Did MPLX meet its distribution and coverage targets in the first quarter of 2024?

Yes. MPLX declared a first-quarter 2024 distribution of $0.85 per common unit, up from $0.775 a year earlier. Distribution coverage was 1.6x, the same as the prior-year quarter, based on DCF attributable to GP and LP unitholders of $1,360 million against total GP and LP distributions declared of $864 million.

Why did adjusted free cash flow fall so sharply compared with the prior year?

Adjusted free cash flow was $294 million, down from $1,005 million in the first quarter of 2023. The main driver was $996 million of net cash used in investing activities, which included the $622 million Utica acquisition (net of cash acquired) and a $92 million contribution to Dakota Access to fund a joint venture debt repayment. Those outflows, along with higher growth capital and investments in unconsolidated affiliates, reduced adjusted free cash flow.

How is MPLX funding the gap between cash flow and distributions?

In the quarter, distributions and unit repurchases exceeded adjusted free cash flow. MPLX used its cash balance, which fell to $385 million from $1,048 million at year-end 2023. It also had $2.0 billion available under its bank revolving credit facility and $1.5 billion available under its intercompany loan with Marathon Petroleum, which had no borrowings outstanding at quarter-end. Management also noted that the stability of cash flows supports leverage in the range of 4.0x.

What are the main growth projects investors should watch?

The Preakness II 200 mmcf/d processing plant in the Delaware basin is approaching startup, and the Secretariat plant is expected online in the second half of 2025, bringing Delaware processing capacity to 1.4 bcf/d. In the Marcellus, Harmon Creek II was placed into service in the first quarter. In logistics, the ADCC pipeline lateral is expected in service in the third quarter of 2024, the BANGL expansion to 200 mbpd is expected by the first half of 2025, and the Whistler and Rio Bravo pipeline combination is expected to close in the second quarter of 2024, subject to regulatory approvals.

Are there any concerns in the operating results?

Pipeline throughput fell 6% to 5.3 million bpd, with crude pipelines down 5% and product pipelines down 8%, and terminal throughput declined 5%. Gathered volumes fell 2% to 6.2 bcf/d, although Southwest and Rockies gathering grew strongly. Management said refinery volume changes had limited financial impact because of contract structure. Part of the G&P improvement also came from a one-time non-cash gain of $20 million, so underlying growth is somewhat lower than the reported figure.

MPLX/MPLXP 8-K: Earnings & Results

01—Abstract

Summary

Summary of the 8-K filed April 30, 2024. Cited figures are marked; the original filing is the authoritative source.

MPLX LP reported first-quarter 2024 results on April 30, 2024, with net income attributable to MPLX of $1,005 million^a (vs. $943 million a year earlier), adjusted EBITDA attributable to MPLX of $1,635 million (vs. $1,519 million), and distributable cash flow of $1,370 million (vs. $1,268 million).

Net cash provided by operating activities was $1,291 million^b. Distribution coverage held at 1.6x, with a first-quarter distribution of $0.85 per common unit, up from $0.775 a year earlier, and the leverage ratio improved to 3.2x from 3.3x at year-end 2023. The partnership returned $951 million to unitholders in the quarter, including $75 million of public common unit repurchases.

Growth drove the quarter. Logistics and Storage adjusted EBITDA rose 7% to $1,098 million^c on higher tariff rates (average pipeline tariff up 13% to $1.02 per barrel), even though pipeline throughput fell 6%. Gathering and Processing adjusted EBITDA rose 9% to $537 million, helped by a $20 million non-cash gain tied to the acquisition of the remaining Utica joint venture interest.

Processed volumes grew 9% to 9.4 bcf/d, led by the Marcellus and Delaware basins. Management highlighted the $625 million^d Utica acquisition (closed March 2024), the Harmon Creek II plant now in service, the Preakness II plant nearing startup, and the planned Whistler/Rio Bravo joint venture expected to close in the second quarter of 2024. Investors should note that adjusted free cash flow was only $294 million, and after $876 million of distributions, adjusted free cash flow after distributions was negative $582 million.

