Welcome to Marathon Petroleum's fourth quarter 2020 earnings conference call. The slides that accompany this call can be found on our website at marathonpetroleum.com, under the Investors tab.

Joining me on the call today are Mike Hennigan, CEO; Maryann Mannen, CFO; and other members of the executive team.

Thanks, Kristina. Good morning, everyone.

I want to start by welcoming a couple new members to our executive team. First, in January, we announced the appointment of Maryann Mannen as our new CFO.

She joins us having spent nearly a decade as a CFO in the energy services and manufacturing sectors. Maryann brings the financial acumen and strategic leadership expertise critical for delivering our business transformation objectives, including strict capital discipline and overall expense management to lower our cost structure.

I'm excited for the perspective and business insights she will add to our executive team as we work together to continue strengthening our financial and competitive position. Yesterday, we announced Brian Davis has joined the company in our newly created role of Chief Commercial Officer.

Brian has spent over three decades in the industry. His extensive commercial experience, his recent deep background in renewables and alternative energy and a track record of developing and enhancing capabilities is highly complementary to our strategic focus on improving our commercial performance.

We look forward to his leadership in developing and implementing a holistic and integrated strategy for MPC's commercial business. These additions will be integral in supporting our strategic initiatives as we progress through 2021 and beyond.

Before we get into our results for the quarter, I wanted to provide a brief business update. The unprecedented challenges this year created by the COVID pandemic accelerated the need for us to act swiftly and decisively to change how we conduct our business.

The three initiatives highlighted on the slide focus on the aspects of our business within our control, strengthening the competitive position of our assets, improving our commercial performance and lowering our cost structure. During the year, we've been faced with many tough decisions, but our team continues to make tangible progress in all three initiatives in ways we believe will drive stronger through cycle earnings and position the company for long-term success.

Slide #5 highlights some of our actions taken around our strategic priorities this quarter. First, we continue progressing the sales of Speedway business.

During the quarter, we responded to the second request from the FTC and continue to support 7-Eleven in its efforts to secure antitrust clearance. Our interactions with 7-Eleven and our interactions with the FTC have gone well.

Thanks, Mike. Slide 9 provides a summary of our fourth quarter financial results.

This morning, we reported an adjusted loss per share of $0.94. This reflects pre-tax adjustments of $851 million, driven primarily by a $1.2 billion pre-tax lower of cost or market inventory benefit.

These adjustments can be found in detail on Slide 29 in the appendix.

Thanks Maryann. I'd like to take a moment to provide some comments on our responsibilities around corporate leadership.

Last quarter, we discussed the recent publication of our 2020 Climate Perspectives Report highlighting opportunities in strategic planning work the company is engaged in related to climate scenarios. We also discussed our goals to reduce greenhouse gas emissions, methane emissions and freshwater withdrawal intensities.

It's important that we set objectives for the organization to driver our continuous improvement on ESG. Our principles for leading and sustainable energy position us to deliver strong results in the space from lowering the carbon intensity of our operations and products, improving energy efficiency in conserving natural resources to increasing renewable fuels production and embracing innovation and deploying advanced technologies.

We believe the goals we are setting and our transparent disclosures on how we plan to achieve them place Marathon at the leading edge of our industry. We're seeing recent improvements in our ESG ratings reflecting our hard work in the area.

Slide 20 in the appendix highlights to some of these accomplishments. Our approach to sustainability also reflects our commitment to create shared value with our stakeholders, the communities where we operate, our people, our business partners and many others.

How we conduct our business enhances the performance we deliver. We look forward to even further expanding our robust engagement with stakeholders and continuing to serve as a valued partner.

With that, let me turn the call back over to Kristina.

Thanks Mike. As we open the call for your questions, as a courtesy to all participants, we ask that you limit yourself to one question a follow-up.

If time permits, we will re-prompt for additional questions. We will now open the line to questions.

Operator?

Good morning, everybody.

Good morning, Doug.

Mark, I have a market outlook question refining and specifically, it looks like inventories for both gasoline and distillate are headed towards normal levels by the end of this quarter, which may be why refining margins are returning to -- have returned to near year ago levels. And if we see OPEC raise output later in the year, which also seems likely, we could also get some help on feedstock differentials.

So my question is whether you're encouraged by the trends that we're seeing in products markets and the pace of the recovery as well and also whether you think this will be sustainable?

Yeah, thanks, it's a good question. Before I answer and I'll let some other members of the team jump in as well.

