Welcome to the Marathon Petroleum Corporation Fourth Quarter 2012 Earnings Conference Call. My name is John, and I will be your operator for today's call. 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. I will now turn the call over to Ms. Pam Beall. Ms. Beall, you may begin.

Thank you, John. Good morning everybody and welcome to our fourth quarter 2012 earnings webcast and conference call. The synchronized slides that accompany this call can be found on our website. On the call today are Gary Heminger, President and CEO; Garry Peiffer, Executive Vice President of Corporate Planning and Investor & Government Relations; Don Templin, Senior Vice President and Chief Financial Officer; and Mike Palmer, Senior Vice President of Supply, Distribution and Planning. Now, if you turn to slide two, please read the Safe Harbor statement. It is a reminder that we will be making forward-looking statements during the presentation and during the question-and-answer session today. Actual results may differ materially from what we expect today and factors that could cause actual results to differ are included here as well as in our filings with the Securities and Exchange Commission. Now, I will turn the call over to Gary Heminger for some opening remarks.

Thanks Pam and good morning. Thank you for joining us. If you please turn to slide three, during our first full calendar year as an independent company, our commitment to safety and operational excellence underpinned our ability to capture value and deliver strong financial results. Our employees and contractors achieved record safety performance across our operations, including the world-class safety record for the DHOUP project. As a result of MPC’s outstanding operational and financial performance in 2012, our continued strong financial position and positive outlook, we were able to allocate capital to value accretive investments and return significant capital to shareholders. We returned approximately $1.76 billion to shareholders during the year. This was accomplished through two accelerated share repurchase programs totaling $1.35 billion and a 40% increase in our dividend. Earlier today, we announced the board authorized an additional $2 billion share repurchase, augmenting the $650 million remaining authorization that was announced in the first quarter of 2012. This provides a total outstanding authorization of $2.650 billion through 2014. The expansion of our share repurchase authorization reflects our intent to continue balancing our use of capital and our recognition of the trust that our investors have placed in us to be good stewards of their capital. In 2012, the U.S. energy industry continued to adapt the growing North American crude oil and natural gas resources and to transportation bottlenecks for those resources. These forces will continue to influence the domestic energy market for years to come, and MPC will invest to remain strategically positioned to create value from these shifts, as they reshape our energy landscape. While we returned substantial capital to our shareholders, we balance that commitment with critical investments that will enhance MPC’s ability to benefit from changing market conditions. Most significant among these was the very successful…

Thanks, Gary. Slide five provides earnings both on an absolute and per share basis. Our fourth quarter and full-year 2012 financial performance was very strong. MPC had adjusted earnings of nearly $760 million or $2.26 per share during the fourth quarter of 2012. This was compared to a loss of $75 million in the fourth quarter of 2011. For the full-year of 2012, our adjusted earnings were $3.3 billion, almost $1 billion over the prior year. Adjusted earnings per share was $9.79 for the full year of 2012, compared to $6.72 for 2011. The waterfall chart on slide six shows by segment the change in adjusted earnings from the fourth quarter of 2011 to the fourth quarter of 2012. The primary driver for the change in our adjusted earnings was the increase in refining and marketing segment income, partially offset by additional income tax expense. The significant improvement in refining the market segment income was primarily the result of higher crack spreads and wider solid crude differentials in the quarter. The increase in income tax expense is a function of higher 2012 earnings. As shown on slide seven, refining and marketing segment income from operations was almost $1.14 billion in the fourth quarter of 2012. This was compared with a loss of $182 million in the fourth quarter of 2011. In explaining the key components of the refining and marketing gross margin, I will refer to the changes in market indicators applied to MPC actual volumes to arrive at the quarter-over-quarter variances. First, the blended LLS 6321 crack spread. It was $2.73 per barrel higher in the fourth quarter of 2012 than the fourth quarter of 2011, resulting in an estimated favorable variable of $371 million. Both Chicago and Gulf Coast crack spreads were higher in the fourth quarter of…

Thanks Don. Many of you have asked about the assets in MPC's refining and marketing segment that could potentially be acquired by MPLX in the future. You will find in our 10-K which will be filed next month additional disclosure about those assets that we believe will be useful to investors. Now, as we open up the call for questions we ask that you limit yourself to one question plus a follow-up and then of course you may re-prompt for additional questions as time permits. So, John with that we would like to open the call to questions.

Thank you, we will now begin the question and answer session. (Operator Instructions) And our first question comes from Chi Chow from Macquarie Capital, please go ahead.

