MPLX - Earnings call transcript Q2 2019

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Welcome to the MPLX Second Quarter 2019 Earnings Call. My name is Elan, and I will be your operator for today's call. At this time, all participants are in a listen-only mode. And later, we will conduct a question-and-answer session. [Operator Instructions] Please note that this conference is now being recorded.

like the now Kristina over would Kazarian. I to call turn to And begin. you Kristina, may

Kristina Kazarian

this everyone, morning, XXXX call. that on and quarter to Investor the earnings conference be tab. accompany ww.mplx.com slides under synchronized Good The welcome webcast and the can found call MPLX second

and Mike invite call will Safe and Actual call during of other our today CEO; filings the be there, Heminger, disclaimer you making from Factors forward-looking Beall, statements SEC. differ the results Pam non-GAAP management the may with Chairman Gary the President; cause X. statements Chief question-and-answer reminder We during to what Slide members follows. included Harbor the to read that we On could well expect are that and today. team. and that as session It's as are Hennigan, on materially Financial Officer, we the results a actual differ

remarks. Heminger turn will the I opening Now, to call Gary for over

Gary Heminger

Thanks, quarter Kristina. second pleased again with you results our Good $XXX delivered solid MPLX joining thank report million. that to morning EBITDA once of and adjusted call. I'm for

distribution a distributable quarter, and maintain for cash million profile and strong of X.XX of the financial flow with to continue Our times we was adjusted leverage coverage times. $XXX X.X

Logistics. scale large fee closed grade leading our high company to acquisition We and into acquisition simplifies a cash company, midstream Andeavor lot, based successfully us allowing one anchored This commercial of our MBC's public flows. midstream structure diversified creating by opportunities

natural creating impressive Coast. the the advance expected integrated an U.S. from Gulf oil high are and Permian to logistics systems We projects, strategy slate return of gas to also of which crude our progressed

processing the these export well these Coast into the ability Mike operations refineries Gulf market. investments demonstrate of and as downstream growing our later detail our will Permian to projects MPC's call. gathering provide support But on to leverage as projects more growing

strategic our to take initiatives would discuss a Turning moment to X, like I for to Slide MPLX.

to returns. expect on expenditures most we our streamline capital focusing the attractive First,

initiative, Second, we include are working asset potential with optimization MPC divestitures. a which could portfolio on

proceeds plan initiatives Third, best well to high we divestitures the help from reduction. these of be industry value believe MPLX return long in term purposes such any investments one to continue positions midstream use for and projects, We as will the creation. as as debt general platforms for the

call With over the to that, me let Mike. turn

Michael Hennigan

Gary. Thanks,

Following want as up I we these through companies, on. to comments, Gary's progress integrating two there's two elaborate on points

XXXX our billion, for the approximately play spending we ANDX's CapEx program, targeted at MPLX growth growth capital grade $X standalone CapEx for in $XXX First, was high target million. stands alone was XXXX

forward the look combined to we we looking than will less As spend be million. $X.X XXXX, to

the focus be across will on portfolio. the projects combined highest Our return

we on outlook Additionally, our XXXX. for the often EBITDA get question

the this our XXXX with asset portfolio MPC end towards update include an plan better for a at we provide program grade do plans growth the defined decision on the divestitures, optimization, not could to be given time. year, will high Producer of and engagement which

the build plans time customer year just around We strategy expect producer gathering we build to through work conviction and growth and or as processing XXXX. in key our continue out for

expectation the to we approximately XXXX, we our the to addition, In capital and spend XX% business. in capital of majority capital to of side XXXX, is investments LNS directed the is that ratio In towards of move XXXX the move the LNS continue to our business. in our XX/XX business. GMP our In

natural crude Slide oil our strategies we system and create Permian highlight Gulf the progress integrated Moving to the to from logistics gas the on Coast. X,

construction feet joint forward secured of investment after natural final transportation This sufficient with the and second we During that announced decision natural Texas. Waha, having per sea Texas agreements design firm cubic venture gas we project in gas miles shippers. XX X the pipeline move approximately south XXX for has Dulce been day area quarter, Whistler designed Agua of from a approximately of the reached to pipeline to billion to inch transport

be a Permian plants pipeline in upstream Basin, mile Whistler as connections from the connections sourced approximate basin to the the counties. XX pipeline direct to in of direct Loving, Culberson, lateral Blanca Reeves, will feet including multiple The the Winkler, an the to inch Basin, as for connection well heart Deployed XX Midland Delaware the Agua crosses portions pipeline cubic of including Agua and Ward pipeline. billion X.X per day Pecos, Blanca through