I first want to say, I appreciate your insights over the years and I want to congratulate you specifically on your next steps in your career and thank you for your contributions to our industry.

Well, thank you, Mike. You guys have been easy to support for sure.

The pleasure has been all mine.

On your question as far as go forward, I think, you mentioned a lot of things that we're looking at. And I guess our term is cautious optimism.

For me, specifically, I tend to try not to call the market, but really call the banks of the rivers more. And on the positive side, some of the things that you mentioned that we're clearly seeing and we have that I call it cautious optimism as a result, hopefully, vaccinations will go smooth and hopefully we'll come out of this pandemic in a robust way.

So that's kind of the bull view. And then the bear case is, we saw towards the end of last year, cases were going up, restrictions started to kick in a little bit more and we saw what a lot of people anticipated, which was a tough December and into January.

Now we’re approaching February and will head into the spring. So for us, there's a bull case that says things are moving in the right direction.

There's a bear case that says we're not through with this pandemic yet and we got some more fuel to play through before we really see the end of it. But let me - I am going to let Tim comment on gasoline a little bit and Brian can comment on the other projects, just so we can get a sense of what we see in the market today.

Tim?

Yes. Thanks, Mike.

Doug, the – just to reitereate Mike’s comments, I mean, we did see a little bit of softness into the back half of the year really after Thanksgiving and really through the end of year, almost a step down with regard to demand and again a lot of it relating to higher case rates. What we'll see, we're seeing a couple of bright spots early in the year, but we're hoping for more.

We think this is probably going to take some time. As Mike said, we really need to get the immunization protocol built and as a country accelerate that process to get more and more people comfortable and then ultimately get schools back in session, get people back in the office, get people back on the roads, improve discretionary travel and we think that's going to happen, but that may take some time.

And I think we're going to be sort of patient over the course of the year to see that really bear fruit. But definitely better times ahead.

We just think it's going to take a little bit of time to really see that. I mean, for the first quarter, I think based on the year-over-year, we're probably going to be 90% of last year's volumes at the retail gasoline level and again, hope to see improvement over the continued -- over the rest of 2021.

Okay. And then also, Mike, a few minutes ago, you talked about strategic focus and commitment to corporate responsibility as being key elements.

And so that makes it kind of clear to me that your leadership team believes that we may be experiencing a paradigm shift in energy may be more so than we've had in the past. And so my question is, first of all, do you agree?

And second, what are some of the things that the management team needs to do to stay on the leading-edge in the industry which I think was a phrase you used a minute ago in this new environment?

Yes. It's a really good question, Doug.

So first off, all yes, we do believe that there is a paradigm shift occurring. I like the word energy evolution.

So we see that occurring. And I guess, the momentum toward the low-carbon future is obvious.

We're focused on how we position ourselves. As you mentioned, I felt that we had to get some things in line relative to cost and looking at our portfolio.

But our focus on cost is essential in addition to our lower carbon intensity company to remain competitive for the long-term as these scenarios start to play themselves out. As you mentioned, we have made a commitment in sustainable energy and partly that comes from lowering the carbon intensity of our assets and increasing our exposure in renewable fuels production and we can talk about that a lot more detail today, but we have our Dickinson facility up and running and raise working through the start up there.

And then we're still very optimistic about what Martinez can bring to us in that area. And then we're hopeful as technologies advance that we're on top of that and commercially and responsibly put ourselves in a position for the future.

So I do agree with your belief that it is a paradigm shift. I do believe there's going to be increasing momentum towards low carbon.

Obviously, everybody sees that occurring through the administration’s announcements as well as many other companies coming out. And our goal is to stay focused on that change and put Marathon in the best position to be a long-term player in that energy evolution.

Thanks again, everybody.

Thank you, Doug, and again congratulations on your next step.

Thank you.

Good morning, team, and congrats on some better-than-expected results here. I guess, the first question is just to build on that is, is refining cost came in certainly better than what we were expecting.

And in the 2021 standalone capital spending surprised as well to the downside and that was largely at refining as well. So can you talk about both of those, the CapEx and the OpEx improvements and how much of it is cyclical given that you still are running at depressed utilization although maybe a little bit better than what we had anticipated based on the guide and how much of it is structural and that will carry forward as we recover from here?

Hey, Neil, thanks for that question. So, obviously, we've been very focused on cost.

I stated that throughout 2020 that we needed to make a step change. And in refining, particularly, Ray and his team have taken that and put some really good actions in place.

