MPLX

Per Unit Data (Q3 2024 vs Q3 2023): Net income per common unit was $1.01 (basic) vs $0.89. The quarterly distribution declared for Q3 2024 was $0.9565 per unit, a 12.5% increase over the prior quarter.

Material Changes vs. Prior Period

• Revenue Growth: Total revenues increased $60 million in Q3 2024 and $555 million for the nine months ended September 30, 2024. Growth was driven by higher pipeline tariff rates, fee escalations, and incremental revenues from the consolidation of MarkWest Torano GP (Dec 2023) and the Utica Midstream Acquisition (Q1 2024).
• Segment Performance:
  • L&S Segment: Adjusted EBITDA increased $66 million in Q3 2024. Service revenue rose due to higher tariff rates and fee escalations.
  • G&P Segment: Adjusted EBITDA increased $52 million in Q3 2024. Service revenue grew due to higher volumes and fee rates in the Marcellus, Rockies, and Bakken regions, partially offset by lower NGL prices and volumes in the Southwest.
• Costs: Purchased product costs decreased $71 million in Q3 2024, primarily due to lower NGL volumes and prices. Depreciation and amortization increased $21 million due to new assets from recent acquisitions.
• One-Time Items: The prior year (Q3 2023) included $63 million in incident response costs related to the Garyville Tank Farm fire, which improved the comparative variance for 2024.

Guidance, Outlook, and Risks

• Capital Allocation: MPLX returned $949 million to unitholders in Q3 2024 via distributions and unit repurchases. The company repurchased 1.8 million common units in Q3 2024 at an average cost of $42.89 per unit. $620 million remains under the $1 billion repurchase authorization.
• Acquisitions and Projects:
  • Acquired an additional 20% interest in BANGL, LLC for $210 million, increasing ownership to 45%.
  • Completed the Whistler Joint Venture Transaction, recognizing a $151 million gain.
  • The 200 MMcf/d Preakness II processing plant began operations in July 2024.
  • Executing growth in the Northeast with Harmon Creek III, expected to add capacity by late 2026.
• Liquidity: Total liquidity was $5.9 billion as of September 30, 2024, comprising $2.4 billion in cash and $3.5 billion in available borrowing capacity (MPLX Credit Agreement and MPC Loan Agreement). Credit ratings remain investment-grade (Baa2/BBB).
• Risks and Contingencies:
  • Dakota Access Pipeline: MPLX holds a 9.19% indirect interest. The Army Corps of Engineers is finalizing an Environmental Impact Statement (EIS) expected in 2025. MPLX has a contingent equity contribution agreement with a maximum potential payment of approximately $78 million if the pipeline is shut down.
  • Legal Proceedings: Ongoing litigation regarding the Tesoro High Plains Pipeline trespass determination on the Fort Berthold Reservation.
  • Commodity Prices: G&P segment profitability is sensitive to natural gas and NGL price volatility.

Investor Verification Checklist

• Distribution Coverage: Verify the sustainability of the increased distribution rate ($0.9565/unit) against DCF and Adjusted FCF metrics.
• Debt Maturity Profile: Review the impact of the new $1.65 billion 2034 Senior Notes issuance on the debt maturity schedule and interest expense.
• Equity Method Investments: Assess the impact of the Whistler Joint Venture Transaction gain ($151 million) on future recurring earnings and the status of the Dakota Access Pipeline EIS.
• Related Party Dependence: Note that approximately 50% of total revenues and 27% of total costs are derived from transactions with MPC.
• Capital Expenditures: Monitor the execution of the $1.1 billion 2024 capital plan, specifically growth projects in the Marcellus and Permian basins.