Marathon Petroleum (MPC) Q4 2024 Earnings Call Transcript

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Marathon Petroleum (NYSE: MPC)
Q4 2024 Earnings Call
Feb 04, 2025, 11:00 a.m. ET

Contents:

• Prepared Remarks
• Questions and Answers
• Call Participants

Prepared Remarks:

Operator

Welcome to the MPC fourth quarter 2024 earnings call. My name is Amanda, and I will be your operator for today's call. [Operator instructions] Please note that this conference is being recorded. I would now turn the call over to Kristina Kazarian.

Kristina, you may begin.

Kristina A. Kazarian -- Vice President, Finance and Investor Relations

Welcome to Marathon Petroleum Corporation's fourth quarter 2024 earnings conference call. The slides that accompany this call can be found on our website at marathonpetroleum.com under the Investor tab. Joining me on the call today are Maryann Mannen, CEO; John Quaid, CFO; and other members of the MPC and MPLX executive team. We invite you to read the safe harbor statements on Slide 2.

We will be making forward-looking statements today. Actual results may differ. Factors that could cause actual results to differ are included there, as well as in our filings with the SEC. I wanted to quickly highlight our new segment reporting, which includes a renewable diesel segment.

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We believe this expanded level of reporting will enhance our comparability with our peers and provide you with more insight into our financial performance and capital allocation decisions. Previously, the results of the renewable diesel business were included in our refining and marketing segment. For your reference, Slides 24 and 25 provide illustrations of this reporting change, and we have provided recast historical financials in our investor packet available on our website. With that, I will turn the call over to Maryann.

Maryann T. Mannen -- Chief Executive Officer

Thanks, Kristina, and good morning. Let me take a moment to highlight a few elements of our performance that we were -- that were most relevant to our results. In 2024, we executed on our strategic commitments. First and foremost, we achieved our lowest companywide OSHA recordable injury rate and strongest environmental performance in the last five years, demonstrating our commitment to safety and reliability.

Over the full year, we delivered refining and marketing segment-adjusted EBITDA per barrel of $5.33. Our commitment to operational excellence, commercial performance, and peer-leading profitability per barrel in each of the regions in which we operate drove our strong results with refining utilization of 92% and commercial capture of 99%. Our midstream segment, which is where we report MPLX's results, grew adjusted EBITDA by 6% year over year. In 2024, MPLX increased its quarterly distribution by 12.5%, driving an annualized cash distribution to MPC of $2.5 billion.

This was the third consecutive year of distribution growth of 10% or greater. This was the fourth consecutive year of MPLX generating mid-single-digit adjusted EBITDA growth. Since 2021, we've grown adjusted EBITDA at a compound annual rate of 7%. Our full-year net cash from operations was $8.7 billion.

This enabled peer-leading capital return of $10.2 billion and a 23% capital return yield for our shareholders, in a business where there is significant value and the ability to return capital to shareholders. The global macro environment continues to deliver refined product demand growth and we expect 2025 will be another year of record refined product demand in our domestic and export businesses, we have seen steady year-over-year demand for gasoline and diesel and growth in demand for jet fuel. Fourth quarter refining margins exhibited their typical seasoned weakness. We expect margins will improve in the second half of this year as announced to refinery closures offset recent capacity additions.

Leveraging our fully integrated refining system and geographic diversification across the Gulf Coast, Mid-Con, and West Coast regions, we are well-positioned to perform in this dynamic market environment. Longer term, we believe fundamentals support an enhanced to mid-cycle environment for refining as we expect demand growth to exceed the net impact of capacity additions and rationalizations through the end of the decade. We expect the U.S. refining industry to remain structurally advantaged over the rest of the world, mainly due to the availability of low-cost energy.

We remain steadfast in our commitment to safely and reliably operate our assets and protect the health and safety of our employees, business partners, and the community in which we operate. Our high complexity refining assets in our domestic and international logistical and commercial capabilities further increase our global competitive advantage. We are committed to achieving peer-leading profitability in every region in which we operate. And over the past several years, we have acted to advance on this commitment.

We have made sustained structural changes to improve our cost competitiveness while maintaining safe and reliable operations. Throughout our commercial organization, we are improving value chain optimization with a more integrated an advanced approach to our execution. We made disciplined investments in our refining and marketing value chains targeted to enhance margins, reduce cost, and optimize systems. Across all three of our regions, we see the results of these actions.

Along the U.S. Gulf Coast, where 42% of our capacity exists, we have more than 1.2 million barrels per day of refining capacity, which leverage feedstock and logistics flexibility to provide a wide range of products to meet U.S. and export demand. 40% of our capacity is defined as our U.S.

Mid-Con regions. We have eight refineries with a total capacity of 1.2 million barrels per day, which capture market opportunities by leveraging our access to advantaged feedstocks, logistics, and optimization of our large integrated value chain in the region. The remaining 18% of our capacity resides along the U.S. West Coast anchored by our 365,000-barrel-per-day Los Angeles Refinery and its fully integrated value chain, which benefits from feedstock and product optionality and a highly competitive marketing business.

Our commitment to safe and reliable operations, operational excellence, and commercial performance position us to deliver peer-leading financial performance, irrespective of the market environment. Our disciplined capital investments have also strengthened our competitiveness in each of the regions in which we operate. Looking into 2025, we believe our planned capital investments will further enhance MPC's position well into the future. MPC's capital outlook for 2025, excluding MPLX, totals $1.25 billion.

