Phillips 66 (PSX) 3 May 232023 Q1 Earnings call transcript

Welcome, everyone to the First Quarter 2023 Phillips 66 Earnings Conference Call. My name is Sierra, 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 Relations. to turn President Dietert, now Investor of will call Jeff over Vice I may you Jeff, begin.

will President, and First Mandell, Chemicals; Call. call and Quarter morning, Marketing Earnings Mark Good welcome Roberts, Refining. Conference Participants to and Commercial; Rich on Midstream CFO; Harbison, Kevin Mitchell, CEO; Phillips Tim XX include Brian Lashier, and today's

harbor financial Today's statement. contains XX website, Phillips section of presentation material the X can Slide be with found and supplemental on our information. safe the Investor Relations operating along

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

over turn that, call Mark. the With to I'll

Thanks, Jeff. morning, us thank Good and you for today. joining

strong $X earnings financial quarter. had adjusted or billion delivered results. a we We operating quarter, record of and per first $X.XX share, first the During

executed Refining, market shareholders driving average refineries returned to Currently, through our industry we maintenance meet $X.X share season. In dividends and above at to successfully and enter repurchases. ran billion summer rates. as utilization we demand running major are We planned and high opportunities capture

dividend. to February, per share, commitment to we X% competitive a $X.XX secure, raised and ongoing our In demonstrating our growing dividend

execute to Our committed cash operating integrated to projects. excellence in strategy. invest provides disciplined cash our the to and remain generate with and flow, allocation ability diversified portfolio us strong shareholders substantial attractive we as return the We capital most

safety our in Recently, Chemicals and were their Midstream, Refining performance for business XXXX. recognized exemplary

by industry. This is Pipeline was API For recognition the Operators. Award American Safety consecutive for awarded Petroleum the highest midstream Large the for Distinguished Midstream year, third the Institute's

Santa Safety Sweeny the recognized our for Maria The awards. and refineries American refineries earned Borger, City a second safety outstanding Distinguished safety the of Refinery also performance. five for Bayway, in year and Ponca row. Manufacturers Fuel received Award Petrochemical

employees' commitment started done. were the continue at and recognized to Congratulations like to Safety off our all CPChem year. with facilities. priorities year these well awards operating Awards. last people strategic four We Day our late would Well to to the honored In from and receive excellence. Investor recognize AFPM advance Chemicals, working facilities We're to these

Slide create billion July of shareholders $XX target performance billion to operational year-end repurchases and and increased period and Since to over through we've July returned XX-quarter shareholder quarter capture first to in increase between targets $XX return distributions. to XXXX value We X our the billion market toward summarizes had XXXX, strong our track meet dividends. the XXXX. on to progress $X.X share to We're through XX%. refining

advancing we're XX, Midstream, employees In our market the NGL continued of Midstream transition synergy Phillips an strategy. We milestone with achieved enabling capture. DCP to wellhead recently integration to

the of delayed anticipation DCP bonds executed buy-in, term and a we In loan. draw issued

the We're transaction to savings billion deliver on rate close to the our year-end. we're transformation initiatives, and second advancing by $X by the of run quarter. expect We business of end on track annual

first year. update quarter, provide of detailed Next a on half savings more cost achieved the through the the we'll

to and fuels the safely facilities. down carbon converting into conversion the shut substantially Maria we're fuels. the from we The refinery emissions Refining, San largest renewables we Santa In of February, produce as our transportation will one In the facility Francisco facility, reduce world's intensity project. continued lower advance

fuels over of of XX,XXX renewable Upon barrels production begin XXXX. capacity. We per in day completion, will first commercial expect Rodeo quarter to the operations have

at world-scale are of the Both its facility. half pursuing in a projects, This portfolio second includes second Bayou asset Chemicals, splitting of X-hexene existing construction CPChem Old Cedar to enhancing and a XXXX. of is of Ocean, Texas its propylene start in the projects unit its optimizing and expected In base expansion operations. high-return capacity up

in and world-scale on our petrochemical building Gulf you to facility Coast CPChem with update at expected to jointly in strategic start-up Qatar Energy forward We Qatar, and continuing XXXX. on US look Ras priorities. are Laffan, facilities each the

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

in value of equity Thank X, of summarized of earnings for our quarter. $X.XX $X.X a results $XX overview $X.XX. were distributions from earnings and financial We by Slide billion, you, $X investment billion capital we cash hello, Starting affiliates the million NOVONIX in $XXX first everyone. the on per our share. reduced million. operating billion use with including $X.X Mark, an or decrease fair per The Adjusted cash flow share generated of and working

billion of projects. spending repurchases. Capital shareholders quarter growth was and quarter ended shares million returned We through million $XXX $X.X to for million million share the $XXX with We dividends for the outstanding. $XXX including XXX $XXX million, of

