Earnings call transcript: Marathon Petroleum Q3 2025 misses EPS, revenue up

Marathon Petroleum Corp reported its Q3 2025 earnings with an adjusted EPS of $3.01, falling short of the forecasted $3.19, marking a surprise of -5.64%. However, the company exceeded revenue expectations, reporting $34.81 billion against a forecast of $33.53 billion, a surprise of 3.82%. Despite the revenue beat, Marathon’s stock dropped 7.01% in pre-market trading, reflecting investor concerns over the earnings miss.

Key Takeaways

• Marathon Petroleum’s Q3 2025 EPS missed expectations by 5.64%.
• Revenue surpassed forecasts by 3.82%, reaching $34.81 billion.
• Stock price fell 7.01% in pre-market trading following the earnings release.
• Dividend increased by 10%, with $3.2 billion returned to shareholders in Q3.
• Renewable diesel facilities operated at 86% utilization.

Company Performance

Marathon Petroleum demonstrated robust revenue growth in Q3 2025, driven by strong operational performance and strategic initiatives. The company processed 2.8 million barrels of crude per day, achieving a refinery utilization rate of 95%. Despite the EPS miss, Marathon maintained a strong cash position and increased dividends, signaling confidence in its financial health.

Financial Highlights

• Revenue: $34.81 billion, up from forecasted $33.53 billion.
• Earnings per share: $3.01, below the forecast of $3.19.
• Adjusted EBITDA: $3.2 billion.
• Operating cash flow: $2.4 billion.
• Year-to-date cash generation: $6 billion.

Earnings vs. Forecast

Marathon Petroleum’s Q3 2025 EPS of $3.01 fell short of the forecasted $3.19, resulting in a negative surprise of 5.64%. However, the company exceeded revenue expectations with $34.81 billion against a forecast of $33.53 billion, a positive surprise of 3.82%. This mixed performance reflects the challenges and opportunities in the current market environment.

Market Reaction

Following the earnings announcement, Marathon Petroleum’s stock fell 7.01% in pre-market trading, with a price decrease of $13.72 to $180.5. This decline reflects investor concerns over the EPS miss, despite the revenue beat. The stock’s performance contrasts with its 52-week high of $201.61, indicating market caution.

Outlook & Guidance

Looking ahead, Marathon Petroleum expects 2026 capital expenditures to be below 2025 levels. The company anticipates $2.8 billion in annual distributions from MPLX in 2025, with potential growth to $3.5 billion by 2026. Marathon remains confident in a mid-cycle margin environment and its ability to lead in cash generation.

Executive Commentary

CEO Maryann Mannen stated, "We believe that we should be able to lead in cash generation through cycle, delivering peer-leading results." She also noted, "Current market fundamentals are indicative of tightness in supply and supportive demand, which we believe will persist into 2026." CFO Rick added, "We’re getting a lot of positive signals today that would lead us to be very bullish looking forward."

Risks and Challenges

• Supply chain disruptions could impact refinery operations.
• Market saturation in gasoline could pressure margins.
• Renewable diesel market uncertainties may affect future growth.
• Macroeconomic pressures could influence demand trends.
• Regulatory changes in the West Coast refining market could pose challenges.

Q&A

During the earnings call, analysts inquired about inventory impacts on Q3 capture rates, West Coast market dynamics, and renewable diesel market uncertainties. Marathon’s management provided insights into crude sourcing strategies and explored midstream growth opportunities, addressing key investor concerns.

Full transcript - Marathon Petroleum Corp (MPC) Q3 2025:

Operator: Welcome to the MPC third quarter 2025 earnings call. My name is Shirley, 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. Press star one on your touch-tone 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.

Kristina Kazarian, Investor Relations, Marathon Petroleum Corporation: Welcome to Marathon Petroleum Corporation’s third quarter 2025 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 Maryann 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 Maryann.

Maryann Mannen, CEO, Marathon Petroleum Corporation: Thanks, Kristina, and good morning. I’d like to take a moment to recognize Mike Hennigan. At the end of the year, Mike will be stepping down as Executive Chairman. Mike’s guidance has been tremendously valuable to our board, to me, and our entire leadership team. We thank him for his service as well as all of his contributions. He will be missed. In the third quarter, we delivered strong cash generation of $2.4 billion. Utilization in the quarter was 95%. As we executed our planned refinery turnarounds safely and on time, our team delivered 96% capture despite significant market-driven headwinds. Year to date, capture is 102%. This compares to the prior year’s level of 95%. We believe this demonstrates our commitment to deliver sustainable, improving commercial performance in varying market conditions.

We have generated $6 billion of operating cash flow, excluding changes in working capital, and have returned $3.2 billion to shareholders through the third quarter. Last week, we announced a 10% increase to MPC’s dividend, reflecting our confidence in our business outlook. We believe that we should be able to lead in cash generation through cycle, delivering peer-leading results. In October, our blended crack was over $15 per barrel, which is seasonally strong, and more than $5 per barrel, or 50% higher than the same time period last year. Diesel and jet demand are up modestly across our system, while gasoline is flat to slightly lower. The product inventory draws reported last week signal strong demand. Gasoline and distillate inventory levels remain below five-year averages. Current market fundamentals are indicative of tightness in supply and supportive demand, which we believe will persist into 2026.

Throughout the quarter, we completed several transactions, advancing our strategic objectives and optimizing our portfolio. We sold our interest in an ethanol production joint venture. As the partner’s strategic goals evolved and diverged, an opportunity came for MPC to exit the partnership at a compelling multiple. MPLX acquired a Delaware Basin sour gas treating business and the remaining 55% interest in the Banegas NGL pipeline. These transactions further MPLX’s growth profile. MPLX increased its distribution this quarter, reflecting conviction in its growth outlook. We now expect to receive $2.8 billion annually from MPLX. MPLX continues to target a distribution growth rate of 12.5% over the next couple of years, which would imply annual cash distributions to MPC of over $3.5 billion. We are driving value and positioning MPC to be industry-leading in its own capital return program.

With our competitive integrated refining and marketing value chains and durable midstream growth driving 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 John to discuss our financial performance.

