01—Abstract
Summary
Summary of the 10-K filed February 28, 2020. Cited figures are marked; the original filing is the authoritative source.
MPLX LP's 2019 10-K report highlights a significant year characterized by the transformative acquisition of Andeavor Logistics LP (ANDX), which substantially expanded MPLX's operational footprint and diversified its asset base.
The company demonstrated resilience and growth across its Logistics and Storage (L&S) and Gathering and Processing (G&P) segments. The strategic relationship with Marathon Petroleum Corporation (MPC) remains a cornerstone, providing stable, fee-based revenue streams through long-term agreements with minimum volume commitments. Financially, MPLX navigated increased debt levels resulting from the ANDX acquisition and other financing activities while maintaining an investment-grade credit profile.
The company's business strategy focuses on capturing the full midstream value chain, enhancing cash flow stability through fee-based services, growing in premier basins, and maintaining financial discipline. Key growth initiatives include expansion projects for pipelines like the Wink to Webster and Whistler, further strengthening MPLX's midstream infrastructure network.
02—Key points
Key Highlights
- Completed the acquisition of Andeavor Logistics LP (ANDX) on July 30, 2019, significantly expanding MPLX's asset base and operational footprint.
- Achieved substantial growth in service revenue and rental income across both Logistics and Storage (L&S) and Gathering and Processing (G&P) segments, driven by the ANDX acquisition and organic growth.
- Executed significant financing activities including a $1.0 billion term loan and $2.0 billion in senior notes, while increasing credit facility capacity to $3.5 billion.
- Invested heavily in growth capital expenditures, including joint ventures for major pipeline projects like the Wink to Webster and Whistler pipelines, scheduled for service in 2021.
- Maintained a strategic relationship with Marathon Petroleum Corporation (MPC), which accounted for a significant portion of revenues and provided stable, fee-based income streams.
- Recorded a $1.2 billion goodwill impairment in the G&P segment, primarily due to updated drilling activity forecasts impacting producer customer growth.
- Intends to maintain an investment-grade credit profile and announced organic growth capital plans of $1.5 billion for 2020, focusing on expanding processing capacity and pipeline capabilities.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-KFY2019filed February 28, 2020Financial Statements
FY2019 against FY2018
| Line item | FY2019FY2018 | Change |
|---|---|---|
| Revenue | $9.04B$7.00B | +29.1% |
| Operating Expenses | $6.66B$4.28B | +55.8% |
| Operating Income | $2.38B$2.73B | −12.9% |
| Net Income | $1.03B$1.82B | −43.2% |
05—Questions
Frequently Asked Questions
What was the impact of the Andeavor Logistics LP (ANDX) acquisition on MPLX's operations and finances?
The acquisition of ANDX, completed on July 30, 2019, significantly expanded MPLX's asset base and operational footprint, particularly on the West Coast. It contributed substantially to revenues across both the L&S and G&P segments. However, it also led to increased debt levels and included a significant goodwill impairment of $1.2 billion in the G&P segment.
How does MPLX's relationship with Marathon Petroleum Corporation (MPC) affect its business?
MPLX has a strategic relationship with MPC, which owned approximately 63% of MPLX's outstanding common units as of December 31, 2019. This relationship is a key competitive strength, providing stable and predictable revenue streams through long-term, fee-based agreements with minimum volume commitments. MPC is a significant source of MPLX's revenues, particularly within the L&S segment.
What are MPLX's key growth strategies and upcoming projects?
MPLX's growth strategies include capturing the full midstream value chain, enhancing cash flow stability, growing in premier basins, and maintaining financial discipline. Key upcoming projects include the development of the Wink to Webster crude oil pipeline and the Whistler natural gas pipeline, both expected to be in service in 2021. The company is also focused on terminal and marine fleet expansions, and increasing processing and fractionating capacity.
What is the significance of the goodwill impairment reported for the G&P segment?
MPLX recorded a $1.2 billion goodwill impairment in the G&P segment during 2019. This impairment was primarily driven by updated forecasts indicating a slowing of drilling activity by producer customers, which consequently reduced production growth forecasts and negatively impacted the fair value assessment of the reporting unit to which the goodwill was allocated.
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