Attached files
| file | filename |
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| 8-K - 8-K - MPLX LP | mplxform8-kq12018earningsr.htm |
| EX-99.1 - EXHIBIT 99.1 - MPLX LP | mplxq12018earningsrelease.htm |
First-Quarter 2018
Earnings Conference
Call Presentation
April 30, 2018
Forward‐Looking Statements
This presentation contains forward-looking statements within the meaning of federal securities laws regarding MPLX LP (“MPLX”) and Marathon Petroleum Corporation (“MPC“). These forward-looking statements relate to, among
other things, expectations, estimates and projections concerning the business and operations of MPLX and MPC, including strategic initiatives and our value creation plans. You can identify forward-looking statements by words such
as “anticipate,” “believe,” “design,” “estimate,” “expect,” “forecast,” “goal,” “guidance,” “imply,” “intend,” “objective,” “opportunity,” “outlook,” “plan,” “position,” “pursue,” “prospective,” “predict,” “project,” “potential,” “seek,” “strategy,”
“target,” “could,” “may,” “should,” “would,” “will” or other similar expressions that convey the uncertainty of future events or outcomes. Such forward-looking statements are not guarantees of future performance and are subject to risks,
uncertainties and other factors, some of which are beyond the companies’ control and are difficult to predict. Factors that could cause MPLX’s actual results to differ materially from those implied in the forward-looking statements
include: negative capital market conditions, including an increase of the current yield on common units, adversely affecting MPLX’s ability to meet its distribution growth guidance; our ability to achieve the strategic and other objectives
related to the strategic initiatives discussed herein and other proposed transactions; adverse changes in laws including with respect to tax and regulatory matters; the adequacy of MPLX’s capital resources and liquidity, including, but
not limited to, availability of sufficient cash flow to pay distributions and access to debt on commercially reasonable terms, and the ability to successfully execute its business plans and growth strategy; the timing and extent of changes
in commodity prices and demand for crude oil, refined products, feedstocks or other hydrocarbon-based products; continued/further volatility in and/or degradation of market and industry conditions; changes to the expected
construction costs and timing of projects; completion of midstream infrastructure by competitors; disruptions due to equipment interruption or failure, including electrical shortages and power grid failures; the suspension, reduction or
termination of MPC’s obligations under MPLX’s commercial agreements; modifications to earnings and distribution growth object ives; our ability to manage disruptions in credit markets or changes to our credit rating; compliance with
federal and state environmental, economic, health and safety, energy and other policies and regulations and/or enforcement actions initiated thereunder; adverse results in litigation; changes to MPLX's capital budget; other risk
factors inherent to MPLX’s industry; and the factors set forth under the heading “Risk Factors” in MPLX’s Annual Report on Form 10-K for the year ended Dec. 31, 2017, filed with the Securities and Exchange Commission (“SEC”).
Factors that could cause MPC’s actual results to differ materially from those implied in the forward-looking statements include: risks associated with the proposed transaction between MPC and Andeavor, including, but not limited to,
our ability to complete the proposed transaction on anticipated terms and timetable, the ability to obtain stockholder and government approval, the ability to satisfy various other conditions to the closing of the proposed transaction, the
risk that the cost savings and any other synergies from the proposed transaction may not be fully realized or may take longer to realize than expected, disruption from the proposed transaction making it more difficult to maintain
relationships with customers, employees or suppliers, and risks relating to any unforeseen liabilities of Andeavor; our abili ty to achieve the strategic and other objectives related to the strategic initiatives discussed herein; our ability to
manage disruptions in credit markets or changes to our credit rating; adverse changes in laws including with respect to tax and regulatory matters; changes to the expected construction costs and timing of projects; continued/further
volatility in and/or degradation of market and industry conditions; the availability and pricing of crude oil and other feedstocks; slower growth in domestic and Canadian crude supply; the effects of the lifting of the U.S. crude oil export
ban; completion of pipeline capacity to areas outside the U.S. Midwest; consumer demand for refined products; transportation logistics; the reliability of processing units and other equipment; MPC’s ability to successfully implement
growth opportunities; the impact of adverse market conditions affecting MPC’s midstream business; modifications to MPLX earnings and distribution growth objectives, and other risks described above with respect to MPLX;
compliance with federal and state environmental, economic, health and safety, energy and other policies and regulations, including the cost of compliance with the Renewable Fuel Standard, and/or enforcement actions initiated
thereunder; adverse results in litigation; changes to MPC’s capital budget; other risk factors inherent to MPC’s industry; and the factors set forth under the heading “Risk Factors” in MPC’s Annual Report on Form 10-K for the year
ended Dec. 31, 2017, filed with the SEC. In addition, the forward-looking statements included herein could be affected by general domestic and international economic and political conditions. Unpredictable or unknown factors not
discussed here, in MPLX’s Form 10-K or in MPC’s Form 10-K could also have material adverse effects on forward-looking statements. Copies of MPLX’s Form 10-K are available on the SEC website, MPLX’s website at
http://ir.mplx.com or by contacting MPLX’s Investor Relations office. Copies of MPC’s Form 10-K are available on the SEC website, MPC’s website at http://ir.marathonpetroleum.com or by contacting MPC’s Investor Relations office.
