Q3 2022 MPLX LP Earnings Call

Okay.

Alright.

Welcome to the MPLX third quarter 2022 earnings call. My name is Sheila and I will be your operator for today's call. At this time all participants are in a listen only.

Press Star one on your Touchtone phone to enter the queue.

Good morning, and welcome to the MPLX third quarter 2022 earnings conference call. The slides that accompany this call can be found on our website at MPLX dot com under the investors tab joining me on the call today are Mike Hennigan.

Chairman and CEO , John Quaid CFO and other members of the executive team. We invite you to read the safe Harbor statements 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 are included there as well as in our filings with the SEC with that I'll turn the call over to Mike.

Thanks, Kristina good morning, and thank you for joining our call.

First of all Sean line and will be joining our calls as our new senior Vice president of logistics and storage. So it has over 33 years experience in engineering and leadership roles across our midstream and downstream organizations. Most recently shown was president of marathon pipeline.

They've had been or will also be joining our calls he has over 34 years of experience with the company Dave's role as senior Vice President of strategy and business development has been expanded to include a focus on midstream.

Now turning to our business update earlier today, we reported third quarter adjusted EBITDA of $1 5 billion and.

<unk> cash flow of $1 3 billion, both of which represent record results and a 6% increase from the third quarter of last year.

These results highlight the performance of our businesses and growth from our recent capital investments.

Based on the strength and continued growth of our cash flows today MPLX announced a 10% increase in the partnerships based distribution. In addition to the $315 million of unit repurchases completed through the first nine months of the year.

We continue to view this as a return on as well as a return of capital business and this quarter, we advanced several organic growth projects.

The <unk> segment, we continue to expand natural gas long haul and crude gathering pipelines supporting the growing Permian.

Working with our partners, we are progressing our natural gas strategy with the expansion of the Whistler pipeline to $2 5 billion cubic feet per day, along with laterals into the Midland Basin and Corpus Christi markets do.

Driven by increasing Permian natural gas production interests for Whistler as additional capacity has been high and we continue to expect it to come online in the third quarter of 2023.

The GMP segment, our growth focus remains mainly in the Permian and Marcellus basin, although all other basins are generating positive cash flow.

In the Permian, our 200 million cubic feet per day Toronado two processing plant is expected to be fully online by year end and then ramping through the middle of next year.

We're progressing our Preakness two processing plant, which we expect will come online in the first half of 2024, bringing our total Permian processing capacity to one 2 billion cubic feet per day.

In the Marcellus or Smithburg D. S. In either began operations this quarter and the facility has been ramping in line with in basin demand.

We're progressing the Harmon Creek to process Harmon Creek, II processing plant, which is expected to come online in the first half of 2024.

Our total Marcellus processing capacity to $6 5 billion cubic feet per day.

These asset additions will continue to support growing cash flows in our portfolio.

Switching topics, we've received questions on the structure of MPLX and whether MPC will acquire the partnership's outstanding public units. So we want to restate, what we've said in the past.

First we've grown MPLX into an entity with a public float of approximately $12 billion, which compared the recent MLP roll ups is substantially larger.

MPLX is a strategic part of Mpc's portfolio.

<unk> continued to demonstrate earnings growth with the increased distribution announced today MPC expects to receive $2 billion of distributions from MPLX annually.

As <unk> pursues its growth opportunities, we expect the value of this strategic relationship will continue to be enhanced.

MPC believes that its current capital allocation priorities are optimal for its shareholders and MPC does not plan to roll up MPLX.

As we continue to grow our cash flows. We also remain focused on executing the strategic priorities of strict capital discipline.

During our low cost culture, and optimizing our asset portfolio.

Shifting to slide four last quarter, we discussed our enhanced ESG commitments and disclosures with the June publication of both our annual sustainability and perspectives on climate related scenarios reports, we're making progress on our targets and challenging ourselves to lead in sustainable energy by meeting the needs of today.

While investing in an energy diverse future that create shared value for all stakeholders.

