Q3 2019 Earnings Call
Well over to Kristina Kazarian Kristina you may begin.
Good morning, and welcome to the MPLX third quarter 2019 earnings webcast and conference call. The synchronized slides that accompany this call can be found on MPLX dot com under the Investor tab on the call today, or Gary Heminger, Chairman and CEO , Mike Hennigan, President Pam Beall, CFO and other members of them.
Management team, we invite you to read the Safe Harbor statement and non-GAAP disclaimer on slide two it's a reminder, that we will be making forward looking statements during the call and during the question and answer session that follows actual results may differ materially from what we expect today factors that could cause actual results to differ.
There are included there as well as in our filings with the SEC. Please note that all financial and operational metrics that will be discussed on this call include full quarter result of endeavor logistics now I will turn the call over to Gary Heminger for opening remarks.
Thank you Christina and good morning to everyone. Thank you for joining our call.
As you may have seen earlier today MPC and also formation of a special committee of its board of Directors Love, but Mike stylish to continue to evaluate alternatives to enhance value across its midstream business.
The special Committee will focus on analyzing valuation structures leverage as well as other aspects and we will continue to keep our unitholders update as we go forward and before I turn the call over to Mike to go into.
Details and Pam further to go into the financial details, let's let me take a moment to congratulate Mike.
We announced this morning, Mike will be.
Taking over tomorrow as CEO of MPLX.
And the so companies in very good hands with Mike.
Tremendous track record.
In the midstream space, but also his track record of within the entire.
Downstream industry, so off congratulations to Mike and I'll turn it over to you.
Thank you Gary.
I'm pleased to report that MPLX delivered strong results of the third quarter adjusted EBITDA of $1.3 billion, including full quarter results remain Dx, our distributable cash flow $1 billion for the quarter provided strong distribution coverage of 1.4 times and we reported leverage of four times.
As noted in our last earnings call. We successfully closed our acquisition of endeavor logistics on July Thirtyth.
This acquisition simplified Mpcs midstream midstream structure into one public company, allowing us to high grade our commercial opportunities and create a large scale diversified midstream company anchored by free by fee based cash flows.
We progress our slate of high return projects would advance our strategy of creating integrated crude oil and natural gas logistics systems from the Permian to the us Gulf Coast.
We also high graded our growth Capex portfolio and announced our projected 2020 growth capital target.
Our expected portfolio projects demonstrates our continued focus on growing the LNS side of the business in key shale areas in the U.S. and leveraging downstream projects to support Mpcs refineries as well as the growing export market.
Turning your attention this slide four I'd like to provide an update on our initiatives to optimize MPLX is growth capex that we introduced last quarter as I mentioned previously.
Our first priority following the combination with Mdx was to high grade the combined capital portfolio.
We have completed plans to streamline our growth capital expenditures focusing on the most attractive returns.
For 2020, we are targeting growth capex of approximately $2 billion. This is approximately $600 million less than with the two prior midstream companies had projected in total.
Virtually all of the reduced spending is in the GMP segment of our business.
Doing so we believe we have selected the highest return projects available to us, which will best position us to deliver long term value to our unitholders.
Our target to spend approximately 75% of growth Capex in the LNS segment continues to shift in our strategic direction over the last couple of years.
At the same time, our GNP business remains an important part of our portfolio.
Slowing northeast growth allows our portfolio of Premier GMP assets in the region to deliver positive cash flow, which can be deployed to our strategic investments, especially in the Permian.
Additionally, as Gary mentioned MPC announced that is forming and special committee of its board of directors to continue to evaluate alternatives to enhance value across its midstream segment.
Moving to slide five we highlight our strategy to create an integrated crude oil and natural gas logistics system from the Permian to the Gulf Coast.
During the third quarter design and construction of the Whistler natural gas pipeline has progressed.
Deal purchase orders construction agreements and compression purchase orders have all been signed.
