Q4 2021 MPLX LP Earnings Call
Speaker 1: And so what began as a cost reduction initiative is being embraced by the organization. Now a low-cost culture is being embedded in how we conduct our business.
As a cost reduction initiative is being embraced by the organization now of low cost culture as being embedded in how we conduct our business.
Speaker 1: We brought multiple projects in the service over the last year while maintaining strict capital distance.
We brought multiple projects into service over the last year, while maintaining strict capital discipline.
Speaker 1: Within the L&S segment, our three Permian takeaway projects, Whistler for natural gas, Link to Webster for crude oil, and our NGL project were all placed in the service, and we expect volumes across these systems to ramp over time.
Within the <unk> segment, our three Permian takeaway projects.
Mistler for natural gas.
Wink to Webster for crude oil and our NGL project were all placed into service and we expect volumes across these systems to ramp over time.
Within the GMP segment, both the Smithburg, one processing plant in the Marcellus and the Preakness processing plant in the Permian have started operation.
Speaker 1: Within the GMP segment, both the Smithsburg 1 processing plant in the Marcellus and the Precness processing plant in the Permian have started operation.
We also continued our portfolio optimization efforts and completed the sale of the Abilene a processing plant in Texas, and some minor gathering assets in southern Wyoming for proceeds of approximately $110 million.
Speaker 1: We also continued our portfolio optimization efforts and completed the sale of the Havillina processing plan in Texas and some minor gathering assets in southern Wyoming for proceeds of approximately $110 million.
In addition to our cost reduction and portfolio optimization efforts.
Speaker 1: In addition to our cross-production and portfolio optimization efforts.
Speaker 1: 2021 also benefited from the tailwinds of strong NGL prices and the recovery in U.S. refined product demand.
2021 also benefited from the tailwind of a strong NGL prices and the recovery in U S refined product demand.
All of these items resulted in exceptionally strong cash flow and enable us to return over $4 $2 billion to unit holders through distributions and unit repurchases.
Speaker 1: All these items resulted in exceptionally strong cash flow and enabled us to return over $4.2 billion to unit holders through distributions and unit repurchase.
On our Alaska in logistics and storage assets, we've been working our sales process. Since we last communicated we'll be back to you. When we have more details that we can share.
Speaker 1: On our last-gen logistic and storage assets, we've been working a sales process since we last communicated. We'll be back to you when we have more details that we can share.
Turning to slide four your deck today, we announced our capital outlook for 2022 of $900 million.
Speaker 1: Turning the slide forward, your deck, today we announced our capital outlook for 2022 of $900 million.
Speaker 1: That plan includes approximately $700 million of growth capital, $140 million of maintenance capital, and $60 million for the repayment of our share of the DAPL pipeline joint venture debt due in 2022.
That plan includes approximately $700 million of growth capital of $140 million of maintenance capital and $60 million for the repayment of our share of the <unk> pipeline joint venture debt due in 2022.
Our 2022 capital plan is directed towards investments expected to deliver high capital returns such as expansions and debottlenecking of our existing assets and projects related to the expected increased producer activity.
Speaker 1: Our 2022 capital plan is directed towards investments expected to deliver high capital returns such as expansions and debondled necking of our existing assets and projects related to the expected increase producer activity.
While our capital outlook is primarily focused on our current LMS and G&P footprint. We also continue to evaluate low carbon opportunities, where we can leverage our competitive advantage through technologies that are complementary with our expertise and our asset footprint.
Speaker 1: While our capital outlook is primarily focused on our current LNS and GMP footprint, we also continue to evaluate low-carbon opportunities where we can leverage our competitive advantage through technologies that are complementary with our expertise and our asset footprint.
Speaker 1: Near term, these opportunities are likely to be supported or to be in support of NPCs' renewable efforts, such as investment in our logistics assets, supporting NPCs, Martinez Renewable Fuel's project.
Near term these opportunities are likely to be supported to be in support of mpc's renewable efforts such as investment in our logistics assets supporting Mpc's Martinez renewable fuels project.
Moving to slide five I'd like to provide some comments on our capital allocation framework as I mentioned on last quarter's call.
Speaker 1: Moving to slide five, I'd like to provide some comments on our Capitol allocation framework as I mentioned on last quarter's call.
The foundation of executing this strategy has a strong balance sheet, we continue to target a leverage ratio of around four times and remain committed to an investment grade credit profile.
Speaker 1: The foundation of executing misstrategy is a strong balance.
Speaker 1: We continue to target a leverage ratio of around four times and remain committed to an investment-grade credit profile. Our maintenance capital remains steadfast and our commitment to safely operating our assets, protect the health and safety of our employees, and support the communities in which we operate.
Our maintenance capital, we remained steadfast in our commitment to safely operating our assets protect the health and safety of our employees and support the communities in which we operate.
We continue to have a distribution with very strong coverage and most recently declared a two 5% increase to the base quarterly distribution on November 2nd.
Speaker 1: We continue to have a distribution with very strong coverage and most recently declared a 2.5% increase to the base quarterly distribution on November 2nd.
After these commitments are met our plan focuses on investing to grow the business in 2022. The majority of capital is expected to be directed at opportunities in the Marcellus Permian and Bakken, where we are focused on high capital return projects that expand and debottleneck our existing assets.
Speaker 1: As I stated in the past, we believe this is both a return on and a return of capital business.
As I've stated in the past we believe this is both a return on and a return of capital business.
Speaker 1: Each quarter, we will evaluate our free cash flow after distribution and determine the optimal use for those dollars, be it growth capital, buybacks, or additional distribution.
Each quarter, we will evaluate our free cash flow after distributions and determine the optimal use for those dollars via growth capital buybacks or additional distributions.
Speaker 1: As a reminder, 2021 had many one-off tailwinds which drove our return to capital, including strong NGL prices and assets sales.
As a reminder, 2021 hadn't had many one off tailwind, which drove our return of capital, including strong NGL prices and asset sales.
Speaker 1: We're optimistic about our opportunity to achieve solid operational performance in 2022, and we'll evaluate the needs of the business as we make decisions on incremental return of capital.
We are optimistic about our opportunity to achieve solid operational performance in 2022, and we will evaluate the needs of the business as we make decisions on incremental return of capital.
Speaker 1: Shifting the slide six, we remain focused on leading and sustainable energy by lowering the carbon intensity of our operations and products, improving energy efficiency and conserving natural resources, all while using innovative technologies to do it.
Shifting to slide six we remain focused on leading and sustainable energy by lowering the carbon intensity of our operations and products improving energy efficiency and conserving natural resources, all while using innovative technology to do it.
And we believe the targets, we're setting and are transparent disclosures on how we plan to achieve these targets position us well for the future.
Speaker 1: And we believe that targets we're setting and our transparent disclosures on how we plan to achieve these targets position us well for the future.
Through the end of 'twenty MPLX was nearly halfway to reaching both our methane and freshwater intensity reduction targets and later this quarter. We plan to report the progress we've made on these initiatives in 2021.
