Welcome to the Third Quarter 2016 Earnings Call for Marathon Petroleum Corporation. My name is Katy 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 Lisa Wilson, Director of Investor Relations. Please go ahead.

Good morning, and welcome to Marathon Petroleum's third quarter 2016 earnings webcast and conference call. The slides that accompany this call can be found on our website at marathonpetroleum.com under the Investor Center tab. On the call today are Gary Heminger, Chairman, President and CEO; Tim Griffith, Senior Vice President and Chief Financial Officer; and other members of our MPC executive team. We invite you to read the Safe Harbor statements on slide two. It's a reminder that we will be making forward-looking statements during the call and during the question-and-answer session. Actual results may differ materially from what we expect today. Factors that could cause actual results to differ are included there as well as in our filings with the SEC. Now I will turn the call over to Gary Heminger for opening remarks and highlights.

Thanks, Lisa, and good morning to everyone. If you please turn to slide three. We issued two press releases earlier today: our third quarter earnings announcement and a strategic plan to enhance shareholder value. Driving long-term value for our shareholders is a top priority. Despite the steps we have taken to create value for investors, we believe that MPC's share price reflects a significant discount to the intrinsic value of our business, particularly as it relates to the valuation described for our general and limited partner ownership interests in MPLX and to the midstream assets we hold directly. First, we announced an aggressive dropdown strategy. By the end of 2017, we plan to offer to MPLX assets contributing a total of approximately $350 million of annual EBITDA with the first dropdown of assets contributing $235 million of annual EBITDA expected to occur by the end of the first quarter. The partnership's plans for funding these drops would likely include transactions with MPC including the potential for substantial amount of equity to MPC. We also intend to execute on additional value-enhancing dropdowns totaling an estimated $1 billion of annual EBITDA as soon as practical within the next three years. As a reminder, we are still awaiting tax clearance on a substantial portion of this dropdown portfolio which includes the revised treasury qualifying income regulations and a subsequent PLR for our fuels distribution business. Nonetheless, we are moving forward aggressively with other portions of the MLP eligible earnings available within MPC. This aggressive dropdown strategy is expected to support increased limited and general partner distributions from MPLX and provide value creation for investors. These transactions are subject to market and other conditions, as well as requisite approvals. In addition, we are evaluating strategic opportunities to highlight and capture the value of our…

Thanks, Gary. Slide four provides earnings on both an absolute and per share basis. MPC's third quarter 2016 earnings of $145 million or $0.27 per diluted share were down from last year's third quarter earnings of $948 million or $1.76 per diluted share. As Gary mentioned, third quarter 2016 results include a $267 million or $0.31 per diluted share impact from the impairment of our investment in the Sandpiper Pipeline project. The chart on slide five shows by segment the changes in earnings from the third quarter of last year. The $803 million net decrease in earnings was primarily due to lower income from our refining and marketing segment. In addition, we had higher impairment expense during the quarter as well as higher interest expense resulting from the debt assumed as part of the MarkWest merger. These negative impacts for the quarter were partially offset by lower income taxes and higher income contributed by our midstream segment. Turning to slide six, our refining and marketing segment reported income from operations of $306 million in the third quarter of 2016 compared with $1.4 billion in the same quarter last year. The decrease was primarily due to weaker crack spreads in both the Gulf Coast and Chicago and less favorable product price realizations compared to the LLS-based crack spread. The lower blended crack spread had a negative impact on earnings of approximately $711 million. The blended crack spread was $4.10 per barrel lower at $8.08 per barrel in the third quarter compared to $12.18 per barrel for the same period last year. There were four primary contributors to the $463 million unfavorable other gross margin variants in this WACC. First, we experienced narrower gasoline and diesel price realizations versus reported market metric LLS-based crack spread in the third quarter of 2016 compared…

Thanks, Tim. As we open the call for your questions, as a courtesy to all participants, we ask that you limit yourself to one question plus a follow-up. If time permits, we will re-prompt for additional questions. With that, we will now open the call to questions.

Thank you. Our first question comes from Neil Mehta from Goldman Sachs. Please go ahead. Neil Mehta - Goldman Sachs & Co.: Hey, good morning, everyone. How are you?

Good morning, Neil. How are you? Neil Mehta - Goldman Sachs & Co.: Great. Thanks, Gary. So, Gary, can you provide some early flavor as it relates to some of the strategic changes that you talked about, dropdowns, the GP structure, and some of the accounting changes? And then, talk about how retail fits into it, if at all?

