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Marathon Petroleum (NYSE:MPC)
Q4 2020 Earnings Call
Feb 02, 2021, 9:30 a.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:


Operator

Welcome to the MPC fourth-quarter 2020 earnings call. My name is Sheila, and I will be your operator for today's call. [Operator instructions] Please note that this conference is being recorded. I will now turn the call over to Kristina Kazarian.

Kristina, you may begin.

Kristina Kazarian -- Vice President, Investor Relations

Welcome to Marathon Petroleum's fourth-quarter 2020 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 Mike Hennigan, CEO; Maryann Mannen, CFO; and other members of the 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. With that, I'll turn the call over to Mike.

Mike Hennigan -- Chief Executive Officer

Thanks, Kristina. Good morning, everyone. I want to start by welcoming a couple new members to our executive team. First, in January, we announced the appointment of Maryann Mannen as our new CFO.

She joins us having spent nearly a decade as the CFO in the energy services and manufacturing sectors. Maryann brings the financial acumen and strategic leadership expertise critical for delivering our business transformation objectives, including strict capital discipline and overall expense management to lower our cost structure. I'm also excited for the perspective and business insights she will add to our executive team as we work together to continue strengthening our financial and competitive positions. Yesterday, we announced Brian Davis has joined the company in our newly created role of chief commercial cfficer.

Brian has spent over three decades in the industry. His extensive commercial experience, his recent deep background in renewables and alternative energy and a track record of developing and enhancing capabilities is highly complementary to our strategic focus on improving our commercial performance. We look forward to his leadership in developing and implementing a holistic and integrated strategy for MPC's own commercial business. These additions will be integral in supporting our strategic initiatives as we progress through 2021 and beyond.

Before we get into our results for the quarter, I wanted to provide a brief business update. The unprecedented challenges this year created by the COVID pandemic accelerated the need for us to act swiftly and decisively to change how we conduct in our business. The three initiatives highlighted on this slide focus on the aspects of our business within our control, strengthening the competitive position of our assets, improving our commercial performance and lowering our cost structure. During the year, we've been faced with many tough decisions, but our team continues to make tangible progress on all three of these initiatives in ways we believe will drive stronger through-cycle earnings and position the company for long-term success.

Slide No. 5 highlights some of our actions taken around our strategic priorities this quarter. First, we continue progressing the sale of the Speedway business. During the quarter, we responded to the second request from the FTC and continued to support 7-Eleven in its efforts to secure antitrust clearance.

Our interactions with 7-Eleven and our interactions with the FTC have gone well. And as everyone is aware, the timing of the close is dependent on the FTC process, and we continue to target closing by the end of the first quarter of 2021. Within the scope of what we can control, we're finalizing transition services agreements with 7-Eleven and expect to have them completed by the end of February. Moving on to other actions to reposition our portfolio, we continue to advance our investments in renewables.

During the quarter, we worked through start-up issues and are ramping production at our Dickinson, North Dakota renewable fuels facility. This facility is now the second largest renewable diesel facility in the United States. Consistent with the time line we discussed last quarter, we have begun to load the trains and ship renewable diesel out of the facility. We remain on track to reach full production by the end of the quarter.

Since the last time we reported to you, we've also made excellent progress on our plans to convert our Martinez refinery into a renewable fuels facility. We've continued to progress engineering and permitting activities. We expect commissioning in the second half of this 2022 with approximately 17,000 barrels per day of capacity. Further, we expect the pretreatment system to be online in 2023 and to reach full capacity of approximately 48,000 barrels per day by the end of 2023.

Finally, we continue to exercise strict discipline on how capital and expense dollars are spent. This year, we accomplished our goal of significantly reducing our capital spending levels by over $1.4 billion from the initial 2021 plans. We also reduced our 2020 forecasted operating expenses by more than our target of $950 million. I started off my comments by saying that we're focused on the things we can control.

No matter what lies ahead, we're setting the company on a path to really drive stronger through-cycle earnings and position the company for longer-term success. I'd like to take a moment on Slide 6 to reinforce comments made on our last earnings call around priorities for the proceeds from the sale of our Speedway business. We continue to receive questions on our use of proceeds framework, so I wanted to reiterate that our plans have not changed. We remain committed to using the sale proceeds to strengthen our balance sheet and return capital to MPC shareholders.

An important priority and our commitment is to defend a solid investment-grade credit profile. On a mid-cycle basis, we expect to target MPC's stand-alone debt to EBITDA leverage metric of one to 1.5 times. This metric contemplates MPC earnings and also includes distributions from MPLX. Given the significant and stable distributions from MPLX, we don't envision an MPC balance sheet with less than $5 billion of debt on a through-cycle basis.

As a reminder, we also expect to increase the cash component of our core liquidity position by an additional $1 billion to offset the loss of cash flows from Speedway upon completion of the sale. With respect to debt reduction, we have approximately $2.5 billion of debt that can be addressed with minimal friction costs. We'll be thoughtful on how we reduce incremental debt amounts to minimize costs while not jeopardizing our credit rating. Within this framework, we continue to expect that the remaining proceeds will also be targeted for shareholder return.

We continue to evaluate the form and timing, and we'll share more details as we get closer to the transaction close. Moving to Slide 7, we highlight some of the reductions we've made to our cost structure. In Refining, we've reduced our operating cost by more than $1 billion from the 2019 spending levels. In the Midstream business, we reduced our cost by over $200 million.

And at the corporate level, we've applied the same discipline, and some of these reductions are reflected in our fourth-quarter results. We're pleased with these results when you consider we have not compromised on our commitment to safely operating our assets and protect the health and safety of our employees, customers and support the communities in which we operate. In fact, the full year 2020 was the company's best performance ever in this area, also with a nearly 30% improvement across both our process and personal safety rates and our best ever environmental performance. Moving to another key focus area, Slide 8 highlights our focus on capital discipline.

Today, we announced our 2021 capital outlook for MPC. We significantly reduced our capital program from 2019 levels. MPC's investment plan stands at approximately $1.4 billion, excluding MPLX. This reflects a nearly $1.7 billion reduction from 2019 and a $1.2 billion reduction from our initial plan for 2020 prior to the pandemic.

Our 2021 outlook reflects funding for growth projects already under way. However, our incremental growth capital will be primarily focused on renewables and projects that we expect will help us reduce future operating costs. We have expected our team's focus on lowering our cost structure and capital discipline to be something that will be a recurring theme for 2021 and beyond. At this point, I'd like to turn it over to Maryann to review the fourth-quarter results.

Maryann Mannen -- Chief Financial Officer

Thanks, Mike. Slide 9 provides a summary of our fourth-quarter financial results. This morning, we reported an adjusted loss per share of $0.94. This reflects pre-tax adjustments of $851 million, driven primarily by a $1.2 billion pre-tax lower of cost or market inventory benefit.