to Whistler expect service of in be the in XXXX. We third quarter

have in Wink-to-Webster will Permian very Bay pipeline to oil a project at in announced destination this participation in highly definitive very Midland, the The inch planned targeted have Wink the ownership all made be service signed our expect project disclose will point, agreements. recently committed market, NPC's pipeline disclosure points and the partners several including Also has with project in strong The in There a return. to participation are with partners and be we that occur but crude shortly. to Galveston Texas. Wink-to-Webster equity is this chosen our the Houston during we early in project that origination is project their XX% XXXX. of the diameter in points combination quarter, not a and Wink-to-Webster refinery, project XX the other the

gain stands remain see achieving we called of for our we an near in threshold NGLs the project At Bellevue hope only support. and to that forward the for time, to pipeline disciplined continues future. to when the return BANGL same capable alternative set, which provide the we move Finally, we update NGO

of of product in versus million weather primarily River-to-Patoka increase by over million throughput impacts Midwest. storage X% an quarter for day, pipeline systems X.X second operational well last quarter year-over-year day the highlights. a quarter, average was movements. increase quarter second This barrels higher Terminal provides by The partially the the and X was logistics increase in higher driven year. throughput was as on related as X% per same Wood barrels Total and the the offset pipeline volumes throughput Slide X.X per XXXX. Ozark

barrels per billion by second increased representing over last quarter X same provides versus a day, X.X new processing XX% volume growth the to feet XX% last billion second per the quarter, bring in XX% of over year. quarter second placed We the day and quarter the volumes in in Creek significant the feet which second of the year per day. condition average fourth Harmon highlights. plants feet increase XXXX. will service XXX,XXX primarily capacity Fractionated day, complexes, representing Gather our billion volumes XX XX Slide had gathering driven process increase both quarter in and XXXX. XXXX. to cubic to vines quarter of and This Quarterly cubic fourth X.X cubic a total the plan complex the this Sherwood X.X at Sherwood plants per averaged quarter

to cover now our the to over highlights. I'll turn Pam financial call

Pamela Beall

Mike. Thanks,

We while Turning Slide adjusted was X. processing adjusted $XXX for our gathering the on segment financial of highlights segment to million adjusted contributed quarter. $XXX and second EBITDA reported EBITDA. the $XXX EBITDA in and million, logistics storage Total million

million the will generated flow, for unitholders. For and the we return we $XXX of distributable our to MPLX $XXX million quarter cash quarter,

resulted coverage close post adjusted account, resulted $XXX to and into have distribution of in retained billion programs. distributable it the taking for of the retain X.XX $XXX XXXX flow. capital cash investment unitholders distributions ANDX This cash million flow transaction. $X.X to of months cash times nearly help up Likewise, declared Before flow convert provided of first six distributable millions in distributable our fund

million. EBITDA the from to second second quarter on adjusted Since in quarter $XX of by XXXX. Slide X XXXX increased year EBITDA bridge our about adjusted The primarily the and volumes, days. shows Ozark higher the logistics prior the pipeline for precautionary we change million of quarter, in five driven The partially and of storage segment by product increase offset a shutdown $XX crude was by oil

of expenses. project work were at $XX into higher second and first a On logistics related are more segment warmer quarter, second than by the results in the refineries. related storage million quarter months, sequential to basis, Midwest logistics $XX planned impacted refining in MPC's the Historically, expenses project due segments higher quarter processing estimated particularly in driven was million weighted lower year. impact, year average These to million EBITDA strong prices benefits NGL volumes and growth adjusted an year. were placed primarily process $XX offset over last fraction over increase gathering assets by due service partially in aided from by new and gathered, the

change the average every in would approximately NGL XX weighted $X.XX estimate in impact. that annual prices result We million

was gallon. Our based price to year $X.XX plan weighted for the recently a the $X.XX and been gallon, has average on $X.XX per

of about think the sensitivity modeling keep earning this you rest the year, in for mind. As please

NGO pipeline. processing one precautionary million gathering impacted Sequentially, results for have associated a and Javelina million segment maintenance roughly the second a planned $XX downtime on Marcellus approximately by week, were facility $X and at with quarter

MPC. the X.X of distributable up unitholders XX ANDX the Slide times billion borrowing closed credit of billion and ANDX term of X.XX ANDX financial X.XX balance under convert totaling were XXXX. to information. on including our In paid bank capacity revolver, XX increase sheet upon credit approximately to ended with of $X.X cash MPLX or to July connection provides supported closing and and with from include to amended company's billion, revolving borrowing a and flow revolving not leverage credit facility. repaid acquisition, and times the the X.X X which revolving with billion transaction. summary X.X does and closing extended the coverage, of highlights flow available post distributions ANDX distributable of borrowings X.X capacity the The the the key with existing the terminated restated intercompany's available the our in facility select cash billion liquidity, quarter billion facilities facility We on we we Adjusted

to loan Additionally, billion $X our X.X we existing with agreement MPC intercompany billion. upsize

