Marathon Petroleum Corp (MPC) Q3 2026 Earnings Call Transcript

Welcome to the MPC Third Quarter 2026 Earnings Call. My name is Julie, and I will be your operator for today's call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session. Press star 1 on your touch-tone phone to enter the queue. Please note that this conference is being recorded. I will now turn the conference over to Brian Worthington. Brian, you may begin.

Welcome to Marathon Petroleum Corporation's third quarter 2026 earnings conference call. The slides that accompany this call can be found on our website at marathonpetroleum.com under the Investors tab. Joining me on the call today are Marianne Manon, CEO, Maria Curie, CFO, and other members of the executive team. We invite you to read the safe harbor statements on slide 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 Ann.

Thank you, Brian. Good morning. We're pleased to welcome David Constable to the Marathon Board, effective March 1, 2027. His four decades of global leadership, experience in energy, chemicals, engineering, and construction sectors will be a tremendous asset as we execute our strategy. Our third-quarter results demonstrate the earnings power of MPC's value chains. Consistent with our commitment to safe and reliable operations, we achieved record third-quarter utilization of 100% to meet market demand while executing our plan turnaround and maintenance activity. Consistent with our commitment to safe and reliable operations, we achieved record third-quarter utilization. Across all three regions, our teams executed in a strong margin environment. We delivered peer-leading cash flow generation in the third quarter, demonstrating the strength of our system. Ensuring the long-term competitive position of our portfolio is a strategic commitment. And today, we announce steps we are taking to advance our strategic commitment. MPC has agreed to sell the St. Paul Park and Mandan refineries, and MPLX has agreed to sell the associated midstream assets to CVR Energy for $4.2 billion. MPC will receive $3.4 billion, and MPLX will receive $750 million. MPLX expects to redeploy proceeds from the sale to advance its growth plans anchored in the Permian and Marcellus basins. The refining macro environment remains constructive. And the U.S. Gulf Coast is the most structurally advantaged refining region globally. We intend to reinvest the proceeds from the announced sale of our mid-con assets opportunities that meet our return thresholds and advance our strategic priorities, primarily in the Gulf Coast. Globally, there are 10 million barrels per day of planned and unplanned refining capacity offline. This is approximately 3 million barrels per day above historical norms, reflecting ongoing Persian Gulf disruptions and Ukrainian attacks on Russian infrastructure. U.S. diesel inventory is below the five-year range, while gasoline inventory is near the bottom of its five-year range, underscoring continued market tightness. Yet within our system, demand remains resilient across gasoline, diesel, and jet. We expect to remain in an enhanced mid-cycle environment through the end of the decade with elevated margins through at least mid-2027. Against this backdrop, our ability to run, advantage crude, and optimize our value chains provides a sustainable advantage. The scale, geographic diversity, and flexibility of our refining system enable us to respond rapidly across dynamic market conditions. Access to low-cost natural gas and integrated midstream logistics further enhances the competitiveness of our system. And we are investing in value-enhancing opportunities focused on lowering operating costs and enhancing system reliability While improving our ability to convert lower-value inputs into the high-value products the market continues to demand, we expect the investments we have been making in our Gulf Coast region to enter service by year-end 2027. These include the construction of a 90,000-barrel-per-day distillate hydro-treater at our Galveston Bay refinery, which will convert lower-value high-sulfur diesel to higher-value ULSD. At GaryVille, further feedstock optimization will increase crude throughput by 30,000 barrels per day and reduce our reliance on higher-cost intermediate purchases. Additionally, we are increasing flexibility at GaryVille to produce an incremental 10,000 barrels per day of export premium gasoline while lowering cost. We will continue evaluating additional opportunities to further strengthen the long-term competitiveness of our strategic value chains, positioning the portfolio for today and the future. Moving on to our midstream business, MPLX continued to execute its natural gas and NGL value chain strategies. Harman Creek 3 began operations with 300 million cubic feet per day of gas processing and 40,000 barrels per day of deethanization capacity, increasing our northeast processing capacity to 8.1 billion cubic feet per day and fractionation capacity to 800,000 barrels per day. Additionally, MPLX and its joint venture partners announced FID of the Solitude Pipeline system, which when completed will provide an additional 4.5 billion cubic feet per day of natural gas egress from the Permian Basin. MPLX is also progressing the expansion of sour gas treating capacity at the Titan Complex to more than 400 million cubic feet per day, expected by year end. Natural gas and NGL fundamentals remain robust, creating compelling opportunities to support growing domestic and global demand for U.S. energy. MPLX continues to advance its integrated U.S. Gulf Coast wellhead-to-water strategies through disciplined investment across the value chain. MPLX increased its quarterly distribution by 12.5% for the third consecutive year. The increase is supported by MPLX's multi-year track record of delivering mid-single-digit adjusted EBITDA growth and growth projects coming online over the next several years. MPC now expects to receive $3.1 billion of annual distributions from MPLX, more than covering MPC's annual dividend and capital expenditures, a differentiator in our industry. During the third quarter, MPC returned $3.3 billion of capital executing on our commitment to industry-leading capital return. We also announced a 10% increase in MPC's quarterly dividend consistent with our We are maintaining balance sheet discipline with a targeted cash framework that allows flexibility while supporting returning capital. We will execute safely, invest strategically, and generate significant cash all at the same time. With that, I'll turn it over to Maria to walk through our financial performance.

