gas and NGL value chain strategy and remains on track to invest $1,700,000,000 on organic growth plans in 2025. MPLX differentiates MPC from peers, providing distributions that we expect to cover MPC’s dividends, standalone capital spending and more. MPLX increased its distribution by 12.5% last year and expects to see similar increases for the next few years.

Our integrated value chain and diversified assets position us to lead in capital allocation. Let me turn the call back to Christina.

Kristina Kiserion, Investor Relations, Marathon Petroleum Corporation: Thanks, Mary Anne. As we open the call for your questions, as a courtesy to other participants, we ask that you limit yourself to one question and a follow-up. If time permits, we will re prompt for additional questions. We will now open the call for questions. Operator?

Operator: Thank you. We’ll now begin the question and answer session. The first question in the queue is from Manav Gupta with UBS. Your line is open.

Manav Gupta, Analyst, UBS: Good morning, Mary Anne. Very strong quarter. I have to ask you this. I know you guys don’t focus so much on it, but 105% capture. I know in the past there are times you go over 100% towards the fourth quarter where things are a little different, but I have never I don’t remember seeing over 100% in the second quarter.

So could you talk about that 105% capture that you achieved in the second quarter?

Mary Anne Mannen, CEO, Marathon Petroleum Corporation: Of course, and good morning. Thank you for your question. We’ve been prioritizing our commercial performance. It has been and will continue to be foundational for us, to deliver peer leading results. The commercial and the value chain optimization teams have been and will remain committed to improving commercial performance and we expect that these are sustainable and we’ll be able to continue to deliver those results in the coming quarters.

We’ve got the scale of our fully integrated system across our three regions. We’ve increased commercial capabilities as you know and we think that those sustainable changes will continue to deliver value in the future. It’s part of our commitment to excellence. And frankly, we expect this to lead to stronger cash flows and our ability to deliver the most cash flow per share. With that, let me pass it to Rick because I’m sure he’s got a few other things that he would like to share with you as well on the performance in the quarter.

Rick, Executive, Marathon Petroleum Corporation: Yes. Hi Manav and thank you for the question. So Mary Anne used the word sustainable. I couldn’t agree more, but I would also say, want to leave you with the fact that we have made and continue to make structural improvements to our organization to better our performance. So I think that’s a key point that I want you to walk away with.

This isn’t a one and done. We expect to maintain this and to continue to improve on our performance. Mary Anne also mentioned our regional optimization. So when you look at our fully integrated value chains within the Mid Con, the West Coast and the Gulf Coast, we believe we’re unparalleled to take advantage of our assets and our connectivity within each region whether that’s moving feedstocks, intermediates, products between one plant or one region to another, we have incredible flexibility. And then Manav, what was mentioned on the call in the second quarter, we certainly achieved strong profitable growth through our product channels, our Marathon brand, our wholesale channel and our international clean product exports.

As well as I’ll leave you with, it’s very well known that diesel cracks have been driving the market as well as jet has been very strong and we leaned in significantly to both of those product channels throughout the quarter. So I hope that helps to give you some color Manav.

Manav Gupta, Analyst, UBS: No, that’s very helpful. My quick follow-up here is we have seen OPEC put in some hikes, more hikes are on the table. We are not seeing still a material widening on the quality discounts. WCS has actually started to move. The last I checked was almost $13 discount to WTI, which does help you a lot.

Mary Anne Mannen, CEO, Marathon Petroleum Corporation: I’m just trying to

Manav Gupta, Analyst, UBS: understand your outlook for the quality discounts as OPEC comes forward with August and September hikes of additional barrels. How do you see those discounts trending into the year end? Thank you.

Rick, Executive, Marathon Petroleum Corporation: Yes. It’s a really good call out Manav. I will tell you that we expect differentials flat out to widen out in the back of the second half this year. As everyone has seen OPEC recently accelerated increasing bringing barrels to market by 547,000 barrels a day by September. And I want to click double click on September for just a moment because that’s key.

What you will find at least in our experience is it will take a month or two Manav for those barrels to impact the global flows and then ultimately impact the spreads. So continue to watch that as 3Q plays out here. And then I’d be remiss if I didn’t chat about the Canadian production as well and where we see everything coming out of Canada. So with Canadian maintenance behind the producers, we’re seeing bullish Canadian production as witnessed by recent apportionment on lines out of Canada for actually six out of the last eight months. And as you know turnarounds are increasing in The Gulf Coast this fall reducing demand for Canadian barrels.