So I'll let him comment in a second. But overall, I think, what you're seeing from us is trying to reset our overall cost structure whether it's in the corporate area or midstream or refining.

To your point, we do expect over time as we get past the pandemic for variable cost to come up a little bit. At the same time, we believe that many of the cost reductions that we have in place are structural.

They're fixed cost in nature. Obviously, we're hopeful that we have more variable cost and that the demand for our product comes back up.

But I think you’ve seen, over the last couple of quarters, a pretty sustainable step change and that's what we're hoping to show the market. As far as capital Neil, what we're doing there is pivoting to what Doug just referred to as a new paradigm.

We have a bunch of projects that are already in progress in refining that we'll continue to finish those out. Examples of that would be like the Star project we have going on down in the Gulf Coast.

That's an important project for us. It's still going to take some time to get through, but at the end of the day, we're going to do those projects that we think are in progress and are still valued.

We're going to look for projects in refining that lower our costs going forward or change the dynamic we have around this energy evolution and then obviously, pivot more into the renewable space. We've a bunch of things planned for both Dickinson and Martinez.

As kind of the first step in this energy evolution, renewables is the hot topic and I think we're in a real good position to put ourselves in a good spot there. So Ray, do you have anything you want to add or…

Sure Mike, Neil, I'll just give a little bit more color on the OpEx and this should be fairly consistent with what we talked about during the last earnings call but for OpEx reductions in refining, it wasn't just one thing, it was a multitude of things, but if I had a key on two items, I would say the first is scrutinizing the number of people in our facilities. This is both contractors and employees and just looking at the number of people we have, the number of projects we were working on and so forth and not just cutting people but also consolidating contractor companies and really taking a deficiency look at that.

The other thing that we really wanted to do and our procurement supply chain group did a phenomenal job of working with us is making sure that we really leverage to spend across our 2.9 million barrel day of refining system. So looking at all of our contracts, goods and services and making sure that we just had the best terms and best contracts out there, just wanted to jump on what Mike said earlier to is our goal is to make sure that these reductions are structural as possible.

Early on in the pandemic, we did some deferral activity with turnarounds, but largely that was to get out of the initial period of March, April, May timeframe but since then, we've caught up on our turnaround work and going into this year we'll do more of the same. So that's just a little bit more color on OpEx.

Thanks guys and a follow-up is just on the transaction of the Speedway transaction. Can you walk us through what are the gating items to close the deal?

Your conviction level that you concluded in Q1 and Mike I've asked this question so many times over the last couple months, but can you just walk through the waterfall again of how you get $16.5 billion of the cash coming in plus another $1.2 billion or so from the government and based on where your debt level is, what the ballpark ability to return capital to shareholders is to that framework? So two questions there, deal gating factors and then return of capital framework?

Yeah Neil on the first one the major gating factor is the FTC process with 7-Eleven, so we're watching the process, we're contributing where we can as needed, but that's really a process between 7-Eleven and the FTC. What we know as of today it continues to go well and like I say, I use the word were targeting for the end of Q1 or we're hopeful that the end of Q1 is the right timing, but really the gating item is essentially that process that is not really our processes it's more 7-Eleven in the FTC.

So we're supporting it where we can. As I mentioned in our prepared remarks, we responded to questions, we're supporting it as much as we can.

The other activities that we have to get accomplished, which we're very confident we'll get done is the transition services. Obviously it's a major transaction between us and 7-Eleven and there are some services that Marathon is going to transition to 7-Eleven over time.

So that's been a lot of the internal work that we've been doing recently. But the bottom line and I know everybody keeps asking about your use of proceeds, we're as anxious as anybody to get to that spot, but at the end of the day, the major gating item is we don't have control of that timing.

All we can do is continue to give you the best insight we have and right now we still say we're hopeful its end of first quarter. We're targeting that.

We think that's achievable based on what we know. So that our best guidance at this point.

On your second issue, as far as the use of proceeds, we've tried as best we can to frame what we believe is the two main pillars that we're going to be targeting, which is getting the balance sheet back to where we want it to be and then return capital to our shareholders as quickly and as efficiently as we can and on the first issue, we've tried to make the statement that our debt situation majorities is there's about $2.5 billion the comes with your essentially minimal friction cost and we'll jump on that one right away. Right today, we have a little over $11 billion of debt.

We'll continue to try and evaluate as everybody wants to know where is mid-cycle going to be etcetera, etcetera. We need to work with the agencies so our financial team, Mary Ann and Tom and the treasury team will work with the agencies as to the proper path to bring that debt down to a level that we think is the right spot.

