Q3 2023 MPLX LP Earnings Call
Welcome to the MPLX third quarter 2023 earnings call. My name is Sheila and I will be your operator for today's call at.
Speaker 1: transcript
Speaker 1: So
At this time all participants are in a listen only mode. Later, we will conduct a question and answer session Press Star one on your Touchtone phone to enter the queue. Please note that this conference is being recorded I will now turn the call over to Kristina Kazarian Kristina you may begin.
Speaker 2: transcript
Speaker 2: Good morning and welcome to the MPLX 3rd quarter, 2023 earnings conference call. The slides that accompany this call can be found on our website at MPLX.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-gaptist claimer on slide two. It's a reminder that we'll be making forward-looking statements during the call and during the question and answer session that follows.
Sheila good morning, and welcome to the MPLX third quarter 2023 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 statement.
And non-GAAP disclaimer on slide two it's a reminder, that we'll 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.
Speaker 2: transcript
Speaker 2: Actual results made different 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.
Speaker 3: transcript
Speaker 3: Thanks, Christina. Good morning, everyone. Thank you for joining our call.
Thanks Kristina.
Everyone. Thank you for joining our call.
Speaker 3: transcript
Speaker 3: Earlier today, we reported third quarter of just a bit of $1.6 billion and distributable cash flow of $1.4 billion. Each set a new quarterly record for MPLX with both increasing over 8% year over year.
Earlier today, we reported third quarter adjusted EBITDA of $1 6 billion and distributable cash flow of $1 $4 billion. Each set a new quarterly record for MPLX with both increasing over 8% year over year.
Speaker 3: transcript
Speaker 3: Our LNS business set a new record for crew pipeline throughput and saw strong terminal throughputs demonstrating the value of our relationship with NPCs.
Our O&M business set a new record for crude pipeline throughput and saw strong terminal throughput demonstrating the value of our relationship with MPC.
Speaker 3: transcript
Speaker 3: In our G&P business, we saw record throughput in our processing and fractionation operations driven mainly by our assets in the Permian and Marcellus space.
In our G&P business, we saw record throughput in our processing and fractionation operations, driven mainly by our assets in the Permian and Marcellus basins.
Speaker 3: transcript
Speaker 3: Our long-term production outlook for our GMP producer customers and our key basins remains largely unchanged.
Our long term production outlook for our GMP producer customers in our key basins remains largely unchanged.
Speaker 3: transcript
Speaker 3: In our largest basin, the Marcellus, the cost to develop remains at the low end of the cost curve and still below current commodity prices. We expect to see maintenance level drilling activity continue.
And our largest basin the Marcellus the cost to develop remains at the low end of the cost curve and still below current commodity prices, we expect to see maintenance level drilling activity continue.
Speaker 3: transcript
Speaker 3: While in the Permian, crew prices remain strong and prices for associated gas do not significantly impact producer activity.
Well in the Permian crude prices remained strong and prices for associated gas do not significantly impact producer activity.
Speaker 3: transcript
Speaker 3: Our integrative footprints in these basins position the partnership with a steady source of growth opportunity.
Our integrated footprint in these basins position the partnership with a steady source of growth opportunities.
Speaker 3: transcript
Speaker 3: For the second year in a row, based on the strength and continued growth of our cash flows, last week we announced a 10% increase in the partnership's distribution, which now stands at $3.40 per unit on an annualized base.
For the second year in a row based on the strength and continued growth of our cash flows last week, we announced a 10% increase in the partnerships distribution, which now stands at $3 40 per unit on an annualized basis.
Speaker 3: transcript
Speaker 3: We're committed to returning capital to unit holders and expect our distribution to be the primary return of capital tool supplemented with opportunistic repurchase.
We're committed to returning capital to unitholders and expect our distribution to be the primary return of capital tool supplemented with opportunistic repurchases.
Speaker 3: transcript
Speaker 3: We are well positioned to optimize return of capital, given the strength of the business and our balance.
We are well positioned to optimize return of capital given the strength of the business and our balance sheet.
Speaker 3: transcript
Speaker 3: Our position on PLX and its structure is unchanged. And PLX is a strategic investment for MPC, which now expects to receive $2.2 billion in annual cash flows via the distribution.
Our position on MPLX and its structure is unchanged MPLX is a strategic investment for MPC, which now expects to receive $2 $2 billion in annual cash flows via the distribution.
Speaker 3: transcript
Speaker 3: MPC believes that its current capital allocation priorities are optimal for shareholders, and MPC does not plan to roll up MPLX.
N P. C believes that its current capital allocation priorities are optimal for shareholders and MPC does not plan to roll up MPLX.
Speaker 3: transcript
Speaker 3: We remain confident in our ability to grow the partnership and our focus on executing the strategic priorities of strict capital discipline, fostering a low-cost culture and optimizing our asset portfolio, all of which are foundational to the continued growth of MPLX's cash.
We remain confident in our ability to grow the partnership and our focus on executing the strategic priorities of strict capital discipline, fostering our low cost culture and optimizing our asset portfolio all of which are foundational to the continued growth of mplx's cash flows.
Speaker 3: transcript
Speaker 3: Now let me turn the call over to John to discuss our growth as well as our operational and financial results for the quarter.
Now, let me turn the call over to John to discuss our growth as well as our operational and financial results for the quarter.
Speaker 4: transcript
Speaker 4: Thanks Mike. As you can see on slide 5, MPLX has a strong history of growing its cash flows by executing the strategic priorities Mike just highly.
Thanks, Mike.
As you can see on slide five MPLX has a strong history of growing its cash flows by executing the strategic priorities, Mike just highlighted looking.
Speaker 4: transcript
Speaker 4: Looking back over the last three years, you can see that our growth comes in stair steps as we develop and bring projects online. And through the first nine months of this year, Distributable Cash Flow has grown over 6% versus the prior year.
Looking back over the last three years, you can see that our growth comes in stair steps as we develop and bring projects online and through the first nine months of this year distributable cash flow has grown over 6% versus the prior year.
Operator: Will be your operator for today's call. At this time, all participants are in a listen-only mode. Later, we will conduct a question and answer session. Press star-win on your touchtone phone to enter the queue. Please note that this conference is being recorded.
We are progressing our.
Speaker 4: transcript
Speaker 4: 2023 capital program, which remains forecasted at $950 million, including $800 million of growth capital and $150 million of maintenance capital.
Kristina Kazarian: I will now turn the call over to Kristina Kazarian.
2023 capital program, which remains forecasted at $950 million, including $800 million of growth capital and $150 million of maintenance capital and the El N. S segment, our joint venture natural gas crude and NGL pipeline projects in the Permian are progressing.
Kristina Kazarian: Kristina, you may begin. Thank you, Sheila. Good morning and welcome to the MPLX 3rd quarter, 2023 earnings conference call.
Kristina Kazarian: The slides at a company this call can be found on our website at MPLX.com Join 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-gap disclaimer on slide two. It's a reminder that we'll 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.
Speaker 4: transcript
Speaker 4: In the LNS segment, our joint venture natural gas, crude and NGL pipeline projects in the Permian are progressed.
Speaker 4: transcript
Speaker 4: Whistler's expansion, the 2.5 billion cubic feet per day, was completed at the end of the third quarter. And we're seeing strong demand for the natural gas pipeline.
Whistler is expansion to two 5 billion cubic feet per day was completed at the end of the third quarter and we're seeing strong demand for the natural gas pipeline.
Speaker 4: transcript
Speaker 4: Construction is progressing on the associated Aguadulsaita Corpus Christi pipeline lateral, which is expected to be in service in the third quarter of 2024.
Construction is progressing on the associated Agua Dulce say to Corpus Christi pipeline lateral which is expected to be in service in the third quarter of 2024.
Speaker 4: transcript
Speaker 4: On the Wink to Webster Crew Pipeline, we expect volumes to ramp over the next two years as the pipeline continues to place segments into service.
On the Wink to Webster crude pipeline, we expect volumes to ramp over the next two years as the pipeline continues to play segments into service.
Mike Hennigan: With that, I'll turn the call over to Mike. Thanks, Kristina.
Mike Hennigan: Good morning, everyone. Thank you for joining our call. Earlier today, we reported 3rd quarter adjusted a bit of $1.6 billion and distributable cash flow of $1.4 billion. Each set a new quarterly record for MPLX with both increasing over 8% year-over-year. Our LNS business set a new record for crew pipeline throughput and saw strong terminal throughputs demonstrating the value of our relationship with MPC. In our G&P business, we saw record throughput in our processing and fractionation operations driven mainly by our assets in the Permian and Marcellus Basins.
Speaker 4: transcript
Speaker 4: Turning to our participation in the NGL value chain, we are progressing the expansion of the Bangal pipeline to about 200,000 barrels per day, which is expected to be completed in the first half of 2025.
Turning to our participation in the NGL value chain, we are progressing the expansion of the bangle pipeline to about 200000 barrels per day, which is expected to be completed in the first half of 2025.
Speaker 4: transcript
Speaker 4: The capital-efficient expansion of this long-haul pipeline is supported by existing and growing demand for NGL takeaway from the Permian's Delaware and Midland Basins to the Fractionation Hub in Sweeney Tech.
The capital efficient expansion of this long haul pipeline is supported by existing and growing demand for NGL takeaway from the Permian, Delaware and Midland basins to the fractionation hub and Sweeny, Texas.
Speaker 4: transcript
Speaker 4: All of these projects are largely financed at the JV level, and therefore our portion of the JV finance capital spending is not reflected in our capital outlook.
All of these projects are largely financed at the JV level and therefore, our portion of the JV financed capital spending is not reflected in our capital outlook.
Mike Hennigan: Our long-term production outlook for our G&P producer customers in our key basins remains largely unchanged. In our largest basin, the Marcellus, the cost to develop remains at the low end of the cost curve and still below current commodity prices. We expect to see maintenance level drilling activity continue. While in the Permian, crew prices remain strong and prices for associated gas do not significantly impact producer activity. Our integrative footprints in these basins position the partnership with a steady source of growth opportunities.
Speaker 4: transcript
Speaker 4: In the GMP segment, we remain focused on growth investments in the Permian and Marcella Spacins in response to producer demand.
In the G&P segment, we remain focused on growth investments in the Permian and Marcellus basins in response to producer demand.
Speaker 4: transcript
Speaker 4: We are bringing online new gas processing plants in the Permian's Delaware Basin to meet increasing demand while targeting strong returns with strict capital disciplines.
We are bringing online new gas processing plants in the Permian, Delaware basin to meet increasing demand, while targeting strong returns with strict capital discipline.
Speaker 4: transcript
Speaker 4: We're progressing construction of pre- business 2, which we expected to be online in the first half of 2024. And in our last quarter, we would be building our seventh gas processing plant in the basin, Secretary it, which is expected to be online in the second half of 2025. Once operational, these plants will bring our total processing capacity in the Delaware basin up to 1.4 BCF per day.
We're progressing construction of Preakness, two which we expect to be online in the first half of 2024 and announced last quarter, we would be building our seventh gas processing plant in the basin Secretariat, which is expected to be online in the second half of 2025 once operational these plants will bring our total processing capacity in the.
Mike Hennigan: For the second year in a row, based on the strength and continued growth of our cash flows, last week we announced a 10% increase in the partnership's distribution, which now stands at $3.40 per unit on an annualized basis. We're committed to returning capital to unit holders and expect our distribution to be the primary return of capital tool supplemented with opportunistic repurchases. We are well positioned to optimize return of capital given the strength of the business and our balance sheet.
The Delaware basin up to one four Bcf per day.
Speaker 4: transcript
Speaker 4: In the Marcella space and we are also advancing construction of the Harman Creek 2 gas processing plant, which we expect will be online in the first half of 2024.
In the Marcellus Basin. We are also advancing construction of the Harmon Creek, two gas processing plant, which we expect will be online in the first half of 2024.
Speaker 4: transcript
Speaker 4: Slide 6 outlines the third quarter operational and financial performance highlights for our logistics and storage segments.