And then here in the middle to end of 3Q, we’re going to have diluent blending kicking in here shortly to swell the pool as well. So we see a lot of positive trends on the Canadian barrel that as you know comes into our system and we can use in a very dynamic way. In fact, there is no one in The United States that can consume more heavy Canadian than us. So we’re looking forward to 3Q, 4Q. As you pointed out Manav, the signals and the differentials are already beginning to change.

Manav Gupta, Analyst, UBS: Thank you so much.

Rick, Executive, Marathon Petroleum Corporation: You’re welcome. Thank you.

Mary Anne Mannen, CEO, Marathon Petroleum Corporation: You’re welcome.

Operator: The next question in the queue is from Paul Cheng with Scotiabank. Your line is now open.

Paul Cheng, Analyst, Scotiabank: Hey guys, good morning.

Mary Anne Mannen, CEO, Marathon Petroleum Corporation: Good morning, Paul.

Paul Cheng, Analyst, Scotiabank: Mary Anne, questions in here. One, maybe this is for Rick. With the two pending California refinery closure, for your system, how you think that is going to impact you? And I would imagine there’s a lot of opportunity for you. Where do you see is the biggest opportunities?

The second question is that on the turnaround expense, you have back to back two years actually pretty heavy turnaround, about $1,400,000,000 spending. Is that considered the cycle high? And over the next several years, what would be a more normal level or average for the cycle? What is the more normal level for the turnaround expense that we can expect? Thank you.

Mary Anne Mannen, CEO, Marathon Petroleum Corporation: Thanks, Paul. First on California, let me share a few thoughts and then I’ll pass it to Rick and he can give you incremental color. On California, we’ve been studying this region as you well know for a long period of time. And one of the things that we’ve said is we believe that we have one of the most competitive regions on the West Coast. Frankly, we’ve shared over the last two years, we’ve put about $700,000,000 to work in our LA asset with a return that we expect in and about 20%.

It will improve efficiency. It will add reliability, obviously generate incremental EBITDA, all at the same time then complying with required NOx emission reductions. And so we think there’s real advantages there as you well know. We think about the number of ICE vehicles remaining in that state, 28,000,000 vehicles. I think about 8,000,000 of those sit in LAR really in very close proximity to our asset as well.

So we’ve made commitments to the region. We continue to feel positive about those commitments we’ve made. And again, this project that I referred to you will be complete this year. I’m going to pass it to Rick and he can give you any incremental color on California.

Rick, Executive, Marathon Petroleum Corporation: Yes. Hi, Paul. So just a few additional items because Marion really covered it well. A couple of things to watch as the closures happen is we will have access to a lot of local California crudes that we don’t have access to today or not as much access to. And we see those as being advantaged barrels.

So look for that to happen. We see that certainly as a tailwind for us being right there in L. A. With our facility. And then I’ll also leave you with, don’t just think of us as L.

A. And L. A. Only. Really think of us as our fully integrated system.

And what I mean by that is our Pacific Northwest. It’s Anacortes and it’s Kenai. So we have the optionality to use all three facilities to play off of one another whether that be providing carb gasoline into the state of California I. E. San Francisco when differentials blow out or to move intermediates between the three facilities.

So, we have a lot of optionality which we believe ultimately gives us a really strong competitive advantage in that region.

Paul Cheng, Analyst, Scotiabank: And Rick, can you also talk about how the impact on the Southwest market where you have the Paso refinery and also into the Rocky Mountain, given that LA is also sending barrel in theory that I mean, they are sending barrel to the Phoenix market. So in theory that those barrel will become lesser and how that you will be able to take advantage?

Rick, Executive, Marathon Petroleum Corporation: Yes, question Paul. I will tell you that El Paso can reach the Phoenix market very efficiently and effectively and we’ll continue to lean into that market even more as all things play out within California. Because ultimately, it’s fair to say that most people know that California is short, right? And it’s going to be even shorter going forward. So that will continue to place more emphasis on our El Paso Refinery to cover the Arizona market.

