Phillips 66 (PSX) 30 Jul 242024 Q2 Earnings call transcript

Welcome to the Second Quarter 2024 Phillips 66 Earnings Conference Call. My name is Emily, and I'll be your operator for today's call. [Operator Instructions] Please note that this conference is being recorded. I will now turn the call over to Jeff Dietert, Vice President, Investor Relations. Jeff, you may begin.

XX Earnings Phillips Call. the to Second Conference Quarter Welcome Harbison, Lashier, will CEO; Baldridge, Participants Mandell, Rich call Mark and Midstream and Chairman Commercial. Marketing Chemicals, Don on today's and include and Brian CFO; Kevin and Refining; Mitchell, on can financial section supplemental of Investor presentation information. Slide operating X XX Today's safe the along harbor Phillips statement. website, Relations found be with and the contains our

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

Welcome, call. Jeff. Thanks, second to quarter earnings everyone, our

previously brings like of strategy. instrumental Don him First, to Roberts our served for his want wealth EVP a retirement being Baldridge, the to introduce in executing of XX, Tim wish thank interim also Midstream the XX. wellhead-to-market DCP I new best NGL including Phillips in CEO his Phillips experience Chemicals. to to and I'd our as of He Midstream contributions and and

to turn second Let's quarter our performance.

our to We Since returned and our systematically execute in focusing XXXX, priorities, what July dividends. control. shareholders billion through to The share are over visible strategic $XX we we've improvements continue on on results. repurchases

Share plan. We year. allocation continue will repurchases priority $XX the to billion our achieve be capital end expect to our to of $XX billion the in by a target

product at XX%. our in Refining, the structure. over was X during returning over enhancing Crude to committed our highest reducing and at cash XX% over was to are of cost our -- quarter clean years we're We yield operating flows performance and XX% shareholders. In utilization

The NGL the barrel. we Pinnacle by our strategy. from fee-based grows high-quality, addition, second stable wellhead-to-market acquisition Midstream. We've on for energy nearly to costs $X end It with of and full earnings our Renewable of XX,XXX the day processing of to Earlier our asset previously and sold over hydrocracker second gathering of processing we interest as per $X XXX% our our billion our long-term assets existing approximately second Express million. dispositions benefit Rodeo complex located the Midland the we are units. was the In execute month, more $XXX rates gas the the By XX% this closed announced strategically In on in the lowered contracts. footprint business complex generated our quarter, pipeline near bolt-on barrels start-up we toward Midstream, than per liquids-rich and synergy both in from capture Rockies of reached is a continue The Basin. In quarter, with $X billion. target our nonoperated we've feedstocks. renewable natural pretreatment Permian

We've supported mitigating our our I'll at realized focus savings WRB share X impacts to rate cost through including our approximately made next half the compared company On the the slides, structure. the improvements XXXX. and the target, hitting with We're $X.X transformation. first the line. provides on million Slide cost approaching growing bottom our X reductions, total business detail are of business we've run while inflationary cost billion results $XXX costs. in We've level of

per efforts X barrel. barrel. as lower per per cost a business closing driving flow in well we've were efficiencies sustaining $X $X.XX transformation as target our on logistics our margin our Additionally, controllable by have costs, lowering highlights been successful excluding into to how We're translated in our spend spend. Slide lower that through barrel. turnarounds, in Adjusted capital cost refining

for dedication shareholders. we and recognize disciplined want strong deliver for and our hard through allocation over strategic capital value you. driving shareholder our to their Kevin, increase value employees to priorities. work to continue on performance creation as We operating I to

$X.X In we Thank $X.XX returned fuel or operating reporting, key renewable per for flow Slide the share. The of X Rodeo segment We made to including results. the our contributions segment cover credits. covers as Renewable of Complex I $X.X Adjusted you, our generated quarter, and billion million cash renewal segment to financial a metrics. the $XXX were and now to second segment Energy well changes as includes new Slide billion business. the Mark. earnings will shareholders. new optimization move fuels feedstocks, from sales X to

our We and NOVONIX to Other. in from Corporate also the Midstream investment moved segment

have and other were earnings fractionation quarter. and up record slides for compared purposes. Adjusted due pipeline volumes. including been higher million NGL reflect with $XXX Our materials comparative reporting the to and mainly results increased recast period prior results prior changes, these volumes, Midstream

