Dave Heppner: So, I appreciate the question. We anticipated that. And Mike said in the past, we like to and do look at everything out there as a general comment. But I think we’re more focused currently on — and Rick touched on this a little bit on opportunities to build out our competencies and increase our competitive advantages along our existing refinery value chains. And when we say that, that’s inclusive of MPC and MPLX, so from wellhead to wheel is the way to think about it. So, with that said and on the current environment, we believe that M&A within refining, refining M&A is one of the more challenging ways to create value. And with all that said, I would not anticipate us, or you shouldn’t anticipate us participating in the current auction process for the Citgo assets. I don’t know where the rumor came from, but we’re not interested in the auction process.
Operator: Our next question will come from Paul Cheng with Scotiabank.
Paul Cheng: Maybe this is for Maryann or maybe for Rich. For the West Coast marketing margins condition, that seems to be very strong and you do have a dealer network there. So just curious that in the third quarter, how much is the West Coast contribution coming from that piece of the business? Is it growing or that — what’s your plan over there? That’s the first question.
Brian Partee: Yes. Paul, good morning. This is Brian. I’ll take that one. Really very limited impact in the quarter from our marketing business on the West Coast. We actually saw prices increase pretty substantially on the West Coast in the quarter due to some unplanned outages in the system. And when that occurs, we actually see just the opposite. We see a lot of pressure on the margin out in the West Coast and other markets. So, not a big contributor there in the quarter. Now, as we look ahead to 4Q, as market comes off, we would expect to see some recovery and some margin expansion in the fourth quarter. But to your other question, we are absolutely actively engaged in growing and continuing to grow that network. We’ve put up really good numbers last year and this year and look at it as a strategic component of our position out in the West Coast.
Paul Cheng: Hey, Brian, do you have any rough estimate you can share that, how many stations that you’re trying to grow it on annual basis over the next several years there?
Brian Partee: Really don’t want to forecast a station growth expectation, Paul. We’re really focused on value growth. So it’s really it’s a PV optimization looking at volume and margin, so it’s not driven by station growth or volume alone.
Paul Cheng: Okay. Mike, I know that maybe it’s still a little bit early, can you talk about that plus and minus is on the variable for the CapEx outlook for the next several years compared to this year? Are we expecting a pretty steady program or that you’re looking for opportunity to grow both in the — maybe refining, including the yield or that reducing energy and MPLX? So, can you just give us some idea that how the trend is going to look like in the CapEx and efficacy level?
Maryann Mannen: Sure, Paul. It’s Maryann. Let me talk a little bit about CapEx in general and then I’ll pass it to Mike and he’ll share some incremental thoughts as well. But as you know, one of our principles, if you will, our strategic pillars is strict capital discipline. And I think that has — hopefully you’ve seen that we have implemented that principle well over the last few years. When you look at 2017 to 2020, our consolidated CapEx averaged about $3.5 billion. And as you look ‘21 to ‘23, that’s averaged $2.1 billion. So again that premise of strict capital discipline ensuring that we’re delivering the returns has been an important piece of the work that we’ve been doing. I think in refining, we continue to look for cost reduction type projects, those that can enhance reliability, margin enhancement type projects, then that we would be continuing to evaluate, and there are several of those projects that we’ll evaluate.
In terms of the timing, we’re a bit early for 2024, frankly, even 2025 guidance. But let me pass it to Mike because I think he wants to give you some incremental color on how he’s thinking about it.
Mike Hennigan: I think, Mary, you answered it very well. Paul, the way we think about it is on the MPLX side of the house, we’ve been spending roughly about $1 billion and growing those cash flows. If you listen to the MPLX call, we’re still very comfortable with those cash flows growing that will continue to kick over to MPC via distribution. And then Maryann said it well, on the refining side of the house, we’re still very optimistic that we have some good projects that enable us to either increase reliability which will hit the bottom line or enhance our margins in such a way that we talked about earlier that we’ll generate more EBITDA per barrel. So, we have a pretty fulsome look at where we think we’re going to invest.
And like Mary just gave you the numbers over the last couple of years, you’re spending $2 billion to $3 billion overall on a consolidated basis. We think that’s a nice base case to have. And then we always look to optimize around that. When we do that, we generate sufficient free cash flow that we can still return capital via dividends and buybacks. And as you’ve seen in this enhanced margin environment, that’s part of our DNA to return capital to shareholders.
Operator: Our next question comes from Sam Margolin with Wolfe Research.
Sam Margolin: Question’s on the buyback, and it’s kind of conceptual just sort of how you think about the stock when you do your internal process. But when you are looking at an MPC share, the question is really how do you view it, or what does it represent to you? Is it representative of just the parent company and a repository for MPLX distributions, or do you kind of analyze it as a consolidated entity where something like 40% of it is like a synthetic MPLX share. And the reason I ask is because we do get a lot of questions about sort of your price sensitivity in the buyback. And I think the methodology maybe is important.
Maryann Mannen: Sam, it’s Maryann. Let me give you a few thoughts on that, and I can pass it to Mike in case he’s got some added value. I mean, there are several things that we look at as we are making decisions about the level of share buyback. And certainly, when we’re looking at intrinsic value, there’s a couple of approaches. So we’ll look at some of the parts. We’ll look at discounted cash flows. We use a series of reviews, obviously, looking at our EBITDA multiples of their respective businesses. But typically, when we are making the decision about an MPC buyback, that intrinsic value assumes the discounted cash flows, as I just shared. There are several constraints as we look at that that we evaluate each time we go to buy back stock, none the least of which obviously is market, cash flows, where we think the quarter is going to be, where we think our cash balances are.
And we’ve worked pretty diligently to try to outperform the market here. Hopefully, you’ve seen that over the significance of the buyback that we’ve done. But we do look at it in a holistic approach. Let me pass that back to Mike and see if he wants to add any color.