John Quaid, CFO, Marathon Petroleum Corporation: Thanks, Maryann. Moving to third quarter highlights, slide four provides a summary of our financial results. This morning, we reported third quarter adjusted net income of $3.01 per share. We delivered adjusted EBITDA of $3.2 billion and $2.4 billion of cash flow from operations, excluding changes in working capital. MPC returned over $900 million of capital to shareholders in the quarter, with repurchases of $650 million and dividends of $276 million. Slide five shows the sequential change in adjusted EBITDA from second quarter to third quarter and the reconciliation between adjusted EBITDA and our net results for the quarter. Third quarter adjusted EBITDA of $3.2 billion was largely in line with the prior quarter. R&M segment results on slide six were strong, with adjusted EBITDA of $6.37 per barrel.

Our refineries ran at 95% utilization, processing 2.8 million barrels of crude per day, and several of our refineries achieved monthly throughput records in the quarter, including Robinson and Detroit in the Midcon and Anacortes in the West Coast. Midcon margins strengthened sequentially, but were offset by declining margins in the U.S. Gulf Coast and the West Coast. Turning to slide seven, third quarter capture was 96% with headwinds in the West Coast and the Gulf Coast. Jet to diesel differentials compressed. We faced lower clean product margins, and inventory changes contributed headwinds to capture. The downtime of our Galveston Bay refinery REZID Hydrocracker was also a headwind to capture of almost 2% across the whole system, with a larger effect on our Gulf Coast results. Slide eight shows our midstream segment performance for the quarter. Segment-adjusted EBITDA increased 5% year over year.

MPLX is executing its growth strategy, targeting its natural gas and NGL value chains, and remains a source of durable cash flow growth for MPC. Slide nine shows our renewable diesel segment performance for the quarter. Our renewable diesel facilities operated at 86% utilization, reflecting improved operational reliability. Margins were weaker in the third quarter, as higher diesel prices and RIN values were more than offset by higher feedstock costs. We will continue to optimize our renewable operations, leveraging their logistics and pretreatment capabilities. Slide 10 presents the elements of change in our consolidated cash position for the third quarter. Operating cash flow, excluding changes in working capital, was $2.4 billion, and in the third quarter, MPLX completed acquisitions of over $3 billion and issued debt in connection with those acquisitions to finance them.

Also, as we discussed with you last quarter, our second quarter share repurchases were influenced by the anticipated proceeds from the sale of our interest in the ethanol joint venture, which closed in July. At the end of the quarter, MPC had cash of nearly $900 million, and MPLX had cash of approximately $1.8 billion. Turning to guidance on slide 11, we provide our fourth quarter outlook. We are projecting crude throughput volumes of 2.7 million barrels per day, representing utilization of 90%. The Galveston Bay REZID Hydrocracker is expected to be at full operating capacity before the end of the month, enabling optimization of our Gulf Coast system. Turnaround expense is projected to be approximately $420 million in the fourth quarter, with activity mainly focused in the West Coast.

We are completing our multi-year infrastructure improvement project at our Los Angeles refinery in the fourth quarter, with startup scheduled to align with the conclusion of planned turnaround work before the end of this month. These improvements are intended to strengthen the competitiveness of our Los Angeles refinery and position us to remain one of the most cost-competitive players in the region for years to come. Operating costs for the fourth quarter are projected to be $5.80 per barrel. Distribution costs are projected to be approximately $1.6 billion, and corporate costs are expected to be $240 million. With that, let me pass it back to Maryann.

Maryann Mannen, CEO, Marathon Petroleum Corporation: Thanks, John. We delivered a strong quarter in refining and marketing. Safe and reliable operations are foundational. Operational excellence is integral. The commercial team is optimizing decision-making as we leverage our value chains and capture opportunities the market presents. We are optimizing our portfolio through strategic investments. Fourth quarter refining cracks have started out stronger than seasonal averages. Current fundamentals highlight the market tightness and support our enhanced mid-cycle outlook into 2026. Our integrated value chains and geographically diversified assets position us to lead in capital allocation and offer a compelling value proposition to our shareholders. Let me turn the call back to Kristina.

Kristina Kazarian, Investor Relations, Marathon Petroleum Corporation: Thanks, Maryann. As we open your call for 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 reprompt for additional questions. Shirley, could you please open the line for questions?

Operator: 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’re 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 comes from Neil Mehta with Goldman Sachs. Your line is open. You may ask your question.

Neil Mehta, Analyst, Goldman Sachs: Yeah, good morning, Maryann and team. Maryann, congrats on the chairmanship as well. The question I had was really around capture rates in the quarter. We’ve gotten so used to you putting up north of 100%. 96% felt a little softer. I think you called out some stuff in the script, a little bit about the RUE, but also some West Coast dynamics around diesel and jet. I was wondering if you could unpack that for us here.

Maryann Mannen, CEO, Marathon Petroleum Corporation: Yeah, certainly. And good morning, Neil. Thanks for your questions. So absolutely, in the quarter, we generated 96% capture, sequentially down from the second quarter capture, excuse me, of 105%. I would say that the West Coast was the leading driver in the quarter. It accounted for more than 50% of the capture change. We actually saw clean product margins fall about 40% in the West Coast. The jet premium to diesel narrowed. In fact, it actually moved from a benefit to a negative. And then, of course, as you know, secondary product margins were clearly a headwind. So again, West Coast really the majority of the driver for the sequential change in capture. Second, and John, as you said, mentioned it in his remarks as well, the REZID, and Mike shared with you sort of the status of that on our last earnings call.

Obviously, its downtime impacted the quarter, and then also the jet to diesel there. Year to date, as I mentioned, our capture is at 102% through the third quarter, and that compares to 95% the prior year quarter. So what we’re hoping that you see is the sustainable changes that we have been working on over the last few years will continue to serve us well. Our headwinds were certainly a challenge. Fourth quarter, as you know, is typically our strongest quarter for many reasons, and we’ll share a little bit more with you there. But we certainly don’t see the fourth quarter being any different than we have in prior quarters as well. So let me pass it to Rick, and he’ll give you some incremental color as well, Neil.