prices. sale flow mostly a million synergy higher, interest million, offset in working cash prices. flow. In margins. REX of shows proceeds results results Marketing XX% In addition, asset seasonally reduced proceeds crack stronger weaker spreads higher were falling of We reflecting Chemicals, reflecting changes and mainly Higher dispositions. lower, and increased in margins payables distillate driven DCP in impact benefit lower were our in volumes. Slide from costs We had capital pipeline. strong mostly Specialties $XXX received Working the due and last of from costs by slightly change that lower was volumes impact commodity aided cash the Refining accounts than the cash include and X by $XXX the capture. receivables operating capital from to of quarter. and was

rate $XXX worldwide million between third million. low the $XXX anticipate We be expect quarter. O&P and million the Other crude Looking million. Refining, turnaround Chemicals, to between utilization costs global and utilization expect and the rate Corporate we and expense the in to in $XXX in XXs ahead to be be we to In to come In the mid-XXs. $XXX

publishing between begin a we will guidance. Refining market a expect monthly million. And and early year, Refining August, from on million Relations full reduction expense Investor turnaround is be the $XXX in website. This indicator For to $XXX we previous finally, our

for Mark up call. which, open will the wrap will after we questions the Now line

[Operator Instructions] of Roger first from Wells the question Fargo. Read Our comes line with

the savings realizations. on cost I'd to cost guess the I like dive cutting, in

barrel in kind of Refining. running understand, look for in basis? much long here. of how you're at structural is which per is run think much showed you it, You And just wanted helps how we barrel as to built better about on of I it it $X a and should the

Yes, Roger. We really view it as structural. primarily

of board. number utilization on course, of going down, to driving the The denominator bigger, the business focused the out be gets Of influence our we goes but are across inefficiencies there's rate. our

we on that controlling continue to efficiency we or without out control, we drive We're focus the going only to cost forward. impairing And sustainable, to can that as not our things so are going it's reliability improve go and our utilization. on

the to reductions you're as utilization on trend we based moves is confidence time, that the seeing. they around, the down. numbers will so over -- But cost If around. continue will And move

add just Rich detail maybe to bit This Roger. I'll Yes, little is the Refining that, a more group. over in

the what couple year, controllable here of a explained half $X.XX of that's our reduced by barrel. maybe best it that maybe first of cost examples adjusted we're by and doing. a And we've are people The doing the

that engaged we've example have had that and inefficiencies process, in to say this from initiatives employees X,XXX business. And So X,XXX actually working over have no than of that maybe our here. reducing better the been an probably ways over driven into way with

in We using our actually is turnarounds examples the on but of Refining. turnarounds, do tank that a tank were lot our Midstream one We Midstream our very experience. compared organization. to of do costs our So high of part

year an applied also piece Midstream usage the to change principles to and So example of X million of organization, a engineering detailed reviewed of out changing drove profile. hydrogen them practices a a through steam-to-carbon the of went best reducing $X.X operations. fuel ends a turnaround to usage, through the out we the concrete organization. lot review. up work. There's our Refining of tank we And we we're ratio our of example took process. year ultimately plant that of of equipment. able which million out how another process we operate the that used how We were fuel drive And $X cost and That's engineering And the

initiatives removed add been they're these cost structural all $XXX of of million system. up thousands the that's and over from You well

been confident employees. with And our very removed. removed that of from money, cost that indicated, because dollar, done has Mark cost And utilization been of that been profile. spend profile dollar I'm structural by it's move that's as that our per around that, this has will So change this that fantastic work barrel but

focus sustain now Yes, creation value sustained of the but going Roger, as excellence mindset and and from lower of see greater transformation forward, -- board, we're that's what's not on through a really to relentless we've business this. going transition you're efficiencies business and value cost efficiencies. got to We're of relentless this and pursuit we across to costs going go creation to pursuit

shifting bit a you that. right? Rodeo Maybe here can I at doing it, gears that little separately, you idea now broken you progresses, Renewable proved Give run clearly barrels First, of an kind us appreciate how of diesel. which out you're XX,XXX since day. a think it's

an Now I where breakeven then with would there presume of to, PTU and market and you business feedstock idea maybe through that dynamics terms the let's to are system. Maybe that in kind get of the the advantaged the of it's just about getting say, profitable.