Sure, Neil. As we – in our separate release this morning and we've been working on this for quite some time on. We spent the early part of the year in the transition to get MarkWest into the fold and to really get our businesses lined out. And then really focused on what is the proper growth strategy and how do we – we have tremendous portfolio of assets that can be considered over time to be dropdown, and we felt that it was the best to get into a very aggressive, strong rhythm on how to dropdown the assets that we have, and it's not just a dropdown strategy, Neil, we expect to be acquisitive in certain markets where it makes sense for the midstream, as well as we have a very good organic suite of projects to work on. But as we step back and looked at our total midstream business, we felt that now is the time to take this a very bold aggressive action and then we've also stated not just the dropdowns for 2017 of approximately $350 million, but we've also then are talking about the future dropdown strategy of the approximate $1 billion of other assets. Let me be specific through about that $1 billion of other assets, as you know, Neil, you and I talked about this many times. We have a significant portion of those assets under the fuels distribution piece that we have a private letter ruling request into the IRS. So we have to be careful and make sure we don't have any potential tax liability of dropping those down sooner than we would believe we have approval from the IRS. One of the – an additional thing that we highlighted, the value of the general partner interest, let me have Tim talk about some of the actions and the aspects that we would have around looking at the general partner interest.

Yeah, Neil, we've – as we sort of outlined, I think the key for us is that we have – we've seen pretty clearly that the value of the GP is not being fully recognized in the value of MPC. So I think we want to take a careful but aggressive look at exactly ways that we can highlight that value, capture it and optimize the cost of capital for the partnership. So again, I'd say that we really want to look at everything. There's no preconceived notion or conclusions as to where ultimately this may lead us. Again with that objective of highlighting that value and optimizing the cost of capital for the partnership, it could include things like a buy-in of the IDRs at the partnership level, a public sale of some portion of the GP, other alternatives around restructuring the GP interests. Again, we want to make sure that we're going to look at everything and make sure that we understand what might be the best path to really have that value better reflected in the overall valuation of MPC. Neil Mehta - Goldman Sachs & Co.: Yeah, I appreciate.

And Neil... Neil Mehta - Goldman Sachs & Co.: Yeah, sorry, go ahead.

Yeah, and Neil, to your question on Speedway. We've talked many times about Speedway as well and you and other sell-side analysts have discussed this on how important Speedway is along with the midstream in trying to balance our cash flow across all cycles and we really believe that significant portion of the discount in our share price today really is reflected in the midstream space and Speedway is not the catalyst or the driver. Speedway has continued to perform very, very well, as indicated again in the performance for this quarter. So we look at the integration value. We look at kind of the dis-synergy if we were to do something different with Speedway, and we still believe that it has a very strong fit in our system. Neil Mehta - Goldman Sachs & Co.: I appreciate those comments, and Gary, my follow-up here is that you cited four reasons that other gross margins were under pressure nearer (22:31) gasoline and diesel, the non-transportation products, RINs, and I believe volumetric gains. How much of that is at third quarter phenomenon here as opposed to a recurring point. And I guess the reason I'm going here is that when I think about MPC's portfolio, historically you guys have outperformed your indicator margins by taking advantage of the logistics and the infrastructure advantages that you guys have. I want to make sure that's going to be a recurring advantage for MPC on a go forward basis.

Neil, you're spot on there with the outcome. Let's go back and look at the third quarter of 2016 versus the third quarter of 2015. Third quarter of 2015 had a rapid drop in the price of crude, and when you have that you're able to retain margins in all aspects of our business and all the way through asphalt. Asphalt was one of the major contributors to our third quarter last year. This year, when we started to see a steady climate in crude prices and with some of the problems that you had in the third quarter, you go back and look at Colonial, while sometimes a dislocation in markets such as – happened with Colonial, sometimes you recognize different pockets of the country and we're able to capture some of that value through the logistics arm that we have. That did not happen with that downturn and in fact it backed product back into the Gulf Coast and in fact backed product for the West. On top of that, we spent a lot of incremental money in order to be able to service our customers and keep our customers full during that period of time. So that was the phenomenon. But it really – Tim mentioned the gas and diesel prices, the price realization, but it really got into the bottom components and asphalt was a big marker that we saw as well. So I would say those are the big things. I would say they're non – expect them to be nonrecurring. Kind of a follow on to that here, early in the fourth quarter, with Hurricane Matthew, that had an upset across the entire Gulf Coast and some don't think about the tropical storm Hermine that hit in the third quarter, that had an effect as well. When you lose that volume from these top tropical storms, it's gone. So you all those affects – but all those things affected the third quarter and some into the fourth quarter. But I would expect that they would be nonrecurring. Neil Mehta - Goldman Sachs & Co.: Appreciate the comments. Thank you.

And our next question comes from Ed Westlake from Credit Suisse. Please go ahead. Edward George Westlake - Credit Suisse Securities (USA) LLC (Broker): Yeah. Good morning and congratulations on the more aggressive strategy. I guess, in MPLX debt to pro-forma adjusted EBITDA I think it was 3.5 times at September 30. So when you think from the MPC perspective of the cash versus units debate, or maybe just give some color as to what sort of expectation of how much cash you could get from these drops over the next year and then maybe next three years.