Thank you, Marianne, and good morning. Our third quarter results demonstrate a strong operational performance across the business. We deliver earnings per share of $26.93, an adjusted EBITDA of $11.7 billion. Refining a marketing segment adjusted EBITDA per barrel was $34.15. Cash flow from operations, Excluding working capital changes was $8.5 billion, and we returned $3.3 billion to shareholders. These results reflect discipline execution. The next slide shows the year-over-year change in adjusted EBITDA from third quarter 2025 to third quarter 2026. Adjusted EBITDA increased $8.5 billion year-over-year, led by our refining and marketing segment. Overall, our results demonstrate the earnings power of our value chains, enabled by a strong planning, commercial, and operational execution. Turning to our segment results, refining a marketing segment, third quarter adjusted EBITDA, was $9.9 billion. Every region contributed to the significant improvement year over year, primarily driven by a stronger margin environment. With total throughput of nearly 3.2 million barrels per day, our refineries ran at 100% utilization. We achieved this while executing our planned turnaround activity, maintaining our commitment to safe and reliable operations. Execution matters, and we delivered. Let's talk about our regional performance. In the Gulf Coast, we ran at 99% utilization, despite planned conversion unit downtime, delivering nearly $33 of adjusted EBITDA per barrel. Our ability to respond to market signals and maximize distillate yields was enhanced by the added flexibility from our Garyville investment that came online earlier this year. The MidCon, we achieved record utilization of 101 percent and delivered $36 of adjusted EBITDA per barrel. Higher rates and maximized distillate yields were supported by our Robinson investment that came online in the second quarter. In the West Coast, we ran at 98% utilization at record levels for this region, delivering over $33 of adjusted EBITDA per barrel. Our results reflect our commitment to peer-leading profitability per barrel in every region where we operate. Turning to slide 7, third quarter capture was 93%. Secondary products were a material headwind, the largest we have seen on an absolute basis to capture, as benchmark clean product prices increased more than secondary product prices during the quarter. Wicker jet margins and seasonal inventory bills were additional headwinds, partially offset by clean product margins and wider diesel-to-gasoline spreads in the quarter. Importantly, 100% utilization enabled us to optimize the system while strong planning and commercial performance further strengthened our results. Slide 8 shows our midstream segment results. Segment-adjusted EBITDA increased $173 million compared to the third quarter, 2025. The increase was primarily driven by higher rates and throughputs, increased income from equity affiliates, and growth from acquisitions. Underlying operating performance was strong across NPLX's value chains. As additional projects enter service and utilization increases across the system, NPLX is positioned to deliver durable mid-single adjusted EBITDA growth. Now, moving to slide nine, we cover our renewal diesel performance. Segment-adjusted EBITDA increased by $310 million year-over-year. These results were supported by a more constructive margin environment, improved regulatory credit values, and higher throughputs. We continue to optimize operations and leverage our feedstock and logistics flexibility to adapt to market conditions. This performance demonstrates the value of our discipline investment. 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 $8.5 billion. Working capital was a $2.3 billion source of cash for the quarter, primarily driven by income tax payables and the timing benefit of the SPR crude exchanges. In the quarter, MPC redeemed all of its upstanding $749 million senior notes due December 2026. As we think about liability management, we will consider opportunities when the economics are favorable. During the quarter, we returned $3.3 billion of capital to shareholders, demonstrating a strong cash generation and discipline execution. At the end of the quarter, MPC had roughly $13.6 billion of consolidated cash and short-term investments, including NPLX's cash of nearly $1.3 billion. Now, turning to guidance, on slide 11, we provide our fourth quarter outlook. For the refining and marketing segment, we are projecting crude throughput volumes of 2.8 million barrels per day, representing utilization of 95%. Turnaround expenses is projected to be $230 million, with activity mainly focused on conversion units in the Gulf Coast and West Coast regions. This will limit our ability to upgrade certain products and create a headwind to capture. For the year, turnaround expenses remain in line with our 2026 outlook of $1,350,000,000. For the renewable diesel segment, we are projecting 85% utilization and planned turnaround cost of $65,000,000, driven primarily by turnaround activity at Dickinson. With that, let me pass it back to Marianne for closing remarks.