Now, let me turn the call over to John to discuss our operational and financial results for the quarter.

Thanks, Mike.

Slide five outlines the third quarter operational and financial performance highlights for our logistics and storage segment LNR segment, adjusted EBITDA increased $65 million when compared to third quarter 2021.

The increase results are primarily due to higher pipeline tariff rates and throughput, partially offset by higher costs, including higher project expenses and fuel and power costs Piper.

Pipeline volumes were up 5% driven primarily by increased utilization at Mpc's refineries, while terminal volumes were down 1%, primarily due to the second quarter 2022 sale of several light product terminals.

As you would've expected our pipeline tariff rates increased in the third quarter. However, due to changes in the mix of throughput you will note our reported average rates were lower year over year.

Moving to our gathering and processing segment on slide six GMP segment, adjusted EBITDA increased $17 million compared the third quarter 'twenty one.

Primarily due to increased volumes offset by increased operating costs.

Higher NGL prices also benefited the quarter with average NGL prices five per gallon higher than the prior year.

Gathered volumes were up 12% year over year due to increased production in the Utica and southwest regions processing volumes were up 2% year over year, primarily from higher volumes in the southwest which includes our Permian operations.

In the Marcellus, while gathering and processing volumes were slightly lower year over year, we did see sequential increases for gathering processing and fractionation volumes in line with our expectations for increased producer activity in the back half of the year.

Moving to our third quarter financial highlights on slide seven.

Total adjusted EBITDA of $1 5 billion and distributable cash flow of $1 3 billion, both of which represent record quarterly results also both increased 6% from the prior year.

We returned $935 million to unit holders through $755 million of distributions and $180 million and repurchases of common units held by the public.

As of September 30th we had just over $1 billion remaining available under our unit repurchase authorizations.

As Mike discussed based on our confidence in the business, we increased the base distribution by 10% to 77 and a half cents per common unit, while maintaining strong coverage of one six times.

During the quarter.

Refinance near term senior note maturities, we issued $1 billion of 10 year notes.

The net proceeds to redeem notes that were due in December of this year and March of 2023.

We ended the quarter with total debt of approximately $20 billion and a debt to EBITDA ratio of three five times comfortably below our target leverage of four times.

In closing given our commitment to strict capital discipline and our continued adoption of our low cost culture. We expect to continue generating strong cash flow enhancing our financial flexibility to invest and grow the business. While also supporting the return of capital to MPLX unitholders.

Now, let me turn the call back over to Christina Thanks, John as we open the call for questions. We ask that you limit yourself to one question plus one follow up we may re prompt for additional questions as time permits with that Sheila could you help us quick questions.

Absolutely. Thank you.

Ill begin the question and answer session. If you have a question. Please press Star then one on your Touchtone phone if you wish to be removed from the queue. Please press Star then two.

If you are using a speakerphone you may need to pick up the handset first before pressing the numbers. Once again if you have a question. Please press Star then one on your Touchtone phone.

Our first question will come from Brian <unk> with UBS.

Hi, Sheila it's there is a question being asked we can't hear it would you mind, prompting Brian .

Brian If you. Please check the mute feature on your phone were not able to hear you in countries that Brian <unk> with UBS, we're able to take your questions at this time.

Do you want to move to the next caller in the queue.

Oh, sorry, I was on sorry.

No worries, Brian good to hear you.

Sorry about that hi, good morning, everyone and Mike It's great to read about your recent positive update.

First to start off on capital capital allocation process, particularly around the permanence of the distribution raise or special.

How should we think about the continuance of buybacks going forward.

How should we think about.

Your ultimate leverage target given that leverage looks to be well below that four times target.

Hey morning, Brian It's John I'll start with that and then Mike can jump in as well so.

First of all talking about the distribution look as we said in our comments, it's really driven by our confidence in the business and the strength of our cash flows.

Quarterly records on adjusted EBITDA, and DCF year to date, $3 7 billion of distributable cash flow and the business also continues to generate cash both in excess of our capital and our distribution.