for Thanks the Roger. Absolutely, question.

an including of just earlier, And the incredible to optimize speak, feedstocks. both lower challenges CI through up day like team of of And barrels as of assets. we're the the want I First typical the facility did job commissioning. of all performance safely commissioning online, renewable processing of congratulate We've economic got new ramping the we They said as at I ahead materials Rodeo. everything to XX,XXX schedule, transitioning the working and pretreatment all, a units. we're we of

that the user. we'll well can into those sustainable Coast fuel. we're the to renewables end aviation positioned all West deliver out be producing to renewable feed retail also So the on we yet way fuels And

to commercial we out possible. the retail a feedstocks, of pull-through works economic we've asset. our secure got can around stations range to slate the team So most wide feed strategy of consistent our this built on the to we've last in that optimize that globally ensure mile And supplies

we logistics exploit access advantages. So well And market with advantages, advantages, has believe large-scale forward. positioned going a and that going scale facility, very all those we're we're to

again. marketplace. Rich and color flexibility maybe is the The there in more really this pretreatment So here, a little this the provides out various unit feedstocks looks just at bit the

by multiple we on to that though, that quarter delivered feedstocks. fourth soybean carbon continues quarter. I lowering the as to range. we're to eventually to want our So through we as make going lower because will XX, facility, [ that our overly Rodeo work yield is through on include our intensity in carbon everybody, the third feedstocks, the roughly, here the driven ] the sure factors transition and the in CI We've XX focused carbon to hydrocracking And caution running the the intensity been of lower and begin to value. be really cost the process intensity pretreatment value feedstock structure well the not in

the proposition. combine value So into all those

the will quarter the aviation production fuel We that. renewable offer and to also start of here in or third continue jet sustainable

color offer pretty fuel. the We get Brian a complex more facility XX,XXX journey The the pass a able of The he and is excited year. over sustainable that little a up bit to marketplace energy And barrels to We're to blend It's add marketplace. Renewable to will maybe aviation about this it to can day will business. for been some to it. in I'll fourth the open here. be of Rodeo quarter

renewable comments were margins consumption end of lower was even positive on were some and an arb open up kind of versus even fuel in the they U.S. but diesel QX, marketplace. range, though to the Europe. Biofuels on Well, we saw the XX% QX,

have I'd begin looking So RD the is reasons. think in will improve, future, a list margins what we of say further to

jet more renewable will produced. First, be

to As that more plant, Rich at producers that on said, renewable own see working QX marginal we're continuing shut. will of our and biodiesel diesel. We QX reduce and in supply the

and Veg to diesel. to general, up potentially we likely impacts. may Canada. Our in the Coast U.S. oils PTC will imports program the been prices for begin PTC prices, increase low. firm, could firm basis fall to of we will plants think, think, out the West And and international addition with the back Demand the basis of make finally, are renewable very RIN for has distillates crushing in

still energy there So of end with saying aimed I year, remains credit said, guess, would, I policies that by at regulatory including for next lot policy, potential farmers. and a all protecting tariffs, programs, uncertainty clean

Sachs. Goldman Our with Mehta next question Neil comes from

A results. set very solid of

was in model big versus One deltas Midstream. of the our

so And with in wanted what about forward NGL particularly price an seeing color about volumes and should we I carry you're the to the give opportunity to any realizations talk guys there, you here. momentum

had and Thanks, Midstream they're benefiting as they're Neil. reductions quarter, Yes, the well. the and experiencing great transformation the business strong from volumes, a cost synergy capture

it So I'll over barrel shot here. Don, first and the to in he'll turn get his

Neil, that's our QX, work. certainly, at continued on thanks the a When second the for our and think the quarter completed We look standout. our focus costs was office DCP question. are systems. really our integration back the major of milestone you improved I I DCP to integration mean, a around testament last in that our IT so results,

performance testament you transaction. But organizational the lot basins quite in us able the efficiencies us quite of for our our was a positive momentum capture through confidence team NGL the a running that well to of as volume assets. all run synergy We've DCP really positioned cost and a we're that's just connected throughout some system. hitting So gives That's in and the well that to mentioned, got volume our strong lot quarter. savings to of for that our

impact But to QX, great fee-based see for some some as in on we'll the Beryl well business. And some off executing the there's throughput pricing so spot one. our little really we're a have pricing wellhead-to-market standpoint, systems But we're volume the that's actually, I really really with it's some of driving you the and to taking at volume feel the that quarter the From look that say as a a in to was I good it's compared think So our have at I'd seasonality to we pivot But would outages think Hurricane strategy. QX, impact. power connected onetimers. performance like the that. QX, we're some and previous a

and us on towards just sales. billion tracking in Can target is marketing $X the follow-up asset you how the retail we sale then specifically Europe And the stand remind where around probably? we're

Yes. Thanks, Neil.