Non-GAAP Financial Measures
Adjusted EBITDA, distributable cash flow (DCF) and distribution coverage ratio are non-GAAP financial measures provided in this presentation. Adjusted EBITDA and DCF reconciliations to the nearest GAAP financial measure are
included in the Appendix to this presentation. Distribution coverage ratio is the ratio of DCF attributable to GP and LP unitholders to total GP and LP distributions declared. Adjusted EBITDA, DCF and distribution coverage ratio are
not defined by GAAP and should not be considered in isolation or as an alternative to net income attributable to MPLX, net cash provided by operating activities or other financial measures prepared in accordance with GAAP. The
EBITDA forecasts related to certain projects were determined on an EBITDA-only basis. Accordingly, information related to the elements of net income, including tax and interest, are not available and, therefore, reconciliations of
these non-GAAP financial measures to the nearest GAAP financial measures have not been provided.
2
Opening Comments
MPC announced its plan to combine with Andeavor creating a leading U.S. energy
company
– At close, MPC will own GPs of MPLX and Andeavor Logistics, and the majority of LP units of
both partnerships
– MPC will evaluate long-term structure at appropriate time following the closing of the Andeavor
transaction
Reported record first-quarter results driven by strong contributions from underlying
base business and February 1 dropdown
Extraordinarily well-positioned to deliver long-term value for investors
3
First Quarter Highlights
Reported record first-quarter adjusted EBITDA of $760 million and distributable cash
flow of $619 million
Declared 21st consecutive quarterly distribution increase to $0.6175 per common unit
for the first-quarter 2017
Affirmed 2018 distribution growth guidance of 10% and execution of self-funding model
Strong financial position at quarter end with 3.8x leverage and coverage ratio of 1.29x
4
MPC Refineries
MPLX Terminals:
Owned and Part-owned
MPLX Pipelines:
Owned & Operated
MPLX Interest Pipelines:
Operated by Others
Cavern
Barge Dock
Headquarters
MPLX Operated Pipelines:
Owned by Others
MPLX Refining
Logistics Assets
Logistics & Storage Segment
5
Completed dropdown of refining
logistics assets and fuels distribution
services from MPC on February 1
Expanded marine fleet by 2 boats and
13 barges; further growth planned later
this year
Robinson butane cavern placed in
service in late March
Ozark and Wood River-to-Patoka
pipeline expansion projects expected
to complete by mid-2018
As of March 31, 2018
Gathering & Processing Segment
6
Marcellus & Utica Operations
Gathered volumes averaged 2.7 Bcf/d,
~46% increase over first-quarter 2017
Processed volumes averaged 5.1 Bcf/d,
~10% increase over first-quarter 2017
Sherwood 9 plant began ramping up
operations
Commenced operations of Houston 1
plant in March
(a)Includes amounts related to unconsolidated equity method investments on a 100% basis
(b)Based on weighted average number of days plant(s) in service. Excludes periods of maintenance
Processed Volumes(a)
Area
Available
Capacity
(MMcf/d)
Average
Volume
(MMcf/d)
Utilization
(%)(b)
Marcellus 4,920 4,114 87%
Houston 720 477 87%
Majorsville 1,070 1,016 95%
Mobley 920 725 79%
Sherwood 1,800 1,527 85%
Bluestone 410 369 90%
Utica 1,325 936 71%
Cadiz 525 490 87%
Seneca 800 446 71%
1Q 2018 Total 6,245 5,050 83%
4Q 2017 Total 5,845 5,194 89%