Slide six outlines the third quarter operational and financial performance highlights for our logistics and storage segment.
Speaker 4: transcript
Speaker 4: The LNS segment reported its third consecutive quarter with $1 billion of adjusted eva dha.
The <unk> segment reported its third consecutive quarter with $1 billion of adjusted EBITDA.
Mike Hennigan: Our position on PLX and its structure is unchanged and PLX is a strategic investment for MPC, which now expects to receive $2.2 billion in annual cash flows via the distribution. MPC believes that its current capital allocation priorities are optimal for shareholders and MPC does not plan to roll up MPC. We remain confident in our ability to grow the partnership and our focus on executing the strategic priorities of strict capital discipline, fostering a low cost culture and optimizing our asset portfolio, all of which are foundational to the continued growth of MPC, and Dr. Smith.
Speaker 4: transcript
Speaker 4: LNS segment adjusted EBIDA increased $122 million when compared to third quarter 22, primarily driven by higher rates and throughputs, including growth from equity affiliates.
<unk> segment, adjusted EBITDA increased $122 million when compared to third quarter 'twenty two.
Primarily driven by higher rates and throughput including growth from equity affiliates.
Speaker 4: transcript
Speaker 4: Third quarter, 2023, segmented just a deba-da, excludes Garyville incident response cost of $63 million.
Third quarter 2023 segment adjusted EBITDA excludes Gary Bill incident response costs of $63 million.
Speaker 4: transcript
Speaker 4: Crude pipeline volumes were up 9% and represent a new quarterly record for the partnership as we grew crude oil through puts through expansion and debattled nicking activities.
Crude pipeline volumes were up 9% and represent a new quarterly record for the partnership as we grew crude oil throughput through expansion and Debottlenecking activities.
Speaker 4: transcript
Speaker 4: Product pipeline volumes were down 9%, driven by less favorable market dynamics, and effects from marathon's refinery downtime. Terminal volumes were up 7% due to higher customer demand, including effects from marathon's refinery turnarounds in both quarters.
Pipeline volumes were down 9% driven by less favorable market dynamics and effects from marathons refinery downtime terminal volumes were up 7% due to higher customer demand, including in facts from marathons refinery turnarounds in both quarters.
John Quaid: Let me turn the call over to John to discuss our growth as well as our operational and financial results for the quarter. Thanks, Mike. As you can see on slide five, MPLX has a strong history of growing its cash flows by executing the strategic priorities Mike just highlighted. Looking back over the last three years, you can see that our growth comes in stair steps as we develop and bring projects online. And through the first nine months of this year, Distributable Cash Flow has grown over 6% versus the prior year.
Speaker 4: transcript
Speaker 4: Looking ahead to the fourth quarter, we do expect some headwinds of approximately 30 to $40 million to sequential LNS segment results. From lower throughput volumes as a result of NPCs planned turnaround activity, as well as higher operating expenses due to the timing of maintenance projects.
Looking ahead to the fourth quarter, we do expect some headwinds of approximately $30 million to $40 million to sequential LNR segment results from lower throughput volumes as a result of mpc's planned turnaround activity as well as higher operating expenses due to the timing of maintenance projects.
Speaker 4: transcript
Speaker 4: Moving to our gathering and processing segment on slide seven, GNP segment adjusted EBIDA increased $3 million compared to third quarter 2022.
Moving to our gathering and processing segment on slide seven.
John Quaid: We are progressing our 2023 capital program, which remains forecasted at $950 million, including $800 million of growth capital and $150 million of maintenance capital. In the LNS segment, our joint venture, natural gas, crude and NGL pipeline projects in the Permian are progressing. Whistler's expansion, the 2.5 billion cubic feet per day was completed at the end of the third quarter, and we're seeing strong demand for the natural gas pipeline. Construction is progressing on the associated Agua Dulceida Corpus Christi pipeline lateral, which is expected to be in service in the third quarter of 2024.
<unk> segment, adjusted EBITDA increased $3 million compared to third quarter 2022.
Speaker 4: transcript
Speaker 4: as the benefits of higher volumes and throughput fees were offset by lower NGL price.
As the benefits of higher volumes and throughput fees were offset by lower NGL prices.
Speaker 4: transcript
Speaker 4: While our GNP segment is largely a fee-based business, we do have some direct sensitivity to natural gas liquids price.
While our G&P segment is largely a fee based business. We do have some direct sensitivity to natural gas liquids prices for the quarter NGL prices averaged 68 cents per gallon as compared to $1.01 in the third quarter of 2022, resulting in a $32 million unfavorable.
Speaker 4: transcript
Speaker 4: for the quarter, NGL prices averaged $0.68 per gallon as compared to $1.01 in the third quarter of 2022, resulting in a $32 million unfavorable effect.
Verbal effect.
Speaker 4: transcript
Speaker 4: Total gathered volumes were up 3% year-to-year due to increased production in the Permian and the Morsellis. Processing volumes were up 5% year-to-year, primarily from higher volumes in the Morsellis and Permian, driven by increased customer demand in our investment in Permian processing capacity.
Total gathered volumes were up 3% year over year due to increased production in the Permian and the Marcellus processing volumes were up 5% year over year, primarily from higher volumes in the Marcellus and Permian driven by increased customer demand and our investment in Permian processing capacity.
John Quaid: On the link to Webster crude pipeline, we expect volumes to ramp over the next two years as the pipeline continues to place segments into service. Turning to our participation in the NGL value chain, we are progressing the expansion of the Bangal pipeline to about 200,000 barrels per day, which is expected to be completed in the first half of 2025. The capital efficient expansion of this long haul pipeline is supported by existing and growing demand for NGL takeaway from the Permians Delaware and Midland Basins to the Fractionation Hub in Sweeney, Texas.
Speaker 4: transcript
Speaker 4: focusing in on the morcelis by far our largest base in of operations. We saw year-to-year volume increases of 4% per gathering and 5% for processing driven by increased customer demand and fractionation volumes grew 10% primarily due to increases to our fractionation capacity to meet in base in demand for ethane.
Focusing in on the Marcellus by far our largest stage spacing of operations, we saw year over year volume increases of 4% per gathering and 5% for processing driven by increased customer demand and fractionation volumes grew 10% primarily due to increases to our fractionation capacity to meet.
In basin demand for ethane.
Speaker 4: transcript
Speaker 4: Moving to our third quarter financial highlights on slide eight, total adjusted EBIDA of 1.6 billion and distributable cash flow of 1.4 billion increased 8.5 and 8.6 percent, respectively, from the prior year.
Moving to our third quarter financial highlights on slide eight total adjusted EBITDA of $1 6 billion and distributable cash flow of $1 4 billion increased $8, five and eight 6% respectively from the prior year.
John Quaid: All of these projects are largely financed at the JV level, and therefore our portion of the JV Finance capital spending is not reflected in our capital outlook. In the GNP segment, we remain focused on growth investments in the Permian and Marcellus Basins in response to producer demand. We are bringing online new gas processing plants in the Permian's Delaware Basin to meet increasing demand while targeting strong returns with strict capital discipline. We're progressing construction of Preakness 2, which we expected to be online in the first half of 2024.
Speaker 4: transcript
Speaker 4: As Mike discussed, based on our confidence in the continued growth of our cash flows, we increased the base distribution 10% to 85 cents per common unit while maintaining strong coverage of 1.6 times. We are committed to returning capital to unit holders, and year to date, we have returned $2.4 billion through our distribution.
As Mike discussed based on our confidence in the continued growth of our cash flows we increase the base distribution, 10% to 85 per common unit, while maintaining strong coverage of one six times, we are committed to returning capital to unit holders and year to date, we have returned $2 4 billion.
Dollars.
Through our distributions.
Speaker 4: transcript
Speaker 4: Our capital allocation framework remains unchanged, and we continue to expect the distribution will be our primary tool to return capital. Opportunistic repurchases of units held by the public also remain a tool to supplement capital returns.
John Quaid: In an ounce last quarter, we would be building our seventh gas processing plant in the Basin Secretaryate, which is expected to be online in the second half of 2025. Once operational, these plants will bring our total processing capacity in the Delaware Basin up to 1.4 BCF per day. In the Marcellus Basin, we are also advancing construction of the Harmon Creek 2 gas processing plant, which we expect will be online in the first half of 2024.
Our capital allocation framework remains unchanged and we continue to expect the distribution will be our primary tool to return capital opportunistic repurchases of units held by the public also remain a tool to supplement capital returns.
Speaker 4: transcript
Speaker 4: The growth of our cash flows and our strong balance sheet, including a quarter end cash balance of $960 million and leverage of 3.4 times, provides us with financial flexibility to optimize capital allocation. Now let me hand it back to Mike for some final thoughts.
The growth of our cash flows and our strong balance sheet, including a quarter end cash balance of $960 million and leverage of three four times provides us with financial flexibility to optimize capital allocation now, let me hand, it back to Mike for some final thoughts.
John Quaid: Slide 6 outlines the third quarter operational and financial performance highlights for our logistics and storage segment. The LNS segment reported its third consecutive quarter with $1 billion of adjusted EBITDA. LNS segment adjusted EBITDA increased $122 million when compared to third quarter 22, primarily driven by higher rates and throughputs, including growth from equity affiliates.
Speaker 3: transcript
Speaker 3: Thanks John . In closing, the growth of our cash flows continues to enable us to invest in and grow the business while supporting our commitment to return capital to the unit holders.
Thanks, John and closing the growth of our cash flows continues to enable us to invest in and grow the business, while supporting our commitment to return capital to unitholders. We continue to expect our distribution would be the primary return of capital tool and with the recently announced 10% increase to the partnership's based.
Speaker 3: transcript
Speaker 3: We continue to expect our distribution to be the primary return of capital tool. And with the recently announced 10% increase to the partnership's base distribution, MPC now receives $2.2 billion annually from MPLX's distributions, illustrating its strategic value as part of MPC's portfolio. As MPLX pursues its growth opportunities, we believe the value of this strategic relationship will continue to be enhanced.
Abuse in MPC now received $2 $2 billion annually from MPLX distributions illustrating its strategic value as part of Mpc's portfolio as MPLX pursues its growth opportunities. We believe the value of this strategic relationship will continue to be enhanced.
John Quaid: Roberts, 3rd quarter 2023, segment adjusted EBITDA, excludes Garyville incident response cost of $63 million. Crue pipeline volumes were up 9% and represent a new quarterly record for the partnership as we grew crude oil through puts through expansion and debatelnicking activities. Product pipeline volumes were down 9%, driven by less favorable market dynamics and effects from marathon's refinery downtime. Terminal volumes were up 7%, due to higher customer demand, including effects from marathon's refinery turnarounds in both quarters.
Speaker 3: transcript
Speaker 3: We are confident in our growth opportunities and ability to generate strong cash flow.
We are confident in our growth opportunities and ability to generate strong cash flows.
Speaker 3: transcript
Speaker 3: By advancing our high return growth projects anchored in the Marcellus and Permian Basins, along with our focus on cost and portfolio optimization, we intend to grow our cash flows, allowing us to reinvest in the business and return capital to unit old.
By advancing our high return growth projects anchored in the Marcellus and Permian basins, along with our focus on cost and portfolio optimization, we intend to grow our cash flows, allowing us to reinvest in the business and returning capital to unitholders.
John Quaid: Looking ahead to the fourth quarter, we do expect some headwinds of approximately $30 to $40 million to sequential LNS segment results from lower throughput volumes as a result of NPC's planned turnaround activity as well as higher operating expenses due to the timing of maintenance projects.
Speaker 2: transcript
Speaker 2: Now let me turn the call back over to Christina. Thanks, Mike. As we open the call for questions, we ask that you limit yourself to one question plus a follow-up. We may reprompt for additional questions as time permits. And with that, Sheila, we're ready for the questions today. Thank you.
Now, let me turn the call back over to Christina Thanks, Mike as we open the call 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 and with that Sheila we're ready for the questions today.
Thank you we will now 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.