John Quaid, CFO, Marathon Petroleum Corporation: Yeah, hi, Neil. Just a couple of comments additional to Maryann. So we are off to a good start in the fourth quarter. We’ve seen the jet and product margins go right back to normal levels, so that’s quite encouraging. We’re one month through the quarter, but signals look promising. And the other item that I’d add on 3Q specifically is we built butane inventory in 3Q, and we’re heading into blending season. So as we go into 4Q now, the building of inventory hit that we took in 3Q will be a tailwind in the fourth quarter. So. We look to be in really good shape here, Neil, heading into the fourth quarter.

Neil Mehta, Analyst, Goldman Sachs: Yeah, thanks, Maryann and Rick. And then the follow-ups just on return of capital. It was a little bit lighter from a buyback perspective than, again, I think where the street was modeling. Can you just talk about how you’re thinking about the share repurchase going forward?

Maryann Mannen, CEO, Marathon Petroleum Corporation: Yeah, certainly. Happy to do so, Neil. Thank you. No change in terms of the way that we view our primary return of capital using share buyback. As you know, essentially what we’ve said, and you heard we’ve announced a 12.5% distribution increase at MPLX, and that brings about $2.8 billion back on the MPC side. So our ability, as we said, given the differentiation with our midstream distribution, should allow us to lead in capital returns. And you can see that on a year-to-date basis, share those statistics there with you. No change, Neil, in our ability to continue to lead in share purchase. No change in the way we view it. And it will be, as you know, the primary return of capital going forward.

Neil Mehta, Analyst, Goldman Sachs: Perfect. Thanks, Maryann.

Maryann Mannen, CEO, Marathon Petroleum Corporation: You’re welcome, Neil. Thank you.

Operator: Our next question comes from Manav Gupta with UBS. Your line is open. You may ask your question.

Manav Gupta, Analyst, UBS: So I’m going to start with the West Coast. We understand capture can move around a bit. It should not matter that much. But when we look at the West Coast, one big refinery has closed in your backyard. Another one will most likely close in the next three to four months. And yes, there are some product pipelines that might show up, but they might not show up for three years. So I’m just trying to understand, given the setup and the upgrade you are doing at your refinery, could we see you generate above mid-cycle margins on the West Coast for next maybe eight or even 12 quarters? Can you talk a little bit about that?

John Quaid, CFO, Marathon Petroleum Corporation: Yeah, hi, Manav. This is Rick. So you point out some very dynamic items that are happening in the West Coast. Let’s maybe walk through them one by one. So as we look today, I think you’re well aware, we’re looking at a $40 crack today. And we’ve got one closure that’s happened, one that appears that it may happen early next year. And this is just simply supply and demand. The market is efficient, and the market is responding and showing you that the market is efficient. So when we look at the overall market, there’s a couple of lenses I’d like you to view it from. One is we optimize not only the West Coast, but along with the Pacific Northwest.

So when we look at our system, it’s no different than what we look at when we look at our Midcon region, which, as you know, is highly integrated. So is the West Coast and Pacific Northwest. What I mean by that, Manav, is when you look at Anacortes and you look at Kenai and you look at LA, which we have invested in and continue to invest in as the largest, most dynamic, complex, efficient refinery in the California region, we believe we have a competitive advantage that not only exists today, but will exist far into the future. And when you maybe back away even from LA, Manav, and you look at Anacortes and Kenai, we’re able to optimize those two refineries to fill the shortage that is in the San Francisco region. So all three of those assets are complementary to one another.

In terms of the pipelines that are rumored to come into the region, I would say that’s a big if. I would say those projects, I would say, are ambitious and at earliest might be 2029. But when we look at the overall structure of the market, Manav, the incremental barrel coming into the marketplace continues to be a waterborne barrel. They have a timing and a transportation cost that we can and will beat all day long. And that does set the market. And that, therefore, is an incredible incremental advantage to Marathon Petroleum, not only for the West Coast, but for the Pacific Northwest.

Maryann Mannen, CEO, Marathon Petroleum Corporation: Manav, it’s Maryann. The other thing that I might add to Rick’s comprehensive response to your question would be, as you know, our LAR project is coming online in the fourth quarter and intended to meet not only NOx reduction emission requirements, but also greater efficiency and improvement in EBITDA. That project will benefit us in 2026 as well. That comes online in the fourth quarter. That’s another West Coast benefit also.

John Quaid, CFO, Marathon Petroleum Corporation: Manav, maybe not to come over top of Maryann, but an item I meant to bring out and it slipped my mind is we have a significant feedstock advantage in the West Coast. If you look even six months ago versus where we’re at today, when you look at the closure that just happened and the one that’s about to happen, in 2026 we are buying more local California crude today than we ever have. Actually, it’s two times greater than we had in the past at a significant advantage. So while our advantages were great even before that happened, that just continues to stress why we’re so committed to California. The feedstock advantage is real and really helps us compete quite well with those waterborne imports.

Manav Gupta, Analyst, UBS: Perfect, Mike, my quick follow-up here is I’m going to focus a little bit on MPC dividend growth. Maryann, you provided a very detailed response to John McKay’s question on the MPLX call, and as you walked through the growth pipeline of projects in MPLX, it’s pretty clear that MPLX could support the distribution growth of 12.5% for two or maybe even three years. Now, when we couple that with the buyback and how that lowers the dividend burden, would it be fair to say that at this point, if refining cracks hold even mid-cycle or maybe slightly below mid-cycle, MPC is in a very good position to raise its dividend by 10% for the next couple of years at least, supported by distribution from MPLX and the buyback that lowered the dividend burden?

Maryann Mannen, CEO, Marathon Petroleum Corporation: Manav, well said. The answer to that is yes. As you know, over the last few years, we’ve taken over 50% of the equity out through our share buyback initiative. For the last three years, we’ve raised the MPC dividend 10% per year, and then prior to that, 30%. But as you clearly state, and our commitment to continue to use our share buyback as a critical lever to return capital to our shareholders, that share count will continue to decline, making it obviously supported by our mid-cycle environment, our belief there, making that dividend opportunity clearly possible for the next several years at MPC as well. And as I mentioned on the MPLX call, we see a couple more years of 12.5%. As we continue to deliver that mid-single digit growth. So both of those things should be extremely supportive.