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

earnings million, the During $XX costs, corporate offset period, partially results decrease adjusted due lower in to higher and in increased Marketing mostly and Specialties. a Chemicals by

our shows X Slide results. Midstream

quarter. primarily was million previous of pre-tax seasonally lower from contributed income The pre-tax million by was the million, driven costs. with $XX $XXX compared million First income $XXX operating prior quarter. in increase Transportation up adjusted $XXX quarter the adjusted

the was $XXX million NGL the and and commodity of impact million quarter. compared to Other processing declining the due in business. prices fourth adjusted was mainly to $XXX gathering pre-tax The in income decrease

per facility run barrels LPG XXX,XXX Export continued the per to nameplate capacity, the record in at XXX,XXX Sweeny a fractionators day. averaging first loaded The day barrels The quarter. Freeport above Hub

The $X.XX income $XXX in margin Global costs. XX% for Chemicals during utilization the slide was with The costs, had quarter. quarter decreased polyethylene million increased compared pre-tax feedstock the due pound of from quarter. lower higher O&P sales and $XX per eight. volumes by to quarter. to to million $X.XX previous improved utility on margins Turning was industry mainly Chemicals the adjusted increase first

down lower costs. quarter. nine. turnaround adjusted income million of offset Turning realized to impact Refining from higher the margins and utility lower was billion, mostly from slide Refining fourth $XX on quarter pre-tax was The volumes $X.X activities first by

the quarter, turnaround million, $XX.XX first the $XXX X%. increased were and clean utilization margins decreased XX% was XX%. was X% costs by yield composite while by realized market crude Our In per product crack barrel, to X:X:X

per the per quarter. XX% of crack barrel in and margin quarter XX%, up covers barrel barrel resulted capture for the from previous market an Realized fourth $XX.XX $XX.XX per was Slide capture. first market overall was the in in $XX.XX to market The compared quarter. XX

Market capture our is impacted the configuration refineries. of by

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

per and increased During barrel. quarter, the gasoline decreased crack per the crack distillate $XX barrel first $X the

of barrel Losses than products $X.XX per were due prices. previous barrel quarter from lower secondary crude the to falling $X.XX per

running primarily was compared improved of advantaged advantage barrel per to due barrel more crudes. per to $X.XX Our feedstock $X.XX fourth the quarter,

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

improved $X.XX First clean previous realizations. per than primarily due product quarter, the quarter was to barrel higher

Moving Specialties a $XXX $XXX million quarter, prior compared the to quarter, in was marketing had with first slide Marketing and stronger-than-typical margins. quarter due solid income international pre-tax to reflecting million Adjusted lower mainly quarter XX. first margins.

On income reorganization quarter had transfer adjusted slide $XXX a improvement XXXX. lower segment million quarter. the costs and $XX foreign Corporate in XX, tax to The prior than pre-tax and recognition was of the entity Other the a million; fourth higher interest of on due of mainly

$X.X cash mainly a reflecting partially working during There $X.X a inventory, the accounts net Slide a was change first billion, use increase billion, from operations with excluding offset working in Cash receivable quarter. capital of the balance. was position. in an the cash $X.X XX billion We our in quarter by started shows capital. decrease

shareholders funded units. billion During Midstream's We dividends the through of in publicly quarter, notes returned we common repurchases. to DCP $X.XX buy-in of of share held capital unsecured and of support $XXX issued senior spending the billion and pending $X.X million

billion. Our ending balance cash was $X

This review concludes the my results. and financial of operating

be between of the global the a we utilization In quarter expected to loan O&P interest Next, outlook the transaction, In to issued March, $XXX quarter entered few term support delayed $XXX higher up costs. and quarter. to is billion unsecured of quarter close be mid-XXs. reflecting a and million. into second be Midstream during I'll quarter. $XXX turnaround $XXX we million, second Corporate billion for coming expenses costs Refining, in of cover worldwide DCP anticipate the second crude in $X.X the million buy-in second We the and draw in and $X.XX notes the rate In million between items to utilization mid-XXs we and which expect rate senior second Chemicals, to expect Other

will open the line we for Now questions.

