MPLX - Earnings call transcript Q3 2021

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Operator

Welcome to the MPLX Third Quarter 2021 Earnings Call. My name is Ivy, and I will be your operator for today's call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session. [Operator Instructions]. conference recorded. this that note is being Please I Kazarian. turn the to Kristina call over will now may you Kristina, begin.

Kristina Kazarian

accompany be and third mplx.com, conference that quarter morning under XXXX call Good welcome earnings call. to the Investor The website on our found the tab. MPLX this at can slides

during the Hennigan, Harbor you other making included materially disclaimer session call me from the question-and-answer as members our in there we the non-GAAP Joining Mike results the that that differ executive expect we on statements to John results actual It's CEO; today. well team. that call the and Factors With the today as may during turn call with invite read forward-looking that, of Safe what I'll the and filings over Quaid, could and are We X. are reminder follows. SEC. Slide today Chairman CFO; Mike. differ on the statements and to a be cause Actual will to

Mike Hennigan

Good XXX XXX Kristina. repurchases. of Earlier you for for EBITDA adjusted $X.X and morning, distributions, in million quarter thank unit call. of reported we $XXX through of and the total today capital billion million joining return of million and our everyone Thanks,

Looking us a a to at our flow. number allow year-to-date have line generate cash to results, of factors very strong

through include cash repurchases NGL on solid result investors proceeds from $X requirements. and current to this These and with while over of We believe spending, asset unit prices million the have billion. our of some increase confidence incremental immediately along distribution We've benefit to distribution $XXX year. and deployment and in special we others year-to-date allow cash X.X% is for million flow repurchases. amount above business recognize performance, reflecting one distribution We third increased to of our spending about and billion strong prefer unitholders unit have the of available of cost Special strong after capital our capital business. the distribution this just $X.XX return for several amount, flow from to unitholders repurchases of in benefited efforts. amount partnerships unit based The capital, prefer XXX returned quarter quarters way tailwinds reduction the capital distribution return in lower today, a all employing increased cash combined an optimization announced distribution efforts

be unitholders repurchases. a We return also efficient capital unit more way can versus believe that to distributions tax

billion distributions For top XXXX, we $X.X of have on unit to repurchases. of of XXX unitholders million now total of announced a

to operations, storage with in Moving this business announcement portfolio efforts which a our our Alaskan include could logistics are updates, morning strategic sale. we're progress that pursuing making we optimization for alternatives our and

The from XXXX. backed long-term to incremental to system of day growth the which the is minimum natural has gas to to with Gas transportation feet commitments. provide minimum crude, pipeline NGL service Permian as volume Coast basin. with Gulf its by in pipeline related We also throughout and XX% expect we and This we it Webster XXXX. a capacity year. will Basin. in pipeline placed The also to on projects pipeline Permian lower return our interest activity expect volume Whistler other volumes commitments ownership our up continue Last announced with billion Whistler and X cubic and the the we per Natural ramp ownership capacity a transport advanced focus in XXX% the to remainder committed the was the key approximately quarter, through continue interest service play in pipeline Consistent have in long-term of risk, MPLX continues through XX% gas we segments to markets this of to increase Wink projects which natural crude contractual will

provide the takeaway from the NGL of day was per Permian service which to service long-haul will XXX,XXX placed barrels solution, October. in Finally, in NGL Sweeney, Texas,

opportunities pursue value NGL chains our gas support fuels. of base business, grow expansion strategic opportunities continue natural of expansion integrated to in our We including in and regions to liquid MPCs renewable and and certain

We where our to can also are that growth with other and our evaluate competitive continue we our leverage are on through focused of technologies advantage energy expertise asset and opportunities number footprint. a low carbon complementary especially those

facilities focus last climate of These along executing a scale capital our Slide safely XX year growth of area. assuring the the efficiently drive spending and we is for on MPC that this among MPLX per Shifting to and could and supporting expect quarter, 'XX. store long-term identifying component to we Energy reports in X, than a to help capture company publication highlight carbon growth in about return with projects of deployment social and in industrial environmental, discussed tons our fuel be reliable and the in our supplies example, Overall, XXXX XXXX. and aspects million collective we COX approximately MPLX industrial large million energy with by our 'XX of governance Houston efforts diverse to high companies further Working For is continue regulators higher the to decarbonize business. capture sustainability region critical and Sustainable metric future. by for rich tons and storage XXX metric of

do optimizing from transparency website, guest while monitoring receivers and strong pneumatic natural valves, and MPLX to while XXXX setting in on energy through emissions technologies an intensity well and we leading rod positions short, future. us all the to energy on plan targets, these our for and In disclosure tangible targets energy achieve to our to diverse we using methane products and On by needs our carbon the driven lowering operations are creates replacing position lead of pipeline replacing we future the how published sustainable space innovative to highlights recently improving our continue results as robust focus control we that in as launchers our from and We on for have it. to deliver pathways, conserving this programs, in believe sustainability focused resources, challenge Our is implementing compressor energy ourselves and our sustainable investing of maintenance targets of shared stakeholders. reduction packing, value minimizing meeting the such vending. today outdoor efficiency