Running at about $730 million year to date.

So all of that kind of gets us to the point as well will remain painting strong strong balance sheet with leverage of three five times.

And looking at a coverage of one six after this distribution.

We our overall capital allocation rate hasn't changed right we want to.

Ensure the safety of our assets look at our distribution grow the business as well and then look to return capital.

And we've continued to optimize that around around the business and where we are so.

Certainly confident in the strength of the business drives our comfort with that 10% increase.

But overall, we'll continue to look at other opportunities to return capital rate, we did $180 million of repurchases this quarter.

But that'll be dynamic right I know you asked about the pace of buybacks I don't know if theres necessarily a pace.

It's certainly an avenue for us to return capital, but we want to be opportunistic as we think about that as well, which is partly to and you've seen us may be carrying some cash on the balance sheet from from quarter to quarter.

No.

I think our framework hasn't changed we continue to optimize around that.

And I think youll see us doing that going forward right. We will probably see us look at that distribution is certainly subject to the board's approval. Once a year. We'll continue to think about how we can be dynamic and a return of capital via unit repurchases and just since you asked about at the special we're actually now calling a supplemental.

But.

Look while not a tool we're going to use this year that is something that remains available to us as we go forward. So lots of levers and we're trying to work around that too to optimize that return of capital.

Hey, Brian It's Mike Let me, let me just add a couple of comments.

First off you know before we get into the how.

How are we going to return capital to key for US is to show the market that we're continuing to grow the partnership growing earnings and cash flows puts us in a good position to have this debate about what's the best way to return.

And MPLX distributions our tax efficient.

Which is different than an MPC at MPC, it's a little bit different situation for the CCAR, but but in MPLX distributions our preferred way at the same time, we've set a couple of times that we have in all of the above approach. So since we started the buyback program, we've executed somewhere around little.

$29 a unit.

So as John says, we try and be dynamic we look at the market conditions, but it all starts with generating and growing cash flows inside the partnership and then debating what's the best way to return that capital and we've said all of the above is the best way to describe it because given the market conditions, we may lean one way or the.

The other I hope that helps you a little bit right now as John said, we're very confident.

The cash flows so so the permanent increase makes more sense last year, we debated a lot as to whether it was permanent not permanent because some of these calls are a little tricky.

I used to use the term red bar Blue bar, and but and that's still in my thinking as we described the cash flows but as we feel confident about them, we're going to increase distributions as we see the market conditions allow us to buy back units, we're going to do that as well. So hopefully that gives you a little more flavor I know, it's been hard for people to understand since it's bounced around.

A little bit.

But it really has to do with where is the market at the time and how we feel about the cash flows.

Hope that helps Brian .

No that's super helpful and I appreciate the.

Extra remarks there.

Maybe as a follow up I appreciate the remarks around the potential low carbon opportunities just from marathon as a general family.

Could you, maybe just talk a little bit more in depth about these opportunities kind of what has changed between this quarter and prior quarters. You know how does the IRS change things and you know there is a peer refiner participating that carbon pipeline in the Midwest is that something that MPLX could also participate in maybe supporting N. P C.

Thanks, Brian .

Brian It's another really good question, let me, let Dave take a shot at how do we think about investing capital et cetera.

Hey, Brian I. Appreciate the question this is Dave so.

As you would expect.

Between MPC and MPLX, we look at noon.

Numerous opportunities and a lot of them being driven and the low carbon footprint.

As the industry in the country evolves and the energy evolution.

And as you stated with the recent announcement of the IRR that we will have some impact as we evaluate those opportunities I will say a couple of things relative to that still pretty early there's a lot of clarification relative to the IRI that needs to.

Come to fruition before he could make forward looking strategic decisions.

Is as you touched on between MPC and MPLX Theres a lot of integration.

Opportunities along the value change, which make these opportunities more viable for the overall enterprise, but I'll leave you with this that all of our growth opportunities whether it be in the base business or in this low carbon energy evolution.

It's all about return on capital.

