Phillips 66 (PSX) 29 Jul 222022 Q2 Earnings call transcript

Welcome to the Second Quarter 2022 Phillips 66 Earnings Conference Call. My name is Joanna, and I will be your operator for today's call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session. Please note that this conference is being recorded. the to turn President, Dietert, now Relations. Investor will call Jeff over Vice I begin. may you Jeff,

Good to include and CFO; Roberts, Participants and morning, EVP, welcome Kevin Brian on conference quarter CEO; and today's call. Mandell, earnings EVP, call Commercial; EVP will Mitchell, Mark Marketing President Phillips Lashier, Slide and XX Tim Midstream; found XX Relations information. Investor the Phillips contains on website, and Harbison, with X section Refining. financial presentation Today's harbor SVP, Rich safe the and materials be supplemental along statement. can our of operating second

making Actual as results here be comments. to materially will Factors forward-looking may today's included are well We statements as during call. from actual differ results in today's that our cause could filings. differ SEC

discussion, will would that Mark. in I highlight that, X. Day Investor to our be an York turn to we on New November I'll With like we Before over hosting it begin

with to Thanks, President here Jeff. and great you It's today as be CEO.

our Refinery, recently, our honor Most strong years he Harbison, lead has leadership I'm and great humbled employees, was a across also he a roles Vice President a the the where Refining. happy variety leadership oversaw of project. As organizations. over of And introduce I'd I Vice of the the Rich Senior new President to XX opportunity of part in Rodeo pipeline Rich by it's like Francisco to San experience our role. company. terminal Renewed of refining, privilege shared and to team taking this an such with be on be to a and

turnaround demand flow. critical to strong early demand. products, of inventories in a $X.X we and the second driven reflect supporting including transportation on spring capacities, earnings with successfully reliably $X.XX per maintained share. second activities results providing had remain billion environment In $X.X the quarter quarter, running billion Even energy by second distillate focused tight global We've in our near margins. the gasoline operating adjusted and global supply We We're quarter. market generated completing refining cash balance. operations low, refineries fuels max or meet Our strong elevated in

secure, operating dividends our repurchases. a our Excluding quarter in to share flow the billion. We million through share shareholders capital, cash and We was remain to and repurchase $XXX resumed returned working program $X.X second competitive committed annual XXXX, share. X% in to May, We've dividend times raised the XX growing and XX% an dividend dividend. In growth $X.XX in our per increased since compound our rate. we inception resulting

a strategic Specialties. and foundation Our We're selectively a investments focused increase Energy excellence while and Refining to Chemicals in Marketing organization. and and consistent, strong strategy of by Emerging operating investing supported in high-performing on remains return-enhancing returns growth Midstream,

returned of continue and the cash share pandemic in form to debt, the reducing target including capital quarter. and allocation reinvestment in XX% We shareholders framework the We've down business repurchases. of dividends debt in second $X.X XX% billion a during of long-term to successful paying been

sustained annual effort uncertain an environment. achieve our forward us been savings to any at economic million. Officer, engagement Transformation on business we prudent, cost Initiatives being in our higher We competitive addition, X,XXX David more cash has at from ensure sharing with are implemented future November. Erfert, in business the are details position organization our over and leading In Investor economic transformation President across remain Day levels transformation $XXX We're and employees. to the Senior given we of scenario. the least for executing enterprise-wide look Vice current Chief to believe

Coast largest million cost is are capacity. X year. X-hexene the projects move expected with fuels the will in projects, refinery expected U.S. which year, In a million. to average the day business X base enhancing CPChem polyethylene. During olefins is X its for X for project CPChem Hub, with to This as to our forward of announced $X.X one of as XXXX. expected first critical investment the The of San we per per at expand its completion, existing to also Ocean, splitter decision and polyolefins Belgium Renewed pounds billion Construction over with Gulf up which begin normal Midstream, project includes our is pounds returns will to double second in operations. we of high-performance Both pounds XX%. with quarter growth XXXX. CPChem approximately well operations our expected Bayou expected XXX located world-scale is Texas. start investment capacity and $XXX total start-up its billion, fuels to the budget The underway excellence renewable quarter, world-scale at cost its final A advancing Refining, a approximately have this total the Rodeo to per by of and Rodeo Laffan, on high-return continued growing Ras barrels for commercial million project into Frac Sweeny year we in to In XX,XXX is facilities. up expect Upon of per is quarter. half project Cedar renewable to on plans late its unit XXXX. billion XXX to on and approximately its operating splitter expected start in XXXX projects Qatar. Francisco initiatives. U.S. million above CPChem for decision component to Coast a in in $X focus petrochemical this facility, CPChem's Old pursuing propylene $XXX final propylene the made Recently, production unit asset the of X-hexene, capital building facilities the portfolio year. capacity is be Frac Gulf alpha is second optimizing a continues produce convert new develop strategic a world's