We assets. interest. active those around are discussions in strong been There's

players those of number a assets. got interested have We in

And so program. asset in our a it but we significant won't really further disposition be would step comment

Royall comes JPMorgan. next with The question from John

your path to leverage my on first is question your So back target.

I sitting think you're at XX% today.

adjustment target looking you path a made clear the is terms priority this of on get helpful. yourself you next target the year. Mark the range? to comments get expected possibility you enough capital, there returns his is asset be year, in but in down is to think there? think a of to I that sales And capital there return Are any the return hitting on on Or return But of the capital target target into capital in just versus of would that get back you there could XX% commentary see levels? I leverage back the to of the reiterated

Yes, John, it's Kevin.

to billion So to range the that. on you $XX way hit well our will we $XX We're year. this target as alluded, billion

mean the may still know, we've in take near right term. But little return the the does a to when confident cash year, meet environment while. we're ahead in confident seen we we're impact ability little But Refining all that in and the than capabilities quite balance look But margin to cash-generating weaker nonetheless, a As targets. we sheet our of the now business. next in is

from cash asset coming, growth to and dispositions. EBITDA we expect generate have also We

the we'll next time can time, we next But cash by a the So operating return giving of we'll and, that with to evaluate half cash good sheet. in spot balance it have flow dollar be. We're we when same targets a in shareholders, confident balance That to than sheet absolute cash manage as will that think together, which committed and you through where for we at this get target shareholders to point. be put year. both feel the we not second we the year to all quite returns the something at return be we to want regards greater year,

Great. M&A. both of talk the and terms M&A that And side sell side. I you're the you the think, in Can the the bolt-on maybe buy at or and more expect we the acquisition, The made you about then demonstrated business? do on more follow-up's buy a side Midstream Pinnacle what looking Or my Pinnacle one-off maybe to there to side? acquisition's acquisitions? more more shouldn't around else Is of look

than instead assets system our looking Thanks, Yes. Midstream out with it great We've say, have to more Pinnacle like I generate to able basis, there, think owners. asset was that value would wellhead-to-market to backbone, on they a contracts. And were of because ability an that of laid John. assets backed being solid And epitomizes and add immediately existing what leverage out is Pinnacle, position us we're by that built accretive, that into and organically. connected a one-off, this fee-based this to opportunity to can we standing a it affords for acquisition up kind also alone we be that's we the would Pinnacle. their to pick almost, shovel-ready

So it's to organic it the we're good at and and be and play accretive an value get-go. able kind that of inorganic get from

And to opportunities in things position, exactly that looking particularly ballpark the like kinds the that Permian enhance in of our I Basin. so for we're wellhead-to-market are think

question The Sandler. with Ryan Todd Piper comes from next

a outlook few this differentials in you then on back seen impacts what maybe Can dynamics Maybe And me, on of first West broadly, months the maybe the now at with more pricing, we TMX about as the half of Canadian your crude you've for about for impacts year? over X talk into crude think terms Coast all? availability, you're the pipeline. operations heavy

barrels, a and TMX to pipeline refineries. going X/X for and have by the year. far, end is a About been to of the our surprise the to Coast. so West L.A. the that both incremental benefit barrels say I'd in to Brian. running We XXX,XXX barrels of of is in been XXX,XXX this has heading Yes, bit about us, the which Ferndale Asia, Coast barrels West from particularly X/X our to XXX,XXX

we we've by XXX,XXX barrels of year, as going the forward, think. production to seen Canadian think think of additions I up of about the end we

differentials. so pipelines. we increased will production X, basically, once to grow, barrels put and and on X.X, years, will pressure those will we be full will the think, again widen X out pipelines think continue the And The in more that Canadian