Well just remind you that this joint venture project is being designed to transport approximately 2 billion cubic feet per day of natural gas through approximately 475 miles of 42 inch pipe from what how Texas physiology, we'll see market in South Texas.
We expect to ultimately deliver natural gas to Mpcs Galveston Bay refinery.
Supply for the with surprise on will be source from multiple upstream connections in the Permian basin, including direct connections to plants in the Midland basin through an approximately 50 mile 30 inch pipeline lateral as well as a direct connection to the 1.4 billion cubic feet per day Algo Blanca pipeline.
Expect whistler to be in service in the third quarter of 2021.
Last quarter, we announced our participation in the Wink to Webster Permian crude oil project 36 inch diameter pipeline with planned origination points in Lincoln Midland, Texas.
The pipeline will have destination points in the Houston market, including Mpcs Galveston Bay refinery.
We have a 15% equity ownership in the winter Webster joint venture in the project continues to be targeted to the in service in early 2021.
As part of the Mdx acquisition, our Permian business now includes the cone and crude gathering system, a 250000 barrel day capacity system in Lea County, New Mexico, and Loving County, Texas.
Volumes on the system continue to grow the new records, averaging 205000 barrels per day in the third quarter up approximately 8% over the second quarter of 2019.
And lastly, we continue to progress our Permian to Gulf Coast, NGL pipeline called Bangle targeting F. I'd by year end to ensure a 2021 startup.
Slide six provide second quarter logistics in storage highlights for our new combined LNS business.
Total pipeline Throughputs averaged 5.2 million barrels per day, 54% increase over the same quarter last year and the year on year increase in throughput is primarily driven by the acquisition of a mdx.
We're also providing quarter over quarter volume information to help provide an apples to apples view of our business as if we had owned a mdx last quarter on a sequential basis pipeline throughputs increased 2% versus the second quarter of 2019.
Terminal throughput averaged 3.3 million barrels per day for the quarter, an increase of 123% versus the third quarter 2018, the year on year, increasing throughput for our terminals was primarily driven by the addition of a mdx terminalling assets.
On a sequential basis terminal throughputs were flat versus the second quarter of 2019.
Mpcs cap line reversal project progress with the purge of the mainline initiated in October .
Excuse me once reverse cap line will be capable of supplying discounted mid continent, and Canadian crudes in the same change, Louisiana, which has a direct connection to Mpcs Garyville refinery.
Cap line is now expected to begin light crude service in the first half of 2021 with heavy crude service expected in 2022.
Slide seven provide second quarter gathering and processing highlights for the new combined GMP business segment.
Others volumes in our legacy MPLX gathering and processing business increased 12% year over year and 7% sequentially over the second quarter of 2019, primarily in the Marcellus Marcellus Utica basins.
Total gathered volumes averaged 6.3 billion cubic feet per day, representing a 33% increase over the third quarter 2018, and a 6% increase versus the second quarter of 2019, primarily driven by the aim Dx acquisition.
Process volumes in our legacy MPLX gathering and processing business increased 13% year over year and 3% sequentially over the second quarter 2019.
Primarily due to significant volume growth at our Sherwood and Harmon Creek complexes.
Total process volumes increased 23% versus the same quarter last year to 8.8 billion cubic feet per day, primarily driven by the aim Dx acquisition and sequentially process volumes increased 3% over the second quarter of 2019.
This month, we placed the Sherwood 12 processing plant in the Marcellus and the Toronado processing plant in the Permian in service, adding 400 million cubic feet per day of incremental capacity.
We plan to Commission Sherwood 13 later in the fourth quarter of 29 team, bringing the total capacity of this complex to 2.6 billion cubic feet per day.
We also have two additional plants on their various stages of development in the Permian, which would add 400 million more cubic feet per day of incremental capacity.
Once completed this will bring our turn our total Permian processing capacity to 1 billion cubic feet per day with approximately 125000 barrels per day of liquids.
Volumes from our Permian gathering and processing operations with feed our planned Whistler natural gas and our proposed bangle NGL pipelines.
