Q4 2024 MPLX LP Earnings Call
Welcome to the MPLX fourth quarter 2024 earnings call. My name is Amanda and I will be your operator for today's call.
Gathering and processing segment, formerly referred to as G. M. P has been renamed natural gas and NGL services with the chain.
Certain equity method investments, serving natural gas and NGL customers now reside in the natural gas and NGL services segment.
Periods have been recast for comparability additional details on these reporting changes can be found on slides 16, and 17 with that I will turn the call over to Maryann.
Maryann: Thanks, Kristina good morning, and thank you for joining our call.
Maryann: In 2024, we executed our strategic commitments full.
Maryann: Full year, adjusted EBITDA was $6 $8 billion, an 8% increase year over year in.
Maryann: In the crude oil and products logistics segment results were driven by strong operational performance and demand.
Maryann: In the natural gas and N. G. S. NGL services segment, we placed two processing plants into service in 2024 and achieved record throughput driven by our growing asset portfolios in the Utica Marcellus and Permian basins.
Maryann: And today MPLX handles over 10% of all the natural gas produced in the United States.
Maryann: This was the fourth consecutive year of MPLX generating mid single digit adjusted EBITDA growth.
Maryann: Since 2021 we have grown adjusted EBITDA at a compound annual rate of 7%.
Maryann: In 2024, we invested $1 $7 billion in organic growth projects and strategic acquisitions of increased ownership interest in existing joint ventures. These capital investments were targeted in key basins and value chains, where we operate we believe these investments will generate mid teens.
Maryann: Returns extending the durability of our mid single digit EBITDA growth profile and our ability to return capital to our unit holders.
Maryann: In November we increased our quarterly distribution by 12.5%, marking the third consecutive year MPLX has increased its quarterly distribution by 10% or more.
Maryann: Over the course of 'twenty 'twenty four MPLX returned nearly $4 billion of capital to unit holders, while maintaining distribution coverage of 1.5 times strong given the stability of our business.
Maryann: Looking forward our growth opportunities are robust and today, we announced our capital expenditure outlook of $2 billion for 2025.
Maryann: 85% of our growth capital will be allocated to opportunities within our natural gas and NGL services segment, we anticipate mid teen returns on these projects in aggregate.
Maryann: And believe our execution on these investments will extend the durability of our mid single digit growth profile, allowing us to invest in the business and support annual distribution increases in the future.
Maryann: And we believe we have the financial flexibility to execute strategic acquisition opportunities that would be complementary to these organic capital deployment plans.
Maryann: P. L X reached a significant milestone in its NGL wellhead to water changed strategy with the announcement of a project to construct a Gulf coast fractionation complex and export terminal.
Maryann: MPLX has fully integrated NGL value chain connecting the Permian to the Gulf Coast and will supply growing global demand for LPG.
Maryann: Our $2 5 billion dollar investment in our fractionation complex in export terminal complements mplx's existing asset base and leverages existing infrastructure.
Maryann: MPLX will build and operate the golf coast fractionation complex, consisting of two 150000 barrel per day fractionation facilities and a 400000 barrel per day LPG export terminal all of which will be located adjacent to Mpc's Galveston Bay refinery.
Maryann: MPLX has entered into a joint venture agreement with one oak for the export terminal and a bi directional purity pipeline between Mont Belvieu and Texas City.
Maryann: One oak will market, it's 200000 barrels per day and provide connectivity to Mt. Belvieu storage enhancing the competitiveness of the terminal.
Maryann: We also believe this strategic partnership with one oak will create additional optionality and value to our customers.
Maryann: We also see it as a platform for future collaboration and growth across our Gulf coast assets.
Maryann: <unk> plans to market ethane production from the Fracs to both existing and new customers.
Maryann: MPC plans to contract with MPLX to purchase the remaining LPG production from the Fracs, which M. P. C will market globally through its existing marketing business via the new export terminal.
This contract structure once again demonstrates the strength of our strategic relationship with M. P C.
Maryann: The fractionation facilities are expected to be in service in 2028, and 2029 and the export terminal is expected to be in service in early 2028.
Maryann: We anticipate mid teens returns on the project, which is expected to begin generating EBITDA when placed in service in 2028 and will ramp through the end of 'twenty 30 <unk>.
Maryann: Additionally, we believe the expansion of our Gulf Coast NGL value chain will create a platform for optimization and an incremental growth opportunities as we look at additional opportunities for MPLX. We are investing for durable growth in response to strong producer demand M.
Maryann: MPLX is expanding its natural gas and NGL integrated value chains progressing long haul pipeline growth projects and investing in processing capacity.
Maryann: In the Permian Basin MPLX is constructing its seventh processing plant Secretariat.
Maryann: The 200 million cubic feet per day processing plant expected online in the fourth quarter of 2025, bringing our gas processing capacity in the Permian basin to 1.4 billion cubic feet per day.