Underpinning our commitment to safety performance and environmental stewardship, sustaining capital is approximately 30% of capital spend. Investments in our refining and marketing segment are focused on value-enhancing and cost-reduction opportunities with expected returns averaging around 30%. Renewable diesel capital spend in 2025 is limited and will be focused on sustaining current operations. I'll provide some details on three of our major multiyear projects that meet our criteria for investment.

We are progressing the distillate hydrotreater project at Galveston Bay, where we are investing to construct a 90,000-barrel-per-day high-pressure distillate hydrotreater. Once in service, the new distillate hydrotreater will upgrade high sulfur distillate to ultra-low sulfur diesel, allowing us to place product in this higher-value market. This project is expected to be completed by year-end 2027 and generate a return of over 20%. The Los Angeles Refinery is a core asset in our West Coast value chain and one of the most competitive refineries in the region.

This low-carbon refining investment once completed, is expected to further enhance its competitiveness by integrating and modernizing utility systems to improve reliability and increase energy efficiency. Additionally, a portion of the improvements address a regulation mandating emissions reductions for all Southern California refineries. The improvements are expected to be completed by the end of this year. We expect to generate a return on our investment of approximately 20%.

The Robinson product flexibility project is expected to further extend the competitive position of our Mid-Con value chain by shifting yields to higher-value products. This investment will increase the Robinson refinery's flexibility to maximize jet production to meet growing demand. We expect the project to be completed by the end of 2026 and generate a return of approximately 25%. The strategic investments at our Galveston Bay, Los Angeles, and Robinson refineries ensure we provide the clean burning fuels of the world demand and further strengthen the competitive position of our U.S.

Gulf Coast, West Coast, and Mid-Con value chains. This morning, MPLX also announced its 2025 capital outlook of $2 billion, including $1.7 billion of growth capital and $300 million of maintenance capital. Approximately 85% of its growth capital will be allocated to investments to grow MPLX's natural gas and NGL businesses in support of expected increased producer activity. MPLX is investing to expand its Permian to Gulf Coast integrated NGL value chain, progressing long-haul pipeline projects, and grow Permian and Marcellus processing capacity.

MPLX anticipates mid-teen returns on its growth capital outlook, which will extend the durability of its mid-single-digit growth profile. Over the last four years, on average, we have grown our midstream segment-adjusted EBITDA by almost 7% per year. The growth of MPLX's cash flows, combined with its strong distribution coverage and low leverage, provides MPLX considerable financial flexibility. We believe MPLX is positioned for additional distribution increases like the 12.5% announced in 2024 in the future.

MPLX reached a significant milestone in its NGL wellhead to water value chain strategy with the announcement of a project to construct the Gulf Coast fractionation complex and export terminal. MPLX's fully integrated NGL value chain connects the Permian to the Gulf Coast and will supply growing global demand for LPGs. The multiyear $2.5 billion investment in the fractionation complex and export terminal complements MPLX's existing asset base and leverages existing infrastructure. MPLX will build and operate the Gulf Coast fractionation complex, consisting of two 150,000-barrel-per-day fractionation facilities and a 400,000-barrel-per-day LPG export terminal, all of which will be located adjacent to MPC's Galveston Bay refinery.

MPLX has entered into joint venture agreements with ONEOK for the export terminal and the bidirectional purity pipeline between Mont Belvieu and Texas City. ONEOK will market its 200,000 barrels per day and provide connectivity to Mont Belvieu storage, enhancing the competitiveness of the terminal. We also believe this strategic partnership with ONEOK will create additional optionality and value for our customers. We also see it as a platform for future collaboration and growth across our Gulf Coast assets.

MPLX plans to market methane production from the fracks to both existing and new customers. Leveraging our strategic relationship with MPLX, MPC plans to contract with MPLX to purchase the remaining LPG production from the frack, which MPC will market globally through its existing market businesses via the new export terminal. The fractionation facilities are expected to be in service in 2028 and 2029, and the export terminal is expected to be in service in early 2028. We anticipate mid-teen returns on the project, which is expected to begin generating EBITDA when placed in service in 2028 and will ramp through the end of 2030.

Additionally, we believe the expansion of our Gulf Coast NGL value chain will create a platform for optimization and incremental growth opportunities. Our capital allocation priorities remain consistent. Our No. 1 priority is sustaining capital.

We remain steadfast in our commitment to safely operate our assets and protect the health and safety of our employees and the communities in which we operate. We are committed to paying a secure, competitive and growing dividend. We will invest where we believe there are attractive returns, which will enhance our competitiveness, and position MPC well into the future. Beyond these three objectives, we will return all excess capital through share repurchases.

As of the end of the year, we had $7.8 billion remaining under our share repurchase authorization, highlighting our commitment to superior shareholder returns. The durable and growing cash flow of MPLX differentiates MPC from peers. MPLX is strategic to MPC's portfolio, and therefore, its value proposition. We expect distributions from MPLX in 2025 will cover MPC's dividend and stand-alone capital outlook.

Operating cash flow generated by our refining and marketing and renewable diesel segment, are expected to be available for capital return through share repurchases. With our highly advantaged refining business and the $2.5 billion annualized distribution from MPLX, we are positioned to lead peers in capital returns through all market cycles. Let me turn the call over to John.