John Quaid: Moving to our gathering and processing segment on slide 7, GNP segment adjusted EBITDA increased $3 million compared to 3rd quarter 2022, as the benefits of higher volumes and throughput fees were offset by lower NGL prices. While our GNP segment is largely a fee-based business, we do have some direct sensitivity to natural gas liquids prices.
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 comes from John Mackay with Goldman Sachs. Your line is open.
John Quaid: For the quarter, NGL prices averaged $0.68 per gallon as compared to $1.01 in the 3rd quarter of 2022, resulting in a $32 million unfavorable effect. Total gather volumes were up 3% year-to-year due to increased production in the Permian and the Marcellus. Processing volumes were up 5% year-to-year, primarily from higher volumes in the Marcellus and Permian, driven by increased customer demand in our investment in Permian processing capacity. Focusing in on the Marcellus by far our largest basin of operations, we saw year-to-year volume increases of 4% per gathering and 5% for processing, driven by increased customer demand, and fractionation volumes grew 10%, primarily due to increases to our fractionation capacity to meet in basin demand for ethane.
Speaker 4: transcript
Speaker 4: Good morning, everyone. Thanks for the time. I wanted to start on maybe the distribution increase last week. Maybe you could just frame up for us how you were thinking about the 10% level, what that kind of means for cadence going forward. And if you could kind of touch on that in the context of leverage now being down at 3-4 versus the 4-0 ceiling. Thanks. Good morning, John . Thanks for the question.
Good morning, everyone. Thanks for the time I wanted to start on maybe the the distribution increase last week, maybe if you could just frame up for us how you're thinking about the 10% level, what that kind of means for cadence going forward and if you could kind of touch about the touch on that in the context of leverage now being down it at three four.
Or versus that four O ceiling. Thanks.
Hey, good morning, John Thanks for the question.
Speaker 4: transcript
Speaker 4: Yeah, I think it all gets down to. We've got a significant amount of financial flexibility here. I think as you can see where we stand, as we've been very focused around our capital allocation to growth, but also making sure we're returning capital to unit holders.
Yeah, I think it all gets down to we've got a significant amount of financial flexibility here I think as you can see where we stand as we have been very focused around our capital allocation to growth, but also making sure we're returning capital to unitholders.
Speaker 4: transcript
Speaker 4: As you know, we've talked in the past. We stay very focused on where our coverage is.
As you know we've talked in the past we stay very focused on where are our coverages.
Speaker 4: transcript
Speaker 4: And digging into that very comfortable here with this increase staying at 1.6 times
And digging into that very comfortable here with this increase staying at one six times.
Speaker 4: transcript
Speaker 4: You know, certainly some capacity there. Again, very happy where the balance sheet is, but I think as I think about, I'm sure Michael has some comments as well. I mean, that's not just return of, but also looking for opportunities to invest and drive return on capital as well. So, you know, I think we're in a very comfortable spot. Happy to do 10% for the second year in a row and continue to be focused on both growing the partnership and also driving returns to unit holders. Hey John , it's Michael. Oh.
John Quaid: Moving to our 3rd quarter financial highlights on slide 8, total adjusted EBIDA of 1.6 billion and distributed cash flow of 1.4 billion increased 8.5 and 8.6 percent respectively from the prior year.
Certainly some capacity there.
Again, very happy where the balance sheet is but I think as I think about it I'm sure Mike will have some comments as well I mean that that's not just return up but also looking for opportunities to invest and drive return on capital as well. So you know I think we're in a very comfortable spot are happy to do 10% for the second year in a row.
John Quaid: As Mike discussed, based on our confidence in the continued growth of our cash flows, we increased the base distribution 10% to 85 cents per common unit while maintaining strong coverage of 1.6 times. We are committed to returning capital to unit holders and year-to-date we have returned $2.4 billion through our distributions. Our capital allocation framework remains unchanged and we continue to expect the distribution will be our primary tool to return capital. Opportunistic repurchases of units held by the public also remain a tool to supplement capital returns. The growth of our cash flows and our strong balance sheet, including a quarter end cash balance of $960 million and leverage of 3.4 times, provides us with financial flexibility to optimize capital allocation.
We continue to be focused on both growing the partnership and also driving returns to unitholders.
Hey, John It's Mike I'll, just add that.
Speaker 3: transcript
Speaker 3: You know, the way we think about it from an investor perspective is
The way, we think about it from an Investor perspective is you know at the end of the day, we're trading around the 9% yield roughly and we've been saying to the market and I think we've demonstrated in our results. We're going to continue to grow earnings somewhere around that mid single digit it'll be a little stair steps, but if you look at our CAGR since 2000.
Speaker 3: transcript
Speaker 3: You know, at the end of the day, we're trading around a 9 percent yield, roughly, and we've been saying to the market, and I think we've demonstrated in our results, we're going to continue to grow earnings, you know, somewhere around that mid-single digit. It'll be a little stair-steppy, but if you look at our CAGR since 2019, it's been a little north of 6 percent. So, as I think about the investment, you know, opportunity for people, our yield plus growth should give a pretty strong opportunity for people to invest in the equity.
19, its been little north of 6%, so as I think about the investment opportunity for people our yield plus growth should give a pretty strong opportunity for people to invest in the equity and the way we think about as John just said is we're thinking about this over the longer term, we have a lot of financial flexibility.
Speaker 3: transcript
Speaker 3: And the way we think about it, as John just said, is, you know, we're thinking about this over the longer term. We have a lot of financial flexibility right now. We have cash on the balance sheet, which is both blue bar and red bar. We have more distribution growth capable. We have opportunistic capabilities. If we see more volatility come back into the equity, which we haven't seen for a little bit of time. But we'll see how that changes. But overall, we're trying to position ourselves.
Mike Hennigan: Now let me hand it back to Mike for some final thoughts. Thanks, John. In closing, the growth of our cash flows continues to enable us to invest in and grow the business, while supporting our commitment to return capital to the unit holders.
Now we have cash on the balance sheet, which is both blue bar and Red bar. So we have more distribution growth capable we have opportunistic capabilities. If we see more volatility come back into the equity, which we haven't seen for a little bit of time, but.
Mike Hennigan: We continue to expect our distribution via the primary return of capital tool, and with the recently announced 10% increase to the partnership's base distribution, MPC now receives $2.2 billion annually from MPLX's distributions, illustrating its strategic value. As part of MPC's portfolio. As MPLX pursues its growth opportunities, we believe the value of this strategic relationship will continue to be enhanced. We are confident in our growth opportunities and ability to generate strong cash flows.
We'll see how that changes, but overall, we're trying to position ourselves as a good investment for people that are interested in the type of cash flows that we're generating so hopefully that gives you. Some perspective is the way to think about it from from an investor angle.
Speaker 3: transcript
Speaker 3: as a good investment for people that are interested in you know the type of cash flows that we're generating so hopefully that gives you some perspective of the way i think about it from from an investor angle
Speaker 5: transcript
Speaker 5: I appreciate that. Thanks. And maybe picking up on the themes of continuing to invest in the business, obviously reiterated growth CapEx guidance for the year. We've also seen, you know, I think if we look at third quarter, growth CapEx came in a little lighter than we would have been, than we expected. Maybe you just talk about the cadence of growth spending from here, where opportunities might sit beyond the project backlog you've announced so far. Thanks.
I appreciate that thanks, and maybe picking up on the themes of continuing to invest in the business, obviously reiterated growth capex guidance for the year. We've also seen.
If we look at third quarter gross Capex came in a little lighter than we would have been one than we expected. Maybe you can just talk about the cadence of gross spending from here where opportunities might sit beyond the project backlog even out so far.
Mike Hennigan: By advancing our high return growth projects anchored in the Marcellus and Permian Basins, along with our focus on cost and portfolio optimization, we intend to grow our cash flows, allowing us to reinvest in the business and return capital to unit holders.
Speaker 4: transcript
Speaker 4: Yeah, thanks John , I'll jump in on that one. I think as we've said before to it, our capital doesn't, right, it tends to move quarter to quarter. So you're not going to see kind of rateable amounts again here this morning. We stated again, we're still looking around that 800 million of growth capital for this year. And again, in my remarks, and on slide five, we've tried to summarize kind of the major projects we're working towards.
Right Yeah, Thanks, John I'll I'll jump in on that one I think as we've said before to it you know our capital doesn't right. It tends to move quarter to quarter. So youre not going to see kind of ratable amounts again here. This morning, we restate. It again, we're still looking around that $800 million of growth capital for this year.
Kristina Kazarian: Now let me turn the call back over to Kristina. Thanks, Mike.
Kristina Kazarian: As we open the call for questions, we ask that you limit yourself to one question plus a follow-up. We may reprompt for additional questions as time permits. And with that, Sheila, we're ready for the questions today. Thank you. We will now 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 speaker phone, 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.
And again in my remarks on slide five we've tried to summarize kind of the major projects, where we're working towards.
Speaker 4: transcript
Speaker 4: You know, we've got two processing plants, one in the Marcellus, one in the Permian, coming online in the first half of next year. You know, we announced last quarter another processing plant in the Permian, which will be out in 2025, right? So you probably start to see us, you know, spend some money on that.
We've got two processing plants, one in the Marcellus one in the Permian coming online in the first half of next year.
You know, we announced last quarter.
Another processing plant in the Permian, which will be out in 2025, Reits, we probably start to see us spend some money on that.
John McCuy: Our first question comes from John McCuy with Goldman Sachs. Your line is open. Good morning, everyone. Thanks for the time. I wanted to start on maybe the distribution increase last week. Maybe if you could just frame up for us how you were thinking about the 10% level, what that kind of means for cadence going forward and if you could kind of touch on that in the context of leverage now being down at 3-4 versus the 4-0 ceiling.
Speaker 4: transcript
Speaker 4: And then we've got a number of the different JV pipeline projects that we're progressing as well. So, you know, again, I think you've asked before and we've said, hey, that, you know, plus or minus a billion of kind of run rate cap X is probably a comfortable zone for us.
And then we've got a number of the different JV pipeline projects that are that we're progressing as well so.
Again, I think you've asked before and we've said, hey that plus or minus $1 billion of kind of run rate Capex is probably a comfortable zone for us.
Speaker 4: transcript
Speaker 4: And I think the opportunities kind of remain in those main basins. And then also too, we also continue to look for opportunities around our large LNS footprint and support of NPC, where are their opportunities for us to find a smaller both on acquisitions where we can operate a midstream asset and NPC can commercially create value around that.
And I think the opportunities kind of remain in those main basins.
And then also too we also continue to look for opportunities around our large Ellen S footprint in support of MPC, where there are opportunities for us to find smaller bolt on acquisitions, where we can operate our midstream asset and MPC can commercially create value around that.
John McCuy: Thanks. Good morning, John. Thanks for the question. Yeah, I think it all gets down to. We've got a significant amount of financial flexibility here. I think as you can see where we stand as we've been very focused around our capital allocation to growth, but also making sure we're returning capital to unit holders. As you know, we've talked in the past. We stay very focused on where our coverage is and digging into that very comfortable here with this increase staying at 1.6 times.
Thank you I appreciate the time thank you.
Thanks, John.
Youre welcome.
Our next question will come from Theresa Chen with Barclays. You May proceed.
Speaker 6: transcript
John McCuy: Certainly some capacity there. Again, very happy where the balance sheet is, but I think as I think about it, I'm sure Michael has some comments as well. That's not just return of, but also looking for opportunities to invest and drive return on capital as well. I think we're in a very comfortable spot.
Speaker 6: Morning. Thank you for taking my questions. John , maybe if I can touch on your last point about potential bull-ton acquisitions, especially at the asset level, we've received multiple announcements from some of your competitors and peers about wanting to disperse assets into the market. Are there particular areas along your infrastructure valley chain that you find more attractive to invest in given what?
Good morning, Thank you for taking my questions John.
John maybe if I can touch on your last point about <unk> and potential bolt on acquisitions, especially at the asset level.
And we received multiple announcements from some of your competitors and peers about wanting to diverse dispersed assets into the market and are there particular areas along your infrastructure value chain that you find it more attractive to invest in given what's.