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

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

Operator: Thank you. Our next question comes from Doug Leggate with Wolfe Research. Your line is open. You may ask your question.

Doug Leggate, Analyst, Wolfe Research: Hi, everyone. Hi, Maryann. And congrats from me as well. Please pass our best regards on to Mr. Hennigan as he officially moves into retirement. I have two quick ones, hopefully. Can you address the CapEx specifically for refining relative to the guidance you gave at the beginning of the year? It seems you’re running a little hot. I’m just wondering if something is changing there or if it was cadence or if there’s some other explanation as to why we should or should not be paying attention to that, and my follow-up is a simple one. I want to hark back to the balance sheet and buybacks and just get your simple perspective. Obviously, we’ve had extraordinary share performance from MPC. One could argue elevated valuation, certainly elevated margins for the time being, and a slowdown in the buyback.

I believe the slowest in the fourth quarter of 2021, I think, might be weighing on your shares today. So my question is simply, are you prepared to lean in your balance sheet to buy back your shares?

Maryann Mannen, CEO, Marathon Petroleum Corporation: So, Doug, let me try to address some of those, and then I’ll pass it to John to give you a little more color. I think we’ve probably said this before, but at the risk of maybe repeating, no one quarter or for that matter, any one given month is meant to be indicative of the way that we view share buyback. And frankly, if you look consistent with what we’ve shared, we are comfortable with roughly $1 billion on our balance sheet last quarter for a lot of reasons. We ended lower than that, and we delivered strong share buyback performance. So again, no one quarter should be indicative of how we view that. We remain committed to using share buyback as the element of return of capital and will consistently do that.

As I shared earlier, the benefit of that growing distribution from MPLX two years now at 12.5%. And growing should also be supportive for us to be able to lead in the return of capital. I think the other part of your question was, would we use our balance sheet? In other words, would we take on debt? And we don’t see taking on debt at MPC to buy back stock as something that we would do. Having said that, we do believe that our margin delivery will allow us to continue to lead in share repurchases. I’m going to pass the question back to John, and he can give you some color on capital, and then I’ll follow up.

Doug Leggate, Analyst, Wolfe Research: Thank you.

John Quaid, CFO, Marathon Petroleum Corporation: Hey, morning, Doug. So yeah, certainly looking at capital, I think what you’re seeing there is, as we’re looking across our value chains and where we’re positioned, we’re finding really good opportunities to drive investments, whether it’s operationally or commercially, to drive reliability, drive mix and yields, and really drive margin and capture. So I think that’s partly what you’re seeing in the numbers this year. And maybe I’ll turn it back to Maryann because I know she had a comment to follow up there as well.

Maryann Mannen, CEO, Marathon Petroleum Corporation: Yeah, thanks. And thanks, John. The one thing that I wanted to be clear, we have not given guidance yet for 2026. And as you know, consistent with the way that we always have, we’ll provide you full-year guidance. But I think as you’re thinking about planning, you should assume that 2026 capital will be below 2025. And we’ll give you incremental color on the next quarter call, but you should assume capital will be below 2025.

Doug Leggate, Analyst, Wolfe Research: Thanks so much, guys.

Maryann Mannen, CEO, Marathon Petroleum Corporation: Thank you.

Operator: Thank you. Our next question comes from Sam Marklin with Wells Fargo. Your line is open. You may ask your question.

Sam Marklin, Analyst, Wells Fargo: Hi, good morning. Thanks for taking the question.

Operator: Good morning, Sam.

Sam Marklin, Analyst, Wells Fargo: Maybe we could drill into this jet to diesel dynamic because it seems like it was pretty influential. You said it’s normalized now, but if you just look at the shape of sort of what underlying crack spreads did for the quarter, it was volatile, right? There were a few sort of big pulses higher, and then it came in. How much of the, I guess, abnormal jet to diesel relationship in the quarter would you attribute to kind of unusual volatility across the array of commodities versus something more structural or any other macro effect you want to call out?

John Quaid, CFO, Marathon Petroleum Corporation: Yeah. Hi, Sam. It’s Rick. So we have not seen a volatility between the jet diesel differential to this extent. I can tell you throughout the length of my career, Sam. It was unprecedented. And I really think it was a combo of inventory and supply driven. We did have some inventory switches on the diesel side, and then jet took the opposite position. And it just caused an imbalance for the better part of a month, month and a half. And it’s certainly corrected itself, but we do not see it structural whatsoever.

Sam Marklin, Analyst, Wells Fargo: Okay. Thanks. That’s helpful. And then maybe taking a step back. Just to the macro because nobody’s asked about demand yet, given all the moving parts of the quarter. But. What’s interesting about this environment is that. A lot of indicators that normally correlate to demand don’t look that strong. Consumer sentiment is very low. PMIs are basically below 50 everywhere. And yet refining margins are still. Very high. And so I guess this is a question about. Kind of the conditions you’re seeing today and what that means for. Kind of what a real mid-cycle margin environment looks like. It looks very much like the mid-cycle might be lifting higher based on kind of long-term capacity trends and indicators today, but would love your perspective on that. Thank you.

John Quaid, CFO, Marathon Petroleum Corporation: Yes, Sam. So let me start by saying we tend to believe we have some of the best indicators in the United States with the breadth and depth of our refining and marketing business throughout the United States. Every day we’re getting demand signals. So while there are a lot of surveys out there, I would tell you we have what we would call hard facts, and we feel very good about what we’re seeing today and going forward. But if I were to take a step back just for a moment, I mean, as you know, global demand continues to grow, whether it’s the IEA or OPEC or almost any institution, everyone continues to upgrade their global demand views by several hundred thousand barrels a day.