John J. Quaid -- Executive Vice President, Chief Financial Officer

Thanks, Maryann. Moving to the fourth quarter and full-year highlights, Slide 14 provides a summary of our financial results. This morning, we reported adjusted earnings per share of $0.77 for the fourth quarter and $9.51 for the full year. Adjusted EBITDA was approximately $2.1 billion for the quarter, and $11.3 billion for the year.

refining and marketing segment-adjusted EBITDA per barrel was $2.03 for the quarter and $5.33 for the year. Cash flow from operations, excluding working capital changes, was $1.7 billion for the quarter and nearly $8.2 billion for the year. And during the quarter, we returned $292 million to shareholders through dividends and repurchased nearly $1.3 billion of our shares. Slide 15 shows the sequential change in adjusted EBITDA from third to fourth quarter 2024 and the reconciliation between net income and adjusted EBITDA for the quarter.

Adjusted EBITDA was lower sequentially by approximately $400 million, driven by decreased results in our refining and marketing segment, slightly offset by improved results for our midstream and renewable diesel segments. The tax rate for the quarter was 12%, largely reflecting the earnings mix between our R&M and midstream businesses. Moving to our refining and marketing segment results for the fourth quarter on Slide 16, lower crack spreads, mainly in the Mid-Con region were the primary driver for lower R&M margins in the fourth quarter. Our refineries ran at 94% utilization, processing nearly 2.8 million barrels of crude per day, and refining operating costs were $5.26 per barrel in the fourth quarter.

Turning to Slide 17, solid commercial execution, as well as typical seasonal tailwinds, drove fourth quarter capture of 119%. We leveraged the scale of our fully integrated system in all three regions to capture margin opportunities across our entire value chain from feedstocks to products. We are committed to improving our commercial performance and believe we are building capabilities that will provide sustained incremental value and will produce results that can be seen in our financials. Slide 18 shows our midstream segment performance for the quarter.

Our midstream segment continues to deliver cash flow growth as segment-adjusted EBITDA for the quarter was up nearly 5% sequentially. MPLX, which is the largest portion of our midstream segment remains a source of durable growth as it progresses its mid-single-digit adjusted EBITDA growth strategy. Slide 19 presents the elements of change in our consolidated cash position for the fourth quarter. Operating cash flow, excluding changes in working capital, was $1.7 billion in the quarter, driven by both our refining and midstream businesses.

Working capital was a $497 million source of cash for the quarter, primarily driven by benefits from inventory reductions and a decrease in refined product prices. Capital expenditures, investments and acquisitions were $935 million for the quarter. Cash was utilized to repay $1.15 billion of MPLX senior notes that matured in December. And MPC returned almost $1.3 billion through share repurchases, exclusive of excise tax payments, and $292 million in dividends during the quarter.

At the end of the year, MPC had approximately $3.2 billion in consolidated cash, including MPC cash of $1.7 billion and MPLX cash of $1.5 billion. Turning to guidance. On Slide 20, we provide our first quarter outlook. We are projecting crude throughput volumes of just over 2.5 million barrels per day, representing utilization of 85%.

Turnaround expense is projected to be approximately $450 million in the first quarter with activity focused in the Gulf Coast and West Coast regions. For the full year, turnaround expenses are expected to be similar to last year at around $1.4 billion. For the quarter, operating costs are projected to be $5.70 per the barrel. Distribution costs are expected to be approximately $1.5 billion and corporate costs are expected to be $220 million.

With that, let me pass it back to Maryann.

Maryann T. Mannen -- Chief Executive Officer

Thanks, John. We are unwavering in our commitment to safe and reliable operations, operational excellence, commercial execution, and our cost competitiveness yields sustainable structural benefits and position us to deliver peer-leading financial performance in each of the regions in which we operate. To deliver this, we will optimize our portfolio to deliver outperformance now and in the future. We'll leverage our value chain advantages and ensure the competitiveness of our assets while we continue to invest in our people.

Our execution of these commitments position us to deliver the strongest through-cycle cash generation. Durable midstream growth is expected to deliver cash flow uplift and expected to deliver distribution increase going forward, a differentiator from our peers. Investing capital where we believe there are attractive returns will enhance our competitiveness now and in the future. We are committed to leading in capital allocation and will return excess capital through share repurchases.

MPC is positioned to create exceptional value through peer-leading performance, execution of our strategic commitments and its compelling value proposition. Let me turn the call back over to Kristina.

Kristina A. Kazarian -- Vice President, Finance and Investor Relations

Thanks, Maryann. [Operator instructions]

Questions & Answers:

Operator

Thank you. [Operator instructions] Our first question comes from Neil Mehta with Goldman Sachs. Your line is open.

Neil Mehta -- Analyst

I guess the first question is just on the refining side. There was a $543 million positive capture impact in the quarter, 119% capture. I'm curious how much of that was seasonal, typically 4Q, you didn't capture well versus commercial. Anything you can do to kind of unpack it either regionally or in terms of what the underlying drivers of that capture beat?

Maryann T. Mannen -- Chief Executive Officer

Yes. Thanks, Neil. So look, as you know, and if you look back over our last several fourth quarters over the past few years, our fourth quarter tends to be one of the strongest quarters. I think if you look at it over the last several years, we've averaged in a range of about 115% to 116%.

In general, as you know, when we look at capture, there are clearly things that we don't have control over. And then there are the things that we do have control over. As we've been sharing, our objective is to approach 100%. This year, on average, we reached 99% in the refining and marketing opportunity there.

So clearly, some things that we believe have been structural in the work that we've been doing, we've been sharing over the last couple of quarters. And obviously, some of those that have just fourth quarter normal activity. But I'm going to pass it to Rick because I think you've got a few things that we'll give you some specifics on.