if or it's lower terms second quarter And commercial operations, Great. is, And bit what given in third driven Is pullback or running a broadly context seeing for maybe a the were headwinds? over maybe turnaround the in utilization than you you of during quarter, the question then more the just activity guidance Refining frame Refining next primarily what we this quarter. your margin the some of kind of that look as put X. macro in by you're

be the about see remain fully little market improve. I'll do broader run the ensure the the macro in start utilization. bit quarter But probably market to softening in this well third West softening now and the Rich, approach, I'll components. to Coast. returns able to there East -- We're strong But to a more take and as coast, softened and conditions with do particularly I'll I'll there to the the going here down turn position discretionary On actually with a in little has when intended right in we're over marketplace. now because in as opportunity guidance do a bit maintenance we broader start regions also some talk to to of guiding is Brian that's that we both this a on a -- on some we market see the right

Sure.

shown we're seen demand, can jet, but were they as and day. But the gasoline So about averages QX the maybe U.S. demand gasoline but below weeks inventories been global few QX in have Recent about in thinking Gasoline about X% a fallen just up gasoline U.S. refineries have diesel, mentioned, implied gasoline, with cuts. What XXX,XXX is margins down to X-year seeing DOEs economic barrels in gasoline. and start DOEs some stronger extended week-to-week, we've with X% now but were a be seeing exports We've Rich about about larger in been firming last the noisy. diesel run and somewhat running outages. where

and balance think we everything it mentioned, on I've help out full So the with gasoline. should turnarounds markets

diesel, Jan was the U.S. but May Europe to demand X.X% global in recover maybe April U.S. X.X%. the It in down We've in through slightly the On and X% diesel seen been of more off was late. has some. up and truck about tonnage X.X%

So the passenger throughput. under jet average also stocks good distillate spot X-year demand is strong, year-over-year, the have global XX% really then bright a now. And fallen U.S. finally, strong bit a remains

is are In finally, generally fact, the jet up jet high regions. in are diesel U.S. jet gasoline, throughput demand all in I'd X%. now above U.S., levels. leading XXXX cracks say And the in U.S., inventories U.S. about although

I strong refineries in U.S. Yes, had ran industry cash and have years, U.S. to at through look and came what Everybody's quarter. repair U.S. capacity equipment. of rest all volumes the demand very see Ryan, refining it up that XXXX coming the XX,XXX-foot impact about growth the And and of remains think, level, clean global been the long as we've we the I flow new gone much their together, anticipated the the of across term, fleet. And think the advantaged well think limited world. of continues bit market. But all the you have last things. last very for little quarter, increase. economics few long you the out to of into then versus a several the medium some beyond last and There's of we into

on medium Refining bullish supply will when and we fundamentals. we long the long-term medium at demand So look the and term, realign, and remain

we've think got even days come. to better I So

comes Blair Pickering, Holt. with The Tudor, next from Matthew question

on diffs. in on given second your Could move did the about of pretty understandable, you the capture quarter, on seemed talk So just challenges the the which capture Refining so down narrowing as as crude trends things some co-products the expect side, Were mentioned Do quarter? improve third And hurricane. a headwind of bit from you you the quarter? side Refining also, the little third any to your Midstream impacted in a assets of the in in far well here?

Matt, Rich. this is

I'll the them. was to There were -- substantial first. some hurricane no operation were our assets. I minimal second Let There start of me none, the question would impacts to logistics, characterize with any impacts, support supplied very supply electrical those on short-term were to in and electricity the back were get very, online some primarily And front, which logistics surrounding we very the up with impact assets The for market quickly. Refining lived. and able back

it's Certainly, of off in reasonable quarter. to from quarter, don't we the much Third a that generally, start. quarter. But some the third second carryover of provide guidance level level

there As Kevin reflective be detail the don't turnaround here is provide far other of a what see -- our have we market. utilization on bit as it than of that his provided operationally, little from will our where can and any that we've we view. point guidance think outlooks we the and more

earlier our our to made slates. publishing indicator, emphasize that that which yield be going point geographies, -- closer will on refining I I Yes, it assets, of just will reflection next, the new actual was Matt, a we a start structures, crude is