Gathering & Processing Segment
7
Marcellus & Utica Fractionation
Achieved 1Q 2018 fractionated
volumes of ~395 MBPD
Achieved ~18% growth in quarterly
fractionated volumes over first-
quarter 2017
Fractionated Volumes(a)
Area
Available
Capacity
(MBPD)(b)
Average
Volume
(MBPD)
Utilization
(%)(c)
1Q18 Total C3+ 287 219 76%
1Q18 Total C2 244 176 72%
4Q17 Total C3+ 287 227 79%
4Q17 Total C2 244 162 71%
(a)Includes amounts related to unconsolidated equity method investments on a 100% basis
(b)Excludes Cibus Ranch condensate facility
(c)Based on weighted average number of days plant(s) in service. Excludes periods of maintenance
Gathering & Processing Segment
Southwest Operations
(a)Includes amounts related to unconsolidated equity method investments on a 100% basis
(b)Based on weighted average number of days plant(s) in service. Excludes periods of maintenance
(c)West Texas is composed of the Hidalgo plant in the Delaware Basin
(d)Includes Centrahoma volumes sent to third parties. Processing capacity and utilization based on the higher of the
partnership’s portion of Centrahoma JV or the average volume processed
Processed Volumes(a)
Area
Available
Capacity
(MMcf/d)
Average
Volume
(MMcf/d)
Utilization
(%)(b)
West Texas(c) 400 220 63%
East Texas 600 386 64%
Western OK 425 406 96%
Southeast OK(d) 217 217 100%
Gulf Coast 142 96 68%
1Q 2018 Total(d) 1,784 1.325 77%
4Q 2017 Total(d) 1,613 1,373 85%
8
Gathered volumes averaged 1.5 Bcf/d,
~10% increase over first-quarter 2017
Processed volumes averaged 1.3 Bcf/d,
~5% increase over first-quarter 2017
Executing growth strategy
– Commenced operations of 200 MMcf/d
Argo plant, our second in West Texas
(Delaware Basin)
– Continue construction of Omega plant in
Western Oklahoma (STACK) expected to
be operational mid-2018
423
760
0
200
400
600
800
1Q 2017 1Q 2018
$
M
M
Adjusted EBITDA
1Q 2018 Financial Highlights
9
354
619
0
200
400
600
800
1Q 2017 1Q 2018
$
M
M
Distributable Cash Flow
Segment Adjusted EBITDA ($MM)
Three Months Ended
March 31
2017 2018
Logistics and Storage 142 437
Gathering and Processing 281 323
Adjusted EBITDA
10
1Q 2018 vs. 1Q 2017 Variance Analysis
423
L&S
142
47
43
169 24 12
42 760
0
200
400
600
800
1,000
1Q 2017 Adjusted
EBITDA Attributable
to MPLX
1Q 2017 Drop 3Q 2017 Drop 1Q 2018 Drop Non-recurring 1Q18
Drop Impact
Logistics &
Storage
Gathering &
Processing
1Q 2018 Adjusted
EBITDA Attributable
to MPLX
$
M
M
G&P
281
G&P
323
L&S
437
(Terminal, Pipeline &
Storage Assets)
(Joint Interests in Pipeline
& Storage Assets)
(Refinery Logistics
Assets & Fuels
Distribution Services)
Estimated Annual
Adjusted EBITDA
from dropdowns(a)
~$250 MM ~$138 MM ~$1.0 B
Total:
~$1.4 B
(a) Based on previous guidance
MPLX Capitalization, Leverage and Liquidity
11
($MM except ratio data)
As of
3/31/18
Cash and cash equivalents 2
Total assets 21,006
Total debt(a) 11,862
Redeemable preferred units 1,000
Total equity 6,978
Consolidated total debt to LTM pro forma adjusted EBITDA(b) 3.8x
Remaining capacity available under $2.25 B revolving credit agreement 2,247
Remaining capacity available under $500 MM credit agreement with MPC 500
(a)Total debt includes $0 MM of outstanding intercompany borrowings classified in current liabilities as of March 31, 2018
(b)Calculated using face value total debt and LTM pro forma adjusted EBITDA, which is pro forma for acquisitions. Face value total debt includes approximately $495 MM of
unamortized discount and debt issuance costs as of March 31, 2018.