In an effort to try and give as much color as we can, we've kind of said to people that hey we don't see it going below $5 billion and that's kind of like our low refining case if you want to call that. So if you say in that regard, we have about a little over $11 billion.

We don't see it going below $5 billion. So a number of the put on the piece of paper is around $6 billion depending on how well the recovery is and how quick the recovery is and working with the agencies etcetera.

Absent that, we said we're going to return capital, we've talked about what's the best way to do that and the only reason we don't give additional color there is because at least in our mind, we believe right now is end of March is the targeted timeframe. So we have another 60 days to go and we'll continue to evaluate the market and the opportunities and we've been going through this internally with our board, with our advisors, with ourselves and we have a pretty good framework, but we just don't want to get ahead of ourselves in case it takes a little longer than we were expecting.

So we do want to return that capital to shareholders. I personally am a believer that refining to a large extent is a return of capital business.

We got to position ourselves where we're generating cash and then think about the best way to create value returning it to shareholders and we've talked about all the various ways to do that. It's predominately in a buyback type mode, that's what we're thinking about and then there's pros and cons to the various ways that you can do that and then our commitment is once we get close enough that we know we're there then we'll come on publicly and give a little bit more color as to how we think that'll affect itself, but our goal is as efficiently and as quickly and effectively as we can, we want to try and provide that return of capital.

Mike, you're going to head in for this, I am going to bleat on about the same issue of my first question and I am going to hold of Mike or Ray for this and really I want to preserve some very quick marks with you and make sure I am think about this right. So your market comp is about $30 billion, your share of MPLX two thirds is about $16 billion.

So let's assume in some of the parts spaces, the value recognized for everything else is about $14 billion and you're potentially going to have a $10 billion share buyback program if our net charge is $6 billion of debt pay down. But those are pretty enormous numbers obviously.

So first of all am I thinking about right and secondly, how exactly would you expect to deploy such a scale of a buyback which I guess is Neil's question and I'm thinking along the lines of what the deal regular acquisition of shares in the market, what are you actually thinking about structure and timing because those numbers are obviously pretty significant when you look at it that way?

Doug, first of all I don’t hate you for asking the question. It's a fair question and I know you've asked a few times about do we plan to use any of the proceeds towards MPLX.

As I stated before, we don't see that as in the best interest, but we do see to your point returning that capital and I think you’ve made the point, it will be a large sum of money. It will take some time to effectively do it efficiently etcetera.

So that's part of what we're kicking around and a lot of things come into play. Where's the equity going to be when we actually go to do this, what's the best method pros and cons relative to that.

So part of the reason that we don't get more detailed at this point, I just use this as the example is when we announce the deal, we were trading in the 30s. Now we're trading around the 40s or so and we'll see where we are in 60 days or whatever the timing turns out to be.

Obviously to your point, if you're trying to convince us for undervalued we're 100% aligned with you. We think that there is a lot of opportunity in our equity, but part of the process and looking at the pros and cons is where is that equity going to be by the time we get there and what's the best way to actually go about doing things.

The debt side of it I mentioned a little bit, that'll be ongoing conversations with the rating agencies. We do want to protect our investment grade rating.

So that's important to us. We want to see how the pandemic continues to play itself out.

As you heard Tim mentioned earlier you're feeling good and then all the restrictions and things give you a little bit of a pause, but we're feeling pretty good about that as well. So taken that all into consideration is what we're thinking about and then to your point, it'll be a large return of capital.

it will deftly take some time and when we get there, we'll give as much color as we can as to what we think at that time and then there will be some ongoing dialogues to your point. The numbers are good and we're happy that we're in that position.

So we think we'll be able to affect the balance sheet adjustment that's really good for us. We think we'll be able affect return of capital that's really good for us.

It will take some time and the only thing they we're holding out is the method and the timing because we'll have to wait and see when that time comes. Hopefully that helps.

I am trying my best to give you guys as much color as I can, but at the same time trying not to get ahead of where we're going to be when we actually receive the proceeds.

I just want to say I am glad to know that we on the sell side don’t have to talk to you and your stock being undervalued, that's very comforting on our side. Kidding comment for the day, to kick back into some of the stuff that's been asked and maybe to dig a little deeper on a couple of things first off I think Doug Terreson mentioned on the crack spreads, but as we know at least part of the move in the crack spreads here has been rims related and I know with the separation of Speedway you're retaining the rims inside of the R&M segment.