of environmental, a being joint matters. and XX% of The as look permanently reduce risks Austria energy a the and Sustainability our actions both to deliver at company's carbon Report, to Europe our by and a the projected venture on the addition, removing of governance published prepare HX stations conversion report retail HX Energy and approximately opportunities XX-XX comprehensive detailed we develop providing the cars in XXXX. Recently, JET to equivalent million X.X with as future we by to Denmark July, Germany, XXXX hydrogen social In to California best In XXX across roads. is performance up Energy various on climate-related Phillips emissions from refueling or life cycle industry's our XX commitment to thrive data includes well analysis the Austria, formed operators. one

excellence. to large the commitment was consecutive review Before we year. the Award like operators results, Midstream business second to We're Distinguished recognize our our the that honored we'd for awarded Safety American for Petroleum financial employees' operating Pipeline Institute's

addition, In the received the these the working facilities. Award Terminals Well done. large at the Midstream Congratulations from in to Platinum company all division Liquid people Safety Association. International

Now results. to to the over I'll call financial turn Kevin review the

Thank Adjusted earnings million $X.X summarize our the of cash or $XX shares A of affiliates value financial capital with per $XXX you, share of billion billion of our $XXX was million everyone. from reduced million, were decrease overview quarter. share use earnings working in investment million $XXX we We Slide on including for Capital X, generated to the an $X.X million. share. projects. and $X.XX Mark, $X.X second were NOVONIX operating results including for the for per through billion. $XXX outstanding. returned Starting in by and of $XXX spending dividends fair hello, million flow, the Cash quarter million $XXX million XXX growth We equity ended distributions quarter repurchases. with a We shareholders $X.XX.

the Slide the to first quarter. by This highlights slide quarter in change adjusted results segment X. Moving the second to from

shows improvement Slide our earnings billion the During results. a Refining. substantial with period, adjusted $X.X in Midstream increased X

impacts. Bakken associated was $XXX the Second volumes mainly with quarter million quarter. quarter. reduced due previous by million Hub. crude and volumes $XXX with unfavorable inventory decrease margin in impact The The includes improved Sweeny equity winter prior earnings, with $XXX lower NGL from previous of in pretax income the compared compared down adjusted $XXX driven quarter. Transportation the due Other adjusted contributed first was $XX adjusted quarter. income million, to $XX pretax million the in at the improvement The margins primarily was was and storm pretax million million to income increase

in and day, the driven million a the export processing up million and from Hub second we the of addition, approximately previous of per the in $XX per income LPG In was million had record hedge improved day higher gain Hills pretax quarter adjusted equity second The the Pipeline the earnings loss at recognized Freeport in quarter. fractionators XXX,XXX $XXX hedging barrels DCP was XXX,XXX compared in by approximately quarter. Midstream and averaged barrels loaded quarter. impacts. first facility gathering a Sand results quarter, The million $XX second with hedge $XX mainly the Sweeny

is investment, the a million exchange in the to The $XXX second first $XXX including investment the foreign decreased in NOVONIX end of compared the marked-to-market each Our value of quarter. reporting fair at decrease million period. impacts, quarter of

capitalized increase quarter. million for higher employee-related and due to the SA&S pretax was projects. and on as pretax million Chemicals Slide $XX and from down results. higher prior margins was specialty in The related quarter. $XXX increased to feedstock million, income as XX% $XXX to mainly million on from as million. resulting $XXX up the X. improved The income of interest Global utilization was well million decrease the margins from The Olefins as pretax benzene lower second costs Adjusted the for turnaround quarter from improved utility Other growth prior Chemicals mainly to adjusted adjusted lower due O&P $XXX styrene reflects costs. $XX quarter Turning income polyolefins expenses quarter. $XX was was primarily improvement million well and was previous chemicals

$XXX quarter, from we cash distributions During the million in received CPChem. second

yield X. regions. by XXX% was turnaround covers margins across was million, $XXX second The million primarily due Slide to increased Turning on barrel. to Refining first Pretax quarter market $XXX all realized $X.X improvement Crude income the clean capture. billion, X adjusted utilization to Slide was margins from quarter. $XXX XX% product Refining's up in million the were higher from prior XX%. up was costs Realized pretax the quarter. $XX.XX quarter second in and in per

Our an compared was quarter. the our X:X:X XX%. capture margin resulted of impacted market configuration of in crack barrel $XX.XX Market was in the refineries. in for to second quarter $XX.XX Market the previous and per was capture by barrel $XX.XX market quarter barrel is composite the per capture overall global Realized first per XX%.