Fractionated volumes in our legacy MPLX gathering and processing business increased 5% year over year, and 4% sequentially due to C and C. Fractionation capacity added in 2018 in the Marcellus Marcellus and Utica Basin.
Total fractionated volumes averaged 547000 barrels per day in the second quarter, representing a 12% increase over the third quarter last year, and a 5% increase versus the second quarter of 2019, primarily driven by the Mdx acquisition.
As part of the acquisition our GMP segment now includes the North Dakota, NGL logistics hub in the Bakken.
This project was built to transport mixed Ngls from a third party third party processing plant in Mckenzie County, North Dakota to our Belfield gas processing plant for fractionation and then the ship. These purity NGL products on manifest in unit trains from our Fryburg rail terminal.
The NGL Logistics Hills project was completed in the second quarter of 29 team and all services, including pipeline fractionation and rail loading our fully operational.
Let me conclude our common my comments by summarizing our strategic direction related to capital spending.
First we continue to shift the portfolio more towards the LNS side of the business and less towards GMP.
Our 2018 plan had roughly 85% of our growth capital targeted to the GMP processing area. Our 2019 plan was approximately 50 50, and we anticipate our 2020 growth capital will target approximately 75% of the spend in the elements segment.
Second related to our northeast GMP business, we continue to diversify the portfolio by investing less than that in the northeast GMP business and more and the other areas of growth, particularly in the Permian.
Our northeast GMP business represents approximately 20% over 2019 expected EBITDA and is projected to be cash flow positive for the first year since the Markwest acquisition.
Third.
With a high graded 2020 capital target, we discussed earlier, we anticipate that outside of the Permian all of our GMP basins in which we operate will be cash flow positive next year to support our investments in the Permian.
I'll now turn the call over to Pam to cover our financial highlights.
Yes, Thanks, Mike turning to our financial highlights on slide eight adjusted EBITDA was $1.3 billion for the third quarter, including results on Andy acts for the full quarter.
Total logistics is storage segment adjusted EBITDA was 849 million, while the gathering and processing segment contributed 424 million in adjusted EBITDA.
For the quarter, we generated $1 billion that distributable cash flow and will return to the quarter approximately 704 million to our unit holders.
This provided distribution coverage of 1.4 times and resulted in 230 293 million of retained distributable cash flow.
For the first nine months of 2019 distributable cash flow was 3.1 billion, which resulted in 1 billion of retained distributable cash flow to fund a portion of our capital investments.
The bridge on slide nine shows the change in adjusted EBITDA from the third quarter of 2018 to the third quarter of 2019.
The acquisition of they Mdx contributed $329 million of adjusted EBITDA.
The logistics and storage segment increased 36 million year over year, primarily driven by growth in crude oil and product volumes through to our pipelines and terminals.
The gathering and processing segment decreased to 29 million, primarily driven by the impact of weighted average NGL prices that were approximately 51% lower year over year.
This was partially offset by strong growth in gathered processed and fractionated volumes from new assets placed into service over the last year.
The bridge on Slide 10 shows the sequential change in adjusted EBITDA from the second quarter of 2019 to the third quarter in 2019.
The acquisition of they Mdx contributed 329 million of adjusted EBITDA on a sequential basis.
Logistics and storage segment increased 14 million.
And this was primarily attributable to again growth in crude I'll end product volumes.
The gathering and processing segment increased 10 million, primarily driven by growth in gathered process and fractionated volumes, partially offset by weighted average NGL prices that were 16% lower from the second quarter two the third quarter.
Slide 11 provides a summary.
Key financial highlights in select balance sheet information.
During and shortly after the quarter, we undertook several financing activities continue to strengthen our balance sheet and provide enhanced liquidity.
These steps were outlined in and fair amount of detailing the earnings release.
We ended the quarter lift on leverage ratio at four times and approximately $5.4 billion of liquidity, including three and a half billion available on our bank revolver $1.4 billion available on our intercompany facility with MPC and 500 million available through our new bank term loan facility.