Now I was just curious how you're looking at the impact of the increase in the rims cost and then how we should think about that flowing through the company now that we're going to have I guess essentially already have the separation in terms of how it comes through?

Hey Roger, that's a good question on rims. I'll let Brian take that one.

Hey Roger, good morning. Thank you.

Yeah so great question. So rims expense is real right, it's cash out the door.

We say it's an element of our industry, but no rims costs are also very transparent day in and day out. So we really believe the full consideration is given really across the entire value chain when you look at refiners and some of our producers, blenders, marketers that sit in the value chain and establishing daily prices.

So that's not to say that is quote unquote in the crack. I think empirically that's very difficult to point to no different than hydrogen cost or catalyst cost being in the crack, but it's a very transparent element in the value chain that we believe is fully considered in the commercial pension across all the various players that we mentioned.

Specific to Speedway, yeah absolutely zero impact. We've always treated Speedway as a third-party customer and our contracts across our entire book really gets full consideration for rims cost and value.

So really no impact, no shift in value when you think about between segments as result of the separation. The last point to make on this really is because their entire book, we have extensive terminal network and a pretty robust marketing platform the least of which is into the Speedway book of business.

So historically or near historic, the last couple years 70% to 75% of RFS obligations one has been met really through when planning with Dickinson you can add roughly another 10% of that and you can keep doing the math and the Martinez. So we're quickly approaching 100%.

So we feel like historically we're positioned well on this issue. We're positioned great today and we're going to be positioned even better into the future.

Okay. That's helpful thanks.

And then I guess is a somewhat unrelated follow up here. I saw on the CapEx for the renewables I think I'm sorry I am going to try to find the chart here, I was flipping around all the different pages, but I think it's 325 or 350 in renewable CapEx in 2021.

Is that all Martinez I know you’ve mentioned some other things in renewables. So I was just curious what all is included in 350 and as we think about Martinez, would it be another 350 and 22 just sort of a preliminary way to think about it.

Roger so you're right on that. Most of that is Martinez, that's the way to think about it.

Little bit it's dedicated to Dickinson but mostly Martinez and that's the start of what we believe is going to be a multiphase project. So I'll let Ray give you a little bit more color on that to talk a little bit about timing and the phase approach that we have to do.

We're pretty excited about the opportunity.

Thanks Mike, yeah as Mike said earlier, we are progressing the Martinez renewable fuels project and that is the bulk of the projected renewable spend in 2021. Just to tell you where we are right now, we're in definition engineering.

So we're in the third phase of the engineering on the project and we're also working to progress our permit. So were working with the governmental, the regulatory, the NGO, all the stakeholders in our project for aggressive permitting efforts and our focus remains to have the first phase, the first of the hydro traders reconverted to an renewable diesel facility or diesel unit in the second half of 2022 and then we would follow that up with the remaining two hydro traders and 2023 along with the pretreatment system.

So it's a stage project and the reason that we're doing the first stage in 2022 is that requires the least amount of the equipment modification to do that. So we're still in the evaluation stage, but just want to give you a little color on the project.

Thank you, Mike. I am so sorry my line dropped when you were halfway through your question, but I'll obviously see the answer in the transcript.

So thank you for that and I apologize again everybody. My follow-up question was probably for Ray, and Ray it's actually I guess a follow-up from Mr.

Terreson's question earlier on the product side, but I wanted to be a little bit more specific, it seems to us that we're seeing lots of LPG substitution in Asia full of heat related driving not the brent spreads and we're obviously the second-order effects on the gasoline fill. So I am just wondering if you can share any alterations you have specific the issue?

Are we seeing gasoline products to support coming from non-transportation sources? I just want to get your color and I'll leave it there, thank you.

This is Brian Partee. I think on that brent spread, we have seen some uptick in the demand over in Asia as a result of obviously the cooler temperatures over there and really the entire petrochemical complex.

So we've seen some steady demand outside of the US Gulf and even beyond moving over to Asia and really moving into the petrochemical space. So I think it's been supportive to that.

I don't know that that's a long-term structural shipment. In the short term we've seen that as a positive.

I just confirmation of that if it was in place but with all these instruction guys and appreciate the answers.

You're welcome Doug.

I wanted to focus on the Gulf Coast opening cost which was like $3.40 down about 31% year-over-year. This is one of the lowest we've in the MPC and definitely well below a number of the FBOs.

So what has allowed them to achieve this? I know Mike you're very focused on cost reductions but I am trying to understand what specifically driving the Gulf cost reductions there?