Thank you, Maria. Our performance reinforces the strength of MPC's value proposition. Our scale, flexibility, and geographical diversification are key competitive advantages. Combined with our integrated midstream logistics and our commercial capabilities, these advantages allow us to optimize our system and enhance margins in dynamic market conditions. Safety and reliability are foundational. Ensuring the competitive position of our assets is a strategic commitment. We are developing a resilient portfolio for today and for the future, investing where we see attractive returns and sustainable competitive advantages. We are directing investment to our Gulf Coast value chain to further strengthen the long-term Competitiveness of our system. Our capital allocation priorities are consistent. We remain committed to industry-leading capital return, supported by strong cash generation that enables us to continue to invest in the business. MPLX provides durable growth and an increasing source of cash flow to MPC, further strengthening our through-cycle cash flow profile. Global supply and demand fundamentals support our constructive outlook for both U.S. refining and midstream. Our differentiated portfolio and disciplined execution position MPC to deliver exceptional value across market cycles. With that, I'll turn the call back to Brian.

Thank you, Marianne. As we open the call for your questions, as a courtesy to all participants, we ask that you limit yourself to one question and a follow-up. If time permits, we will re-prompt for additional questions. We will now open the call to questions. Operator?

Thank you. We will now begin the question and answer session. If you have a question, please press star then 1 on your touchtone phone. If you wish to be removed from the queue, Please press star, then 2. If you are using a speakerphone, you may need to pick up the handset first before pressing the numbers. Once again, if you have a question, please press star, then 1 on your touchtone phone. Our first question comes from Neil Meadow with Goldman Sachs. Your line is open.

Yeah, thanks, Mary Ann, for the rundown here. Just wanted to start off on the transactions and the asset sales. It's been a long time since This Marathon has monetized some of its refining assets, so maybe you could just talk about the process, why you identified these assets, and how that fits into the broader strategy, and how did you get comfortable with the valuation around this monetization as well?

Yeah, good morning, Neil, and thanks for the question. And maybe before I share a little bit about the divestiture, once again, I really want to thank the employees of our St. Paul Park and Mandan refineries and those employees that are accompanying the midstream assets that support it as well for their ability to safely and reliably operate these assets up until this point and all the way through the close of the transaction. So just a big thank you for all of our employees. But let me try to address your question, Neal, around the divestiture. I think you know, maybe as far back as August of 2024, I and the rest of the leadership team have really been talking about ensuring that we create a portfolio for today, looking at market demand, et cetera, and a portfolio for the future. And we remain committed to ensuring that that is a portfolio that we are operating consistently. You know, we acted on an opportunity to align our portfolio with our strategy at valuations that I think we deem to be very attractive. Glad that we are able to divest to a company that is looking to grow and also operate safely and reliably. And we believe those assets fit well into their portfolio. And as I mentioned, I think we have been committed to ensuring that we will deploy capital strategically, grow in the areas like the U.S. Gulf Coast that we believe have the strongest long-term potential for growth and value creation. So that would be, you know, the reason why all of our assets in our portfolio are cash flow positive and generating strong returns there. But this was, we think, an appropriate decision to align our strategy with the long term. Let me pause, Neil, and see if I've answered your question.

You have, and that kind of brings me to the follow-up, which is just as we think about crude sourcing post this transaction, how should we think about how much WCS marathon is running and just your perspectives on the Western Canadian crude environment? And I think on the last call, you had indicated a view that it could widen out a little bit. But, boy, this has exceeded, I think, even the most bullish expectations for differentials. So your views on the market and your perspective on how much WCS you can run through the system.

Yeah, Neil, I think you said it well. I'm going to give Rick the opportunity to share some of the details. But, you know, as you know, we have been one of the largest, if you will, operators that using WCS, including the imports, and we continue to see the strength of those differentials, particularly as you look into the fourth quarter. So let me pass it to Rick.

Yeah, Neil, so we're really leaning into the WCS story. I think this morning my team reported to me that there was a print of minus 32, a hardesty barrel under TI, so it continues, that differential continues to widen out. And, you know, when you look at it, Neil, I continue to think it may widen out further. There's just significant tailwinds when you look at the heavy and the sour grades. It's led by freight, the freight challenges with crude export economics, especially on the medium and heavy sour barrel. And thankfully for MPC, we have a very small exposure to freight on the crude side as about 90 percent of our crude sourcing is from U.S. and Canada. And then what little we do bring in via waterborne barrels, we locked into very attractive time charter rates before the war started. So we're in a really good spot there. And then when you couple that with the Venezuelan and the SPR barrels that have hit the U.S. Gulf Coast, the diluents that are being blended in to the heavy Canadian right now, and then here recently we just saw increased Enbridge apportionment on both lights and heavies, we're in a really good spot. In fact, here in the fourth quarter, we expect to set records on how much heavy Canadian we process.

That's great. Thanks, Rick.

Thank you. Thanks, Neil.

Thank you. The next question comes from Manab Gupta with UBS. Your line is open.