Alright. Thanks and good morning. Gary, you mentioned in your remarks the news on Capline and I am wondering with Marathon becoming operator does that change your thoughts at all on a possible reversal of line or are you still happy with the crude supply optionality from the Gulf Coast longer term?

Thanks Chi and good morning to you. The operatorship -- this has been under discussion for some time and so I would find that separate from whether or not there is an opportunity to reverse the line. We continue to study those opportunities. As we’ve said before there were three owners and it takes all of us to agree on which direction that pipeline might flow. So, we will continue to analyze this going forward and determine if there's any change in that direction.

So, the ownership structure doesn’t change at all?

No, it does not.

Okay, and does the upcoming decision on the Keystone XL line influence your thoughts or I guess, all three owners thoughts?

Well it’s going to be very interesting if Keystone XL gets approved or if its delayed, that is, I think it’s going to take longer to get that decision made than we had initially thought. But certainly if something would to happen in that pipeline doesn’t get built to the Western Gulf, then that would put I think a different view maybe for some of the owners on Capline, but all remains to be seen.

Okay, Thanks Gary. And then a second question on DHOUP. Can you talk about how the unit is operating so far? You’re in January and I think you have put out a $350 million EBITDA accretion number out there on 2011 pricing. What are your thoughts on handicapping upside or downside on that increase at this point?

Right, the numbers that you have quoted are correct that we put out numbers to both the 2006 to 2010 timeframe and 2011. The number you have quoted is correct and Chi we are very pleased, I really congratulate and complement our refining team that built this project and had it up and running. It’s running very well. It's been able to meet its stated capacity very early on and so we are in the process now of testing to see, it’s too early yet Chi. If I take you back to how we brought Garyville up, we are in some very early stages, so I don’t have any of the test data yet on if it can outrun its design capacity, so it’s too early. But its running very well, and it came up relatively seamless.

Great, what type of barrels are you displacing with the increased runs of the heavy Canadian?

Let me ask Mike Palmer to answer that.

Oh yes Chi, obviously, we talked before about the ability of bringing in an incremental 80,000 barrels a day of heavy Canadian and we've been ramping that up. But basically we've been bringing in the heavy Canadian, which we've been very successful at acquiring and moving, and just backing out a really what is a variety of other lighter in some sweet crudes.

Okay, great, thanks Mike, appreciate it.

Our next question comes from Doug Leggate from Bank of America, please go ahead. Doug Leggate – Bank of America: Well, thanks, good morning everybody. I've got a couple as well, hopefully I won't take too long. You guys mentioned that you're getting ready to basically or you'd be able to process increasing amounts of condensate opened from the Utica, have you already got line up sight as to where the supplies are coming from and have you been in negotiations with suppliers already, because obviously volumes are still somewhat fairly sparse, as we understand it?

Great, thanks. Two quick follow-ups if I may. Gary, the accelerated or rather the step-up in the buyback program, could you give us some idea as to how you're thinking about prioritizing that between competitive dividend growth and buybacks. And perhaps what the likely pace you would anticipate given the cash in your balance sheet of executing that buyback program, and have got one final input?

Sure Doug. Let me ask Don to take that one.

Great, thank you. I apologize to squeezing the third one in, but just very quickly on the micro Gary. If I could just ask for your perspective on the outlook for Canadian heavy differentials, I know that you guys are essentially a fairly significant buyer of that, and I'll leave it there, thank you.

Yes Doug, there are going to be many changes in the Canadian heavy market this year. Now, of course it depends on what happens with the Excel pipeline, but that won't be completed even if they were approved first half of this year, probably won't be completed into the 15th timeframe or so, somewhere in that arena. But we just brought Detroit up, DHOUP in November, and there is another very large project up in Whiting that will come up, we understand later this year. So we really would expect to have strong differentials through the front half of this year, and then we'll see what happens when those other project comes up. But at the same time you're going to see one or two more fields come on stream. And I still think it's going to come down to the pipelines and the pipeline capacity, and where and what regions that heavy crude can move. And then of course that will be tempered by any turnarounds and not any downtime in any of the Canadian upgraders or Canadian production operations.

Got it, thanks for the answers Gary, I appreciate that.

Thanks Doug.

Our next question comes from Ed Westlake from Credit Suisse, please go ahead.