But more so closer to home here, Sam, when we look at diesel and jet, we continue to see modest growth and saw that in the third quarter, and we’re seeing that here again to start the fourth quarter. And gasoline, it depends on the region within gasoline, but gasoline is flat-ish to slightly lower to prior year, which to us is a very strong signal. And as you know, we’re in max diesel mode everywhere driven by the diesel crack, and we are seeing strong signals not only on over-the-road, but container business as well, harvest season. So we’re getting a lot of positive signals today, Sam, that would lead us to be very bullish looking forward here into the near term.

And then if I even zoom out a little bit further, Sam, you continue to see the slightest bit of disruption in a region that is causing cracks to blow out greater than what they have in the past. A good example is the West Coast today. There’s operating issues out on the West Coast as well as a closure. But then even go to the MidCon, where we’re seeing outsized cracks for this time of year because of a disruption. To me, if an outsider is looking in, I would say this is a primary example of how tight this market is from a U.S. perspective. And then globally, when you look at drone attacks, I woke up and read another article yet this morning on a Russian refinery getting hit with another drone. That’s sending the market in turmoil, especially from a diesel perspective.

We’re having good success, Sam, taking diesel to Europe because the whole Russian product export portfolio has been turned upside down. So that is advantaging U.S. refiners like us who have a really strong appetite to export on the Gulf Coast.

Sam Marklin, Analyst, Wells Fargo: Thanks so much.

Maryann Mannen, CEO, Marathon Petroleum Corporation: You’re welcome, Sam. Thank you.

Operator: Thank you. Our next question comes from Paul Cheng with Scotiabank. Your line is open. You may ask your question.

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

Maryann Mannen, CEO, Marathon Petroleum Corporation: Good morning.

Paul Cheng, Analyst, Scotiabank: Maryann, or maybe this is for John, you guys have mentioned that the third quarter, one of the impacts on the margin capture is inventory build. Can you give us some idea that how big is that impact, whether it is in dollar per barrel or percent of capture weight? Secondly, I want to go back into California. With the new pipeline proposal and all that, we know that, I mean, not all of them probably will be materialized, but I suppose that at least one may be materialized. And so how you guys will position yourself and also that I think Rick has said that you believe the main import avenue is going to be waterborne. Will MPC be an active and aggressive player in that market and already organize a range of imports coming in given your LA logistics that you will be able to easily bring imports?

So trying to understand how you are positioning yourself.

Doug Leggate, Analyst, Wolfe Research: Hey, morning, Paul. It’s John. I’ll start with the inventory question you had on capture. Rick mentioned earlier, there were a few different inventory changes, I would say, that affected capture. One that Rick mentioned earlier, you would expect every season, right, as we’re building LPGs to get ready for blending season. We also had some VGO. We built ahead of some FCC turnarounds that kind of bridged the quarter. And then probably some other pieces as well, Paul. But I mean, it was. If you add all those up, it gets you to a pretty good effect on capture quarter to quarter.

Paul Cheng, Analyst, Scotiabank: John, can you quantify? Is it, say, 3%, 4%, 1%, and any kind of colors?

Doug Leggate, Analyst, Wolfe Research: Yeah, it’s probably closer to three to five, Paul.

Paul Cheng, Analyst, Scotiabank: Thank you.

John Quaid, CFO, Marathon Petroleum Corporation: Hey, Paul, it’s Rick. So let me start with the pipeline question. So there are, as you mentioned, several announcements out there. And if one of them goes through, I would say that’s a big if. If one does and it comes, the origin comes out of the MidCon, I would say, Paul, that’s extremely positive for us. Most pundits on the one coming out of the MidCon would say that about 100,000-200,000 barrels per day could come out of the MidCon. And as you know, Paul, we’ve got about 800,000 barrels per day through our four plants that come out of the MidCon. So we feel like we would benefit significantly with that draw coming out of the MidCon.

Now, I will pause, though, and say that’s a big if because when you look at a tariff that’s yet to be set on if a line comes out of the MidCon, as best we can tell, it’s about a 1,000-mile pipe that would need to be laid across several states. It’s long haul, and it would most likely or potentially cross governmental administrations. So there’s a wild card there. So there are a lot of ifs on the cost and the likelihood of it happening. But if one would come out of MidCon, we see it as quite bullish for us. On the second part of your question, on the waterborne market. From a commercial perspective, we absolutely have a significant advantage with our LA asset and our Pacific Northwest assets.

However, Paul, if we see a trading opportunity in the waterborne market, we will look at it just like we look at every other market. But I would tell you at this juncture, that would not be a primary focus of ours. Our focus is to really wring the value out of our fully integrated value chain between the West Coast and Pacific Northwest.

Paul Cheng, Analyst, Scotiabank: Okay. So Rick, if I interpret you correctly, it means that you do not have planned to be a consistent and active importer of product into the California market.

John Quaid, CFO, Marathon Petroleum Corporation: Paul, I wouldn’t tell you if I was or wasn’t. But it’s a nice try, Paul, but I won’t tell you that. We look at every opportunity to make money.

Paul Cheng, Analyst, Scotiabank: Sure. Understand. Thank you.

Maryann Mannen, CEO, Marathon Petroleum Corporation: You’re welcome, Paul. Maybe just one last wrap on the capture question, just to be sure. As you know, over the last several quarters, one of the things that we’ve been trying to do is continue to provide color on the things that are sustainable, that which Rick and his team are working on to provide that sustainable excellence in terms of our commercial performance. And the lion’s share of that change that we talked about this particular quarter was really market-driven. That’s the volatility I talked about, the jet versus diesel, the clean product margins, etc. And then, as you know, as a result of that volatility, then the secondary product headwinds can be significant for us. And you know that they are obviously largely not within our control as well.

The one that was, and that’s where we’ve shared with you the progress, was the Gulf Coast part of that. And that was the downtime that we experienced on our REZID. And Mike shared with you the intent to bring that back up. And obviously expect to have that operational for much of the fourth quarter. That would be the piece that I would tell you was sort of ours. But largely, when you look at the change quarter over quarter, it was largely market-driven for all of the reasons that I shared. I hope that’s helpful for you as well. Thanks, Paul.

Paul Cheng, Analyst, Scotiabank: Very much. Thank you.

Operator: Thank you. Our next question comes from Theresa Chen with Barclays. Your line is open. You may ask your question.