These primarily as to services anticipate to million result the during associated approximately deal. the legal for and are with advisory forward transaction X fees ANDX. with additional a Looking third our We costs of be quarter. costs merger incurred of related

adopt of will In related addition, accounting to company and projects. capitalization combined in maintenance the MPLX major of policies the planned new MPC

XXXX this XX reduction approximately capital. to remainder additional million expense of per maintenance We an to offsetting in expect the result for quarter of with

our by cash cash to fee investing to long to profile. returns term earnings while enhance service us strong agreements, the flow term long our in provide based Our underpinned business allows unitholders

the turn for over me questions. to let Now, back Kristina call

Kristina Kazarian

Pam. Thanks,

plus question follow-up. yourself one we As ask we open questions, the limit for one you that to call

You now for time additional may will as Operator? questions. questions open permits. with that, to And the be call prompt we

Operator

Thank you.

begin Jeremy [Operator Tonet from Morgan. question from First We today Instructions] the JP will is session. now question-and-answer

Jeremy Tonet

morning. good Hi,

or delays Curious Just back level Sherwood further I want to agreements to or contractually any for guess have they just. start back push ability here how push work the if plant with there little the at bit competence here financial are And guarantees how this with just that the your Antero and work? a off the what's being hope timeline?

Michael Hennigan

Jeremy, XX mainly bit and quarter. Sherwood within we're is Antero Mike. a gas. cooperatively We're this handle Sherwood but to So It because are the to X is that's through startup fourth working the in little XX terrific able all running rates and XX delayed

as little But a on, So we're are to costs. to cooperatively what soon doing. operating we're a as that's we bit those delaying reduce put in anticipating position

to than XX But of it's So an we and the towards anything. XX starting be end year. in more are them optimization of the sync up with

Jeremy Tonet

there's with That's projects? can might Apollo, with have the But those us update in just if and you it And to in I Swordfish regards the helpful. Thanks. remarks missed on presentation. or anything

Michael Hennigan

FID. for get going one we we're us capital not deploy Swordfish, not enough things to commitments mean a and on one maintain have return. I the first to of is believe going we Yeah, forward we're we on to the discipline high unless go did that capital receive

we Swordfish know, the on bit little at So you put point, back a burner. this

going plants As now far it our is you growth. of Preakness as as only look the into Apollo in shown XXXX. in kind our if is of Permian moved through far Apollo, XXXX. as front we've materials,

will Preakness be Apollo little the starting has part, bit. So of and early half moved up first in a XXXX back

around move but as depending you the plants, can on little those the you Permian growth know, producer So very as far processing a bullish see profiles, bit. timings on

Jeremy Tonet

for me. it That’s Thank Great. you.

Michael Hennigan

You’re welcome.

Operator

from And next Shneur you. Gershuni UBS. from question Thank is our

Shneur Gershuni

and Hi, good at just start off you appreciate morning, everyone. to so a literally chance that little Maybe forth. the a books merger bit getting and look just the totally the fact to here, closed

with you like us? that the out like, do no what in later And sense so share there of of you’re you’re kind of be MPLX Is there’s guidance a kind waiting you and floor putting that a legacy sort would till year. for have of of sensitivity But XXXX can earnings XXXX? some for of the sort kind there obviously,

Michael Hennigan

is, Mike. don’t that share this Shneur, at We point. have willing we’re to this floor a

we I’ll for plan As mentioned you just tell I highlight billion our closed you the – to about that looking deal. focuses first portfolio. a such at have be just AMDX it, we is first better said million you XXXX. X on prepared position our the with the the I get at program and at remarks, in high capital level. even our the goal the MPLX is And and level, return going the ourselves that less focus $XXX to spend first portfolio six an combined our two in grading that, than

going the that’s concentrate to So we’re immediate first thing on. that

that aware on about And Northeast looks volumes, live XXXX of fits as saying in like continue real your iterate the producers going XXXX To our people very particularly theme Northeast. are asked XXXX. what that’s overall. know strategy, I et this coming the kind of look, volumes question or a I far into point have We within Many as to keep cash in flow. phenomenon we’re that cetera. that the of volumes to

and in As some to the accomplish. the the we’re of fits capital little and that haul to us long up generating The in can LNS our other cash cash deploy flow, investing business these that produces portfolio in looking high Northeast capital projects, be less we Northeast of really or we’re position live the will in a position in the still capital puts or generator and Permian across pipelines, side say where good within free other deploy about fact a so what feel in return areas, that there. We a growth diversify trying portfolio. the more the cash be flow