Rick D. Hessling -- Chief Commercial Officer

Yes, Neil, let me start by saying thank you for calling this out. This is obviously a significant focus for us and the team executed extremely well in the fourth quarter. So just a couple of nuggets for you. On the export side, Neil, we've been stating quarter after quarter that we're leaning into our export strategy.

And the fourth quarter was a great example of that. Our assets ran extremely well across the board, and we were able to lean into our export strategy and set records on volume and margin. So that's a piece of the puzzle, Neil. And then secondly, an area that we don't speak much of is asphalt, but I will say we had great execution on the asphalt front, allowing us to take advantage of improved asphalt spreads and execute our strategies, driven by strong asphalt retail sales.

So, those are just a couple of nuggets, Neil. There's many more, but I'll just leave you with those two.

Neil Mehta -- Analyst

Thank you, Rick. And the follow-up is just on MPLX and the wellhead-to-water strategy. The mid-teens returns that you're targeting on this, can you talk a little bit about some of the underlying assumptions? And is it fair to say that even though capital is coming in a little higher at the midstream side of the business, given the framework that you laid out here, where the buyback is coming from the refining and renewable diesel business, higher MPLX spend won't impact the outlook for your ability to return capital?

Maryann T. Mannen -- Chief Executive Officer

Yes, Neil, certainly, let me try to answer those questions for you. So first and foremost, when we think about this NGL wellhead-to-water strategy, you're right, we do expect mid-teens returns. You may know that over the last several quarters, we have been talking about the opportunity set. But frankly, we've been looking at this project for a period of time.

So underlying assumptions with respect to overall capital that we need to spend, timing of that markets that we will serve, cost to get implemented, or all things that we have considered and evaluate it to be sure that when we look at this project that we're confident in these mid-single-digit returns. I think the next project -- sorry, question that you asked was really about capital. And whether or not the capital that we would be spending in MPLX has implications for MPC. So the answer to that is no.

As you know, MPLX has really solid balance sheet flexibility. One, when you look at the debt-to-EBITDA ratio, we've talked about our ability to be kind of in the range, plus or minus four times. We're somewhere in the range of three. So we absolutely have balance sheet flexibility there.

Really all of that $2.5 billion multiyear capital in MPLX is largely MPLX. There's a $70 million piece that is MPC. And then the last part of that is as we continue to grow that MPLX distribution, you've heard me talk about the 12.5% increase. That's a $2.5 billion distribution to MPC.

It covers the 2025 MPC dividend and the 2025 capital that we just announced of $1.25 billion. Therefore, giving MPC the flexibility to return capital via share buyback. So balance sheet flexibility and MPLX will support the growth of those MPLX projects. I hope that gets you.

Neil Mehta -- Analyst

Thanks, Maryann.

Maryann T. Mannen -- Chief Executive Officer

You are welcome.

Operator

Thank you. Our next question comes from Doug Leggate with Wolfe Research. Your line is open.

Doug Leggate -- Analyst

Thank you. Good morning, everyone. Good morning, Maryann. Fantastic result in refining despite breakeven.

We actually see that bullish. So well done. My question is, I hate to ask the obvious one, but we've got a 30-day delay now potentially on -- I don't know if it's posturing or not, but the tariff situation, you guys are obviously a large consumer of heavy barrels. My question is, what would be your -- how are you planning for the contingency? What would the impact be, I'm thinking specifically about how does your plant adapt to a different diet of crude if you had to.

Frame it for us in whatever way you like, but we're obviously all trying to struggle with what it would actually mean if the tariffs were in fact introduced.

Maryann T. Mannen -- Chief Executive Officer

Doug, thanks for your question. Yes, it's interesting, studying tariffs has been at the top of the list of things that we've been doing among many others like running the business, right? But -- so when we think about the impact of tariffs, one, if they were to be imposed or not, still a variable question, we've got a highly integrated system, and we've got a lot of optionality, and we'll use that optionality. Having said that, as you state, we do process a significant amount of heavy crude. And therefore, we think it's likely if tariffs will be to put in place, seeing 30-plus days or not that we would see cost increases.

We believe that the majority of that will ultimately be borne by the producer and then, frankly, to a lesser extent, the consumer. We, MPC will use our integrated system, our commercial excellence, our operational performance to really minimize the best that we can, the margin impact to our financial results. That's our goal. And we'll continue to evaluate.

We're working with the administration, and we're working with agencies, as well as the trade associations, to be sure that the right people understand the implications of these decisions. But with that, let me pass it to Rick and he can give you a little more color on our diet.

Rick D. Hessling -- Chief Commercial Officer

Yeah, Doug, a very timely question. As we have run scenario planning for every facility and market that we have coast-to-coast, so we're well versed in this, as you might expect. And Maryann hit it well when she touched on our integrated system, our knowledge, our commercial performance, we believe we're in as good or better shape than anyone in the industry to absorb a tariff, if it were to ever get put into place. And maybe a good example of that that I would want to unpack for you is in the Mid-Con, we have worked tirelessly for a long time on our logistics capability and connectivity.

So many of our refineries in our Mid-Con region, we could look to pivot to alternative crudes because of our logistics capabilities, and we're quite unique that way. And I would give you crudes to think of such as Bakken, Rockies, Utica, Marcellus as a few. So I want to leave you with every region is different. Every refinery is different, but we believe that we have done the scenario planning to make this as least painful as possible, and in fact, we believe at the end of the day, in most regions, if not all, that we operate in, we'll have a competitive advantage against others who are running significant amounts of Canadian grades.