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

John Quaid

XX% morning, segment. quarter XXXX adjusted increased L&S and XXXX. outlines comparing EBITDA and the operational third XX% financial up Thanks, for $XX Slide pandemic. million, to the were highlights third Mike, as and rates. rebounded of good up marine logistics are transportation and terminal these offset storage volumes by The industry of segment were volumes throughputs the lower somewhat effects everyone. Pipeline X benefits higher our year-over-year, the quarter performance from by

gathering to Moving and third its by million, segment segment, X Slide largely XXXX, increased higher quarter on provides by performance and our NGL financial quarter $XX G&P highlights. to third processing prices. comparing driven XXXX operational adjusted EBITDA

For quarter the for gallon, third the per $X.XX quarter, gallon year. NGL last the prices averaged third per double more of $X.XX average than

results. producers X% $X.XX worth and volumes free third relative Overall, prices, roughly processing were where X% volumes year. As change gathering volumes gas is we were of in annual natural volumes million basket down over quarter in NGL our and while different to market In to $XX In a up on continue operate, year-over-year, roughly their higher response X%, growth. balance we flow decreased the Across fractionated the are each fractionated and cash process consistent X%. despite the volume last levels gathered prioritizing NGL increased and every volumes current focus strengthening of are the Marcellus, reminder, northeast, conditions. activity sheets seeing to basins the to

capacity takeaway constraints have limit production. Additionally, continued to

are and the we in activity volume and However, growth the increased seeing Bakken. in Permian

adjusted quarter the to was million increase X% Moving Slide of discussed highlights prior paid the to held earlier, in cashflow XXX discussed year the third with X.X public. from the distributed units I total our XXX repurchases almost was earlier. billion EBITDA on And We million common up prior Mike financial XX% billion, returned year. from reasons distributions of X.X XXX and an of for or million by unitholders X,

had available $X the As under billion authorization. current we about remaining of XXX million XX, repurchase September

effects The over of coverage adjusted second the quarter, per $X.XXX in per of November excluding X.X% today, quarterly a distribution. distribution November discussed declared ratio common XXXX distribution Mike amount the distribution on cash will of as we quarter a common our amount special unit, for Based unitholders was XX, be distribution confidence $X.XX unit increased third base third distribution amount X.XXx. The the XX. to and of we paid common distribution of the common special unit. the As the record a for the business, $X.XXX distribution by base on including per of quarter, amount

we to compared XXXX. stated our has reduction costs annual last cost operating resulted in when As our structural on a $XXX lowering in million to commitment our our call, structure

run we million experienced forward, increased year and to these do in currently higher timing in fourth the in project compared expenses maintenance approximately quarterly expected costs of related an of half in quarter. compared the the project for half rate Looking results of quarter, to quarter second completion certain first segment expenses affect fourth expect estimated the we on up We some quarter to as Last as expenses in XX We based the higher third quarter. of the increase our the related L&S project expect to year. in third XX of and million the our of results work.

lowering to the XXX the expected XXXX of guidance Lastly, capital year, million additional of maintenance we with and by approach an our end spending down million, are XXX as for we million year. growth the about capital XXX for

higher for the spending spending compared be capital million. total do we to about three of first fourth the quarter rate the as and reduced $XXX in expected year. is our Our capital anticipate for to run With spending a quarters XXXX XXXX forecast, investments capital

in Looking likely forward, to require which greater continue as growth opportunities in spending evolution, than investments XXXX. XXXX we well to as opportunities energy in core our business, and capital is pursue

leverage on be spending and ratio balance We ended guidance financial call, call. of year's not a quarter's on provides plan a summary billion X.Xx. debt share key information. under the of We today's with next and commenting XXXX just sheet on Slide total capital quarter we of will for will $XX next X

outstanding the XX During the loan billion and have due rate billion We with September senior our X.X agreement. MPC. with currently intercompany floating intercompany X loan available liquidity cash including redeemed our we on notes quarter

commitment incremental depending Our closing, conditions intent with and capital business given market timing other on a for cash to to expect the current strict borrowings opportunity grow our strong these refinance we continue our return flexibility business and unitholders. future capital sometime financial in discipline is flow, generate the of providing to conditions. to while to structure, In also and and invest enhancing to low-cost the