John McCuy: Happy to do 10% for the second year in a row and continue to be focused on both growing the partnership and also driving returns to unit holders.
Speaker 6: transcript
Speaker 6: out in the market from companies today as well as potentially a piece of TNX later on. All right. I got three somebody yes.
I'm out in the market from companies today as well as potentially a piece that's panamax later on.
Mike Hennigan: John, it's Mike. I'll just add that the way we think about it from an investor perspective is at the end of the day, we're trading around the 9% yield roughly, and we've been saying to the market. I think we've demonstrated in our results. We're going to continue to grow earnings somewhere around that mid-single digit. It'll be a little stair-steppy. If you look at our Kager since 2019, it's been a little north to 6%.
So I'll, maybe ask Dave chime in on that one.
Speaker 3: transcript
Speaker 3: Hey, trees, so this is Dave. Um, so yeah, that's a great question. So as we look at the opportunities to pursue, number one, we always look at the high quality assets that are aligned with our long-term strategies.
Patriots. So this is Dave.
So yeah. That's a great question, so as we look at our opportunities to pursue.
Number one are we always looking at high quality assets.
That are aligned with our long term strategies.
Speaker 3: transcript
Speaker 3: and also provide the ability to integrate and capture synergies along our value chains. Mainly around crude, that gas and NGLs.
And also provide the ability to integrate and capture synergies along our value chains, mainly around crude nat gas and Ngls.
Mike Hennigan: As I think about the investment opportunity for people, our yield plus growth should give a pretty strong opportunity for people to invest in the equity. The way we think about it, as John just said, we're thinking about this over the longer term. We have a lot of financial flexibility right now. We have cash on the balance sheet, which is both Blue Bar and Red Bar, so we have more distribution growth capable.
Speaker 3: transcript
Speaker 3: and also finally, of course, is a return of capital.
And also finally of course as a return of capital.
Speaker 3: transcript
Speaker 3: uh... return on capital i'm sorry uh... they always have to put you know give us the appropriate acceptable risk adjusted returns so i think if you think through that it's it's really um... there's a lot of m&a out there as you stated uh... we continue to look at them but we're looking through the lens of strict capital discipline
Return on capital I'm, sorry, they always have to give us the appropriate acceptable risk adjusted returns. So I think as you think through that it's really.
Mike Hennigan: We have opportunistic capabilities. If we see more volatility come back into the equity, which we haven't seen for a little bit of time. But we'll see how that changes. But overall, we're trying to position ourselves as a good investment for people that are interested in the type of cash flows that we're generating. Hopefully that gives you some perspective as a way to think about it from an investor angle.
There's a lot of M&A out there as you stated we continue to look at them, but we're looking through the lens of strict capital discipline and those in those key tenants high quality assets in synergies and integration value. So that's kind of how we're thinking through it.
Speaker 3: transcript
Speaker 3: and those key tenants, high quality assets and synergies and integration values. So that's kind of how we're thinking through it.
Speaker 4: transcript
Speaker 4: In three sets, John again, maybe just to add on to that with some examples. And again, these are what we like to call kind of singles. Maybe there even bumps, but...
<unk>, it's John again, maybe just to add on to that with some examples and again. These are what we like to call kind of singles, maybe they're even bumps but.
Speaker 4: transcript
Speaker 4: You know, earlier this year, we were able to acquire some boats and barges to expand our marine fleet to provide increased flexibility to MPC on moving product.
Earlier this year, we were able to acquire some boats and barges to expand our marine fleet to provide increased flexibility to MPC on moving product.
John McCuy: I appreciate that thanks and maybe picking up on the themes of continuing to invest in the business, obviously reiterated growth cap ex guidance. For the year we've also seen, I think if we look at third quarter growth cap ex came in a little lighter than we would have been when we expected. Maybe you just talked about the cadence of growth spending from here, where opportunities might sit beyond the project backlog even out so far.
Speaker 4: transcript
Speaker 4: Last year we had a rail facility near our Dickinson, MPC's Dickinson refinery that MPLX was able to acquire to move product there too. So.
Last year, we had a rail facility near our Dickinson Mpc's Dickinson refinery that MPLX was able to acquire to move product there too. So that's the piece of it is thought that value of interacting with our sponsor where again, we can kind of find those so I'd say, it's across as Dave said that whole value chain, where do we you know those are assets.
Speaker 3: transcript
Speaker 3: That's the piece of the, is like that value of interacting with our sponsor or again, we can kind of find those. So I'd say it's across as Dave said, that whole value chain. Where do we, you know, those are our assets. We know how to run and operate and we've got a customer that needs them too. So I'd say it's around those kind of examples as well. Mike, did you want to? Yeah, Teresa, I'm going to add on to John's comment there.
John McCuy: Thanks. Yeah, thanks, John. I'll jump in on that one. I think as we've said before to it, you know, our capital doesn't write it tends to move quarter to quarters. You're not going to see kind of rateable amounts again here this morning. We, we stated again, we're still looking around that 800 million of growth capital for this year. And again, in my remarks, and on slide five, we've tried to summarize kind of the major projects we're working towards.
We know how to run and operate and we've got a customer that needs them to so I'd say, it's around those kinds of examples as well Mike did you want to yeah. Today, so I'm going to add onto John's comment. There. So you know obviously on the calls people like to hear big sexy projects and that has not been our forte, but we have been investing in smaller where we get.
Speaker 3: transcript
Speaker 3: So obviously on the calls people like to hear big sexy projects and that's not been our forte, but we have been investing in smaller, where we get a really good return for a little to no capital.
John McCuy: You know, we've got two processing plants. One in the more sellers, one in the Permian coming online in the first half of next year. You know, we announced last quarter, another processing plant in the Permian, which will be out in 2025, right? So we probably start to see us, you know, spend some money on that. And then we've got a number of the different JV pipeline projects that that we're progressing as well.
It really good return for little to no capital.
Speaker 3: transcript
Speaker 3: You know, as an example, you know, we had record crew through put.
As an example, we had record crude throughput.
Speaker 3: transcript
Speaker 3: you know it's not sexy to come out and say we had a pump here or something along those lines but where you can deploy small amounts of capital and get large returns you know we think those are really great opportunities for us
It's not sexy to come out and say, we added a pump here or something along those lines, but where you can deploy small amounts of capital and get large returns. We think those are really great opportunities for us and.
Speaker 3: transcript
Speaker 3: And, you know, the magnitude of the size of our asset base enables, you know, Sean's team and Greg's team to look throughout all of our assets and come back. And even though the total capital number seems to some people to say, how are you getting this growth? Well, part of it is because we're getting some really good returns out of that deployment. And to me, that's part of the game that we're trying to do is get the highest possible returns out of the lowest capital deployment.
The magnitude of the size of our asset base enables.
John McCuy: So, you know, again, I think you've asked before and we've said, hey, that, you know, plus or minus a billion of kind of run rate cap ex is probably. A comfortable zone for us. And I think the opportunities kind of remain in those main basins. And then also, too, we also continue to look for opportunities around our large LNS footprint and support of NPC, where are their opportunities for us to find a smaller both on acquisitions where we can operate a midstream asset and NPC can commercially create value around that.
<unk> team and Greg's team to look throughout all of our assets and come back and even though the total capital number seems to some people to say, how you're getting this growth well part of it is because we're getting some really good returns out of that deployment and to me. That's part of the game that we're trying to do is get the highest possible returns out of the lowest.
Capital deployment and at the end of the day to me. It still comes down to are you generating cash flows.
Speaker 3: transcript
Speaker 3: And at the end of the day, to me, it still comes down to, are you generating cash?
Speaker 3: transcript
Speaker 3: And we feel very confident that at the end of the day, our cash flow generation is showing a consistent pattern that we think investors should find appealing. Hopefully that's answering your question in a little bit more detail.
And we feel very confident that at the end of the day, our cash flow generation is showing a consistent pattern that we think investors should find appealing hopefully that that's answering your question in a little bit more detail.
John McCuy: Thank you for your time. Thank you. Thanks, John. You're welcome.
Speaker 6: transcript
Speaker 6: It does thank you. And within the context of capital allocation, you have a healthy balance sheet, ample coverage, JV Finance projects, and the cash on your balance sheet is building to nearly a billion dollars. Can you just remind us how much cash you want to keep on the balance sheet on a rateable basis? Should we just assume that the cash continues to build? What's the best use to set that cash over the near-medium term?
It does thank you.
Theresa Chen: Our next question will come from Theresa Chen with Barclays. You may proceed. Good morning. Thank you for taking my questions. John, maybe if I can touch on your last point about potential bolt-on acquisitions, especially at the asset level, we've received, you know, multiple announcements from some of your competitors and peers about wanting to disperse assets into the market. Are there particular areas along your infrastructure value chain that you find more attractive to invest in given what's out in the market from companies today, as well as potentially a piece of TMX later on?
And within the context of capital allocation, you have a healthy balance sheet ample coverage JV finance projects and the cash on your balance sheet building to nearly a $1 billion can you just remind us how much cash you want to keep on the balance sheet on a ratable basis should we just assume.
That the cash continues to build and what's the best uses of that cash over the near medium term.
Speaker 4: transcript
Speaker 4: Hey, Teresa, great question. I don't think we've really talked about a targeted cash level for MPLX, as a kind of stable.
Yeah, Hey, Theresa Great question.
I don't think we've really talked about kind of a targeted cash level for.
MPLX right as a kind of stable.
Speaker 4: transcript
Speaker 4: midstream entity. It's not something we've been focused on. I think for us we've been focused on how do we optimize that capital allocation? How do we maintain that flexibility for both opportunities to invest in and grow the cash flows of the partnership and other opportunities to continue to grow our return of capital as well. So
Midstream entity, it's not something we've been focused on I think for US we've been focused on how do we optimize that capital allocation, how do we maintain that flexibility for both opportunities to invest in and grow the cash flows of the partnership and other opportunities to continue to grow our return of capital as well so.
Theresa Chen: Theresa, maybe us, Dave, the chime in on that one. Hey, Theresa, this is Dave. So, yeah, that's a great question. So as we look at the opportunities to pursue, number one, we always look into high quality assets that are aligned with our long-term strategies and also provide the ability to integrate and capture synergies along our value chains. There's mainly around crude, that gas and NGLs, and also, finally, of course, is a return of capital return on capital.
Speaker 4: transcript
Speaker 4: I think it's just been a spot of where we are, but we like that flexibility that it gives us for those two levers, Mike.
I think it's just been a spot of where we are but we like that flexibility that it gives us for those two levers Mike Jim.
Speaker 3: transcript
Speaker 3: It's a treat I'll add that it wasn't our desire. We didn't set out to say let's end up with a billion dollars of cash on the balance sheet. What has disappeared a little bit from the market is the volatility in the unit price.
It treats all I'll add that it wasn't our desire we didn't set out to say, let's end up with $1 billion of cash on the balance sheet.
What has disappeared a little bit from the market as the volatility in the unit price.
Speaker 3: transcript
Speaker 3: We have a decent amount of that cash that I call Redbar. It's targeted to repurchase units.
Theresa Chen: I'm sorry. They always have to, you know, give us the appropriate acceptable risk adjusted returns. So I think as you think through that, it's really, there's a lot of M&A out there. As you stated, we're continuing to look at them, but we're looking through the lens of strict capital discipline and those key tenants, high quality assets and synergies and integration values. So, that's kind of how we're thinking through it. In three sets, John, again, maybe just to add on to that with some examples.
A decent amount of that cash that I called Red bar, that's targeted to repurchase units now we haven't done that for a little bit of time, it's not that we've given up on that we just have been surprised at how much tighter the equity prices trade it, but it's they're ready to deploy.
Speaker 3: transcript
Speaker 3: Now we haven't done that for a little bit of time. It's not that we've given up on that. We just have been surprised at how much tighter the equity price has traded. But it's there ready to deploy, is it suboptimal? You could argue that sometimes, but we're getting a decent interest rate on it, right at the moment as we sit here. So it's not hurting us real bad. And we're just looking for that opportunity. So it's...