yield distillate indicator. and higher market the a have We yield than lower a gasoline

percentage a distillate the $XX.XX as was quarter. was barrel, was $XX.XX first of quarter, per were quarter. secondary market crack $X.XX per crack the the barrel. to from the gasoline prior barrel line During Losses crack products configuration in The similar of the per and with impact

per declined due Our Canadian quarter feedstock of from the previous $X.XX $X.XX per crude barrel loss to differentials. barrel narrowing

category per impacts. $X.XX clean other barrel. freight costs margins product includes realizations, reduced inventory The RINs, realized This and by category

change pretax higher Adjusted in barrels $XXX previous first balance. a in mainly due Cash impacts. of exports working billion $XXX XX quarter. We This $X.X per a quarter on from billion, billion, second pretax million Refined reflecting Specialties the product increased XXXX. $XXX below the Slide since and in $X.X higher cash prior million and quarter. Other million, second adjusted with started generated the debt, XXX,XXX excluding repaid with realized capital was line We day. including and income quarter Marketing with compared margins, income to was sales. cash fuel of capital. Slide ratio was Marketing of Specialties $X.X quarter primarily prices the fourth operations to working use increase XX%, our inventory the quarter in during product due an shows second Moving $XXX million the it There receivable were XX. of accounts the second has quarter. of lowering the to was to $X.X quarter lowest timing debt-to-capital the billion in net been from quarter.

$XXX million capital $XXX spending funded we addition, million and to In shareholders. returned of

This Our ending concludes was my of review $X.X and cash billion. results. financial operating balance the

million. to outlook be rate Next, expect and the the be be mid-XXs. $XXX rate million I'll In worldwide refining, utilization $XXX to we mid-XXs we cover pretax crude Chemicals, global items. to third a in quarter third between In the few in low expenses the expect utilization to turnaround quarter and O&P

and our in We third expect million full year pretax be million of turnaround guidance. the at to come We $XXX $XXX to to quarter pretax. end and expenses other $XXX $XXX million million between corporate costs anticipate lower

for line the questions. Now will we open

Neil Mehta Goldman ahead. Instructions] [Operator from Sachs, go please

in that to I one CEO, an you, Mark, about new on of is wanted you, the to profitability this the came kick is And some that sure. past with the of there again, Refining talked and through perspective the congratulations areas to for role. your the off earnings on that improve you as segment gap opportunity think of and around the quarter, you've

would doing we evaluate just love you're the strategically how on And hear as transformation. an that progress? What ground? that you're investment things the I So should business how community seeing to are the

you, that. And question number a Neil. great appreciate There's at dimensions Thank that a I and it's of we're that. looking

what can can business we to high a reduction, we've expense quite There's we upside and we're but million in do level, analyzing identifying we're in mentioned probably little our At transitioning targeting a mentioned executing. what over number. You do transformation. there, that from confident we're that $XXX

at execution speak. a think $XXX across do what in how standardizing a that maintenance optimize and implemented way Refining more do it to looking as When And things at yields the the things. to what of we out you to operate how to really looking digital, how We're functions looking about million. doing margin utilize a launching Refining, reliability, all maintenance, We're big our many quicker. you like things to of support whole lower boils think capture, So refineries identify we've And at certainly piece maximize of to things better we the flight of Refining our about produce we opportunities the when and things using we cost optimize reliability, aggressively, that. address it's for we're centralizing and we we've do down piece is those to in we're at enhance utilization, ability our into things that assets. cost big got yield, like fleet, to

identify putting a do have beyond up bottom hit, was we're our will flight change in different it's we business on those element, to we things our different the as can yields transformation. that organization All in you in place pushing frontline so we when think And the going can big the folks really before all of kinds pushing way are on our real-time, of that layer The equipment our better from the Wi-Fi that monitor digital envelope all better in what in reliability through -- business in sensors efficiencies opportunities. that even And add and forward. come them work. utilization, to processing some inefficient of that, transformation we operating on things but we will the the up facilities the we're from and of and in capture that enhance further. role to they And go how and that out identifying cost pumps

they'll Refining all dimensions that in on, there's we think performance much stronger competitive So our of a number and contribute we're sector. Neil, pressing to

utilization, little right a question impacting how think about is now more which the conditions should theory, You're opportunity we is trading to mid-XXs, XQ diesel your that refining set follow-up from to Refining winding guiding this the profitability? crude above is out. is is market maybe low bit gasoline, business. be to term good good, a your And WCS In should pretty your for

and we strong that. We need forward our going very kit well. Neil, Yes, in operate alignment think are the for in fundamentals we're to

into the the opportunity later we We picture will strong. run some year, an turnarounds later see come back but see quarter, in to the in

moving and on are strong. outperform will diffs versus assets in ability the our in be are really crude favor, gasoline distillates And our good certainly Our shape. to

Europe, build prompt fundamentals inventories well. just If at where look that if you bullish the on where We're fundamentals is. the we with at the are, around inventory as U.S. you can't and curve any cost between the around look it outlook demand

Doug go please Leggate Bank from ahead. America, of

And again, for hot interesting you I seat. guess Mark, to an welcome the it's sure. for time

Thanks, Doug.

and business. you relative a ask to can U.S. compared relating macro the wonder on a Europe question to to profitability the of morning, I if I question quarter This specific your

prognosis share and my additions forward. such laid the the could or ExxonMobil [indiscernible] So capacity I morning if two. you just on that business could And wonder this Phillips offer next their macro for over is out there if if for curious perspective of you kind question thing, normal XX how just a business. going your see, a new I'm is And this you thoughts year

You broke Doug. bit, up a little

I'm then broke address I may think going to that. a the first about part was of second Jeff capacity little half on because the additions. you And bit. our you we have repeat up the view have question

of million Yes. time capacity between year growth X.X 'XX, barrels 'XX, day in million frame. 'XX Doug, and a we have X.X per the

will converting that Rodeo coming will be offset that we're that's half of be much out renewable the by as capacity that diesel our Now a about to facility. announced Renewed including market, rationalizations

but know, the you will So the there be some growth, currently. as cracks marketplace inventories the capacity tight, today and from market the in is

Okay.