you. Thank

We [Operator begin question-and-answer will Instructions] is Sachs, now ahead. line your session. the Neil go with open. Goldman Mehta Please

morning team. Good

and also quarter, around expected The the was little QX looks bit for better first better. the in question utilization. guide is refining It than a

you're and the about on months a from a you been making improvements Refining So choppy talked it's what XX utilization standpoint. that in ground

turned we've Thank you the here? So what that can you. provide conviction the corner market

a a it's us. and to Rich. in here Yes. of number Back Thanks, things we November, question, This Neil. coming is of refining's improve outlined together performance. for Good opportunities number

asset turnaround really in us, that's crude our those at availability. durations, quarter One really done utilization. that pretty of a Optimizing for them we've in job executing component to those operate XX% turnaround status. big good allowing a executing and heavy a us of unit was It's a very turnarounds high-performing

capture very well. us their for Coast, you XX% also capture as crude Gulf good additional us They also and market which well. up allowed the the our as market performed refining that saw well, to On allowed window quarter as very flexibility utilization of was well, increased assets to the open the rate

guidance The guidance. are in executing the with that And coming continuing we that and our running this there control well. first turnarounds to able us in Neil, that in do can quarter, below assets key business, -- is last were what on our or focusing a assets, below started coming trend year year this we

to to I'll projects commitments commitments, relating the and through, really were that a Day for the had that see to small on fruition made little those Yes, were with on, the what blocking going seeing there. some based groundwork we we pleased come that back we're Neil, come taking time, with And is fairly this that and Mark. bit Investor over we're those starting been we're that we underway the just out now. tackling

effectiveness to starting just results biggest think as has doing cycle initiative, their and I see virtuous to really our started edge employees. hearts Wasn't when been starting of really, own in there the well are in. plants are a business There's cost. impact future now. year And turnarounds, a ago they're they're competitive doing, of first now work the their they the that seeing want operational the all it the and the the they for They impact our stronger of hard to as a very but out that's been that they're transformation things and the minds employees. And that impact way

some you last completed talk of to year? were Rich, want that projects about the

for pricing XX% focused X.X% of Yes, that I rate plays implemented actually the is we of impact market quarter Last XX think capture. for on projects capture assumptions. the in into with The us. mid-cycle the market those capture a Refining year, of result improvement projects

We of capture. XXXX, pricing. that we implemented have and $XXX million in net million are $XXX is identified estimate or worth on return the mid-cycle those projects flight, a investment EBITDA that the XX was X.X% generation at improvement for actually market additional the and projects, in

you're we is Refining. November of what seeing line starting of laid the out think is I So, to come in the to plan the performance bottom really here the

of lot That's good a color Thanks. there.

perspective seen And any business, on manifest different think decline parts question about the we should the from itself in can is so perspective. around a across we've that second how crude would I prices. in love modeling it The

around tailwind, rates, headwind secondary capture a working which to products declining also be capital. crude prices help to for Specifically tends be can tends a Marketing, but

think QX of So, about price that if in you. crude should movements? terms decline we sustains, the Thank how

we let earnings me Talking marketing This happy and is noticed QX. strong probably Pretty Brian. that. Neil. about in had start, very Well, marketing about

parts assets And a particularly is the our number doing have of to You with Western here what on great. in higher of we the business, know focus US been channels, and also through branded, is portfolio both our market and we've Europe, that geographic sales retail. margin which in But retail. a trying we wholesale, diverse

past And few purchased the years. in retail we

we in mid-XXXX, fact, retail the in JV In US. had XX stores

of Now, stores business. JV we get in all higher margins we stores in also our reimaging have to X,XXX US, the and spent retail time some

strongly performing And base also in lubes business, that it's the that I both also products. finished and quite say would oils in

marketing as you generally benefits slower. business that spot come So, prices marketing mentioned, off, marketing generally, as or the because fall prices generally margins,

Yes.

up On Refining the usually the framed flat you in accrued secondary side, product price question, it's Neil, as does drop losses. the the reduce

of in refining. what that sweet close heavy it's off differential, additional so any our we tighten make positive impact that? for the bit a -- there, really, light and to in So add they color us, differential tend it's Kevin, But eye money to a for has little up us we keep on a that on. the refining, that's to

Yeah. Neil, just working capital the on impact.

with the will payables net have working a highlighted, in you've declining As we we're a capital prices, position. because hurt

So receivables. million and you X essentially barrels think the about per a payables duration system on a that's longer on outstanding than the day

approximate the somewhere in crude move the crack thumb the the assumes working of at per million So and that But of per simple $X $XX of to that million so there's stays million other And what's $XX rule inventories level. movement order a But of you $XX price price. together, a and reduction. of of can is of million products also, the rule that use as thumb, capital in to and the hurt know, parts $X happening you $XX lot on. as capital, moving working thumb, to in rule same

really Thanks, everyone. Okay. That's helpful.

Thanks, Neil.