As you look forward and update your models for 2020 I wanted to highlight a few important considerations that should inform your estimates.
The 2020 gathering and processing volume guidance provided last year at our December 2018 Analyst day was based on the best information available to lessen the months, leading up to that meeting.
As you know shortly after our Investor day, our gathering and processing customers began talking about slower production growth for 2019 and 2000 in 2020.
While the year over year volume growth in in 2019 year to date has remained relatively strong we do expect slower growth. In 2020, then we assumed for the December 18 analyst day, and we do not expect our customers to finalize their drilling programs for 2020 until early next.
Year.
In addition to December 2018 analyst day guidance for 2020 assumed NGL prices of 84 cents a gallon.
I'll remind you our NGL basket price for the third quarter of this year was 44 cents per gallon.
And while there are some we believe this might be a low point and expect to some improvement in NGL prices. We do want to remind you that we estimate that every five cent change in the NGL basket results in 23 million of annual earnings impact.
And the guidance from last year to the recent prices would imply about a 20 200 million dollar impact.
As Mike mentioned, we're focusing on high grading our project backlog in our growth capital target for 2020 is now 600 million lower than the combined 2020 guidance that went provided at the December 2018 Investor day.
For MPLX and a Indiana.
And finally, it's important to note that the new combined company adopted the accounting policies as MPC and MPLX related to planned major maintenance and capitalization and project.
We continue to expect this to result in approximately 25 million of additional expense per quarter.
Or approximately 100 million per year impact to EBITDA with an offsetting reduction to maintenance capital.
As we look forward, we expect to continue to grow free cash flow to our disciplined approach to allocating capital investments to the highest return projects.
With long term strategic focus.
This disciplined capital investment approach should allow us to increase our financial flexibility maintain strong distribution coverage and an investment grade credit profile.
Now, let me turn the call back over to Christine. Thanks, Pam as we open the call for questions. We ask that you limit yourself to one question plus one follow up we may be a prompt for additional questions as time permits with that let us now open the call for questions.
Thank you and we will now begin the question and answer session and if you had a question. Please press Star then one on your Touchtone phone.
I wish to be removed from the Q Press Star then too if you are using a speaker phone you may need to pick up the handset first they suppressing the numbers and once again, if you would like to ask a question. Please press star one.
First question today is from Jeremy Tonet from JP Morgan.
Hi, good morning.
Morning, Jeremy.
Thanks, just wanted to start off with.
Any thoughts you are able to share on portfolio optimization I know that the strategic review is still ongoing in the.
And Kevin dried yet on on that the merger there, but it seems like theres quite a lot of stuff in the portfolio now and maybe not all of it touches and is this integrated.
So I don't know for there's any thoughts you can share on GMP sales, there or maybe said another way could you give us any thoughts on what's the right mix between logistics versus GMP, you think in the portfolio longer term.
Yes, sure Jeremy we don't have anything to report on asset optimization. This quarter as I mentioned earlier, we would love to.
Continue to move our strategy from a capital standpoint towards the LNS business. We are interested it to time is right and the valuations are correct to optimize the portfolio, but with the current macro environment around the natural gas business.
We don't plan on given any assets away, they're all generating free cash at this point, so absent any activity there.
I think youve been you've heard us say on the call that will continue to deploy more capital towards Yelena side of the business and I mentioned in his prepared remarks about 75% of our 2020 capital will go towards the LNS size of business and at the same time, the GMP side of the business is kicking off a lot of cash.
Northeast exposure is a very good solid part of our portfolio and it's going to continue to kick off a lot of cash as we have.
It's going to be a little slower growth than we've had in the past, but generate net cash.
Outlay enables us to continue to invest a little bit down in the Permian as we diversify the portfolio.
Thanks for that.
Maybe just turning to a high level question with regards to return to capital seems like there's a lot of a distress in the market today and the midstream market continues to evolve. So just wondering if you could share your latest thoughts with regards to how you think about returning capital between.