Jeff, So [indiscernible]... want I

a breaking Doug. You're bit, us little Come at up again.

signal apologize. is I My not best. phone Okay,

my the the profitability thinking So the your lifting cost is refining. relative cost I'm obviously of specifically I'll try interested follow-up. Humber to relative natural gas I'm of in U.S. business. about in of European Europe

You've [oil]. that, unique got along to with insight guess, I a

the So share Humber on other [indiscernible] refiners? just is environment. wondering perspective in where European doing if this And I'm perhaps your you how could see relative you to

Yes.

of I They're They're performance. well. happy a doing profitable. really high think level, at number a we're Humber's things with

on position can more I think there. competitive Rich color our provide a little

good now. of The has Yes, minds natural of right quite in European question. the certainly, certainly. lot And And the gas gone market price Doug, on Mark. it's folks Thanks, of high. a

energy as obviously, for a They're the as with advantage efficiency. emitter they that very gas impact a in very UK gas. supply actually in stewardship right, costs mature to facility chemical is broader no high in that program. us, operation, place Fortunately, well. environment, provided business, lowest refining systems. consumer gas the operation little costs natural on for efficient XX where years electricity natural that for But in very as Humber industry gas natural are and They're buy And in facility. in low very the far of Humber's some purchased their COX the over a consistent And It's are those is there's fuel areas, to a externally which primarily, marketplace. the has been the price fuel

on hydrogen hydrotreating? And for

they And self-generated that but bit bit will consume little price facility. hydrogen little impacted natural mostly inside And the of a that's the by hydrogen Yes. right. be a gas,

your U.S. I on relative Europe clearing give Also we guess, how advantaged. see Humber's for cost versus of the the versus as generically, it supply, do costs what are perspective But European trade-off U.S., at. getting incremental to the is relates obviously, you

most and Generally, range, in refiners. somewhere for in the think we other that the advantaged Humber those market. where stands pointed $XX refiners, to Rich $XX out refiners in versus versus we're

Fargo. from Roger Read Wells

setup any, max where think price? in diesel jet you max seen on gasoline, terms you? max a Mark, about mean, mentioned how speaking, is a know to winter, your towards welcome many to look, bigger as or sensitivity, production, I if role. between the looks diesel of Maybe worries broadly following then are that taking either bit as And do take first for gasoline everybody times, kit. that And I look hit. distillate But diesel or the of a now little a demand in forward you've we we part of

at Roger. distillate winter. solver that. We're to This Well, for see Maybe I'll is up Brian. in the It's thanks, take coming inventories. low hard a

they're we think doesn't barrels into Russian XXXX much. RIN be as strong. at We're distillate, the in running max is to help to there's to minus harvest heading much season. better XXX,XXX heading We're produce in so prices. averages. help over about, look able of into now XX% just expensive turnaround you every and we're U.S., seen jet We Cost versus which XXXX about Refiners the have currently. distillate talked pad If is in to adjusted We've demand the going either. Europe, U.S. we are market, than distillate a Demand off versus season. XXXX not

out, our So I distillate-heavy in you we're think as pointed system.

a I be that's view our going going thing think to forward, good distillate. given of

And then the overall question. European kind into of also leaning

European and all thus, in all measurement kind we've exposure of in your of several Refining or a across constraints for catalysts operations, similar segment, operations, your power of affect could As trying of that significant have countries long of chemicals. different any some of over face it given Just could gauge you I'm such that valves specific, year need items and next other and Midstream seen and some so look valves metering the specific equipment, in the two. terms maybe and industrial Do any lead of that you supply and Northern maybe to you within thinking risk, way parts time the quarters, curtailment the over some in some sort logistics last might chain or the issues turnarounds? the to

I be is, specific natural are Roger, that question? back cut specific could might that So Is gas we the to to have suppliers, exposure the ability and they on manufacture. their Europe manufacturers as there question disrupted think that in

Yes.