America. with Doug Leggate Bank of

Your line now open. is

may You proceed.

getting Thanks the ask capture for on. rate. question Guys, everyone Neil's I follow-up me on to want a to

-- now over if a of of same seems the you're schedule just bit looks mark level about should we that's past question normal? of I the there. reliability So bolt-on little rate, ahead I a think that, we that, bit new should mean, risk a this of capture should to kind to it, was anticipate So of of kind true a the It be progress. a obviously, year? cost-cutting like And could

all of So it kind earnings as higher. together, trending wrap looks power business it like past overall, the the of hump you're and the we

way. I whether kind right So just of we're that you wonder, if could characterize the thinking about

the I'll I'll Great progress. address rate, come let capture in and cost-cutting question, Doug. on back Rich the

Yeah.

secondary rate difficult configuration lot can feedstock so But is our parts costs, it's of Doug, component products, to the very what has So we it, back predict to control a seeing we're moving in that, our well a and it to on maturity others. capture going of issues business, catching I programs, for from And where are on preventing the also continued is reliability asset availability, we're very in execution mentioned these us. under turnaround as and coming earlier, saves basis regular larger events occurring. early focusing

improved most over necessary are continuing hitting the significantly on processes. all goals, We've importantly, even predictability work takes equipment though safely we're over to That a lot the turnaround of operate work those our reliably our complete And and time this. we time. execution leg to improve to

So to that. if in that to that rates our program to is operate market available continuing market see there. mature. And will the be We'll is continue to utilization allow the

as of side cost a as then the component big of you it well. mentioned, this And is

basis. on we've clear $XXX rate a by the costs million by a run path have of that We reducing identified this year end our

lower indicated, Refining. Over in Mark half has of that's the out as And mentioned our coming rate probably And run more are $XXX news savings organization the of to that million cost good work directionally market much for us. Kevin the comments We're efficient importantly, his should business, challenge more we cost. and improved is which and utilization. entire being all accepting uncovering in opportunities how capture improve support to

goal and of Thanks, a the we're hitting accelerating progress. the efforts. by Yes. so, in $XXX focus lift, Doug, first months XXXX, we've way business Rich. our seeing XXXX, last long the into year-end was more than a great It beat a really for of $XXX or on transformation We major quarter. we're and really million come XX million right heavy

quarter We've structure organization We've excited of major realized the on a excited. is changes we'll comments, in in And as organization the savings to people loops of in. And the And I those a feedback of and place savings at that take in we're inefficiencies. sustainable. tour the second that our we we're real they're made call. got mentioned make you sure put that lot that these have eliminates are it bought and seeing

what sure those line. We're and we to we're bottom using that to really make the tools capturing we're capturing state-of-the-art think results some delivering

to the realized. just change that be organization or the months we've it's an incredible things witnessed as last start So eight in six over

of in apologize progress of predictable, a short my this for demand. I fairly lot Mark. I and follow-up is guess A period time,

about now. deal one doesn’t for in believe what -- just and your of if of wonder, through on increases to gasoline a talked demand large that big I healthy year-over-year. marketing share, channels, Your trends. outlook market large seem could And competitors right you’re seeing those your you both

market. talk I’ll seeing it's of Yes. what as we’re is kind kind in well. Doug, about that, Brian. what our seeing the this we’re Maybe in And business of

the because somewhat our of flooding of California sub-maintenance. and off, are Although, volumes because

demand for almost better better driving gasoline demand US and than last now heading was as seeing XX we’re the last seeing we’re in gasoline generally, gasoline, US X% inventories global years. lowest year. kind than And mentioned, of about we’re But season, with year to

a the of than seeing were better they spreads have as first quarter prices last year, -- to year, we that about given hold also last We’re than particularly expect year would of very retail demand lower We strong well. last $X.XX. octane a-third versus larger

side, demand off diesel weaker planning to Currently we’re year firm US X.X% did the the has seeing season. become in about start under winter year early with with the year. last but On diesel warmer Mid-Continent

demand. and a last are over China, over global demand America, at strong last But In seeing seeing year demand Latin last is bit X% than and distillate strong some that said, we’re year. year countries XX% diesel particularly

pad Pad max max US, mid-February gasoline back max diesel it's between in been much. And max since I’d and and bouncing mid-April. pretty finally, gasoline signaled and Xs in X gasoline say that, forth the EBIT

so for bodes well up throughout this summer. distillate firm the And the helping

for much so your Thanks guys. interest, with watch answers. Will color. Interesting

Thanks, Doug.