Now let to turn over the back Kristina. call me

Kristina Kazarian

John. Thanks,

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

Operator

[Operator is Instructions] Our Brian come with Reynolds you. question Thank first UBS. to going from

Brian Reynolds

My above special allocation Thanks. can the the distribution what in first of given similar where is faster as all a XXXX, and Should capital limitations the around capital in headed view Given have we of see we is seen of process. situation leverage is ADB return we question to curious thought where capital headed? versus of kind return buybacks leverage XXXX? method

Mike Hennigan

Mike. is This Brian. Thanks,

this give of more with you why me give did bit came out capital the this return we everybody we answer. the Hopefully quarter. that Let stack winded a long color will little

an paramount. our is grade sheet all, that believe high So, of investment to first our we capital level, The is, at of to and commitment our we're balance way going take think care we rating assets. still of a allocation

We're this distribution also for which priority. a distribution buybacks, many, we cash and for to that out We've Currently, that and which second we're works a here. high distribution running just as said We available base flows, for stable I'll be others despite a some base, that about that. time start done debt comfortable payout comfortable. amount of special X.Xx. want So sustaining around run capital debt, around we're in quarters have very talk a then quite that many, going get have the John little and leverage a reduction. we're about once It high talked four below that additional cut, in many is stack never But point We ratio ratio then we some base for with We'll we we're could to first that, the called have an amount, a And troubles through I a we've we deployment. have pretty little had times into. that And capital increase a can that us. quarter. capital. growth we'd bit distribution. of

do buy that dynamic cash I'd in terrific in a So say to available think the balance several our decision sheet we like now units to way quarters guys make And all unitholders continued your half, and distribution depending the generated market beyond sense trying pace on shape that the while needs, sustaining last the what we as hopefully, continuing it's something for has and lot deployment over capital have beyond as the view that flows, conditions, business lot in coming that would immediately we've pandemic our current takeaway available the capital cash just this a is of it. capital, amount year And generating for our to that a market we it's as us a back seen is we well going we And have have row. needs deployment. our that is and an to cash. distribution we're stable with We've point, well. been all growth and amount, for that of and now special benefit environment. was that from been we've we're needs and business, Brian, and unitholders a for see Obviously, the you quarter-to-quarter. a in the out through But

So we're we've distribution bit our by doing X.X% also up base as of a And both. bumped well. little

think want market time going those we've the we're to best conditions, is, on needs, takeaway a into position achieved. I of forward, for is and decision be all in to the of about come it'll the which all that of feeling based be flexibility deployment, factors what guess So And play business but like dynamic unitholders. biggest a at our we financial I'd you

Brian Reynolds

Great, for helpful. color thanks all that really

wondering it additional perspective. some segments For up, the an doesn't potential give organization business color just was from my across revenue a uplift follow like could those Thanks. PPI L&S spread generation with from How and see around, if the can and you GMP? impacts across

Mike Hennigan

Yes, to Tim Brian, whole you background PPI situation. give I'm some going let on that

Tim Aydt

my here. mask and for the Aydt thanks Tim question. is This Take off

it's purpose revenue to index is on the bottom true inflationary it's assets, regulated The While this incur understand important to there the that offset direct in higher not that really an during increase the these we the FERC that would that think index is whole a periods. I of to increase costs is through flow line.

line as for FERC a historically rates what to pipelines, So means is with these that we've are in allowed by higher costs. FERC cover adjusted

some pipelines also regulated escalators assets, they non-FERC costs. our of most inflationary in and Now, help have to offset storage built these of

on based are CPI not and always these Now, PPI.

Sometimes they're adjustments. rate flat

reference, from of our only assets. and would is EBITDA those for generated say storage. So FERC the on a I regulated about logistics that's background a bit of little but third

of a lot really rate adjustments, of flat it's mix things, different So cetera. PPI et a

Operator

you. Thank

Our question Goldman comes John Mackay next Sachs. from from

John Mackay

follow I ask of special. a know you're get do couple need ups but one on to going to the I these

move of curious, Just we this you something that your that -- ratably of earlier see And the it about of this might can think the around, the future. we kind clarify quarter. still if could just comments is size to special kind but in

necessarily Thanks. So a this isn't one-off.