Shneur Gershuni

do you capital mentioned if In order of you there the can eight Are basis, potentially not, able thinking? rank that bit magnitude outside to CapEx CapEx right, of we you to prepared color, multiple you terms if Permian think guess the you’re the operating which Marcellus the like that, in and if basins that the I of it you like further. the maybe basins terms think type I is discuss that remarks, of of your priorities sales. footprint a math could you’re reduce your of Okay. a in outside looking my of unpack I other a the Appreciate sort asset Mike, – want looks reduction way opportunities? of basins through in of And there’s spend little what

Michael Hennigan

color can’t the I want going throughout we’re be point as we this about program would I some don’t opportunistic. the producers remainder yet the Shneur. areas. of capital is like. because look we’ve Yes, there do very at give with those this and as open you in that looks a emphasis. lot what some Permian where concentration we’re basins eight and than of currently Northeast of strategically, is, we’re in to said, Other that, been to XXXX to our you our of really we year, work basins going out we in believe to know put just What concentrate

We have balance a sheet. good

assets into either financial proceeds business. some debt divest projects our we We’re see because ideas as that. take have an sense large of we us anything not doing mix and to at and or for and evaluate other like reduce the side asset it as the return are them or going we at have portfolio use for to or on we to the what selling opportunity a that this some to deploy look a point. want far makes And take high those But other

focus. So first that’s of kind our

though to that’s get start closed, going out, we’re to I we just said you it what well think after. very

to capital. going at the We’re look

We’re look the going at asset to base.

optimizing and try to going up that and on We’re our move the optimize if portfolio. allows market free some cash forward

Shneur Gershuni

So it with reduction And respect, mentioned, that In purposes. can definitely optimization a sense. had general third as proceeds, perfect mentioned if debt sneak in and makes initiatives you’d you just the towards corporate question. that the tells, I

it, as sell I decline out you if of flowing, to take asset is think would as were part sort your coverage if amount that’s units. about unless buybacks an the curious a Just of you because well, effectively of equation corresponding too, cash

if of things coverage and neutral? keep wondering was thought that Just try the to process part

Michael Hennigan

absolutely, the part Yeah, Shneur. of definitely process. It’s

on to at approaches that available levers will you the debt And look know the will we at. We as all mention have reductions you I the look a can us. but table, head it. financial have balance buybacks the the capitals are it on one gamut open the be that Redeploying of we unit we hit on to table, table, those as didn’t levers us. all on just what

Shneur Gershuni

Perfect. much, Really guys. Thank color very today. you appreciate the

Michael Hennigan

welcome. You’re

Operator

you. Thank

Our from Dounis next Spiro Credit question is from Suisse.

Spiro Dounis

sounds But any Hi, hear good that’s off return. say you well should everyone. progressing right unless also get here the here progress start that; pretty you projects we could, morning, with BANGL Maybe soon. won’t you you like something heard

color just in a being out on maybe customers system? on, guess I the that potential what’s hammered just context, you with little So probably still there

Michael Hennigan

still on discipline you construction good to looks going all really re-evaluating like said, as very market patterns. fourth very about. the far like as to optimistic let and and over growth moving signed Spiro, second are and pipeline on all that we’ve a four talking last up you back been at been projects working give the me and couple deals color. the us a the is BANGL just now little long we’re Feel maintaining Capline executed Whistler we’re Yes, strongly give phase. returns. But Wink-to-Webster, quarters. projects We’ve what for about about we’re more level those that haul that

there, through details. continuing some So the to we’re we’re but to get work of still optimistic we’re going

Still lot think working cost partners area, build that area makes with. project is define estimates, that go we’re Sweeney partners sense. alternative that We hub we’ll to the of project Belvieu, continue forward. that with the we’re an the the a to to we a and, in of and believe dealing that that with Mont the out Some could to in working point

Spiro Dounis

just that. here. as then to project And with it it. far Got asset like some Appreciate coordinating sounds the as goes, degree MPC you’re sale it where

it, the you is we And sort are your Should assets. to MPC sort really one, be along to given assets that term if selling assets fronts, would MPC so process? attached look alternatively level then at those lot a you’d extreme drop it with we that then go question is assets my that and of two consider obviously integrated might now? midstream their sale in of with there unload, that should that, And has maybe candidates a that down assume near then sort of of still some more to on

Gary Heminger

is Spiro, this Gary.

