Business context and reporting period
MPLX LP’s Form 10-K covers the fiscal year ended December 31, 2021; it is an annual report, not a standalone fourth-quarter filing. MPLX operates U.S. midstream infrastructure through Logistics and Storage (L&S) and Gathering and Processing (G&P). Marathon Petroleum Corporation (MPC) owned about 64% of MPLX’s common units and its general partner. MPC generated 50% of MPLX’s 2021 revenue and other income, including 90% of L&S segment revenue.
Financial and operating highlights
| Metric | 2021 | 2020 |
|---|---|---|
| Revenue and other income | $10.027 billion | $7.569 billion |
| Income (loss) from operations | $3.992 billion | $211 million |
| Net income (loss) | $3.112 billion | $(687) million |
| Net income (loss) attributable to MPLX LP | $3.077 billion | $(720) million |
| Adjusted EBITDA attributable to MPLX LP | $5.560 billion | $5.211 billion |
| DCF attributable to general and limited partners | $4.644 billion | $4.200 billion |
| Net cash from operating activities | $4.911 billion | $4.521 billion |
| Free cash flow (non-GAAP) | $4.399 billion | $3.272 billion |
| Excess cash flow after base distributions (non-GAAP) | $1.429 billion | $266 million |
Adjusted EBITDA, DCF, free cash flow and excess cash flow are non-GAAP measures; the filing cautions they are not substitutes for GAAP results. Revenue growth included higher G&P product-related sales as commodity prices rose, with much of the increase offset by higher purchased-product costs. The filing reports no separate gross-margin measure.
Segment Adjusted EBITDA was $3.681 billion for L&S (up from $3.488 billion) and $1.879 billion for G&P (up from $1.723 billion). L&S crude throughput rose to 3.380 million barrels per day from 2.998 million; refined-products throughput increased to 2.073 million barrels per day from 1.714 million. Consolidated G&P gathering and processing volumes declined year over year.
Capital spending and investments were lower: total growth capital was $509 million versus $878 million in 2020, and maintenance capital was $87 million versus $115 million. MPLX repurchased $630 million of public common units in 2021, with $337 million remaining under its $1 billion authorization at year-end. It paid a $0.575-per-unit special distribution for the third quarter and increased its regular quarterly distribution 2.5% effective for that quarter. Total 2021 distributions declared were $3.36 per common unit, including the special amount.
Changes versus the prior year
- Results rebounded from 2020’s loss, chiefly as impairment expense fell to $42 million from $2.165 billion. The 2020 charge included $1.814 billion of goodwill impairments and substantial impairments of long-lived assets and equity-method investments.
- Adjusted EBITDA increased 7% and DCF attributable to general and limited partners increased 11% year over year. Operating cash flow rose by $390 million.
- Revenue and other income rose $2.458 billion, substantially reflecting higher commodity prices and product sales, alongside a $1.257 billion improvement in equity-method investment income versus 2020’s impairment-driven loss.
- MPLX sold its Javelina assets for $70 million plus contingent future consideration and sold minor Wyoming gathering assets for $41 million. The company cited lower costs, portfolio optimization and stronger refined-product demand as factors in its results.
Outlook, financial position and risks
For 2022, MPLX outlined $900 million of capital spending: $700 million growth capital, $140 million maintenance capital and $60 million for an investment related to its share of Bakken Pipeline joint-venture debt repayment. Planned growth projects include Permian processing capacity and Marcellus de-ethanization capacity. The filing does not provide specific 2022 earnings or cash-flow guidance. Management stated it expects operating cash flow, credit facilities and capital-market access to meet funding needs and support distributions.
At December 31, 2021, disclosed total debt obligations were $20.359 billion, including amounts under the MPC loan agreement. MPLX reported $3.263 billion of total liquidity, including $3.250 billion of available borrowing capacity and $13 million of cash. It had $18.6 billion of senior notes outstanding, and its revolving-credit covenant leverage ratio was 3.7x against a 5.0x limit; MPLX reported covenant compliance. Ratings were investment grade with stable outlooks. Debt and liquidity figures reflect different presentations in the filing; investors should review the debt footnotes for reconciliation.
Key exposures include dependence on MPC and producer customers, commodity-price and volume changes, inflation, COVID-19 uncertainty, severe weather, cybersecurity, environmental and climate regulation, and substantial debt. The Dakota Access Pipeline remained operational while an environmental impact statement was being prepared; MPLX’s maximum potential undiscounted contribution under its contingent equity agreement was about $230 million. A separate dispute over a pipeline crossing Fort Berthold Reservation includes government counterclaims seeking profits, removal and remediation. MPLX also expected to finalize an EPA settlement concerning alleged emissions violations at certain compressor stations.
MPLX reported $7.657 billion of goodwill at year-end and no goodwill impairment in its 2021 annual test; the auditor identified the Crude Gathering reporting unit goodwill test as a critical audit matter because of assumptions about future volumes. The company reported effective internal control over financial reporting, and the auditor issued unqualified opinions on the financial statements and controls.
Important facts for investors to verify
- How much of future cash flow remains exposed to MPC, and whether MPC continues to meet contractual commitments and use MPLX infrastructure.
- Whether higher commodity prices and product sales translate into sustained cash generation after associated product costs, and how G&P volumes develop.
- Debt maturity, refinancing and interest-rate exposure, including the MPC loan’s demand feature and LIBOR transition provisions.
- Progress and costs for 2022 capital projects, and whether distributions and repurchases remain supported by cash flow after investment needs.
- Developments in the Dakota Access and Fort Berthold matters, the EPA settlement, and environmental or regulatory requirements that could raise costs or disrupt operations.
- Goodwill valuation assumptions, particularly forecast producer volumes and the effect of any deterioration in operating outlook.