Paul Cheng, Analyst, Scotiabank1: Hi, Vera. Building off of Rick’s comments about how MidCon product margins would likely improve if Kinder Morgan and Phillips 66’s pipeline gets built, is the same true for Path4 if the Dino project goes through, considering that you do also have a Salt Lake facility and given the relatively low CapEx and minimal looping that would require, would that also improve netbacks for you in that region?

John Quaid, CFO, Marathon Petroleum Corporation: That one’s a little tougher to call, Theresa. This is Rick, by the way. But I would tell you where we see our significant advantage in Salt Lake City is we are the largest refiner in Salt Lake. And we have a significant feedstock advantage with the amount of black and yellow wax we run in that region. And so regardless if something comes in and/or out of that region, the project that you’re referencing is of such de minimis volumes, we don’t see it affecting us really negatively. And so we really like where our assets at because of the reasons I’ve mentioned and our ability to clear our product to other areas of the country, i.e., Vegas, Arizona, etc.

Paul Cheng, Analyst, Scotiabank1: Understood. And on the light-heavy outlook, what are your expectations on how those differentials evolve from here? What do you think are the key drivers in keeping the geopolitical instability and general macro volatility in mind?

John Quaid, CFO, Marathon Petroleum Corporation: Yeah. Up until now, Theresa, I would tell you that TMX has been the key driver. I would say most have been projecting the differentials to get wider, but increased Far East demand through TMX pipeline has really kept Canadian inventories low and differentials tighter than expected. However, as Far East demand appears to be waning, we believe this could provide some relief to those differentials. So we expect sour differentials to widen slightly in Q1 on incremental OPEC production and incremental Canadian production, especially as we enter the diluent blending season and production grows. The one area that I would like to point out is we’ve certainly seen depressed WCS prices as grades are under pressure due to more challenging export environments, both within the U.S. and China. So we believe this is extremely positive. As you know, we’re a big player in the WCS market.

We have a ton of exposure of our barrels priced against a WCS benchmark. And just as a reference, WCS prices are $2 weaker than earlier in the year. And the forward curve is one of the weaker 4Q-1Q WCS curves that I’ve seen and we’ve seen in the last five years as offshore production continues to be quite bullish. The latest number I looked at is it looks like it’s slightly above 2 million barrels a day for the first time since 2020. A lot of big exploration projects coming online. So we’re quite bullish on the WCS as we’re seeing that not only in current WCS markets, but in the future forward curve. I hope that helps answer your question.

Maryann Mannen, CEO, Marathon Petroleum Corporation: That’s very helpful. Thank you, Rick.

John Quaid, CFO, Marathon Petroleum Corporation: Thank you, Theresa.

Maryann Mannen, CEO, Marathon Petroleum Corporation: Thank you, Theresa.

Operator: Thank you. Our next question comes from Jason Gabelman with TD Cowen. Your line is open. You may ask your question.

John Quaid, CFO, Marathon Petroleum Corporation: Yeah. Hey, morning. Thanks for taking my questions.

Maryann Mannen, CEO, Marathon Petroleum Corporation: Morning, Jason.

John Quaid, CFO, Marathon Petroleum Corporation: I wanted to start on the West Coast. It’s been a heavier turnaround year in that region, and it seems like that’s going to continue into 4Q. So just wondering what’s driving that. And then more broadly, it looks like turnaround spend is going to be a bit higher than what you had previously got it to. So wondering if that’s related to what’s specifically going on in the West Coast. And then I have a follow-up. Thanks.

Doug Leggate, Analyst, Wolfe Research: Morning, Jason. This is Mike. On the West Coast, primarily, we’re running the refinery currently, but we do have our FCC and our ALCI down. We started that turnaround in the third quarter. And then we’re coming up with the project that Maryann talked about, our intertie project, will come up here in the next few weeks. So we should be in a good position to capture that in the West Coast. So at this point, we’ll be able to run hard on the LAR refinery. From the turnaround cost side, some of it has went up, specifically at LAR, GBR. That was primarily around opportunities on growth projects and projects, mainly around some reliability, which allows us to put us in a position for better capture, both on the West Coast and the Gulf Coast. And Jason, it’s John. I might just kind of add on to Mike’s comments.

So certainly, you’re seeing the number. You can add the fourth quarter to get to a number for the year. But as we look to 2026, that’s the number we see coming down. And after 2026, we see that trend continuing as well, just to give you a little bit of a forward look.

John Quaid, CFO, Marathon Petroleum Corporation: Great. Thanks for that. My follow-up is maybe just on margin capture. Your indicators don’t include some regions that were really strong in 2Q and 3Q, the Pacific Northwest and the Rockies. I suppose some had thought that strength would offset some of the headwinds that you had mentioned. So can you just talk about your ability the past couple of quarters to capture the strength in the Pacific Northwest and the Rockies? Has that driven that distribution cost number higher, which came in above estimates, or do you feel like your system is kind of well situated at this point to capture those dislocations in the market? Thanks.

Doug Leggate, Analyst, Wolfe Research: Hey, Jason, it’s John. I’ll start with distribution costs and then turn it over to Rick to talk about kind of those regional cracks, as you noted. So again, just to take a step back, right? This is our cost that we look at to kind of get our product to markets across all our refinery systems. Again, a little bit of a different convention for us. Certainly, like you said, the number is a little bit higher than our guidance, but that really reflects commercial decisions. Rick’s team’s making every day about products, which markets we go to, and where we see the most margin opportunities. Some of those might have higher distribution costs, if you will, but we’re going after relatively higher margin.

And the only other thing I would offer, again, that can move quarter to quarter based on those decisions, but if you look at it on a barrel sold basis versus our normal throughput basis, you look year to date this year, year to date last year, it’s pretty much the same number. But it can move quarter to quarter, but it reflects those commercial decisions Rick and his team are making. And I’ll turn it over to Rick to talk about kind of your regional question.