Is it suboptimal you could argue that sometimes but you know we're getting a decent interest rate on it right at the moment as we sit here. So it's not hurting us real bad and we're just looking for that opportunity. So it's it's ready to be deployed if we see what we call that opportunistic at the same time, there's a portion of that cash thats, what I call Blue bar.
Theresa Chen: And again, these are what we like to call kind of singles. Maybe they're even bunched. But, you know, earlier this year, we're able to acquire some boats and barges to expand our marine fleet to provide increased flexibility to MPC on moving product. Last year, we had a rail facility near our Dickinson MPCs Dickinson refinery that MPLX was able to acquire to move product there, too. So that's the piece of that value of interacting with our sponsor, or again, we can kind of find those.
Speaker 3: transcript
Speaker 3: It's ready to be deployed if we see what we call that opportunist.
Speaker 3: transcript
Speaker 3: at the same time you know there's a portion of that cash that's what i call blue bar which is there for the long term and and back to the question was athler you know could we have pushed a distribution more yeah we could we have the financial flexibility to do that but not our opinion what we're trying to do is convince investors that it's a good longer term play we're not just gonna come out and you know bang it really high and then kind of disappear you know we want to show people that we're gonna generate cash flows very consistent
<unk>, which is there for the long term and back to the question was asked earlier you know could we have pushed the distribution more yeah. We could we have the financial flexibility to do that but in our opinion, what we're trying to do is convince investors that it's a good longer term play we're not just going to come out and Bang at really high and then kind of disappear.
Theresa Chen: So I'd say it's across as Dave said, that whole value chain, where do we, you know, those are our assets. We know how to run and operate and we've got a customer that needs them, too. So I'd say it's around those kind of examples as well. Mike, did you want to? Yeah, three. So I'm going to add on to John's comment there. So, you know, obviously on the calls, people like to hear big sexy projects.
We want to show people that we're going to generate cash flows very consistently that's why you've heard me say over the last couple of quarters. We're.
Speaker 3: transcript
Speaker 3: That's why you've heard me say over the last couple quarters, you know, we're gonna do midstream, I mean, mid single digit growth. And it's not aspirational. We've been doing that since 2019. So that's...
We're gonna we're gonna do midstream.
Mid single digit growth and it's not aspirational, we've been doing that since 2019. So that's.
Speaker 3: transcript
Speaker 3: part of what we're trying to convince the market is that we understand, you know, if you invest in us that you want to get a good return, you want to see a growing distribution, you know, we think 10% you know, a couple years in a row is a good number. You know, by your by your question, you know that we have more financial capability to do more. And we can just decide to try and manage that over a long term. And if we get a little volatility in the equity, you know, we'll, we'll deploy some repurchasing power as well.
Part of what we're trying to convince the market is that we understand if you invest in us that you want to get a good return you want to see a growing distribution, we think 10%.
Theresa Chen: And that's not been our forte. But we have been investing in smaller, you know, where we get a really good return for a little to no capital. You know, as an example, you know, we had record crew throughputs. You know, it's not sexy to come out and say we added a pump here or something along those lines, but where you can deploy small amounts of capital and get large returns, you know, we think those are really great opportunities for us.
A couple of years in a row is a good number.
By your by your question you know that we have more financial capability to do more.
And we can just decided to try and manage that over the long term and if we get a little volatility in the equity.
Theresa Chen: And, you know, the magnitude of the size of our asset base enables, you know, Sean's team and Greg's team to look throughout all of our assets and come back. And even though the total capital number seems to some people to say how you getting this growth. Well, part of it is because we're getting some really good returns out of that deployment. And to me, that's part of the game that we're trying to do is get the highest possible returns out of the lowest, you know, capital deployment.
<unk> will deploy some repurchasing power as well.
Thank you.
Youre welcome.
Our next question will come from Brian Reynolds.
Speaker 7: transcript
Speaker 7: Brian Reynolds with your light is open.
Your line is open.
Hi, good morning, everyone.
Speaker 3: transcript
Speaker 3: Maybe to fall up on some of the growth expectations for MPLX of which Permian is the large driver. While we've seen some of the activity in the Permian week and as of late, the medium-term outlook for the Permian remains intact with some forecast points of greater than a million barrels per day of growth from today through year and 25. So curious if maybe you can talk a little bit more macro, but it'd be great if you could just talk Permian fundamentals from an MPLX perspective and whether you're seeing some similar growth trends over a multi-year outlook at the MPLX level.
Maybe to follow up on some of the growth expectations for MPLX of Whats Permian is the large driver while we've seen some of the activity in the Permian weakened as of late the medium term outlook for the Permian kind of remains intact with some forecasts pointing to a greater than 1 million barrels per day of growth from today through year end 25, So kind of curious if maybe you can talk a little.
Theresa Chen: And at the end of the day, to me, it still comes down to are you generating cash? and we feel very confident that at the end of the day, our cash flow generation is showing a consistent pattern that we think investors should find appealing. Hopefully, that's answering your question in a little bit more detail. It does.
Bit more macro but it'd be great. If you could just talk Permian fundamentals from an MPLX perspective, and whether youre seeing some similar growth trends over a multiyear outlook at the MPLX level. Thanks.
Speaker 3: transcript
Speaker 3: Yeah Brian , it's a good question. I'm gonna let Shawn talk a little bit about what we're going on in the pipes, whether a Twinked Webs or Bangalops that are all that I'm going to end. And then let Greg talk a little bit about what we got going in the processing area. And as you know, it is an area focused for us.
Yeah, Brian It's a good question I'm going to I'm going to let Sean talk a little bit about what were going on in the pipes, whether its going to Webster bangle et cetera, I'll, let them do that and then I'll, let Greg talk a little bit about what we've got going in the processing area.
Theresa Chen: Thank you. And within the context of capital allocation, you have a healthy balance sheet, ample coverage, JV Finance projects and the cash on your balance sheet building to nearly a billion dollars. Can you just remind us how much cash you want to keep on the balance sheet on a rateable basis? Should we just assume that the cash continues to build? What's the best use of that cash over the near-medium term? Yeah, hey, Theresa.
You know it is an area of focus for us it's no secret that there's a lot of growth in the Permian and we're just trying to enable our own ability to get in there and invest prudently and generate cash flows along with all the other competitors are trying to do the same so Sean why don't you give a little more color on what we got going there.
Speaker 3: transcript
Speaker 3: There's no secret that there's a lot of growth in the Permian, and we're just trying to enable our own ability to get in there and invest prudently and generate cash flows along with all the other competitors we're trying to do the same. So Sean, why don't you give a little more color on what we got going there? Sure. Hey, bro.
Theresa Chen: Great question. I don't think we've really talked about a targeted cash level for MPLX as a kind of stable midstream entity. It's not something we've been focused on. I think for us, we've been focused on how do we optimize that capital allocation? How do we maintain that flexibility for both opportunities to invest in and grow the cash flows of the partnership and other opportunities to continue to grow our return of capital as well?
Sure Hey, Brian This is Sean.
Speaker 8: transcript
Speaker 8: Hey, really, I'll first touch on our NGL pipeline bangle, you know, last quarter we talked about the expansion on that pipeline. And really, that's been a capital efficient pipeline for us. And as volume has come available, we've said we would announce the expansion and we did that last quarter. So we're really pleased with that. And that'll take us to the Sweeney Hub there in Sweeney, Texas.
Really I'll first touch on our NGL pipeline Bangle last quarter, we talked about the expansion.
On that pipeline and really thats been a capital efficient pipeline for US and is as volume has come available. We've said, we would announce the expansion and we did that last quarter. So we're really pleased with that and that'll that'll take us to the sweeny Sweeny hub, there and Sweeny, Texas, Yeah. There you know wink to Webster, if you look at that.
Theresa Chen: I think it's just been a spot of where we are. But we like that flexibility that it gives us for those two levers. I'll add that it wasn't our desire. We didn't set out to say let's end up with a billion dollars of cash on the balance sheet. What has disappeared a little bit from the market is the volatility in the unit price. We have a decent amount of that cash that I call red bar.
Speaker 8: transcript
Speaker 8: Yeah, there, you know, weak to Webster. If you look at that pipeline there, it continues to ramp up as per plan. And really we're seeing those cash flows increase over the next couple years as the commitments continue to ramp up. So again, really pleased with both those long haul strategic pipelines. And again, they're measured, but they're steady and it's meeting the expectations we thought to return cash to the partners.
That pipeline there it continues to ramp up as as per plan and really we're seeing those cash flows increase over the next couple of years as the commitments continuing to ramp up so again really pleased with both those long haul strategic pipelines and again, they're they're measured but they are steady and it's meeting the expectations we thought.
To.
Return cash to the partnership.
Theresa Chen: It's targeted to repurchase units. Now we haven't done that for a little bit of time. It's not that we've given up on that. We just have been surprised at how much tighter the equity price has traded. But it's there ready to deploy. Is it suboptimal? You could argue that sometimes, but we're getting a decent interest rate on it right at the moment as we sit here so it's not hurting us real bad.
Okay.
Speaker 3: transcript
Speaker 3: Great, thanks. And maybe to touch on a Permian natural gas takeaway, we continue to work through all available brownfield capacity here over the next six months through year.
Great, Thanks, and maybe to touch on the Permian natural gas takeaway.
We continue to work through all available brownfield capacity here over the next call it six months to a year.
Speaker 3: transcript
Speaker 3: But beyond that, more greenfield is needed. MPLox has some unique relationships there, but MPLox is in a much different position today than it was a few years ago, just given a much larger processing capacity position, and it's existing balance sheet. So kind of curious, how MPLox is participation in future, you know, permeant natural gas takeaway or LNG supply made different, you know, a year or two from now versus how I participated in the prior cycles.
Beyond that more greenfield as needed MPLX has some unique relationships there, but MPLX is in a much different position today than it was a few years ago, just given the much larger processing capacity position and its existing balance sheet. So kind of curious you know how MPLX has participation in future.
Theresa Chen: We're just looking for that opportunity. It's ready to be deployed if we see what we call that opportunistic. At the same time, there's a portion of that cash that's what I call blue bar, which is there for the long term. Back to the question, it was there earlier, could we have pushed the distribution more? Yeah, we could. We have the financial flexibility to do that. But in our opinion, what we're trying to do is convince investors that it's a good longer term play.
Permian natural gas takeaway or LNG supply made different a year or two from now versus how it participated in prior cycles.
Speaker 4: transcript
Speaker 4: Hey Brian , it's John . I'll start and let some of the team jump in as well. As you know, really excited with our relationship there with the resulted in the Whistler project, right, building that line, expanding it, heading lines to the end to get from Aguadulseta market.
Hey, Brian It's John I'll start and let some of the team jump in as well as you know we're really excited with our relationship there with the resulted in the Whistler project right building that line expanding it heading lines to the end to get from Agua Dulce say the markets. We're a small player in the Matterhorn.
Theresa Chen: We're not just going to come out and bang it really high and then kind of disappear. We want to show people that we're going to generate cash flows very consistently. That's why you've heard me say over the last couple of quarters. We're going to do midstream, I mean, mid single digit growth, and it's not aspirational. We've been doing that since 2019. So that's part of what we're trying to convince the market is that we understand if you invest in us that you want to get a good return, you want to see a growing distribution.
Speaker 4: transcript
Speaker 4: We're a small player in the Madahorn pipeline, right coming online in third quarter, 24 again, would have loved to have been a bigger player, but I think as you know, the way those works, your participation is driven by the producer volume, you bring to the project. So, you know, we'll continue to look for those opportunities, you know, where it makes sense. But I'd also say, look, we've got a platform there right now that we can continue to optimize as well off of that base, whether again, it's...
Pipeline right coming online in the third quarter of 24 again would have loved to have been a bigger player, but I think as you know the way those works. Your participation is driven by the producer volume you bring you bring to the project so.
We will continue to look for those opportunities.
Where it makes sense, but I'd also say look we've got a platform there right now that we can continue to optimize as well.