ahead. Ryan Sandler. Please, Todd go from Piper

Your line open. is

to already cost target. you was does on at I next to reduction amount of you the great mean, that I there there. of mean, $XXX you've hit bit might basically can you about target? ahead upside talk trend capital of made changed a quarter, Maybe side. where that reduction prior of schedule some And had versus as the have in million terms cost were you've wondering all this Great. expectations little whether that mean savings Thanks. continue kind Is further you've success talk the you've about -- until I not where your going ahead been and you schedule, said available? sustaining you of progress but find your to ultimate there

Ryan, Kevin can couple high But a how into distributed. at then to drill those savings has we're level, touch Refining I'll With of very transformation, and really respect a business things, seeing that. the are well. performed

On want to and an not just efficient going do to to we're continue really in that's the more that, capital outright sustaining capital, we're sustaining It's it that, reduction spending in productive opportunities. make more that. and I clear becoming how

forward You'll that. and see that at look in not any really that our we're projects going of really capital impact we capturing

it's So, how to around be more sustaining going look to and to process continuous at efficient capital. a get more

adventure And year. get we're end the of the to when not program to the next of end defined at we end this going

goals. outlined have We

more We that on into that continue capital about and require enhance today things to savings talking aren't cost expect XXXX savings. to will that generate even further are we beyond. There some modest

to an they're and every as want ongoing this culture, part got march win instilling motivated. of employees XX,XXX day to we're out and competitive that So, Ryan, there We've highly improvement, edge. this greater be just of continuous is our going

going these see where you're numbers. Now, Kevin little a you insight can to to give

Yes. Mark. Thanks,

from as that we that's EBITDA proportionate of seeing as the it's said, show the run an we look quarter north fact of the in you that are quarter, at adjust standpoint, of $XXX detail a share And at for we the rate million end rate. over So capital when million of up. run $XXX some the the

Refining, that's more that, be, where is you obvious of given half necessarily of $XXX of into externally area showing bit even rate, which largest anyway. up It's in consolidation things in our of the because that and it run spend would the reported not or is the data from million-plus like other just But expect the results company happening little on. a so DCP that to

We're We this the seeing completed quarter of activities centralization benefit doing of work. of combination that through some this we're of our organization sort year a and across flow through that between last the organization.

around for a done in our the we've where just and processes we looking ways and, of We've to lot simplify cases, work. been some do eliminate work way standardize work

optimized support those the overall of we've around business so of model activities. And all sort

technologies And foundation sourcing put then progress those our the we continue activities we really areas. digital to of have XX in made in on in external spend, the work that with the third-party Advantage we leveraging and place terms the

to So, as elements quarter this a lot half available. we next different the that, and specifics results of year give we'll more have time

heavy these Can and differentials coming talk maybe, widening seen differentials this Thanks. the then I of And importance is crude remainder you Can you talk big we've the narrowing. little pretty outlook I in on out mean, there, for bit then year? Canadian mentioned Refining some some crude some seeing you're your Great. crude mean, what differentials about what -- moves you differentials a of to of profitability. over

Sure, Ryan, Brian. is this

pointed to of as think and new now year. but it's in this I you you in strength factors the capacity starting a have And weaken China gained you the beginning as out, was number strength since of refinery sours overall, you have Kuwait.

additions Galveston We new an million had Arthur have unexpected Gulf X.X refinery at barrels. the on You Port cut, and Coast Bay. OPEC US

economy that's back how has people driving, know economy see And been don't barrels much more happen. that can coming cut with on of of very people I and lack Chinese sour large you will a cut. But the flying market. strong. then actually that more

So firm market to weaken. and things combination initially of that then the started did

They're averages. has the weak, though about so you even historical the Latin than $X QX at that to come since I to Castillo When perspective, market sours if weaker relative weak, think about but they're remember look useful still to will five-year American it's point sours, still $X Amaya. they're you off out like that while

up still than firmed historical since QX. weaker although are differentials they some those So

you. thank Okay,

Ryan. Thanks,

Manav Gupta UBS. with

proceed. You may

now is line Your open.

So the just demand? you margin? a should further are to just wanted given we chain do side? chemical the think chemical seeing the on point little margins first touch in ethylene understand you chemical earnings bit the base to on a from in I strong rebound it expect improvement demand helps I the out, $X.XX global a seen really Guys, trying you What and strong recovery have