Good morning. I wanted to ask you on the refining macro. You guys were constructive coming into this year. Obviously, it's been a record year for you. I'm just trying to understand what's the margin outlook now. We have seen gasoline pullback. Do you think that's just seasonal? But obviously, the overall differentials, even medium hours, are pretty wide. So as you enter 2027, how are you looking in terms of the overall refining macro? And have you seen any early signs of any kind of demand destruction here?

Good morning again. It's Marianne. So let me start first with, as you mentioned, we have been extremely constructive long-term prior to the Iran conflict. We look at the supply coming online, frankly, and the demand that we see over the longer term. And we, you know, went into 2026 in a very constructive environment. Obviously, Iran conflict has had significant impact, really elevating margins, as you see. And one of the things that we've been trying to do, frankly, is capitalize on that through our planning, commercial, and operational excellence to be sure that we're delivering the, you know, greatest value possible. As I've mentioned, and again, Rick, we'll give you a little bit more color here, but frankly, we haven't seen really demand destruction across our system, particularly when you look at jet and diesel. So we head into 2027 believing that it continues to be structurally sound, solid, notwithstanding the timing of resolution on the Iran conflict, a series of things would have to happen. And so we remain quite constructive over 27. I'll let Rick give you an increment of color to some of the specifics there.

Yeah, Manav, on the demand side specifically, when you really take a step back and look at the industry, but then even say look at MPC specific, we ran at 100% utilization in 3Q and met all of our consumer demands, both domestically and internationally. And then when you kind of overlay that and look at the inventories on gas and diesel, they continue to remain at or below five-year averages. So we're really bullish as you look back into the larger term S&D fundamentals within the system. And then, as Marianne said, within our system, consumer demand remains very resilient across gasoline, diesel, and jet, both domestically and internationally. And then on the recent pullback, I think maybe a little color there, you know, we're expecting the unexpected. Everything you see is headline-driven here lately, but in our view, a slight pullback was not unexpected as we transitioned out of the summer driving season. This is just a seasonal pullback that is quite typical, as well as when you couple that with their third-quarter turnarounds, it really makes sense to us. But going forward, Manav, we see continued volatility. We're bullish because of the inventory positions I mentioned on gas and diesel throughout the United States, and bright days are ahead. We haven't entered a winter season in this position ever, and we feel very constructive on it going forward.

Thank you. My quick follow-up is on the amount of cash on the balance sheet. You ended the quarter at 12.3. This is before the asset sale proceeds come in, and then fourth quarter is looking pretty strong, as you said. Your cash on the balance sheet could balloon to over $20 billion by the end of this year, and that's a lot of cash to hold on to the balance sheet. I'm just trying to understand the possible uses of this amount of cash on the balance sheet. Thank you.

Certainly. And thanks for the question. Yes, you're right. Obviously, as we look at the third quarter, we built cash. And of course, depending on how you view that outlook for the fourth quarter, Rick just shared with you sort of how we see it. We are obviously quite constructive. We could build cash again. A few things to think about. In the third quarter, we remained disciplined to our capital allocation priorities. We increased our dividend 10% at normal timing as we have in previous years. We also bought back $3 billion of our own equity. We would continue to say that our capital allocation priorities have not changed. And to your point, as we see the sale come to conclusion, as we're projecting by the end of the fourth quarter, we would also see, obviously, net proceeds from that. As I mentioned in my prepared remarks, and you see in the press release, our objective would be to invest those proceeds into U.S. Gulf Coast as well as other value chains. You know, historically, over the last few years, we have put capital to work that has grown our EBITDA per barrel. You can talk about the things that we did in 2026, frankly. We talked about our Robinson jet project. We talked about Garyville. Coming online in 2027, we have the DHT. We have two Garyville projects that I mentioned that will reduce cost, improve feedstock input, as well as give us capabilities for export premium. And we see the opportunity in the U.S. Gulf Coast to put that capital to work as well, Manav. Thank you.

Thank you.

You're welcome.

Thank you. The next question comes from Sam Margolin with Wells Fargo. Your line is open.

Hi. Thanks for taking the question. Well, your last point, I think, is a pretty good prompt for some more detail on maybe some reinvestment opportunities in the Gulf Coast. It sounds like you have a lot underway right now. You're prosecuting some projects, but I think you just said pretty clearly that you see opportunity for more. So can you talk about the categories of reinvestment that are most appealing right now, whether it's de-bottlenecking or conversion or all of the above or, you know, what exactly I think is jumping off the screen for you right now?

Sure, Sam. Thanks for the question and good morning. You know, first and foremost, whenever we consider putting capital to work, as we've been sharing over the last several years, we want to be sure that there are certain things that are evident and obvious when we put capital to work. One, we're looking for yield enhancement. We're looking to strengthen our reliability. Frankly, you know, you may have heard over the last couple of quarters, we talked about reliability that has been kind of some of the best that we've been able to experience in a decade as those projects come to fruition, critically important. We want to enhance flexibility. We talked about increasing our jet yield and also having flexibility to move to different distillates as demand changed. We executed those this year. And then cost reduction also being a place that we would look to invest. They are the areas where our review, if you will, and objectives must be met. You know, if you think actually over the last five years from the capital that we've put to work, we've actually been able to increase about 175,000 barrels a day of capacity, and I think that's been pretty important. But I'm going to pass it to Mike because, as you know, we've got what we think to be two of the best assets on the U.S. Gulf Coast, One of which is probably the lowest cost operating asset, and I'd like Mike to share a bit about what he's contemplating, what we're contemplating as well into next year.

