Marathon Petroleum (MPC) Q1 FY26 earnings call: guidance and Q&A

Can you elaborate on the 94% utilization guide for Q2, regional plans, and factors contributing to improved reliability?

Maryann explained that the 94% utilization reflects strong Q1 turnaround execution, with 40% of full-year maintenance completed. This proactive approach, combined with commercial planning and operational excellence, positions them well for strong demand. She highlighted the lowest unplanned downtime this decade and strategic focus on Gulf Coast export opportunities and West Coast positioning.

“we pulled forward some of our turnarounds so that we've actually completed roughly 40% in the first quarter. And we did that because, obviously, we had a good view on what we saw the macro to be.”

asked by Neil Mehta · answered by Maryann Mannen

Given the $1 billion in Q1 returns and prior comments about higher returns in 2026, what is the expected cadence of capital returns?

Maryann stated that the capital allocation priorities remain unchanged, with MPLX growth supporting MPC's capital plan and dividend. The company expects to generate strong cash flows from the current market, and share buybacks will continue to be the primary vehicle for returning capital to shareholders.

“We should be able to generate cash flows as a result of this market, and we would continue to see return of capital via share buyback is -- as the vehicle to return capital to our shareholders.”

asked by Neil Mehta · answered by Maryann Mannen

Discuss the elevated crack environment and MPC's ability to maintain strong capture despite historical trends of capture dropping when cracks spike.

Maryann reiterated a constructive long-term view on refining macro, exacerbated by geopolitical events. Rick Hessling detailed how MPC leverages inland crude connectivity (Canadian, Bakken, Utica Marcellus, SPR barrels) to secure advantaged feedstocks. He also highlighted maximizing diesel and jet production, new jet capacity at Garyville, and creative export moves (ULSD to Australia, naphtha to Asia) to drive capture. He noted Q1 capture would have exceeded 100% without derivative timing impacts and secondary product headwinds.

“If I start with crude, think of the theme on crude that we are utilizing our inland connectivity to buy advantaged barrels versus high-priced waterborne barrels that are being bid up throughout the world.”

asked by Manav Gupta · answered by Maryann Mannen

Can you discuss the new regional adjusted EBITDA per barrel disclosures and their link to management compensation?

Maryann confirmed that the new disclosures provide incremental visibility into regional performance, aligning with the objective to be competitive in every operating region. She stated that approximately 20% of executive annual cash bonus is linked to achieving this goal, covering cost competitiveness and driving incremental returns from capital allocation decisions.

“Our executive compensation, the annual cash bonus element of that. It's a portion of that, about 20% actually is focused on the delivery of being the most competitive in every region where we operate.”

asked by Manav Gupta · answered by Maryann Mannen

Are there commercial constraints with refining yield enhancements, and how does MPLX's gas-focused investments fit into this, potentially competing for capital?

Maryann explained that MPLX's capital program is 90% targeted at natural gas and NGLs, meeting strategic objectives and supporting mid-teens returns. Refining projects have high hurdles (25% returns) and focus on yield optimization and cost reduction. She emphasized that both businesses have specific mandates and financial hurdles, and MPC leverages MPLX's gas footprint to secure advantaged natural gas for its refineries, especially in the U.S. Gulf Coast.

“Our capital program is targeted as you well know, toward nat gas and NGL. It's roughly 90% of the spend in 2026.”

asked by Sam Margolin · answered by Maryann Mannen

Clarify the derivative impact on Q1 capture and how the 'windfall' from current market conditions influences the pacing of share buybacks.

Maryann explained that Q1 capture was impacted by secondary product headwinds and derivative timing, which will unwind in Q2. Maria specified $500 million in unrealized derivative losses for Q1, with $63 million in midstream and $340 million in margin calls impacting working capital. Maryann reiterated that capital allocation philosophy hasn't changed; they will remain disciplined in returning capital, but did not specify a ratable vs. opportunistic pacing for buybacks.

“Our derivative program in the first quarter is no different than any quarter that we have ever executed. We use derivatives to cover a portion of those inventories to protect physical -- protect the price, obviously, the challenge in this quarter is just the extreme volatility of the commodity.”

asked by Douglas Leggate · answered by Maryann Mannen

What drove the weaker-than-normal seasonality in inland markets in Q1, and will it normalize? Also, comment on the West Coast's strong Q1 but volatile start to Q2.

Rick Hessling stated that Mid-Con performed as expected in Q1, with a tough Jan/Feb but widening in March. Currently, Mid-Con is the best market due to extreme tightness in gas and diesel inventories from turnarounds and unplanned maintenance, leading to strong ag demand and tight gas inventories. West Coast cracks have fallen slightly but remain robust due to structural shortness and reduced Asian imports, expected to persist.

“As we leaned into March, though, we saw the Mid-Con start to widen out. And as we look at the Mid-Con today, it is absolutely the best market we have right now within our system.”

asked by Jason Gabelman · answered by Rick Hessling