These adjustments can now be found in detail on Slide 29 in the appendix. Adjusted EBITDA was $907 million for the quarter. This include the results from both the continuing and discontinued operations. Our dividend payment for the quarter were $377 million.

Slide 10 shows the reconciliation from net income to adjusted EBITDA as well as the sequential change in adjusted EBITDA from the third quarter of 2020 to the fourth quarter of 2020. Adjusted EBITDA was also down $100 million quarter over quarter, driven primarily by lower earnings in Refining and Marketing and Speedway. As a result of the contemplated sale of Speedway, both the third and fourth-quarter results reflect Speedway as a discontinued operation. Moving to our segment results.

Slide 11 provides an overview of our Refining and Marketing segment. Fourth-quarter adjusted EBITDA was negative $702 million, a decrease of approximately $80 million when compared to the third quarter of 2020. And as a result of this contemplated sale of Speedway, adjusted EBITDA for the R&M segment now includes the direct dealer business. Crack spreads and margins remain under considerable pressure.

Results across our three regions were impacted by weaker crack spreads and narrow crude differentials. As a result of these challenging macro conditions, we moderated throughput levels, which resulted in capacity utilization of 82% for the fourth quarter. In response to these challenging conditions, the team continues to focus on structurally lowering cost and some driving efficiencies. When you compare our R&M expense to the prior year, 2020 expenses are over $1 billion lower than 2019, and we continue to pursue opportunities to lower cost.

Slide 12 shows the change in our Midstream EBITDA versus the third quarter of 2020. Our Midstream segment continues to demonstrate earnings resiliency and stability, increasing by $22 million from the last quarter. This performance is underpinned by stable fee-based revenues, growth from organic projects and the continued execution on operating expense reductions. It is worth highlighting that MPLX, which contributes a substantial portion of MPC's Midstream EBITDA, inflected to excess cash for 2020 for the first time in the partnership's history, self-funding both capital spending and distributions.

With this inflection, MPLX began repurchasing units in the fourth quarter. Slide 13 provides an overview of Speedway results as a discontinued operation. Fourth-quarter adjusted EBITDA is now down $66 million from third quarter. Fuel and merchandise revenues were impacted by seasonality as well as COVID-related lower fuel demand and lower resulting foot traffic in the stores.

On a year over year basis, merchandise sales were up 1.8%. Slide 14 presents the elements of change in our consolidated cash position for the fourth quarter. It reflects both our continuing and discontinued operations. Within continuing operations, operating cash flow before changes in working capital was $144 million in the quarter.

Changes in working capital was $804 million source of cash in the quarter as rising commodity prices and increasing utilization continue to offset working capital cash use impacts from the first quarter. During the quarter, debt declined $344 million. We returned $377 million to shareholders through our dividend. Our cash balance at the end of the quarter for both continuing and discontinued operations was approximately $555 million.

Slide 15 provides our capital investment plan for 2021, which also reflects the continuing focus on strict capital discipline. MPC's investment plan, excluding MPLX, totals approximately $1.4 billion. The plan includes just over $1 billion for the Refining and Marketing segment, of which approximately $250 million or roughly 25% is related to maintenance and regulatory compliance spending. Our growth capital is approximately $800 million, split between renewables and ongoing projects such as the STAR project.

Keeping these ongoing projects moving forward will enhance the capability of our refining assets, particularly in the Gulf Coast. Within these renewables spending, we have capital allocated for potential projects like our Martinez conversion. Until close, we will fund Speedway capital and anticipate this spending will be approximately $150 million. The plan also includes approximately $50 million for our Midstream segment for projects such as the Capline reversal.

Also included is approximately $150 million of corporate spending to support activities we believe will enhance our ability to lower future costs. This morning, MPLX also announced its 2021 capital plan, investment plan, which includes approximately $800 million of organic growth capital and $165 million of maintenance capital. On Slide 16, we provide our first quarter outlook, which includes estimated throughput at our facilities based on projected regional demand. We expect total throughput volumes of just over 2.5 million barrels per day, a slight increase compared to our fourth quarter actual throughput.Planned turnaround costs are projected to be $150 million in the first quarter, which includes activity in our Galveston Bay refinery.

For the year, we expect turnaround spending to come in at below our 2020 levels, reflecting a lighter than average year. Total operating costs, including major maintenance and engineered projects, are projected to be $5.35 per barrel for the quarter. This operating expense guidance represents a slight increase from the fourth-quarter actuals to account for higher costs associated with work we plan to do in conjunction with our turnarounds. Distribution costs are expected to be approximately $1.3 billion for the first quarter.

This slight increase relative to fourth-quarter actuals is due to cost associated with moving product to the West Coast from our new Dickinson renewable diesel facility. So, as a reminder, our Dickinson renewable facility is accounted for in the guidance we provided for the R&M segment. For Speedway, we expect fuel volumes of approximately 1.3 billion to 1.5 billion gallons, and merchandise sales in the range of $1.43 billion to $1.53 billion. With that, let me turn the call back over to Mike for some closing remarks.

Mike Hennigan -- Chief Executive Officer

Thanks, Maryann. I'd like to take a moment to provide some comments on our responsibilities around corporate leadership. Last quarter, we discussed the recent publication of our 2020 climate perspectives report, highlighting opportunities and strategic planning work the company is engaged in related to climate scenarios. We also discussed our goals to really reduce greenhouse gas emissions, methane emissions and freshwater withdrawal intensities.

It's important that we set objectives for the organization that drive our continuous improvement on ESG. Our principles for leading in sustainable energy position us to deliver strong results in this space, from lowering the carbon intensity of our operations and products, improving energy efficiency and conserving natural resources, to increasing renewable fuels production and then embracing innovation and deploying advanced technologies. We believe the goals we are setting and our transparent disclosures on how we plan to achieve them place Marathon at the leading edge of our industry. We are seeing recent improvements in our ESG ratings, reflecting our hard work in the area.

Slide 20 in the appendix highlights just some of these accomplishments. Our approach to sustainability also reflects our commitment to create our shared value with our stakeholders, the communities where we operate, our people, our business partners and many others. How we conduct our business enhances the performance we deliver. We look forward to even further expanding this robust engagement with stakeholders and continuing to serve as a valued partner.

With that, let me turn the call back over to Kristina.

Kristina Kazarian -- Vice President, Investor Relations

Thanks, Mike. [Operator instructions] We will now open the line to questions. Operator?

Questions & Answers:


Operator

[Operator instructions] Our first question will come from Doug Terreson with Evercore ISI. Your line is open.

Doug Terreson -- Evercore ISI -- Analyst

Good morning everbody.

Mike Hennigan -- Chief Executive Officer

Good morning, Doug.