Mary Anne Mannen, CEO, Marathon Petroleum Corporation: And Paul, I wanted to come back to your second question, think which was around turnaround and whether or not this run rate is what we’re expecting going forward. Just a couple of comments and I’ll pass it to John to give you some of the details. But as you know, we’ve continued to prioritize our peer leading performance and our operational excellence to ensure one, safe and reliable operations and two, the ability to continue to improve profitability per barrel. And a lot of the work that we’ve been doing, quick hit projects, projects that I mentioned as well are all part objective of ensuring the most profitable results, for each of the regions. Let me pass it to John to address your turnaround question.

John Quaid, CFO, Marathon Petroleum Corporation: Yes. Thanks, Mary Anne, and thanks for the question, Paul. I think like you noted, I think we’re still kind of coming out of the backlog from COVID, etcetera, still working through that. So we might be here at the peak as we continue to work through that backlog. And then, I think if you look out a little further beyond that, we’ll see the numbers come back down, although I’m not going to give you a twenty twenty seven guidance on the call today.

But hopefully directionally that gives you a feel for where we are.

: All right. Will do. Thank you.

: Thanks, Paul.

Operator: The next question in the queue is from Neil Mehta with Goldman Sachs. Your line is now open.

Mary Anne Mannen, CEO, Marathon Petroleum Corporation: Yes. Good morning, Mary Anne

: and team. Thanks for all this. First question just around return of capital. Obviously, that’s been a hallmark of MPC coming out of COVID, the amount of you’ve shrunk your share count. Buyback this quarter maybe a little bit lighter than where we’ve been trending.

I don’t know if there was some specific dynamics there or just it’s where we are at this point with the cash balances. But Miriam, maybe you could talk about how you’re thinking about the return of capital specifically around the buyback?

Mary Anne Mannen, CEO, Marathon Petroleum Corporation: Yes. Good morning, Neal. So no change in the way that we think about prioritizing the return of capital. One of the things that we’ve been trying to say is all of the work that we’re doing improving commercial performance, our operational excellence should yield the strongest cash flow per share and therefore allow us to lead in capital return compared to our peers. I think the other thing that I would want to be sure, when we look at MPLX, we’ve been talking about that 12.5% distribution and the potential to continue to grow that over the next few years.

We raised that distribution last year as well. The benefit of that, at least right now is $2,500,000,000 on an annual basis coming to MPC. And as you know, that covers MPC’s dividend to its shareholders and the capital that MPC was planning to put to work in 2025 with some right available for other elements. So as MPLX is able to grow that distribution and that 2.5% improves as well that should further support our ability right to continue to lead in capital return. But I think your statement is accurate.

When you look at the amount of cash flow that we have in terms of our results and how we prioritize that cash flow, these are reasonable ranges. We’ll take a look each quarter at market dynamics, our cash flow expectation, etcetera. But we intend to return all free cash flow in the form of share buybacks. So no change to that at all, Neil. Hope that answers your question.

: That’s really helpful. Thanks, Mary Anne. And then the follow-up just on Galveston Bay. Looked like there was some downtime at the RU unit. Where are we in terms of starting that back up?

And I know you’re working on some projects around the high sulfur distillate and trying to get that into ultra low sulfur diesel. And so where do we stand on that asset that project as well?

Mary Anne Mannen, CEO, Marathon Petroleum Corporation: Yes, certainly, Neil. So really, as you saw in the second quarter, very minimal impact from GBR. I’m going to pass it to Mike here in a moment who will take you through what the plans are for 3Q and walk you through that coming back up, if you will, for GBR. And you’re right, we are also prioritizing capital. Galveston Bay is one of them for the DHT, really trying to optimize that product slate.

We’ve got a couple of other projects Robinson being another one, where we can improve yield. And so we continue to try to put capital to work, very similar to what you say with respect to Galveston Bay. We think that’s important for us from a reliability standpoint, particularly when you look at the level of returns that we can see on those major projects as we’ve shared in at about 20%, Our overall portfolio in at about 30% this year. But let me pass it to Mike and have him walk you through the plans for GBR restart.

Mike, Executive, Marathon Petroleum Corporation: Thank you, Mary Anne. In June, an incident occurred around one of our trains in the ReZED hydrocracker. The refinery team did a great job responding quickly and extinguished the fire with no injuries. We’re roughly about halfway through our phase startup process. The 200 train is up and running and the downstream units are currently stable and we’re working on the 300 train and plan to be operational soon.

Overall, we should be back at planned rates shortly. We are currently optimizing the remaining plant operations around resid containment and, this has been incorporated in our third quarter guidance and is expected to have a minor impact on our capture trends.