12
Appendix
MPLX Organic Growth Capital Projects
Gathering and Processing Segment
13
(a)Utica Rich- and Dry-Gas Gathering is a joint venture between
MarkWest Utica EMG’s and Summit Midstream LLC.
Dry-Gas Gathering in the Utica Shale is completed through
a joint venture with MarkWest and EMG.
(b)Sherwood Midstream investment
(c)Replacement of existing Houston 35 MMcf/d plant
Processing and Fractionation Shale Resource Capacity
Est. Completion
Date
Sherwood 9 Processing Plant(b) Marcellus 200 MMcf/d In-Service
Houston 1 Processing Plant(c) Marcellus 200 MMcf/d In-Service
Argo Processing Plant Delaware 200 MMcf/d In-Service
Omega Processing Plant Cana-Woodford 75 MMcf/d Mid-2018
Majorsville 7 Processing Plant Marcellus 200 MMcf/d 3Q18
Sherwood 10 Processing Plant(b) Marcellus 200 MMcf/d 3Q18
Sherwood C2 Fractionation Marcellus 20,000 BPD 3Q18
Sherwood 11 Processing Plant(b) Marcellus 200 MMcf/d 4Q18
Harmon Creek Processing Plant Marcellus 200 MMcf/d 4Q18
Harmon Creek C2 Fractionation Marcellus 20,000 BPD 4Q18
Hopedale IV C3+ Fractionation Marcellus & Utica 60,000 BPD 4Q18
NGL Pipeline Expansions Northeast & Southwest N/A Ongoing
Gathering
Est. Completion
Date
Marcellus/Utica Rich- and
Dry-Gas Gathering(a)
Ongoing
Western Oklahoma - STACK
Rich-Gas and Oil Gathering
Ongoing
MPLX Organic Growth Capital Projects
Logistics and Storage Segment
14
Projects Description
Est. Completion
Date
Ozark Pipeline Expansion
Increasing pipeline capacity to 360 MBPD; provides crude sourcing
optionality to Midwest refineries
Mid-2018
Wood River-to-Patoka
Pipeline Expansion
Increasing pipeline capacity to 360 MBPD; provides crude sourcing
optionality to Midwest refineries
Mid-2018
Robinson Butane Cavern
Displaces MPC’s third-party storage services and optimizes butane
handling
In-Service
Texas City Tank Farm MPC and third-party logistics solution 3Q18
Patoka Tank Farm MPC and third-party logistics solution 4Q18
Marine Fleet Expansion
Displaces MPC’s third-party barges and supports increased
demand
2018/2019
Reconciliation of Adjusted EBITDA and Distributable Cash
from Net Income
15
(a)The Partnership makes a distinction
between realized or unrealized gains
and losses on derivatives. During the
period when a derivative contract is
outstanding, changes in the fair value of
the derivative are recorded as an
unrealized gain or loss. When a derivative
contract matures or is settled, the
previously recorded unrealized gain or loss
is reversed and the realized gain or loss of
the contract is recorded.
(b)The Adjusted EBITDA and DCF
adjustments related to the Predecessor
are excluded from adjusted EBITDA
attributable to MPLX LP and DCF prior
to the acquisition dates.