Doug Terreson -- Evercore ISI -- Analyst

Mike, I have a market outlook question in refining. Specifically, it looks like inventories for both gasoline and distillate are headed toward normal levels by the end of this quarter, which may be while refining margins have returned near year-ago levels. And now we see OPEC raise output later in the year, which also seems likely, we could also get some help on feedstock differentials. So my question is whether you're encouraged by the trends that we're seeing in products markets and the pace of the recovery as well, and also whether you think this will be sustainable?

Mike Hennigan -- Chief Executive Officer

Yes. Thanks, Doug. It's a good question. Before I answer it, I'll let some other members of the team chomp in as well.

I first want to say, I appreciate your insights over the years and I want to congratulate you specifically on your next steps in your career, and thank you for all your contributions to our industry.

Doug Terreson -- Evercore ISI -- Analyst

Well, thank you, Mike. You guys have been easy to support, for sure. The pleasure has been all mine.

Mike Hennigan -- Chief Executive Officer

On your question as far as go forward, I think you mentioned a lot of things that we're looking at. And I guess our term is cautious optimism. For me specifically, I tend to try not to call the market but really call the banks of the rivers more. And on the positive side, some of these things that you mentioned that we clearly see, and we have that, I call it, cautious optimism as a result.

Hopefully, vaccinations will go smooth, and hopefully, we'll come out of this pandemic in a robust way. So that's kind of the bull view. And then the bear case is, we saw toward the end of last year, cases were going up, restrictions started to kick in a little bit more. We saw what a lot of people anticipated, which was a tough December and into January.

Now we're approaching February and we'll head into the spring. So for us, there's a bull case that says things are moving in the right direction. There's a bear case that says we're not through with this pandemic yet, and we got some more field to play through before we really see the end of it. But now let me -- I'm going to let Tim comment on gasoline a little bit and Brian can comment on the other projects, just so you can get a good sense of what we see in the market today.

Tim?

Tim Griffith -- President of Speedway LLC

Yes. Thanks, Mike. Doug, just to reiterate Mike's comments, I mean, we did see a little bit of softness into the back half of the year, really after Thanksgiving and really through the end of the year, almost a step down with regard to demand. And again, a lot of it relating to higher case rates.

We'll see. We're now seeing a couple of bright spots early in the year, but we're hoping for more. We think this is probably going to take some time. As Mike said, we really need to get the immunization protocol built and as a country, accelerate that process to get more and more people comfortable.

And then ultimately get schools back in session, get people back in the office, get the people back on the roads, improve discretionary travel, and we think that's going to happen, but that may take some time. And I think we're going to be sort of patient over the course of the year to see that really bear fruit, but definitely better times ahead. We just think it's going to take a little bit of time to see that. I mean, for first quarter, I think, based on the year over year, we're probably going to be 90% of last year's volumes at our retail gasoline level.

And again, hope to see improvement over the continued -- of the rest of 2021.

Doug Terreson -- Evercore ISI -- Analyst

OK. And then also, Mike, a few minutes ago, you talked about strategic focus and commitment to corporate responsibility as being key elements. And so that makes it kind of clear to me that your leadership team believes we may be experiencing a paradigm shift in energy, maybe more so than we've had in the past. And so my question is first of all, do you agree? And second, what are some of the things that the management team needs to do to stay on the leading edge in the industry, which I think was the phrase you used a minute ago, in this new environment?

Mike Hennigan -- Chief Executive Officer

Yes. It's a really good question, Doug. So first off, yes, we do believe that there is a paradigm shift occurring. I like the word energy evolution.

So we see that occurring. And I guess, this momentum toward a low-carbon future is obvious. We're focused on how we position ourselves, as you mentioned. I felt that we had to get some things in line relative to cost and looking at our portfolio.

But our focus on cost is essential in addition to a lower carbon intensity company to remain competitive for the long term as these scenarios start to play themselves out. As you mentioned, we have made a commitment in sustainable energy. And partly, that comes from lowering the carbon intensity of our assets and increasing our exposure in renewable fuels production. We can talk about that in a lot more detail today, but we have our Dickinson facility up and running and Ray is working through the start-up there.

And then we're still very optimistic about what Martinez can bring to us in that area. And then we're hopeful as technologies advance that we're on top of that and then commercially and responsibly putting ourselves in a position for the future. So I do agree with your belief that it is a paradigm shift. I do believe there's going to be increasing momentum toward low carbon.

Obviously, everybody sees that occurring through the administration's announcements as well as many other companies coming out. And our goal is to stay focused on that very change that put Marathon in the best position to be a long-term player in that energy evolution.

Doug Terreson -- Evercore ISI -- Analyst

Thanks again, everybody.

Mike Hennigan -- Chief Executive Officer

Thank you, Doug. And again, congratulations on your next step.

Doug Terreson -- Evercore ISI -- Analyst

Thank you.

Operator

Our next question will come from Neil Mehta with Goldman Sachs. Your line is open.

Neil Mehta -- Goldman Sachs -- Analyst

Good morning, team, and congrats on some better-than-expected results here. I guess the first question is -- just to build on that is, refining costs came in certainly better than what we were expecting. And the -- in the 2021 stand-alone capital spending, surprised as well to the downside, and that was largely at refining as well. So can you talk about both of those, the capex and the opex improvements? And how much of it is cyclical given that you still are running at depressed utilization, although maybe a little bit better than what we had anticipated based on your guide? And how much of it is structural in that will carry forward as we recover from here?

Mike Hennigan -- Chief Executive Officer

Yes, Neil. Thanks for that question. So obviously, we've been very focused on cost. I stated that throughout 2020 that we needed to make a step change.

And in refining, particularly, Ray and his team have taken that and put some really good actions in place, so I'll let him comment in a second. But overall, I think what you're seeing from us is trying to reset the overall cost structure, whether it's in the corporate area or midstream or refining. To your point, we do expect, over time, as we get past the pandemic for variable costs to come up a little bit. At the same time, we believe that many of the cost reductions that we have in place are structural.

They're fixed cost in nature. Obviously, we're hopeful that we have more variable costs and that the demand for our products comes back up. But I think you've seen over just this last couple of quarters a pretty sustainable step change, and that's what we were hoping to show the market. As far as capital, Neil, what we're doing there is pivoting to what Doug just referred to as a new paradigm.

We have a bunch of projects that are already in progress in refining that we'll continue to finish those out. Examples of that would be like the STAR project we have going on down in the Gulf Coast. That's an important project for us. And that's still going to take some time to get through.

But at the end of the day, we're going to do those projects that we think are in progress and are still valued. We're going to look for projects in refining that lower our cost going forward or change the dynamic we have around this energy evolution. And then obviously, pivot to more into the renewable space. We have a bunch of things planned for both Dickinson and Martinez as kind of the first step in this energy evolution.