Distributions any growth there if that makes sense at any context or buybacks or how that all kind of place together.
Yeah, Jeremy its PMSO in return of capital has been that very big part for midstream companies and I think a well continue to be a very big part of the thesis we have been and returning penny a quarter distribution growth. This year and we haven't provided that guidance for next year.
But we.
We continue to believe thats going to be a very important part of the value proposition for investors going forward.
And as Mike highlighted with our focus on high grading the portfolio.
Shrinking the amount of capital we're investing in the business. Our focus is on generating free cash. So that we can fund a greater portion of our investments in the business with cash we generated from operations and obviously, we have to balance that with keeping the appropriate leverage maintaining an investment grade credit profile is paramount importance.
To us.
So it's really balancing those things, but our focus is going to be on in a strengthening our financial flexibility.
Returning capital to shareholders is an important part of that prospect.
Thank you and our next question is from Shinier Gershuni from you BS.
Good morning, everyone.
I wanted to start off with the the committee that's been put together I think led by Mr. study.
It seemed interesting that if the word midstream was used to not MPLX and I'm trying to understand what is the mission of this committee in terms of extracting are creating value.
Is it just going to be from an empty. The perspective is it can be options to create value from an MPLX perspective, what are the different options that they're going to be looking at just wondering if you can give some color on that and the timeline on when we expect that concludes.
Yes.
Sure there this.
Maybe.
We chose wrong, where there's is but the we look to midstream as being synonymous with MPLX levels of few other assets will then midstream now we will.
I think that's really why we used the term midstream smss still to be considered one of that are going to be dropdown into MPLX into the future but.
I wouldn't read anything into whether it's been streamers MPLX. It's it's all of our logistics type assets.
Yes.
Are you able to talk to the mission of it and what different options. There can you look yes.
Yes, I'll have Mike.
Go into the details.
Sarah.
One of the things I'll, just remind everybody is weak we stated publicly back in the summer that we had a mid engaged for quite some time with moldable external advisors as well as our internal team on ways to unlock value in the midstream for both MPLX and MPC and.
I had told people earlier that we've analyzed over 25 cases, we've analyzed different structures weve looked at cash flow impacts balance sheet impacts tax considerations transaction costs.
Liquidity outcomes and credit ratings synergies dis synergies C Corp, not as C Corp asset optimization portfolio realignment I mean, we've looked at everything and we've said consistently it's 25 plus different cases, the bottom line to date, though is we have not found the silver.
Bullet to act on that would create long term value and Thats why we haven't announced any activity in this regard those so thats, where we are to this point.
We obviously support the Board's special committee to continue to evaluate options and we're going to continue to do that ourselves we're going to continue to challenge ourselves to see if there's ways that we can create value, but up until this point after looking at all the different permutations that we can come up with and engaging moldable advisors.
We have not found that that silver bullet to act on.
Thank you. Our next question is from Spiro Dounis from credit Suisse.
Hey, good morning, everyone and congrats Mike.
Starting off with the midstream review and thinking about timing. He has had mentioned that we should conclude around April next year and I think we're all to some degree expecting 2020, EBITDA guidance, maybe well before that so just curious to 2020 guidance get get tethered to that reviewing our can those to be separate.
So spiro one of the things that we learn the last time in guidance is we had given in December of 18, and then the producing community came out with a lower growth profile profile in early 19. So one of the dynamics that we have is the producers look over their portfolio and get.
Their plans together, but they don't really come public with them until the early part of the next year. So so at this point. The one thing we did want to share with you was our best look at our capital and I thought it was a good.
Realization for the market to understand that we are optimizing both MPLX named Dx together trying to find synergies commercially as well as on the capital side. So we're very happy that we've gotten that capital program from 2.6 down to 2.0, and that's what we have guided for at this time, but any additional information.
From the producers, we don't expect to have until the early part.