Sure Ed. It's Tim. This is something that I think we're going to sort of carefully evaluate. I mean, the drops that we've talked about here and contemplated are certainly bigger than we've done in the past but I think we'll always be mindful of what the market capacity is to absorb new units. I think we would certainly want to take advantage of opportunities that exist, but clearly would not want to overwhelm the market with the number of units. So what we will – we'll assess as we go forward and make sure that we're being smart about it. I think the – from the overall enterprise perspective, we have a tremendous amount of flexibility here to take back units where we need to and we'll access the market in an opportunistic way as we go forward. Edward George Westlake - Credit Suisse Securities (USA) LLC (Broker): And then you've just had this new 707 tax rule, which reduces the amount of debt that you can use in basis for dropdowns, so I don't it maybe still early, but have you got any idea in terms of what tax leakage you would expect at the MPC level in terms of the drops or the impact that that ruling has?

Yeah, well. Obviously doing things as tax efficiently as possible will always be a primary focus. I mean the changes to the 707 regs to be honest, Ed, don't have a massive impact on our strategy, utilizing sort of debt-financed distributions back would not have been part of our normal mode with regard to the drops anyway. And frankly even before the 707 regs, a more aggressive tack that the IRS have sort of been targeting and obviously the change in regs is a – it sort of demonstrates that that's where that focus has been. So I don't think from our perspective, we view the change in the regs under the sky sale as substantially impactful to our strategy. But again, even the notion of taking back units and identifying assets with the greatest amount of basis, to shield as much tax as possible will be an important consideration as we evaluate which and what timing we'll undertake for the drop portfolio. Edward George Westlake - Credit Suisse Securities (USA) LLC (Broker): Okay, and then if I could sneak a quick one in, the cash flow was the full working capital at $1.07 billion, but your earnings collapsed. I mean obviously there's the impairment, but even adjusting for that. So any color as to why cash generation is diverging from earnings would be helpful.

Ed, there's nothing specific in it. I'd say the – we had certainly some working capital impacts from the quarter that again really build on – based on some changes in prices and some inventory build in the quarter. And that was a relatively big use of working capital in the quarter. That's probably the biggest item of potential divergence that we'd highlight. Edward George Westlake - Credit Suisse Securities (USA) LLC (Broker): Okay, thanks.

And our next question comes from Chi Chow from Tudor, Pickering, Holt. Please go ahead. Chi Chow - Tudor, Pickering, Holt & Co. Securities, Inc.: Great, thanks. Good morning. Gary, can you talk about the specific assets you're targeting for the 2017 drops?

Yeah. So, let me ask Don to cover that. Don's been doing most of the work on this.

Yeah, Chi. We would expect that particularly the first drop that we're targeting, those assets would be predominantly pipeline and terminal assets, so very, very traditional midstream assets that we currently own. And then later in the year, we also have some joint interest pipelines and others. So, it'll be in that vein of assets: typical, straight down the fairway, midstream assets that'll be moving from MPC to MPLX. Chi Chow - Tudor, Pickering, Holt & Co. Securities, Inc.: Okay, great. And can you comment at all on what sort of multiple range you're targeting for the drops?

I guess we're not targeting a specific multiple range. I think it'll be a fact and circumstance driven function based upon making sure that the drops are appropriately accretive for MPLX. One of the really important things about these drops was that, we wanted to – we don't believe that our yield is as low as we would like it to be at MPLX. And we are trying to take actions to lower that yield or lower our cost of capital. So, driving a distribution growth rate that is 12% to 15% and double digit in out years is important to us and having a valuation or multiple on the drop that makes sense to support that is, I think is in the best interest of both MPC and MPLX. Chi Chow - Tudor, Pickering, Holt & Co. Securities, Inc.: Okay, great. Thanks, Don. And then one other question, can you comment on Marathon's interest in utilizing the reversal of the Laurel Pipeline once that becomes operational? And what are the opportunities this might open up for you down the road?

Yeah, Chi, this is Mike Palmer. I can answer that for you. Chi Chow - Tudor, Pickering, Holt & Co. Securities, Inc.: Hi.

Yeah, hi, Chi. Obviously, when you look at the Midwest, we have a lot of refining capacity, and in the wintertime when gasoline demand goes down, certainly we have gasoline and distillate that needs to seek new markets. So you know we've been looking at a number of opportunities, but the reversing Laurel, such that Pittsburgh becomes primarily a pipeline supplied from the Midwest market is certainly big for us and we would participate in that.

And Chi, we've been saying for some time, in fact I think Marathon was one of the catalysts of this idea, that it really makes sense to go West to East and starting to supply the PAD 1 market and it further balances all of PAD 2. So, we won't get specific yet into how many barrels we might move. I just say that this open season that has been just completed is going to be a big event for the entire PAD 2 industry because it has another outlet for us to balance the Midwest. Chi Chow - Tudor, Pickering, Holt & Co. Securities, Inc.: Yeah, I agree. And do you see enough demand from PAD 2 to eventually force the reversal all the way back to Philadelphia?

I really believe long-term. And I've talked about this long-term that this is a – it's something that needs to happen, and is a big strategic move. So first I think we're looking to Altoona Mike (32:44), but yes, eventually I would see it going all the way to the East Coast. Chi Chow - Tudor, Pickering, Holt & Co. Securities, Inc.: Yeah. Okay, great. Thanks Gary. Appreciate it.