John Quaid, CFO, Marathon Petroleum Corporation: Yeah, Jason. The regional question is a dynamic one because as we look, and I’ll just talk about California for a moment. So in California, especially in 3Q, you had the dynamic between the cracks between San Fran and LAR. Now, we will and can take some of our Anacortes product and take it and back it into San Francisco and backfill the San Francisco market. But the swings that we have seen between the PNW and the California market, which I always break into two, San Francisco and LAR, are quite significant. So in any one given quarter, there are times when one region is out clipping the other, but it’s a tough call to make consistently throughout the quarter. And in a lot of cases, in 3Q, I would tell you the PNW actually trailed parts of California. For a negative for our margin pull-through.

So it’s quite dynamic, and we do all we can to move around and optimize it to take advantage of the highest margin areas within that region. Great. Thanks for those answers. Thank you.

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

Operator: Thank you. Our next question comes from Matthew Blair with TPH. Your line is open. You may ask your question.

Paul Cheng, Analyst, Scotiabank0: Great. Thank you. And good morning, everyone. Could you give your thoughts on the RD market going forward? Given these losses, are you considering shutting your California RD asset? And do you have any explanation on why D4 RINs aren’t at stronger levels now? On our supply demand, it looks like D4 is in shortage this year. We see a lot of companies operating at pretty low utilization, implementing economic run cuts, and yet the D4 market still seems pretty depressed. So if you have any thoughts on that, that’d be great. Thank you.

Maryann Mannen, CEO, Marathon Petroleum Corporation: Yeah. Good morning. So maybe just a couple of comments, and then I’ll pass it to John to give you some of the specifics to your questions with respect to our renewable diesel segment. As you know, in the very beginning of the year, one of the things that we said was in terms of operation, the only investment that we were considering was anything to ensure reliability. And that really hasn’t changed. As you know, there’s been a tremendous amount of backdrop as we think about the regulatory environment. That continues to ebb and flow, still decisions that are pending with respect to how resolution will happen, etc. So it is a place where we are ensuring that our operations are running as efficiently as possible, but there’s certainly some headwinds when we look at margins, feedstock, etc.

And as we went out to work on this project, we felt like we had some very favorable, I’ll call it, metrics with respect to this project. When we look at its location, we look at the center of demand, logistics, etc., feedstock was a place where we felt strongly that we wanted to further optimize as well. So very small part of the portfolio. We’re ensuring that we can run it as efficiently as possible, but you don’t really see us putting capital to work in this space. But let me pass it to John, and he can answer some of the specifics for you.

Doug Leggate, Analyst, Wolfe Research: Yeah. Hey, morning, Matthew. It’s John. Maybe just building off some of Maryann’s comments, and I’m sure you’ve heard similar comments from some of our peers on some of those regulatory items. There’s probably more unknowns than knowns right now. Lots of things need to play out there. We’re looking at that D4 RINs just like you are, as well as maybe LCFS credits, and you could kind of go down the stack there. Certainly seeing margins improve some in the fourth quarter, but it really feels like we got to get into 2026 before we’re going to get some clarity there. As Maryann noted, we’re going to work on driving the most value out of the assets we have, given where we are in Martinez and what we can do there. So we’ll keep focused on that, but I think there’s just a lot of uncertainty.

You’re seeing other players come out of the market, and we’ll just have to keep an eye on it as we go into 2026.

Paul Cheng, Analyst, Scotiabank0: Great. Thank you. And then maybe just to expand the conversation on crude dips, you talked about favorable dynamics on WCS and Syncrude. We’re also seeing wider moves in areas like ANS, Bakken, and Syncrude so far in the fourth quarter. So I guess fair to say this would be an additional tailwind on capture this quarter. And do you have any sort of other insights on what’s pushing these other grades wider as well?

John Quaid, CFO, Marathon Petroleum Corporation: Yeah. Hi, Matthew. It’s Rick. So I’ll start with ANS. That is the one that is the most logical to explain because when you look at the TMX barrels that have entered the market there and the closures, the demand for ANS has gone down significantly. So the differential has had to widen out to compete. And then we’re seeing stronger than what we would have expected, Bakken production and Syncrude production. So quite nice tailwinds, both from a production perspective in those two fields that is driving those differentials wider for us.

Doug Leggate, Analyst, Wolfe Research: And hey, Matthew, it’s John. Just to add on one more thing, kind of when you think about for modeling purposes, the way we do our blended crack numbers and our market metrics, we include those dips in those numbers. So when we do capture, it’s above and beyond what’s going on here. It would certainly drive margin, but it’s not going to be a capture tailwind. We’re a little different than what some of our peers do around their indicators. So I just wanted to remind you.

Paul Cheng, Analyst, Scotiabank0: Sounds good. Thanks for your comments.

Maryann Mannen, CEO, Marathon Petroleum Corporation: Thank you.

Operator: Thank you. Our next question comes from Philip Jungwirth with BMO. You may ask your question. Your line is open.

Paul Cheng, Analyst, Scotiabank0: Thanks. Good morning. Gulf Coast and Midcon are expecting to run a higher percentage of sweet crude in the fourth quarter than they have in prior quarters. Just given what should be increased availability of crude, I was hoping you could talk through the planned crude slate and also just what you’re seeing in the market as far as sourcing more advantage barrels.

John Quaid, CFO, Marathon Petroleum Corporation: Yeah. Hi, Philip. It’s Rick. So from a sweet perspective, GBR really sits right at the mouth of incredible amounts of sweet discounted crude. So we’re highly advantaged to run it at GBR. And then at Garyville specifically, we will toggle between sweet and sour depending on the price and the economics. I will tell you, we’re starting to see a few more looks at what we see as Iraqi barrels that are becoming more promising and getting a slight hint that we might lean into those a little bit more so. But generally, the increased sweet and the amount of sweet you’re seeing is just because of where we’re logistically set up. And the toolkit for Garyville is really well-positioned to run a lot of sweet barrels.

In addition to that, we do run, I think, as you know, a lot of Canadian heavy barrels that we feed into the coker that are highly discounted as well. And we see that discount becoming slightly larger in the coming quarter. I hope that helps you, Philip.