Maryann: Integral to our wellhead to water NGL strategy. The bangle joined debenture is progressing segment expansion, enabling additional ngls to reach our golf coast fractionation complex.
Maryann: The bangle pipelines expansion to 250000 barrels per day is expected to be in service by the end of the first quarter and the JV partners have sanction the expansion of the mainline to 300000 barrels per day, which is expected online in the second half of 2026.
Maryann: Within our natural gas value chain. The Matterhorn Express pipeline began full commercial service in November and we continue to see strong demand from shippers.
Maryann: Additionally, MPLX and its partners are progressing the black home and Rio Bravo pipeline designed to transport natural gas from the Permian to domestic and export markets along the Gulf Coast.
Maryann: Both pipelines are expected in service in the second half of 2026.
Maryann: In the Marcellus Basin MPLX is constructing the Harmon Creek, three processing plant and adding fractionation capacity as we work with our customers to align capacity expansion with their drilling plans.
Maryann: This complex will comprise of a 300 million cubic feet per day processing plant and 40000 barrel per day death or neither.
Maryann: Following completion in the second half of 2026, MPLX expects gas processing capacity in the northeast to total $8 1 billion cubic feet per day, and fractionation capacity to totaled 800000 barrels per day.
Maryann: Within the crude oil and products logistics segment, we anticipate spending $250 million on growth projects.
Maryann: This includes expanding crude gathering pipeline supporting the Permian and Bakken basins there.
Maryann: Areas butane blending projects at our products terminals.
Maryann: And investing in other high return investments targeted at the expansion or debottlenecking of assets.
Maryann: We have a very high degree of confidence in these investments as the macro environment.
Maryann: For energy remains favorable.
Maryann: The United States as a low cost producer of energy fuels needed across the globe and the outlook for hydrocarbons remains robust.
Maryann: Grid electrification onshoring Nearshoring and data center development are driving natural gas demand growth forecast through the end of the decade.
Maryann: As demand increases for natural gas powered electricity, we are well positioned to support the development plans of our producer customers.
Maryann: Globally demand for transport tracing fuels is expected to grow.
Maryann: The U S refining industry is expected to remain structurally advantage over the rest of the world.
Maryann: Furthermore, we believe the MPC refining assets are the most competitive in each region and P. C operates and our strategic relationship with M. P. C will provide additional opportunities to enhance value chains supporting their operations.
Maryann: We are confident in our growth opportunities to generate durable cash flow for MPLX.
Maryann: Porting our commitment to return capital to unit holders now, let me turn the call over to Chris to discuss our operational and financial results for the quarter.
Chris: Thanks Marianne.
Chris: Slide eight outlines the fourth quarter operational and financial performance highlights for our crude oil and products logistics segment. The segment adjusted EBITDA was a new record increasing $60 million when compared to the fourth quarter of 2023.
Chris: The increase was driven by higher rates from three quotes across our systems.
Chris: Pipeline volumes were up year over year, primarily because of the timing of refinery maintenance and increased volumes in the Permian in 2024.
Chris: Terminal volumes were also up year over year, primarily due to higher throughput on the west coast.
Chris: Moving to our natural gas and NGL services segment on slide nine.
Chris: The sudden and established a new record.
Chris: Segment, adjusted EBITDA increased $79 million compared to the fourth quarter of 2023.
Chris: This was driven by increased volumes, including contributions from increased ownership interest in existing joint ventures in the Utica and Permian basins and growth from our equity affiliates.
Chris: Gathered volumes increased 8% year over year, primarily due to the addition of dry gas volumes from Utica assets acquired earlier this year and increased production in the Marcellus.
Chris: Processing volumes increased 6% year over year, primarily from higher volumes in the Utica and Permian basins.
Chris: In the Utica processing volumes increased nearly 50% year over year, highlighting the value producers are seeing in our liquids rich acreage.
Chris: Our processing utilization exited $2024 70 per cent and as new wells are placed on line. We are positioned for additional volumes with minimal capital spending in 2025.
Chris: Marshalls processing utilization was 92% in the quarter, reflecting the ramp of our Harmon Creek processing plant.
Chris: Total fractionation volumes grew 14% year over year, primarily due to higher process volumes and ethane recoveries in the Marcellus and Utica basins.
Chris: Moving to our fourth quarter financial highlights on slide 10.
Chris: Total adjusted EBITDA of $1 $8 billion, and distributable cash flow of $1 $5 billion increased 9% and 7% respectively from the prior year.
Chris: MPLX returned nearly $1 billion to unit holders and distributions and $100 million and unit repurchases.
Chris: During the quarter MPLX retired $1.15 billion of senior notes, which mature in December.
Chris: We ended the quarter with a cash balance of $1 $5 billion and expect to retire another $500 million of senior notes maturing later this month.