Rich, have that? perspective do you on a

this to suppliers don't has our But continue a inside us anticipate ability there's to supply lead supply are Well, cases, the organization conduct our point. at we're and to that we're splitting any we've business. moving others. time certainly concerned chain In Refining issues identified But at chain taking little maybe supplier about significant in this we no some specific bit point longer. times seeing that restrictions,

equipment Yes. I of failure going. any in don't operations need think any that single keep might we we points have to our securing

please Sandler, go Piper from ahead. Todd Ryan

have there some year. the overhang of follow-up have earlier various I trends half degrees a on capture been the mean, of kind varying Refining in the questions. on you that been first things think as Maybe side, about of

where XQ? think XQ things about as of dynamics, third the in of in crude trending we're and product versus secondary backdrop look Refining you would you of XQ widening the differentials, As trends and the you quarter, some terms capture like kind about think backwardation, how et into cetera,

bump the trajectory. the Rich is nice continue improved capture quarter. we first to Market over certainly XX% right? a market here. in had this over quarter, Harbison first capture, Refining, working This We're

we'll some Mark are to indicated capture. that in We is impact planned next focused the some of on key really, be the has our earlier -- maintenance that subject the comments, we're turning product it's the that utilization clean programs focus improving around are opening yield and existing implementing we value, reliability his products highest our our backside of as market improvements. into to quarter, potential on while also on, which But generally facilities, the

that's in So differential also for the directionally looking quarter, the and of we heavy think light good indications our us early a the for also are tailwind third widening kit. crude good

I issues price in to depending first timing with could increase some of just influence so direction in increase rapid price. crude market on in one price XQ, quarter it was things continued direction on we crude have identified the which some the moves. think Crude the associated of the capture,

are seeing side. on you provide have in there. And Chemicals seeing of on potential later year. then kind a shutdowns at demand Globally, you gears bit for margin signs are on demand some expansion major shifting can you obviously, have on comments Any slowdown little Chemicals of the environment? Chemicals of products? maybe China the of been in FID The kind demand and terms any What this impact an And macro a margin? the you

it on backdrop forward? the does think a And few the as in are as for next you potential how over quarters, that next inform chemical we the where then you of look about to over years you? there macro like and So investments, think backdrop as any what the will cycle going thoughts things couple

looking Tim of of increases polyethylene in perspective, cover sits capacity ask then I'll in costs to And of demand, Roberts, coming CPChem capacity what's those strong in chain export new up. and on a the Board to is opportunities. with I'll really sector, FID there's America megaprojects. on significant they polyethylene. their Directors, pretty for on energy the spite is continue from they'll particularly him in have going products, provide frankly, seeing, be challenges. their the macro CPChem The and most demand challenge in Ryan, color more North he the Yes, in at on the But face -- gone macro feedstock

So see to And getting European take bottled up has North kind producers very advantage of America Europe demand quite European is strong. been been because you on North logistics has well America that. demand into strong. doing of

captured So seeing that Middle by East European producers, by you're producers.

Asia back, Asia will in slow. of upside If still comes add is dimensions. that a some to things number

is from So Specialty Chemicals having Styrenics look their there, lower exposure business, driving years. And at of if Pipe you their business, naphtha, values some benzene business, I in kind Performance of they're their aromatics even record their better think, benefiting relative abundant their abundant products.

pretty across seeing for demand robust now. they're the board So

Tim, you on to that, with So do want up pick the major projects?

Yes.

project. quarter, in Mark. decision Thanks, good. anticipate, the Sounds still making the From a the standpoint we on FID, of fourth

As said been work, the typical all would AFD before, is consider probably is which before you permitting complete. underway. has the you we've -- All pre-sanctioning

encounter. things, that inflationary extruders, some also civil So lead to has compressors, started, an some with effort mitigate may any you long some items, those work along issues already of in

a point project in quarter. here moving a to fourth decision the big overall, forward So and

just feel ROPP about cover that. will we good So when real talk that I quick that we about project. way

So the a XX%-XX% on again, got. two EPC that biggest items -- another we've Awaiting venture. project, Energy joint particular CPChem/Cutter bids that's

this And we of FID we moving a it's project, have decision also stage size. on that's that but along. projects anticipate And particular XXXX per advancing gauge as the so for

rural projects those Both be scale. will Yes.

in off Qatar. plus One, of and, tons advantaged X.X both Ras was will Coast course, Gulf million be to X tons going Coast considerable infrastructure of These about think on plus million you it the If they're derivatives. leverage derivatives, Laffan Gulf in and

with So along And lowers to to them. And exposure very project we're owners their they've don't the inflationary that the in Energy have through a -- got which both CPChem, of mitigate inflationary will positioning take Tim sheet the and market the offer a those to deliberate that talk advantage, you pressure. that? market best there. done, way, they've a as got be Qatar mitigating about substantial those -- referenced, things go CPChem, is any capital and pressure. to to diligent, Kevin, you've off-balance projects long-term perspective ensure Why financed. will risks what advantage fundamentals process

will Coast the to big XX% project worked that's I CPChem project. you in both Middle The that scale of East Obviously, financing XX% factor point. of But point for those to with dramatically outlay. the be XX% Coast the it's projects ventures, at as is project. both the subject FID. at joint construction financing, on actively XX% they're when But of cash will the on Two on this you financing will CPChem's combined Gulf being the the expectation so and And projects. Yes. reduces about capital because running. outlay the then a important think X project, an that Gulf that that fact other, if get is CPChem is project one have funding of of ownership is ready that XX%

