MPLX - Earnings call transcript Q4 2019

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Operator

Welcome to the MPLX Fourth Quarter 2019 Earnings Call. My name is Sheila and I will be the 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. [Operator Instructions]. conference recorded. this that note is being Please

I Mallamaci. Jim, turn the to Jim call over you will now may begin.

Jim Mallamaci

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

Mike President other management the members CEO; call Beall, Pam the On Hennigan, Chief today of team. are and Financial and Officer,

arrival Kristina of this hosts baby As you is I’m that ago. celebrating today Kazarian the baby doing week-and-a-half know a call. because and Agnes her doing girl, typically Kristina well. Kristina Both are

materially We invite making session you there as reminder SEC. non-GAAP Safe and as with results we cause statements follows. what to It’s we Slide could that that call filings may Harbor question-and-answer forward-looking statements disclaimer expect well included a results Factors that to are the read the X. actual and during differ from the in our differ be today. will the on during Actual

Now I’ll quarter Mike Hennigan highlights. over and to opening remarks for fourth the turn call

Mike Hennigan

joining morning for thank you call. Jim. Good Thanks and our

flow of pleased $X continued of that MPLX delivered cash adjusted EBITDA which excellent billion I'm X.X X.X coverage of times $X.X to and strong and times. distributable with distribution fourth provided billion results report quarter of leverage

capital EBITDA Full-year of billion billion approximately of Andeavor return including was the $X $X.X our Logistics, adjusted the results supporting of to unitholders.

the advancing quarter. Committee work to to Special Board we is an MPC’s its provide of first Midstream Directors during MPC’s board expect and update continue

Gulf projects our and Coast in to slate Permian also of progress high storage We have Corridor. logistics continued the to return

guided a when $X of from approximately $X.X billion Last together. with XXXX quarter, estimate our In addition, target updating we’re growth merger came billion to the ANDX down we the capital again targets.

value project approximately highest long-term of target and returns a to creation. our maximizing high-grade reduction continued XXXX. to This billion $X.X focusing guiding now on portfolio, shows our for commitment We’re the

flow continue the we and our improved in buybacks This to investment, inflection capital is us our be to grow, capital flexibility internal will As and to expected our after and we capital XXXX. for approach cash in investments be continue provide distribution earnings generation free generated allow program both disciplined positive distributions debt from flow allocation cash to reduction. and unit capital entirely or funding of both targeting

to little more In unitholders. XXXX, Slide $X this our of a operating of $X approximately to of Turning our return cash we can X, supports billion billion plan discuss over the flow capital detail.

with cash As a result, program retained capital and debt. we funded growth our

we from years, our to For debt project been have several growth of portfolio and funding cash committed a operating combination flow.

investment our approximately and around we XX% capital leverage growth times, done project coverage so, needs while of portfolio, distribution four debt. around funded historically X.X growth have times. with We’ve attractive healthy our of maintaining of Given grade

strict investment Looking forward, combination of expected continued and to investments positive plan distributions cash discipline. a in continued and expect through is growth of our free through capital This capital high our be we achieved achieve both growth to capital, grading flow XXXX. earnings of net

allocation As long-term enhancing we options, leverage a incremental pursue that or result, flexibility. reduction be we repurchases, creation and our capital opportunities believe to value positioned broadening will unit including

optimization X, highlights of see Slide to portfolio. the related On could further growth you our capital

time, growth XXXX the the at combined that with capital we mentioned the announced billion. capital combination $X portfolio. As following And ANDX to I quarter, of approximately target was first priority our last high-grade

attractive on additional the since capital growth most expenditures further We've focusing opportunities our identified returns. to streamline

growth We’re now billion $X.X capital approximately targeting for for XXXX and approximately of XXXX. billion $X

to element and achieve our capital cash distributions XXXX. targeted are plan reductions on of important you investments the in flow saw these As positive previous excess slide, an after

and Storage emphasize We’ll growth to our Logistics the of continue segment.

strategy of our Our gas on growth U.S. focused Coast. systems crude the the creating capital oil to Gulf and logistics Permian natural integrated advancing from will remain

investments producer a continue And business, will we infrastructure in plans Processing on our customers. of and just-in-time in the basis Gathering our planned evolving to growth support

look Northeast slowing assets to the will positive volume forward, portfolio can in to be of flow, to premier the expect our we we in Permian. allow region continue investments strategic cash which growth in As other our deliver deployed the especially

of we In with our XXXX, progress Terminal completion for significant L&S expansion in Permian Airy segment expect the our along projects. Mt. major our

crude from expect Permian we these the the natural projects we forward of NGL cash look the As our assets. flow and gas, oil, completion to in XXXX, of and pipeline generation

our call over turn me financial and discuss and Now, full-year to to quarter Pam the fourth let results. XXXX operational