Maryann: MPLX maintained strong financial flexibility and we expect to continue growing the partnerships cash flow, enabling the return of capital to unit holders now let me hand, it back to Maryann for some final thoughts thanks, Chris.
Maryann: <unk> has a strong history of growing the partnerships cash flows and its distributions to unitholders by executing our strategic priorities, all while maintaining capital discipline.
Speaker Change: While year to year growth may not be linear we are targeting a mid single digit growth rate over multi year periods and as you can see from our results. We have achieved this growth.
Speaker Change: By deploying capital wisely controlling our cost and optimizing operations to get the most out of our assets. We have delivered 7% growth on both an adjusted EBITDA and DCF on a three year compound annual basis, Similarly, the growth and durability of our cash.
Speaker Change: Flows combined with the strong coverage of one five times and low leverage just above three times has allowed to MPLX to consistently increase its quarterly distribution. Most recently by 12, 5%.
Speaker Change: And we expect for years to come.
Speaker Change: Our capital allocation priorities are unchanged first to maintenance capital we are steadfast in our commitment to safely operate our assets protect the health and safety of our employees and support the communities we operate in.
Speaker Change: Second we are focused on delivering a secure and growing distribution and expect this will remain our primary return of capital tool.
Speaker Change: Third we will invest in growing the business seeking to achieve superior returns.
Speaker Change: After these priorities, we will assess the opportunity opportunistic return of capital the unit holders through unit repurchases.
Speaker Change: In summary, the opportunities ahead of MPLX in 2025 are compelling as we execute our mid single digit adjusted EBITDA growth strategy.
Speaker Change: In addition to optimizing our highly contracted asset base, we see growth across our natural gas and NGL value chain.
Speaker Change: In the Marcellus and Utica producer activity remains robust supporting growth of our gathering processing and fractionation footprint development of our Gulf Coast fractionation complex in export terminal will enhance our NGL value chain.
With our joint venture partners, we are progressing long haul natural gas and NGL pipelines to meet growing demand from Gulf Coast and international markets.
Speaker Change: Advancing these high return growth projects position us to grow our cash flow, allowing us to reinvest in the business and return capital to unit holders through a growing distribution the.
Speaker Change: The growth and durability of our cash flows combined with strong coverage and low leverage provides MPLX considerable financial flexibility. We believe MPLX is positioned for additional distribution increases like the 12, 5% seen in 2024.
Speaker Change: At the current distribution M. P C expects to receive $2 $5 billion annually from MPLX illustrating the strategic value of MPLX within Mpc's portfolio.
Speaker Change: And as both pursue value enhancing opportunities the value of this strategic relationship is further strengthened.
Speaker Change: Our commitment to operational excellence, our growth opportunities and our financial flexibility position us to generate durable cash flow for MPLX.
Speaker Change: Porting our commitment to peer leading capital returns to unitholders now let me turn the call over to Christina. Thanks, Maryann as we open the call for your questions as a courtesy to all participants we ask that you limit yourself to one question and a follow up if time permits we will re prompt for additional questions. We are ready for questions.
Thank you we will now begin our question and answer session. If you have a question. Please press Star then one on your Touchtone phone if you wish to be removed from the queue. Please press Star then two if you are using a speakerphone you may need to pick up the handset first before pressing the numbers. Once again if you have a question. Please press Star then one on your <unk>.
Speaker Change: Telephone our first question comes from John Mackay with Goldman Sachs. Your line is open.
John Mackay: Hey, good morning, Thanks for the time just wanted to start on the NGL value chain announcement, maybe you could just share a little more background on the strategic rationale here among bringing the partners like one oak, taking having MPC you take the offtake and what that means.
Speaker Change: Your confidence the return profile overall thanks.
John Mackay: Hey, good morning, John sure.
John Mackay: First and foremost this Gulf coast NGL value chain expansion that we talked about this morning as you know over the last several quarters, we've been talking about our ability to build out our wellhead to water strategy.
John Mackay: We've shared our thoughts around how we were building optionality and ensuring that this opportunity could yield mid single digit growth Oh, we think that this project demonstrates our ability over the long term to continue to do that you know beginning at the wellhead are you know we have incrementally grown.
John Mackay: Processing capacity over the last few years.
John Mackay: Serving some of the best producer customers in the Permian Basin I mentioned earlier this morning, our board, bringing on secretary at seventh processing plant in the Permian as an example last quarter, we talked about or increase in ownership and the bangle pipeline too.
John Mackay: 45% and as you know with this gives us this increased ownership gives us the long haul pipeline to bring the you know the volumes bangle as I mentioned this morning also expanding the mainline to 300000 barrels a day so.
John Mackay: We think this investment and the fractionation complex in the export terminal really complements our MPLX is is the existing asset base I think the second part of your question was sort of why the Jv's. If you will with one oak and the JV for the export terminal and the purity pipeline.