Doug Leggate -- Analyst

Rick, I appreciate the detailed answers from both of you. I wonder if I could just do a quick part beyond that. If you did displace heavy with a Bakken or similar crude, would that require utilization reduction?

Rick D. Hessling -- Chief Commercial Officer

It may shift yields more than anything, Doug, and it could potentially impact utilization. However, I would lean you -- maybe ask you, as you look at yesterday as it played out. The market was quickly sending signals that it would quickly respond and absorb a lot of the indicators that would continue to make potentially a heavy barrel economic to run. As Maryann said, we do believe the producer will bear a large part of the impact.

So I would say, a light switch within our system, we believe would have minimal impact.

Doug Leggate -- Analyst

Maryann, I've got a very quick follow-up, which is I wanted to pick on one of your comments at the end of your prepared remarks. We will optimize our portfolio. I wonder if you could care to elaborate on what that means. And I'll leave it here.

Maryann T. Mannen -- Chief Executive Officer

Yeah. Certainly, Doug. For the last several years, one of our strategic pillars is to ensure the competitiveness of all of our assets that has been in place historically and will continue to be in place. We need to be sure that every one of our assets is delivering the cash flow that we expect and is part of our long-term scenario for how we will operate in the future, so we'll continue to look at that all the time.

Doug Leggate -- Analyst

Thank you so much, guys.

Maryann T. Mannen -- Chief Executive Officer

You're welcome, Doug.

Operator

Thank you. Our next question comes from Manav Gupta with UBS. Your line is open.

Manav Gupta -- Analyst

Hey, Maryann. I wanted to congratulate you. I think when you took over the CEO, one of your key goals was that to fully fund the dividend and capex at MPC through MPLX. And our model got you there, but we got to do more in '26 and '27.

We didn't have you getting there in 2025. So congratulations on that. My question here is we think about MPC's buybacks as funded by R&D and refining with MPLX funding the dividend and capex, but the projects that you announced today could put you on a distribution growth path of 12% for four or five years. So starting 2026, is it possible that MPLX distribution is not only funding the capex, the dividend but also possible buybacks at MPC?

Maryann T. Mannen -- Chief Executive Officer

Thank you, Manav. So we have been trying to demonstrate that our cash flows being generated at MPLX are durable and that we can put together capital, as well as small M&A bolt-on, that can support mid-single-digit growth for a period of time. And hopefully, today, the announcement of our NGL strategy, wellhead-to-water value chain isn't yet another example of that in addition to some of the investments that we made in 2024, expansion of Bengal. As an example, our Summit acquisition in the Utica and Wintoebster.

That 12.5% distribution increase that we announced in November of 2024, we also said we thought had the ability to be sustaining in similar nature for the next several years. So as we continue to grow, we certainly believe that distribution coming back to MPC gives us flexibility for peer-leading capital allocation. We think it's a differentiator. And certainly, we believe that that growing distribution to MPC will allow us to increase our share repurchase in the future.

Manav Gupta -- Analyst

Perfect. My quick follow-up is a little bit on the West Coast. Another refinery is probably going to go down at the year-end. There are some reports of an unplanned refinery downtime also in first half now.

So just trying to understand from your perspective, the dynamics on the West Coast, understanding that the regulatory environment may not be the best, but from the perspective of supply/demand, the region might still work for you.

Maryann T. Mannen -- Chief Executive Officer

Yeah. Actually, I think you said it well. As you know, we have made some commitments and investments. I talked about one of them here on the call this morning for our Los Angeles asset.

One, we think it is a really efficiency capital investment. We also think, obviously, it meets the required NOx reduction emission requirements going forward and gives us incremental efficiency and profitability, particularly in a low-carbon environment. Certainly, we understand the challenges of doing business in this environment. You know this well.

I mean we have evaluated our ability to participate in this region for many, many years. Hence, the decision that we made back in 2020 to close Martinez as a fossil fuel refinery and then in early in '21, the decision to convert it to renewable diesel. We're working closely with the agencies in the state to ensure that we understand and in similar fashion, as I mentioned earlier, through our trade associations also really trying to understand and, frankly, influence be of help so that those making the regulatory decisions and the legislative decisions in the state have the facts that they need to make good decisions. We continue to believe our asset on the West Coast is one of the most competitive, particularly when you look at the integrated nature of it, the MPLX, as well as its ability to process various crudes, etc.

So yes, we continue to believe in the long-term viability of that asset.

Manav Gupta -- Analyst

Thank you. I'll turn it over.

Maryann T. Mannen -- Chief Executive Officer

Thank you.

Operator

Thank you. Our next question comes from Paul Cheng with Scotiabank. Your line is open.

Paul Cheng -- Analyst

Hey, team. Good morning. Maryann, this year, I think you guys saying that your turnaround cost is about $1.4 billion, similar to last year, which is quite high. So trying to understand that average for the cycle, what's considered as a normal turnaround course for you guy? Is $1.4 billion is the new normal or this is considered somewhat a high yield?

John J. Quaid -- Executive Vice President, Chief Financial Officer

Paul, it's John. I'll maybe start with that, and then we'll see what follow-ups you might have. Certainly, like you said, we're looking at $1.4 billion for this year, similar to last year's. If you look back over the last several years, it gets a little bit hard to see a run rate, right? You would have had COVID where we really would have slowed down, that would have pushed some turnarounds to the right, if you will into future years.

We also continue to invest in our assets and change kind of the capacity of what we have. I mean, interestingly, if you go back pre-COVID and post either shutting down or converting refineries, we're almost back to the same or more capacity than we were previously. So I think all of those things are driving that number. And again, and Tim and the team can speak to this, right? Those are scheduled outages that we have on the cycle that we're managing to that we need to get done.