Renewables is the hot topic, and I think we're in a real good position to now put ourselves in a good spot there. So, Ray, do you have anything you want to add or -- ?

Ray Brooks -- Senior Vice President of MPLX GP LLC

Sure, Mike. Neil, I'll just give a little bit more color on the opex. And this should be fairly consistent with what we talked about during the last earnings call. But for opex reductions in refining, it wasn't just one thing.

It was a multitude of things. But if I had to key on two items, and I would say the first is scrutinizing the number of people in our facilities. This is both contractors and employees. And just looking at the number of people we have, the number of projects we were working on and so forth and not just cutting people, but also consolidating contractor companies and really taking an efficiency look at that.

The other thing that we really wanted to do and our procurement, the supply chain group did a phenomenal job of working with us, is making sure that we really leverage the spend across our 2.9 million barrel a day refining system. So looking at all of our contracts, goods and services and making sure that we just had the best terms and best contracts out there. Just want to jump on to what Mike said earlier, too, is our real goal is to make sure that these reductions are structural as possible. Early on in the pandemic, we did some deferral activity with turnarounds.

But largely, that was to get out of the initial period of March -- in the April-May time frame. But since then, we've caught up on our turnaround work. And going into this year, we'll do more of the same. So that's just a little bit more color on opex.

Neil Mehta -- Goldman Sachs -- Analyst

Thanks, guys. And the follow-up is just on the transaction, the Speedway transaction. Can you just walk us through what are the gating items to close the deal? Your conviction level that you can close it in Q1? And, Mike, I've asked this question so many times over the last couple of months. But can you just kind of walk through the waterfall again of, you got $16.5 billion of cash coming in, plus another $1.2 billion or so from the government.

And based on where your debt level is, what the -- sort of the ballpark ability to return capital to shareholders is to that framework? So two questions there, deal gating factors and then return of capital framework.

Mike Hennigan -- Chief Executive Officer

Yes, Neil, on the first one, the major gating factor is the FTC process with 7-Eleven. So we're watching the process. We're contributing where we can and as needed, but that's really a process between 7-Eleven and the FTC. What we know as of today, it continues to go well.

And the like -- as I say, I use the word we're targeting for the end of Q1 or we're hopeful that the end of Q1 is the right timing. But really, the gating item is essentially that process that is not really our process, it's more 7-Eleven and the FTC. So we're supporting it where we can. As I mentioned in our prepared remarks, we've responded to questions.

We're supporting it as much as we can. The other activities that we have now to get accomplished, which we're very confident will get done is the transition services. Obviously, it's a major transaction between us and 7-Eleven, and there's some services that Marathon is going to transition to 7-Eleven over time. So that's been a lot of the internal work that we've been doing recently.

But the bottom line, and I know everybody keeps asking about use of proceeds. We're as anxious as anybody to get to that spot. But at the end of the day, the major gating item is we don't have control of that timing. All we can do is to continue to give you the best insight we have.

And right now, we still say, we're hopeful it's end of first quarter. We're targeting that. We think that's achievable based on what we know. So that's our best guidance at this point.

On your second issue, as far as the use of proceeds, we've tried as best we can to frame what we believe is the 2 main pillars that we're going to be targeting this -- which is getting the balance sheet back to where we want it to be and then return capital to our shareholders as quickly and as efficiently as we can. And on the first issue, we've tried to make the statement that our debt situation maturities is, there's about $2.5 billion that comes with essentially minimal friction costs, and we'll jump on that one right away. Right today, we have a little over $11 billion of debt. We'll continue to try and evaluate, as everybody wants to know, where is mid-cycle going to be, etc., etc.

We need to work with the agencies. So our financial team, Maryann and Tom, and the treasury team will work with the agencies as to the proper path to bring that debt down to a level that we think is really right spot. In an effort to try and give as much color as we can, we've kind of said to people that, hey, we don't see it going below $5 billion. And that's kind of like our low refining case, if you want to call it that.

So if you say in that regard, we have about a little over $11 billion. We don't see it going below $5 billion. So a number to put on the piece of paper is around $6 billion, depending on how well the recovery is and how quick the recovery is and working with the agencies, etc. Absent that, as we said, we're going to return capital.

We've talked about what's the best way to do that. And the only reason we don't give additional color there is because at least in our mind, what we believe right now is end of March is the targeted time frame. So we have another 60 days to go. And we'll continue to evaluate the market and the opportunities.

And we've been going through this internally with our board, with our advisors, with ourselves, and we have a pretty good framework, but we just don't want to get ahead of ourselves in case it takes a little longer than we're expecting. So we do want to return that capital to shareholders. And I personally am a believer that refining, to a large extent, is a return of capital business. We've got to position ourselves where we're generating cash and then think about the best way to create value returning it to shareholders.

And we've talked about all the various ways to do that. It's predominantly in a buyback type mode. That's what we're thinking about. And then there's pros and cons to the various ways that you can do that.

And then kind of our commitment is, once we get close enough that we really know we're there, then we'll come on publicly and give a little bit more color as to how we think that will effect itself. But our goal is, as efficiently and as quickly and effectively as we can, we want to try and provide this return of capital.

Neil Mehta -- Goldman Sachs -- Analyst

Yeah, very clear. Thanks, guys.

Mike Hennigan -- Chief Executive Officer

You're welcome, Neil.

Operator

Our next question comes from Doug Leggate with Bank of America. You may proceed.

Doug Leggate -- Bank of America Merrill Lynch -- Analyst

Good morning, everyone. Happy New Year, Mike and team. Hope you all do well.

Mike Hennigan -- Chief Executive Officer

Thanks, Doug. Same to you.

Doug Leggate -- Bank of America Merrill Lynch -- Analyst

Mike, you're going to hate me on this. I'm going to bleep on about the same issue with my first question, and I've got a follow-up on the macro for Ray, please. And it's really, I wanted to do some very quick math with you and make sure I'm thinking about this right. So your market cap is about $30 billion.

Your share of MPLX, two-thirds is about $16 billion. So let's assume in a sum of the parts basis, that means that the value recognized for everything else is about $14 billion, and you're potentially going to have a $10 billion share buyback program, if I net out $6 billion of debt paydown. Those are pretty enormous numbers, obviously. So first of all, am I thinking about that right? And secondly, how exactly would you expect to deploy such a scale of a buyback, which I guess is Neil's question? And I'm thinking along the lines of like a bought deal, a direct regular acquisition of shares in the market.

What are you actually thinking here about structure and timing because those numbers are obviously pretty significant when you look at it that way.

Mike Hennigan -- Chief Executive Officer

Yes. Doug, first of all, I don't hate you for asking the question. It's a fair question. And I know you've asked a few times about, do we plan to use any of the proceeds toward MPLX.