Speaker 1: Through the end of 20 MPLX was nearly halfway to reaching both our methane and freshwater intensity reduction target.
Speaker 1: And later this quarter, we plan to report the progress we made on these initiatives in 2021.
Speaker 1: Now let me turn the call over to John to discuss our operational and financial results for the quarter.
Now, let me turn the call over to John to discuss our operational and financial results for the quarter.
Thanks, Mike.
Speaker 2: Slide 7 outlines the Fort Quarter operational and financial performance highlights for our logistics and storage segments.
Slide seven outlines the fourth quarter operational and financial performance highlights for our logistics and storage segment.
<unk> segment, adjusted EBITDA increased $50 million, when comparing fourth quarter, 2021% to 2020 piping.
Speaker 2: L&S segment adjusted EBITDA increased $50 million when comparing fourth quarter 2021 to 2020. Pipeline volumes were up 18% and terminal volumes were up 11% year over year as the industry rebounded from the pandemic. The benefits of these higher throughputs and higher distributions from our pipeline joint ventures were partially offset by lower contracted marine transportation rates with MPC.
Pipeline volumes were up 18% and terminal volumes were up 11% year over year as the industry rebounded from the pandemic the benefits of these higher throughput and higher distributions from our pipeline joint ventures were partially offset by lower contracted marine transportation rates with MPC.
Turning to our capital outlook more than half of our planned 2022 growth capital is directed to the LNR segment, including a number of smaller expansions in debottlenecking projects, such as expanding our Permian natural gas and NGL takeaway systems.
Speaker 2: Turning to our capital outlook, more than half of our planned 2022 growth capital is directed to the LNS segment, including a number of smaller expansions and the bottlenecking projects, such as expanding our Permian natural gas and NGL takeaway.
Moving on to our gathering processing gathering and processing segment.
Speaker 2: Moving on to our gathering and processing segment, slide eight provides the segment's fourth quarter operational and financial performance highlight.
Slide eight provides the segment's fourth quarter operational and financial performance highlights.
Speaker 2: G&P segment-adjusted EBITDA increased $40 million compared to the fourth quarter of 2020, largely due to higher NGL prices. For the quarter, NGL prices averaged $1.05 per gallon, more than double the $0.52 per gallon average in the fourth quarter of 2020.
E&P segment, adjusted EBITDA increased $40 million compared to the fourth quarter of 2020, largely due to higher NGL prices for the quarter NGL prices averaged $1 <unk> per gallon more than double the 52 per gallon average in the fourth quarter of 2020.
These higher NGL prices and this quarter's asset.
Speaker 2: These higher NGL prices and this quarter's asset sale gain of $19 million more than offset the effects of lower volume.
<unk> gain of $19 million more than offset the effects of lower volumes.
Speaker 2: Overall, gathered volumes were up 3% while processing and fractionation volumes were down 2% and 6% respectively compared to the fourth quarter of 2020.
Overall gathered volumes were up 3%, while processing and fractionation volumes were down, 2% and 6% respectively compared to the fourth quarter of 2020.
Speaker 2: Our lower part processing and fractionation volumes were partially due to the vestiture of our javelina processing plant in early 2021.
Our lower part processing and fractionation volumes were partially due to the divestiture of our javelina processing plant in early 2021.
Focusing on our largest region in the Marcellus gathered volumes were up 7%, while processing volumes decreased 2% and fractionation volumes decreased 1% as compared to the fourth quarter of 2020.
Speaker 2: Focusing on our largest region, in the Marcellus, gather volumes were up 7% while processing volumes decreased 2% and fractionation volumes decreased 1% as compared to the fourth quarter of 2020.
During the fourth quarter as Mike mentioned, we completed commissioning of the 200 million cubic feet per day Preakness processing plant in the Delaware Basin.
Speaker 2: During the fourth quarter, as Mike mentioned, we completed commissioning of the 200 million cubic feet per day Preakness processing plant in the Delaware Basin.
The facility began to ramp up operations in December and is expected to continue to ramp up volumes through the first half of the year.
Speaker 2: The facility began to ramp up operations in December and is expected to continue to ramp up volumes through the first half of the year.
Speaker 2: Turning to Capital, Plan 2022 Growth Capital for the Gathering and Processing Segment is largely directed to projects from the Permian Marcellus and Bachin Basin.
Turning to capital planned 2022 growth capital for the gathering and processing segment is largely directed to projects in the Permian Marcellus and Bakken basins.
Speaker 2: such as the 68,000 Barra Pade Smithburg de Ethanizer in the Marcellus and the 200,000 cubic feet per day turn out our two processing plant in the Delaware Basin, both of which are expected to come online in the second half of 2022.
Such as the 68000 barrels per day Smithburg. The F&I is there in the Marcellus and the 200000 cubic feet per day turn out our two processing plant in the Delaware Basin.
Of which are expected to come online in the second half of 2022.
Moving to our fourth quarter financial highlights on slide nine total adjusted EBITDA was $1 4 billion up 7% from the prior year and distributable cash flow was $1 2 billion, an increase of almost 5% from the prior year.
Speaker 2: Moving to our fourth quarter financial highlights on slide nine, total adjusted EBITDA was 1.4 billion, up 7% from the prior year, and distributed will cash flow was 1.2 billion, an increase of almost 5% from the prior year.
Speaker 2: In the fourth quarter, MPLX returned 1.5 billion to unit holders through 1.3 billion of distributions and 165 million in repurchases of common units held by the public. As of December 31st, MPLX had over 300 million remaining available under the current $1 billion unit repurchase authorization.
In the fourth quarter MPLX returned $1 5 billion to unit holders through $1 3 billion of distributions and $165 million and repurchases of common units held by the public as of December 31st MPLX had over $300 million remaining.
Available under the current $1 billion unit repurchase authorization.
We declared a fourth quarter distribution of <unk> 75 per unit, resulting in distribution coverage of 164 times for the fourth quarter.
Speaker 2: We declared a fourth quarter distribution of 70.5 cents per unit, resulting in distribution coverage of 1.64 times for the fourth quarter.
We ended the year with total debt of around $20 billion and a leverage ratio of three seven times as you'll recall during 2021, we repaid about 175 billion of maturing long term debt with cash and availability under our intercompany loan with MPC as of year end, we had about.
Speaker 2: We ended the year with total debt of around $20 billion and a leverage ratio of 3.7 times.
Speaker 2: As you recall, during 2021, we repaid about 1.75 billion of maturing long-term debt with cash and availability under our intercompany loan with MPC. As of near end, we had about 1.5 billion drawn on our intercompany loan agreement with MPC, which subject to market conditions we expect to opportunistically refinance into long-term debt.
$1 5 billion drawn on our intercompany loan agreement with MPC, which subject to market conditions, we expect to opportunistically refinance into long term debt.
In closing <unk>.
Speaker 2: In closing, giving current business conditions our commitment to strict capital discipline and our ongoing adoption of a low cost culture, we expect to continue to generate strong cash flow, enhancing our financial flexibility to invest and grow the business while also supporting the incremental return of capital to unit hold.