Yeah, Sam, a couple things. Obviously, the reliability, we're continuously investing in that, but all the things you laid out are all in the plan, to be honest with you. We're looking at additional conversion, yield enhancements, and throughput as well in the Gulf Coast, and as Marianne stated, we have two world-class facilities there that we intend to invest in. But the future looks bright in the Gulf Coast, and we're ready to invest.

Okay, thanks. And then just as a follow-up on the seasonality of gasoline, I think one of the factors right now that's unusual is that LPGs have a very high value, and it's influencing blending economics and some other seasonality that might be important in gasoline. But MPC has a very integrated system when it comes to LPGs and blending, and so maybe if you could just remark a little bit on how you're positioned right now within this kind of abnormal commodity skew with respect to, you know, butane and seasonal gasoline. Thanks.

Yes, Sam, very timely question. We have a build program that we execute, and we executed it very well on butane this year. So we built in 2Q and early 3Q, and to your point, we're reaping the benefits of that right now significantly. So I would say we're positioned very well from a butane perspective. And then I would also say when you look at propane, you know, we export a decent amount of propane as well, and we're seeing...

Standby.

Please continue to hold for today's conference call. We will begin one moment. Please continue to hold. We are having technical difficulties. Please stand by. Thank you for standing by. Please continue to hold for today's conference. Please continue to stand by.

Please stand by. Your conference will begin momentarily. Sorry about this. We're having some technical difficulties. Thank you. Thank you for continuing to make the commitment on standing by. Thank you.

Sam, it's Marianne. Sam, can you hear us? Sorry. We think we lost audio there for a moment. Just wanted to be sure that you got the answer to your question.

Yeah, I heard – that's right. It did interrupt, but I heard most of it. I think – I'm not sure if I speak for everybody on the call, but I cut off when you were talking about propane. So I don't know if you want to continue there, if you felt it's been answered.

Yeah, Sam, let me just finish my thoughts on propane, and then we'll continue on. So on propane, as you know, we're a large exporter and about to get a lot larger as we bring on our projects on the U.S. Gulf Coast next year. But on the propane side, we have had significant economic margins within the environment, mainly because of the demand overseas. So we've not only, I feel, really been played advantageously the butane market, but propane's been a nice shot in the arm for us as well. Thank you. I hope that answers your question, Sam.

Yes, thanks so much.

Yeah, thanks, Sam.

Sorry about that.

Sorry to all.

Thank you. Our next question comes from Joe Latch with Morgan Stanley. Your line is open.

Hey, good morning, team, and thanks for taking my questions. So I wanted to just start on the refining side. Utilization came in much stronger than guidance and that we expected really across the regions during the third quarter. Can you just talk to what went right during the quarter and some of the drivers of the outperformance? Thank you.

Just Mike. A few things we talked about earlier is the investment and reliability has been key for us, not just in the Gulf Coast, but all of our value chains. With that, it gives us a better platform to grow from as well. But I will say we're tackling just the basics of operating, really paying attention to the blocking and tackling of day-to-day operations, and a lot of work around training and optimization as well. That's been the target to our utilization.

And, Joe, it's Marianne. I think the other thing that I would add, you know, as you know, over the last several quarters, you know, we've been talking about the opportunity across our planning, commercial, and operational value chains, and I think really we are focused on the things that we can control, looking for those opportunities and ensuring that we are able to deliver that. I thought I'd pass it maybe to Julian to see if there was anything else that he wanted to add as he's thinking through the planning side of our utilization.

Yeah, thanks, Marianne. I think our performance, as Mike said, it reflects the strength of our integrated planning, commercial, and operations teams, and optimization can only really create value if the assets are available to run. So kudos to Mike and the team. Reliability was and remains. It's the foundation upon which the capture of any commercial opportunity really depends. And we've said previously, I think our speed of analysis now, the sophistication of our tools and modeling, that's given us the ability to identify opportunities and convert it to executable sort of insights that we can pass to the teams. And it's our ability now to coordinate those decisions as one integrated system that creates that durable differentiating resilience, I think. Great. Thank you all that time.

I hope that helped, Jim. Yeah, definitely. Thank you. And then maybe just looking ahead into the fourth quarter, so recognizing it's still early, the market obviously remains volatile. Can you just walk through some of the puts and takes on CAPTCHA relative to 3Q? And in particular, how should we think about the benefit of wider WCS differentials like we talked about earlier, maybe changes in freight? Crude backwardation, secondary product margins, and then I think you also had mentioned in the prepared remarks that there's some conversion unit maintenance, so how that factors in as well. Thank you.