And -- publish for next July that be week. so we'll we'll

to historic, we more actual our our realized And with track crack. closer X:X:X indicator new that expect would margin than so generic

we when a look website. our little that So on bit next of a out you'll week get get

pricing have polyethylene $X.XX forward start sort of would then almost I'm helpful, spot inventory you too. prices a already are pound the on up side, on levels insights that the be Chem for in And back Looking half just QX. expectations the it. seeing of you PE even your any And of and overall demand talk year? the since to could about

they're in and continues support producers to face balance, would seeing America recover. Sea-Suez Canal as well, access. environment, the that well to some current Yes, because continue challenges on All exports, of to producers with are favorable absolutely, operate North struggling would really, export the Red CPChem. Middle East as European view cost which demand Matt. and certainly CPChem strengthening really strengthening the margins

position stronger, that margins do those the world we markets quarters large seeing term few domestic gradually inventories constructive we're we continue and lower medium we out a works the also is So improving, value inventory too. trough which improve U.S. to see be think ago. the saw as to indicates a of that chain the domestically, I since And exporter are particularly that now, long

from The Jason TD with Gabelman comes next question Cowen.

on ask confident I the EBITDA mid-cycle spoken And that do billion at, some and billion, $XX I'm one so first that previously see think that where have about different the to divergences far? mistaken. Do The I trending you guidance wanted you feel How is still outlook? it's to in $XX is if segments? the you outlook not between

Yes. Thanks, Jason.

XXXX, We continue to will that is the by in to can we be billion given $XX and mid-cycle believe the at mid-cycle EBITDA position that generate that $XX conditions, that we conditions, achieve billion.

discussion. will to we'll structure, achieve isn't have in whether in not units Now in I guidance we another cost the And mid-cycle the XXXX the is place that $XX be billion mid-cycle board. if that we we that operating or the our projects, want XXXX the believe at across this be clear to of at all for were initiatives

projects we you've recovering is mid-cycle Midstream in I at but And of really or the commercial performance Strong likely established at upgrade renewable performance at around the execute Refining. inferring question to through value continue fuels operations. the capture to as mid-cycle I think control, a streams but Specialties. that well, we mid-cycle. a We that don't not be We Chemicals are Midstream. mid-cycle. see above segment and for the seen for to is in don't market our we that we fuels, to segment. And the big haven't we believe what will think be renewable the believe strong enhance -- Marketing

Refining and see improvements continue the we billion about are. talked those to EBITDA. how We that of confidence we that what $XX that our will And sustainable that's able to to gives us mid-cycle contribute costs, lower cost

quarter-to-quarter. Great. think and Can specifically segment as volatile we on in us EBITDA been And follow-up's has segment deal, been you pretty volatility be that stable my Midstream. being quarter-to-quarter the you the a swings occurring if this a of the $XXX of It's close forward? of more DCP expect volatile sense that million-plus typically moving give why just since to

Don Baldridge. is this Yes,

really of think of is volatility some integration. a the I reflection and timing that integration of efforts the

sequence in of the as really the of the going finishing IT lot have think last back of just of and major eliminate timing we're I office so I through to systems. you a and help kind may and milestone us efforts. that's variability seen our And mentioned, that QX the And normalize up integration

on $X.X is expectation the EBITDA guidance. my billion we're to track that So

you around kind X of see quarters, path of If that million look $XXX that to our I we're quarter trailing going a think you're at stabilize us IBT. on and

So we I think to delivering it that's see that. on and how positioned well we're start

The Doug Research. Leggate from Wolfe next with question comes

So to of to medium-term guys, outlook. the question the come Refining I back wanted

I think and including generic U.S. elsewhere. everybody, it to can is, term, our handle require well. this. another added where about seeing know the historically major of is on up clean we've talk Utilization that for yourself, seems capacity been back, cycle example. you we're that you is the when capacity medium And my it utilization question I both running right on that's Whiting really But is is here been concern top now new at a because level? does guess XX% turnaround congestion

a level around of see think to utilization And I it's not historically, seeing about industry. aligned just factors talked been last quarter. across as I utilization you're in that the the Doug, positive earlier, sustainable of number

that, everything naturally And and very it well operating that you a So yes, cycle bright, the evolve. normal think will I across things shiny, turnaround as new, into industry. roll clean, will see is

industry. see you'll kind So sustainable of across think on witnessed the I basis utilizations we a don't the

is some everybody up to it. I $XX listened it let's sorting Or point? comments can feel And line a and that point with diesel continue you that appreciate you seems, you COVID, target? seeing realistic running any moving since to of well becomes a but I Yes, sight the do million watch I obviously, that us it the benchmark? have that. versus, to guess what where the you like post Do say, themselves reset mid-cycles's But at that your out RINs target. help you're came need $XXX renewable about on We'll seems plant lower billion. to

Yes.