Given current business conditions, our commitment to strict capital discipline and our ongoing adoption of our low cost culture. We expect to continue to generate strong cash flow enhancing our financial flexibility to invest and grow the business. While also supporting the incremental return of capital to unitholders now, let me turn the call back over to Chris.
Speaker 3: Now let me turn the call back over to Christina. Thanks, John . As you open the call up for questions, we ask that you limit yourself to one question plus a follow-up. We may reprompt for additional questions as time permits. With that, operators can you open the call for questions?
Dana Thanks, Shannon as we open the call up for questions. We ask that you limit yourself to one question plus a follow up we may re prompt for additional questions as time permits with that operator can you open the call for questions.
Operator.
Thank you we will now begin the question and answer session.
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Our first question comes from John .
Speaker 4: Our first question comes from John McCuy. Your line is out.
Your line is now open.
Hey, good morning, everyone and thanks for the time.
Speaker 5: Hey, good morning everyone, thanks for the time. I appreciated the context and some of the color on DROADCAPEX, looking into 22. Just wondering if you could give us a little bit more in terms of...
David the context, and some of the color on gross Capex looking into 'twenty. Two just wondering if you could give us a little bit more in terms of we saw 21 way below where you had initially guided so maybe if any of that as kind of 'twenty. One spending is shifting into 'twenty. Two and then also just on the energy transition side is there anything in that.
Speaker 5: We saw 21 way below where you initially guided. So maybe if any of that is kind of 21 spending, shifting into 22, and then also just on the energy transition side, is there anything in that bucket related to Martinez? Would that be incremental to this number? Just any context on that too. Thanks.
Bucket related to Martinez would that be incremental to this number just just any context on that too. Thanks.
Good morning, Jon on your first point, yes, there is a little bit of 'twenty, one spending that makes its way into 'twenty. Two so there's a little bit of that so that was a good observation.
Speaker 1: Good morning, John . On your first point, yeah, there is a little bit of 21 spending that makes its way into 22. So there's a little bit of that, so that was a good observation. In general, I would tell you, I'm going to let Tim and Greg give some comments here, too. But in general, I would tell you...
In General I would tell you that.
I'll, let Tim and Greg gave some comments here too, but in general I would tell you.
Speaker 1: You know, we don't have any big headline projects this year that we would talk about as large capital.
We don't have any big headline projects. This year that we would talk about it as large capital but at the same time, we're pretty excited about we have a lot of smaller bolt on debottlenecking expansion projects, which tend to be a little better in return.
Speaker 1: But at the same time, we're pretty excited about, we have a lot of smaller, bolt-on, de-bottlenecking expansion projects, which tend to be, you know, a little better in return. Obviously, you don't have the headlines, so it's a little tougher for you guys to think about it in general. But I actually like the set that we have now. And let me, you know, Tim, Greg, why don't you guys give, you know, some examples of what we're talking about.
Obviously, you don't have the headlines so it's a little tougher for you guys to think about it in general.
But I actually like to set that we have now and let me know.
Tim Greg why don't you guys give some examples of what we're talking about.
Speaker 2: Okay, well this is Tim Wright. I'll just give maybe a couple of them and turn it over to Greg. You are spending money at Martinez and really that's spending capital to modify the assets and support of MPCs, conversion of the refinery to renewable fuels. So that's a chunk of money there. And then I think maybe another example I'll point to is recently we announced the expansion of the Whistler Midland Basin.
Okay, well this is Tim I would just give maybe a couple and then turn it over to Greg.
You are right, we are spending money at Martinez and really that's spending capital to modify the assets in support of Mpc's conversion of the refinery to renewable fuels. So that's a chunk of money there and then I think maybe another example, I would point to is the recently, we announced the expansion of the Whistler <unk>.
Linde basin.
Speaker 6: 36 inch up and further into the Midland Basin. I think that basically the most volatile, essentially fill the capacity on Whistler and given the tightening gas take away situation that's being faced, we're starting to see a lot of producer customer.
36 inch up and further into the Midland Basin, I think that basically.
Those volumes will essentially fill the capacity on Whistler and given the tightening gas takeaway.
Situation, that's being faced we're starting to see a lot of.
Producer customer.
Speaker 6: input and as a result we're starting to consider the potential expansion of glycerin to 2.5 BCF. So those are just a couple examples but as Mike said there's a lot of other opportunities for bolt-ons and so forth and that's a focus.
Input and.
As a result, we're starting to consider the potential expansion of Whistler to two five Bcf. So those are just a couple of examples but as Mike said, there's a lot of other opportunities for bolt ons, and so forth and Thats our focus.
Speaker 2: This is Greg Flerke. With regard to gathering and processing capital, the two largest projects that we have underway now are our Smithburg de-ethanizer, and that project is scheduled to come online mid-year, and then the other large plant capital is for our Tornado II plant, which will
This is Greg <unk> with regard to gathering and processing capital.
The two largest projects that we have underway now or smithburg.
<unk> met projects scheduled to come online mid year and then the other large plant capital is for our tornado two plant.
Which will.
Speaker 6: increase our West Texas processing capacity to one VCF per day when it comes online late next year. The other capital is around growth on gathering lines in the Bakken and some in the Utica Dry and Marcellus area.
Increase our west, Texas processing capacity to one Bcf per day when it comes online late next year.
Other capital is around growth on gathering lines in.
In the Bakken.
And some in the Utica dry and Marcellus area.
So John I think it's a really good question and I know people, who are going to try to understand that so what Greg was saying is hey, we're adding to our smithburg complex with Tim was saying as we're adding to the Whistler project. As an example, so we have a long list of those that's what really is in our program for this year a lot of assets.
Speaker 2: So, John , I think it's a really good question, and I know people are going to try to understand that. So, you know, what Greg was saying is, hey, we're adding to our Smithburg complex. What Tim was saying is we're adding to the, you know, the Whistler project as an example.
Speaker 1: So we have a long list of those. That's what really is in our program for this year. A lot of assets that are already existing that we're gonna tweak and debattle that and expand a little bit. And they're really nice projects because it's relatively small in the capital five, but it can enhance the revenue side pretty good.
Our already existing that we're going to tweak and debottleneck and expand a little bit and they are really nice projects because it's relatively small on the capital side, but it can enhance the revenue side pretty good.
Speaker 2: Hey, John , it's John Quaid. Good morning. One other, just while we're talking about capital, one other item just to be thinking about.
Hey, John It's John Corey and good morning, one other just while we're talking about capital one other item just to be thinking about.
Maybe a little bit abnormal from prior years I would say as we look at the plan right now, it's probably more front end loaded towards the beginning of the year than what you might have seen from us in prior years and again, we've got this nuance as well where there is some maturing debt at a JV, we've got to fund our.