Operator: And the next question in the queue is from Doug Leggate with Wolfe Research. Your line is open.

: Thanks. Good morning, everyone. Mariano, I wonder if I could come back to the issue, good morning, of capture please. You and I have had this conversation before about the danger of the perception that when you talk about commercial people think trading and you get a one times multiple. And what I really want to ask is obviously this capture trend has been getting better and it looks like it’s more embedded in the go forward capture rate, which you’ve always talked about as being a kind of 100% target.

So wonder if I could put you on the spot a little bit and say well if this is repeatable what is the new capture rate? What is the new sustainable capture rate that you would expect out of your system or is it still too early to answer?

Mary Anne Mannen, CEO, Marathon Petroleum Corporation: Yes, Doug, thanks. So a couple of things. One, and I hope you heard both from the earlier question around capture both Rick and myself speak about sustainable changes. As you mentioned, we’ve been talking about it for a period of time. We’ve continued to prioritize our commercial performance.

We’ve talked about some of the things that we’ve done, giving us greater visibility as we look at operations not only in Findlay, but in Houston, in London and in Singapore. We think those provide us sustainable change in visibility. It’s an area where we continue to prioritize. I don’t think you heard in Rick’s response that he talked about, onetime results in trading. Now certainly, we look to optimize in the prompt as well.

But a lot of the work that we’re doing is really quite different. And that is really sustainable looking at the way that we make our decisions, looking at the tools and the capabilities that we have to make decisions more rapidly. Those would be the things that I would point to. It’s a challenge to call capture from quarter to quarter. And the reason for that obviously is some of those things are not within our control.

We’ll use the phrase you’ve heard us say it, we’re going to control the things we can. Obviously, as prices move up or down more rapidly, the impact on secondary. Rick talked about brand. Rick talked about across the value chains and the integrations there. These are the types of changes that he and the rest of the commercial team have been making.

So we prioritize commercial for a period of time and we will continue to do that and ensure that we can deliver results quarter after quarter. I’m going to pause Doug.

: You know what I’m getting at right because when Shell and others talk about trading is kind of a one time is multiple business and I just want to make sure that we are interpreting it correctly. My follow-up, Marianne, you don’t mind is on cash taxes. Some of the question we ask of the E and Ps, but it seems to us although you don’t disclose the full detail of your cash flow statement, It seems to us that we’re starting to see some benefit maybe of the One Big Beautiful Bill on some of the investments you made on the West Coast. I wonder if you could maybe offer some insight as to whether you are getting accelerated bonus depreciation not just in the West Coast, but your planned projects over the next year or so around the portfolio as well?

John Quaid, CFO, Marathon Petroleum Corporation: Hey, morning Doug, it’s John. I’ll just step in and take that one. I think you’re spot on, right? We’re capital intensive business and going back to full expensing on a permanent basis and rolling that back to January, there’s a nice cash tax benefit that we’re going to be expecting to see versus where those rates had lowered under the previous legislation. We don’t mind the federal rates staying at 21 as well, but certainly a nice cash flow benefit from bonus depreciation.

: Can you quantify it John?

John Quaid, CFO, Marathon Petroleum Corporation: No, don’t know if I want to do that here today. I think you’ll see that as we start to report in our quarterly results and we’ll speak to it then.

: Got it. Thanks so much.

Kristina Kiserion, Investor Relations, Marathon Petroleum Corporation0: Thanks, Doug.

Operator: And the next question in the queue is from Jason Gabelman with TD Cowen. Your line is open.

Kristina Kiserion, Investor Relations, Marathon Petroleum Corporation0: Start on the balance sheet and it seems like you leaned on it a bit more this quarter to support buybacks. If I think about prior guidance, I think it included $7,000,000,000 gross debt at the parent and $1,000,000,000 of cash. So $6,000,000,000 of net debt and I think you’re closer to $7,500,000,000 now. So can you talk about if your targets for net debt have changed or if there are one offs in the quarter that impact in net debt that you’d expect to reverse?

John Quaid, CFO, Marathon Petroleum Corporation: Yes. Hey, Jason, it’s John. I’ll take that one. Yes, I think, look, I don’t know that I’d look too much this quarter and I’ll try and walk you through some pieces because our targets have not changed of being around $1,000,000,000 on the cash and the debt targets you mentioned from a gross debt standpoint. I think here, you heard us talk about the sale of this interest in our ethanol JV, which closed last week.