Manav. has Yes, here chemicals on in They -- we that that front United advantage This our is was up did lower the crack prices Roberts ethane, as the related dropped. which but if Tim got to advanced really saw advantage really feedstocks, the benefit it yes, then and showed became margin. you namely so in in propane, States, subsequently those the butane

as lower help well The other utility which course of to that whole of with is Also regard cost. structure. side prices, driving natural that gas as

feedstock So quarter. the advantage in it so lower yes, utility really better costs, the helped

board You in still and demand coming you've fundamentally got here on a got States. supply United issue capacity and issue you more the have supply a that's side and

capacity. going have through you're So to new to work that

coming you're lot disruptions out side still around. in that as had of demand the happened chain supply a off the The there marketplace. trying you is But inventory to work

got to coming need you back that inventory. China see through stronger. So And to also you work

well strength that consumption things are meet show so some needs Brian on in global production made there of polymers. As as side there products for in some mentioned, to to demand driving travel, there also good as out up

If two anything throw an there's inventory in rapidly. significant the We're things cylinders, see take got especially see bit China work by bump. need expecting can a be we to from time a to going little demand to one But would all Asia. additional clicking is to us at in going to a significant happen to this caveat we've point those But think of on not of back, market. impact through end fundamentally, change they're the I and you it's is I imbalances. come year, So time, off, some work the still

to Yes. delivering they're I is environment, very only ability strong in delivering position their and thing on strong. And is the solid CPChem's their been operations operations Manav, tough add, I -- competitors have they're outperforming. outproduce cost their their and a and think And based would

is slow that. don't point And their towards you're geared to is Yes. on are on the Mark, -- up it have front, and Durables bit that exactly I also consumables. that as durables a a though much little they do little product bit seeing think, exposure slate

My quick some making your renewable XXXX. is follow-up starts project, or -- on you year-end hopefully, updates progress your guys. up on the if early get can diesels by Perfect, and you're it

out we're Manav, Yes. making Rodeo. on progress the good project at

next on and heard down year. the which unit prep Rodeo has it is and the feed Maria basically quarter fought weather shut in that challenges The lots is facility, a mention along. out first You the are facility. me we of there having Santa project but the looking through of with for moving dealt And team it, there, we're forward to

I'll you expectations there tell more. and XXX strategy more let We've renewable expectations. diesel, details. are Brian and out commercial we Unit our had a call unit got April operating since what, And for and XXXX. what frankly, And our operating those I'll we're executing. on there implementing of both you it's and touch exceeded I'll we a we've that And remind producing ready great And

better follow on have Hi, XXXX, we in Manav, than the point, that just to Unit single up of every at we've started premised we margins been quarter. QX Mark's since XXX, the unit seen

and actively and blending Unit And feedstocks run oil oil, canola when cooking XXX used now. if but we're at corn remember, only, we plant we've also running distillers oil, soybean you the feedstock pretreated oil premised

crushing imports of And US in general oils. And comment, more general a the just the now also we're low seeing into -- than times for volumes vegetable last CI we're seeing X year. capacity

also the we've then and directly the selling California offer we're production all volumes incentives through of And higher to end business, locations that And some the on consumer. retail our than side sold of geographic our outlets feedstocks. credit to Marketing branded almost the for of

these on programs, then as and Washington proposed Minnesota California, two know, available currently states Oregon, but LCFS are are we're program. you the side, and states and finally, And LCFS credit proposing an Canada, seeing programs that recently the in fact, Pennsylvania in other

Mark premised Mark, more on production of we're than the higher too. side, that's at originally plant than kind we the also yields And then XX% And side. renewable commercial operating making RD we're seeing the of than operating mentioned diesel And the XX%. thought. greater side, the at

So pointed barrels very have flexibility Renewed renewable to up we're and as Renewed of forward also to fuel looking Rodeo XX,XXX Mark jet producing capital. Rodeo will with little of out, the

very all are guys. you, Thank encouraging Those updates.

Manav. Thanks,

proceed. Please JPMorgan. with Royall John

Your line is open.

Hi. Good morning. Thanks for my questions. taking

on first OpEx. my one is So

in OpEx talk Refining lower natural guide So maintenance. item that can XQ but about and quarter? on into It's ticks presumably gas prices the you an trends higher don't to, despite down, you second

you'll have price an around even presumably your efforts XQ, and costs. of and maintenance, In lower course, less

color Refining XQ going on on forward? and the in expectations any OpEx side So

this We're in see to is from to would I XQ natural drop lower level, say, points a And your guidance we'll see not We'll maintenance expect so the a turnaround valid. at just XQ. giving costs. Kevin. number. gas the settling I are prices low specific would you mean, John, -- are on benefit and pretty

modest I a see some be Now of good small that of side the decline. higher, a you you'll thing. other from. net-net, costs, think a is will should small impact the But see But -- a that's so variable utilization sequential