Speaker 2: Maybe a little bit abnormal from prior years. I would say as we look at the plan right now, it's probably more front-end loaded towards the beginning of the year than what you might have seen from us in prior years. And again, we've got this nuance as well where there's some maturing debt at a JV. We've got to fund our equity partner there to make that payment. And we know that's going to happen in the first quarter just based on when the debt matures. So just another little context too, it's probably a little bit more front-end loaded this year than what you've seen in the past.
Equity partner, there to make that payment and we know that's going to happen in the first quarter just on them based on when the debt matures. So just another little context, too, it's probably a little bit more front end loaded this year than what you've seen in the past.
No that was great Super Super thorough and clear across the bar definitely appreciate that maybe just.
Speaker 5: That was great. Super, super thorough and clear across the board. Definitely appreciate that. Maybe just my, my follow-up here. Overall quarter looked, looked pretty good. Some kind of puts and takes, you know, products, volumes look good. GM feel it's good. Utica was processing a little weak again. Just curious if you could give us some context on, you know, you're looking at into 2022, just some of the general, you know, upside downside drivers for EBITDA that we should be watching. Thank you.
My follow up here.
All quarter looked pretty good.
Some kind of puts and takes that product volumes look good G&P lets good Utica with processing a little weak again, just curious if you could give us some context on how you're looking at into 2022, just some of the general upside downside drivers for EBITDA that we should be watching.
Thank you.
Yes, John maybe one way to think about that is to think about the tail winds are as Mike's call them in the past the red bars that may be affected in 2021.
Speaker 2: Yeah, John , maybe one way to think about that is to think about the tailwinds or as Mike's called them in the past the red bars that may be affected 2021. I mean, certainly.
Certainly, while we're largely a fee based business on the G&P side we.
Speaker 2: While we're largely a fee-based business on the G&P side, you know, we do have some sensitivity to NGL prices, which moved up significantly throughout the year.
Do have some sensitivity to NGL prices, which moved up significantly throughout the year right.
Speaker 2: Right, you know, and we roughly say, you know, five cents on NGLs is roughly 20 million a year of an annual impact. So we start to see that when, you know, for the year we go from 43 cents to 87 cents, you know, the fourth quarter was $1.05.
And we roughly say five on Ngls is roughly $20 million a year of an annual impact. So we start to see that win for.
For the year, we go from 43 to <unk> 87.
Fourth quarter was $1 five.
What's it going to be for all of 'twenty. Two that's something we don't know so that's.
Speaker 2: What's it going to be for all of 22? That's something we don't know, so that's.
Speaker 2: you know, certainly something will be watching that, you know, I think drove 21 results, but it's early in 22 to understand how that might drive 22.
Certainly something we'll be watching that I think drove 21 results, but it's early in 'twenty two to understand how that might drive 22.
Speaker 2: You know, we also would have had some asset sales as Mike referred to, you know, over.
We also would have had some asset sales as Mike referred to.
Over.
Speaker 2: $110 million in proceeds, so are we going to have those again or not? Again, we continue to review our portfolio and look for opportunities, but those may come, those may not.
$110 million of proceeds so we are going to have those again are not again, we continue to review our portfolio and look for opportunities but.
Those may come those may not.
Speaker 2: Um, we also, you know, had to reduce capital spending. Um, you know, again, some of that was certainly our, our kind of continuing focus on strict capital discipline, but some of that.
We also had reduced capital spending.
Again, some of that was certainly are kind of continuing to focus on strict capital discipline, but some of that maybe to just producer activity and their uncertainty around COVID-19 that maybe we're seeing knock on wood.
Speaker 2: maybe to just a producer activity and their uncertainty around COVID that, you know, maybe we're seeing knock on wood.
Speaker 1: maybe start to look a little less concerning as the case has come down on Omicron. We had some favorable working capital last year, too, that, you know, we wouldn't necessarily count on that repeating as well. So, Mike, I don't know if there's some things you want to add to that. Yeah, John , I just want to add, John used one of the terms that I used internally, and it's one that I used in my prior life. I should probably explain a little bit more is I color code cash flows.
Maybe start to look a little less concerning as the cases come down on Omicron, we had some favorable working capital last year too that we wouldn't necessarily count on that repeating as well. So micron uninteresting things you want to add to that John I. Just I just wanted to add John used one of the terms that I use internally and it's one that I used in my prior life I should probably ask.
Playing a little bit more as I color code cash flows and.
Speaker 1: And I use the term blue bar to refer to cash flows that I think are there in all markets.
Use the term blue bar to refer to cash flows that I think are there in all markets.
Speaker 1: you know, very stable, they're there on all markets and then I put, you know, red on.
Stable, though they are in all markets and then I put read on cash flows they could be.
Speaker 1: cash flows that could be, you know, one time or not, you know, not necessarily going to repeat themselves, et cetera, things that we don't count on as much. And since John just referred to that, I thought I would explain that a little bit. So, you know, I think about blue bar and red bars are cash flows. And as we think about the year, you know, you know, we're hopeful there are going to be some other, you know, red bar cash flows, but we try not to count on that. You know, John mentioned, you know, NGLPRO.
At one time or not not necessarily going to repeat themselves etcetera things that we don't count on as much in as Jon just referred to that I thought I would explain that a little bit so.
Think about Blue bar and Red Bar is our cash flows and as we think about the year.
We're hopeful they're going to be some other red bar cash flows, but we try not to count on that John mentioned NGL prices.
Maybe it'll stay strong through the.
Through the full year or who knows right. That's the way the market goes on commodity pricing. So that's got a little bit of red element to it.
Speaker 6: So that's got a little bit of red element to it. Like John said, sales are clearly red. You know, we'll evaluate those as those come along. So that's kind of the way we think about, you know, our capital allocation in general as we get to the back part of the capital allocation, you know, which are blue, which are red, and helps us make determinations on distributions versus buybacks, et cetera. So hopefully that helps. That's great.
John said sales are clearly read we will evaluate those as those come along so so that's kind of the way we think about our capital allocation in general as we get to the back part of the capital allocation, which which are blue, which are read and helps us make determinations on distributions versus buybacks et cetera, So hopefully that.
It helps.
That's great appreciate the time thank you.
Youre welcome. Thank you.
Our next question comes from Michael Blum Wells Fargo. Your line is now open.
Thanks, Good morning, everybody.
Good morning, Michael just one I just wanted to follow up on the Whistler comment about expansion to two and a half a bcf a day just wanted to clarify if that's something that's actually in the budget and plan for 2022 or is that still something that you're considering and if it if it isn't the budget.
Any details on timing or cost would be really helpful.
Okay.
So this is Tim ill take that one.
Currently that that expansion is being contemplated by the JV partners and so forth. It is not a budget item that is currently in there what I was trying to draw attention to is that as we continue to extend up into the Midland basin and so forth, we've essentially tapped out.
Some of the existing capacity and we'll be looking to grow that.
Sure.
Capacity on Wister overall so.
As far as timing that remains to be seen.
So more to come later.
And Michael It's Mike I'll, just add to tims.