That cash is in the bank. We knew kind of where we were with that as we went into the end of the quarter. And again, from quarter end to quarter end, you’re going to get some timing things that come through. I guess the clearest way I can kind of maybe put you at ease is we just closed here the month of July. We’re pretty much right back to our $1,000,000,000 of cash on the balance sheet.

Kristina Kiserion, Investor Relations, Marathon Petroleum Corporation0: Got it. That’s helpful. And then my other question is kind of strategic initiatives. And at the June investor event you held, you talked about a few things that I was hoping you could update us on. One of them being targeting moving more barrels from kind of Eastern pad to further East, one on interest in Petchem bolt ons and then the last on kind of organic Gulf Coast capacity growth.

And I’m not sure if any of those really were had more fully baked plans behind them or if those were things you were initially exploring, but was just hoping to get any additional color on those if you have any to share?

Mary Anne Mannen, CEO, Marathon Petroleum Corporation: Sure, Jason. Maybe just a couple of comments and I’ll pass it to Rick, to address a few of them that you had embedded in there that we shared, when we were together in June. Certainly portfolio optimization, is a strategic priority for us. As an example, we talked about the Andersons today. So, we continue to ensure that the portfolio that we have for today as well as the portfolio we see necessary to carry out our strategic objectives both at MPC and MPLX are where they need to be.

Ensuring the competitive nature of all of those assets and optimizing our profitability across all three regions that we operate is one of the key tenets of our strategic opportunities. So, just wanted to be sure, we’ll continue to look for those, and ensure that the portfolio is appropriate for now and for the long term. I’ll pass it to Rick and he can address some of the specifics that you mentioned.

Rick, Executive, Marathon Petroleum Corporation: Yes, Jason. Maybe the one item I can give you a brief update on from the last time we spoke is clearing Mid Con barrels. So that’s a focus of ours every day all day long, but especially in the wintertime when demand shrinks in the Midwest. So we continue to push, look for opportunities to push East. There is a third party pipeline that is supposed to come online, I would call it early to mid 4Q, which we would certainly take advantage of and push barrels east on it as well as we push barrels towards the Gulf Coast into the Nashville market and other markets.

So we’ve been doing that for years, but there’s a more concentrated effort to push into those markets today more than ever. And then the East Coast will truly be an incremental barrel that we look to clear here by the end of 4Q.

Kristina Kiserion, Investor Relations, Marathon Petroleum Corporation0: Great. Thanks for the updates.

Rick, Executive, Marathon Petroleum Corporation: Thank you.

Mary Anne Mannen, CEO, Marathon Petroleum Corporation: You’re welcome, Jason.

Operator: And the next question in the queue is from Theresa Chen with Barclays. Your line is now open.

Kristina Kiserion, Investor Relations, Marathon Petroleum Corporation1: Thank you for taking my questions. Maybe turning back on the macro. As we see the evolution of capacity curtailments and limited additions, How do you view the net capacity outlook for the global refining kit between the near to medium term and its relative impact on your assets?

Mary Anne Mannen, CEO, Marathon Petroleum Corporation: Hey, Theresa. Thank you. Look, overall, as you well know, we’ve been very constructive in the long term on our refining space. As you well know, we’ve seen capacity reductions coming offline in the beginning of this year. When you add in total that which has been announced and that which needs to still come offline, I think we’re approaching over 1,000,000 barrels a day granted some of that will happen into next year.

When you look at incremental supply Dangote and Das Bocas have started up, still some challenges along the way. That’s close to 900,000,000 to $1,000,000 once they get to full capacity. And then there’s a few more smaller potentially European and Asian that could come offline. We believe demand growing somewhere in the 1,000,000 to 1,200,000 barrels a day. So once you sort of get past this balance here with additions and supply coming online or offline, excuse me, we see it to be extremely constructive, so globally.

Again, The U. S, we think, we remain quite advantaged. And the work that we’re doing across our portfolio, we think should give us good opportunity to continue to lead there.

Kristina Kiserion, Investor Relations, Marathon Petroleum Corporation1: Understood. And longer term as far as the strategic path forward with significant growth announcements within your Midstream portfolio, both organically and inorganically thus far this year, What do you think of the next frontier of growth for MPC?