($MM) 1Q 2018 1Q 2017
Net income 423 187
Depreciation and amortization 176 187
Provision for income taxes 4 -
Amortization of deferred financing costs 16 12
Non-cash equity-based compensation 4 3
Net interest and other financial costs 114 66
(Income) loss from equity investments (61) (5)
Distributions from unconsolidated subsidiaries 68 33
Other adjustments to equity method investment distributions 22 -
Unrealized derivative losses(a) (7) (16)
Acquisition costs 3 4
Adjusted EBITDA 762 471
Adjusted EBITDA attributable to noncontrolling interests (2) (1)
Adjusted EBITDA attributable to Predecessor(b) - (47)
Adjusted EBITDA attributable to MPLX LP 760 423
Deferred revenue impacts 9 8
Net interest and other financial costs (114) (66)
Maintenance capital expenditures (25) (12)
Equity method investments capital expenditures paid out (11) (2)
Other - 1
Portion of DCF adjustments attributable to Predecessor(b) - 2
Distributable cash flow attributable to MPLX LP 619 354
Preferred unit distributions (16) (16)
Distributable cash flow available to GP and LP unitholders 603 338
Reconciliation of Adjusted EBITDA and Distributable Cash
from Net Cash Provided by Operating Activities
16
($MM) 1Q 2018 1Q 2017
Net cash provided by operating activities 450 377
Changes in working capital items 178 44
All other, net (3) (9)
Non-cash equity-based compensation 4 3
Net gain on disposal of assets - (1)
Net interest and other financial costs 114 66
Asset retirement expenditures 1 1
Unrealized derivative losses (a) (7) (16)
Acquisition costs 3 4
Other adjustments to equity method investment distributions 22 -
Other - 2
Adjusted EBITDA 762 471
Adjusted EBITDA attributable to noncontrolling interests (2) (1)
Adjusted EBITDA attributable to Predecessor(b) - (47)
Adjusted EBITDA attributable to MPLX LP 760 423
Deferred revenue impacts 9 8
Net interest and other financial costs (114) (66)
Maintenance capital expenditures (25) (12)
Equity method investments capital expenditures paid out (11) (2)
Other - 1
Portion of DCF adjustments attributable to Predecessor(b) - 2
Distributable cash flow attributable to MPLX LP 619 354
Preferred unit distributions (16) (16)
Distributable cash flow attributable to GP and LP unitholders 603 338
(a)The Partnership makes a distinction
between realized or unrealized gains
and losses on derivatives. During the
period when a derivative contract is
outstanding, changes in the fair value of
the derivative are recorded as an
unrealized gain or loss. When a derivative
contract matures or is settled, the
previously recorded unrealized gain or loss
is reversed and the realized gain or loss of
the contract is recorded.
(b)The Adjusted EBITDA and DCF
adjustments related to the Predecessor
are excluded from adjusted EBITDA
attributable to MPLX LP and DCF prior
to the acquisition dates.
Segment Operating Income Reconciliation to Income
From Operations
17
($MM) 1Q 2018 1Q 2017
L&S segment operating income attributable to MPLX 424 156
G&P segment operating income attributable to MPLX(a) 350 309
Segment portion attributable to equity affiliates (53) (40)
Segment portion attributable to Predecessor(b) - 53
Income (loss) from equity method investments 61 5
Other income – related parties 13 11
Unrealized derivative losses(c) 7 16
Depreciation and amortization (176) (187)
General and administrative expenses (69) (58)
Income from operations 557 265
(a)All Partnership-operated, non-wholly owned subsidiaries are treated as if they are consolidated.
(b)The operating income of the Predecessor is excluded from segment operating income attributable to MPLX LP prior to the acquisition dates.
(c)The Partnership makes a distinction between realized or unrealized gains and losses on derivatives. During the period when a derivative contract is outstanding, changes in the fair value of the derivative are
recorded as an unrealized gain or loss. When a derivative contract matures or is settled, the previously recorded unrealized gain or loss is reversed and the realized gain or loss of the contract is recorded.
Reconciliation of Segment Adjusted EBITDA to Net Income
18
(a)The Partnership makes a distinction
between realized or unrealized gains
and losses on derivatives. During the
period when a derivative contract is
outstanding, changes in the fair value of
the derivative are recorded as an
unrealized gain or loss. When a
derivative contract matures or is settled,
the previously recorded unrealized gain
or loss is reversed and the realized gain
or loss of the contract is recorded.
(b) The adjusted EBITDA adjustments
related to the Predecessor are
excluded from adjusted EBITDA
attributable to MPLX LP prior to the
acquisition dates.
($MM) 1Q 2018 1Q 2017
L&S segment adjusted EBITDA attributable to MPLX LP 437 142
G&P segment adjusted EBITDA attributable to MPLX LP 323 281
Adjusted EBITDA attributable to MPLX LP 760 423
Depreciation and amortization (176) (187)
Provision for income taxes (4) -
Amortization of deferred financing costs (16) (12)
Non-cash equity-based compensation (4) (3)
Net interest and other financial costs (114) (66)
(Income) loss from equity investments 61 5
Distributions from unconsolidated subsidiaries (68) (33)
Other adjustments to equity method investment distributions (22) -
Unrealized derivative losses(a) 7 16
Acquisition costs (3) (4)
Noncontrolling interest 2 1
Adjusted EBITDA attributable to Predecessor(b) - 47
Net income 423 187
19