He is referring to is at the end of January the partners made this announcement of this extension lateral.
We have a little bit of capacity beyond the MVC commitments. So that extension kind of gives us another little geographic area to us to put into the project and then the next step as the Permian continues to grow is can we add some more additional assets to take the capacity up some more so with Tim was describe.
And kind of a two pronged thing, which we just announced in January is nearing committed we're doing that the second part of it is we expect this to happen we have a good asset and it'll be tough to beat the expansion economics that we'll be able to provide if that makes sense.
Yes, absolutely I appreciate that.
Thank you. The second question I had was really I guess the capital allocation.
Question in light of all the inflationary pressures, we're seeing in the market.
Wanted to know if that impacts your thinking on the mix of distribution growth for versus buyback from all the other options in 2022, meaning do you see the need to raise the distribution faster to offset inflation for investors or do you just sort of continue your ratable distribution increases <unk> been doing year after year.
Yeah, Hey, Michael It's John Craig Good morning.
I think as we think about where we are and go back to Mike's comments right. We look at the balance sheet, we want to be around four times, we're very comfortable at around three seven times now.
Right, we'll focus on maintaining our assets securing the distribution looking at growth opportunities and then looking at kind of where we are where we are lessons that growth capital opportunity is that the buybacks or is that more distributions again, we've got a pretty strong payout ratio in distribution as you know.
So it's.
Certainly one of the avenues, we look at as we think about return of capital.
Great. Thank you.
Okay.
Thank you.
Our next question comes from Jeremy Tonet Jpmorgan Chase your.
Your line is now open.
Hi, good morning.
Good morning, Jeremy.
I wanted to pick up with some of your comments at the beginning of the call there with regard to the asset sales.
I just wanted to catch that that was a bit over $100 million of sales there in Wyoming and just wondering.
If this was a process that is continuing to evaluate your assets in and check out kind of what the value is on the market there or did someone else approached you and just in general I guess, how are you seeing.
The appetite for G&P assets out there or are they starting to closing on the valuation that you see that maybe there could be more rotation.
Hey, good morning, Jeremie, it's John I'll start with the first part of that so just to clarify the $110 million is the proceeds for the year from two sales. So that includes the about $70 million from the sale of Javelina earlier in 2021, and then $40 million from the sale of.
Those gathering assets in southern Wyoming, So there's actually two two pieces to that again in the quarter. It was just the sale of the gathering assets in Wyoming for proceeds of about 40, and a gain of about $19 million just to kind of Rev. Rec those numbers and I would say both of those just resulted from.
Our continuing kind of portfolio review to look at our assets and optimize them what makes sense in our portfolio versus what might make sense in someone else's.
I think maybe I'll start on kind of the basic question, we talk about every quarter I'll, let some others chime in as well.
Again.
We're still in the same spot where while in some of these basins.
We're continuing to generate cash flow. So we're not in a rush to sell those and.
We will see.
As the market moves if that bid ask starts to compress a little bit, but it's certainly something we'll actively review, but I don't think we have any significant updates here on that right now.
Got it thats helpful. There.
Unless anyone else is going to jump in there.
I'm getting thumbs up around the room. So I think I think that was the I think everybody is good with that Jeremy If you got another question, yes, great I just wanted to touch on the northeast a bit more in.
So activity there.
Yes, Mariner east looking like it's getting completed here.
Which would add.
Needed NGL egress, and then you have the shell cracker in the middle of this year and this could really help NGL price realizations in the basin and incentivize drilling at the same time.
The basin has been challenged for takeaway over time, although there has been incremental capacity additions coming in here just wondering.
How you think the basin production progresses at this point do you see shifting activity dry the wet that benefits you how were producer activity conversations.
Going at this point.
Yeah.
Jeremy This is Greg flourish again.
I think as we've talked before in most of our producers in the northeast are they're focused on free cash flow generation and on.
Making sure that even with good NGL prices and gas that they match the takeaway capacity as you mentioned, both residue and natural gas liquids.
Mariner East capacity is incrementally expanded over the last few years.
As Mariner East two and two X of that work towards completion, and so I think thats more of an incremental gain and it does free up room for more ethane production.
Long with Monaco plant coming online mid year.
We mentioned our Smith <unk>.
Plant down in West, Virginia, along with our existing fleet of <unk>.
This is going to open up even more capacity to help fill that Monaco plant we expect.
Towards of 80% of the supply to come off of our system.
And otherwise some producers will continue to to.
Slowly bring on new pads.
Some are in decline and some have may be single digit growth. So overall, we're looking at continued flat.
I think flat production in the northeast that's going to be.
A series of some producers up some down but overall in balance.
Got it that's very helpful. Thank you.
Youre welcome.
Our next question comes from Spiro <unk> with Credit Suisse. Your line is now open.
Thanks, operator, good morning team.
I wanted to go back to growth Capex quickly.
Just given that a lot of these projects are smaller in scale than brownfield in nature. I was just curious if it's fair to assume that the majority of that $700 million in capex could actually be cash flowing by yearend or is that a little too aggressive.
Yeah.
Yes.
Spirit's John here, I think maybe a little aggressive.
Yes.
I mean, some of these as Greg talked about some of those plants coming up mid year. Some of those will be ramping throughout the year.
Timing wise, we are spending some capital on the Martinez renewables project right, but mpc's not finishing that project this year.
So that's not going to cash flow.
So.
That might be a little bit strong.
Some of them and some of them kind of come on and pieces too.
Throughout throughout the year so.
I think I'd be a little hesitant to say they are all going to be cash flow and at the end of the year.
Experience, Mike I'll, just add in general the capital you're spending one year has a lag before the cash flow, especially.
If it's going to be ramping volumes as well. So yes, it's kind of aggressive to think of this capital will be to hit the cash flow. It's really capital that we spent the year before and the year before that really starts to play itself into this year's cash flows.
Understood.
Makes sense, just like setting a high bar for you Mike So my apologies on that one.
Next one just on <unk>, thanks for the help.
Got it.
Next one just on processing capacity I noticed that some of the capacity I guess in three of your basins.
Fell quarter over quarter from <unk> and.
And just curious what exactly drove that sorry, if I missed it in the prepared remarks.
Yes, so if you look.
The year over year.
There is some slight decreases there I think I'll, let Greg chime in as well I think some of that's just going to be timing in the basin as producers move through activity. The other thing don't forget because the volumes year over year.
On the quarters, while they're slightly down remember we had the <unk> facility that we sold so.
Like fourth quarter year over year, if we're down 2% like it's a small decrease in half of that is probably the fact that we had heavily and in one period and not the other but I think it's both the sale of Javelina and then maybe just timing on the producer side, Greg If you wanted to.
I'm, sorry to cut you off but it was more around not so much the volumes that went through but just the capacity specifically at that product Im sorry, Im sorry, Scott firepower my apologies.
So as we look at our regions.
We do kind of an annual review of our capacities and as you noted in the.
Southern Appalachia in the Rockies in those particular regions.