Mary Anne Mannen, CEO, Marathon Petroleum Corporation: I’d say, look, in the short term, as we continue to grow MPLX, that distribution growth coming back to MPC gives us flexibility to return capital. I mentioned earlier, the importance of our portfolio optimization, ensuring that the assets that we have today and those that we have in the future support our long term strategic plans. As you know, with the announcement of our frac and export dock on the midstream side, Our ability to market LPGs in the export market continues to be an opportunity for us to grow in that space as well. There would be a few things, Teresa, that I would tell you in the short term support, how we see MPC.

Kristina Kiserion, Investor Relations, Marathon Petroleum Corporation1: Thank you very much.

Mary Anne Mannen, CEO, Marathon Petroleum Corporation: You are welcome.

Operator: And the next question in the queue is from Matthew Blair with TPH. Your line is now open.

Kristina Kiserion, Investor Relations, Marathon Petroleum Corporation2: Thank you and good morning. Could you talk a little bit about the factors behind the recent strength in diesel cracks? I think you previously mentioned low inventories and pretty good demand. But how sustainable do you think this is? Should we expect strong diesel cracks for the rest of the year and into 2026?

Thanks.

Rick, Executive, Marathon Petroleum Corporation: Yes. Hi, Matt. It’s Rick. So you nailed it. The core reasons are U.

S. Inventories. As you know, they’re at five year lows or below. We’ve not seen this these type of inventories from a diesel perspective in a long time. And the signals that we’re getting from a diesel demand perspective with, not only our over the road customers, but through our ag customers is very healthy.

And then we’re also seeing strong jet demand. So as you produce more jet, you’re cutting that’s pulling away from diesel. So that just adds to the diesel strength. And so as we look forward, we continue to see a healthy premium persisting through the rest of the year, especially if we get a cold winter. We’re in the midst of, as you very well know, hurricane season.

So if there are some weather disruptions that could also be a tailwind. So with all that being said, over the next three to four months, we’re quite constructive on diesel cracks being sustained at levels similar to where they’re at today, Matt.

Kristina Kiserion, Investor Relations, Marathon Petroleum Corporation2: Sounds good. And then could you also share a little bit more behind the thinking of divesting the ethanol stake? Looks like the valuation was quite attractive, approximately $1.7 per gallon. I think some of the public peers trade much closer to $1 per gallon. But were there any other factors that led you to exit the JV?

Also should we think about the proceeds as being earmarked for share buybacks? Thank you.

Mary Anne Mannen, CEO, Marathon Petroleum Corporation: Yes. Thanks for your question. I think you said it well. We received what we thought was a compelling offer for our partner. We have been the largest ethanol blender and we will continue to be.

There’s no change there, really no change to the commercial outlook. When we think about this JV, the opportunities that we saw to put capital to work versus the opportunities that our partners saw, were different. And so we took the opportunity to optimize our portfolio for the future. And I think you characterized the economics well.

Kristina Kiserion, Investor Relations, Marathon Petroleum Corporation2: Great. Thank you.

Mary Anne Mannen, CEO, Marathon Petroleum Corporation: You’re welcome. Thank you.

Operator: The next question in the queue is from Philip Junkworth with BMO Capital Markets. Your line is now open.

Kristina Kiserion, Investor Relations, Marathon Petroleum Corporation3: Thanks. Good morning. More on the midstream side, a number of the major Appalachia producers are pointing potential growth in coming years with incremental in basin demand, new takeaway. You have the processing expansion, but wondering what other areas of the value chain could you see yourselves participating in across the midstream build out? And how are you viewing these opportunities versus the Permian?

Kristina Kiserion, Investor Relations, Marathon Petroleum Corporation4: Hey, Philip, this is Dave. I’ll take that. So I’m going to take it from two different angles. I’ll touch it from the NGL side and also from the nat gas side. So let me start with the NGL side.

So when we’ve looked at our business, it’s really around the continued evolution and optimization of those strategies. When you look at the Permian NGL, you touched on the processing side. We recently acquired 100% of our Bengal pipeline, announced our Gulf Coast fractionation export terminal project. But again, don’t stop. They continue to evolve.

So as you look forward on the NGL side, one of the reasons we’re excited about it, is with our JV with ONEOK, with our relationship between MPC and MPLX. We have some of the largest advantaged refineries in The U. S. Gulf Coast. So think of integration with those.