And if we can achieve those rated turnout capitals.

Versus our other alternatives for those.

For that capital we wouldn't proceed with those projects.

Okay.

Great I really appreciate the color sorry about the mute hiccup in a really great to hear you're doing better Mike have a great rest of your day.

Thanks again, Brian appreciate it.

Thank you. Our next question will come from John Mackay with Goldman Sachs. Your line is open.

Hey, everyone. Good morning, Thanks for the time.

Maybe we'll do something on the <unk>.

Operating side.

Let's say northeast volumes really strong we've seen kind of mixed results from some others out there, particularly I think the Utica was I don't know if record volumes since 2019 or something.

Can you just talk a little bit about what youre seeing in the northeast whether these recent gains are sustainable whether or not you are taking share from others. Just how do we think about that going forward given the overall base and still a little constrained.

John This is Greg I'll take that question the northeast your utilization remains high but there is room for growth there and the.

The gas processing facilities are distributed across the Marcellus and Utica around certain customers.

And so we may be full at one plant and we're actually expanding Harmon Creek. Two is a good example of that which we announced last quarter.

So we're actually expanding their other plants still have room.

For production growth. The good news is is that.

Gasoline NGL prices or continue to be supportive.

In the northeast as well as elsewhere for more growth and we do think it's sustainable.

As certain producers potentially or remain flat or decline a bit it makes room on the takeaway residue lines with NGL lines from for more growth there. So.

In general we remain bullish we are seeing more activity in the Utica area, we see a lot of growth on the gathering side there and.

Also anticipate growth.

On the rich gas and process side in the future.

Okay. Thanks for that maybe as a follow up turning to the Permian.

Just give us an update on the Whistler extension I think that's supposed to come online. This quarter is that is that going to allow incremental egress out of the basin.

And then maybe if you can just give us an update on on what your position and Matterhorn is looking like thanks.

Hey, John This is Sean I'll take that.

Really excited about our position up for gas takeaway out of the Permian.

We've seen differentials expand and widened from <unk> to Agua Dolce and Oaxaca to Houston.

We've seen on the original capacity for Whistler that's.

At near capacity, it's really match the expectations that we've had and then as we've announced before we've had an expansion that will come online in September of 'twenty, three and that will again help us before the gas takeaway there at <unk>.

<unk> had in our prepared remarks, we have.

Some lateral and one coming in called the Martin County lateral coming in to Whistler and one on the end that we're really excited about in a partnership we have with Cheniere.

That again will go to a liquefaction facility on the coast. There. So so that's where we stand there kind of moving to Matterhorn, we have decided and we announced it earlier to participate in.

Matterhorn and again that will help the gas takeaway there.

Okay.

Oh, sorry, yes, I was just going to remind you on Matterhorn right. We've got a 5% interest there again, that's driven by the producer volume, we're able to bring to the project right I just don't want folks to think some indication of our confidence in the project. It's really just driven by the volume we were able to bring and so your question you may have been recalling at one point.

We were we were pushing for 15%, but we're coming in at 5% on that project, which is out.

A bit as well.

Alright, thanks for that I appreciate the time today.

Thanks Pat.

Thank you. Our next question will come from Justin Jenkins with Raymond James Your line is open.

Thanks, Good morning, everyone, Mike one of Echo Brian's comments on your health update that Thats, great to see I guess my first question I appreciate it.

John You mentioned project costs were up year over year in your remarks, but can I ask if that maybe came in lower than you expected in <unk> and that's been part of the upside in the quarter itself and just your outlook on that line item in the fourth quarter again.

Yeah, Hey, good morning, Justin Thanks for the question, Yeah, while still up year over year.

Team just continues to do an outstanding job of managing risk and managing projects and looking for efficiencies. So we.

We probably did we had been kind of guiding to sequential changes that probably came in.

A good bit less than we were expecting and again just to talk about these projects in total right. These are really larger maintenance programs we do.

They are never going to be ratable quarter by quarter by quarter.

And one of the things we've typically seen.