I think, though, I was trying to give you some factors, though, that are maybe driving the $1.4 billion we're seeing for this year.

Paul Cheng -- Analyst

John, thank you for that. However, what consider from internally you guys' standpoint will be more of a normal cycle, say, average for the cycle?

John J. Quaid -- Executive Vice President, Chief Financial Officer

Yeah, Paul. I don't know if it's helpful to get into. There's lots of things that can move that on the asset portfolio, where we are in the schedule. I think we're -- we've even kind of stepped into here just recently giving you the number for the year.

We used to just kind of give you the number by quarter. So I think if you're OK with it, we might just stick with what we're looking at for this year, and then we'll speak to it as the year progresses.

Paul Cheng -- Analyst

OK. The second question, I want to go back into the margin capture. California actually have done really well. Yes, I mean, we stay and took out renewables, so that improved or that helped the margin, but still is very good.

Typically that I think for the butane branding, California doesn't really benefit that much. So trying to understand that, I think Rick mentioned about export and some of the -- is there any one-off item in California? For this quarter, we should be aware. Or will that -- I mean, is there any other factor that you can point us to why that there seems to be performing really well?

John J. Quaid -- Executive Vice President, Chief Financial Officer

Paul, it's John. I'll start and maybe then turn it over to Rick. I think one of the things we would call out, really, I'll start with Tim and his team and how we ran the facilities in the quarter, strong utilization really positioning us to then turn to Rick and his team to take that production to market across our really competitive value chain. So at a high, high level, I think that's what you're seeing.

And maybe I'll turn it over to Rick for any other details.

Rick D. Hessling -- Chief Commercial Officer

Yeah, Paul. Maybe just to address the export comment. When I referenced our exports earlier, think of that as predominantly U.S. Gulf Coast.

It's not that there weren't some exports going out of the West Coast, but they were minimal in terms of our overall portfolio. The only item that I would add to John's commentary is we often talk fully integrated value chain and our advantages in California. And in-house, we talk refinery to retail. And we are one of the few out there that takes the value chain all the way to the end consumer.

And that is a value driver that I think -- that we believe is showing up and capture that others aren't able to capture. So we see it as a differentiator, Paul.

Paul Cheng -- Analyst

OK, very good. Thank you.

Operator

Thank you. Our next question comes from Roger Read with Wells Fargo. Your line is open.

Roger Read -- Analyst

Yeah. Thank you. Good morning. To come back to your comments on the macro and the demand may exceed capacity as we see more closures within the industry.

What's your view here looking at '25 in terms of demand as we think about gasoline, jet fuel, and then diesel, particularly we finally got a plus 50 on the ISM manufacturing for this past month.

Maryann T. Mannen -- Chief Executive Officer

Yeah. Sure, Roger. I'd say, look, you've heard us share our views, really no different. As we look at the long term, we absolutely remain constructive over the long term.

We think 2025 is going to be another year of growth in refined product demand, and we see that continuing through the decade. As you know, in 2025, there's -- we've got supply coming online, two of which we know we've talked about Dangote. Clearly, some challenges, particularly in the first quarter here, even in the fourth quarter with us. And then there's probably about 800,000 barrels a day that we think will be coming offline.

One of them we know happening in the first quarter, another one happening in the fourth quarter, which probably won't have much impact in 2025. And then there's a few in -- well, I think one in Germany, a couple in Scotland, Europe. And then there's always really what happens with respect to China. So back half of the year, when we look at 2025, we think we should see improvement.

We should see margins expanding. Frankly, we're beginning to see a little bit of that as seasonal unwind begins to occur. In our system, gasoline year over year has been fairly steady, diesel up slightly. And to your point, we've actually seen jet demand growth, which is what you would expect as well.

So overall, we remain constructive long term. I think the back half of '25 could look better. China always an interesting dynamic to the extent that's better than we anticipate could be an accelerator. Obviously, some of the decisions that are being debated here with China would mute that, and we'll have to wait and see what happens there.

So I think that's how I would characterize it, Roger.

Roger Read -- Analyst

Appreciate that. And then maybe as an unrelated follow-up. Obviously, a lot of things going on with the Trump administration on the tariffs and all. But there's also in any executive orders, a lot of things to rolled back a lot of, let's call it, pro-sustainable energy or clean energy as it was advertised.

What are some of the key things you're watching on that progress that may or may not be made during 2025?

Maryann T. Mannen -- Chief Executive Officer

Yeah. Roger, here's what I would say. When we look at our sustainability initiatives, you look at Scope 1, Scope 2, and even our Scope 3 absolute, we remain committed to those. And frankly, last year, we actually increased our target because we were making progress particularly on methane as an example.

So we'll continue to remain focused on delivering Scope 1, Scope 2. We'll evaluate what opportunities we have as we look at Scope 3. The whole concept around renewable diesel, you heard me mention perhaps in my remarks that our focus in the short term is limiting the amount of capital that we're putting to work in renewable diesel, we'll certainly do what we need to, to ensure the sustainability and the reliability of that asset came up to nameplate capacity in the fourth quarter, as we said. And we believe that as we look at 2025, that asset will be profitable.

But again, as we look at, we'll watch the variables just really in the whole renewable space, that is certainly one that we'll be looking at carefully as well. I'm going to pass to Jim and see if there is anything that Jim feels that I've missed in our --

Unknown speaker -- -- Analyst

Roger, I agree with what Maryann said. I think we're going to remain steadfast kind of the middle of the fairway on our sustainability goals and metrics and kind of watch some of the variables.