best what at to what’s I way to think the to this working and that’s the we’re with we way want don’t look misinterpret, stated optimize. MPC I everybody

not You have question. been absolutely now, we several dropped. ever right were No, ask the assets as Capline has

We these level MPLX coverage and better front of of MPC is new at have basis. to we the some have investing the assets before time and adjust we and in drop kind in end them assets, ensure these these in on in drop

absolutely your And point, second that to right. you’re

overlap them all Some an with of have MPC.

shoulder looking call front run a within are the as that. whether what over people way bring who from way together. those to optimize work drops, high optimize of up not So them we Mike standpoint the is projects, we is have return it’s MPC, to invest to MPLX segment the at working some these just whether the further to at see assets drops MPC to with is or is the in together further you timing we it’s that looking governance best

Spiro Dounis

it. Got

Michael Hennigan

It’s Mike.

model really, tremendous that just a integrated MPLX, to they’re Gary’s just but I which projects Let mentioned in comment under MPC being projects, mean appreciated. me mentioned. the the thing that add Gary also one MLP gets really each sponsored strong value just of part Capline working Wink-to-Webster, coordination MPC with by by and gets has. as Whistler, of I

those benefiting can the of with fact projects. and types MPC that developing So MPLX is from work we

think missed sometimes gets I the that in marketplace.

Spiro Dounis

color. the Thanks, all Appreciate fair. that’s guys. no, Yeah,

Michael Hennigan

welcome. You’re

Operator

Thank you.

Our from Wells next Blum Fargo. is Michael question from

Michael Blum

Thanks.

First questions kind BANGL. of related to

to plans So assume that? FID, the should that effectively you’ve on also, those you So of the of BANGL have BANG? that we if frac are downstream the clarify if some sort investments like BANGL identified that just export does reach go, the not contingent want

Gary Heminger

well. all are Yeah, but have distinct Michael, integrated, it been But they there we've BANGL. three a good point, you separate are pieces, actually calling as very together pieces

pipeline gets is frac, piece the ultimately the frac piece. a So the and export a the separate separate into is

of you know, asked discussions project. also different goes explains, question different that But pretty is I you line product, complex, one our it's natural earlier, Agua partners gas. Dulce we natural have gas was Whistler, fact, in today to you more that think the segments much you it from In Waha, that know, straightforward know, the know,

BANGL involves, know, grade wide you You know, NGOs.

you component butane, thing, it, propane, So to there's et cetera. that know, you gasoline, natural know,

essentially So in there's as there's it. three you as the products, which of to that a a you're know, making, mix pieces the well more point is, much

them think separate. So of as

adding to of the go way the from stream goal that more is to is I a in get like export different so integrate time little wellhead to partners closure. the areas, of that the just the are facility. complexity little and But there which said, to to bit we a it each all Our whole

Michael Blum

you business it business investment long any color is think organic my that And of then LNS growth just kind do on great. the is, Okay, underlying rate provide term. it grow? segment. a would about be that the general growth, And that over excluding just second question Will Will the flat? can meaning we for question question stay capital Should how any the great? decline? Just

Gary Heminger

as there, some and our also have concentrations, tariffs, more business, know, things one you returns. in of so say, fact, we divest assets. of capital deploy do weren't create of our alluding in Obviously, to, know, capital, point and you that value. one much getting one, that look we deploy you. high the tell a the to is point expansion get take is know, in deploy better bolt-on you will where your that capital of to group to Ozark value et crude structural has knows for project you can existing out but And a goal Ozark the the some way example, focus to The for head have capital, assets a that system I'll returns movements, two value, the Number existing we you deploying to it in cetera, where an been number I not not and BD And Yeah, we more of Existing Michael, have, we pieces assets that our rest cetera. et year last lot expand you create bring know, through the then, terrific to that us. area. don't assets us, not only through about of

just assets So Greenfield the assets, know, for we the that's about, all all Greenfield. using LNS talked way bolt-ons, higher utilization, that long LNS existing assets you looking are to that haul the And part then are of pipes system.

Michael Blum

Great. Thank you.

Gary Heminger

You're welcome.

Operator

[Operator Instructions]

Kristina Kazarian

Alright, operator, other are in questions there the queue? any

Operator

No at this further questions time.

Kristina Kazarian

morning, day. you you for MPLX. topics IR take calls. interest be a thank for clarifications today additional and of like questions you our to the available discussed in will on joining great would Thank your Should team any us or have Have your this

Operator

today's conclude does And Thank you. this conference.

may disconnect time. at You this

MPLX (MPLX) 1 Aug 192019 Q2 Earnings call transcript