It's a good question. I'll let Ray give you some specifics there.

Hey Manav, good morning. Say on the Gulf Coast we have two refineries large refineries Gary Bell and Louisiana and Galveston and Texas and of course Gary Bell has always been a very low cost refinery for us and so the ability to get better there is somewhat limited.

The big reductions that we've had in our Gulf Coast structure has been the Galveston Bay. They've made significant improvements in their OpEx and that really showed in the back half of 2020.

A quick follow-up here is on your Dickinson facility. Obviously you're spending some money right now to move the product to California, but Canada has already just talking about introducing the two standards in 2022, the location of that facility would allow you to move the products across the border.

So is that something you're considering and also if possible at the Dickinson facility also the size of the market in that facility, thank you.

Hey Manav. This is Brian Partee.

Just to address kind of the market disposition out of Dickinson, of course we're looking for the highest valued markets, the design for Dickinson and the expectation in and around placement is certainly in California and that really has proven to be the most lucrative markets out of the box, but we're having active dialogue with outside of really the West Coast in California and including Canada and we'll continue to chase that high-value placement. But with our position in the Portland area and the Pacific Northwest, we really feel optimally positioned with the wet physical position to be able to move product into Canada and even export as well as into Californian and we also think long-term with the contemplated project that Martin is really complementary to having an robust position out on the West Coast.

And the last thing I would say beyond just Canada, there's a lot of different contemplated low carbon fuel standards in the US as well as with a load out on rail, we have really ultimate flexibility only limited by the rail infrastructure in the US which is quite robust. So along with a way of saying, we really feel like we've got a good -- we're in a great position logistically to optimize the placement of the product out of Dickinson.

And let's consider pretreatment at Dickinson also.

We have pretreatment options for Dickinson, but that would be at our facility with Beatrice pretreated corn oil. So that is in progress.

I think the first question I have is for Brady . The average cost in refining and the distribution cost is really impressive.

So at this point if it's the bulk of whatever it is you're doing that you're think you already captured it as you say that is limited upside or that I am sure that you continue to drive the cost down, but when that function changed from this point on that we can expect or that this is a pretty good phase and any improvement would be pretty limited. So that's the first question.

The second question is probably for Mike and Brian. Brian when we look at your oil they're far more aggressive in the commercial trading and everything.

So when we're looking at Marathon, do you have to raise systems getting paid and also the right person to have for your organization or that's really if only the first staff and you're really going to take some time for you to build it out and where do you see the most opportunities for the improvement in return and earning from that operation and where is the risk and are we going to see that increase the risk?

So Paul I'll start on both in a minute and I'll let Ray and Brain chip in. So on the cost, we've made a significant move as you noted, we're going to challenge ourselves in '21 and beyond to continue to look at each part of our portfolio and where we're spending money whether it's in refining or on the corporate side etcetera.

So I don't want to ever say that we're done and at the same time, I do appreciate acknowledging that it was a pretty significant move. We decided when I put out the three initiatives that cost would be a major part of what we were doing in 2020.

So that's why it got a lot of attention, but it continues on. It's not something that's over just because we've come to the end of the year whatever.

So I'll let Ray comment a little bit more on refining and then on your second question relative to commercial and systems one of the things if you look at in our disclosure on capital is we are spending some money at the corporate level to try and improve ourselves from a digital standpoint. Doug mentioned we were moving in the low carbon future.

The business has also become much more strategic from a digital standpoint and our new Chief Digital Officer has a lot of good thoughts that will help our commercial teams advance the ball. So we're going to try and deploy capital in that regard and put ourselves in a much better position from an information standpoint so that you we can act on it better commercially, but I'll let Ray jump in and Brian if he wants to add something there.

On the OpEx, I'm prepared to ask that because Mike actually ask that to me all the time, are we done yet? Is there more to do?

What I'll tell you is with $1 billion of cost taken out of the system, we took a big bite out of the apple in 2020, but what I'll tell you is that the culture is there and as far as questioning everything we do, whether it's a person replacement, whether it's a project need to do or whatever, there's definitely the mentality and refining the question everything that we do from a cost standpoint. The one thing that I want to emphasize though is the one thing that's not in play is anything that would impact the safety of our environmental performance of our refineries.

Mike in his opening comments talked about 2020 being the safest environmental performance that we had. So that always is the key thing, but with our team really is questioning everything we do beyond that.

In September we guys have a restructuring and so 1,000 people from McKinsey and also we people that are gone. So that already into the fourth quarter or we have another breakup in the first quarter that we receive the benefit of the companies.