Credit Manav from Gupta ahead. Suisse, please go

I made Corridor to traditionally, I'm cost, your data, just least. running probably Central you made back you XXX gas noticed at on if that in $XXX XXX some and your

is Basin the two the I'm just Coast. like quarter obviously, Gulf turnaround make And this turnaround Gulf So do you needle Atlantic more Corridor the for heavy because was Central are which trying Or Central quarter was to because to understand, and a coke of below seems Coast? it basically was where Corridor. -- it regions there

those of could two up needle to make you if those help Corridor regions dynamics. actually understand coke relative maybe where needle don't So earnings coke? So is Central the you pushing us

simple activity. Rich primary again. at that. the area. the couple down is regions those of This were by two was turnaround quarter of a good difference as in It's We a driven part facilities for between Harbison as really Mid-Continent The

to hardware So in the run historical equation reverses you XQ, as ratios roughly?

hope. what our be would but That market the Depends yes. does on

quick if trying energy energy to business? be become open Or Okay. And grow I'm a and or and you sheet. have balance I you like from that where guys want fuel JV to question your do the partners mostly here you to just owners right green clean investments point or would this in energy on green arise, build or to look, business? more business, on, balance be you sheet NOVONIX the your use is your organic and try to And think partial opportunities deals new understand,

establish great got a that trying Yes, we're Manav, to ourselves. four that's We've in business pillars question. that

the Of around hydrogen, fuel, longer-term of whole the learn sustainable around most of. very converting more capital these good Rodeo. modest course, be aviation aware things we're take us very, a got per we're the approach right got capture to It's that and We lowest to It's renewable and line investment. things, the a right take disciplined capital gallon around renewable of project. Across investments to things facility the those very how assets is making the to are of the cost that going logistics feedstock and in like you'll carbon We to we see going diesel, We've high-return -- spectrum access. really marketplace. It's that produce on sight diesel and on have actionable to any It's things. project. us. nearest batteries close that

of line As we our in we bring take competitive and if the to a to energies is investment. or you to investment, adverse it see with. we've those to the we'll advantage joint go close help us them? very now things can we or and out to you establish value not right in explore in are NOVONIX opportunities, market that you and in assets good chase big in. until in will areas create that inorganic entered it modest position And the We to Where value own organically returns invest demonstrated, hydrogen do on understand believe makes a at won't on these look sense. further that So establish have to look right value we the a as doing investors we've how ventures be sight -- right real wheelhouse capture happy can needs our But capture advantage into for steps are our chains. that products, batteries to the returns, to way was out time, chase in we

Manav, And it's Kevin.

the in use point, sheet balance reinforce to are that to very we sheet. but have how be diligent Just we balance a we going

as if thresholds balance we're our expectation is that to we've of expecting work, sheet And so our about we're meet putting in typical that all returns our talked the past.

from Chen Barclays, please ahead. Theresa go

segment. to the wanted touch Marketing I on First,

strong happening talk items contribution discrete there Just is reflected time really can if quarter? or real the that second in and in contribution volumes, in you in quarter this this run rate what demand resilient seeing the And that about segment? that a were boosted is new

that diverse all market volatility I of having quarter, And know, Marketing also part large seasonality, the Marketing is market start typically, that QX. portfolio, a QX both because as Theresa, than would do we in saying because for did markets the from geographically. the in. by benefit time is And this in well better of a in Brian. we you

supply We and besides a unbranded, But I'd I'll Western a overseas product would the store and we've volatility portfolio. I really products. started portfolio, customer branded alternative number branded which of who Europe business marketing U.S. business, which destinations. building the retailers and have beginning our in finally, We related And at from recovered give marketing channels, market. through market benefit a volumes German and strength running tax part Austrian current including to of refinery, saw marketing retail. in end at the in we convenience you will currently have here in been the at the Also, Germany, the perform end supply of the say and we very I supply which is and the from across sales say, in of In XX%. August. June seasonality, retail, inside operations sell only benefited discount to across areas U.S. U.S. In think number of well, by Austria's of holiday, constraints the some to examples. our performed well, given

to saw including, business, volatility we and of course, number a help seasonality. of the opportunities So

about that the that are of there's of would quarter. half with inventory-related associated gains add that realistically I the Theresa, year, back movements to probably come million quarter, $XX it's just Kevin. in also in the we third would second that expect

So component in there's that those is that results. included

turning it. to Got And Midstream.