Roger Read -- Analyst

Great. Appreciate it. Thank you.

Maryann T. Mannen -- Chief Executive Officer

You're welcome, Roger. Thank you.

Operator

Thank you. Our next question comes from Jason Gabelman with TD Cowen. Your line is open.

Jason Gabelman -- Analyst

Hey, good morning. Thanks for taking my question. The first one on the buyback and the ability to generate cash beyond cash from ops at the parent company. I think you're going to be refinancing $750 million of debt at the parent.

So should we think about that being available for use toward buybacks? And then any opportunity for buyback -- or sorry, for drop-downs from the parent down to the MLP? Is that still an arrow in your quiver that you could use?

John J. Quaid -- Executive Vice President, Chief Financial Officer

Yeah, hey. Good morning, Jason. It's John. Yeah, you're spot on the cash balance and that maturity, right? That was one that matured in September, we decided to pay it off and mentioned at that time, we'll be looking to refinance that at the right time, right? So you've got $750 million of cash that's coming back onto the balance sheet.

That's available for allocation. I'll let Maryann speak to the drops.

Maryann T. Mannen -- Chief Executive Officer

Yeah. Jason, with respect to the drops, there is a few assets that sit on the MPC side that we believe ultimately belong rightfully so in the midstream business. When we or if we consider these drops, in the past, they have certainly not been a priority for several reasons that you know well. But if and when we consider these drops, we want to be sure that we're clear these drops would not count, if you will, with respect to our commitment for MPLX to have mid-single-digit growth.

This EBITDA is currently in the system. We would make that drop to be sure that the assets are positioned properly in the business. Having said that that cash on the MPC side could certainly be used to continue to buy back stock, in particular, when we look at the valuation today versus our long-term opportunity set and the value creation that we think we can generate in MPC, that cash could be put to good use on the MPC side, but would not count. We would not do that, it would not count against MPLX's mid-single-digit growth objective because that EBITDA is already in our system.

I hope that helps.

Jason Gabelman -- Analyst

Yeah. Got it. Understood. Do you have an estimate for the amount of EBITDA that could potentially be dropped down?

Maryann T. Mannen -- Chief Executive Officer

Jason, when we -- if and when we do a drop, we'll be sure that we give you good clarity so you understand how not to include that in the growth, but we'll share that with you when the time comes.

Jason Gabelman -- Analyst

All right. Great. And my follow-up is just a quick one. I noticed in the press release, there wasn't a quarter-to-date buyback figure for 1Q '25.

I think that's the first time you've excluded that figure in the press release for a handful of quarters if not two years. Do you have that figure handy? And was there a reason that you decided to exclude it this quarter?

John J. Quaid -- Executive Vice President, Chief Financial Officer

Jason, it's John. Let me try and answer that for you. And maybe too, it's kind of where you were going a little bit of history. Certainly, if you go back in time, post the Speedway sale, post a significant change in margins, we were returning a significant amount of capital and really wanted to lean in and share with you all what that first month of the quarter looked like.

As we've kind of approach to a more normalized balance sheet, even as we continue to provide that, you've also heard us say, hey, one month isn't really indicative of what the repurchases might be for the entire quarter. So I think just as we're pivoting now, we decided maybe now is the time that that number may be isn't as useful as it had been in the past. So hopefully, that you can understand kind of our change in view there.

Jason Gabelman -- Analyst

Yeah. That's great. Thanks for explaining that.

Maryann T. Mannen -- Chief Executive Officer

Thanks, Jason.

Operator

Thank you. Our next question comes from John Royall with J.P. Morgan. Your line is open.

John Royall -- JPMorgan Chase and Company -- Analyst

Hi. Good morning. Thanks for taking my question. So my first question is on 2024 MPC-level capex.

The $1.52 billion for '24 came in a bit above the original $1.25 billion guide, and it looks in particular like a big 4Q. I was just hoping you could help us bridge the difference between the guide from a year ago and where you ended up.

John J. Quaid -- Executive Vice President, Chief Financial Officer

John, it's John. Let me try and give you a little bit more color there. Really, I think what we saw were a couple of things. And I'll start with -- you've heard Rick talk about how we're going to market in our fully integrated value chain.

And frankly, we saw some really strong opportunities to invest some capital to drive cash flow in the marketing side of our business. That was probably the majority -- or a larger portion of what drove that. But we also had some opportunities across the refining base where we saw some projects that we could put money to. So I'd just give you that as some color where again, we saw those opportunities and wanted to take advantage of them as we continue to look to drive cash flow growth of the refining and marketing business.

John Royall -- JPMorgan Chase and Company -- Analyst

OK. And then my next question is on renewable diesel margins. There's a lot of uncertainty in the regulatory environment right now. I was just hoping for your thoughts on R&D margins early in 2025 and how you think the 45Z could ultimately play out.

Rick D. Hessling -- Chief Commercial Officer

Yeah. John, this is Rick. So with Martinez fully online, as we stated earlier, we continue to expect EBITDA contribution going forward. As you saw in the release, we were positive $28 million in fourth quarter.

So we really have a good stable environment, and we have a great team executing our feedstocks and our product distribution. With that being said, as you said, there remains a lot of uncertainty in this space, and it continues to evolve, right? When you think of our new administration, how does 45Z get implemented or does it and at what pace? And then when you have the BTC expiry. I would tell you, I would not make a prediction, but here's what I would say. We will control what we can control, and from a feedstock optimization perspective, we're procuring advantaged feedstocks with low CIs and then placing them as you would certainly expect us to in the highest-margin market as possible.