Hey, good morning Gary and everyone and congrats on the results. Just trying to focus in on Texas City, obviously we'll actually see the EBITDA soon enough. But, could you give us any updates on say OpEx per barrel, or the logistics EBITDA within Texas City, or the potential capture rate that you think relative to Gulf Coast margins given that you've got lot of aromatics and propylene production in Texas City?

Right, let me ask. Thanks for the comments there Ed, and let me ask Don to cover this.

Yes. Ed, with respect to I would say the operating expenses or manufacturing costs, we have embedded those manufacturing costs in the outlook information that we have included in our slides. So that includes two months’ worth of Galveston Bay or the Texas City refinery in those amounts. So, you can see kind of those numbers as reflected or compared to 2012. With respect to the EBITDA, we don’t give specific EBITDA per plant or by refinery, but at the time that we did announce the acquisition last year we used two different price decks and the incremental EBITDA associated with the refinery using those two price decks was between $700 million and $1.2 billion.

Great.

Ed, the other thing with your question on aromatics, we are just going to take over on Friday. We just received the LP, late in the process here and because the former owner that was their property and we need to make sure the same got to the finish line, as I said, it will on this Friday. So, we just got that LP. We will be refining that and really get into the details of that starting next week. So, we really can’t breakout the aromatics yet. But all of that value is embedded in the numbers, the 700 or 1.2, that John just gave you. Those numbers were based on a 12-month and of course, this is going to be an 11-month period.

Yes. The other question is around gasoline versus diesel. Oversea gasoline prices have been depressed partly because of American demand and partly because refineries in the US are running as hard as they can whereas diesel obviously has been a little bit more profitable. When you think about uses of the free cash flow that you have. What sort of thoughts do you have around making some larger investments to improve the diesel yield at the refinery system?

Well, Ed, we have made and I think we were a little bit ahead of the curve going back to when built Garyville. We built Garyville to be a balanced refinery about 50% gasoline and 50% diesel. Then when we did DHOUP the same thing to get more diesel output and to be able to lessen the amount of reset in the marketplace and then further investments we made at Garyville to even expand the hydrocracker to make more diesel and with the help of other process units and then lastly to be able to export that diesel out of the marketplace in an efficient manner. So we have made a lot of investments in what I call low hanging fruit early on and probably ahead of some.

But no plans to do a major sort of hydrocracker build?

Not at this time, Ed.

Okay, thanks very much.

Our next question comes from Evan Calio from Morgan Stanley, please go ahead. Evan Calio - Morgan Stanley & Co. Inc.: Hi, good morning, guys.

Good morning, Evan. Evan Calio - Morgan Stanley & Co. Inc.: Question on your 2013 CapEx. I guess first can you quantify how much of the $1.6 billion is midstream including dock capacity, I am trying to understand the better the organic growth or kind of more of the conventional growth in MLP assets within the portfolio? I have a second question.

Evan, this is Don. We have not typically broken that out. I mean, you can see what we have included for pipeline transportation but a big piece of that number relates to the Patoka, the Catlettsburg upgrade expansion project. We have not separately detailed the other projects. Evan Calio - Morgan Stanley & Co. Inc.: Right. But the fact is listed number two would mean it’s a pretty big priority item you are spending here? I guess my second question is -- I mean maybe you are just saying you want to answer that but in terms of the Galveston Bay or the Texas City CapEx, I mean, can you mention how much is regulatory maintenance versus growth, just trying to understand how much invested capital could drive incremental returns on a flat crack basis rather than aggregate amount of what’s being invested?

I think $400 million is our expectation of the spend that we would have related to Galveston Bay this year, Evan. I would say substantially of all that relates to either regulatory or projects that were ongoing. Our view around expansion opportunities actually occurs in subsequent years. Evan Calio - Morgan Stanley & Co. Inc.: Okay. Maybe finally a question is, obviously, it’s very topical around midstream and downstream this quarter but do you see any role for rail in your system or do you really think you are kind of best served by pipe given your location? I would leave with that. Thanks.

Evan, this is Mike Palmer. We have looked at rail over and over again. If you look at our system, again, with our plants in the Midwest and the plants in the Gulf Coast, we just don’t think that our investing in rail makes a lot of sense. We think that we can accomplish much lower transportation costs through pipeline. We understand why others do it, but what we have looked at it and just can’t make sense of it. Evan Calio - Morgan Stanley & Co. Inc.: Okay. It makes sense. Appreciate you guys.

Our next question comes from Doug Terreson from ISI, please go ahead.

Good morning, everybody and congratulations on your great results.

Thanks, Doug.