We frankly and really since part of our cost reduction efforts to some degree.
We had some units that really were not needed based on demand in the region and we don't see them to be needed. So we've kind of permanently idled their disconnected those units.
From our capacities in those regions saves.
Save some cost for us. So those are adjustments, we made again primarily in those two regions to the processing numbers just an annual process. We do instead of change in that every quarter, we kind of flow those through here at the at the end of the year My apologies for answering the wrong question.
No no worries that was really helpful. So I'll add to that guys. Thank you very much.
Youre welcome.
Thank you.
Next question comes from Theresa Chen Barclays. Your line is now open.
Good morning, and I'd like to ask a little bit more about MPLX is overall de carbonization plans and potential participation in mpc's.
Carbonization effort so.
First in addition to the logistics assets and survey in March and is there any appetite to take.
Take up some bigger capital projects with the processing units.
So this is Tim ill take that one.
I think maybe it'd be helpful to kind of give you a little bit of an overview of our strategy. It really involves a two pronged approach.
MPLX is going to support MPC and its renewable fuels build out now thats, primarily through the associated logistics opportunities. We've talked a lot about Martinez already this morning, So thats. The prompt example.
Second is just as important though and that's we're going to look to be part of developing and executing industry solutions for decarbonization.
As we've announced previously we are participating in the Houston area Ccs consortium and are discussing other similar efforts as well.
I think beyond that we continue to evaluate really a wide array of low carbon opportunities.
Unfortunately, there is none that I can publicly discuss at this time, but stay tuned.
I think as a general rule when you look at the timeline that we're working off of we see R&D and Saf as being really the prompt in shorter term opportunities Ccs, maybe RMG would would come in the mid term and then certainly hydrogen and distributed power is something we're looking at this.
Probably.
More capital deployed in the longer term.
And of course.
As we've noted before we're bullish natural gas and so we really see natural gas is.
[noise] transitional energy source, and that's going to play a key role in the energy mix well into the future. So we have a lot of opportunities in that regard as well thats tied to energy evolution. So.
Hopefully that answers your question.
That does very comprehensively. Thank you.
Thinking of natural gas, maybe pivoting towards something.
Earlier comments related to the Whistler potential expansion granted that you are still going through the process and imagine having discussions with the partners and producers and such.
But in terms of getting to that $2 five Bcf per day.
How do you view the economics.
With the expansion relative to other.
Possibilities for expanding.
Current assets within the basin of competitors like how does your project stack up versus competitors, certainly more competitive than any sort of Greenfield project and what are the gating factors.
Getting producers to sign on and are there any initial thoughts about how much that would cost.
So.
I'll answer two parts of that I think when you look at the forecast they continue to indicate a need for increased takeaway out of the Permian basin.
Now some of this could be served by a whistler expansion.
But I think even beyond that.
The other pipeline is viewed as being necessary in the next two to three years, but certainly I think the goal of the industry and certainly the goal of our JV would be to fill up existing assets first obviously, that's the most capital efficient.
Path forward.
We like our we like our project as it exists today with Whistler.
And we see that as very capital efficient way to move forward.
But again that would get you about a half a b.
The basin is looking to grow we think a lot more than that so.
As far as project capital and so forth I'm not able to get into any of that so I would just tell you that as is customary for gas.
We would require nbc's to expand existing systems or to participate in any new pipeline.
As is customary.
Thank you.
Thank you.
Our next question comes from Keith Stanley Wolfe Research. Your line is now open.
Hi, Good morning wanted to ask first on your pipeline volumes oil and products States. They continue to run solidly ahead of where they even were before COVID-19 and 2019.
So are you still is it still the dynamics of just lower exports and higher volumes through MPLX pipes and do you expect this to be sustained into the future.
Yes, good morning, Keith its John that's a great question and may be another tailwind that benefited us last year that we've got to watch this year that maybe fell dimension before it can certainly there is a portion of that as we as we saw less exports, but recovering U S demand, we were able to utilize those assets more certain.
<unk>.
We're looking to go after market share et cetera, but if exports kind of pick back up that that might be a headwind then on those volumes as you've noted there are pretty strong.
Great.
One one on operating costs. So I think last quarter, you talked to a $40 million increase for Q4 did that materialize in the quarter and I guess more importantly, how should we think about operating costs in 2022 relative to fourth quarter levels.
Yeah. Thanks, Keith Great question, and I think I had talked about perhaps up to 40.
I think I might have to stop losing my bet with Tim and Greg because they continue to find other ways and their teams to offset those increases so while we did see it in certain areas. The team was able to find other areas to reduce costs.
And offset a good bit of what we were maybe seeing in our forecast so.
Great job by the team and we'll be fighting to maintain that as we go through next year, but.
Certainly.
No major swings pluses or minuses to kind of say going into next year on project expense.
Okay. So we should it for now we should assume 2022 is pretty similar to kind of where you were in Q4.
Yeah, Yeah, I mean again the teams as Mike talked about going back to 2019.
We feel we've taken about $400 million of cost out of our cost structure.
And the teams are really focused on maintaining that looking for other opportunities managing costs with with some of our growth capital as we bring new operations on.
So we're going to be fighting to embed that and look for more opportunities as we continue to work to really move from this low cost initiative into our into our low cost culture.
Great. Thank you.
Okay.
Thank you next we have Brian Reynolds UBS. Your line is now open.
Hi, good morning, everyone.
Follow up on some of the early return on our capital questions. When we look ahead into 'twenty two we appear to be seeing some similar trends as 'twenty. One in terms of sub four leverage and free cash flow. In addition to some growth just given that there's roughly $300 million left on the buyback authorization.
So if you could talk about interest in expanding and extending the buyback program and how we should ultimately think about an additional special distribution in 'twenty two.
Yes. Thanks.
Think on the buyback, obviously thats a discussion with the board that will take up with them at the appropriate time, so I wouldn't want to get ahead of that discussion.
And then the overall return of capital again, we've kind of walked through a number of times kind of how we think about the framework and our priorities there.
And that's something we're going to evaluate each quarter and looking at where we are in thinking about our avenues for return of capital whether it be distribution increase unit repurchases.
Or or special again, driven by where we are and what we're seeing.
So I think thats, an ongoing maybe somewhat.
More dynamic kind of assessment.
Then maybe to some degree what.
Dynamic, but looked a little programmatic last year.
Brian It's Mike I'm going to add to John's point, there is that.
The way, we think about it is we want to put the portfolio in a position that we are generating this excess cash beyond distribution beyond capital now to what level that turns out to be some of these other factors that we talked about blue and Red bar cash flows kind of come into play. So at this point about being dynamic is the way we think about it we look at the year.
Trying to assess things.
We're committed to returning capital that's something I feel strongly about and at the end of the day, whether it comes in the form of distribution, whether it comes in the form of buybacks.
We discussed that throughout the year and I've said this on many calls we also SD owners the unit holders and there is a bifurcation there are those who really support buybacks in there are those who really support distributions. So part of what you saw last year was some some balancing in our view.