As I stated before, we don't see that as in the best interest. But we do see, to your point, returning this capital. And I think you've made the point, it will be a large sum of money. It will take some time to effectively do it efficiently, etc.

So that's part of what we're kicking around. And a lot of things come into play. Where is the equity going to be when we actually go to do this, what's the best method, pros and cons, relative to that? So part of the reason that we don't really get more detailed at this point, I just use this as the example is, when we announced the deal, we were trading in the $30s. Now we're trading around the mid-$40s or so.

And we'll see where we are in 60 days or whatever the timing turns out to be. Obviously, to your point, if you're trying to convince us we're undervalued, we're 100% aligned with you. We think that there's a lot of opportunity in our equity. But part of the process in looking at the pros and cons is, where is that equity going to be by the time we get there and what's the best way to actually go about doing such things? The debt side of it, I mentioned a little bit, that will be ongoing conversations with the rating agencies.

We do want to protect our investment-grade rating. So that's important to us. We want to see how the pandemic continues to play itself out. As you heard Tim mentioned earlier, you're feeling good and then all the restrictions and things give you a little bit of a pause, but we're feeling pretty good about that as well.

So taking that all into consideration is what we're thinking about now. And to your point, it will be a large return of capital. It will definitely take some time. And when we get there, we'll give as much color as we can as to what we think at that time.

And then there'll be some ongoing dialogue. To your point, the numbers are good, and we're happy that we're in that position. So we think we'll be able to effect a balance sheet adjustment that's really good for us. We think we'll be able to effect return of our capital that's really good for us.

It will take some time. And the only thing that we're holding out is the method and the timing because we'll have to wait and see when that time comes. Hopefully, that helps. I'm trying my best to give you guys as much color as I can.

But at the same time, try not to get ahead of where we're going to be when we actually receive the proceeds.

Operator

Our next question will come from Roger Read with Wells Fargo. Your line is open.

Roger Read -- Wells Fargo Securities -- Analyst

Hey, good morning.

Mike Hennigan -- Chief Executive Officer

Good morning, Roger.

Roger Read -- Wells Fargo Securities -- Analyst

I just want to say, I'm glad to know that we, on the sell side, don't have to talk you into your stock being undervalued. That's very comforting on our side.

Mike Hennigan -- Chief Executive Officer

Thanks, appreciate that.

Roger Read -- Wells Fargo Securities -- Analyst

Kidding comment for the day. Yes, to kick back into some of the stuff that's been asked and maybe to dig a little deeper on a couple of things. First off, I think Doug Terreson mentioned on the crack spreads but as we know, at least part of the move in the crack spreads here has been RINs-related. And I know with the separation of Speedway, you're retaining the RINs inside of the R&M segment.

And so I was just curious how you're looking at the impact of the increase in the RINs costs and then how we should think about that is also flowing through the company now that we're going to have or I guess, essentially, already have the separation in terms of how it comes through?

Mike Hennigan -- Chief Executive Officer

Hey, Roger, that's a good question on RINs. I'll let Brian take that one.

Brian Partee -- Senior Vice President Global Clean Products Value Chain

Hey, Roger. Good morning. Yes, so great question. So RIN expense is real, right? It's cash out the door.

We face it. It's an element of our industry, but RIN costs are also very transparent day in and day out. So we really believe the full consideration is given really across this entire value chain when you look at refiners, ethanol producers, blenders, marketers that sit in the value chain and establishing daily prices. So that's not to say that it's "in the crack." I think empirically, that's very difficult to point to, no different than hydrogen cost or catalyst cost being in the crack.

But it's a very transparent element in the value chain that we believe is fully considered in the commercial tension across all the various players that we mentioned. And specific to Speedway, yes, absolutely zero impact. I mean we've always treated that Speedway as a third-party customer and our contracts across our entire book really give full consideration for RIN costs in value. But so really no impact, no shift in value when you think about between segments as a result of the separation.

The last point to make on this really is across our entire book, we have extensive terminal network and a pretty robust marketing platform, the least of which is the Speedway book of business. And so historically or near historically, the last couple of years, 70% to 75% of our RFS obligation has been met really through wet blending. With Dickinson, you can add roughly another 10% of that, and you can keep doing the math into Martinez. So we're quickly approaching 100%.

So we feel like historically, we've positioned well on this real issue, we're positioned great today, and we're now going to be positioned even better into the future.

Roger Read -- Wells Fargo Securities -- Analyst

OK. That's helpful. Thanks. And then, I guess, as a somewhat unrelated follow-up here.

I saw on the capex for the renewables, I think -- I'm sorry, I'm going to try to find the chart here. I was flipping around all the different pages but I think it's $325 million or $350 million in renewables capex in 2021? Is that all Martinez? I mean I know you've mentioned some other things in renewables, so I was just curious what all is included in that $350 million? And as we think about Martinez, would it be another $350 million in '22 as just sort of a preliminary way to think about it?

Mike Hennigan -- Chief Executive Officer

Yes, Roger. So yes, you're right on that most of that is Martinez. That's the way to think about it. There's a little bit that's dedicated to Dickinson, but mostly Martinez.

And that's the start of what we believe is going to be a multi-phase project. I'll let Ray give you a little bit more color on that to talk a little bit about timing and the phased approach that we have to it, but we're pretty excited about the opportunity.

Ray Brooks -- Senior Vice President of MPLX GP LLC

Hey, thanks, Mike. Yes. As Mike said earlier, we are progressing the Martinez renewable fuels project, and that is the bulk of the projected renewable spend in 2021. Just to tell you where we are in right now.

We're in definition engineering. So we're in the third phase of the engineering on the project. And we're also working to progress our permit. So we're working with the governmental, the regulatory, the NGO, all the stakeholders in our project for our aggressive permitting efforts.

Our main focus remains to have the first phase, the first of the hydrotreaters reconverted to a renewable diesel facility or diesel unit in the second half of 2022. And then we would follow that up with the remaining two hydrotreaters in 2023, along with the pretreatment system. So you know it's a staged project. And the reason that we're going to do in the first stage in 2022 is that requires the least amount of equipment modification to do that.

So we're still in the evaluation stage, but I just want to give you a little color on the project.

Roger Read -- Wells Fargo Securities -- Analyst

Appreciate it. Thank you.

Mike Hennigan -- Chief Executive Officer

You're welcome.

Operator

Our next question will come from Doug Leggate with Bank of America. Your line is open.

Doug Leggate -- Bank of America Merrill Lynch -- Analyst

Thank you. Mike, I'm so sorry, my line dropped when I -- you were halfway through your question, but I managed to see the answer in the transcript. So thank you for that. And I apologize again, everybody.