And our next question comes from Doug Leggate from Bank of America Merrill Lynch. Please go ahead. Doug Leggate - Bank of America / Merrill Lynch: Thanks. Good morning, everyone. Good morning Gary.

Doug, how are you? Doug Leggate - Bank of America / Merrill Lynch: Good, thank you. I – hopefully, we're going to see you in a couple weeks. I'm looking forward to that. The decision to take or the potential to take MPLX units in lieu of cash, obviously the quantity of the balance hasn't been determined yet, but what would that mean for your subsequent monetization of those units as it relates to your buyback strategy for MPC?

Doug, its Tim. Obviously that – if we did take back units, the percentage and number of units that MPC holds become substantial. And I think the things like potential sale of those units is something we'll evaluate over time. I mean again, wanting to make sure that anything that we do around that is tax efficient and we can minimize the amount of leakage around it. Again I think that our focus is much more around the total value getting realized within the system as opposed to the net cash, but I think we'll look at if there are efficient ways for us to potentially look at those units over time. Doug Leggate - Bank of America / Merrill Lynch: I guess, just for clarification on my question, so if you took MPLX units, would you expect your buyback pace to moderate?

Well, again, the dropdown itself is not predicated on producing a huge amount of cash for a buyback necessarily. I mean the buybacks will always be a function of the cash that's being generated on an operating basis and potentially some from what gets dropped, so again, we'll evaluate as we go forward, and as we said, I mean, even if there are a number of units taken back, there's probably still a fair amount of debt that gets undertaken at the MPLX level on those assets. So I think the cash opportunity around it is beyond just the equity units themselves. Doug Leggate - Bank of America / Merrill Lynch: Okay.

Yeah, I think you know Doug – Doug, this is Don. In 2016, one of the things that we were doing at MPLX was we had a leverage ratio that was non-investment grade in our view. And so, we committed to taking that leverage down and now we are in the zone that we want to be with respect to our leverage and to supporting an investment grade credit profile. So we would likely be thinking about funding future growth. Whether it is organic growth or whether it is dropdowns with a more sort of balanced 50-50 debt and equity type of arrangement. So, I think, hopefully that answers some of your question as well. Doug Leggate - Bank of America / Merrill Lynch: Okay. That's helpful, Don. I guess my follow-up is probably also for you, Don, because the more traditional nature of the assets you know pipelines, terminals and so on, accelerating the dropdowns obviously means accelerating the increase in the refining cost basis. Can you quantify what that would look like based on the plan you have? In other words, how much would you expect the cost basis for refining to go up as you monetize these assets? And I'll leave it there. Thanks.

Yeah, I guess, I am not sure from the MPLX perspective. I mean, what we're trying to do is to build an EBITDA portfolio so that you know, we can continue to support that high growth rate that we are committing to. Doug Leggate - Bank of America / Merrill Lynch: Right. But the EBITDA that you're transferring has an incremental cost to the refining business, right? Because you know the refining business, I know it's a wash at the consolidated level, but the refinery business has to now pay a fee for those assets that it's not currently paying. So I'm trying to understand what the increase in the cost base – and how you would account for that. I guess it's going to come out in the wash in the accounting but order of magnitude would be useful?

Yeah, again, Doug, and I know we've had a similar dialogue as over time. We really are viewing this at sort of the enterprise level with regard to the earnings that are available within the business and where ultimately they may reside rather that's as part of the traditional R&M segment or part of MPLX and obviously with the IDRs around them and the sort of recycle of cash. I mean we have tended to look at this and I think we'll continue to look at this on an enterprise-wide basis as opposed to the specifics around the impact on a particular segment within the business. Doug Leggate - Bank of America / Merrill Lynch: All right. I'll take it offline. Thanks guys.

And our next question comes from Paul Cheng from Barclays. Please go ahead.

Hey, guys. Good morning.

Hi Paul.

Gary, just curious that do you have a timeline in terms of the strategic review win that – I mean, when's the next time we're going to hear from you guys do you have or that it is just go along and that you really don't have a specific timeline?

As far as a strategic review, Paul, I'm not sure I understand.

Right. So I mean, do you have...

Strategic review for the MLP or...

For the MLP, GP and the LPE (38:10) structure...

Okay, okay.

...that strategic review. Do you have a timeline in terms of when that you think you're going to conclude or perhaps.

Sure. Sure.

You don't really have a timeline at this point, and also that whether that strategic review and timeline have any indication on your MPLX distribution growth target for 2017 and 2018?

Right. I'm sorry I didn't – I wasn't tying your question at first. But I understand it. We've already been working on the strategic review. I would expect that we don't have an end date in mind, but with all the work we've already done, I would expect sometime mid-year or to be kind of in the arena of where we should have this work complete.

So that the December Analyst Meeting we should not assume we are going to hear a lot of update on that?

Well, Paul there's no Analyst Meeting scheduled for this year, but...

Are you guys not going to do one?