As the first quarter is the lowest and then the other quarters kind of ramp up either driven off of weather or the timing of the program. So yes, I would say probably sequentially. We did a really good job of managing those expenses still up year over year.

But that.

Probably is.

Is driving some of the variance versus what we would've expected last quarter.

Okay. That's helpful and John I think my second one for you as well on gross debt seems like we've been in the $20 billion to $21 billion range for a while now is that just coincidental or if we think of that level starting to make to become more of a target here and I guess related is the four times leverage target starting to turn into a ceiling.

[laughter], that's great great questions, just Justin so, yes, I mean, the 'twenty one of kind of gross debt is where we've been and we've been comfortable with it just because our leverage has been <unk>.

<unk> are kind of kind of four four times guidepost.

So you've seen US earlier this year twice go out and issue new notes to refinance upcoming maturities and I would expect you would see us to continue to do that right looking out to next year.

We've got a July maturity of about $1 billion that we'll look to address at the right time. We also too maybe just I'll just offer this up as well we have some series B preferred units there at a fixed rate now but in February they moved to a floating rate which as of this.

Morning would be like eight 5%, so that'll be something we'll look to address as well now that's not in the 'twenty one right because that 'twenty. One is just our senior notes.

But that's something we've got on the radar as well so I think youll continue to see us to be come.

Comfortable with the leverage it provides us some financial flexibility as we think about.

Running the business.

But.

Youll see us continue to refinance those.

Thank you will see us paying down debt.

Justin It's Mike I, just wanted to add.

Said earlier is the business models, we need to support our capital program and our distributions with cash flow generated through the partnership.

And obviously, we want to have access so so we havent increased our debt level in quite some time to your point.

Bounce it around that same level the main.

Reading the leverage has come down is because the earnings have gone up so for relatively constant.

At an earnings going up that's what's driving our leverage numbers down and we'll continue to look at that but the key for US is run the partnership in such a way that we generate enough cash flows to self sustain our capital program. Our distributions have excess so we have a good return program and obviously not increase.

Our debt levels.

Hope that helps perfect perfect.

Perfect. Thanks.

Thank you. Our next question will come from Michael Blum with Wells Fargo. Your line is open.

Hi, Thanks, good morning, everyone.

Just two quick ones for me.

One I'm sure you're seeing diesel prices are really spiking in the northeast and I'm just curious if that presents any potential investment opportunities for MPLX.

Dave do you want to take that one sure Hey, Michael.

Yes. There is no question, where were keeping an eye on that and as I stated earlier.

We look at everything as far as investment opportunities and with the.

<unk>.

Logistics and commercial footprint of MPC and MPLX.

Those opportunities.

Pop up quite a bit.

But again a couple of things to keep in mind is these have to be long term market.

Fundamental changes to justify a long term investment and getting back to the the key point I touched on earlier, it's all about return on capital and making sure that we can achieve.

The acceptable return on those capital investments for the long term.

Okay, great. Thanks for that and then I wanted to ask you.

Extensive marketing NGL marketing operation in the northeast.

I Wonder if you could just speak to the shell cracker coming into service pretty soon here, how that might change the dynamics for you in the northeast.

Michael This is Greg Yeah glad to answer that question or address that question. We're excited to see the.

Shell's Monaco ethane crackers start to commission and ramp up in late third quarter.

As I've mentioned before in previous calls.

We expect to supply through our producers recover and supply $80 to 90% of the flow into that plant.

That's driving.

Both in terms of ethane recovery.

Or smithburg, two excuse me our Super <unk>.

<unk> fully online now supporting that so.

We.

The amount of ethane that we recover where we recover is driven by the producers what ultimately the producers have.

The arrangements with with the end user in this case show, but yes.

Yes, we do see growth in terms of ethane recovery in the north eastern.

Is that plant continues to ramp up.

And Michael It's Mike I, just wanted to add we're still bullish the Marcellus in the very short term.