Gary, industry exports or net exports seem to have slowed during the past year although I think you pointed out that you didn’t have any problems because yours was -- increased further with the expansion in Garyville. My question involves any insights that you may have into the slowdown in the industry exports, meaning, are there supply or demand side features that are present here and what you consider your major advantage is in this area? Also how the new refinery will affect your export capabilities in coming years? Meaning, will you have to make investments or is it readymade for exports. So if you could just comment on couple of those items I would appreciate it?

Sure, Doug. Our numbers on exports appear to be about flat for distillate and I can talk about distillate because that’s the commodity that we export the most. So about flat to last year. One of the things that I think give us a good position in the market is the quality of the distillate that we are making out of Garyville as a high cetane rate which is sought after in the marketplace. So I think that is, say, it gives us a strong position. You will notice that we substantially increased quarter-over-quarter last year, the numbers were 151 this year to 94 last year. So we substantially increased that and continue to have a strong demand for our distillate. As we take on Galveston Bay and the way -- part of the synergies and the way that we are going to operate there, the day we move some of our products, I would say we kind of crisscrossed with Galveston Bay because Galveston Bay is a very large supplier into the Florida market as same as Garyville is and then we also both plants were exporters into the Latin America, South America market and some to Europe. So, we will be able to pick up some synergy and be able to optimize how we move those products to marketplace and I think take advantage of some good transportation savings both in distance and in the volume or the metric tons that you are going to ship in one batch. So, that’s what we are looking at upfront, Doug.

Okay. I had a couple of other questions about inventory. I think you guys mentioned that there was an inventory gain in the quarter, so I want to find out the magnitude? And then Gary, you are (inaudible) for the industry in Washington, so I wanted to see if we could get some updated insights from you on, potential changes in industry tax policy and specifically, while it doesn’t sound like there is going to be some type of mandate whereby the refiners migrate from LIFO to FIFO, just want to see what your views might be in that area and also the level of your current LIFO reserves, so there is three question there.

Right. Donald, go over the inventory first.

Yes. So, with respect to inventory I think the comment I made was in the fourth quarter as part of our cash flow or working capital items our inventories at year-end were slightly below or were lower than our inventories at the end of the third quarter. On a year-on-year basis our inventories are just slightly up, maybe $200 million I want to say roughly. So, that’s the inventory.

And industry tax policy Gary, your view?

Right. A couple of things, industry tax policy of course the industry would certainly embrace staying with LIFO and that’s the direction that we are working hard and trying to explain in Washington. I would say the biggest item in Washington that we are dealing with short-term will be the renewable fuel standard. It’s unworkable in its current approach. You see that there was a decision that came out this week that said that a decision was made that EPA oversteps some boundaries within the biodiesel side of the business. I would say Renewable Fuel Standard because as we come to hit the blend wall and the requirements that are there for blending and the lack of cellulosic and the lack of some other advanced cellulosic type of materials it really puts us in an unworkable solution, or unworkable position, I should say. The next discussion point is going to be around E15 and we don’t think that works either and it’s going to be something that we continue to work very hard inside the beltway. From a tax position, we certainly embrace staying with LIFO. I will let Don discuss.

Yes. I think you had asked about LIFO but I don’t have the reserve number with me right now. If you are asking about the replacement cost, I mean, fair value exceeds our carrying cost by somewhere around $5.4 billion at the end of the year.

Okay, great guys. Thanks a lot.

See you, Doug.

Our next question comes from Blake Hernandez from Howard Weil, please go ahead.

Hi, guys, good morning. I had a question for you on Texas City, understanding you are about to close but just kind of the history of the facility, it’s obviously been run somewhat inefficiently I am just curious if you have had a chance to get in there and assess some cost cutting and efficiency opportunities yet?

Yes, Blake. First and most important to us is to bring this on a very safe manner, safety to the employees, safety to the community and the environment and that’s really where we are focused. We have set up a complete separate team to be able to bring this on and turn this over so that they are not distracted with their job back at one of their other refineries they are there to look after this plant. We have named the new management team and we have confidence in their abilities. We are not going to focus on cost cutting early on. We really need to, as Don outlined a little bit ago, that the capital that is on our plate this year is mainly to this and the next couple of years is to complete the regulatory or consent decree capital if you want to call it then that is required in this plant. Then we will focus on what is the best way in our opinion to operate. Mike Palmer’s group is going to focus on the best way to optimize the feedstocks and then how we sell it into the marketplace. I want to be very clear, we are not going to step out and try to reduce operating cost immediately until we totally get this under control and a safe turnover the operation.