John Mackay: Include one oak, one oak will bring marketing and provide connectivity to Mt. Belvieu storage and we think this improves the competitiveness of the terminal also we think this strategic partnership with one oak will create additional optionality and value for the customers.
John Mackay: For our customers and clearly give us some optionality for the future so putting all of that together given our current infrastructure and the opportunity that we see we have a high degree of confidence that this project will continue to extend our EBITDA growth into the future.
John Mackay: Pause there.
John Mackay: Okay. Thanks for that matter and they made a lot of sense.
John Mackay: Maybe it's just my follow up you touched a couple of times on additional opportunities in the future. Maybe you could just flesh that out for us if we look at the capacity of this footprint theres, probably some more room for you to.
John Mackay: Add some processing upstream.
John Mackay: What else what else could we be talking about here for those incremental opportunities.
Speaker Change: Yes, certainly so you know as you know the NGL and Nat gas opportunities set for us as we've been talking about we think is an extremely important platform, particularly as we look at the connectivity to our export markets and what we might be able to do in the future I'm going to ask Dave to give you a.
John Mackay: A little more color on what some of those opportunities longer term might be.
Dave: Yeah, Thanks, Maryann, maybe I'll set the stage with when.
When we use the word strategy think about long term roadmap of where we want to.
Dave: Go within the crude the Nat gas and NGL value change and and those will continue to evolve and develop so when you think about the announcement today of our Gulf Coast fractionation complex.
Dave: We talked a lot you know and we've seen it.
Dave: Talk a lot about the justification of the rationale around that but.
Dave: Also think about the Gulf coast and within the Gulf Coast.
Dave: Some of our refinery assets at MPC and the Interconnectivity opportunities that will provide in the future. In addition to the in addition to that the Gulf Coast as everybody knows has got a very large petrochemical footprint and think about the interconnectivity with some of our existing or new customers down the road in the petrochemical side of the <unk>.
Speaker Change: And finally, and Marianne touched on it very well with our new JV partner, one oak as we continue to build out this project and look at incremental opportunities between that partnership.
Dave: We believe.
Dave: There is there is a roadmap for some pretty pretty substantial growth opportunities. There also so I think the combination of those three with within the U S. Gulf Coast footprint show has a lot of growth potential in the NGL platform.
Dave: Yeah.
Dave: Alright, thanks, very much for the time I appreciate it.
Speaker Change: Youre welcome John Thank you.
Speaker Change: Thank you. Our next question comes from Manav Gupta with UBS. Your line is open.
Manav Gupta: Oh, good morning, Vivien I think one of the unique features of your stock MPLX instead of double digit distribution growth and I'm trying to understand with these new projects that you have added have you been able to extend that for a period of time, where we can see you know maybe for them to you in the next four or five years MPLX could continue to grow their distributions.
Speaker Change: Double digits.
Good morning, Manav and thanks for the question. So certainly as we look at this opportunity as well as putting other capital to work this year next year.
Speaker Change: We remain optimistic about mid single digit growth EBITDAR.
Speaker Change: Sure you know it might not be perfectly linear just based on how that capital goes to work and when these projects actually come to fruition, but you know our reason for the 12.5% distribution increase last year was certainly are predicated on the fact that we believed it was durable cash flows being generated from these projects.
Speaker Change: <unk> you know as you've seen over the last few years the growth in EBITDA growth in the D. C. F. So we are certainly optimistic that this level of distribution increase likes a 12 and a half that our unitholders experienced in 2024 will be a we will be able to do that in four years.
Speaker Change: Come.
Speaker Change: Perfect. My quick follow up is obviously these are very good organic projects with excellent returns, but when you have a good balance sheet. If the right small bolt on opportunities do come along the way could you still look at them for growth and then.
Speaker Change: The parent obviously has some assets, which can also be moved into MPLX. So how are you thinking about those things.
John Mackay: Yeah. Thanks, Manav sure. So maybe a minute on just to be sure. We're clear on how would you think about capital.
John Mackay: If I step back first to 'twenty 'twenty four you know we've talked about capital in and about $1 billion per year, but if you've seen we actually put about $1.9 billion to work in 2020 for some of that what we would classify as true traditional capital, but another 800 million or so.
John Mackay: In small bolt on M&A you may remember early in the year. We did the summit transaction, we took an incremental ownership in Bengal, a wink to Webster. So a couple of examples this year, we're talking to them a capital project capital expenditure estimate in at about 2 billion keep in my.
John Mackay: And as you know, we've got the balance sheet capability to be able to do that but 85% of that capital, we're saying would be targeted toward the nat gas and Ngls NGL services. So you know obviously the project that we just got done announcing this morning is a part of that secretary at that we will be completing in the back half.
John Mackay: Of this year.
John Mackay: Harmon Creek, three that we talked about back half of next year.