Theresa Chen: We think 10 percent, a couple of years in a row is a good number. By your question, you know that we have more financial capability to do more, and we can just decide to try and manage that over a long term. If we get a little volatility in the equity, we'll deploy some repurchasing power as well. Thank you.
Theresa Chen: You're welcome.
Off of that base, whether again, it's more straws on the front end or more pipe on the tail end to get the other other end customer markets and.
Speaker 4: transcript
Speaker 4: more straws on the front end or more pipe on the tail end to get to other other end customer markets and other opportunities to expand there. So again, we may really bolster the premium.
And other opportunities to expand there. So again, we remain really bullish the Permian.
Great. Thanks, I'll leave it there.
Yeah.
Our next question will come from Jeremy Tonet with Jpmorgan. Your line is open.
Brian Reynolds: Our next question will come from Brian Reynolds with your light is open. Hi, good morning everyone. Maybe to fall up on some of the growth expectations from PLX of which Permian is the large driver. You know, while we've seen some of the activity in the Permian week and as of late, you know, the medium term outlook for the Permian kind of remains intact with some forecast point into greater than a million barrels per day of growth, you know, from today through year and 25.
Speaker 9: transcript
Speaker 9: Hey guys, this is Ralph and Ready on for Jeremy. I think in the past you guys have discussed the potential for renewed Utica activity to improve processing plant utilization and flows on regional pipes such as cornerstones. So just wondering if you could provide any updated dots here. Thanks.
Hey, guys. This is Ralph already on for Jeremy I think in the past you guys have discussed the.
Brian Reynolds: So kind of curious if maybe you can talk a little bit more macro, but it'd be great if you could just talk Permian fundamentals from an MPLX perspective and whether you're seeing some similar growth trends over a multi-year outlook at the MPLX level. Thanks.
Potential for renewed Utica activity to improve processing plant utilization.
Flows on regional pipes, such as cornerstone. So I was just wondering if you could provide any updated thoughts here. Thanks.
Speaker 3: transcript
Speaker 3: Yeah, Utica's an area that I'll let Greg comment in a second. Like we were talking about earlier, we do have already deployed capital there and we have excess capacity. So going back to the question, Teresa asked earlier, we love when that opportunity starts to present itself. Greg, why don't you give a little update there?
Utica is an area that I'll, let Greg comment in a second like we were talking about earlier, we do have already deployed capital there and we have excess capacity so.
Back to the question <unk> asked earlier, we love when that opportunity starts to present itself, Greg why don't you give a little update there.
John: Brian, it's a good question. I'm going to let Shawn talk a little bit about what we're going on in the pipes, whether it's going to webs or bangles that are letting them go. And then the Greg talk a little bit about what we got going in the processing area. And as you know, it is area focused for us. It's no secret that there's a lot of growth in the Permian and we're just trying to enable our own ability to get in there and invest prudently and generate cash flows, you know, along with all the other competitors we're trying to do the same.
Speaker 10: transcript
Speaker 10: Yeah, this is Greg. You know, the eutica is an area that had strong growth early on, along with the Marsalis, and then...
Yeah. This is Greg.
The Utica is an area that had had strong growth early on along with the Marcellus and then.
Speaker 10: transcript
Speaker 10: if some of the rigs moved from there more than Marcellus now with sustainable crude prices in good levels.
Some of the rigs moved from their more of the Marcellus now with with sustainable crude prices and good levels.
Speaker 10: transcript
Speaker 10: That's driven better prices for condensate and for the light oil in the Western portion of the Utica window. So we are seeing more activity there. And even new producers moving in the area and leasing acreage and.
That's driven better prices for condensate and for the light oil in the western portion of the Utica Windows. So we are seeing more activity there and.
Even even new producers moving into the area and leasing acreage and in store.
John: So, Shawn, why don't you give a little more color on what we got on there? Sure. Hey Brian, this Shawn. Hey, really, I'll first touch on our NGL pipeline, Bangal. You know, last quarter we talked about the expansion on that pipeline. And really that's been a capital efficient pipeline for us. And as volume has come available, we've said we would announce the expansion and we did that last quarter. So we're really pleased with that.
Speaker 10: transcript
Speaker 10: starting to make plans. So we're excited to start to see some growth again in the Utica and volumes pick up there. And as Mike said, we've got capacity now that we can grow into by connecting pads and we essentially already have the gathering system and the processing capacity there to handle that.
Starting to make plans. So we're excited to start to see some growth again in the Utica and volumes pick up there and.
As Mike said, we've got capacity now that we can grow into.
Hum by connecting pads, and we essentially already up the gathering system and the processing capacity there to handle that.
Speaker 9: transcript
Speaker 9: Got it, that's helpful. And I think previously discussed cap line as a potential midstream asset within the MPC before they go that could kind of be drop down. So I'm just curious on updated thoughts on how MPC could drop down interest in remaining logistics assets.
Got it that's helpful.
John: And that'll take us to the Sweeney Hub there in Sweeney, Texas. Yeah, there, you know, wink to Webster. If you look at that pipeline there, it continues to ramp up as per plan. And really we're seeing those cash flows increase over the next couple years as the commitments continue to ramp up. So again, really pleased with both those long haul strategic pipelines. And again, they're measured, but they're steady and it's meeting the expectations we thought to return cash to the partnership.
And I think previously discussed cap line is a potential midstream asset within the niche or the M. P. C portfolio that could be dropped down. So I'm just curious on updated thoughts on how N. P. C. You could drop down.
Interest in remaining logistics assets.
Speaker 4: transcript
Speaker 4: Yeah, John , I'll take that. We've kind of said, look, we've got some assets, whether it's cap line, gray oak, or some other midstream type assets that are up on the sponsor's balance sheet. I think right now we're kind of, we can save those for a rainy day, not something that's really on the front burner for us, but certainly gives us some optionality looking out into the future.
Yes, it's John I'll take that we've kind of said look we've got some assets whether its cap line gray oak because some other midstream type assets that are up on the sponsor's balance sheet I think right now we're kind of we can save those for a rainy day not something that's really on the front burner for us, but certainly gives us some optionality looking out into the future.
John: Great. Thanks. And maybe to touch on a Permian natural gas takeaway, you know, we continue to work through all available brownfield capacity here over the next, you know, called six months through year. But beyond that, you know, more greenfield is needed. MPL access has some unique relationships there. But MPL access in a much different position. You know, today that it was a few years ago, just given a much larger processing. Capacity position.
Great. Thanks.
Youre welcome.
Our next question will come from Keith Stanley with Wolfe Research you May proceed.
Speaker 5: transcript
Speaker 5: Hi, good morning. Two follow-up questions. First in the Permian, are you considering larger opportunities at all to expand the value chain further downstream or do you think your strategy will stay focused on processing plants and pipelines?
Hi, Good morning, two follow up questions first in the Permian are you considering larger opportunities at all to expand the value chain further downstream or do you think your strategy will stay focused on processing plants and pipelines.
John: And it's existing balance sheet. So kind of curious, you know, how MPL access participation in future, you know, Permian natural gas takeaway or LNG supply made different, you know, a year or two from now versus how participated in the in the in prior cycles. Thanks.
Speaker 4: transcript
Speaker 4: No, no, great question, Keith. I appreciate it. You know, we've said, look, we'll continue to look at where we might be able to participate, you know, up and down that whole value chain. You know, certainly to date, right? It's been on the processing side and then the takeaway capacity. But, you know, we like participating in that. And if there's more opportunities to touch the molecule along that chain, that's something we can certainly consider and take a look at.
No no great question, Keith I appreciate it.
We've said look we'll continue to look at where we might be able to participate up and down that whole value chain.
John: Hey, Brian, it's John. I'll start and let some of the team jump in as well. As you know, you're really excited with our relationship there with the resulted in the Whistler project, right, building that line, expanding it. Adding lines to the end to get from Ogwood Dulcita markets. We're a small player in the Madahorn pipeline right coming online in third quarter 24 again would have loved to have been a bigger player.
Certainly to date right, it's been on the processing side and then the.
The takeaway capacity, but we like participating in that and if there's more opportunities to touch the molecule along that chain that something we can certainly consider and take a look at.
Speaker 5: transcript
Speaker 5: Great, second one just on the distribution just to clarify.
Great.
One just on the distribution just to clarify.
John: But I think as you know, the way those works, your participation is driven by the producer volume you bring, you bring to the project. So, you know, we'll continue to look for those opportunities, you know, where it makes sense. But I'd also say, look, we've got a platform there right now that we can continue to optimize as well. Off of that base, whether again, it's more straws on the front end or more pipe on the tail end to get the other and customer markets and other opportunities to expand there. So again, we may really bullish the premium. Great. Thanks.
Speaker 5: transcript
Speaker 5: Is there an ultimate level of kind of long-term cash flow coverage you would look at or any other metric that you think could help investors think about multi-year distribution growth relative to the growth you expect in the underlying?
Is there an ultimate level of kind of long term cash flow coverage, you would look at or any other metric that you think could help investors think about multiyear distribution growth relative to the growth you expect in the underlying business.
John: I'll leave it there.
Speaker 4: transcript
Speaker 4: Now, that's a great question Keith, I appreciate it. I mean, it's one, we haven't given a framework, we've talked more conceptually about it. You know, you heard Mike talk a little bit about red bar and blue bar cash flows, so we really dig into our results to understand what's that year in and year out stable cash flow that we call blue bar when we think about where the distribution is and where we might want to head. I would just say I think we've got ample capacity there.
That's a great question Keith I appreciate it I mean, it's one we haven't given a framework we've talked more conceptually about it you heard Mike talk a little bit about red bar in Blue bar cash flows. So we really dig into our results to understand what's that year in and year out stable cash flow that.
We call Blue bar, when we think about where the distribution is and where we might want ahead I I would just say I think we've got ample capacity there.
Jeremy Tonet: Our next question will come from Jeremy Tonet with JP Morgan. Your line is open. Hey guys, this is Rothen Readyon for Jeremy. I think in the past you guys have discussed potential for new Utica activity to improve processing plant utilization and flows on regional pipes, such as cornerstones. They're just wondering if you could provide any updated notes here. Thanks.
Speaker 4: transcript
Speaker 4: uh... as we look forward uh... to to manage that and again we want to continue to keep growing the cash flows that that kind of that plus or minus mid-single digits as well
As we look forward to manage that and again, we want to continue to keep growing the cash flows that kind of that plus or minus mid single digits, as well, which should drive an opportunity around distribution growth.
Speaker 4: transcript
Speaker 4: uh... which should drive uh... an opportunity around uh... distribution growth
Speaker 3: transcript
Speaker 3: Keith, it's Mike. I'll repeat what I said earlier a little bit is I think about it from an investor standpoint. What type of return is the investor getting if they invest in us. So so I look at our you know where we're going to trade from a yield standpoint. Again we personally think we should trade a little lower in yield but you know the market has kept us around that.
Mike Hennigan: Utica is an area that I'll let Greg comment in a second. Like we were talking about earlier, we do have already deployed capital there and we have excess capacity. So going back to the question, Theresa asked earlier, we love when that opportunity starts to present itself. Greg, why don't you give a little update there? Yeah, this is Greg. You know, the Utica is an area that had had strong growth early on along with Marcellus and then some of the rigs moved from there more than Marcellus.
Keith It's Mike.
Pete what I said earlier, a little bit as I think about it from an investor standpoint, what type of return is the investor getting if they invest in us. So so I look at our.
We're gonna trade from a yield standpoint again, we personally think we should trade at a little lower in yield, but the market has kept us around that around 9% or so somewhere in that range and then we look at the growth and try and put ourselves in a position that we offer the market a good total return opportunity. So that's the way I think.
Mike Hennigan: Now with sustainable crude prices and good levels, that's driven better prices for condensate and for the light oil in the western portion of the Utica window. So we are seeing more activity there and even new producers moving in the area and leasing acreage and starting to make plans. So we're excited to start to see some growth again in the Utica and volumes pick up there. And as Mike said, we've got capacity now that we can grow into by connecting pads and we essentially already have the gathering system in the processing capacity there to handle that.
