10-QPeriod: Q2 FY2020

MPLX LP Quarterly Report for Q2 Ended Jun 30, 2020

Filed August 3, 2020For Securities:MPLXMPLXP

Summary

MPLX LP's (MPLX) Q2 2020 filing reveals a significant net loss attributable to MPLX LP of $2.076 billion for the six months ended June 30, 2020, primarily driven by a substantial $2.165 billion impairment expense recognized in the first quarter. This impairment was largely due to the economic disruptions caused by the COVID-19 pandemic and volatile commodity prices, impacting goodwill, equity method investments, and long-lived assets, particularly within the Gathering and Processing (G&P) segment. Despite the net loss, operational performance for the three months ended June 30, 2020, showed resilience, with income attributable to MPLX LP of $648 million, and adjusted EBITDA of $1.227 billion, indicating that core operations are generating positive cash flow. Total revenues and other income for the six months decreased significantly to $3.073 billion from $4.445 billion in the prior year, largely due to the aforementioned impairments and reduced commodity prices. The company's liquidity remains robust, with $4.242 billion in total liquidity available at the end of the quarter. MPLX continues to manage its capital expenditures and operational expenses effectively in response to the challenging economic environment, signaling a focus on cost control and strategic asset management.

Financial Highlights

37 data points
Beta

Revenue

$2.08B

Net Income

$648.00M

31.1% Net Margin

Total Assets

$37.02B

Cash & Equivalents

$67.00M

Free Cash Flow

$776.00M

Financial Statements
Beta
Revenue$2.08B
Operating Expenses$1.20B
Operating Income-$1.61B
Net Income$648.00M

Key Highlights

  • 1Significant impairment charges totaling $2.165 billion were recognized in the first half of 2020, primarily impacting goodwill, equity method investments, and long-lived assets within the G&P segment, driven by the COVID-19 pandemic and commodity price volatility.
  • 2Net loss attributable to MPLX LP for the six months ended June 30, 2020, was $2.076 billion, a stark contrast to the net income of $985 million in the prior year's comparable period.
  • 3Despite the year-to-date loss, the three months ended June 30, 2020, showed positive net income attributable to MPLX LP of $648 million, indicating a recovery in operational profitability.
  • 4Adjusted EBITDA for the six months ended June 30, 2020, was $2.521 billion, a slight increase from $1.850 billion in the prior year, demonstrating the underlying operational cash generation capability.
  • 5Total revenues and other income for the six months decreased by $1.372 billion year-over-year to $3.073 billion, largely attributable to the impairment charges and lower commodity prices.
  • 6The company maintained a strong liquidity position with $4.242 billion available at June 30, 2020, comprising cash and available credit facilities.
  • 7MPLX announced a quarterly distribution of $0.6875 per common unit for the second quarter of 2020, consistent with the first quarter and an increase from the prior year's comparable quarter, signaling confidence in its distribution policy despite the challenging environment.

Frequently Asked Questions

The substantial net loss attributable to MPLX LP of $2.076 billion for the six months ended June 30, 2020, was primarily due to a $2.165 billion impairment expense recognized in the first quarter. This impairment was a result of the economic disruptions from the COVID-19 pandemic and volatile commodity prices, which led to impairments of goodwill, equity method investments, and long-lived assets, particularly in the Gathering and Processing segment.

The pandemic and price volatility significantly reduced global economic activity and demand for midstream services. This led to a decline in forecasted volumes and prices for MPLX's services, triggering impairment assessments for assets and resulting in substantial write-downs. Total revenues for the first six months decreased, and costs and expenses increased significantly due to these impairments.

MPLX maintains a strong liquidity position, with $4.242 billion available at June 30, 2020, including cash and available credit facilities. The company expects its ongoing sources of liquidity, including cash generated from operations and borrowings, to be sufficient to meet short-term and long-term funding requirements, including capital expenditures and quarterly cash distributions.

MPLX has taken steps to manage the economic impacts, including canceling or delaying certain capital expenditures and taking actions to reduce operating expenses. The company declared a quarterly distribution of $0.6875 per common unit for the second quarter of 2020, which is consistent with the first quarter and an increase from the prior year, indicating a continued commitment to its distribution policy.