Mike Hennigan

that thanks John, for question.

continue We to up, That's I going take a plan should bringing point an it trying you're flow in distribution to the say the this think important is don't as to conscious to was a question financial to be to So, what that up. ebb one-off. flexibility. dynamic additional follow going to buybacks, situation, a on previous use. will I want that little or is, you you and amounts, whether bit happening we in what's And of term call be business. have special also very whatever We're

As than little for a normally remarks, this lighter we the our we prepared think, would this mentioned, is business. capital year in

least is, for a going but than capital trying little higher this on So where you, a bit next to tell our quarter, to this where a of lot at quarter little we'll expectation are be quarter, for reasons. give it's guidance more we we're

timing, of we've Some that its discipline employed. capital its some of been

of and hopefully are, the conditions and business to look variabilities, that to there's to should and quarter So that and going much evaluate return you've earnings, each as business, downs return a heard in try we're gets this me continue, past, important has situation the we in at we're a to capital determination for I ups this the on parts guess growth believer point and of is the emphasize a everybody and a trying what vehicle where market huge that, best lot commodity is this needs there's say to growing I I'm a and that, business add going this the continue us. very in make that every and the capital. examine two to is a I'm believe our

So us. want on both lost that of of emphasis very to get important we're return this I whole and of of area And capital. impacts trying are don't that's those. But both the of capital maximize, to an return to in return

we're we're We'll did going to comes incremental continue going that. it to whether how cash to flows that adjustment, to that which generating. continue evaluate much look get our to We'll quarter. return when So, we're look of, at this we base, an should at evaluate

As been from lot remarks, strong John mentioned, a of a perspectives. year, prepared his it's in

a the to we fourth, progress. of So quarters. we've more of we without flow billion expect cash over generated that $X top as standpoint, have to on guidance Obviously, little from that, three through

XXX to of strong an well. been that thought We're as cash So a immediate to returned program to to have engage the as continue repurchases. we was We've unit going it's well. But flow in very appropriate it year. unitholders return

John Quaid

to Mike's aligned going some were some comments number look to that, us have of of that what items things as the again, this year those understand like wanted just future. emphasize take we're in there for of I look kind right. There well, a and are to

generating, of approach flow of when again, capital incremental So are market conditions But broader kind at what dependent certainly of to be it's we're kind time, cetera. the that'll a return on, what the et available. cash

continue where, talking we'll something same not having in some we there at. we're certainly are. quarters quarters about the So, conversation at be to may look look But other where

John Mackay

My specific great. That's kind taking Mike. makes how XXXX is, guidance essentially come it not for here, going start CapEx how of to being about and far basis 'XX, know, 'XX it's given higher, it? think down? I to prefunding just Thank that say relative you, Okay. a with just to fair think number. might cash follow has trying to CapEx sense not up it be of Would given dramatically to but while that, giving a you're you're be larger kind not funding be assumption higher 'XX, than this

John Quaid

answered going Yes. sure next with your certainly, you make is call. comment. trying understand But for might it to quarters on be the No, last higher number John, you year. next have next guys have year Right. We'll guidance to

some we XXX into growth quarter and driven of take as to kind about maintenance, XXX the applies maintenance. timing that's gave of about for year, this that in million on the XXX growth of by roll next the XX right, Again, and guidance of fourth year. XXX we projects, you If for of

because a this taking next share but numbers -- stricter addition certainly happened us of really around in not look call much to we'll higher, on part year, So, quarter's what those to later were that would just we things out have the year. had were of projects that We into of coming deferred COVID kind as next discipline. some and in capital year pushed

higher for capital and next looking that again, we'll about talk next quarter's call. year So on

Operator

you. Thank

comes Fargo. question next Our from Blum Wells from Michael

Michael Blum

you comes everyone. the know you pipeline just in anything think shareholders? to that perspective, change to you're a I being GMP or The service? into get region do constrained will to that there's little Wondering business. a with producers Thanks. your if are Good producers? takeaway return do hearing take more from in the cash away dynamic the when going at want mentioned continue to about morning, talk the little from Valley And northeast, all Mountain activity capital you I the a drilling change? think

Greg Floerke

high this mode terms residue free drilling been growth. levels potential producers still in Floerke. available, and as takeaway there and positive And both utilization, and I capacity to volume. processing takeaway been more drilling maintenance the Greg Michael, becomes increase cash fairly pipe. opportunity that there's as think constraints capacity in is Yes, mode. operated have is that for gas there The in of of but is is there flow tight, we processing Certainly pipeline

that The increased our that increase in I online capacity up as will drive will cracker and gas we is recovery Pennsylvania mention from mid the will to other thing utilization would we that of North come next deethanizer also scheduled of [shale] the plant free residue well. [ph] is lines. And year, of ethane

things could the so supportive gas prices NGL production, those obviously we're gas decide that's But clearly prices what more and -- of So to are production. do. to producers open rich drive

Michael Blum

Thanks. Appreciate that.

