10-QPeriod: Q3 FY2020

MPLX LP Quarterly Report for Q3 Ended Sep 30, 2020

Filed November 6, 2020For Securities:MPLXMPLXP

Summary

MPLX LP reported total revenues and other income of $2,247 million for the three months ended September 30, 2020, a slight decrease from $2,280 million in the prior year period. Net income attributable to MPLX LP was $665 million, an increase from $629 million in the prior year quarter. However, for the nine months ended September 30, 2020, MPLX LP reported a net loss attributable to MPLX LP of $1,411 million, a significant decline from a net income of $1,614 million in the same period last year. This was heavily impacted by a $2,165 million impairment expense recorded in the first quarter of 2020, primarily related to goodwill, intangible assets, and property, plant, and equipment within the Gathering and Processing (G&P) segment. The company's balance sheet shows total assets of $36,662 million as of September 30, 2020, down from $40,430 million at the end of 2019, largely due to decreases in goodwill and equity method investments. Total liabilities stood at $22,599 million, down from $22,849 million. MPLX generated $3,336 million in cash from operating activities for the nine months ended September 30, 2020, an increase from $2,990 million in the prior year period. The company also announced a unit repurchase program authorization of up to $1 billion.

Financial Highlights

37 data points
Beta

Revenue

$2.25B

Net Income

$665.00M

29.6% Net Margin

Total Assets

$36.66B

Cash & Equivalents

$28.00M

Free Cash Flow

$948.00M

Financial Statements
Beta
Revenue$2.25B
Operating Expenses$1.35B
Operating Income-$709.00M
Net Income$665.00M

Key Highlights

  • 1Reported net income attributable to MPLX LP of $665 million for Q3 2020, an increase from $629 million in Q3 2019.
  • 2Recorded a significant net loss attributable to MPLX LP of $1,411 million for the first nine months of 2020, largely due to a $2,165 million impairment expense in Q1 2020.
  • 3Total assets decreased to $36.66 billion as of September 30, 2020, from $40.43 billion at December 31, 2019, primarily due to impairments and a decrease in goodwill.
  • 4Generated $3,336 million in net cash from operating activities for the first nine months of 2020, up from $2,990 million in the prior year.
  • 5Announced a unit repurchase program authorizing up to $1 billion of outstanding common units.
  • 6Maintained compliance with its debt covenants, with a Consolidated Total Debt to Consolidated EBITDA ratio of 3.9 to 1.0 as of September 30, 2020.
  • 7The Dakota Access Pipeline (DAPL) remains operational despite ongoing legal challenges regarding its easement and environmental impact statement requirements.

Frequently Asked Questions

The substantial net loss attributable to MPLX LP in the first nine months of 2020 was primarily driven by a significant impairment expense of $2,165 million recognized in the first quarter of 2020. This impairment was related to goodwill ($1,814 million), intangible assets ($177 million), and property, plant, and equipment ($174 million), mainly within the Gathering and Processing (G&P) segment. These impairments were largely due to a slowdown in drilling activity, reduced production forecasts from producer customers, and volatile commodity prices, exacerbated by the COVID-19 pandemic.

The COVID-19 pandemic significantly impacted MPLX's business, leading to a decline in demand for midstream services and increased price volatility. This resulted in the company taking actions such as canceling or delaying capital expenditures and reducing operating expenses. The economic disruption also contributed to the triggering events that led to the substantial asset impairments recognized in the first quarter of 2020.

The Dakota Access Pipeline remains operational despite ongoing legal challenges concerning its easement and environmental impact statement requirements. If the pipeline is temporarily shut down, MPLX, as a 9.19% indirect owner, would be required to contribute its pro rata share of funds for interest payments and maturing principal. In the event of a permanent shutdown, MPLX would be obligated to contribute its share of the cost to redeem the associated bonds. While these events pose a financial risk, the full impact is uncertain and depends on the ultimate legal and regulatory outcomes.

MPLX announced a unit repurchase program authorizing the repurchase of up to $1 billion of its outstanding common units held by the public. This program indicates management's confidence in the company's financial position and its commitment to returning value to shareholders. The repurchases can be executed through various methods, and the timing and amount will depend on market and business conditions.