John Mackay: And then certainly if there were to be incremental bolt on M&A opportunities that met all of our criteria. So first and foremost strategic fit our mid teens returns extension of our value chains all of those criteria, we would certainly have the capacity.
John Mackay: At the MPLX level to be able to do that I think your last question to me was you know whether or not we would consider drops and as you know you know over the past couple of years drops were probably lower on our items of priority.
John Mackay: I think a few things about drops today one it certainly makes sense I'll bet. There is just a small a few to get those assets to the midstream side, putting those assets, where they belong having said that in no way would we do that to support mid single digit growth we believe the organ.
John Mackay: <unk> opportunities that we have support our mid single digit growth. If we were to do drops then that cash that would be a part of M. P. A a part of MPC of course, we could use to increase the buyback given the valuation that we see at MPC, but should be clear.
John Mackay: That if we do a drop it would not be because we're trying to support mid single digit growth with those drops because that EBITDA is in the enterprise today.
John Mackay: Thank you so on ones that have done it a lot and congrats on a great quarter.
John Mackay: You're welcome thank you.
Speaker Change: Thank you. Our next question comes from Jeremy Tonet with J P. Morgan Your line is open.
Jeremy Tonet: Hi, good morning.
Speaker Change: Good morning, Jeremy.
Speaker Change: Just wanted to come back to the NGL strategy, a bit more quite a chicken up to high gear here wanted to touch base on a couple of points as far as it relates to the fractionation component is this a take or pay contract for MPLX, where it's all kind of firmed up an M. P. She's responsible for the marketing so there's not that type of exposure.
Speaker Change: MPLX and then if I think back on the Markwest assets, There's you know.
Speaker Change: MPLX has GMP and a lot of different areas could those areas be piped into this exports frac and export facility or what's the art of what's possible here.
Jeremy Tonet: Thanks, Jeremy So first and foremost want to be sure that we understand particularly on the contract with MPC and MPLX as you know as we have in all other contracts any commodity risk would be borne by M. P. C. Not by MPLX I'm going to pass it to Dave first and he can give you a little bit of color on the.
Speaker Change: Facts, and then I'll move on to Greg, who can talk about the markwest assets.
Jeremy Tonet: Hey, Jeremy So let me touch on.
Speaker Change: And I think maryann did a nice job of articulating it but.
Speaker Change: I want to be clear with the contracts between MPLX and specifically MPC from the Fracs and then over the export terminal.
Speaker Change: B B.
Speaker Change: B.
Speaker Change: Our end up agreements without the commodity exposure on the MPLX side of the equation. So I just want to be clear there that would be the commodity exposure in the marketing of those see threes, specifically coming out of the fracs because as maryann touched on earlier, the ethane will be going to existing customers or new.
Speaker Change: <unk>.
Speaker Change: Excuse me in the market.
Speaker Change: But the.
Speaker Change: The contracts between MPLX and MPC for the C. Three plus a out of the Fracs and across the dock will be you know commercial agreements without commodity exposure on the MPLX side of the equation. So hopefully that answer your question.
Speaker Change: Yes.
Speaker Change: Jeremy This is Gregg with regards to your question on the data centers.
Speaker Change: Datacenter power demand.
Speaker Change: Continued.
Go ahead.
Speaker Change: Yeah.
Speaker Change: I'm sorry, Greg he was asking about markwest assets can they be integrated that was jeremy's question.
Speaker Change: No worries.
Speaker Change: Sorry, I apologize if I misheard the question.
Speaker Change: In terms of.
Speaker Change: Yeah.
Speaker Change: <unk> that we have I'm, sorry, I did Miss I misunderstood the question our facilities in the Permian, Delaware Basin are already piped into to deliver Ngls to bangle and the bangle pipe will be extended to our our Gulf coast facilities, which then will allow access both for fractionation and for for <unk>.
Speaker Change: Access to water.
Speaker Change: Yeah.
Speaker Change: Got it but I think that you might have GMP assets in other basins and just wanted to see if those could be integrated into this.
Speaker Change: Hey.
Speaker Change: Yes.
Speaker Change: We definitely have NGL access fractionation in other basins and those Ngls would have the ability in some cases to be directed down towards our towards our fractionator.
Speaker Change: Fractionator and our export facilities on the Gulf Coast.
Speaker Change: Got it that's helpful. Thank Jeremy just making sure. We got your question now are you. Good [laughter] Yeah I just wanted to see what was possible. There and then maybe I guess going towards the data center side as I touched on there just there's a lot of talk about what what's possible and what mid streamers could provide for solutions their.
Speaker Change: <unk> looked at laterals to feed gas into data centers or even.
Speaker Change: Possibly behind the meter or anything else just wondering what's on your radar at this point.