No, no.

We do it.

Okay.

We do it generally every other year, Paul.

All right.

And I think that, Paul, the – may be to provide a little bit of framework around that, I mean, we've identified this as one of the biggest sources of value discount with regard to MPC. So we have every incentive and motivation to move through this as expeditiously as we can. Again but I think we want to be careful and disciplined around the way that we look at things, but – we will be inclined to move through this as quickly as we can, and certainly we'll report back to investors, I think once we've determined what the most appropriate path is so, stay tuned. This is something that is a top priority for us.

Okay. The second question then, just quickly, Tim, on the – I think with the Colonial Pipeline time for 10 days you incurred some additional trucking cost to supply your Speedway and Marathon network in the Southeast. Do you have a number that you can share, how big is that trucking cost? Is that material? And also whether that is being reported net of your refining margin?

Yeah, we have not sort of quantified or have anything to share. I mean, I think we would indicate there were some marginal increases on sort of trucking and some of the logistics cost to accommodate the situation, but nothing that is material that we'd call out specifically.

I see. And is it in the net margin or is it below line on the terminal cost and all the other total catch-all expense line?

Yeah. This is what sort of shows up in the other category with regard to the WACC. So again not amounts that we'd call out specifically, but that's where we would have captured it.

All right. Thank you.

And our next question comes from Brad Heffern from RBC. Please go ahead.

Good morning everyone.

Hey, Brad.

Gary, just circling back to some of the earlier questions about the general partner, I'm curious about the comment that you made specifically about reducing the cost of capital or optimizing the cost of capital for the partnership. I'm curious how that interacts with also unlocking value and how maybe having a public marker on the GP would help reduce the cost of capital and really what I'm getting at here is, is there a chance that maybe there is an IDR waiver that comes out as part of this process?

Well, again, Brad, I don't think there is any preconceived conclusions as to exactly the path we take, but I think modifications to the GP interests or potentially IDR modifications, again the buy-in, the public sale, there are all things that are on the table. I don't think we want to exclude anything from our considerations to make sure that, again, the focus really here is on highlighting that value and making sure that everyone sort of understands and the market can see and understand that value and making sure that we've focused on optimizing the cost of capital for the partnership, which obviously over time, and certainly in the lifecycle of MPLX is at a point where the IDRs continue to be a cash flow that has to be covered with regard to the growth. So I think we want to be mindful of all of these considerations before we land on any solution, and we'll certainly let the market know once we reach some conclusions.

Okay. Thanks for that. And then thinking about the drops that you were talking about before, I think pipeline and terminals were mentioned. I know that the RINs are generally internal within the refining and marketing business, but I'm wondering if any of these drops are going to include the RINs.

No, I mean, I think the drops that we've got contemplated now with some of the private pipelines and the terminals would not have any reflection from an earnings basis on the RINs, those are sort of independent from how we're looking at things.

Okay. And one more quick one if I could. Gary, I think that a couple of months ago you talked about a potential reduction in the scope of the STAR project from $2 billion to $1.5 billion. I'm curious where you are in that review, and if you have any sort of updated EBITDA target for that new scope?

Right, let me ask Ray to answer this.

Sure. Earlier this year, we completed feasibility engineering of all the components of STAR, and what we concluded from that review was that, one of the components on newbuild distillate hydrotreater did not meet our internal minimum returns. So, at this point, we're not progressing engineering on that portion, and we're looking for other opportunities, evaluating other opportunities of unit revamps within the refinery to accommodate distillate desulfurization. So, that's a long way of saying that we do anticipate a drop in the CapEx that we were looking at before of the $2 billion range, we're looking at something south of that now, and we'll continue to progress our engineering and just do really what makes sense there. I might add at this point that the STAR program really is a multi-year, multi-faceted project, and earlier this summer we brought on the first pay part (44:40) which was a resid (44:42) desulfurization unit repurposing and expansion and that's played out very well for us. That was CapEx of about $65 million and it delivered the results and performing as expected, so we'll continue to look at the program and just do what makes sense economically.

Okay, so no new EBITDA target?

Not at this time. We're still finalizing the components of the project and when we have that finished, we'll make – we'll put it into our deck.

Okay. Thanks.

And our next question comes from Phil Gresh from JPMorgan. Please go ahead.

Hey, good morning.

Good morning, Phil.

First question is just on capital spending. I saw there is a budget out there for MPLX for 2017, wondering if you could just comment on the overall total MPC level capital spending outlook relative to this year, which I believe was tweaked up to 3.1 from 3.0 (45:42).

Yeah, so we haven't given specific guidance at the MPC level, again that's something that we'll provide probably sometime in the fourth quarter here. At a macro level, we'd probably suggest that we're unlikely to see major changes from where things tracked in 2016, and again you saw the MPLX guidance in terms of the range that we might expect at the partnership, so.

Right. Okay. Second question is, just on the droppable EBITDA pool and the $1 billion that includes fuels distribution. Gary, I think in the past you've mentioned that there might be an opportunity for that pool to potentially increase for fuels distribution, is that accurate or is that – would you say that that fully encompasses the total opportunity within fuels distribution?