Certainly, Joe. So maybe let me start with, you know, third quarter, and then I'll head to fourth quarter, and then I'll let Rick give you some of the more intricate details as we're thinking about your questions on freight and WCS diffs, et cetera. You know, in our third quarter, we delivered capture of about 93 percent. And as we mentioned in the second quarter, we had some elements that we did not expect to repeat. Obviously, crude sourcing and the benefit of SPR that occurred in the second quarter were clearly tailwinds that, you know, we shared would not be able to repeat into the third quarter. I think the other headwind that we had, very significant, Maria mentioned it too as she was sharing her remarks with all of you, was the most significant secondary headwind that we have experienced, and that certainly played into the third quarter as well. Having said that, you know, if you go back and you look at the average over the time period, you know, our third quarter averages in and about that 94-95% range. So just a few things to consider as we think about the third quarter's strongest, really, headwind coming from secondaries ever in the history of the company. And then as we, yeah, year to date, frankly, through the third quarter, we are at capture of 101%. And then the fourth quarter is typically our strongest quarter on the things that we can absolutely control. So I'm going to pass it to Rick, and he can give you some of those specific thoughts to answer your questions.

Yeah, Joe. So when you look at 4Q, just a little bit of insight there. One month in of a three-month game here, we're seeing through October, we saw the same headwinds on secondary products. So we'll continue to watch that for the next 60 or so days. But early on, we're seeing very similar numbers that we saw on the secondary side in 3Q. I do want to make very clear one item, though, because I think it's not well understood, and I think it's because within the industry, our capture metrics seem to vary company by company, and we're no different, or we are quite different, I should say, than others. So I talked earlier about tailwinds on heavies, sours, and inland crudes. However, I want to remind you that they, those differentials, they're referenced in our market indicator, as well as backwardation is referenced in our marketing indicator. Unlike others, they put that in their capture results. So we're a bit unique there, and I just wanted to call that out so you're not overstating what our capture may be in any given quarter. I hope that helps answer your question, Joe. Yes, thanks for the time.

And Joe, one other thing that I'd like to maybe just add as we talk about capture, it's clearly one of the metrics that we look at only one. But, you know, as we've stated, our objective really is to ensure that we're the most competitive in every region where we operate. And that comes through, obviously, commercial and our ability to capture those markets, hurtling the things that Rick just shared with you that are already embedded in the market metrics, our planning, and then, obviously, our operational execution, which allows us to be the most competitive in every region where we operate over a period of time. So we hope that helps and answers your question. Yes, thank you very much. You're welcome.

Thank you. Thank you. The next question comes from Jason Gableman with TD Cowan. Your line is open.

Yeah. Hey, morning. Thanks for taking my questions. I wanted to go back to the use of proceeds from this asset sale, if I could. Three and a half billion to MPC. I imagine there'll be some tax leakage there. But in terms of deploying that to the U.S. Gulf Coast, your kind of growth capital The past few years has been a billion dollars, so it doesn't necessarily seem like all of that cash will be deployed to incremental growth projects. So should we expect some of that cash to be used to defend the stock if the market turns? Does it open the aperture for inorganic activity? Just a bit more color would be helpful there. Thanks.

Oh, you're welcome, Jason. Thanks for the question. So maybe let me start with capital allocation to the Gulf Coast. As you know, we always give you the detailed capital planning as we head into our fourth quarter call, and it'll be in February this year. And, of course, we will do the same with a significant amount of clarity in terms of where that capital would be deployed and the projects. You're right. You know, we've averaged a little over a billion dollars each year, and hopefully, as I tried to articulate in some of my earlier responses, we are actually seeing the benefit of that capital deployment pull through in our results. You're seeing it earlier this year as we saw jet demand rise in our ability to have that conversion project complete and meet that demand. I mentioned a couple of other projects that are coming online in 2027, like the DHT, obviously a little bit later in the year. There's a few Garyville projects that we think also will be incremental to the value propositions and the planning that Julian and Rick have been talking about. So, yes, if we deploy more capital into the Gulf Coast, it is likely that our total capital plan for 2027, you will see higher than what you normally have seen, given, you know, the opportunity that we see on the U.S. Gulf Coast. Mike talked about a few of the areas that we're planning on. You know, we really are not intending to reduce or shrink our refining footprint. We really want to be sure that our refining footprint meets the demand, and we believe the Gulf Coast is a place where capital is warranted there. Let me pause and see if that answers the question, Jason.

Yeah, that's great. My follow-up is on the MidCon, and I think Laurel is now shipping product D, so just wondering to what extent you expect that to reduce seasonality and kind of the eastern pad to Chicago markets and the benefits that has to MPC. Thanks.