Speaker Change: Yeah, Jeremy Great Great question, and I'm going to give Greg the opportunity to share because he he's got a lot to offer on this on this topic, but you know as I mentioned you look at the about 10% of our U S. Gas production is going through MPLX. We think there are opportunities, particularly when you look at the location of our producer customer.
Speaker Change: <unk> are the amount of residue gas that we have and the opportunities over the long haul we think we're well situated.
Speaker Change: To support our producer customers, but let me pass it back to Greg because I know he's got some things that he wants to share there.
Speaker Change: Yes, Jeremy it's with regard to the power supply for data centers.
Speaker Change: Data center power needs and demand has been growing and where do you think it will continue to grow whether or not its AI driven or whether it's basically cooling for for these large data centers.
Speaker Change: Natural gas is positioned to be the primary fuel source, we believe for that growth and.
Speaker Change: In order to generate that power you need processed and treated gas so that could either be co location, you'll often one of our large processing plants or any of our processing plants or off of downstream residue pipelines. We think that we do have the ability either through short short pipe connections or co location.
Speaker Change: To be locations, where were co generation would be favorable as well as potentially even data center development.
Speaker Change: It's easier at this point to put in more fiber optic cable for long haul transmit data than to build new electric transmission lines or pipe. So we think there may be definitely a co location for for data for our power generation, but potentially data centers as well.
That's very helpful I'll leave it there thanks.
Speaker Change: Thank you Jeremy.
Speaker Change: Thank you our next question comes from.
Speaker Change: Theresa Chen with Barclays. Your line is open.
Theresa Chen: Good morning, and thank you for taking my question.
Theresa Chen: Organic capex step up in 2025, I just wanted to get more color and clarify her views on the cadence of capital deployment, both organic and inorganic over the next couple of years.
Theresa Chen: With the backlog that you have.
Theresa Chen: Organic projects. So is the 2.0 billion a good run rate for organic taking into account additional potential processing in the backlog and then M&A would come on top of that or how should we think about that.
Speaker Change: Thanks Teresa.
Speaker Change: What I would tell you, yes, indeed, the $2 billion is different than the 1 billion, we've communicated historically and as Maryann had articulated we've always talked about the one but we've been deploying more such as the one nine that she went through.
Speaker Change: Last year in 2024, and if you look back even to 2023 it was closer to about one four.
Speaker Change: With the tornado acquisition, we did at the end of the year.
Speaker Change: Looking forward the 2 billion as a rough number that is growth capital with maintenance this year I.
I would expect that number to look similar in future years, but I also would tell you I don't think it's going to be linear and linear in nature.
Speaker Change: I also would tell you Theresa that the 2 billion is not inclusive of M&A, we're not projecting M&A.
Speaker Change: But as as Maryann had stated we will absolutely look at M&A that fits into our strategic footprint and hits our return profiles, so with our significant balance sheet flexibility. We currently have we think we're in a great position to be able to do that.
Speaker Change: Understood and in terms of the LPG export.
Speaker Change: Project can you share how that partnership with one of them is going to work we will be operating the facility or is it a JV UGI will all the storage in Mont Belvieu. This all of it exists at this point is it underground any.
Speaker Change: Color around that would be great. Thank you.
Speaker Change: Hey.
Speaker Change: So this is Dave.
Speaker Change: Let me touch on that a little bit and we use the word JV.
Speaker Change: It'd be probably consistent we use the plural jv's and I'll touch on that in a minute. So let me start on on the pipelines.
Speaker Change: There'll be the JV pipeline from Mont Belvieu to Texas City by directional we will be at 20% equity owner and there'll be an 80% equity owner and that that'll be constructed.
Speaker Change: And operated by one of them on that piece of the equation. The second JV, which is the export terminal will be a 50 50 terminal.
Which will be constructed and operated by MPLX.
Speaker Change: That's a new ones on the on the JV as far as the equation. So there is no UGI.
Speaker Change: Within this Gulf Coast fractionation relationship is purely jv's.
Speaker Change: Very similar different equity ownership on the two and different operational.
Speaker Change: Both construction operational differences between the two between one oak in MPLX. So I hope that gives a little more color on that.
Speaker Change: Thank you and just a storage place as alluded to earlier, how is that going to work.
Speaker Change: Yeah, that's I think I missed that piece. So yeah that is one of the strategic rationales when when we looked at potential partners for this Gulf Coast fractionation.
You know.
Speaker Change: Project and the continuation of our wellhead to water strategy storage was a key element of that and is that that is one of the pieces that are 100 brings to the table storage in Mont belvieu as existing storage and I think your question is what type. It is cavern storage just to be clear on that.
Speaker Change: Thank you very much.
Teresa: Youre welcome Teresa.
Speaker Change: Thank you. Our next question comes from Keith Stanley with Wolfe Research. Your line is open.
Keith Stanley: Hi, good morning.
Speaker Change: First.
Speaker Change: Any color you can give on how much of your Ngls from your Permian processing plants do you control today and you'd be able to move through the pipeline Fracs and export dock.
