Rodeo Project Earnings Impact
Q: How will the Rodeo Renewed project affect earnings and when will it be profitable?
A: The Rodeo facility is ramping up production after completing its conversion to renewable fuels. By the end of the second quarter, it will reach full production of 50,000 barrels per day. Initially, margins are impacted due to higher carbon intensity (CI) feedstocks, but as we shift to lower CI feeds and start producing sustainable aviation fuel in the third quarter, profitability will improve. The $180 million loss in the first quarter was due to transition and start-up costs , but we expect this to turn positive as operations stabilize.

Refining Performance and Capture Rates
Q: What affected refining capture rates this quarter and what's the outlook?
A: First-quarter headwinds, including turnaround activities and the Rodeo conversion, reduced our capture rates to 69%, below our target of 75%. We faced a $50 million headwind from Gulf Coast pricing differentials and a $100 million headwind from inventory hedges. With turnarounds complete and catalysts refreshed, we're positioned to improve capture rates and clean product yields in the upcoming driving season.

Cost Reduction in Refining
Q: How are cost reductions translating into refining OpEx savings?
A: Our business transformation initiatives have achieved over $500 million in run-rate cost savings, equivalent to $0.75 per barrel. We're on track to reach $650 million in savings by year-end, targeting a $1 per barrel reduction. These savings are beginning to manifest in lower OpEx, despite inflationary pressures.

Sale of European Retail Assets
Q: What are the implications of selling European retail assets on refining operations?
A: We're selling our Germany and Austria retail assets, which contribute approximately $350 million in EBITDA. The sale does not include our stake in the MiRO refinery. Proceeds from the sale could potentially enhance our cash return targets, but we haven't made definitive decisions on allocation yet.

Midstream Earnings Variability
Q: What caused the quarter-on-quarter variability in Midstream earnings?
A: First-quarter Midstream earnings were impacted by a $30 million effect from the winter storm and commercial true-ups from the fourth quarter. Despite this, we remain on track with our guidance of $675 million per quarter in Midstream income before taxes.

Chemicals Segment Performance
Q: What's driving the improved performance in the chemicals segment?
A: The advantage of light feedstock cracking and lower feedstock costs, such as natural gas and ethane, have improved margins. CPChem benefited from mid-cap projects coming online, including a C3 splitter and a 1-hexene unit, contributing to earnings in the first quarter.

Diesel Market Outlook
Q: What is the outlook for diesel margins and market conditions?
A: Diesel margins have been pressured due to factors like a warm U.S. winter and robust refinery operations. However, we anticipate improvement as run cuts in Europe and Asia occur, gasoline demand rises during the driving season, and jet fuel demand increases.

Balance Sheet and Leverage Targets
Q: How are you approaching net debt levels and capital allocation?
A: Our leverage is currently above our target range of 25% to 30%, but we're comfortable due to strong business outlook and cash generation. We're prioritizing share repurchases, reflecting confidence in our growth trajectory toward $14 billion of mid-cycle adjusted EBITDA.

Commercial Optimization Efforts
Q: How are efforts to optimize commercial operations impacting earnings?
A: We're enhancing our commercial supply and trading by integrating across the value chain, reducing costs, and capturing embedded optionality. This includes reorganizing our commercial group and advancing capabilities to improve market capture and overall earnings.

Near-Term Capture Rate Outlook
Q: What is the expected trend for capture rates in the upcoming quarters?
A: With completion of maintenance and turnaround activities, our facilities are positioned to improve capture rates. We expect clean product yields and product values to be strong entering the summer driving season, and our flexibility allows us to adapt to market changes like WCS price movements.