So won't pretend to say we have a crystal ball in the future. I think we'll watch this closely, but we feel very good about our asset base and our execution.

John Royall -- JPMorgan Chase and Company -- Analyst

Thank you very much.

Maryann T. Mannen -- Chief Executive Officer

You're welcome, John. Thank you.

Operator

Thank you. Our next question comes from Theresa Chen with Barclays. Your line is open.

Theresa Chen -- Analyst

Hi. Can you talk about how much LPG export currently exists within your system, just off of your refining assets in the Gulf Coast and maybe the West Coast? And following the FID of the NGL infrastructure projects and MPC's role in marketing those LPGs, what kind of economic uplift would you expect just to bring to MPC either in terms of cash or EBITDA?

Rick D. Hessling -- Chief Commercial Officer

Theresa, it's Rick. Thank you for the question. So when we look at our current footprint, what I'll do, without giving you specific numbers is tell you that our footprint and our ability to export once the dock is fully commissioned and we're up and running will be significant. We will attack global buyers, and we will go to market in a diversified approach.

And what I mean by that is, is we'll go turn, we'll go spot a percentage term, percentage spot, a percentage FOB versus delivered. And then from an EBITDA perspective, we have a variety of ranges. It depends on what the market is at that point in time, but we are bullish in this environment with the Chinese PDH units in the global worldwide demand. I would say we have a very optimistic view forward.

Theresa Chen -- Analyst

Got it. And as a quick follow-up, are you -- is MPC also marketing Oneok portion of the terminal facility volumes coming out of the terminal facility? Or is it just MPLX's 50% interest?

Rick D. Hessling -- Chief Commercial Officer

MPC is just marketing the 50% of the dock. Oneok will be marketing their own barrels.

Theresa Chen -- Analyst

Thank you.

Maryann T. Mannen -- Chief Executive Officer

Thank you, Theresa.

Operator

Thank you. Our last question will come from Matthew Blair with Tudor, Pickering, Holt. Your line is open.

Matthew Blair -- Analyst

Great. Thanks. Thank you for the questions, and congrats on the strong results. You mentioned record product exports.

And we are seeing things like industrial production improve and in several Latin American countries with, I guess, the exception of Mexico. My question is, could you contrast demand trends in the U.S. versus your overseas market? And if you have any sort of a split between gasoline and diesel, that would be helpful, too. Thanks.

Rick D. Hessling -- Chief Commercial Officer

Yeah, Matt. So what I would tell you is where we're seeing significant demand signals is all things Latin America and Europe. Those are the biggest signals we're seeing. Demand growth is more robust than we have seen in a while.

And then when you look at where we are from a split perspective, gas versus diesel, I will tell you, diesel has been pretty steady, but we are seeing a significant uplift in gas export demand.

Matthew Blair -- Analyst

Sounds good. And then turning back to the renewable diesel segment. With the 45Z coming in, does this change anything in regards to your RD feedstocks? And I guess, in particular, are you looking to run less vegetable oils going forward? And do you run any imported UCO? And if so, would you scale that back going forward?

Rick D. Hessling -- Chief Commercial Officer

So great question. I would tell you, so what we're looking to do is maximize low CI stocks, feedstocks. And with that that plays right into the 45Z on what would be the most maximum feedstock we could run and get credit for and apply toward the 45Z. So I think that's the best way to share that, Matt.

Maryann T. Mannen -- Chief Executive Officer

Matt, it's Maryann. Just maybe one other comment, if I could. When we think about Martinez as well. As I mentioned earlier, we brought the asset to full nameplate capacity in the fourth quarter, that's 48,000 a day.

We share that now with Neste, one of the advantages of being at full nameplate is our ability to operate the PTU. And part of the strategic rationale with our developing this long-term relationship with Neste, in particular for Martinez, was to be able to optimize the feedstock. And so we think that will be a value driver as well into 2025 as we're now able to look at -- given the amount of volume that's in place, but be able to look at where those opportunities exist through the commercial lens in addition to the incentives that are obviously still critical for profitability. Hope that addresses your question, Matt.

Matthew Blair -- Analyst

It does. Thank you.

Maryann T. Mannen -- Chief Executive Officer

You're welcome.

Kristina A. Kazarian -- Vice President, Finance and Investor Relations

All right. With that, thank you for your interest in Marathon Petroleum Corporation. Should you have more questions or want clarification on topics discussed this morning, please contact us, and our team will be available to take your calls. Thank you for joining us today.

Operator

[Operator signoff]

Duration: 0 minutes

Call participants:

Kristina A. Kazarian -- Vice President, Finance and Investor Relations

Maryann T. Mannen -- Chief Executive Officer

John J. Quaid -- Executive Vice President, Chief Financial Officer

Maryann Mannen -- Chief Executive Officer

Kristina Kazarian -- Vice President, Finance and Investor Relations

Neil Mehta -- Analyst

Rick D. Hessling -- Chief Commercial Officer

Doug Leggate -- Analyst

Rick Hessling -- Chief Commercial Officer

Manav Gupta -- Analyst

Paul Cheng -- Analyst

John Quaid -- Executive Vice President, Chief Financial Officer

Roger Read -- Analyst

Unknown speaker -- -- Analyst

Jason Gabelman -- Analyst

John Royall -- JPMorgan Chase and Company -- Analyst

Theresa Chen -- Analyst

Matthew Blair -- Analyst

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