Gas has been a little constrained, but like Greg just mentioned so shell is going to pull some ethane out as you heard us say earlier, we're going to start up another processing plant so as different producers.

Execute their strategy is up in the northeast, we still think over the long term. It's a great resource, it's a low cost resource and there will be an important part of U S. Natural gas supply for a long term obviously the constraints on pipelines needs to get sorted out we think that will happen, whether its MVP or some of the others that are in process.

But overall, we're still pretty bullish that the Marcellus is a good place to be we have a strong position as you mentioned and Greg has talked about in the past. So we like our positioning there we think it's a good area and we believe it's going to continue to grow.

Thank you I appreciate it.

Youre welcome.

Thank you. Our next question will come from Theresa Chen with Barclays. Your line is open.

Good morning, everyone and make it as great again to hear you voice.

I wanted to.

First ask on that yet Whistler expansion coming online in the third quarter of next year and so initially is this going to be.

Involving any sort of ramp period or would there have to be immediate and during any of the initial period.

It completely.

Belonging to the contracts by the third party customers or will you have any sort of marketing capability in that initial startup.

Hey, Theresa this is Sean.

We've seen basically the interest in the expansion capacity be very high.

And we expect that to be.

Our expectations are exceeded again based on the differentials we've seen.

<unk>.

Coming out of the Permian there.

So we think thats going to thats going to fill up fairly.

Fairly quickly along with what our expectations were.

Chris It's Mike I'll, just add first of all thank you for the kind words on my help.

As far as the marketing goes we do not market in that area.

<unk> are the players in that and we are the transporters of it so as Sean said, we're pretty excited.

The area needs to takeaway.

<unk> is continuing to grow we're trying to be part of that growth profile as Sean mentioned and at the end of the day, we believe it will ramp very quickly.

Got it and in relation to the ethane recovery dynamics as shall Monaco comes online Im just curious as to your view on the utilization.

That facility and pull it will have across your system in light of the challenging pet Chem dynamics globally right now and.

Tailwind from utilization of existing plants as a result of these problematic.

Net backs.

This is Greg again.

The producers ultimately as I mentioned before determined whether we recover or reject ethane and obviously the residue gas prices in our region versus the ethane price has an impact on that but the other thing that has a big impact as prior commitments that were made for ethane supply.

Downstream.

<unk> petrochemical companies and companies like shell so.

Based on commitments that were made.

567 years ago or more when the plant was in there.

<unk> phase there is an expectation that.

That will continue to recover ethane to help supply for example, in Monaco plant and Thats true of other <unk>.

Downstream crackers.

To the markets that are <unk> pipeline delivers too whether it's Gulf Coast, Canada.

Or to Europe through the the market sort of connection so we would expect.

With our over 300000 barrels a day now.

With Smith <unk> online in the region, we have.

Our utilization will clearly climb with with ramp up of Smithburg.

With the <unk> plant, but we still have capacity, we don't see an issue.

Hugh.

In the near term there.

That's very helpful. Thank you.

Yeah.

Thank you and once again, if you would like to ask a question at this time you can press star one and record your name when prompted our next question will come from Keith Stanley with Wolfe Research. Your line is open.

Hi, Thank you.

I wanted to follow up first you cited the series B Preferreds that you go to variable rate in February .

And also just being below the leverage target.

It is one of the options you would consider to actually just issue debt to repay those preferreds and take that up a little bit since you're below the target or if you take out the perhaps would it more likely come from from excess cash flows.

Hey, Keith it's John Thanks for the question.

Certainly when you think about those preferreds and I may not have mentioned that they've got a face of 600 $600 million right. So not a not a big turn on leverage we've got some capacity thinking about.

Where are those notes might be relative to that floating rate of eight and a half it certainly would be.

Strong possibility for us to look to just move that over in the different part of the capital structure.

Great.

Second the second question, just I think last quarter, you talked about some cost inflation into 2023, and it's felt like the companies definitely had a more optimistic tone on growth the past couple of quarters. So.

