Marathon Petroleum Corporation (NYSE:MPC) Q4 2014 Earnings Conference Call - Final Transcript

Feb 04, 2015 • 10:00 am ET


Marathon Petroleum Corporation (NYSE:MPC) Q4 2014 Earnings Conference Call - Final Transcript


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Good morning, and welcome to the Fourth Quarter 2014 Marathon Petroleum Earnings Call. My name is Brendan, and I'll be your operator for today. 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 and I will now turn it over to Mr. Tim Griffith. You may begin sir.

Timothy T. Griffith

Okay, thank you, Brendan. Good morning, and welcome to the Marathon Petroleum Corporation's fourth quarter 2014 earnings webcast and conference call. The synchronized slides that accompany this call can be found on our website at under the Investor Center tab.

On the call today are Gary Heminger, President and CEO; Don Templin, SVP and CFO; Mike Palmer, SVP of Supply, Distribution and Planning; Rich Bedell, SVP of Refining; Pam Beall, SVP of Corporate Planning, Government and Public Affairs; and Tony Kenney, President of Speedway.

(Forward-Looking Cautionary Statements)

With that, I'm happy to turn the call over to Gary Heminger for opening remarks and highlights. Gary?

Gary Heminger

Thank you, Tim and good morning for everyone, and thank you for joining our call. We're pleased to report strong results for the quarter and full-year with $798 million of earnings in the fourth quarter and $2.5 billion of earnings for the full-year. MPC completed another milestone year. Our refining and marketing segment achieved income from operations of $3.6 billion for the year, while executing the largest series of planned refinery maintenance projects in the company's history.

Our achievements, such as the acquisition of Hess' retail operations and the acceleration of MPLX's growth, underscore our commitment to grow higher value, stable cash-flow segments of the business while optimizing our refining system for strong returns. While crude oil prices fell and crack spreads narrowed during the fourth quarter, we experienced strong product price realizations at both the wholesale and retail level.

Speedway reported record earnings of $273 million for the quarter, including the newly acquired Hess locations, and posted what would have been a record earnings for just the legacy Speedway locations. Conversions of these new locations and the deployment of Speedways' highly successful merchandising model are progressing well.

As of January 31st, 134 of the 1,245 acquired stores have been converted. We're taking the opportunity to evaluate ways to leverage existing best practices of both business models and implementing those practices across the entire Speedway platform. The earnings power of this combined business will be tremendous and we're well positioned to execute our strategy to grow the EBITDA of this business to over $100 billion -- excuse me, to over $1 billion.

MPC completed its third and largest drop down to MPLX during the fourth quarter of 2014, which increased MPLX's interest in Pipe Line Holdings to 99.5%. This drop down was an important first step in our strategy to substantially accelerate the growth of MPLX. As the sponsor of MPLX, MPC intends to maintain a growing reserve of MLP eligible assets.

That growth in reserves will be accomplished through MPC's