Yeah, hi, Jason. It's Rick. So we see a significant advantage with Laurel moving east. In fact, we're going to be a significant shipper or are a significant shipper here in November, and we'll continue to ramp up through the winter months when Pad 2 is predominantly long. So as you know, we're uniquely positioned across pad two, and our ability to clear product is really a lifeline that we have that others don't have. And the reason is, is we've invested over the years, especially with a Midland connection, specifically to Laurel, that's going to enable us to lean into that market in a big way. So we see significant advantages, specifically when you look at our Canton and Catlitzburg refineries. Hope that answers your question, Jason. You're welcome.

And Jason, I probably didn't completely answer your question because I think you were also talking about overall capital allocation. And so our capital allocation priorities have not changed. We continue to be committed to return capital to our shareholders via share buyback. You've seen we've built a little bit of cash in the third quarter, and again, as I mentioned earlier, depending on what you believe about the fourth quarter, but we intend to continue our capital allocation priorities and return capital via share buyback as well. Hope that helps.

Thank you. The next question comes from John Royal with Piper Sandler. Your line is open.

Hi. Good morning. Thanks for taking my question. So my first question is just another follow-up on the divestiture and specifically on the tax implications. I would imagine the sale price is well in excess of your cost basis. And should we expect most of the proceeds to be taxable? Is that kind of the right way to be thinking about it?

Hi, Roy, John. Great to talk to you today, and thanks for the question. So, when you think about the taxable implications from a refining perspective, you will expect that those proceeds will be taxable. From an MPLX, as you know, it's a different structure, so we have a different level of tax implications on that side, but just from a refining perspective.

Understood. Thank you. And then I guess my follow-up is on midstream. It looks like a really strong quarter, and you previously talked about kind of back half-loaded growth this year, which seems to be playing out. Can you just update us on how the project startups are faving in from an EBITDA perspective, or are there other drivers there driving the 3Q strength, and any expectations for 4Q?

Certainly, yeah. You know, one of the things that we tried to share is we expected our MPLX EBITDA back half of the year, so Q3 and Q4, its growth to be stronger than the first half, and that's largely because of the timing of project completions and capital that we've put to work. And we have no different expectation operationally that our fourth quarter should actually be stronger than the third quarter. And I also shared earlier today on our MPLX call that we expect 2027 EBITDA growth to be stronger than we have in 2026. So fourth quarter, just to walk through a few of the projects coming online. Secretariat 1 came online earlier in 2026, and that continues its ramp. Harmon Creek 3 and the Marcellus came online around August of this year. That continues to ramp. We're seeing strength in utilization in the Utica from second quarter in about 70%, moving to 80% in the third quarter, and we expect that to continue into the fourth quarter. As you look at our Titan 1, so this is our Delaware Basin sour gas processing, we expect to see good performance there and completing the expansion to 400 a day for Titan 2, which will be a very strong support as that ramps through 2027. That will start there as well. So there are a few of the key operational opportunities that we have across the system to see the strength in the fourth quarter. On the call, Chris mentioned that we could have a headwind or a tailwind coming from executive compensation, and that's partly because that executive compensation is tied to the performance of the MPC stock. So as it increases or decreases, there is some mark-to-market that is necessary. But when we think about the growth on an operational basis, we feel good about the fourth quarter delivering, as we said. Hope that helps, John.

Thank you. Thank you. You're welcome.

Thank you. The next question comes from Doug Leggett with Wolf Research. Your line is open.

Thanks. Good morning, everyone. Marianne, you probably want to delegate this one, But I want to ask, if I may, about gasoline. We all know what's going on with diesel, but utilization rates are running pretty hard. And I'm just wondering if your team has a prognosis to the extent of seasonal gasoline weakness, but more importantly, what you can do to minimize gasoline versus maximize jet and diesel within your system. And I've got a quick follow-up, please.

Yes, certainly. Good morning, Doug. I'm going to look at both Julian and Rick here to give you some incremental color, one, on kind of what's happening, and two, on our planning opportunities to continue to modify yield as we look at both jet and diesel versus gasoline.

Hi, Doug. I'll take maybe the first part and then pass it to Julian. One thing I don't want to be overlooked is, as we're in max diesel mode, as we've been predominantly all year, and lean into the diesel and jet markets, that continues to put pressure on the gas crack. Here recently, a good example of that is when you look at the S&D balances in the MidCon, you see that they're They're extremely tight, so any disruption in the Chicago market, you see outsized responses on the gas crack specifically, and we saw that where within a week or two, we saw a $30 crack move. So I will just maybe double-click on saying we are leaning in on the yields, specifically on diesel and jet, but it's also bearing fruit on the gas side. So with that, I'll pass it to Julian to give Thanks, Rick.

I think in terms of flexibility, Doug, historically, we've demonstrated the ability to shift roughly 4% of our product yield between gasoline and diesel. But more importantly than that, we can now respond incredibly quickly as jet and diesel economic shift and re-optimize our production and product placement accordingly. So it's part of our DNA to continuously improve and optimize the assets. And I think really it's that combination of manufacturing flexibility and the commercial optionality that enables us to respond quickly to change your market conditions and shift things around to capture opportunity as and when they arise.