Speaker 3: transcript
Speaker 3: around 9% or so somewhere in that range. And then we look at the growth and try and put ourselves in a position that we offer the market a good total return opportunity.
Speaker 3: transcript
Speaker 3: So that's the way I think about it long-term. You know, we kind of evaluate where the market's going to trade us. We think out in time as to where that distribution needs to be to be to be one, you know, part of the equation. We think of how much cash flows need to grow.
About it long term, we kind of evaluate where the market is going to trade as we think out in time as to where that distribution needs to be to be one part of the equation. We think of how much cash flows need to grow to be part of that equation and then we kind of manage it occur.
Speaker 3: transcript
Speaker 3: to be part of that equation, and then we kind of manage it across time, if that makes sense to you. And kind of like people have asked earlier, we didn't set out to have a billion dollars of cash on the balance sheet. That wasn't a stated goal. It's kind of the way the market has played out for us.
Across time, if that makes sense to you and kind of like people have asked earlier you know we didn't set out to have a $1 billion of cash on the balance sheet that wasn't a stated goal it's kind of the way the market has played out for us.
Speaker 3: transcript
Speaker 3: you know we're not opposed to it you know financial flexibility not a bad thing it's just the way it's played out that we haven't gotten to deploy some of the repurchasing that we would have liked up until this point and like I said we have more more capacity on the blue side but we want to make sure investors see it as a better long-term investment
Not opposed to it financial flexibility is not a bad thing. It's just the way. It's played out that we haven't gotten to deploy some of the repurchasing that we would've liked up until this point and like I said, we have more capacity on the blue side, but we want to make sure investors see it as a better long term investment.
Mike Hennigan: Got it. That's helpful. And I think previously discussed cap line as a potential midstream asset within the mid or within the MPC portfolio that could kind of be dropped down. So I'm just curious on updated thoughts on, you know, how MPC could drop down interest in remaining logistics assets.
Got it thank you.
Youre welcome.
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 Michael Blum with Wells Fargo. Your line is open.
Mike Hennigan: Yes, John, I'll take that. We've kind of said, look, we've got some assets, whether it's cap line, gray oak, some other midstream type assets that are up on the sponsor's balance sheet. I think right now we're kind of, we can save those for a rainy day, not something that's really on the front burner for us, but certainly gives us some optionality looking out into the future.
Keith Stanley: Great. Thanks. You're welcome.
Speaker 11: transcript
Speaker 11: Thanks, good morning everyone. I just had two quick questions really. One, I'm sure you're aware there's been many NGL pipeline expansion announcements out of the Permian. So just, do you remind us if the Bangle expansion is contracted? And second question is in the LNS segment.
Thanks, Good morning, everyone.
I just had two quick questions really one I'm sure you're aware of this business.
Any NGL pipeline expansion announcements out of the Permian. So just can you remind us.
The tango expansion.
Keith Stanley: Our next question will come from Keith Stanley with Wolf Research. You may proceed. Hi.
Is contracted.
And second question is on the LNR segment.
Speaker 11: transcript
Speaker 11: You have a big increase in the average pipeline tariff, you're over year 13%. How much of that is just driven by the inflation escalators or are there other factors contributing to that that really big increase? Thanks.
Keith Stanley: Good morning to follow up questions. First in the Permian, are you considering larger opportunities at all to expand the value chain further downstream or do you think your strategy will stay focused on processing plants and pipelines? Now, now, great question, Keith. I appreciate it. You know, we've said, look, we'll continue to look at where we might be able to participate, you know, up and down that whole value chain. You know, certainly today, right, it's been on the processing side and then the takeaway capacity, but, you know, we like participating in that. And if there's more opportunities to touch the molecule along that chain, that's something we can certainly consider and take a look at.
You had a big increase in that.
Average pipeline tariff year over year, 13%.
How much of that is just driven by the inflation escalators or are there other factors contributing to that that really big increase thanks.
Speaker 4: transcript
Speaker 4: Hey Michael, good morning. Thanks for the questions. I'll maybe take the first one and then pass it over to Sean. So when you think about Bangle, we certainly have dedications to that line, but right, you're not going to have commitments on a natural gas liquids line. But we do look and see you can kind of imply those same producers do have commitments, for example, on natural gas takeaway lines.
Hey, Michael Good morning, Thanks for the questions I'll, maybe take the first one and then pass it over to Sean. So when you think about bangle, we certainly have dedications to that line, but right youre not gonna have commitments on our natural gas liquids line, but we do look and see you can kind of imply those same producers do have commitments for example on natural gas.
Speaker 4: transcript
Speaker 4: So we know their committed there gives us some comfort on how the volume might flow through Bangal, but typical with NGL lines, right? It's dedication, not commitments. And I'll leave it to Sean for the first question.
Hey lines.
So we know they're committed there it gives us some comfort on on how the volume might through flow through bangle, but typical with NGL lines rates dedications, not not commitments and ill leave it turn it to Shawn for the FERC question.
John Quaid: Great. Second one, just on the distribution, just to clarify. Hey, is there an ultimate level of kind of long-term cash flow coverage you would look at or any other metric that you think could help investors think about multi-year distribution growth relative to the growth you expect in the underlying business? Now, it's a great question, Keith. I appreciate it. I mean, it's one we haven't given a framework. We've talked more conceptually about it.
Speaker 8: transcript
Speaker 8: Hey, Michael, this is Sean. Thanks for the question. You know, really, if you look at our average tariff pipeline, average pipeline tariff, it's, you know, around the 13%. It just so happens that that's exactly the FERC rate that we announced, that FERC announced July 1. But that just happens to be the same right there. It's really due to the tariff mix.
Hey, Michael This is Shawn thanks for the question.
Really if you look at our average tariff pipeline average pipeline tariff.
Around the 13% it just so happens that thats exactly the FERC great.
That we had announced that FERC announced July one.
But that just is that just happens to be the same right. There, it's really due to the tariff mix.
Speaker 8: transcript
Speaker 8: that just happens on the pipelines that we use the most on our increased throughput that help drive that. The other piece I would say that is,
That just happens on the pipelines that we use the most on our our increased throughput that helped drive that the other piece I would say that is.
John Quaid: You know, you heard Mike talk a little bit about red bar and blue bar cash flows. So we really dig into our results to understand what's that year in and year out stable cash flow that we call blue bar when we think about where the distribution is and where we might want to head. I would just say I think we've got ample capacity there. As we look forward to manage that. And again, we want to continue to keep growing the cash flows at kind of that plus or minus mid single digits as well, which to drive an opportunity.
Speaker 8: transcript
Speaker 8: something that we try to make sure that people are aware of. A furc directed directly furc tied to our assets, it's only about 20% of our overall MPL examina is tied to the furc index there. So hopefully that gives you a little more color on your question there as far as the furc rate.
Something that we tried to make sure.
That people are aware of a FERC directed.
<unk> are tied to our assets, it's only about 20% of our overall MPLX EBITDA.
It is tied to the FERC.
Index there so hopefully that gives you a little more color on your question there.
The first rate there.
Speaker 3: transcript
Speaker 3: And, Michael, it's Mike. I'll just add that obviously what FERC is trying to do is to look at all those impacts that are raising costs and, you know, they're hitting us as well. And what we do as a team is say that we, you know, we got to be better than that average. We got to look for opportunities for us where we can run it at a lower cost compared to, you know, where the average of the industry is. And in that way, we'll create a little bit of value. But our costs definitely move up, you know, with those impacts. And we try and optimize around that. Thank you.
Michael It's Mike I'll, just add that obviously with FERC is trying to do is to look at all those impacts that are raising costs and they are hitting us as well and what we do as a team is to say that.
Mike Hennigan: Around distribution growth. Keith, it's Mike. I'll repeat what I said earlier a little bit is I think about it from an investor standpoint, you know, what type of return is the investor getting if they invest in us? So, so I look at our, you know, where we're going to trade from yield standpoint. Again, we personally think we should trade a little lower in yield, but, you know, the market has kept us around that around 9% or so somewhere in that range and then we look at the growth and try and put ourselves in a position.
Got to be better than that average we got to look for opportunities for us where we can run it at a lower cost compared to where the average of the of the industry is and then that way, we will create a little bit of value, but but our cost definitely move up with those impacts and we try and optimize around that.
Yeah.
Perfect. Thank you.
Mike Hennigan: That we offer the market a good total return opportunity. So that's the way I think about it long term, you know, we kind of evaluate where the market is going to trade us. We think out in time as to where that distribution needs to be to be to be one, you know, part of the equation. We think of how much cash flows need to grow to be part of that equation. And then we kind of manage it across time if that makes sense to you.
Youre welcome.
Our next question comes from Doug <unk> with Citi. Your line is open.
Speaker 12: transcript
Speaker 12: Doug her. David Rol stabbed Microsoft haz horns
Speaker 9: transcript
Speaker 9: Hey, thanks for the question. Just another on the balance sheet. Looking at slide 10 in the earnings presentation, what kind of almost $3 billion of debt maturing over the next couple of years. Seriously, if you talk about how you're thinking about these maturities here in a higher rate environment, particularly in the context of all the cash you have on the balance sheet and already being below your leather's target.
Hey, Thanks for the question just another on the balance sheet.
Looking at Slide 10, and the earnings presentation. It looks like you have almost $3 billion debt maturing over the next couple of years.
I'm just curious if you could talk about how youre thinking about these maturities here in a higher rate environment.
Mike Hennigan: And kind of like people have asked earlier, you know, we didn't set out to have a billion dollars of cash on the balance sheet. That wasn't a stated goal. It's kind of the way the market has played out for us. You know, we're not opposed to it, you know, financial flexibility is not a bad thing. It's just the way it's played out that we haven't gotten to deploy some of the repurchasing that we would have liked up until this point. And like I said, we have more, more capacity on the blue side, but we want to make sure investors see it as a better long term investment.
Particularly in the context of all the cash on the balance sheet.
Michael Blum: Got it. Thank you. You're welcome.
Anything below your leverage target.
Speaker 4: transcript
Speaker 4: Yeah, hey Doug, it's Sean. Thanks for the question. Yeah, we've got what about a billion 150 due December next year and then...
Hey, Doug it's John Thanks for the question, Yes, we've got what about $1 billion 50 due December of next year and then.
Speaker 4: transcript
Speaker 4: the next several years plus or minus a billion a billion four or so. I think if you've seen us in the recent past, we'll look to be thoughtful about how we do that. Certainly, your spot on given where
The next several years at plus or minus $1 billion for so I think as you've seen us in the recent past, we'll look to be thoughtful about how we do that certainly you're spot on given where rates are today versus the last refinancing. We did again, we've got some financial flexibility there.
Speaker 4: transcript
Speaker 4: rates are today versus the last refinancing we did, again we've got some financial flexibility there and I'd say it's not only the cash on our balance sheet, but we've got
Operator: Once again, if you would like to ask a question at this time, you can press star one and record journey when prompted.
I'd say, it's not only.
The cash on our balance sheet, but we've got <unk>.
Speaker 4: transcript
Speaker 4: revolver with our parent as well, which gives us some flexibility to be thoughtful about the right time to look to refinance.
Doug Irwin: Our next question will come from Michael Bloom with both Fargo. Your line is open. Thanks.
Our revolver with our parent as well, which gives us some flexibility to be thoughtful about the right time.
Look to refinance.
Doug Irwin: Good morning, everyone. I just had two quick questions really. One, I'm sure you're aware there's been many NGL pipeline expansion announcements out of the Permian. So just to remind us if you're the Bangal expansion is contracted and second question is in the LNS segment. You got a big increase in the average pipeline tower. If you're over year, 13%. How much of that is just driven by the inflation escalators? Are there other factors contributing to that really big increase?
Speaker 6: transcript
Speaker 6: Yeah, thanks. And then he talked about the potential growth opportunity that he used with NPC. And I think one that came up last quarter was hydrogen. And I think NPC's involved in at least one of the hydrogen hubs that was just selected for funding negotiation. Wondering if you could kind of talk about what you see and the Alexa's potential role being here and maybe just help frame that opportunity.