My follow-up question was probably for Ray. And Ray, it's actually, I guess, a follow-on from Mr. Terreson's question earlier on crack spreads but I wanted to be a little bit more specific. It seems to us that we're seeing naphtha LPG substitution in Asia, probably heat-related, driving up naphtha Brent spreads.

And we are obviously outside the second-order effects in the gasoline fill. So I'm just wondering if you could share any observations you have specific to that issue. Are we seeing gasoline crack supports coming from non-transportation sources? I just want to get your color on that. I'll leave it there.

Thank you.

Brian Partee -- Senior Vice President Global Clean Products Value Chain

Yes, Doug, sorry about that. This is Brian Partee. Yes. I think on the naphtha to Brent spread, we have seen some uptick in the demand over in Asia as a result of, obviously, the cooler temperatures over there and really the entire petrochemical complex.

So we've seen some steady demand outside of the U.S. Gulf and even beyond moving over to Asia and really moving into the petrochemical space, so I think it's been supportive to that. I don't know that, that's a long-term structural shift. But in the short term, we've seen that as a positive.

Doug Leggate -- Bank of America Merrill Lynch -- Analyst

No, just one confirmation that that tailwind is in place. But again, apologies for the disruption, guys, and appreciate the answers.

Mike Hennigan -- Chief Executive Officer

You're welcome, Doug.

Operator

Our next question comes from Manav Gupta with Credit Suisse. You may go ahead.

Manav Gupta -- Credit Suisse -- Analyst

Hey, guys. I wanted to focus on the Gulf Coast operating cost, which is like $3.40, down about 31% year over year. This is one of the lowest we have seen it for MPC and definitely well below a number of your peers. So what has allowed MPC to achieve this? I know, Mike, you are very focused on cost reductions.

But trying to understand what specifically driving the Gulf Coast cost reductions here?

Mike Hennigan -- Chief Executive Officer

Yes. Manav, it's a good question. I'll let Ray give you some specifics there.

Ray Brooks -- Senior Vice President of MPLX GP LLC

Hey, Manav. Good morning. So, on the Gulf Coast, we have two refineries -- large refineries, Garyville in Louisiana and Galveston Bay in Texas. And of course, Garyville has always been a very low-cost refinery for us and so the ability to get better there is somewhat limited.

The big reductions that we've had in our Gulf Coast structure has been at Galveston Bay. They've made significant improvements in their opex, and that really showed in the back half of 2020.

Manav Gupta -- Credit Suisse -- Analyst

A quick follow-up is on your Dickinson facility. Obviously, you're spending some money right now to move the product to California but Canada has already -- is talking about introducing the clean fuel standards. They kick in 2022. The location of that facility would allow you to move the product seamlessly across the border.

So is that something you are considering? And also, if a pretreatment unit possible at the Dickinson facility also besides the Martinez facility? Thank you.

Brian Partee -- Senior Vice President Global Clean Products Value Chain

Manav, this is Brian Partee. Yes. Just to address kind of the market disposition out of Dickinson. Of course, we're looking for the highest-valued markets.

The design for Dickinson and this expectation in and around placement is certainly in California, and that really has proven to be the most lucrative markets out of the box, but we're having active dialogue with outside of really the West Coast and California, including Canada, and we'll continue to chase that highest value placement. But with our position in the Portland area, in the Pacific Northwest, we really feel optimally positioned with a wet physical position to be able to move product into Canada and that even export as well as into California. And we also think long term with the contemplated project at Martinez is really complementary to having kind of a robust position out in the West Coast. And then the last thing I would say, beyond just Canada, there's a lot of different contemplated low carbon fuel standards in the U.S.

as well that with the load out on rail, we are -- have real ultimate flexibility, only limited by the rail infrastructure in the U.S., which is quite robust. So a long-winded way of saying, we really feel like we've got a good -- we're in a great position logistically to optimize the placement of the product out of Dickinson.

Manav Gupta -- Credit Suisse -- Analyst

Would you ever consider a pretreatment unit at Dickinson also?

Ray Brooks -- Senior Vice President of MPLX GP LLC

We have pretreatment options for Dickinson, but that wouldn't be -- that would be at our facility at Beatrice to pretreat corn oil. So that is in progress.

Manav Gupta -- Credit Suisse -- Analyst

Thank you.

Mike Hennigan -- Chief Executive Officer

You're welcome.

Operator

Our next question will come from Paul Cheng with Scotiabank. Your line is open.

Paul Cheng -- Scotiabank -- Analyst

Hey, guys. Good morning.

Mike Hennigan -- Chief Executive Officer

Good morning, Paul

Paul Cheng -- Scotiabank -- Analyst

I think the first question I have is for Ray. Ray, the opex cost in refining and the distribution cost is really impressive. So at this point, is it the bulk of the, say, whatever it is you are doing that you think you already captured it, as you say, like in Garyville that is limited upside or that -- I mean, I'm sure that you continue to drive the cost down, but is that really a step function change from this point on that we could expect or that this is a pretty good base and any improvement would be pretty limited? So that's the first question. The second question is probably for Mike and Brian.

Brian, I mean, if we look at your old firm, they are far more aggressive in their commercial trading and everything. So when we're looking at Marathon, do you have the right systems in place and also the right personnel for your organization or that really is only the first step and you're going to take some time for you to build it out? And where you see the most opportunities for the improvement in return and your earnings from that operation and where is the risk? And are we going to see that increase the risk?

Mike Hennigan -- Chief Executive Officer

So Paul, I'll start on both of them, and then I'll let Ray and Brian chip in. So on the cost, we've made a significant move, as you've noted. We're going to challenge ourselves in '21 and beyond to also continue to look at each part of our portfolio and where we're spending money, whether it's in refining or on the corporate side, etc. So I don't want to ever say that we're done.

At the same time, I do appreciate acknowledging that it was a pretty significant move. I mean, we decided, when I put out the three initiatives, that costs would be a major part of what we were doing in 2020. So that's why it got a lot of attention but it continues on, right? It's not just something that's over just because we've come to the end of the year or whatever. So I'll let Ray comment a little bit more on refining.

And then on your second question, relative to commercial and systems. I mean one of the things if you look at in our disclosure on capital is we are spending some money at the corporate level to try and improve ourselves from a digital standpoint. Doug mentioned, we're moving into a low-carbon future. The business has also become this much more strategic from a digital standpoint.

And our new Chief Digital Officer has a lot of good thoughts that will help our commercial teams advance the ball. So we're going to try and deploy capital in that regard and to put ourselves in a much better position from an information standpoint so that we can act on it better commercially. But I'll let Ray jump in and Brian, if he wants to add something there.