Pam Beall

you, Mike. Thank

X per quarter provided with Note reflect X% fourth ANDX the day, part of acquired comparisons increase million pipeline that the Andeavor and October of provides consistent per combination day being segment by the with X.X of of highlights. quarter MPC all throughputs averaged Logistics an of throughput Terminal its barrels versus inclusion fourth averaged quarter XXXX. barrels as Slide XXXX. quarter, business relatively Storage X.X of fourth Total in for million XXXX. the the

in to XXXX. fourth per second volume capacity Bcf half The the with is Whistler day This the the natural During project quarter, commitments. now committed approximately minimum progress. gas pipeline of continued startup is XX% X expected

contractable as equity in of oil MVCs. continues Wink-to-Webster we of planned The XXX% also is joint project crude venture have ownership which committed XX% the capacity and a with the Permian

to early expect in service pipeline system XXXX. be continue to We the

pipeline for Permian NGL And investment we're final Coast a pursuing our Gulf decision to called BANGL. still

our continue for is on in in expect but work decision opportunity XXXX. This late investment projected project this commercial near-term. startup We a and final also the

the Capline St. capable a progressing purge will quarter additional project of operates reversal progressed Louisiana, and completion MPC’s MPLX pipeline MPC’s Canadian per activities Mid-Continent the Garyville which in which and mainline crude direct reversed, the connection Once discounted refinery. are fourth of to Capline the James, with supplying has of plan. to Lastly, be

heavy and service mid-XXXX crude Capline expect service XXXX. to We in in crude begin light

of note and ANDX And Marcellus, in reflect Utica, provided increased processed, of Slide XXXX. segment inclusion combination growth being primarily quarter gathered, comparisons October fractionated quarter that regions. its X Gathering provides Fourth part Bakken and as the driven MPC fourth acquired Processing year-over-year in by all volumes with again businesses by the highlights. business and Andeavor of

been There's in in our of G&P volumes discussion the to Marcellus a business related Basin. the lot

you basis. As very real-time know, producer it activity in these volumes are as difficult making forecast on to dependent region evolve plans the to continue on a particularly producer

increasing and For Utica in XXXX. growth to processed with the volumes show full-year increasing volumes the versus XXXX, full-year volumes increasing our Marcellus of of fractionated gathered continue XX%, XX% and significant XX%, volumes

in still our largest of macro are as growth expect the some environment significantly Despite the challenging Northeast gas, for natural through customers XXXX. hedged we continued

at fourth the quarter, the the our XX processing In along and CX plants service final we Marcellus. placed the in complex with Sherwood two into XX, fractionator

processing Tornado per In million plant incremental day XXX of placed cubic added the addition, into was service processing collectively feet the projects in These capacity. Permian.

turning X. full-year Now on Logistics approximately EBITDA highlights by $X.X to billion fourth with financial and was generated Adjusted our of two-thirds $X.X XXXX approximately was EBITDA and segments. Slide the billion adjusted quarter for Storage the

organic For $X capital and the distributable remainder flow, our unitholders growth supporting the XXXX program. capital to approximately billion cash $X.X we year, the billion our of return supported of of generated

of show driven fourth $XX in from million segment Turning EBITDA XXXX. Slide throughput. Logistics the in we X, part adjusted terminaling by to increased XXXX Storage the of the The on year-over-year quarter fourth to change increased bridge and quarter the

by The commodity past and primarily to Gathering by in lower year, over gathered placed increased offset from and Processing growth processed prices. assets million $XX partially new the strong driven volumes segment service fractionated into

ended On Slide and XX, available of bank liquidity, $XXX approximately and we leverage our year times revolver information. a of facility provide key available We summary financial approximately on highlights million ratio a $X.X the billion of sheet on intercompany balance with X.X with MPC. $X.X billion our select including and

with free investments and by grade forward, to As continue to strategic coverage to return focus. approach maintaining distribution flexibility increase grow capital allow disciplined flow capital long-term investment to an financial we profile. look projects highest expect while credit us This cash we our should a investment allocating

some over concluding me remarks. Mike turn Now, back the let call for to

Mike Hennigan

Pam. Thanks

strong distributions. executed high-grade capital flow and operationally, cash In continued results, XXXX, moving plan, financial to we free after delivered and investments those closer our to capital

executing forward the Special of XXXX, business to conclusion the Midstream we’re As on Committee. looking our begin we plan and MPC focused

Jim. turn me back call let Now to over the

Jim Mallamaci

Thanks Mike.