Yes, Phil, I don't recall of saying that there is a chance for that to increase. That's volume dependent. We sell approximately 20 billion gallons today of material that what we believe would qualify for this fuels distribution, but I don't recall of ever saying that we are looking at that of possibly increasing.

Okay. And then just my last question, there is a recently MPC filed a lawsuit with respect to Texas City, and I was just wondering Gary, if may be you could comment on that a little bit, just provide more color?

Sure, Phil. And I'm sure as you respect, we cannot openly talk about the litigation ongoing, so I just have to defer that to a later date.

Okay. Fair enough. Thanks.

And our next question comes from Jeff Dietert from Simmons. Please go ahead. Jeff Dietert - Simmons & Company International: Good morning.

Good morning, Jeff.

Hi, Jeff. Jeff Dietert - Simmons & Company International: Tim, on your slide 20, you did a WACC on the basic components of refining segment income that other gross margin to $287 million. I assume that they are probably the same variables that you talked about on the 3Q 2015 to 3Q 2016 slide. On the narrower gasoline, diesel margin, was that primarily a factor of Colonial Pipeline outage, or were there other factors that impacted?

Yeah, there is a number of factors, and as you suggest, the drivers that sort of led to the full quarter are really a lot of the similar ones that we saw on the year-over-year with regard to narrower gas and diesel price realizations are Colonial piece of that, but I wouldn't say the major driver, but again a component of the total change. Jeff Dietert - Simmons & Company International: Okay. So, but Colonial was not the major driver there?

No. No. It was not. Jeff Dietert - Simmons & Company International: Okay. Okay. Thank you. And you also mentioned building inventories during the third quarter as a negative hit here, how significant inventory build did you have, and is that going to be a positive offset in 4Q?

Well, again, the inventory actions that we took in third quarter are not unlike other years, in large parts for hurricane build and sort of positioning the business into the season, so nothing unusual. And, again, I think a lot of those effects will always manage into the sort of LIFO targets that we've got for the business. So that was probably the bigger driver in the quarter with the refined products and crude build that were not sort of unexpected relative to how we manage the business. Jeff Dietert - Simmons & Company International: Got you. And talking about alkylation, any updates to your Garyville FCC alkylation project scheduled for the end of the year, and perhaps any change to your octane outlook going forward?

Yeah. In the third quarter, we actually initiated some work on the alkylation revamp at Garyville, so that still stays well on target, and to be completed on schedule.

As far as octane, Jeff, we still believe as you talk to the autos and you talk about the overall demand, we still think octane into the future is going to be a product in great demand, and it should be a valuable – it should have some incremental value to the entire slate as we go forward. Jeff Dietert - Simmons & Company International: Thanks for your comments.

And our next question comes from Blake Fernandez from Howard Weil. Please go ahead.

Hey, folks, good morning. Gary, historically, you've talked about the benefits of control and basically maintaining a decent amount of control with regard to the MLP. I'm just curious with the announcement today, and some considerations on changes at that level, has there been any change in your appetite with regard to control and potentially maybe foregoing a bit in an effort to drive that value at the GP level?

No, Blake. It's still a very big piece of our strategy that as we said back when we first initiated the MLP. Being able to control and having all the pipeline assets, terminal assets that are really the key to our integrated model is very, very important. And we'd continue to expect to control those.

Okay, great. The second question, and this is really more just clarity from a reporting standpoint. But obviously, you've already got a midstream segment, is it fair to think that the impetus behind this is to really reallocate some of that EBITDA that's coming out of the refining segment into midstream? And if so, I'm assuming we'll get some restated historical gross margins, et cetera.

Yeah, Blake. I think that's conceptually how we're targeting that. There's a fair amount of what we've identified as MLP eligible earnings that really have been in the R&M segment historically. So certainly, for those portions that we think are and will be MLP eligible, identifying them independent from the R&M segment is conceptually I think what we're really targeting here.

Got it. Okay. Thanks, Tim. Appreciate it.

And our next question comes from Roger Read from Wells Fargo. Please go ahead.

Yeah, good morning.

Hi, Roger.

I guess to kind of come back to the overall strategic plan here if we could. As you've mentioned about the GP, we should consider almost anything as a possibility here from potentially elimination of the GP, a resetting of the IDRs or even an IPO of the GP, or is there something that's not on the table here? I just kind of want to make sure I understand all the potential here.

Yeah. Again, I think we want to be careful that we have looked at everything and have evaluated things, again with the real focus on highlighting that value and optimizing the cost of capital for the partnership. So, again, I think as we suggested, this is an evaluation that we'll undertake over the course of the next several months. And, again, I mean, it could include things like a buy-in of the IDRs, it could include a partial public sale of the GP, it could include some restructuring of the GP interest or the IDRs. Again, we want to be careful that we evaluate everything. We'll look at everything and pursue the path that we think makes the most sense relative to those objectives.