Wondering if you can give any directional sense of how youre thinking about capex into next year versus 2022, and any any potential major projects you'd highlight aside from Whistler expansion in the processing plants that youre building. Thank you.

Hey, Keith it's John I'll take that one again I mean again I think we've tried to talk about the projects, we have and that we've announced and some of those will roll into next year.

I think we'll we'll be ready to talk to you about our 2023 capital on next quarter's call.

But I think we've highlighted the areas, where we're focused on with the gas plant as Greg talked about in the Marcellus and the Permian.

Again, whats interesting too we've got opportunities around some of those Permian takeaway lines, but as you might recall is mentioning before a lot of those will largely be financed at the JV level. So that's not going to draw too much capital against the budget as those move forward. So.

We've got a favorable price deck that.

Support some of our producer activities and we'll be back to you next quarter with what 2023 looks like.

And Keith it's Mike just to add we have a little bit of I'll call. It all all of the above approach on capital as well as capital allocation on the capital side.

You heard that on the gas business, we're investing up in the northeast, we're investing down in the Permian and the <unk> business, we're investing in some long haul pipes and some other activities to support the refining business.

We have today so.

It's not as sexy not to have a really big project, but personally I like these smaller organic projects that have typically better returns.

Then major large projects. So we're pretty happy with the capital program. We have it continues to chug, along and generate earnings and Thats why I think at the end of the day and you mentioned it earlier. Thanks for thanks for noticing that we continue to grow the earnings and the cash flows and Thats what puts us in a position to have that debate about what's the best way to return.

Capital, but it all starts with with growing earnings and growing cash flows within the partnership and Thats, where our main focus is and then we can optimize after that.

Thank you.

Youre welcome.

Thank you our last question will come from Neal Dingmann with true Securities. Your line is open.

Good morning, Thanks for fitting me in.

Just one question for you.

You've done a great job, obviously, the cash flow sort of speaks for itself and I'm. Just wondering given that strong cash flow could you, maybe you've talked around cap allocation a bit but I'm just wondering a little bit more on how comfortable you are allocating Neil when it comes to cash flow more towards growth versus shareholder returns, how youre thinking about that on a go forward.

Hey, Neil it's John I'll start and then I'm sure.

Sure Michael chime in as well again part of it and maybe this is one of the things we've been doing but maybe folks have noticed this quarter. We are still focused on growing the partnership and its earnings and cash flows right.

We've got a capital outlook this year of about in total across growth in maintenance and some other items about $900 million and we remain on track for that that total spend.

So we want to make sure we're growing the business, but we're also in a position where we've got the financial flexibility to do that and look at return of capital as well across a number of different tools right, whether it's the permanent whether its repurchases.

We still have as an option or supplemental distribution, if and when that might make sense and we just continue to try and optimize about that but we're certainly not losing sight of our focus on growing the earnings and cash flows of the partnership.

Yeah, Neil I'll, just add to what John said, it's clearly the higher priority in our capital allocation, but at the same time as Dave mentioned, a couple of times, we're trying to have strict capital discipline and make sure that we're getting good returns investing that capital wisely and when we have those opportunities we are advancing the ball we certainly.

We want to grow the earnings and cash flows over time.

But we also like the position that we have such that if we maintain good discipline and have a good robust program. John mentioned spent a little under $1 billion in capital.

That's a good base to add on to some of the current assets that we have and then if there's excess cash beyond that we still tested against additional capital to your point, where we say we will return it to unit holders.

So in our mind, it's still a win win if.

If we think Theres a good investment opportunity, we'll go that way and hopefully investors have confidence that we are delivering good returns and if not we'll return capital and we will debate, whether it's via the distribution or buybacks.

Yeah.

Got it.

Thank you, yes, we are showing no further questions.

Sounds great well, thank you for joining us today and thank you for your interest in MPLX should you have additional questions or would you like clarification on any of the topics discussed. This morning members of our team will be available to take your call. Thank you everybody.

Thank you that does conclude today's conference. Thank you for participating you may disconnect at this time.