I the is there's incentives responding producer's to will, jurisdictions ensure long the run. matters respond we're the constructive on over in credits our it think RINs, are all that are those expert to volumes. And to increased tax but -- Brian run. various LCFS, that in in time,

Yes, to renewable and We'll yet. see. run ready mid-cycle adjust to the diesel. I'd we're have say incentivize But not to you have people credits our to

think we those over be so there. will And time, incentives

And length distillate. now just seeing what part you're of the is in

of has part the -- those that value big on the a And so that's just and to of there's around we to have brought to realign bit and respond been all base markets renewable diesel distillate. volume float market think that's see incentives that. top quite a And you'll of

comes The Paul from next question Cheng Scotiabank. with

presentation is new First, in chart some thank And renewable the congratulations on Tim, also Two out retirement for the that and thanks for also, your business helpful. of the you breaking help. questions. the diesel and

gentlemen changed you come? And running? changes from you you point Refining the in First, the you West at already how or market standpoint, you're that think may felt your believe the that additional Have how still that run operation That's is it? Coast the this fully TMX, way first impact impact Coast do question. West that

I'll maybe So start.

to that day. a barrels will think we XXX,XXX be what full TMX think I is capacity almost up

refineries, impact currently, continues at able And impact our where advantaged Ferndale, that So in it we've taking L.A. got we Asia the biggest we're barrels basically as that I've seeing its on prices. barrels, the more barrels as same has into get think X/X the will the L.A. been of to have. if mentioned we're but far more

we're We I shut looking if ago, curious, months down California, at in But year. X the case. early just in not given think summer, California we conversation. the this be had I that margin, was very thought mean, you strong And the Rodeo will

tell do you you I have the California shaking And us sense that, so terms Can in that you retail how how have is in market California. mean, any demand up of demand? the operation seems

Yes.

shut and gasoline our including California to diesel, saw a met. production we to need was there say Rodeo, us, ensure many So market that the that an resupply to market Phillips make demand I the opportunity would after renewable gasoline XX, players,

the and the gallon. more international so and market balanced, and $X.XX from so to QX, way remains we and ships supply, the ensure imports basis pressure into needed supply which will some And per saw more the as Paul. volatility market in it adjust come timing time to into and oversupply, during may recently made domestic of the less came the market with But cause time its as margin markets off on supply than put the basis

station is same-store I the they share? of any your In you How how information did terms mean, there service But can over is perform? sales, retail there?

marketing Coast West the strong. off and in Demand have been and stores but Yes. been has the performance the some,

slightly say sales And the doing would well. we're but same-store much. business that I not off some seen we've demand So seeing

Barclays. question next Chen comes Our from Theresa with

how area inorganically, Going balance will capacity around your to processing NGL per Midstream MMcf NGL organically lot over given in processing this the same do at from the per on the build-out, plus the Pinnacle plant. back just in another general you that the side organically to of early organic for ability of or versus the Permian growth build XXX inorganically? acquisition discussion Xx versus you additional more right the opportunities Midland the here, $XXX to of spending grow a Does rate day to purchasing have built plant option come give million competitors

remember very acquisition, multiple some have multiple just it newbuild that we when the does that be concern. that pay understand in Pinnacle And fee-based lower contracts. you the the brought also we have yes, Yes, to good about going you'd think would a than Theresa, long-term think And you high-quality, that. to for I

get acquisition, you've there's to and the on so solid there lag. and And an time place, already turn growth, instantaneously they're you course, a getting. Organic that of exactly contracts earnings in and you're inorganic got with you what know

risk, and assets but opportunities we of backed in sense. we right middle adverse by so you've to And We're look strong not contract as our continue risk, it, can bring makes and in construction the got time to doing system, the you've tied at that, tremendous contracts build well. we'll it And high-quality lag existing then organic out go it. the got to you think where

build, and, right, we'll acquire. an If not it's either/or, we'll to not but if it's the So we is build. opportunity need

to should it. sheer contract roll-off as or the think current Got to call the contracts decade volume the in legacy now and Permian gallon? look Hills of, of end compared how upcoming of Belvieu from And Coast we with the average Sand rate Permian mid-single general, Mont all it, Gulf NGL weighted per cents with going digit the in the on rate we mind about to