And along those lines, do you – where you mentioned in the strategic plan optimizing the cost of capital for MPLX, which presumably applies to the GP and the IDRs, et cetera. I mean, is there an ideal cost of capital that you would plan to have there both pre-and post the $1.03 billion of dropdowns?

Well, I don't know if there's a specific number, Roger, that we focus on. But as Don alluded to earlier we've been generally unhappy with where the units have traded at the LP level. And certainly as the partnership moved into the high splits, and certainly with the addition of MarkWest, we know that the IDR burden on the partnership is significant, and obviously impacts the level of growth and things that we can pursue. So, I think a focus around things that will improve both in terms of the LP yield and where things are at as well as, again, ways to optimize the cost of capital for the overall partnership given the cash requirements that the IDRs bring are part of exactly what we're going to look at here.

Okay. And then my last question, just as a follow-up of all of that. Presumably, the majority of the capital raised from the dropdowns, we should expect goes towards what, share repos, paying down debt, combination of the two?

Well, it all will sort of come into the total. I mean, I think to the extent that again we're comfortable with the liquidity position of the company, and we've got cash beyond the needs, then share purchase is high on our list. Debt pay down, I think we'll evaluate as we go forward. We did a little bit this quarter just to sort of calibrate the cap structure relative to the refining environment we've seen. But I'd say the priority is probably more around share purchase, and again certainly where the shares trade we think there's a tremendous value there, so.

Okay. I appreciate your time. Thank you.

And our next question comes from Evan Calio from Morgan Stanley. Please go ahead. Evan Calio - Morgan Stanley & Co. LLC: Hey, good morning, guys and congrats on today's strategic actions.

Thank Evan. Evan Calio - Morgan Stanley & Co. LLC: Maybe just a follow-up to the last point. I mean, accelerated drops would be a significant cash windfall, I mean $1.4 billion x 9 is $12 billion before tax, before considering any GP potential monetization proceeds, which dwarf any capitalized costs you kind of referenced earlier today. Shouldn't we assume that most of that's going to support a buyback? I mean given your history, given your impetus for announcing today's actions that your equity is undervalued? And secondly, if drops are on the come, would you buy shares, use the balance sheet before they occur like in the 4Q? Your stock's down 5% today, and I know you didn't acquire much in the third quarter and with that size of monetization, you have a lot of shares to put away potentially.

Well, and I think you're right, to be extent that there are big cash proceeds that ultimately come back, either from equity or debt that get raised through the drop process there, share purchase continues to be a priority for us in terms of where that money gets spent. Again, our focus is I think primarily and starts with the notion that the value hasn't been recognized. So, we want to make sure that that value recognition occurs, and to the extent that that produces cash at MPC level, that can be used for share buyback all the better. Again, provided that we have done that tax efficiently and managed it relative to the total needs of the enterprise. But, I think the notion that substantial portion could take the formal share purchase is not unreasonable. Evan Calio - Morgan Stanley & Co. LLC: Great. And maybe a similar follow-up to that and the prior questions on taking back equity as well as I guess your theory in terms of how this would be recognized by the market? But you mentioned dropping as soon as practical and then you dropped, and then you define drops per year. I mean, so is the limiting factor on the pace that you selected here, the capital markets – the equity capital markets for MPLX. So, meaning your actual dropdown pace could be faster if access or market depth or counterparty side proves to be greater? And secondly that your goal is really to sell units for cash, right, because that's what compresses your multiple, and that's ultimately in my opinion what forces and unlock the value versus potentially taking back units. So what's the limiting factor there? What is the limiting factor to the pace, and, I guess, is your goal to optimize the equity?

Yeah. I mean, I think, our goal will definitely be to optimize. The market capacity to absorb transactions is certainly a consideration among others that we've evaluated. But again, Evan, this is really a look as to – obviously, there is a piece of the dropdown portfolio that we're just not going to get comfortable with until we can get to the QI regs and the PLR around it. So let's set those aside for a moment. So, the remaining piece, we are moving pretty aggressively here. We're talking about dropping down up to half of those and setting a schedule for the remaining pieces, again, provided that we can get tax comfort on the rest at a pretty good clip. So, I think the considerations around it, it certainly involves market capacity to absorb larger transactions, but also just in terms of the pace and the capacity to manage the growth of the partnership and making sure that we can optimize that total sort of equation with regard to how fast we grow the partnership at the LP level and ultimately the cash flow that comes to the GP as well. So, again, I think, we are moving very aggressively here. I think we are – there are still certainly pieces of the drop portfolio that we will need to spend some time on the readiness for, but they are all from my perspective likely going to be part of MPLX, and we're moving very rapidly on it. So, I think this is an aggressive schedule, I mean, even though the drop that we suggested for first quarter would be the largest transaction for MPLX in its history, and again we recognize that that value is not getting picked up, and this increased clarity around the drop portfolio and when it comes in, we think, will help address that valuation gap. Evan Calio - Morgan Stanley & Co. LLC: Yeah. And then just maybe one more if I would. I mean, in terms of your statement of taking back units in conjunction with the drop, I mean, is that just a pragmatic statement that if that's what's necessary to fund, and I realize there is a debt piece that that provides cash to the parent. I mean, is that statement essentially there – if that's necessary? I mean, what's – or is it a goal to take, I guess, units back? That's what I am trying to get to.