Great. And buyback on Thanks, the share Kevin. XQ. then just in

your You paced have quarterly but that your need the from XQ, an acquisition. to outflow pace guidance, bit does longer-term of you hit ahead a

cracks a to as the deteriorate continue a expecting well? further, in to from be impact could pacing And if we should that your slowing were perspective, XQ? environment then So

the cash Yes. term quarter. the too we buyback wouldn't at first John, drawn of have of had We the at -- billion a being end buyback pace driven $X.XX are not had I drawn by the issued facility, yet. we billion about but concerned notes we funding $X loan which has balance be because the been

And will the we buy-in. so on that fund as draw we

healthy balance all point in time. even still still we'll have things cash. that So other at unchanged, a We're generating cash

a respectable our buyback should think pace the quarter. And level that so second I at be still very in

assumptions, mid-cycle Refining operating looking the balance The still strong. margins. position. business really is cash weakening flow We've to relative But a is good sheet our some is The in seen in good. still

So about by I'm impacted DCP the the being buyback pace not too buy-in. concerned

you. Thank

TPH. with Please Matthew proceed. Blair

open. Your line is

then hoping Hey, in in on QX into the Central as the good you bit morning. could a expand and little I Corridor was QX heading well. dynamics

impacted looks of QX? pretty Corridor and Wood utilization issues lower dips? capture you Borger I WCS QX into from QX. Were of Central good think dips? ran at with still And function in QX, a heading XXX%. guess, wider margin then some would margin it expect in narrower by then, that we actually XX% WCS the capture Was I was River And your in like

Yes, this Rich. is

storm Central so So analysis, and first winter of some the I remember, the kind effects, baseline. think with quarter-over-quarter the quarter, to thing pretty the Keystone shutdown that headwinds fourth Corridor, sets had we heavy the

well. as And advantage capture market improved of the are slate we That first quarter, percentage running there to to able our see did these actually the that more feedstock we impacted heavy In we our were crudes crudes. importantly, run. crude increase able

second Wood initiated Now some up repaired one first that -- at and impacts first week quarter, that -- of into unplanned unplanned was We is the did primarily half running. by this downtime slide of the facility the is to was is carried now now turnaround and That that ramping from back River quarter first quarter. up That on here. turnaround the the carried quarter. on downtime, fourth offset

utilization WRB do get expect back we to So higher the to for the assets. levels rates

a some bit forward. and see little of Corridor we that into well There that -- the market moving how that's impacts also, played But kind cracks other Central result. first slight there also to results lower turnaround was as quarter that

We back expect to upwards. turn utilization our rates

comprehensive And you had there. backed the pretty getting follow-up for the one how longer peers than talk I going for that taking update. process is just and LCFS have Could Thanks. RD mentioned it's is about of thanks up -- Great. CARB Some then expected. pathways? your

a XXXX, risk on that earnings the pathways bring contribution? to in at you to site all the full As is have that QX expect you time, your would or LCFS

the to We the get the Well, well. for we've get of would Renewed this for the Rodeo approved as -- XXX to that ahead we applicable start-up -- of was operation flood is approved. approved occur And working pathways this project. these activity is been diligently Unit Any pathway LCFS again. even these Rich anticipated also that of to project

pathways. of we're meter start-up there applications consistent position, So while to the flood say our is good we would with are should a system, that think concerned, a We I and in project. that the into of

Thanks much. so Great.

Cheng with Paul Scotiabank. Please proceed.

Your line is open.

guys, two questions. Hey just good morning. Mark,

penalty, California new Refining both view or being how passed, the about the California in with First, does your view, and your change it profit asset, Marketing? change does that windfall your that

capacity rushed lot that taking industry Yeah. a think, been Paul, up the was intellectual that's for, since I through. entire of

up even think today, was to Before intended and step got like level, business, the of and a it's what to the see and when at that supply there. certainly, you've people creates disruptions in I everyone to tight for place though be difficult this even hard things the the consequences hill and little it fundamental And it unintended is demand, supply Refining tough chain to coming understand working more reduce SBXX-X. else, chain can make that, because happens uncertainty, demand the difficult. makes invest a We're consumers just and over of to you both pretty there's strong, more it going more can need, a a and California manage lot

to at So it's is really day. of how end see to the consumers going tough this new us law benefit the for the

them industry anything have to industry the think you to do in not slapped not why you with been because a -- penalty? going is how be done challenge has sure will proven or the court, I'm wrong, that Mark,

Yeah.

That's to to action. industry the defend protect going company. up think being be that, But perspective, certainly of companies logical even that's an angle each the industry I and that interests and associations may assume it's that I obviously at. looked will from take industries, to individual an think that's

Okay.

