10-KPeriod: FY2018

MPLX LP Annual Report, Year Ended Dec 31, 2018

Filed February 28, 2019For Securities:MPLXMPLXP

Summary

MPLX LP (MPLX) reported strong financial and operational performance for the year ended December 31, 2018, benefiting from significant "dropdown" acquisitions from its sponsor, Marathon Petroleum Corporation (MPC). These acquisitions, primarily of Refining Logistics and Fuels Distribution assets, substantially increased MPLX's scale and diversified its midstream infrastructure and services. The company's Logistics and Storage (L&S) segment saw a significant surge in Adjusted EBITDA, largely driven by these newly acquired assets, while the Gathering and Processing (G&P) segment also demonstrated growth in throughput volumes and facility utilization. Financially, MPLX successfully executed a series of debt financings, raising substantial capital to support its growth initiatives and refinance existing debt. The company maintained its investment-grade credit profile throughout the year. Management highlighted a focus on enhancing cash flow stability through fee-based services and long-term contracts, with fee-based contracts expected to constitute approximately 95% of its net operating margin. The strategic relationship with MPC remains a key driver of MPLX's business, providing a stable revenue stream and a platform for continued growth through asset dropdowns and organic development projects.

Financial Highlights

38 data points
Beta

Revenue

$7.00B

Net Income

$1.82B

26.0% Net Margin

Total Assets

$39.33B

Cash & Equivalents

$77.00M

Free Cash Flow

$960.00M

Financial Statements
Beta
Revenue$7.00B
Operating Expenses$4.28B
Operating Income$2.73B
Net Income$1.82B

Key Highlights

  • 1MPLX completed significant "dropdown" acquisitions from MPC in 2018, notably Refining Logistics and Fuels Distribution, bolstering its midstream asset base.
  • 2Adjusted EBITDA for the Logistics and Storage (L&S) segment increased by 165% year-over-year, largely due to the acquired assets.
  • 3The Gathering and Processing (G&P) segment also experienced growth, with gathering volumes up 26%, processing volumes up 9%, and fractionated volumes up 16% compared to 2017.
  • 4MPLX successfully raised substantial capital through senior note offerings totaling $7.75 billion in 2018, primarily used for debt repayment and general business purposes.
  • 5The company continued to execute its organic growth plan with ongoing projects to expand pipelines, processing capacity, and fractionation facilities.
  • 6MPLX maintained its investment-grade credit profile, with credit ratings from Moody's, Fitch, and S&P at or above investment grade.
  • 7The elimination of the general partner's incentive distribution rights (IDRs) and conversion of its economic general partner interest to a non-economic interest in February 2018 simplified the capital structure and reduced distribution requirements.

Frequently Asked Questions

In 2018, MPLX focused on executing its strategic vision by growing its midstream infrastructure and logistics assets. A major strategic move was the "dropdown" acquisition of Refining Logistics and Fuels Distribution assets from its sponsor, Marathon Petroleum Corporation (MPC), which significantly expanded its scale and capabilities. The company also completed other acquisitions, such as the Mt. Airy Terminal, and initiated joint development projects for new pipelines, demonstrating a commitment to both organic and non-organic growth across the midstream value chain.

The acquisitions from MPC in 2018, particularly Refining Logistics and Fuels Distribution, had a substantial positive impact on MPLX's financial performance. These acquisitions contributed significantly to the growth in revenues and Adjusted EBITDA, especially within the Logistics and Storage (L&S) segment, which saw a 165% increase in segment Adjusted EBITDA. The G&P segment also benefited from overall growth, reflecting the company's strategy to enhance cash flow stability through fee-based services and long-term contracts.

MPLX demonstrated strong financial discipline in 2018 by raising substantial capital through senior note issuances, which were utilized to refinance debt and fund acquisitions. The company's strategy is to maintain an investment-grade credit profile, which it successfully did throughout the year. Management indicated plans to fund organic growth primarily through operating cash and debt, with no intention to issue public equity for these needs. The GP/IDR exchange in early 2018 also simplified the capital structure, removing general partner cash distribution requirements.