As a follow-up. for plus one the questions, we may We will call call limit yourself open we question questions for we to ask as now the additional to that With re-prompt you that, questions. open permits. time

Operator

Thank you.

[Operator We begin question-and-answer the will Instructions]. now session.

Charlie with from Morgan. Barber J.P. Our question comes first

Your open. line is

Charlie Barber

of [indiscernible]? level the about like just I wanted that you Can gauge on morning. reduction, looks to trying any talk projects the of drivers have good being to backlog. BANGL may timing sort versus backlog the from XXXX just Hey, to what removed start

Mike Hennigan

of Hi What would you little Charlie, a a this answer. is you Mike. tell long I give bit

and MVC we've projects. had investment a of cetera. want but in have et time, Wink-to-Webster, high always fee-based long-term projects the priority a discipline didn't flow, really same for couple backed Whistler on free to goal been we we getting cash At the pass are think good ROIC opportunities So the us. committed Those are

in you So in. after ANDX BANGL still line continue second. the that the the in And to our is high-grade just program, bottom I'll as portfolio, is a those as continue and a we result of about mentioned, But talk to we put that, particularly merger.

where in where be ROIC knowing and well a on wanted to know indication firm to more and portfolio going the call XXXX. and now risk indication you they're think we a last a be through we're as as to XXXX outlook that at profile, our going given So going felt have as higher some to process as lower future we an early in comfortable we we're of that

put though ourselves which after looking that is The billion. is free we’re driver flow about main distributions, $X cash to excess here in

flow a as free to good our cash feel capital, process Hopefully for can cash unitholders of after amount -- thought we position quickly we you as want to unit return gives buybacks flexibility offer today. still the we in a for a after leverage $X reductions. flow and So overall to distributions that feel there. or we more be significant billion of But

Charlie Barber

I it prioritize leverage to talk on you those the when that? how free Yes, you try does. two to talk unit what about side, flow guess you about do criteria and place and can in repurchases, cash have you reductions

Mike Hennigan

get to we is Well, thing discussion. that the that in important position have most where

So currently, of the look we a where quite prices unit both, where when we look to we're and it see debt evaluate get the there from and we'll standpoint. But going there, also not we're we'll stand at opportunities yet. at

news can time. optimize there as we best good the is we and the at to quickly as what's then that us we'll option So want get for

Operator

Shneur come will from question with next Gershuni Our UBS.

open. is line Your

Aga Zmigrodzka

between swap morning, and Good MPC and a Zmigrodzka asset this review dialing the why today? Shneur for guidance Gershuni. board in MPC is it the released of is no Aga MPLX Does EBITDA as was evaluating part

Mike Hennigan

first, just hear I second far that we're the is question. at part Aga, more cetera. didn’t answering But so as the overall looking et committee structure the of the doing MPLX of as what to

those. have on think been do has it’s we’ve have that. our at the are on second generating conversation to that that talked Oak, And MPC Specifically until about a question. cash, we question your towards they're I Gateway, past, Gray then little Texas progressed nothing a drops didn't you, couple candidates a hear has your but premature Capline position And assets that I of level sit South the in

Pam Beall

producers’ just guidance then Is today, outlook also the why producers our for giving about key not to year EBITDA some basis I'll waiting the the plan we was for so shared have results just the their around are for that the committee. and changing with EBITDA and real-time a It really And that plans their spending we're capital guidance. but process add, mentioned of it's and on not their play-out XXXX. you

Midstream producers we be able well. to will that XXXX the Committee that and think we’ll we’re have time the as to outlook an share in better of you, around probably a what their update So from with also the position for be idea hear

Committee. particularly to to expect provide are Like better our would when growth producers conclude expect insight We a process with and largest continue in Midstream some the we we the I hedged. little Marcellus, into but XXXX the substantially do said

Operator

next with Dounis Suisse. Our comes from Credit question Spiro

Your open. line is

John Mackay

John for Hey, guys, Spiro. it's Mackay on

your can Just this numbers guys if this back little production outlook CapEx. to as a could feel as a the is XXXX at you you let's quick one Do low more? Or say down point, bit go? going flex worsens,

Mike Hennigan

project have as type Yes, I it numbers. is, challenge pretty rolling it's John. good The think a number, biggest a on we to hitting opposed calendar exactly number

that this think is and it's to it a little changing getting why around always rolls we there estimate expecting really be and I it, into firm. approximately as be year of flex around X.X obviously of bit December be pretty going whole we're that's trying at lot a lot. to little anticipate point where don't we’re But I So could at said as but year a this XXXX. progresses end a as bit into not I'm may the that. the the But getting in