I think that volatility argument is something that we've been focused on, so I appreciate the answers. Marianne, I apologize for this one, but I just wanted to touch on the MPC-MPLX relationship. Extraordinary times for MPC share price. But my question is a little different than the usual, what about the structure? It's really more about the reinvestment. Does MPLX have the opportunity set and the reinvestment capability to maintain its tax-free status and tax-free distributions? I'm just wondering if that factors into your thinking about the right affiliate relationship between those two, and I'll leave it there. Thanks.

Yeah, sure, Doug. So I'd say right now, yes, absolutely. We do not see any challenge in maintaining our tax-free status through the MLP, notwithstanding the structure at all. But we're confident in our ability to maintain that structure, obviously, for the things that we can control, right? I certainly don't know what an administration might choose to do, but as the current rules, if you will, and tax structure is today, no issue with us being able to do that. Hope that helps, Doug.

It does. Thanks so much.

You're welcome.

Thank you. The next question comes from Philip Jungworth with BMO. Your line is open.

Thanks. Good morning. We've seen higher operating costs across the industry this quarter, but you guys were spot on guidance. 4Q also looks a bit better along with the turnaround performance. So I was just hoping you could touch on how you're managing the cost side of the business, just given inflation and any areas where you're seeing pressure. And separately, if there's any initial read on whether 2027 could be average or above average turnaround year for NPC in the industry.

Sure. This is Mike. I will say overall, from a cost-discipline standpoint, has been a major focus for us. You know, we're not in the cost-cutting. We're in cost-discipline. But when you invest in the reliability like we are, we're starting to realize those benefits in 26 and in 27. So the investment side of it, I would say the upskilling of our resources and our assets are really helping on, I would say, the cost discipline, cost control side. Turnaround for 2027, it looks to me it's going to be a lighter year in 2027 than it was in 2026. So our investments are paying off, especially around the reliability.

And, Phil, it's Marianne. I also wanted to say, you know, we maintained our turnaround plan for 2026. I think Maria talked about it as well. We did not delay, postpone any turnaround activities in 2026. Obviously, you can see we were still able to run. So our decision on 2027, as Mike just said, is a plan that we've had in place for a period of time. Discipline has been paying off for us over a period of time as we constantly manage cost discipline. We hope that helps, Phil.

No, that's great. And then recognizing it's less a factor in the MidCon and the Gulf Coast, I was hoping we could just bring the whole freight rate discussion to the West Coast And see how you're seeing market dynamics across crude sourcing, but also the cost of product imports. And if you could just separately touch on your ability to source in-state crude, along with just market implications of less Jones Act waivers, waiver usage versus 2Q.

Yeah, Phil, I'll start with the end. And the Jones Act waivers, we've been able to lean into specifically, you know, during Hurricane Isaiah's, while it didn't impact California specifically, but it was a big help for us in supplying the Florida market. So that's been a win for us there. Specifically, when you think of the West Coast, one of the things we've been able to do is with the recent closures, we have been able to double, actually more than double, our California grades that we're running at LAR. That's been a big win for us. We've also leaned in, when we think West Coastville, we also, in our vernacular, we weave in Pacific Northwest. And when you think of Pacific Northwest, we're actually running a lot of inland crudes over to Anacortes, Washington, specifically to give us a competitive advantage over more expensive crudes such as ANS. And then lastly, I would say when you think of the transportation from a crude perspective, as I stated earlier, we have a significant amount of our time charters locked in at a rate significantly below the high market today that is providing us a significant benefit. And then in terms of Asian barrels making their way over, it continues to be more and more difficult. The marker with freight is high, and you continue to have supply disruptions as well, causing them to not run at full rates. So we continue to see that as a nice tailwind for our West Coast asset. I hope that helps. You're welcome.

Welcome, Phil.

Thank you. Our last question comes from Matthew Blair with TPH. Your line is open.

Great. Thank you. Maybe we could end on renewable diesel, where your results see better than expected, better than peers. Anything to highlight in the third quarter? And then so far in the fourth quarter, it looks like industry margins are generally trending higher. Are you seeing the same thing in your system? Thank you.

Yeah, Matt, it's Rick. Let me start with, just as with our fossil fuel refineries, our RD plants are running and have been running really well. That's where it all starts. But in addition to that, our results were certainly supported by a more constructive margin environment, improved regulatory credit values, and higher throughputs. And we're early into the fourth quarter, but we see more of the same in the fourth quarter. Great. Thank you very much. Thank you.

You're welcome.

And that was our last question.

Thank you for your interest in Marathon Petroleum Corporation. Should you have more questions or want clarification on topics discussed this morning, please contact us and our team will be available to take your calls. Thank you for joining us.

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