the volumes you provide tell heels Mid-Con if in Gulf key to of half us fractionation? of footprint can in a on your will as tailwind Coast, for fire and this could On those a barrels the need Y-grade the likely the fractionation fractionators one for elsewhere frac potentially your second major be diverted

up XXX,XXX Medford there's this out yes. on that, is Medford unfortunate piece the barrels XXX,XXX But there Yes. capacity so it of that, about incident barrels answer that at in Conway would a I particular context it, say significant Conway, question frac behind Hub. is that, Theresa. hub. Great is about me Of and currently. of the up way Probably let that at Yes, of

put Conway So for pressure Conway, tight. room with There's that not operating, any that's effectively no there. more so on currently, is barrels

from down. Gulf So U.S. instead of down moving move the Conway Y-grade to Coast, you're purities seeing

So the both Y-grade facility home and say our for I we've out. is well, full at looking would as Belvieu been Mont a but running

tight it's at Conway, Mont and So enough, the will not And may we see some get because to itself. tightening pressure the at help obviously, on the market get Belvieu enough volume our going put system we're in -- because down margin in shop. tight you'll of though really some

moment be I that, on in in you've time board Frac late will this third is the coming in XXX,XXX tell a Now that barrels you X, months, the our is which quarter. X XX coming because XXX,XXX about temporary is a will next fracs what here got onstream Of day.

we're so that on of that seeing And because system the that some pressure incident. relieve currently will

from Tudor, ahead. Blair go Holt, Pickering, please Matthew

the perhaps Mark, the that any not businesses a stand fit? are look long-term range as there you out that under umbrella, are at wide as of PSX

Yes.

as integration at Emerging opportunities. good Energy we add we're across the I think as in, we look there's the businesses these even businesses

our batteries, a be we else and going think opportunities and individual full create market diesel individual that at respects, about renewable chain take pretty I always we think needle you assets aviation do that in. I capture you comfortable ability integrated, CPChem -- at I produce integration to mode. There's we assets But that able there. the to look more like that about opportunities and around may ability view our the at are there, like in value think someone into around through and businesses consistently macro things we're many that into there's If a critical fuel, for to always We're think if level, that, portfolio, optimization that things sustainable our assets. we're on the to and think Midstream with the as coke value in see

a Alliance are of as assets. for converting of facility to opportunities think, renewable done you for the I the the Matthew, And to searching examples better terminal Rodeo at our existing conversion it and know, a diesel work some and of

Rodeo. And Got sticking it. then maybe on

strategy. as mentioned big You RD of a energy part new your growth

comment that that utilization from think is RD? you XXX about running currently. of on was there million positive And the the the I cash in you capacity quarter? quarter in the performance kind at? gallons Could What are

XXX. Unit

have unit Unit the yes. running XXX, we now, that

Yes.

Yes.

quite And Brian what currently it's call that this time. to and in So performing, it it. to renewable this turn unit out the, we our Matthew, standpoint at maybe I'd the running is color utilization But has team an is run anticipated the from lengths. been of our over I'll running diesel, also and say, that's point but Unit producing I'll -- operating It's actually extend a to XXX then Rich, above add marketing it, while they're well. they've lot learned expectations able there performing to some

in all, so above at And would expectations, is the I performing all this unit say, time.

market On Brian? the side,

us. through we've say XXX, I marketing running low would CI which been helping material has been Unit the on side, more

the And years, the slowest well. much as highly RINs, priced look because than If X.X feedstock the into to heating That's you know, the past heating at very part risen benefit the oil in as the a oil, us. oil has it's in quicker are take a large the spread, plant. you

So some right now. in to expect for continue very, strong that margin for We'd of time. terms it's Unit very XXX,

John Royall please ahead. JPMorgan, go from

year? on ex the been can has but forward, the potential So the on the RD, extension then news speak sticking on weaker catalysts which of Canada with think some process thoughts price the you that's you around program project starting week how this side to that the any been or going BTC and in And maybe about with the BTC? LCFS recently and next BTC returns the scoping

I can LCFS. Rich BTCs without take the But Rodeo I'll premised that and we BTC. would say start with the project, then Renewed

an economics. to add-on our that's So

going know, you think together, forward. credits full so to the to value I the we see expect some wouldn't of as move the all that but expect we'd economics see in dollar

it's John, And Yes. Rich.

for managing program As the that's Sacramento the development California Resources program, scoping area. alluded the and LCFS state the agency conversations Board, CARB, recent LCFS there, in responsible about you to plan talking in the been the has

seems itself and over good signal. conversation weeks LCFS several last be credits the that to seems to the a the stabilized have Just

But reduction. increasing originally the targeted changes in to intensity this reduction changing conversation we're XX% whole But where However, considering likely at still demand. time. to this required as reduction, some talk not to XXXX credit XX% specifically, CARB's all this result is which was XXXX. increased going. clear CARB's in been CI discuss a as that But more some that discussing about in discussion the has side, will obligation to or carbon is reduction, by XX% been now proposed There to

certain So this let emphasize no path that forward point. at there's me

position installation lower carbon However, -- on still us puts unit, intensity premised the we quite mentioned think in the that Rodeo project it still attractive. Brian of Renewed feedstocks And a is facility. with do is quite the competitive there. And pretreatment at as it's project the

you're to on And there. Can XXXX I this if Was any turnarounds deferral lower is think in about presumably, there? one year, in That's back some Just there lower-than-expected any really guidance, the helpful. you sure execute going costs? at if might the not then color -- kind your looking expect any where that of you relative year catch-up? answer early to able have then I end you to And of the look at but to some full the for you this, correctly? into maybe coming heard next of would talk year Refining. Were turnarounds