John Mackay

and Mike. Thanks. you And potentially to flow positive also thanks factor the context How just being fracs think on do maybe And FID then in right, on spending well? the you about free cash strategic and in in guys how All BANGL XXXX. of review? as the that then that

Mike Hennigan

Sure.

thought still might industrial we of BANGL, hopefully We logic still So pursuing feel We're all the continuing that by short-term, the the very commercial holds. FID on still we’re there be work. now. first good an we in

feeling is good And told we BANGL estimates. capital in about that still people we're our that. continually So

your first So that's the part question. of

remind Second part second part again, what's was was? me the

John Mackay

The change free second positive really -- any cash could featured part is that Or the given can now? something flow Is for after is of review? kind us distributions XXXX? is just that, there of in that after being formal you've chance on focus we guidance

Mike Hennigan

Yes, the announcing obviously out strategic on change mean saying have, that's anything of now, into cash could that flow business the good I John. believe a position that managing review of that be that capital, plans we we're the comfortably ourselves on later. get we we’ll cetera. great we can based free based Right our a have by et plan today, very question, we

we've XXXX a Anything now, right as to based can giving obviously, But at that that gave said, the trying on comes we'll the a deal portfolio. the one committee, update as you out to of firm as for ANDX the some since feel give trying to much have to we're we capital after update like conclusion. set with as you the we we I where that more you driving call. for now been guidance merger last and quick And as outlook well we're

Operator

Instructions]. [Operator

from next Capital. TJ Our RBC Schultz with question comes

is line open. Your

TJ Schultz

there, lower path to hedged to kind changing view you free producers you clear give next understand I level? that morning, free a assumptions a The that flow expect now XXXX. things the as what Hey, flow takeaway the G&P good basis, push get of but that level on you But just in cash could that years producers could to in comfort is sufficiently couple out are real are on CapEx getting your driver. XXXX. Or on the to of a than react that cash pretty differently volumes time as

Mike Hennigan

let now our Processing going Greg give runs a Yes, some going introduction, who I'm to Floerke little Gathering to I'm and comments. give

startup. to step has look planned I all, a of this said first results it's everybody because year-on-year always stair mean you I at would as tell I've these

it’s she Heads, Sherwood not the XX. in And to up XX for customers several and the largest also get environment. sequentially the hard of business. And reported, so Pam we up as macro feel experiencing as started tough So Northeast the a are reported, they're good

number which Utica was The versus XX% XX% and XX% is pretty in is think meaningful year-on-year XXXX, processing, still in in we up fractionation. Marcellus, gathering, XXXX growth

same producer the we slow up their is growth it some as time, view anticipate area. models. our customers expectation in to So at down financial that for in good But move the still

still on the we’re So area. bullish very

we let specific I'll Greg on got operations give the there. comments going a that Now couple

Greg Floerke

-- we're, The think a I in comments. what utilization. the Northeast. seeing quarter; I last good Greg XX% still Northeast we we're over because Mike’s it’s is Floerke, on following story mentioned Yes, Yes, growth on following are

temporarily because drop Sherwood of side. see we online You'll remainder plants filled that brought down plant two and the the up

adjoining Smithburg third on So it we're and online completing that now moving plant on the to bringing planning quarter. site

the a capacity, in by just capacity point So at gas left are hedge fill we we're strong plant, of takeaway our and customer situation. we're residue have incrementally positions. and at in I trying that and do similar we still But a lines look if think you to now where see

good it's been a So really spot.

West We're got up year. we've Tornado this grow and plant to for We year, in our later Texas. turned now our Preakness plant continuing this planned earlier

fill to plants Oklahoma so well. as continue And gradually and we grow volumes Western those in

also are growth. to areas yes, more climb continuing later turning Hopedale corresponding for our or plant the But, to think liquid areas. that Some growth to Fifth rigs Hopedale focus account we're of because still into We're the degree. continue in the year certain in I supportive up

TJ Schultz

XXXX the Does another plant? Permian CapEx Okay. include

Greg Floerke

bring another guidance as but volume continue to we'll here yet not think on, don't continue growth XXXX. We we we're grow see hopeful plan giving, we're continue capital on our to I hope for to to we're giving