Next year. So that's a that's one of the dynamics that we learned from this last time and then with regards to the committee of like you said, they're going to.
Engage and Mike spaces, leading it as Gary mentioned and entirely will continue to supported as well as I guess I continue to challenge ourselves and continue to look for ways. Because we're we're all very frustrated both unit holders and ourselves as to where the equities have traded so it is of high priority for us and we continue to look for opportunities.
But I guess, so we havent found something that we think is is worthy of action.
Yeah, No. That's a fair appreciate the color and then you mentioned 2020, Capex, which segways into the next question here I know you mentioned, mostly GMP, but maybe you could just provide a little more detail, maybe regionally kind of where most of that that fat is kind of been trend out and then budget and then just more color around does that does it contemplate any sort of asset sales or dropped.
Downs from NBC MPC in other words could asset sales take that figure lower and would you try and balance that out with assets from MPC.
Yes. So we have not included any asset sales in that analysis and to your question as to where it was it's kind of been directed across the portfolio and I mentioned, mostly in the GMP segment. We're we're happy with our GMP portfolio from a cash standpoint, we're now kicking off cash as I mentioned and we're kicking off a lot of.
Cash up in the northeast so we're in a real good position there and we've kind of directed a little bit more of the capital into the LNS segment, because we want to diversify the portfolio little bit more and kind of broaden our LNS segment to a larger extend and that's what we've been doing over the last couple of years.
Just just repeating in 2018, 85% of the capital was targeted in GMP and in 2020, 75% of it will be targeted into LNS. So we're kind of continued to strategically repositioned the portfolio towards LNS and enjoy the cash generation, that's encouraging NRG MP business.
Thank you. My next question is from a swap spread on from Bank of America Securities.
Good morning, everyone first congratulations to both dairy and Mike and thanks for taking my question.
Thanks for all the color on your thoughts are on GNP, but I wanted to dig a little further into that so as you hi, greater future Capex and continue to current review of your asset base thinking longer term is retaining the entirety of your GNP business still a strategy priority for you at NBC.
And also regarding portfolio optimization, you mentioned in the earlier MPC call that.
So if you're GNP assets or not gardening market a fair market value.
So I was wondering if you can share softer thoughts in terms of GMP priority and how you plan on managing going forward.
Yeah, I don't want to repeat myself, but you know our GMT priority was to make sure that we have cash generation coming out of all the basins to help support the growth in that business down in the Permian. So that's what we've trimmed out of the of the budget going from that 2.6 capital down the too, but we are very.
He happy with the cash flow generation from these assets, we've deployed quite a bit of capital in the area, particularly in the northeast and I know, we get a lot of questions around northeast GNP and I've said in on many occasions that affected the northeast is slowing down a little bit fits what we're trying to do as far as diversification, we do bill.
Leaves the northeast will continue to grow up I'm going to let pan make a few comments on some of the recent data that we've gotten as far as a public statements, but we believe the northeast is going to continue to grow we've deployed a lot of capital. There is is that is kicking off cash. So for right now we're continuing on the path that we've been on which is continue to move the port.
Folio more towards LNS little less towards GNP enjoy the cash generation is coming off that business to support our growth in the other area and then I think you're going to see us continue to high grade that portfolio. We've spent between the two MLP is close to $3 billion.
Last year and now we're bringing that down to 2 billion as we high grade and I think you'll see more of that from us in the future as well.
Yes, just to elaborate on what Mike said about where we are spending the capital. It is very focused on the Permian. So we will continue to invest in gathering and processing in the Permian and we'll be leveraging the gathering and processing business. There into these large long haul downstream pipelines so the pipeline.
For the linked to Webster crude pipeline natural gas pipeline Whistler.
And then the project that we're still advancing the bangle pipeline, which is an NGL pipeline. So we have the enough in flight.
About five plants India.
The Permian that will generate about 129000 barrels a day and liquids and that would be available to move on an NGL pipeline and a quite a bit of of gas that at least the bcf of gas will will be from our own plant. So we continue to allocate capital in the Permian. So that we can leverage that into some of the downstream projects also.