Yes.

this is again. Rich So

execution, programs leaders predictability instituted the our advantage to improve I'm of of we're turnaround starting for processes, paying we take of I'll taking those a things execution. has fundamentals honored all And to able really of of. -- of dividends been us do previous executing quite some our now some follow And are mention, our who One now to the by behind our that been here that's one shape. onboarding, planning to we've turnaround. improving that those And now. really programs And

annual that's And spend anticipated part. the lower from actually much been end than so is that the of performance we're our working we the primary our guidance that reason on towards really has better execution

Yes.

up during I were of times. some this And has far the able we caught been outlays We that year. catch-up think a was on as you're to activity as lot deferred turnaround year, right, because too cash risky. COVID out a save this was of volatile year heavy it season

more typical you'll and turnaround So lower much think in activity XXXX. see year I the

Yes.

been So isn't the of executing turnarounds. those turnarounds we've guidance as by deferrals driven

from Scotiabank, Cheng go please ahead. Paul

to call welcome and as Mark -- conference want I also CEO. First, the the your to congratulate first

Thank you, Paul.

questions. Two

one the I think the Rich is Mark. for second first for and is one

Is that? I on And maintenance major there some year, For that that Rodeo an is for there next I very you you By a remain give second reasons yes, Mark, robust. on or think shut can have postpone you Rich, is us you flexibility? behind? down or other touched to do shutdown market to question If the that. the just mean, time Mark. can come the you option the conditions otherwise because idea any need it that do

the the as long-term term, And we on company don't be Midstream, -- seems early things on And seat, of given the is back to at in the from quite the Refining. longer part more think last more There's in that the that on maybe the us to less Midstream and portfolio. new look Refining Chemical strategy for decade, I clear. decade, over-invest. if already one the future, even in need that you point look is take what you

great. say, can, would you be that comment those, on If

I'll Rich let take I'll Sure. up. his up and follow then

land Costa the Renewed the environmental certified That execute a for Paul. also That to County Contra in received Early the project. Rodeo second use impact we Okay, activities. Thanks a report. quarter, from the And of carbon we're has yes. and question, support permit jobs path subsequently intensive California's producing wage initiated continue pollutants family transportation preconstruction fuels, on lower objective support criteria reduce there. cycle we on-site life to significantly to while the included

Rodeo that Mark a in $X-plus So a mentioned that in versus at that $X Renewed. this we're changing capital-efficient investment roughly range. Rodeo Renewed have to project, the It's are earlier. is to higher gallon very on much $X don't projects execute time. which announced I I other see think a point path

track Rodeo see QX project we So in Renewed of XXXX. remaining start-up on for

the distillate we talked earlier the Renewed. about economics market the We've in And and diesel Rodeo the of like call market. the in strength

those economics look so And strong.

supports Yes. project that. This

Yes.

As far and Refining. always the portfolio investments, about most and I create as have can we're a strategy plan we around we that think where value. think investing the exiting talking I don't

invest as on that slowed helped around I that Permian, create nice done the as got growth that deliver capitalize our the right we've certainly whether Midstream see our a landscape. to to the finding opportunities to disciplined we've in in capture Refining mentioned investing future assets, has basins the got of in of to GDP West selectively And can long-term have to players, where were continue way some we that out There very good the Midstream well. CPChem, the think quick we continued chemicals market or make fundamentals, right do in in Midstream I you think the right but assets in upstream pieces enhance that our assets value in of quarter. payout the we improve can for the opening there, opportunities that job But want again, that we strong. those needs yield, some or it's there but petrochemicals in if growth. what we market here strong as we'll on production look a ability we to second consolidation to find that's Refining participating projects different. participate There's certainly in to down, comments see look improve to existing make what we've offer if us, that we kinds to that occurred fundamentals the We'll targeted Texas in our long-term Refining, opportunities in capture changes above joint through a I as consolidation came put can that utilization, Refining then in very that. produce in a that of we'll opportunities And ventures retail our assets, at to in locations. high-return, sure take to the saw primarily

So be capital I driven we'll strategy value. value the create for to are opportunities energy by way to us. flag. to finding -- available that it's think out the going markets to and our disciplined overarching invest, Emerging is then that emerging investments, And right building the an value going emerging to Energy there capture too. we're to And not be business, though, in energy just fly It's capture

headed. So that's where we're

I We have turn over of call. now the to the today's reached back end will call Jeff.

Thanks. and in Phillips interest XX. your We greatly time appreciate

you. contact If call, you Shannon or following questions please me. have today's any Thank

you. concludes and today's this conference. Thank gentlemen, Ladies

disconnect. now may You