Sure, this Don. is

term, you look If contracted that under at years almost is of long in over duration. our system, X pipeline XX%

And to outlook. so power we we're volumes pretty our broad in our over terms regular But recontract we -- current shift, obviously, our pretty some, we across go-forward long-haul see a of on good as are basis outlook feel earnings contract There's market. with that our about comfortable that our terms closer pipelines. NGL,

next line comes Laetsch with Joe the from of question Our Stanley. Morgan

margins what and some I dynamics in on more mentioned weakness coasts. regional Central seeing there? on know So the Corridor the I balances are ask side. of you the terms to But wanted in you

This Joe. is Rich. Thanks,

on side. as the they the impacts saw So the their rising. the did products distillate crude pricing, And products. and was and what on Margin prices Basin around was decrease were also Atlantic let's centered materialize secondary start secondary our some dropping really then on were we prices coast, on happening

market the was that on Atlantic margin and the impact bigger Basin. to capture So collection

our on assets also was XX%. at high of operation, strong XX% -- that performance. operating partially yield by ran a had that utilization offset and clean product The Now they

the to continue the improve efforts swings in these in we're that marketplace. business our offsetting So seeing are to --

absence to at the due sitting West Coast quarter XX%. refinery. The Angeles were XX% first utilization yields a primarily volumes was Coast, West clean the turnaround a at Los product also On of our were nice higher for the and at up us

putting on the in market. What we were the was San fuels plants the Coast, the Refining renewable to the due Rodeo So running West our segment. saw into product refinery well primarily change Francisco and moving on

that. and operating is the operation highest on our we renewable the some were that So into that I margins the Coast West through operation, San shift on the there. out segment, what portfolio. kind gone relatively we then Corridor, margins out from Central of were should into my that of always saw the the that the cost Coast the And I cleaning Central margins profile the saw say, the of West numbers -- I up it think segment. -- West in our move we or remember, in was first enough our flat the a headwind renewables the Brian's to high-cost fuels inventory Refining occurring a We things quarter. swing But that. of with benefit and was in so saw see an was Coast in a costs million Francisco Refining so X There $XXX front. But color demand on and Coast That inventory saw impact. And

the at lower the and it second advantages existing in crude Trans feedstock lower due impact Pipeline Canadian quarter. And offsetting that to that mostly differentials. -- quarter-over-quarter, So was Mountain we're the not our was when looking discussion around

performance ran organization. part very that which XXX% Our well Corridor at Central utilization, by the of the assets in outstanding is

outlook the was Shifting talk could you Specialties I gears Marketing and hoping here. Great. to a little for bit, business the

stronger were on typically think seasonally periods, broken there anything for rest setup and some changes the And share the you of minor XQ Rodeo also then year? with So XQ out. could the but I getting

color any be So great. would there

seasonally good QX is this a had increases earnings Yes, Brian. We in from quarter QX. with

Marketing U.S. and falling back prices. the Europe, lubricants in all business, improvements seasonality on prior business along Our and with from quarter showing of

value QX the will we've per quarter. business point in the in good for segment, is which $XX $XX renewables million So is the of that usually segment, to renewables your and moved new on Seasonality the the [indiscernible] QX. to marketing million think we to continue about

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

Thank you questions. your all for

per The optimizing utilization from Our in interest going team contributed been driving on benefiting of strategic and returns. synergy $X approximately We've our barrel. is availability shareholder near-record that signing portfolio Refinery we're and cost got our lowering Thank Rodeo, reported our over performance of executing X barrels crude highest Midstream results, shareholder and to processing business that renewable feedstocks. incremental operating And our delivering strong across or per priorities. through cost strong value in per capture. At XX. Refining we've year for and the Phillips billion is day reductions increase years. transformation generate continued to your rate you We're XX,XXX board

today's If call, please questions Owen. after you have Jeff call or

you, lines. This our call, everyone, joining now concludes today. your for and may Thank disconnect us you