Speaker Change: Some of them committed long term elsewhere or are they pretty much under your control.
Greg: This is Greg.
The answer to that question is is that some of the we don't have our own fractionation right. Now. This is part of why we're building the fractionation.
So all of the Ngls that are produced at our six plants soon to be seven plants are fractionated of third party facilities.
Greg: So right now.
Greg: We don't have direct.
Greg: Direct responsibility for those liquids with producers do but.
Greg: The fact that we're building the plants and have the ability to redirect these barrels in the future give us whats given us confidence to a.
Greg: To build a new fractionator.
Greg: So as those contracts roll off we do expect to have the ability to redirect liquids through our fractionator.
Greg: Hey, Keith it's Maryann I just wanted to reiterate what Greg just said you know today, we are using third party in the future that won't be the case and that's what gives us confidence in our ability to fill these fracs as well as its proximity to a G. B R. A.
Greg: And other basins that we believe will also be contributing so we've got a high degree of confidence in our ability to to see these fracs.
Greg: Okay. Great second question was a follow up from an earlier one.
Speaker Change: Under understand Theres, no commodity exposure on the contracting with MPC, but what percentage of the Frac and export capacity is actually contracted with MPC versus still available to contract with the market as is most of it kind of spoken for with MPC just any sense you can give there.
Dave: Yes, Keith this is Dave I won't give specifics on percentage, but I will say the vast majority of the.
Dave: The volumes coming out of the Fracs again ex ethane and can see three plus propane coming out of the fracs will be contracted with MPC.
Speaker Change: Okay, great. Thank you very much.
Youre very welcome.
Speaker Change: Thank you. Our next question comes from Michael Blum with Wells Fargo. Your line is open.
Michael Blum: Thanks, Good morning, everyone.
Speaker Change: Wanted to ask Michael about.
Speaker Change: Good morning, the maintenance Capex for 2025, it's a pretty noticeable jump from the run rate you've had the last two years. So I'm just wondering if theres anything kind of one time items or anything to call out there or is this just the result of a.
Speaker Change: I don't know a larger asset base.
Speaker Change: Yeah. Thanks, Michael what I would tell you first maybe let me just step back and tell you how we develop our maintenance capital both expense and capital every year first it's bottoms up so when I say that we look asset by asset and determined what we need to do to make sure that that asset runs safely.
Speaker Change: That's always our first priorities have safe reliable operations, and that's what our capital and expense maintenance programs really reflect.
Speaker Change: What I will tell you you do see a bit of a step up in 2025.
Speaker Change: But even with that step up we remain extremely confident in our ability to grow EBIT in the mid single digits.
Speaker Change: One thing I would point to that is in the 2025 budget and it's something I know that you are familiar with would be the new Quadro regulations. So when you look at some of the emissions.
Speaker Change: Capital spend requirements that you see from a regulatory perspective, some of that's built into that 2025 budget. So that's one reason you see a bit of a creep up.
Speaker Change: Hey, Michael This is Sean I'll, just tag on to Chris's comments, so theres not any one particular thing it debt.
Speaker Change: I'll tell you what he mentioned about Quad O. It is really just our ability to make sure our assets are safe reliable based.
Speaker Change: Based on the age and as we risk manage those what we need to do so there's no special story on that is just the cycles that you go through a maintenance.
Speaker Change: Great. Thanks for that and then just wanted to ask about.
Speaker Change: Yeah.
Speaker Change: Daniel you know with the change in ownership.
Speaker Change: NGL I realize you are announcing a modest expansion of bankable. This morning, but just wanted to see if that does that limit your ability at all to expand bangle further down the road and just how does that play into your wellhead to water strategy from a pipeline perspective. Thanks.
Speaker Change: Yeah.
Sean: Thanks, Michael for that question this is Sean.
Sean: As we look at if you take a step back on <unk>, it's been a really capital efficient growth project for us and we will continue that as we go we've gone from.
Sean: 125 to $2 51st quarter, 302nd half of 'twenty, six and then as needed. The demand we will look at those expansion opportunities at that time and regarding the specific question about epic.
Sean: We don't anticipate that relationship will change just like we had an existing relationship with epic just because <unk> is purchasing so well that will continue to be working closely on the operational side as we move forward on our NGL strategy.
Sean: Thank you.
Michael Blum: Thank you Michael.
Speaker Change: Thank you. Our next question comes from Neal Dingmann with true Securities. Your line is open.
Neal Dingmann: Morning, Thanks for the time.
Neal Dingmann: Question is on Appalachian for you all specifically just wondering when you see it today as Marcellus activity trended today, largely as you all were expecting I'm wondering if you're expecting any sort of step up in activity a latter part of this year based on sort of macro today.
Neal Dingmann: Yeah.
