Maryann Mannen: Hey John, Maryann again. So in general, notwithstanding the impact of COVID, if you look over an average period of time, our turnaround is pretty similar. We’re operating 13 refineries, fossil fuel and two renewable diesel. And at every point in time, there is some level of turnaround. You’re absolutely right. One of the things that we did, notwithstanding the unplanned downtime on the reformer is pull forward some turnaround that we expected to do in our 2024 plans into 2023. But again, absent the period of COVID, you can see the level of turnaround being pretty similar watching those. In the fourth quarter also, you may have noticed in our guidance, West Coast utilization, we do have turnaround activity there. We’ve got two locations in LAR. We are trying to get those turnarounds done ahead of the driving season next year, just as an example, if you’re looking at activity in the fourth quarter as well. I’ll pause there.
Operator: Our next question comes from Jason Gabelman with TD Cowen.
Jason Gabelman: Decent amount of focus on the buyback. I wanted to ask about the dividend raise of 10%. Last year, the dividend raise was higher in line with the amount you had repurchased over the trailing 12 months. This year, that wasn’t the case. And it’s also, I guess, lower than the incremental cash you’ll be receiving from MPLX with their higher distribution. So, the question is, how do you think about kind of that dividend raise? How did you come up with that 10%? And then how do you think about it moving forward, especially in light of the commentary that you expect the refining environment, the mid-cycle environment to be higher, and I would expect the dividend moving higher would be a good way to message that earnings power to the market.
Mike Hennigan: Jason, it’s Mike. I’ll start, and I’ll let Mary jump in. Yes, I think what you’re referring to is we had a bigger increase before because the way we looked at it is most in our industry kind of paused around COVID during that tough year of cash. So, we made a bigger jump. And now what we’re showing this year is we’re trying to show the market that we believe in a growing dividend that is part of our capital allocation. We want it to be competitive. But at the same time, I often say that it’s more tax efficient to go return capital through share repurchases. And the sheer quantum of dollars in each case is pretty different. So overall, we want the market to know, yes, we’re going to grow the dividend.
We’re going to consistently do that. We want it to be competitive. We want to show that we’re going to grow earnings, that comes back to investing capital and all the self-help that we can do. But at the same time, we’re going to err more on the side of share repurchases because we think it’s more tax efficient and a better way to return capital.
Maryann Mannen: Jason, it’s Maryann. The only thing that I would add to Mike’s comments are the dividend is only one part, as you said, of the capital allocation strategy. But having said that, we think this increase is peer leading at 12% CAGR over the last five years. So, we hope you see it that as well.
Jason Gabelman: Got it. Thanks for that. And then my follow-up is on one of the growth projects that I think you have for next year, the hydrogen hub project that was selected for funding from the DOE. I was hoping just to get more color on exactly what Marathon’s participation is in that project, how it could benefit the Company? Any thoughts around capital spending that you would have to contribute there?
Dave Heppner: Yes. Jason, this is Dave. I’ll touch on that. So start with high level. Number one, there are 7 hubs that were approved for fund from the DOE for $7 billion. We mean MPC/MPLX, we’re involved in two of them. So, one in Appalachia and one in the Heartland area. So when we think about the involvement of MPC and MPLX, they’re a little bit different. On the MPLX side, it’s more around story of hydrogen and transportation of CO2 on pipelines. From an MPC perspective, it is inclusive of lowering the carbon intensity via hydrogen production. And when you think about it in the Heartland area, due to the location of it’s very — the proximity very close to our Dickinson renewable diesel facility. So of course, anytime you can lower the CI of the base product you’re making from renewable diesel, you can get that pull-through value of that asset that we already invested in.
So, the best way to think about it, like we do everything, these are bolt-on type investments that can create value up and down the value chains.
Jason Gabelman: Okay. When should we see those benefits start to accrue when do the projects come on line?
Dave Heppner: Yes. So that’s great. So, we are — while this DOE funding was a major milestone for all of us that got granted, some funding from this, it’s in the very early stages. So, to think about it, next phase of this is a negotiation with the DOE on the funding and the contractual commitments around that funding requirement, then you’ve got to design and build the facility. So, from a capital spend and an associated benefit to the company, I think you’re looking into late 2024, 2025 time frame. So, it’s still a ways out there.
Operator: Our next question comes from Theresa Chen with Barclays.
Theresa Chen: I wanted to follow up on Sam’s question related to TMX for which MPC has a known commitment. And I was just wondering if you could update us with where you think the toll may settle at given the discussion with the pipeline owner and the bid/ask currently? And related to that, how much do you think really it can tighten WCS differentials for your Mid-Con assets given that coast holds are comparable to going to the U.S. Gulf Coast versus Burnaby?
Rick Hessling: Yes. Hi Theresa, it’s Rick. So on the first part of your question, I’m just really not in a position to comment on the toll or speculate what it may end up at. On the second part of your question, the guidance I’d give you is as we look at the forward curve on WCS, so today, WCS sits at about a $26 discount. In Q1, it’s plus or minus $25. And in Q2, if TMX comes online there, and I think the market is still questionable on that. The forward curve is $15 to $18 discount. So still a pretty significant discount. And we’ll just have to see where it goes from there.
Theresa Chen: Got it. And going back to Mike’s earlier comments about additional investment opportunities, RNG being one of them. Can you just give us an update on progress related to the LF Bioenergy assets after the Q1 acquisition announcement, how that’s trending? And do you expect to use this as a launch pad for additional RNG investments, or is this going to be more of a roll up strategy from here?