On that one Paul you'll see some of the benefit occurring in the first quarter. We did the restructuring in the back end of 2020 but you'll actually see the benefit in the first quarter, but before I turn it over to Brian Partee, since we have two Brians, you may have been asking relative to Brian Davis who has just joined us, but Brian Davis is not on the call for us today but I'll let Brian Partee talk a little bit from products and I'll let Rick kick in with a little bit from crude and by our next call, Brian Davis will be with us and will be able to get his insights as well.

Just to answer your question on people and systems and commercial opportunity, the short answer is absolutely yes. We've gone through a massive transformation over the last several months realigning on the clean product side of the business, our marketing, supply and trading.

our international book as well as into one unified organization. So I think just ordered structure loan will help unleash opportunities.

As Mike indicated, we're spending quite a bit of time building out for a massive system to integrate the back office and that's in-flight and underway and really long-term see great potential and we're starting to see the benefits of that already and when we think about commercial performance it's not just revenue, it's looking at the expense and distribution cost as you called out earlier, inventory positions as well. So it's really the full deployment of capital across the value chain, not just on the revenue side, but I am extraordinarily encouraged with we're at and we're really pivoting Paul to be quite honest with you from really a legacy as more of an operational focus with refining over the last decade running full capacity and utilizing physically infrastructure and arms to maximize value to system that we're in today, which is requiring a little different playbook and more commerciality.

So were excited to work with the team to bring out to bear and we're seeing benefits already. We'll continue to build on that here over the next year.

Mike I'll just sneak in a really quick question. Should we look at over the next several the CapEx for 2021 would be sort of the base and you're not going to be substantially higher than that?

Yeah Paul on capital we're not given guidance beyond that, but I give you my general philosophy is like I mentioned earlier, we're going to obviously finish the projects that we have in progress. So some of those are going to go in '21 into '22.

So that's ongoing. As far as investment in refining, asking Ray to look at ideas that reduce cost and put ourselves in a position for low carbon future.

So energy intensity as an example is something that still matters a lot in the energy evolution. Looking at putting ourselves in a position where we check both of those boxes of cost and carbon emission reductions etcetera are going to be top of mind for us.

At the same time we're pivoting to investment into renewables and some of the other areas, which will give you some more color as time goes on, but I think that's the general philosophy of it. As far as the absolute spend, we will obviously give guidance as we progress, but I think just in general, I think that's the philosophy that you should be thinking about and it kind of started off with the way Doug asked the question.

We do think there's a paradigm shift occurring and our reaction to that is get our cost down be very conscious of the new environment and trying to check off two birds with one stone, put ourselves portfolio wise in a position where our refining assets are in a good spot for many decades to come. That's obviously the goal for us and position ourselves so the products we're making are with the demand in the market.

So that's kind of our overall philosophy and we'll continue to challenge what we're doing in that area and we tried to give you a little bit more color with that breakdown of capital. So hopefully that helps people get a sense of what we're thinking philosophy wise.

My first question is really on your outlook on the gasoline market. I think over the next couple of years we're going to see almost a million barrels of capacity come offline.

Arguably half of that is going to be gasoline and if look at the imports over the last five years, we've been making 5,000 barrels per day. If the math kind of rounds back up to more of a normal environments, could we get back to more of an importing scenario for US?

Is that kind of a reasonable way to think about it or how do you guys think about that?

So I'll start off and I'll let other guys jump in. So one of the things Benny that I think everybody is obviously trying to understand is what does the supply-demand look like post-pandemic and we obviously are seeing in the short term the demand reduction supply rationalizations in progress, but how that all plays itself out at the end of the day is still an unknown.

We tend to like I said earlier, we look at the banks of the river, we anticipated some challenges on the supply demand coming into the decade as part of the reason why we wanted to focus on cost reductions. But the question of where does the supply-demand you end up after the pandemic after the demand settles to a new normal wherever that's going to be after the rationalization settles out to where that's going to be, I think that's still the question that we're all trying to get our arms around.

For us like I keep saying is we’re trying to look at it from the banks of the river standpoint and then we'll assess it as time goes on. I don’t know if you guys have anything to add, they're shaking their head.

So I think that's the best we can give you at this point.

Thanks Mike, that's very helpful and can you just remind us like if we look at NPC system what's the ability to flex your gasoline deal and how different is that from the US complex? Is it more or less or is relatively alive?

Are you asking Benny liked flex between gasoline and diesel, is that what you're asking?