That shortfall was driven largely by the $622 million Utica acquisition, and it means the partnership funded part of its payout and buybacks from its balance sheet, including $1.5 billion of available intercompany loan capacity from Marathon Petroleum. Cash fell to $385 million from $1,048 million at year-end.

Total debt was roughly flat at $20.4 billion. Declining pipeline throughput and the reliance on external funding for the gap are the key points to monitor.

02—Key points

Key Highlights

Net income attributable to MPLX rose 7% to $1,005 million, and adjusted EBITDA attributable to MPLX rose 8% to $1,635 million year over year.
Distributable cash flow of $1,370 million covered the $0.85 per-unit distribution 1.6x, the same coverage as a year earlier, with the distribution up 10% from $0.775.
Logistics and Storage adjusted EBITDA increased 7% to $1,098 million, driven by a 13% rise in average tariff rates despite a 6% decline in pipeline throughput.
Gathering and Processing adjusted EBITDA increased 9% to $537 million, with processed volumes up 9% to 9.4 bcf/d and a $20 million non-cash gain included.
Adjusted free cash flow of $294 million did not cover $876 million of distributions, leaving adjusted free cash flow after distributions at negative $582 million, largely due to the $622 million Utica acquisition.
Leverage improved to 3.2x from 3.3x at year-end 2023, and cash fell to $385 million from $1,048 million, with $2.0 billion available on the revolver and $1.5 billion on the MPC intercompany loan.
Growth pipeline remains focused on the Permian and Marcellus, including the Preakness II plant nearing startup, Secretariat plant expected in 2H 2025, and BANGL expansion to 200 mbpd by 1H 2025.

03—Questions

Frequently Asked Questions

Did MPLX meet its distribution and coverage targets in the first quarter of 2024?
Yes. MPLX declared a first-quarter 2024 distribution of $0.85 per common unit, up from $0.775 a year earlier. Distribution coverage was 1.6x, the same as the prior-year quarter, based on DCF attributable to GP and LP unitholders of $1,360 million against total GP and LP distributions declared of $864 million.
Why did adjusted free cash flow fall so sharply compared with the prior year?
Adjusted free cash flow was $294 million, down from $1,005 million in the first quarter of 2023. The main driver was $996 million of net cash used in investing activities, which included the $622 million Utica acquisition (net of cash acquired) and a $92 million contribution to Dakota Access to fund a joint venture debt repayment. Those outflows, along with higher growth capital and investments in unconsolidated affiliates, reduced adjusted free cash flow.
How is MPLX funding the gap between cash flow and distributions?
In the quarter, distributions and unit repurchases exceeded adjusted free cash flow. MPLX used its cash balance, which fell to $385 million from $1,048 million at year-end 2023. It also had $2.0 billion available under its bank revolving credit facility and $1.5 billion available under its intercompany loan with Marathon Petroleum, which had no borrowings outstanding at quarter-end. Management also noted that the stability of cash flows supports leverage in the range of 4.0x.
What are the main growth projects investors should watch?
The Preakness II 200 mmcf/d processing plant in the Delaware basin is approaching startup, and the Secretariat plant is expected online in the second half of 2025, bringing Delaware processing capacity to 1.4 bcf/d. In the Marcellus, Harmon Creek II was placed into service in the first quarter. In logistics, the ADCC pipeline lateral is expected in service in the third quarter of 2024, the BANGL expansion to 200 mbpd is expected by the first half of 2025, and the Whistler and Rio Bravo pipeline combination is expected to close in the second quarter of 2024, subject to regulatory approvals.
Are there any concerns in the operating results?
Pipeline throughput fell 6% to 5.3 million bpd, with crude pipelines down 5% and product pipelines down 8%, and terminal throughput declined 5%. Gathered volumes fell 2% to 6.2 bcf/d, although Southwest and Rockies gathering grew strongly. Management said refinery volume changes had limited financial impact because of contract structure. Part of the G&P improvement also came from a one-time non-cash gain of $20 million, so underlying growth is somewhat lower than the reported figure.

04—Continue

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