Pam Beall

dates additional do Yes, will highlight but processing, we Permian on haven't we be there that. given

some We XXXX, for show we of have we will what be G&P. XXXX, like for L&S X expect that and on Slide coming on XXXX and

will the if that So helpful. as we said look might And be But list before, online. then and a Appendix come in also projects to at expected that they're day would XXX,XXX specific Permian we've processing in very expect when we take the models you our near-term to in the liquids, integrated Coast. a Permian that Bcf that yield from we’re have be the directed barrels capacity building the both a toward Gulf of of will

would coming BANGL dry the the So Whistler, feeding project. and feeding off would of be gas the plants the be liquids

Operator

of comes with Our next question Bank America. from Ujjwal Pradhan

open. line Your is

Jason Fernandez

Fernandez on Ujjwal. good for morning Hi is This everyone. Jason

Mike Hennigan

morning. Good

Jason Fernandez

I traditionally step-down? of ratio the of graded or gotten there, XXXX spend it L&S driver you can high the from last a is might ROIC key G&P there out have discuss little sort the like but there mentioned My consistent bit question just is of quarter was you that the a was dig that the on looks know if deeper CapEx, combination of assets

Mike Hennigan

a from but we Yes, we believe of those. G&P the the didn't were met portion that the like projects L&S well as good there original was plan would reductions that area hurdles some also ROIC in the for

end way Gathering obviously these types et of trying in that Whistler other up profile different put ourselves risk it projects part long-term look in than the earlier is cetera of at contracts And ROIC some and we the to the the MVC projects way said So like of I think and other some we're MVCs the is best risk area. have give high-grade that us of try a also to Wink-to-Webster and profile. Processing best like of

continuum. to that needed last it's a combination. ANDX So we We felt after indication quarter you give some the

we So initial we gave firmer you much and an at feel indication, point, XXXX. for this

to those capital sooner outlook a creates mentioned, opportunities we you high some can except deploy if some believe there or pass to value not at goal would we XXXX, still the returns, lot been as cetera, have then And that's like that unitholders. gotten ours for for think because very we're I et of of time, on Wink-to-Webster in Whistler going that a for

been significant $X free grading a try billion remind we'll that in flow. drive we cash of pretty flow and cash return a capital be we've in operating to number trying high capital of is think everybody of mind, $X a where with to out distributions. billion point and our after But I the of that position And after

Jason Fernandez

variables little leverage you to can Okay, on of we distribution growth into cash into XXXX, very And the XXXX then should great. how target? think that for a flow the last terms in of about is bit, Thanks and my spoken dive hit clarity you’ve but free question other out growth about helpful. there, few

Pam Beall

position Yes, in said I'll we'll a sorry to on, think be wasn't and what just Pam. get of Pam. mic guidance, we in my reiterate don't is it's want And I earlier better this terms

Review and it earlier our much position what respect get on get with end tick-up X.X. cash it we've in guidance mentioned to managing it for of free flow I that we year a process. will getting leverage, be Midstream we four the As that to that we'll outlook Committee of below where and around to better other meaningfully provide at side the expecting said above managing some four But the reported not be times we're times the for -- we once comfortable above, for to is would times the the

us flow, of be lot But to at get to right free whether which to as we returns to the to debt, growing think idea is return a capital use time form a what or interest unitholders, increase of whether or be to the reduce make from point when we buybacks flexibility financial would to to a unitholders. decision our a of of have different cash from seems view the allow

in form So to right credit our continue the the and as of Mike We’ll of managing an to get capital profile. to distributions. what in said, we as we return terms investment of cash leverage lot always the a flow, evaluate capital mix return today grade free is

Operator

comes from Jefferies. with Thank you. And Vikram our question Bagri last

Your is line open.

Vikram Bagri

Good morning apologize I everyone. I wanted if small clarification, it. missed I've and

billion FID wondering yet. is your prior for if of I capital? in reduction $X of But what You've that And it outlook Thank the are so, kind capital BANGL outlook this that I on was you. XXXX part not was assumptions that, And embedded plan? pipeline? of into of was financing to XXXX wondering if capital reached it part

Mike Hennigan

that BANGL our on and it plans mention we plans that of earlier. Yes, in our is did FID capital project this is point. still part are I Vikram, at and pursuing still

and guidance in X.X of We XXXX individual itself the specifically X.X the is on haven't the project part in it given XXXX. other than

Operator

you. closing call Mr. Thank Jim for turn back will I the Mallamaci now to remarks.

Jim Mallamaci

of our joining be to calls. have take your thank discussed us in you the questions additional for would you or your members team today. And interest on this available like clarification will topics Should any Thank morning; MPLX. of for you

Operator

does conference. for participating. Thank This you today's conclude you. Thank

time. may You disconnect at this

MPLX (MPLX) 29 Jan 202019 Q4 Earnings call transcript