And then also think about the Gulf Coast, the large petrochemical platform and the integration opportunities around the petchem down the road. So I think that kind of gives you a view of what we’re thinking about on the NGL side going forward. If you go to the nat gas side, out of the Permian, I’ll start by saying, we believe incremental takeaway capacity is necessary, in the Permian for the nat gas. That’s really being driven by not only the growth of nat gas in the Permian, but also from the demand side really driven by the LNG complexes down in U. S.

Gulf Coast. That is being complemented a little bit with a lot of the discussion around the growth in the data center side, but the main drivers being the LNG. So if you think about our previously announced projects, a lot of them around the JV, we’ve been really pleased with the pace of our volume growth, our ramps from FID to full capacity in our JV. So think about the Whistler, the Matterhorn, Blackcomb, those long haul pipes coming out of the basin. In addition, think about our announcement of Traverse and the subsequent expansion of 2.5 Bcf a day, the connection between Agua Dulce and Katy and the increased flexibility that gives our customers.

And the last piece I want you to maybe keep in your mind is the final connectivity to those LNG facilities I touched on earlier, think of ADCC and Bay Runner. So, with all that said, based on the continued strong demand we’re seeing, the production growth, the interest from our business partners, we believe there’s still a lot of opportunities going forward in that space. Hopefully that helps.

Rick, Executive, Marathon Petroleum Corporation: And hey, Philip, this is Rick. Just one other item maybe to point out on the Utica Marcellus. So we have a healthy demand for condensate in the region. We have condensate splitters at Canton and at Catlettsburg. And over the years, we’ve built out quite a system to connect to the Utica Marcellus region to get access to those barrels and we’re continuing to look for new opportunities to even lean into it more so.

So keep your eyes open there.

Kristina Kiserion, Investor Relations, Marathon Petroleum Corporation3: Yes. And we saw some producer consolidation there during the quarter, which might help also. Then just on California refining, so the legislature is currently looking at a number of potential regulatory changes, including RVP waivers, E15, LTFS caps, streamlining refining permit and also a regional gasoline spec. So a lot there, but just any view on how you would see some of the changes impacting market conditions, potential changes, or just helping to offset some of the impact from closures?

Mary Anne Mannen, CEO, Marathon Petroleum Corporation: Yes, Philip, thank you. Just a couple of things really about California. I think it’s interesting, you talked about several of the initiatives, thoughts, changes, etcetera. We’ve been dealing with the potential for minimum inventory requirements, not necessarily sure whether it’s on production or on demand. There was a point in time at which perhaps, the state was considering actually running refineries to ensure that there was ample supply and others.

I think one of the things that we are seeing now, with respect to some of the closures that have been announced also is a shift from some of this, rulemaking and trying to be more structured around that to a way that the state is really trying to ensure that there will be ample fuel supply to meet customer demand. And then you talk about a series of other changes. I think you mentioned, a couple of them. I’m going to ask Jim to give you his thoughts as we really track what’s been happening in California to some of those that could have some meaningful impact either in a positive or a negative way. But I’ll ask Jim to share some of that with you.

Kristina Kiserion, Investor Relations, Marathon Petroleum Corporation5: Thanks, Phil. We’ve been dealing with carve on a lot of matters to help kind of expedite permitting through the state on a few of the projects we’re looking at, some of the maintenance projects that currently get held up, by the CEQUA process. So we find the agencies are very open right now to those discussions, and we do think some good benefits will come out of them. So I would say, all in all, they’ve been much more receptive, I think, to the items we need, to execute our refineries in the state.

Kristina Kiserion, Investor Relations, Marathon Petroleum Corporation0: Thanks. You’re welcome.

Operator: And the next question in the queue is from Ryan Todd with Piper Sandler. Your line is open.

Kristina Kiserion, Investor Relations, Marathon Petroleum Corporation2: Good, thanks. Good

Kristina Kiserion, Investor Relations, Marathon Petroleum Corporation5: one for me the biofuel side and renewable diesel, nice improvement quarter on quarter. But if we take a step back and look at the macro backdrop, you’ve had a couple of positive regulatory steps in the right direction this year, but margins have stayed pretty rough. Is this lingering uncertainty, this lag effect as we work through credit banks? Or as you look into the back half of this year and into 2026, what do you think we need to see for the market to tighten up and margins to move higher?

Mary Anne Mannen, CEO, Marathon Petroleum Corporation: Yes. Thanks for the question. I would say this. First and foremost, you’ve seen the approach that we and PC have taken in renewable diesel. And as you know, it’s a fairly small portion of our daily throughput.