Neal Dingmann: Neil This is Greg yes, we are seeing the activity that we expected in the Marcellus.
Neal Dingmann: We're seeing growth.
Neal Dingmann: And some of the areas as indicated by our New Harmon Creek III plants in construction will come into service later next year.
Neal Dingmann: We've been as high as 95% utilization in that area.
Neal Dingmann: You know as we brought on the Harmon Creek II plant that that drop down, but as we feel that we're moving back up so.
Neal Dingmann: We're in the mid 90% utilization range and expect we'll continue to keep those plants.
Neal Dingmann: <unk> filled the Marcellus certainly higher gas prices are good and the NGL market is very very good for us right now too.
Speaker Change: Great details and then maybe just a second question on I'm wondering how you all look at this when I'm looking at sort of your growth versus shareholder return I'm. Just wondering how do you weigh the prospects of buybacks against the I know you all announced the $1 seven capital that's earmarked for growth because again when I look at your centers still seem discounted after last year's <unk>.
Speaker Change: Would return yet you definitely have a number of exciting growth prospects like you've laid out. This morning. So I just wonder how you sort of balance those two.
Speaker Change: Neil It's maryann.
Speaker Change: Thank you for the question I think look first and foremost as we said.
Speaker Change: Our main return of capital tool will continue to be our distribution.
Speaker Change: And we hope based on our opportunities for mid single digit growth that youll be able to see similar distribution increases for for years to come.
Speaker Change: Our growth opportunities and like we talked about here. This morning have to meet our strategic roadmaps. They have to have those mid teens returns that we think are critical to be sure that we're deploying capital we do that through the lens of strict capital discipline and always have and we will continue to do.
Speaker Change: That and we need to be sure that you know that capital or extensions of the value change that we've been talking about absent that share repurchase will be a tool that we will use to return capital and as you can see in this last quarter.
Speaker Change: We returned about 100 million I'm really trying to support the fact that we continue to see our equity as undervalued. So certainly another opportunity for US post all of the allocations that I just mentioned and.
Speaker Change: No change in that thanks for the question. Thank you.
Speaker Change: Yeah.
Speaker Change: Thank you. Our last question comes from Neel Mitra with Bank of America. Your line is open.
Neel Mitra: Alright, congrats on all the downstream NGL announcements today I.
Neel Mitra: I just had a couple of questions on the export facility.
Neel Mitra: So first of all.
Neel Mitra: How are you able to kind of commercialize this with the MPC MPLX complex as a greenfield export facility when.
Neel Mitra: The brownfield players have been kind of a very able to crowd people out and the second part of it is.
Neel Mitra: This.
Neel Mitra: Commercialized or are we waiting to see.
Neel Mitra: Contracts to.
Neel Mitra: So completely F I do this.
Neel Mitra: How are you looking at kind of term versus spot.
Neel Mitra: How how are you.
Neel Mitra: We're going to actually sell the Ngls over the dock.
Dave: Hey, Neil this is Dave again.
Dave: Let me touch on this one of the key elements that I touched on.
Dave: With the Doc and the export terminal is the joint venture with with one oak.
Dave:
Dave: And the reason that that's important is it gets us to a world class scale Doc.
Dave: So you are very capital efficient number one when youre doing a 400000 barrel day dock.
Dave: And then as I stated, it's a 50 50 JV so each each of us both.
Dave: One oak in MPLX will have control of 50 found that dock and then MPLX.
Dave: We'll contract with MPC.
Dave: For our 50% of what we control the Doc so so that'll be that commercial relationship between MPLX and MPC and then MPC would then market internationally and take on any commodity exposure and any upside or downside relative to that so.
Dave: On a second PC equate your second piece of your question on Hey, do we have the the volumes are too.
Dave: D and commit those projects then the answer is yes, or we wouldn't have F. I did it and announced it so we're very confident.
Dave: And this project we've been working on it for a long time, we've been talking about it for for a long time as with any large complex projects a lot of work done behind the scenes.
Dave: This to this point of both from a project projects.
Dave: Project schedule project planning and then also our commercial relationships, where the new JV partner.
Speaker Change: Maryann, just maybe one other additional point to all of Daves comments, you know on the commercial side, particularly as we looking at MPC.
Speaker Change: Keep in mind of export markets are clearly something that MPC participates in today.
Speaker Change: And our ability to continue to extend the sustainability of that commercial excellence both in the short term and over the long term is a key strategic tenant that has been and will continue to be part of mpc's value proposition as well so confident in our ability to execute that also.
Speaker Change: Great. Thank you and again congratulations on all the announcements.
Speaker Change: Thank you.
Speaker Change: Alright with that thank you for your interest in MPLX should you have more questions or would you want clarification on the topics discussed. This morning, please contact us and our team will be available to take your calls thank you for joining us today.
Speaker Change: That concludes today's conference. Thank you for participating you may disconnect at this time.