Ray Brooks -- Senior Vice President of MPLX GP LLC

Sure, Paul. On the opex, I'm prepared to answer that because Mike actually ask that to me all the time. Are we done yet? Is there more to do? What I'll tell you is, with $1 billion of cost taken out of our system, we took a big bite out of the apple in 2020. But what I'll tell you is that the culture is there as far as questioning everything we do, whether it's a person replacement, whether it's a good that project need to do or whatever.

There's definitely the mentality in refining to question everything that we do from a cost standpoint. The one thing that I want to emphasize, though, is the one thing that's not in play is anything that would really impact the safety or environmental performance of our refineries. Mike, in his opening comments, talked about 2020 being the safest and best environmental performance that we had. And so that always is a key thing, but our team really is questioning everything we do beyond that.

Paul Cheng -- Scotiabank -- Analyst

Ray, just cue with that. In September, you guys have a restructuring effort and about 1,000 people from the Martinez and also Gallup people are gone. So is that benefit already fully factoring in into the fourth quarter or we have another leg up in the first quarter that we will see the benefit come in?

Mike Hennigan -- Chief Executive Officer

On that one, Paul, you'll see some of the benefit occurring in the first quarter. We did the restructuring in the back end of 2020, but you'll actually see the benefit in the first quarter. But before I turn it over to Brian Partee, I want to -- since we have two Brians now, you may have been asking relative to Brian Davis, who's just joined us. But Brian Davis is not on our call for at least today.

But I'll let Brian Partee talk a little bit from products, and I'll let Rick kick in with a little bit from crude. And by our next call, Brian Davis will be with us, and we'll be able to get his insights as well.

Brian Partee -- Senior Vice President Global Clean Products Value Chain

Yes. Thank, Mike. Paul, this is Brian Partee. Yes.

Just to answer your question on people and systems and commercial opportunity. The short answer is absolutely, yes. I mean, we've gone through a dramatic transformation over the last several months realigning on the clean product side of the business our marketing, supply and trading, our international book as well into one unified organization. So I think just org structure alone would help -- has helped unleash opportunities.

And as Mike indicated, we're spending quite a bit of time building out for a massive system to integrate the back office, and that's in-flight and under way and really long term see great potential. And we're starting to see the benefits of that already. And when we think about commercial performance, it's not just revenue, it's looking at the expense and distribution costs, as you called out earlier, inventory positions as well. So it's really the full deployment of capital across the value chain, not just on the revenue side, but I'm extraordinarily encouraged with where we're at.

We're really now pivoting Paul, to be quite honest with you, from really a legacy of more of an operational focus with refining over the last decade running full capacity and utilizing physically the infrastructure and arbs to maximize value, to the system that we're in today, which is requiring us a little different playbook and more commerciality. So we're excited to work with the team to bring that all to bear, and we're seeing benefits already. We'll continue to build on that here over the next year.

Paul Cheng -- Scotiabank -- Analyst

And Mike, can I just sneak in with a really quick question. Should we look at over the next several years the capex for 2021 will be sort of the baseline and you're not going to be substantially higher than that?

Mike Hennigan -- Chief Executive Officer

Yes, Paul. On capital, we're not giving guidance beyond that, but I can give you -- my general philosophy is, like I mentioned earlier, we're going to obviously finish the projects that we have in progress. So some of those are going to go in '21, into '22. So that's ongoing.

As far as investment in refining, asking Ray to look at ideas that reduce cost and put ourselves in a good position for a low-carbon future. So energy intensity, as an example, is something that still matters a lot in the energy evolution. Looking at putting ourselves in a position where we check both of those boxes of cost and carbon emission reductions, etc., are going to be top of mind for us. At the same time, we're pivoting to investment into renewables in some of these other areas, which we'll give you some more color as time goes on.

But I think that's the general philosophy of it. As far as the absolute spend, we'll obviously give guidance as we progress. But I think just in general, I think that's the philosophy that you should be thinking about. And it kind of started off with the way Doug asked the question.

We do think there's a paradigm shift occurring. And our reaction to that is, get our costs down, be very conscious of our new environment, trying to check off two birds with one stone, put ourselves portfolio-wise in a position where our refining assets are in a good spot for many decades to come, that's obviously a goal for us, and position ourselves that the products we're making are what the demand in the market is. So that's kind of our overall philosophy, and we'll continue to challenge what we're doing in that area. And I -- we also tried to give you a little bit more color with that breakdown of capital, so hopefully that helps people get a sense of what we're thinking philosophy-wise.

Paul Cheng -- Scotiabank -- Analyst

Thank you.

Mike Hennigan -- Chief Executive Officer

You're welcome.

Operator

Our next question will come from Benny Wong with Morgan Stanley. You may go ahead.

Benny Wong -- Morgan Stanley -- Analyst

Hey. Good morning, guys. Thanks for taking my question. My first question is really on your outlook on the gasoline markets.

I think over the next couple of years, we're going to see almost 1 million barrels per day of capacity come offline, arguably half of that is going to be gasoline. And if I kind of look at the imports over the last five years, we've been importing about 500,000 barrels per day. If demand kind of bounce back up to more of a normal environment, could we get back to more of an importing scenario for the U.S.? Is that kind of a very reasonable way to think about it or how do you guys think about that?

Mike Hennigan -- Chief Executive Officer

So I'll start off and I'll let the guys jump in. So one of the things, Benny, that I think everybody is obviously trying to understand is what does the supply/demand look like post pandemic. And we obviously are seeing in the short term the demand reduction, supply rationalizations in progress. But how that all plays itself out at the end of the day is still an unknown.

And we tend to, like I said earlier, we look at the banks of the river. We anticipated some challenges on the supply/demand coming into the decade. That's part of the reason why we wanted to focus on cost reductions. But the question of where does the supply/demand end up after this pandemic, after the demand settles to a new normal, wherever that's going to be, after the rationalization settles out to where that's going to be, I think that's still the question that we're all trying to get our arms around.

For us, like I keep saying is, we try to look at it from a banks of the river standpoint. So, then we'll assess it as time goes on. I don't know if you guys have anything to add. They're shaking their heads, so I think that's the best we can give you at this point.

Benny Wong -- Morgan Stanley -- Analyst

Thanks, Mike. That's very helpful. And can you just remind us, like if we look at MPC's system, what's the ability to flex your gasoline yield? And then how different is that from the U.S. complex? Is it more or less or relatively in line?

Mike Hennigan -- Chief Executive Officer

Are you asking, Benny, like flex between gasoline and distillate, is that what you're asking?

Benny Wong -- Morgan Stanley -- Analyst

Yes. Like how high can you get your yield in terms of gasoline output overall?

Ray Brooks -- Senior Vice President of MPLX GP LLC

Yes, Benny, this is Ray. We typically will have like a 10% swing that would swing between our gasoline and diesel, and we'll do that based on the economics that we see. And what I'll tell you in this last year and the pandemic, you've seen us do it both ways, seeing us all the way to diesel and challenging ourselves how much more diesel we can make and we've gone back to the other direction.