Got it thanks.
You talked about potential growth opportunities with MPC and I think one that came up last quarter was hydrogen.
And I think MPC is in Boston at least one of the hydrogen hydrogen hubs that lets just selected for funding negotiations I'm wondering if you could kind of talk about what you're seeing MPLX as potential royalty here and maybe just help frame that opportunity.
Speaker 8: transcript
Speaker 8: Yeah, this is Dave. So yes, you are correct actually of the
Yeah, Doug This is Dave So yes, you are correct actually of the <unk>.
Speaker 8: transcript
Speaker 8: seven hydrogen hubs that received DOE funding at seven billion dollars. MPC slash MPLX is involved in two of those. One in Appalachia and one in
Seven hydrogen hubs that received funding at $7 billion MPC Slash MPLX.
Doug Irwin: Thanks. Hey, Michael. Good morning. Thanks for the questions. I'll maybe take the first one and then pass it over to Sean. So when you think about Bangal, we certainly have dedications to that line, but right, you're not going to have commitments on a natural gas liquids line. But we do look and see you can kind of imply those same producers do have commitments, for example, on natural gas takeaway lines. So we know they're committed there gives us some comfort on on how the volume might through flow through Bangal, but typical with NGL lines, right?
Is involved in two of those.
One in Appalachia and one in.
Speaker 3: transcript
Speaker 3: The one in the heartland and so specifically around MPLX Involvement, it's going to be more around the storage and transportation of hydrogen and co2 rather than constructing hydrogen Production facilities that'd be more on the MPC side of the equation the last piece. I'll leave you with
The one in the Heartland and so specifically around MPLX involvement is going to be more around the storage and transportation of hydrogen and cotwo.
Rather than constructing hydrogen production.
Production facilities that would be more on the MPC side of the equation.
Doug Irwin: It's dedication's not, not commitments. And I'll leave it turn it to Sean for the first question. Hey, Michael, this Shawn. Thanks for the question. You know, really, if you look at our, our average tariff pipeline, average pipeline tariff, it's, you know, around the 13%. It just so happens that that's exactly the fur great that we announced, that fur announced July 1. But that just happens to be the same right there. It's really due to the tariff mix that it just happens on the pipelines that we use the most on our, our increased throughput that helped drive that.
The last piece I'll leave you with.
Speaker 8: transcript
Speaker 8: Well, these projects have received DOE funding. That's just the first step. It's a big milestone, first of all. It's good to get narrowed down and secure the funds from the DOE. But it's the first step in a long journey.
While these projects have received.
D O funding that's just the first step it's a big milestone first of all it's good to get narrowed down and secure the funds from the Doe, but as the first step in a long journey to.
Speaker 8: transcript
Speaker 8: to, you know, secure the agreements with DOE, design and construct the project. So we'll talk more about these, you know, in the next year, but I appreciate you bringing that up. And like I say, we're excited on the first step of receiving funding in those two projects.
Secure the agreements with do we design and construct the project. So we'll talk more about these.
Into next year, but.
I appreciate you, bringing that up and like I say, we're excited on the first step of receiving funding on those two projects.
Doug Irwin: The other piece I would say that is something that we try to make sure that people are aware of, of fur directed directly, furc tied to our assets. It's only about 20% of our overall MPL Xabada is tied to the furc index there. So hopefully that gives you a little more color on your question there as far as the furc rate there. And Michael, it's my, I'll just add that obviously what furc is trying to do is to look at all those impacts that are raising costs and, you know, they're hitting us as well.
Yeah.
Great questions.
Youre welcome.
And our final question will come from Neal Dingmann with truly Securities. Your line is open.
Speaker 5: transcript
Speaker 5: I'm going to get it. Thanks for giving me. And you've talked around this in my first question, maybe just around general activity thoughts. I'm just wondering, you know, is the long term production outlook for your GMP producer customers? Would y'all consider that as good today as you thought it would be to be given to the year? Or maybe even sounds like would be slightly better than you initially expected just wondering sort of general thoughts?
Hey, guys. Thanks for getting me in you've talked around this a bit.
First question, maybe just around general activity thoughts so I'm just wondering.
Is the long term production outlook for your G&P producer customers would you all consider that as good today as you thought it would be the beginning of the year or maybe even it sounds like it would be slightly better than you. Initially expected just wondering sort of general thoughts.
Doug Irwin: And what we do as a team is to say, that we, you know, we've got to be better than that average. We've got to look for opportunities for us where we can run it at a lower cost compared to, you know, where the average of the, of the industry is. And in that way, we'll create a little bit of value. But, but our costs definitely move up, you know, with those impacts. And we try and optimize around that.
Speaker 10: transcript
Speaker 10: Neil, this is Greg. I would say that if you look at, you know, a year ago where prices were, they were about double on gas and NGLs, and a lot of the forecast was built around some expectation of that. As the prices came down, we did see some slow, slowing of growth in terms of rig activity and bringing new pads on.
Neil This is Greg Yeah, I would say that if you look at a year ago, where prices, where they were about double on gas and Ngls.
Doug Irwin: Perfect. Thank you. You're welcome.
A lot of the forecast was built around some expectation of that.
As the prices came down.
We did see some slow slowing of growth in terms of rig activity and bringing new pads on.
Speaker 10: transcript
Speaker 10: So, yeah, I think that that was expected based on the pricing changes, but we have been seeing growth maybe beyond even what you would expect. And I think that shows that people are still very, producers are still bullish on.
So yeah, I think that that was expected based on the pricing changes, but we have been.
Doug Irwin: Our next question comes from Doug Irwin with City. Your line is open. Hey, thanks for the question. Just another on the balance sheet. Looking at slide 10 and the earnings presentation that looks like you have almost 3 billion debt maturing over the next couple of years.
<unk> growth maybe beyond.
Even what you would expect and I think that shows that people are still very producers are still bullish on.
Speaker 10: transcript
Speaker 10: on where pricing is going with the LNG plants that are going to come online over the next couple years. NGL prices have been supportive and really the drilling and production costs have come down.
On where pricing is going with the LNG plants that are going to come online over the next couple of years NGL prices have been supportive and really the.
Doug Irwin: I'm serious if you talk about how you're thinking about these maturities here in a high rate environment, particularly in the context of all the cash you have on the balance sheet and already being below your leverage target. Yeah, hey, Doug. It's Sean. Thanks for the question. Yeah, we've got what about a billion 150 due December and next year and then the next several years and plus or minus a billion, a billion, four.
Production drilling and production costs have come down as the producers are drilling longer laterals that brings more volume in faster.
Speaker 10: transcript
Speaker 10: As the producers are drilling longer laterals, that brings more volume in faster.
Speaker 10: transcript
Speaker 10: and it keeps the cost level below even where some of the lower prices are. So, yeah, we have seen growth.
And it keeps the call.
Cost level below even where some of the lower prices are so.
Yes, we have seen growth.
Speaker 10: transcript
Speaker 10: You know, single digit, loaded to medium single digit across most of the basins, and that's been, you know, really good to see.
Doug Irwin: So I think as you've seen us in the recent past, you know, we'll look to be thoughtful about how we do that. Certainly, you're spot on given where rates are today versus the last refinancing we did. Again, we've got some financial flexibility there. And I'd say it's not only the cash on our balance sheet, but we've got revolver with our parent as well, which gives us some flexibility to be thoughtful about the right time to look to refinance.
Single digit uploaded to medium single digit across most of the basins and that's been a really good to see.
Speaker 8: transcript
Speaker 8: That's right, details. And then just my second maybe just around your capital program specifically, given that it sounds like just continues efficiencies you all see, would you expect maybe going forward that maintenance capital declined slightly from the current 150 level?
That's great details and then just my second maybe just around your capital program, specifically given the it sounds like just continuous efficiencies you. All see would you expect maybe going forward that that maintenance capital declined slightly from the current $1 50 level.
Speaker 4: transcript
Speaker 4: Hey, Neil, it's John . I don't know that I'd expect a change in maintenance capital, right? When we think about our capital allocation framework, that first kind of step is making sure we're investing to maintain the safety and reliability of our assets. So I don't know that I'd expect a change there. Okay, okay.
Hey, Neil it's John I don't know that I'd expect the change in maintenance capital right. When we think about our capital allocation framework that first kind of step is making sure we're investing to maintain the safety and reliability of our assets.
Doug Irwin: Yeah, thanks. And then you talked about the potential growth opportunities with NPC. And I think one that came up last quarter was hydrogen. And I think NPC's involved in at least one of the hydrogen hubs that was just collected for funding negotiation.
I don't know that I would expect a change there.
Okay. Okay. Thank you all.
I appreciate it.
Youre welcome.
David Heppner: I'm wondering if you could kind of talk about what you see in TLX's potential role being here and maybe just help frame that opportunity. Yeah, Doug, this is Dave. So, yes, you are correct. Actually, of the seven hydrogen hubs that received DOE funding at $7 billion, NPC slash MPLX is involved in two of those. One in Appalachia and one in the Heartland. And so specifically around MPLX involvement, it's going to be more around the storage and transportation of hydrogen and CO2 rather than constructing hydrogen production facilities.
Yes.
Speaker 2: transcript
Speaker 2: All right, Sheila, well, if there's nobody else in the queue, 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 today, members of the Investor Relations Team will be available to take your call. Thank you.
Alright, Sheila if theres nobody else in the queue. 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 today members of the Investor Relations team will be available to take your call. Thank you.
Thank you that does conclude today's conference. Thank you for participating you may disconnect at this time.
David Heppner: That'd be more on the NPC side of the equation. The last piece I'll leave you with while these projects have received DOE funding. That's just the first step. It's a big milestone, first of all. It's good to get narrowed down and secure the funds from the DOE. That's the first step and a long journey to secure the agreements with DOE design and construct the project.
David Heppner: So, we'll talk more about these in the next year, but I appreciate you bringing that up. And like I say, we're excited on the first step of receiving funding in those two projects.
David Heppner: Thanks. Great. Thanks for the questions.
Neal Dingmann: You're welcome.
Gregory Floerke: Our final question will come from Neal Dingmann with truest securities. Your line is open. I'm going to get it. Thanks for giving me. You talked about this in my first question, maybe just around general activity thoughts. I'm just wondering, you know, is the long-term production outlook for your G&P producer customers? Would you all consider that as good today as you thought it would be the beginning of the year, or maybe even sounds like it would be slightly better than you initially expected, just wondering sort of general thoughts?
Gregory Floerke: Neal, this is Greg. I would say that if you look at, you know, a year ago where prices were, there were about double on gas and in Geels, and a lot of the forecast was build around some expectation of that. As the prices came down, we did see some slowing of growth in terms of rig activity and bringing new pads on. So, yeah, I think that that was expected based on the pricing changes, but we have been seeing growth maybe beyond, you know, even what you would expect.
Gregory Floerke: And I think that shows that people are still very, producers are still bullish on where pricing is going, with the LNG plants that are going to come online over the next couple of years. In Geels prices have been supportive, and really the production, drilling and production costs have come down. As the producers are drilling longer laterals, that brings more volume and faster, and it keeps the cost level below, even where some of the lower prices are.
Gregory Floerke: So, yeah, we have seen growth, you know, single digit, loaded to medium single digit across most of the basins, and that's been, you know, really good to see. That's right, Geels, and then just my second maybe just around your capital program, specifically, given that it sounds like just continues efficiencies you all see, would you expect maybe going forward that that maintenance capital declined slightly from the current 150 level? Yeah, hey, Neil, it's John.
Gregory Floerke: I don't know that I'd expect the change in maintenance capital, right? When we think about our capital allocation framework, that first kind of step is making sure we're investing to maintain the safety and reliability of our assets. So, I don't know that I'd expect a change there.
John Quaid: Okay, thank you all. Appreciate it. You're welcome.
Kristina Kazarian: All right, Sheila, well, if there's nobody else in the queue, 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 today? Members of the Investor Relations team will be available to take your call. Thank you.
Operator: That does conclude today's conference.