We’ve got about 12,000 a day in Dickinson. We produce 48,000 a day at Martinez of which 24,000, is ours. So a pretty small percentage if you allow me to round up right at 50 a day versus our 3,000,000 barrels a day. We’ve tried to take a prudent approach to putting capital to work there, particularly on Martinez as well. I think you said it well, there’s clearly some things that need to have happened in order for the economics to improve.

We believe we have, frankly one of the most competitive assets, but certainly, the incremental regulation and other changes in order to get the margins to improve are critical for the longer term.

Kristina Kiserion, Investor Relations, Marathon Petroleum Corporation5: Great. Thanks, Maria.

Mary Anne Mannen, CEO, Marathon Petroleum Corporation: You’re welcome.

Operator: And the next question in the queue is from Joe Lache with Morgan Stanley. Your line is open.

Kristina Kiserion, Investor Relations, Marathon Petroleum Corporation6: Hey, good morning, team. Thanks for taking my questions. I just wanted to go back to California and we talked about peers closing facilities while Marathon continues to invest in its L. A. Refinery.

I know currently you’re investing to reduce operating costs and lower emissions. But looking ahead, you talk to how you think about further investments or expansions at L. A. To take advantage of a market that’s becoming increasingly short gasoline and jet?

Mary Anne Mannen, CEO, Marathon Petroleum Corporation: Certainly. And thank you for that. That project, we expect to really come online by the end of this year. We think it’s about a 20 ish percent return. As I mentioned, improves reliability, reduces overall cost, adds efficiency while committing to NOx reduction emissions, etcetera.

Going forward, I think, what we would be looking at is really all focused on improving the reliability of that asset. As we’ve talked about, one of the things that we are trying to achieve is being the most profitable in every region where we operate. And reliability and commercial execution obviously are key to that. So what we’re looking at right now would be really committing work that would improve the overall reliability of the assets at LAR.

Kristina Kiserion, Investor Relations, Marathon Petroleum Corporation6: Thanks. That’s helpful. And then on the refining side, would you mind just giving us an update on your demand outlook here for gasoline heading into the end of the summer? And then what are you currently seeing in your system relative to last year? Thank you.

Rick, Executive, Marathon Petroleum Corporation: Yes, Joe. We continue to see strong, and what I would characterize as stable compared to last year gasoline demand. We’re having a good summer driving season. A lot of times when you get to the point in time where we’re at in the summer, you would see quite a fall off and we’re not seeing that yet. So we’re very constructive.

Kristina Kiserion, Investor Relations, Marathon Petroleum Corporation6: Great. Thank you.

Rick, Executive, Marathon Petroleum Corporation: Thank you.

Manav Gupta, Analyst, UBS: You’re welcome.

Operator: And the final question in the queue is from Connor Fitzpatrick with Bank of America. Your line is open.

Kristina Kiserion, Investor Relations, Marathon Petroleum Corporation7: Hi, everybody. Thanks for taking my question. Diskillist strength and broader tightness in heavier molecules have been discussed a bit already, but diesel and jet differentials appear to have been particularly strong in the Mid Con and West Coast in recent weeks. What are you seeing in those regions that could be driving that?

Rick, Executive, Marathon Petroleum Corporation: Yes, Conor, this is Rick. I think what you’re seeing is you’re seeing more refiners running a sweeter slate and that shorts diesel and jet and thus you’re seeing octane spreads blow out in the Mid Con. So but I think it’s a slate call one and then it’s a demand call two. So when you put both of those on top of one another, I think that explains the majority of why you’re seeing that phenomenon.

Kristina Kiserion, Investor Relations, Marathon Petroleum Corporation7: Okay. Thanks. That’s all I had.

Rick, Executive, Marathon Petroleum Corporation: Thank you.

Manav Gupta, Analyst, UBS: You’re welcome, Connor.

Operator: And with no further questions, I’ll turn the call back over to Christina.

Kristina Kiserion, Investor Relations, Marathon Petroleum Corporation: Thank you for your interest in Marathon Petroleum Corporation. Should you have additional questions or want clarification on topics discussed this morning, please contact us. Our team will be available to take your calls. Thank you for joining us today.

Operator: This concludes today’s call. Thank you for your participation. You may disconnect at this time.

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