Paul Cheng, Analyst, Scotiabank0: Yeah. No, it’s helpful. And then when you look at the need for waterborne refined product imports into California. Can you touch on available dock space just to bring volumes in? I know you’re utilizing some of this through your other refineries, but from an industry perspective, how much of dock space do you view as utilized? And is that at all a bottleneck to future supply as additional refineries close?

John Quaid, CFO, Marathon Petroleum Corporation: Philip, you’ve identified something that certainly is a deterrent and headwind for waterborne imports. Even prior to imports needing to go up significantly because of the recent announced closures and one to come, the docks have always been the wild card on the West Coast, and the reason is, as you have fog, you have delays, you have unexpected waterborne incidents that are far less ratable than having a refinery in the state, so when we look at not only the docks, but when we look at weather concerns, when we look at high freight rates today, which is also causing the CARB to be where it’s at and cracks be where it’s at, we see all of these as significant tailwinds for us.

Paul Cheng, Analyst, Scotiabank0: Great. Thanks.

John Quaid, CFO, Marathon Petroleum Corporation: Thank you.

Maryann Mannen, CEO, Marathon Petroleum Corporation: Thank you.

Operator: Thank you. Our final question comes from Ryan Todd with Piper Sandler. Your line is open. You may ask your question.

Ryan Todd, Analyst, Piper Sandler: Good. Thanks. Maybe. A couple of follow-ups on earlier ones. On the Renewable Diesel side. You mentioned a lot of the uncertainty, which there’s still a ton of uncertainty out there regarding various policies. One of which is the treatment of foreign feedstocks. What sort of impact could this have on your access to or approach to feedstock at Martinez? If you continue to see penalties there? And maybe on the RD side as well. Are you at a ratable run rate at this point in terms of kind of monetization or booking of PTC credits, or is there still movement one way or the other there?

Maryann Mannen, CEO, Marathon Petroleum Corporation: Yeah. Ryan, thanks for the question. So really on foreign feedstock, that is still being debated. But as we know right now, there is a potential for a 50% limitation on that from foreign feedstocks. As I mentioned earlier, one of the things that we were really focused on was ensuring that we could optimize our feedstock when we ran our initial economics on the Martinez project. We were looking at largely a soybean-only feedstock. And then as we did our transaction with Neste and had access to other foreign feedstocks as well as other local advantage feedstocks, we saw that as a benefit and actually improved the economics of the project. Today, I think we can largely source and have benefit with our partner Neste and our access. So we don’t see this as necessarily being significantly limiting to us.

I think the question longer term is, what does the administration do and whether or not that 50% stays in place and would have obviously broader market impact, or whether or not they are able to delay the implementation of that as they are resolving the RVO issue and also other elements associated with go forward as well as the historical review of that. So for us, less of an impact, but it will be obviously a market-driven decision as they decide how they’re going to implement that 50% foreign feedstock.

Doug Leggate, Analyst, Wolfe Research: And then, Ryan, it’s John. Just to add on to that, as Maryann said, we’ve got really strong logistics, not just water for international, but actually rail offload for domestic coming in at Martinez. That puts us in a good spot to pivot wherever the market goes. And then on your, I figured we couldn’t get off the call without a 45Z question. Again, as a reminder, we made some changes to our structures there back in April, and that really got us a big chunk of those credits. There’s some little pieces here and there we’re still pursuing. There’s a piece back in Q1 we haven’t given up on kind of getting, but I think you’re largely seeing the production tax credit in the numbers right now.

Ryan Todd, Analyst, Piper Sandler: Great. Thanks. Maybe one. CapEx or question overall on the overall business. I appreciate the provided details and the release on many of the projects that you have going on, either on the refining or the midstream side. Can you talk about some of the macro opportunity set that has you leaning in a little more here in the near term into some of the project spend, particularly on the midstream side? And then should we see that trend back towards a more normal level as we look out a couple of years?

Maryann Mannen, CEO, Marathon Petroleum Corporation: Yeah. Ryan, sure. Thank you. So when we look at the midstream, our growth opportunities are focused in the Permian, excuse me, as you see, really trying to build out our nat gas and our NGL value chains. So most recently, we put some capital to work to acquire a sour gas treating set of assets. And the reason why we think that’s so important is we believe that this is some of the best rock in the Permian in this Delaware Basin, Lee County. The challenge with that is producers moving to that region is it is a sour gas, high H2S, CO2, and requires a certain level of treatment to blend it down to be able to further process.

But in this area, this is very close, adjacent, and complementary to the assets that we are currently operating and fit very nicely with the producer customers that we are currently supporting. That EBITDA will improve in 2026 as the second follow-on amine treating plant comes online, bringing our EBITDA to its projected run rate by the end of 2026. So contributing in 2026, frankly, and beyond to incremental EBITDA. Additionally, we talked about some other projects. First of all, Banegas, we took the remaining ownership and incremental 55%. And so that ownership will be another EBITDA growth into 2026. Similarly, the full-year benefit of our Preakness II plant. And then Secretariat, another processing plant in the Permian, bringing our processing capability to 1.4, will come online at the end of this year and therefore be incremental.

And then if we look at even longer term, we talked about our fractionation and LPG export dock. So two fracs coming online, one each in 2028 and 2029. Along with our export dock. And that’ll add incremental EBITDA in both of those years. As we look at nat gas and NGL demand, frankly, you look at the growth of NGL, you look at gas oil ratios, we see demand, LPG pool, the strength of the producer customers in that region really as all very supportive long-term to that growth as well. And then that growth allows us the ability to increase the MPLX distribution, bringing back at least this year about $2.8 billion. Which supports MPC’s ability to lead in capital return. Again, as we bring that back, our goal, as we’ve always said, is to lead in the return of capital through all parts of this cycle.

And that is extremely supportive of, we think, extremely supportive of our ability to do so. Let me pause there and see if I’ve answered your question.

Ryan Todd, Analyst, Piper Sandler: Yeah. That’s great. Thank you very much.

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

Operator: All right. With that, thank you for your interest in MPC. Should you have more questions or want clarifications on topics discussed this morning, please contact us. Our team will be available to take your calls. Thank you for joining us this morning. Thank you. This does conclude today’s conference. We thank you for your participation. At this time, you may disconnect your line.

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