Yeah. But I wouldn't call it a goal. I would say that we want to be mindful of the market's capacity to absorb transactions. And where we can officially raise that capital, I think, we'd be inclined to do so. We have the flexibility to take back units to help alleviate any of those issues, and again we'll manage it prudently as we go here. Evan Calio - Morgan Stanley & Co. LLC: Big source of cash, guys, again congratulations.

Yeah, Evan, this is Don. I mean just one more comment on that. I mean one, you know, historically, we manage tax leakage by taking back units, so that was one aspect of it. And the other is, we are a substantial holder of MPLX units, so the value in the MPLX units, we want to make sure that we're not doing anything in the market that puts an overhang on those units that causes the value of our investment to decrease. So those are all things that get into the consideration. Evan Calio - Morgan Stanley & Co. LLC: And in the future if you could share an aggregate tax basis, so the drop (01:01:30) EBITDA I think that would be helpful as well.

Okay. Thank you.

And our final question comes from Paul Sankey from Wolfe Research. Please go ahead.

Thank you. I guess, having settled that, I'm still a little bit perplexed by the timing here. If I look at the MPC share price or even the MPLX share price charts they don't look that troubled, I mean, I am sure you would want them higher, but I am still not clear why we have to have this announcement right here, right now. Could you just remind me why you decided that now is the moment that this needs to be announced? Thank you.

Paul, we've – as I said earlier in my comments that the first nine months or so, we work very hard at getting the MarkWest transition in place, really working with the producers, MarkWest had an outstanding reputation in the producers field, so meeting with producers and that really as I say getting these assets under wraps. But then, as you step back and look at how MPLX has performed and how the value has really been transparent or we believe lack of transparency of that value back into MPC, and the value to MPLX as well, that we thought it was important to really take a bold move here to increase the dropdowns, increase the pace of the dropdowns, of course a very bold move around us to reflect -an attempt to reflect what we believe is substantial value that is tied up inside of both components.

So, Gary, basically, I'm (01:03:35) obviously apologies, but do you see this as a major change in the strategy that is a much more aggressive dropdown outlook, and you felt the need to announce it right here right now?

Right. And Paul, if we take you back to prior to MarkWest, our strategy was to be a company-sponsored MLP, and all we had are dropdown components, and a few organic projects. At the time that we did MarkWest, we stated that we looked out into the future and could easily see that the rate of dropdowns from a sponsored MLP was not infinite and as you get out over time it was going to be much more difficult, and at the same time the pressure from others in the marketplace of attempting to be able to find growth opportunities was going to continue to be challenging, that's what we did the merger with MarkWest to begin with. We've been very pleased with the assets. Don has talked about the rate of growth, the volumetric increases and the gathering and processing businesses is very solid as well as the logistics and storage business that we have as well, but still we were not seeing that value transferred in the yield component of MPLX. And talking to a number of unitholders, they wanted to have a better understanding of the rhythm of how we were going to dropdown assets, and we felt that at this time it was again after getting all this under our belt, we felt its compelling that we needed to move forward back in line with where we said we would grow, kind of middle double-digits where we said we would grow when we first started the discussion on the merger to begin with.

Yeah. I get it. And I know we're over the hour, but can I just change subjects and ask you about...

Sure.

...the dreaded RINs thing. You've highlighted the cost here (1:05:51), but I get the sense there is a slight difference of view among refiners as to what should be done next. Could you first talk about what you anticipate to happen at end of November if anything? And then secondly talk about how you view the issue – the way the issue should be resolved? Thanks.

Right. Well, I don't know that anything is going to be happen at the end of November, Paul. But our – we've said for quite some time, and I know you've reported it as well that we believe how Marathon is positioned, we have the optionality, the flexibility with our retail component, our branded component and our very large blending component as well as some methanol production capacity. We have the ability to capture RIN value, and probably more so to lessen the cost of rig value across all those different components of our business. To change the point of obligation, we think that as fraught with many ramifications. Today, you have a – I don't know probably the number is less than 50 of refiners are big blenders for managing really step back and look at this, we're managing the whole RIN cycle for the EPA today. If you are going to go put this into the hands of 150,000 people, this considered what those ramifications are. We believe the RIN cost is captured in part of the frac spread today, and part of its retail, and part of its in blending. So we just think that change in the point of obligation is a bigger distraction.

And with that let me turn the call back to over Lisa.

Thank you Katy, and thanks all of you for joining us today and your interest in Marathon Petroleum Corporation. Should you have additional questions or would like clarification on topics we discussed this morning, Teresa Homan, Doug Wendt and I will be available to take your calls. Thank you.

Thank you, ladies and gentlemen. This concludes today's conference. Thank you for participating and you may now disconnect.