Like how high can you get your yield in terms of gasoline output overall?

Benny this is Ray. We typically will have like a 10% swing that we can swing between our gasoline and diesel and we'll do that based on the economics that we see and what I'll tell you in the last year and the pandemic you've seen us do it both ways, you’ve seen this all the way to diesel and challenging ourselves how much more diesel and we come back the other direction.

Benny this is Rick, just one thing I'll add to that to raise comments on yield, a lot of that is driven by econ and a lot of that is driven by the sweet sour spread, the heavy to light spread. So as we've stated many times, we have great flexibility by region as you'll continue to see as we pivot from suites to sours from heavy to lights.

We often say one third, two third, but that varies by region and that gives us the flexibility to really turn that yield now.

First one Mike, I wanted to touch back on the leaning into renewables, we've talked about it several times on this call, so wanted to take a big picture view, ultimately how do you think about your ambitions here and would you think about at some point maybe as we go forward holding that out either as a separate earnings stream or a separate segment, I think some of the peers in the space are starting to allude to or are starting to do that and I was helping the analysts and investors to quantify that and sort of gauge where the progress is. So that's my first question any within that too sort of a tag along is on the carbon capture.

I know you’ve talked about in carbon emission reduction and energy intensity earlier in this call, I was curious there is opportunities of that in carbon capture on LCFS programs that are fairly attractive. So wanted to sort of ask on that and then I just had a follow-up on the cash flow statement after that thanks.

Prashant on your first one as far as the renewables and segment results, we do have that on the radar screen. At some point we think that may be appropriate for us.

As you know, we just started up Dickinson, so we don't even have a full quarter yet. So once we get Dickinson up and running and are generating results and then we have Martinez coming behind that, then we'll have more of a significant discussion point on actual results as opposed to where we are today which is anticipating those results.

So I can see that at some point. I would say one of the things that we've worked with Kristina and her team is trying to be very consistent so people can get a good insight into the things that we're doing today, but at some point in the future, I think you could see some changes from us and we'll give you obviously heads up when we're thinking of doing that.

Second question was carbon capture and I'll let Ray jump in on this as well is I mean right now in all of the areas of low carbon future or climbing areas, there's a lot of things on the plate. Obviously renewable diesel as you mentioned is kind of at the top of the list because we're executing on that as we speak, but there's a lot of different items that we haven't talked a lot about technologies, different areas that we think we can drive our carbon footprint down and there's different ways whether it's capture or many other areas that we have on the radar screen and we're looking at it.

We want to make sure that what we're thinking about is economical for us, going to create value for the shareholders or I guess if we can hit two birds with one stone, that's the best of all world. So I'll let Ray comment specifically on capture.

Yeah what I just had on capture is that something that's on the radar screen. We're looking at opportunities there and I'll just emphasize that the capture part is the easier part.

The sequestration is a little bit more of the challenging part. So you have that opportunities within hydrogen plants and some of our other operations to do capture and sequestration.

I'll just say that it's on the radar screen. We're looking at it, but nothing more incremental there to really say at this point.

Okay. Appreciate all the color and than just a quick follow-up on the financial statements particularly on the cash flow.

Working capital is a good tailwind and the quarter sort of a two-parter, one how to think about that here in 1Q as that hold on towards that if what we see a bit a reversal and secondly, within the Speedway portion of discontinued is working cap also assuming it's concluded in that, was that also sort of positive there as well?

Prashant, on working capital as we've said in the past is there's a rule of thumb that as flat price moves we have a essentially a net 20 days exposure to that. So as flat price moves itself up, that's a obviously a source of capital for us in a flat price where it comes down like we saw in the early part of 2020 then it's the use of capital.

So the part of that that you're going to see is dependent on where crude price is and product prices are, but as a general rule, we're about a net 20 days exposure there.

Okay. And then fix this and that Speedway number in the discontinued also included working capital as well that's not just to clarify that's not an ex-working capital number correct?

I don’t know if I am understanding your questionnaire there.

The working capital, there will be cash flow from ops from Speedway that was in the discontinued portion. I just wanted to just clarify that that includes any working capital impacts the Speedway and the discontinued portion of cash flows that makes sense.

I am just trying to flush out how much, the comments was of working capital impact is still in MPC after Speedway, but I can take the question offline as well Mike.

Okay try better to take it offline.

Sounds great. Thank you, everyone for joining the call today.

If you have any follow-ups after the call, our team is available to help out with that. And with that, I'll turn it back to the operator.