MPLX LP Quarterly Report for Q3 Ended Sep 30, 2016

Summary

MPLX LP's third quarter 2016 results demonstrate significant growth driven by the integration of MarkWest, acquired in late 2015, and the acquisition of Hardin Street Marine (HSM) in early 2016. Revenues and income from operations saw substantial increases compared to the prior year, primarily due to the expanded asset base and operational synergies from these transactions. The company successfully managed its liquidity, utilizing proceeds from its ATM program and preferred unit issuance to fund operations and debt repayment, while maintaining its credit ratings. Despite strong operational performance, the company recorded a significant goodwill impairment charge in the first quarter related to the MarkWest acquisition, reflecting challenging commodity price trends and increased cost of capital. Management remains focused on integrating its expanded operations, managing costs, and continuing its growth strategy through strategic dropdowns from MPC, while also navigating potential environmental and legal contingencies.

Key Highlights

• 1Total revenues and other income significantly increased by $489 million (228%) to $703 million for the three months ended September 30, 2016, compared to $214 million in the prior year period, largely due to the MarkWest merger and HSM acquisition.
• 2Income from operations rose by $139 million to $207 million for the three months ended September 30, 2016, compared to $68 million in the prior year period, reflecting improved performance across both Logistics and Storage (L&S) and Gathering and Processing (G&P) segments.
• 3The company issued approximately $984 million in preferred units in May 2016 and raised approximately $499 million through its ATM Program during the first nine months of 2016, enhancing liquidity for capital expenditures and debt repayment.
• 4MPLX LP recorded a goodwill impairment charge of $130 million in the first nine months of 2016, primarily related to the MarkWest acquisition, driven by commodity price deterioration and increased cost of capital.
• 5Long-term debt decreased by approximately $825 million to $4,411 million at September 30, 2016, from $5,255 million at December 31, 2015, primarily due to repayment of the bank revolving credit facility.
• 6The company declared a quarterly cash distribution of $0.5150 per unit for the third quarter of 2016, an increase from the prior year, reflecting confidence in operational performance and cash flow generation.
• 7MPC accounted for a significant portion of MPLX's revenues (28% in Q3 2016) and costs (23% in Q3 2016), highlighting the ongoing related-party relationship and its impact on the business.

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