<unk>.
People that want buybacks, we think we did a good portion of that with the capital that we had for people that want distributions.
We were a little cautious because of some red bar. So we put it in the form of special as opposed to permanent.
But we also have been a little bump up on permanent as we continue to feel good about our our blue bar cash flows so dynamics a good word.
John said, it well I think people think a bit more programmatic because it's been around the same level, but but that's mainly because as we sat down and looked at it we were forecasting about the same level for a while and then things came our way a little bit and we ended up with a little bit more.
And then we made an adjustment. So so we will proceed into 'twenty two very similarly, we have a base plan that obviously, we were going to execute on and we will see how the market plays itself out, we'll see where the equity trades, we will see how the capital projects kind of progress throughout the year.
And we'll just continue to evaluate it and then each quarter try and give you guys an update on how things have played out.
Great.
I appreciate all that color.
Maybe to pivot I know I appreciate all the color.
On the gas takeaway from the Permian, but maybe to talk about the NGL side of things and the new bangle solution and bringing in the new JV partner just curious if you could provide some color about how you see that project and the <unk> evolving over time.
While the gas pipes needs appear to be first how do you see the NGL takeaway in the future and how do you see bank will be in a part of that solution over the long term. Thanks.
Okay. This is Tim I'll take a stab at that.
We did recently announce.
The addition of another partner that was rattler midstream to the bank JV.
No.
That program or that project, rather kicked off operations.
Early fourth quarter last year with deliveries to sweeny.
So that project continues.
As the basin continues to recover we're seeing increases in NGL.
Demand for takeaway and so as a result, I see I see that platform much like the Whistler on the natural gas side being a good platform for growth for the JV.
<unk>.
Think there's certainly certainly an appetite for more volumes.
The head towards Sweeney, and we have capital efficient expansions that we can do on a just in time basis and that's what we're looking to accomplish.
Great and as a quick follow up is there any capex related to <unk> in this year's budget in terms of expansions or would that be more of a 'twenty three of them.
There is there is some.
I can't speak to the quantity on individual projects, but yes.
Great I appreciate it I'll leave it there have a good day everyone.
Thank you.
Thanks, Brian Let me just add a little bit to what Tim just said.
And I was hoping that we were clear, but maybe we haven't been so if you look at our asset base across all of our portfolio.
As Greg mentioned and Tim mentioned at the beginning you think about we're doing little projects across our whole asset portfolio. That's kind of the way. This is shaping up this year. So there is not that I use the term there is not a headline project, but theres a little bit of opportunity throughout our asset base.
Hope, that's a little bit clearer, maybe not but trying to give you guys as much color on that as I can.
Yeah.
Thank you next step is chase mulvehill.
<unk> of America. Your line is now open.
Hey, good morning, everybody.
So I guess, we'll come back to Whistler, a lot of questions around Whistler.
You've kind of talked about the potential for has to be a day of additions.
But if demand was actually there could you do more than half of the year as it has to be tied to the limit of what you are relatively brownfield expansion it could be on that pipeline.
Okay. This is this is Tim.
Relative to whisper expansion, a half would be would be would be the Max you could get through the 42 inch pipe with compression.
So what I was pointing out earlier is that the basin is expected to continue to grow obviously beyond that.
And most projections again suggest two to three years and other pipe would be necessary. So as is the case.
The industry is looking to potentially solve that problem.
We're also looking to solve that problem as well, but that's.
That's kind of the outlook.
Whistler expansion in and of itself.
Would not be deemed enough to meet the basins needs.
Alright, and what would be the timing if you sanctioned that today.
The incremental has to be what would be the timing to kind of bring that that incremental capacity alone.
It's really going to come down to the lead times on compression.
With the supply chain issues.
I would say a good timeline is.
Probably.
Minimum 18, with probably closer to 24 months.
Okay great.
The quick follow up here.
Kind of Permian takeaway capacity.
The issue is is probably getting contracts for 10 year contracts with some of these whether it would be a brownfield expansion or greenfield expansion.
Obviously, the demographics of the Permian production growth or changing more profits profits have less drilling inventory.
Certainly most of them don't have 10 years of drilling inventory to sign a 10 year take or pay contract. So somebody is going to have to absorb more risk to get more pipe built. So how do you think this ultimately plays out.
Well I think the.
LNG market is continuing to grow and is forecasted to grow in a pretty big way over the course of time. So I think the producers are looking to make sure that they have adequate takeaway capacity and as a result I think.
No.
It's going to come down to making those commitments I do believe that that several several producer customers.
Have north of 10 years of <unk>.
Drilling capacity Theres also reduced amount of flaring and so forth. So I believe the gas is out there and we will continue to be with the outlook on LNG exports being what it is.
Yes. It makes sense if you allow me to squeeze one more in.
Obviously MVP, it's very topical these days.
Having kind of continued permitting issues.
Political issues there.
How can you kind of just walk through the puts and takes.
Of MVP delays.
How this will impact your Marcellus business.
Greg <unk>.
In terms of.
The delays there have been a number of hurdles there the pipe as we understand it is over 90% complete so it's down too.
The distance is probably less important remaining them then what kind of crossings and permits are required.
I can't speculate not being involved in that project on on what the delays mean or what the timing would be I can say that in terms of takeaway capacity for.
Our producer customers. Most of them were early players that took out capacity that have firm capacity on existing lines and with the flat to very limited amount of growth near term to medium term.
They've got sufficient capacity and where depending on most I think most were not depending on.
Ahmet expansion, obviously longer term the basin needs more takeaway to.
Experienced more growth and towards.
We're hopeful that it will.
Eventually the pipeline is completed.
Okay perfect.
Turn it back over thanks.
Thanks.
Next up we have Tristan Richardson true Securities. Your line is now open.
Hey, good morning, guys I.
Love all the Red bar Blue bar references great.
Great drawback.
You've covered a lot of ground already so just one for me, but can you talk about just capital and activity levels Youre seeing in the Bakken, obviously small asset but.
It's in Debottlenecking spend there and just curious on the capital that's going in and then also activity levels and if over time you see.
Any need for additional potential processing on your footprint there.
I'll start off and I'll, let Greg first of all thanks for the throw back some.
Sometimes.
Can change my straight from the past but.
Yes, like I was saying earlier I'll, let I'll, let Greg comment a little bit more but yes, all of our areas. What I was trying to say is we're doing a little bit in each of these areas. So we're doing some marcellus for doing some Permian, we're doing some bakken et cetera as.
As the market is recovering and as the commodity cycle is what it is we have assets that can participate in.
We're putting a little bolt ons and little expansions to incrementally increase our asset base do you want to add Gregor.
Yes, Thanks, Mike I'll add.
Obviously.
Crude high crude prices and crude rig activities driving.
Not only expansion opportunities for us on the on the crude gathering side.
For MPLX, but also the associated gas.
A large amount of gas even with existing production that was being flared.