Understood. Thanks, Gary. And then the second question was -- one of your peers yesterday talked about I guess the opportunity to where they have pushed out all the foreign barrels that we are using along the Gulf Coast and replaced it with domestic barrels. I am just curious, do you have a similar opportunity with Garyville and of course Texas City coming online. I don’t know if you have a mix offhand of what foreign crude you run, is there a chance to replace those?

Yes, Blake. This is Mike Palmer. We certainly believe that here in 2013 that there really won’t be any material volume of foreign cargo sweet crude left in the Gulf. We always look to optimize our crude slates and where we can bring in a domestic barrel that’s priced better and provides higher profitability than a foreign barrel, we do that. So, there is not a lot of foreign sweet crude that we bring into the Gulf anymore. There may be some at Galveston Bay and once we get the LP and we are looking at that refinery closely will determine what the best crude slate is there. The other thing I would say is, while they won’t be any real material light sweet cargo crude coming into the Gulf, there will always be opportunities that various refiners will look at to bring special crudes in that provide value to that refinery. So, it’s not as if this crude is going to go completely away.

Got it. Perfect, thank you.

Our next question comes from Jeff Dietert from Simmons, please go ahead. Jeff Dietert - Simmons & Company International: Good morning. I know we are late in the hour. My question is regarding barging activity on the Mississippi River. I think historically you have moved something like 50,000 barrels a day and by barged down to Garyville. Are you being impacted by the low water levels and what are the constraints to moving more (inaudible) crude down to Garyville?

Yes, this is Garry Peiffer. Regarding the Mississippi River, at moment it’s pretty much operating as normal. We are operating at Wood River dock with 9 foot drafts, so that’s pretty much what we normally operate at. So the good news is we had some pretty good precipitation here lately. So from a operation standpoint, other than the incident that occurred down in the southern part of the river here over the weekend that they expect to have up and running in the next couple of days, the river levels are not impeding our flow on the or activity on the Mississippi. Jeff Dietert - Simmons & Company International: Is the 50,000 barrel a day movement the right ballpark and what’s the constraining factor to keep these from moving more?

Yes, this is Mike Palmer. Let me answer that. As you well know, the reason for these very wide differentials that we are seeing on the heavy Canadian now is due to pipeline constraints and that’s for everybody. What we will do as we go forward is we will have to look at the logistics space, the pipeline space that we have and how we best utilize that space within the system. So, whether or not the heavy barrels that we can get into say the Patoka area, whether those move on to Garyville by barge or whether we move those by pipe down to Galveston Bay or whether we move those to the Midwest system will be part of the optimization process that we will do each and every month. But there are pipeline constraints. Jeff Dietert - Simmons & Company International: Thanks, Mike. Thanks, Garry.

John, we will take one last question and then we will call it a wrap.

(Operator Instructions) We have a question from Thomas Stinball from Brokerage [ph], please go ahead. Thomas Stinball - Brokerage [ph]: Hi, good morning guys and congratulations on a great year. My question to you is on how you are acting as a blender and producer of gasoline in response to the moves higher and RINs over the last few weeks. You alluded to sort of the structural question on the blend wall, but we have incurred RIN economics and shortage of ethanol after last year’s crop year, how are you planning to comply with the renewable mandates for ‘12 and ’13?

We don’t see that we will have any problem meeting the renewable mandate. Please understand the way that RINs work is you can carry some RINs forward and then we buy RINs on the third party market as well and of course there was a bit of issue a couple of years ago with the validity of some RINs but that has pretty much been all straightened out and we feel confident that it is not going to give us any problem in meeting that window. Thomas Stinball - Brokerage [ph]: Would you prefer if you could get term ethanol supply agreement or buying RINS from the third party market as a means to fulfill that obligation?

We don’t have any problem, we have term ethanol agreements already. So that’s not a problem to us. Thomas Stinball - Brokerage [ph]: Alright, thank you.

Alright. Pam let me state that, I mentioned something in my speech that I thought afterward, for the folks at Speedway I said 15 straight quarters, it’s really 15 straight years that they have increased their merchandise sales and my compliments to them.

Okay. Well thank you Gary. Thanks everyone for joining us today. If you have any follow-up questions I will be in the office this afternoon if you want to give us a call. Thank you. Bye, bye.

Thank you. Ladies and gentlemen this concludes today’s conference. Thank you for participating. You may now disconnect.