I the is quarters. back went Refining positive. is Kevin, the mentioned this very actually Kevin. to presentation, you for big And about your in capture I question, think five corners other a second in the in The last, say, four,

I that column mainly instead quarter. a helping margin say, negative, of, exception, is is in like we've think that benefiting seen without always this what your

whether in that column really such you than I think have those Can your more and what an improvement prepared bit bit represent elaborate talked is a seen sustainable? and remarks. of a why you sort little we

the quarter particular the big way this Yes. around comparing the driver do realizations to product of or Europe. a item quarter we differentials. was New the crack change quarter, is the we distillate negative or a crack our York, was use clean Harbor-based last And because the fourth in capacity the Basin, Paul, XX-XX and our Northeast especially York was that It particularly strong And crack market weaker product, New clean Europe. product Atlantic for is York jet and New crack in Harbor. in between approximately

production distillate market. Europe our to so relative a And that negative causing is

pulled the a so for that in overall -- Northwest. up and the we where as which West shows of in other California And Coast bit down capture, we and Pacific had includes a Coast, West that entire an going phenomenon LA well, the similar on little used the marker Northern

That's Paul. with that biggest show in are each markets our up driver single other, those product and that will the in sync realizations, out other. there, in of can when drive differentials so And that actual

impacts in And it the quarter. fourth really was from -- negative

Yes.

Please Cowen. with Gabelman Jason proceed.

line now open. Your is

questions. my taking for thanks Hey,

cracks I wanted a are really still ask there are healthy, stories on to plants was of barrel. that margin cutting runs structure. $XX There The Asian out first Refining global are kind while US

indicator way somewhere? is cutting weakness some is, environment it we're Thanks. kind is because be its margins, that via could or that over global the that a lower an the question will the indication ultimately of So floor into leading US that of make a around at margin

turnaround and as refineries. fall, are this said, US Asia in that is summer stepping begin Europe Korea, should, our and you and And a advantaged have global into the Europe. Jason, say into beginning the Brian. see to refineries with opinion, China fact Taiwan and particularly to margins season, along in is as runs to the trim, I'd month inventories like Hey, in you begun European margins. heading in that, Also, we're know, this strengthen, low which Asian relative help season, to we're driving US

midstream I closed understand fill early and is DCP, my of part the Phillips support and yet platform would indications follow-up And was Okay, the assets more attract Midstream I that but isn't the combined to deal on of deal on get for within rationale And DCP there. to think some specifically, platform the maybe just great. wanted and progress. growth acreage

Thanks. are that any favorable to combined companies with, as is, indications more early future view growth platform Philips? question the there upstream for support do to this so partner And

a Jason. Roberts. Yes, couple Yes, Tim This things. of is

second get our here the of which to XQ, close in and units. We're buy-in the behind the part probably that latter of us and XX%. deal, is to on the get that that expecting public thing of First completed the increasing second quarter, done interest the economic portion get and

that transportation So, rationale wellhead the fractionation especially maybe market, the NGL advantaged that the i.e., exports. than were logistics, that as those to of portion chain, wellhead, in of a value we integrated, GNP the more deal, next is those part, found what or far we're the space, only as the in participated

sell to if being you And do some a get and wellhead to is so to way major the market way being able there. into -- to all able participate the the tough all to go don't ability the

So, bringing compete. the that together of all out with DCP the dock, GNP to now we Phillips' that go way was infrastructure and created the portion, portion can which think the transportation that

that do any Now, to your out question, producers there percolating has any The we yes. from interest interest like or is answer shown that? have who

We've People of as expect. had you and a would more options alternatives. want lot engagement, a lot and of activity

Houston barrels them ability well get of as down congested and area so the Ship down bringing and a get out area. viable And less to we're the the Channel a to Freeport as option alternative in

just make bottom-line. so to yes, We those been convert into good. need so far, we it's So, sure

for Thanks color. helpful. the really That's Great.

Jason. you, Thank

concludes Lashier for I back the to over will session. call That Mark question-and-answer closing the remarks. turn now

$XX return want to I to our of billion our you, July the targeted deliver recap We pace quarter had a $XX year. we from Thank results, are strong and the repurchases, XXXX to things. start just few raised of Sierra. year-end dividend We key had and a increased share billion which XXXX. on solid first to to

confident execution, improved Midstream in capturing made just Midstream, integration In lower synergies. with costs. in Refining we $XXX remain market advanced great mentioned, We've million capture, as we turnaround progress and of strong and Tim

expect this to progressing on of rate business and savings initiatives, transformation We run $X by the quarter. year-end. to billion close our annual achieve we're track on buy-in We're

on We remain shareholders. returning Phillips your interest for committed our progress. to XX. and our financial you We look capital to allocation, updating strength, Thank distributions you to in forward disciplined all