Rick Hessling -- Senior Vice President ofMPLX GP LLC and Senior Vice President of Crude Oil Supply and Logistics

Yes, Benny, this is Rick. Just one thing I'll add to that -- to Ray's comments on yield. A lot of that is driven by e-com and then a lot of that is driven by the sweet-sour spread, the heavy to light spread. So as we've stated many times, we have great flexibility by region as you'll continue to see as we pivot from sweets to sours, from heavies to lights.

We often say one-third, two-third, but that varies by region, and that gives us the flexibility to really turn that yield knob.

Benny Wong -- Morgan Stanley -- Analyst

Sure, guys. Very helpful. Thank you, very much.

Mike Hennigan -- Chief Executive Officer

You're welcome.

Operator

Our next question will come from Prashant Rao with Citibank. You may go ahead.

Prashant Rao -- Citi -- Analyst

Hi. Thanks for taking the question. First one, Mike, I wanted to touch back on the leaning into renewables. You've talked about it several times on this call.

So wanted to take a big picture view. Ultimately, how do you think about your ambitions here? And would you think about, at some point, maybe as we go forward, holding that out either as a separate earnings stream or a separate segment? I think some of the peers in the space are starting to allude to this or are starting to do that, helping sort of analysts and investors to quantify that and sort of gauge where the progress is. So that's my first question. And within that too, sort of a tag along is on the carbon capture.

I know you've talked about carbon emission reduction in the energy intensity earlier in this call. I was curious, there's opportunities with adding carbon capture on LCFS programs that are fairly attractive. So I wanted to sort of ask on that. And then I just had a follow-up on your cash flow statement after that.

Thanks.

Mike Hennigan -- Chief Executive Officer

Yes. Prashant, on your first one, as far as renewables and segment results, we do have that on the radar screen. At some point, we think that may be appropriate for us. As you know, we have just started up Dickinson so we don't even have a full quarter yet.

So once we get Dickinson up and running and are generating results, and then we have Martinez coming behind that, then we'll have more of a significant discussion point on actual results as opposed to where we are today, which is anticipating those results. So I can see that at some point. I would say, one of these things that worked with Kristina and her team on is trying to be very consistent so people can get a good insight into the things that we're doing today. But at some point in the future, I think you could kind of see some changes from us.

And we'll give you, obviously, a heads-up when we're thinking of doing that. Second question was --

Ray Brooks -- Senior Vice President of MPLX GP LLC

Carbon capture.

Mike Hennigan -- Chief Executive Officer

Yes, carbon capture, and I'll let Ray jump in on this as well, is -- I mean, right now, in all of the areas of low-carbon future or climate areas, there's a lot of things on the plate. Obviously, renewable diesel, as you mentioned, is kind of at the top of the list because we're executing now on that as we speak. But there's a lot of different items that we haven't talked a lot about, technologies, different areas that we think we can drive our carbon footprint down. And there's different ways, whether it's capture or many other areas that we have on the radar screen, and we're really looking at it.

We want to make sure that what we're thinking about is economical for us, going to create value for the shareholders. Like I said, if we can hit the two birds with one stone. That's the best of all worlds. So I'll let Ray comment specifically on capture.

Ray Brooks -- Senior Vice President of MPLX GP LLC

Yes. What I'll just add on capture is that's something that's on our radar screen. We're looking at opportunities there. And I'll just emphasize that the capture part is the easier part.

The sequestration is a little bit more of the challenging part. So you have opportunities within hydrogen plants and some of our other operations to do capture and sequestration. I'll just say that it's on our radar screen. We're looking at it, but nothing more incremental to really say at this point.

Prashant Rao -- Citi -- Analyst

OK. Appreciate all that color. And then just a quick follow-up on the financial statements, particularly on the cash flow. Working capital is obviously a good tailwind in the quarter.

Sort of a two-parter, one, how to think about that here in 1Q, if that holds up toward -- if we see a bit of a reversal? And secondly, within the Speedway portion of discontinued is working cap also. I'm assuming was included in that. Was that also sort of positive there as well?

Mike Hennigan -- Chief Executive Officer

Yes. Prashant, on working capital, as we've said in the past is, there's a rule of thumb that as flat price moves, we have essentially a net 20 days exposure to that. So as flat price moves itself up, and that's obviously a source of capital for us. And so if flat price were to come down, like we saw in the early part of 2020, then it's a use of capital.

So part of that, that you're going to see is depending on where crude price is and product prices are. But as a general rule, we're about that net 20-day exposure there.

Prashant Rao -- Citi -- Analyst

OK. And then -- and that Speedway number in the discontinued also included working capital as well? That's not -- just to clarify, that's not an ex working capital number, correct?

Mike Hennigan -- Chief Executive Officer

I don't know if I'm understanding your question there.

Prashant Rao -- Citi -- Analyst

The working capital -- sorry, not the working capital. The cash flow from ops, I apologize. The cash flow from ops from Speedway that was in the discontinued portion. I just wanted to just clarify if that includes any working capital impacts to Speedway under the discontinued portion of cash flows, if that makes sense.

I was just sort of trying to suss out how much was -- how much of the working capital impact is still in MPC after Speedway, but I can take that question offline as well, Mike.

Mike Hennigan -- Chief Executive Officer

OK. Probably better to take it offline. Thanks.

Prashant Rao -- Citi -- Analyst

Yes, thanks.

Operator

Thank you. That is all the time that we have for questions. I will now turn the call back over to Kristina Kazarian for closing remarks.

Kristina Kazarian -- Vice President, Investor Relations

Sounds great. Thank you, everyone, for joining the call today. If you have any follow-ups after the call, our team is available to help out with those. And with that, I'll turn it back to the operator.

Operator

[Operator signoff]

Duration: 69 minutes

Call participants:

Kristina Kazarian -- Vice President, Investor Relations

Mike Hennigan -- Chief Executive Officer

Maryann Mannen -- Chief Financial Officer

Doug Terreson -- Evercore ISI -- Analyst

Tim Griffith -- President of Speedway LLC

Neil Mehta -- Goldman Sachs -- Analyst

Ray Brooks -- Senior Vice President of MPLX GP LLC

Doug Leggate -- Bank of America Merrill Lynch -- Analyst

Roger Read -- Wells Fargo Securities -- Analyst

Brian Partee -- Senior Vice President Global Clean Products Value Chain

Manav Gupta -- Credit Suisse -- Analyst

Paul Cheng -- Scotiabank -- Analyst

Benny Wong -- Morgan Stanley -- Analyst

Rick Hessling -- Senior Vice President ofMPLX GP LLC and Senior Vice President of Crude Oil Supply and Logistics

Prashant Rao -- Citi -- Analyst

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