The cone and crude gathering he has been an important element and that will continue to decent Greg.
Yes. This is Greg for Joe just want to make one comment regarding the northeast.
We have deployed a large amount of capital the northeast and it's been.
Traditionally just in time, we've as we've added.
Cryogenic processing capacity in de Ethanization capacity on an individual facility in customer basis, and then we grow or Youre hopedale fractionation capacity as well if you look at our numbers were 93% utilization in the Marcellus right now and so good capital. It's been deployed is being used and now we're able to sort of.
Dial down from eight or 10 plants, so year to one or two and just growing where we have been be season, and gradually incrementally growing fractionation with that and we're also preparing for the Michelle Minorca.
Hundred plus thousand barrels a day cracker, that's coming up.
Soon and though there were deployed to.
We've deployed de Ethanization capacity to fill a significant majority of that that demand awful our system.
And I'll just add into two let Greg sent their that now I mentioned earlier that the growth has been relatively strong in 2019, but just to give you an idea for the Marcellus and Utica basins combined our gathering volumes are up 20% this year year to date.
Process volumes were up 16%.
And fractionated volumes were up 14%, so very strong volume growth here in 2019, despite some of the more bearish outlook cuts in the market today and again, we do expect that volume or growth will come down some but we but we do expect there to continue to be to be growth, especially in areas that have the.
Have that wet gas components and and the value of Ngls, we expect might have had bottomed and so we're looking for some potential improvement there as well.
Got it that's helpful. Just a quick one.
On bank goal.
Can you give us some color on water saw the gating items on if I'd, there and where the two fractionators that have discussed feature in that plan.
Yes, so we're still excited about the bangle project.
One of the things that's occurring as we speak is paper documentation occurring between parties and had mentioned that a couple of times. So right now we have a a strong discipline to make sure that we're not going to go forward unless we have a lot of support we believe we do have that support we're engaged in a lot of documentation at this.
Point.
Some of the specific details on that are still being worked out so I'm not going to go into a further details there because we will come into a a critical point here and I said in our prepared remarks that we are looking to have if I'd in the next coming months. So we're we're right at that critical point to determine the go forward basis for the.
Project.
Thank you. Our next question is from Shinier Gershuni from U.S.
Hi, So my follow up question that I wanted to ask earlier was.
With respect to the Speedway spin.
Steve we become a material.
Customer or counterparty to MPLX on a on a go forward basis and is there any risk to any contracts being renegotiated as part of Thats been.
Oh this is Gary scenario no we don't expect.
All all of that though the supply agreement between MPC and speedway, so really be upstream of all of any logistics assets.
Whatsoever, we don't have any ties even today between us speedway from a MLP standpoint.
Between Speedway and.
And MPC.
Alright, perfect. Thank you very much appreciated.
Thank you and we do have time for one final question or last question today is from Jeremy Tonet from JP Morgan.
Hi, Good morning, Thanks for taking me that man here, just wanted to touch base Theres been some.
Talk about producers looking to renegotiate contracts on the midstream side Antero has been talking about that a bit. So it was just wondering if you're able to comment on that at all what that could mean for for MPLX.
Yeah, Jeremy yet, obviously, we're always having discussions with our customers related to fees and we always want to offer customers competitive fee.
Our philosophy is theres a win win arrangement that's different than the current situation. We're happy to have this discussion, but but obviously it needs to work for both parties. So we're open to those discussions as long as at the end that today, we feel it's a win win for both parties.
But other than that we haven't had anything that I would comment on at this point.
That makes sense that's it for me. Thank you.
You're welcome.
And with that.
If your last question. Thank you for joining us today and thank you for your interest in MPLX.
Should you have additional question or would you like clarification on any they topics discussed. This morning, we will be available to take your calls thank you operator.
Thank you and this does conclude today's conference you may disconnect at this time.