Lee the flaring is not something that's sustainable whether it's in the Permian or the Bakken, So theres opportunity to pick up more more rich associated gas gathering opportunities and processing opportunities.
In terms of future expansion, yes, I would say, there's definitely opportunities for theres going to be opportunities in the <unk>.
Current pricing regime for for additional processing.
We have high utilization there, we don't have the amount of processing capacity build out that we do in some other areas, but but we do have some capacity. We continue to fill and also look at look at other potential joint venture opportunities as well if there's existing capacity that can be utilized and that we can gather.
Work with.
Yeah.
Yes interesting, Sean just to be clear as Greg was saying, so I think a lot of the capital now in the Bakken is probably more on the gathering side and filling up systems. We have are looking at opportunities to fill up another system sits there. So while we will look at processing. There is no processing in the Bakken and our in our plans right now.
Great Super helpful. Thank you guys very much.
You are welcome.
Our next question comes from James Carreker U S capital Advisors. Your line is now.
Yes.
Hi, Thanks for the question.
I was just wondering if you could talk a little bit more about Q4 results a pretty nice step up in adjusted EBITDA relative.
Two the prior three quarters in 2021.
And then just thinking about.
Is there anything that happened in Q4 that maybe.
Shouldnt carryover into 2022, as we as we look to.
EBITDA could be that in kind of thinking about.
What a run rate EBITDA could be.
Yeah.
I'll just leave it there I guess.
Hey, James It's John Thanks for the question I think I might circle back to <unk> and talk a little bit about some of those that were in the fourth quarter right. So we talked about nearly a $20 million asset sale gain in the quarter right. That's not going to repeat every quarter, we talked about NGL prices, which were there the highest quarter of last year.
Was the fourth quarter at $1 five again, what we'd love to see $1 five all this year, yet but is that going to happen.
An open question I think we too we probably you would have noticed on the <unk> side of the business, we had some higher distributions from our pipeline joint ventures.
Some of that would have been with remember hurricane Aida in Q3, so some of the Q3 distributions might've pushed into Q4.
And again to I think theres some timing there on when distributions are made from from those ventures that may.
Maybe kind of piled into Q4, that's not going to maybe be a normal run rate looking into next year. So there is certainly some things I'd be careful just taken in Q4 and times and it by forward given given kind of the drivers of those results.
Yes, that's helpful. That's exactly I was looking for.
But then I guess that should be offset I assume youre going to continue to have.
Growth on a number of your JV pipes.
Dapple Wink to Webster Whistler Bengal.
Should all contribute meaningfully more in 'twenty two to 'twenty one.
Yes.
As we look at the volumes on those again Whistler will keep ramping up as Tim has commented.
Certainly I'd say this year was probably less about the Permian joint ventures, and more about our other kind of crude line joint ventures.
So we will.
It was probably more on that side right, where we're not really changing those pipes.
Whistler will come on again remember, we finance some of that as well so that will affect how that comes through cash flow.
Got you and then I guess, maybe the final question can you talk.
How much maybe impacts.
The FERC tariff adder could have on your business I know, it's not until July .
July one, but potentially a 9% increase can you remind us.
How much that impacts your LLS segment.
So this is Tim Ryan I'll take that one.
I guess it was a kind of a reminder of the escalators are meant to cover the cost increases that that.
Come with inflationary pressures.
So while we do expect to see an increase in the FERC index rate and therefore the revenue.
We don't really expect to see a material change to our EBITDA again those are those are meant to offset.
We do plan to manage any inflationary pressures that might come up through either increased efficiencies or these index adjustments.
I guess relative to the amount I can't give you specifics on that but I'll just kind of remind you that less than a third of the LLS revenue comes from FERC regulated assets, so most but.
But not all revenue streams do have some form of <unk>.
Inflation escalator attached to them.
One exception to that is the storage revenues. They are generally not indexed but all the other revenue sources would have either a fixed.
Fixed inflation adjustment or maybe a PPI or CPI adjustment or some other formulaic.
Path. So hopefully you find that helpful.
Thank you.
Youre welcome.
Yeah.
Next we have Tim Schneider for our last question with Citi. Your line is now open.
Hey, Thanks, and good morning, let's see your deck colors actually match, the Red bar Blue bar as well. So there you go.
First question real quick on Western apologies, if I missed it.
The only potential expansion is has that already is there any interest from shippers on that or are you just taking talking hypothetically about that.
If I if I heard the question right you were asking about the expansion and whether there is interest already.
Yes, I would say we are in constant communication with producer customers and there is there is interest.
So I can't get into specifics on shippers and potential shippers et cetera, but but.
It's not really hypothetical there's interest out there.
Okay got it and as a follow up to this and this is maybe.
Little bit more longer dated longer dated impacts here, but let's assume Permian Permian gas egress gets jammed again like we saw a couple a couple of quarters ago do you think theres, a big kind of marketing opportunity and Whistler by the Whistler to realize some of those basis differentials between <unk> and.
Aqua Dolce and then how much how much of that capacity or potential.
Capacity is actually available for kind of marketing activities versus what's committed.
Yeah, Tim it's Mike.
It's a great question, it's a good hypothetical.
Want to speculate on it but I think what Tim was trying to say.
And it kind of got caught a little bit of runaway here was I was trying to say look we have some good bolt on projects, we announced one just.
Last week and that's why I was trying to explain this lateral into into Midland.
And then it sets up an expansion at west.
Conversations are current but.
I think he said it also very well earlier is this is going to continue to evolve. This isn't this week or this month issue.
Over time, we expect producers to continue to.
Spend money in the Permian.
Increased their production there so.
You have a fair point.
Could it eventually bottle up the way it was before it's <unk>.
<unk>.
Personally I think the.
The market is aware of that and probably.
We're going to look to avoid that and talk to us and other players to make sure that doesn't happen the way it happened in the past that's just my own personal guess.
That's why I said, it's speculation it's not a bad thought but my own personal view is people are going to be conscious of that and get out in front of it and talk to midstream players like ourselves and <unk>.
And see if they can have put a plan together.
Alright, Great and my last question is just just on the debt I mean look here at.
Call. It $3 seven now you said youre comfortable with with four X you don't have a ton of debt maturities due in 2022, a couple of things in 'twenty three last time I checked I think your 10 years, where yield to worst was sub 3%. How do you think about retiring that debt versus just rolling it and just using that cash flow for other things.
Yes, Tim it's John I mean, certainly that's something we take a look at all the time right looking at optimizing that that portfolio and frankly.
When you look at where rates are both short and long term.
Cost of trying to go after that that really doesn't work for us to do that so.
I think.
The numbers change, we will take a look at it but right now.
And over that portfolio. It's just it's not cost effective to go after that longer term debt.
Alright, that's it for me and go Bangles there we go.
[laughter].
Love, the Ohio connections and thanks.
Okay.
Alright, operator with that thanks, everyone for joining us today and thank you for your interest in MPLX should you have additional questions or would like clarification on any of the topics discussed. This morning members of the IR team are here to help you. Please just reach out thank you everybody.