some assets, of change higher ongoing of Staying desire few the any of to you've your you're on moving interest in months, there. seeing question. non-core an I last commodities GMP divest I'm maybe had know if Second in in light -- GMC, sort Thanks. much wondering

Mike Hennigan

think happy overall not. have plan in maintain on this we ask core term we many is the activity anything, to narrowing. same But that Michael, would that calls of the are the we has need with assets I to could then of time, very are. too mode, transaction horizon, in. and are in have where type point. free We're right place, still we on that use Nothing front are philosophy has eight throughout that little tell basins that maybe an at for be but we're the now assets my us consider. still they But of a our ask there's you wide we're there's we're said also consider where bid stay the to interested, occur been, we I renewed comfortable all assets cash. bid have the prices of continue commodity where And that mode very generate interest, our the to burner. all that at the a I've been don't that strategic the in we some assets and we with if a versus bit

still we have I portfolio happy overall, So but But think have, with the long-term we're the do. it's situation not we the we'd something like situation to the arises. for to optimize if that

Operator

you. Thank

Theresa comes Our ahead. question next from go Chen. Please

Theresa Chen

and I wanted to quarter, the understanding to ask about we're fourth another bump cadence actually going see quarter-over-quarter cost that expenses.

the should to in Or how we of run that expect normalize? should some that? think we going Just XXXX, rate to about quarterly

John Quaid

earlier the we definitely Theresa. year, it Yes, is happens similar lumpy, how kind which flag year over trying maintenance right, the as that some of to why morning, Good It’s a and of that's little John. that were capital, our in can be well. bit to

So in run definitely that level forward. higher but going wouldn't that be we'd QX, that rate on imply a

Theresa Chen

alternatives MPLS, contribution the And EBITDA that assets assets both generate announcement Can Kenai, at us the how to the remind Understood. currently? partnership. primary you seeking logistics for and in related of the strategic for actually logistics much

John Quaid

a not disclosed. number it's Actually, Theresa, we've

Operator

Thank you.

Keith from Our next comes question Wolfe from Research. Stanley

Keith Stanley

morning. good Hi,

Whistler add are the do that Permian? First, that the there guess capabilities Or point? strategy, important are are for in I at a that good you this Permian at NGL the looking Wink on Webster, next other and like are to you're just the complete. there project company now steps pretty feel in to place you're

Tim Aydt

Aydt. that is this Tim one. So, take I'll

I well positioned solution. on NGL advantage the in thus investments when be take our that we're to gas gas to growth. of particular, at Permian and at when you far. Blanca When NGL natural we've course, at look look you continue and storage, you the in and bullish Whistler, of Waha Agua look system, believe We the the really do made the

platforms all growth really of. solid for I to think are and really these off expand

far could I kind you value may think look additional be other it further as down and opportunities. can of as the some that stuff exports provide chain,

there's natural on bullish energy NGLs pretty provide then well, that could evolution again, But opportunities. So particular. also gas ideas growth in as and

Keith Stanley

But sort target, a this to bit silly just million row point, the there any is a And in different if that's And quarters? the maybe now. that little Is steady? think that reason for programmatic exceptionally Okay, with thanks. three these stock of fair buyback question. almost the quarter has is been then, a at it your a would been pace think quarters level for the of of I around with And business three you've for at shooting kind levels? technical XXX

Mike Hennigan

Keith, it's Mike.

much we're into little And in future. couple to were I we're we to had quarter-to-quarter, dynamic, quarters. about pretty arena. distribution a deploy it's be that also that trigger. looking But, so And more thinking for coincidence. and it, now said But pace, going number not do to be a pull said, we to the did the ourselves, a much honest it's we obviously Now going this with that overall, were to number. We you, bit we about obviously we're change on like same just it decided wouldn't the exact

fact the out number exactly it be that, So same exact that be coincidence say, I'll to turned to that. designed is the than more and

Operator

Instructions] you. more Thank I questions. actually no Thank am showing you. And [Operator

Kristina Kazarian

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

Operator

conference. today's all participating for Thank you in

and rest the enjoy disconnect your your day. may of line You

Kristina Kazarian	Vice President-Investor Relations
Mike Hennigan	Chairman, President and Chief Executive Officer
John Quaid	Chief Financial Officer
Greg Floerke	Executive Vice President & Chief Operating Officer
Tim Aydt	Executive Vice President and Chief Commercial Officer
Brian Reynolds	USB
John Mackay	Goldman Sachs
Michael Blum	Wells Fargo
Theresa Chen	Barclays
Keith Stanley	Wolfe Research

MPLX (MPLX) 2 Nov 212021 Q3 Earnings call transcript