MPLX - Earnings call transcript Q2 2022

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Operator

Welcome to the MPLX Second Quarter 2022 Earnings Call. My name is Sheila 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] Please note that this conference is being recorded. the to turn Kazarian. now will call Kristina over I Kristina, begin. you may

Kristina Kazarian

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

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

Mike Hennigan

for Earlier morning, of everyone. Thanks quarter reported $X.X billion. our EBITDA today, joining Thank Kristina. adjusted second we Good you call.

could the extension out NGL recent Our several of will terms additional two as Contracts quarter fit June, make them have and MPC’s pipeline base X% entities. the for These to represented systems provisions, system. contracts for renewal business, refining increase MPC. extensions, of performance pipeline these of years from to renewed renewal continued of year. quarter which and are capital integral This XXXX. tailwinds and investments. and marketing higher automatic XXXX purpose extended which XX for second In an this financial take and last highlights economic have as to our now from operating both well allow sense the from The growth we've results coming resiliency prices, late contracts with

In the a several regions. continue the pipeline And L&S haul supporting business. gas and long gathering as projects. as to growing continue we organic this return advance quarter, business we view the well Permian on expand We of growth to natural return crude as a capital and segment, Bakken

segment, the bcf Specifically natural progress per along with to Midland X in the plant, markets. online demand. processing gas response basins Whistler focused from per In partners, the in on In Permian, advanced Permian half Marcellus the continue with to in G&P XXXX. to expected laterals construction we we and bcf expansion day is to and come Permian, of the of strategy producer pipeline the day, basin X.X Corpus into remain our Tornado working the our the with on X our Christi which second

up also third per II, capacity is incremental We which expected in to our X.X meet first processing build to bring the half demand be of our in plant Marcellus, in online Smithburg will day. total Preakness sixth XXXX. in-basin come basin, Permian are the In the online processing the This of expected is to planning XXXX. bcf quarter our to to de-ethanizer

of XXXX. add come plant, day half bcf total to X.X will Marcellus. in Creek This will which we processing the expect plan the up to to Additionally, the bring online capacity Harmon processing first in II per

climate and report. we our X, this annual $X repurchases. year-to-date, increase return. of Shifting We Our and quarter, related to distribution billion will continue the the and to in scenarios with authorization. capital through an And to returned billion our stability part of an framework evaluate later the $X.X ESG to have business, commitment repurchased commitments unchanged. Today capital on long-term perspectives publication our and enhance over we strength to unit our the remains slightly distributions both allocation unitholders of Slide unit announced our In incremental sustainability recent disclosures base year. is with we

by for compatible targets the XXXX XX of our needs carbon our further sustainable today we've our stakeholders. end on right-of-ways an levels. enhancing progress intensity make biodiversity are I'm target reduction, profile We've XXXX. energy meeting achieved Through energy that – achieved we've methane challenging MPL to a XX% from about of to shared year, across XX% XX,XXX emissions the this develop future lower the already lead last in target. sustainable gas We're landscapes diverse in investing while to last sorry, all XX% acres reduce added by a continue of of XXXX of year, of XX% creates end Through value We nearly to natural of also business. the our ourselves

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

John Quaid

X% Thanks Mike. higher utilization throughputs. at Pipeline by for year-over-year, our volumes quarter The Logistics performance primarily $XX segment operational second million Slide compared quarter highlights do to X adjusted segment. increased Storage EBITDA were MPC’s largely of refineries. up second to volumes up and financial when and and driven increased XXXX terminal outlines X% L&S the were

of Moving gathering X. segment to adjusted due and million G&P EBITDA on second our to largely compared to segment XXXX, quarter $XX NGL higher on increased processing Slide prices.

due Processing averaged is the of as and $X.XX roughly compared than Southwest increased For second per offset a higher decrease the XXXX. quarter per average volumes the the production by gallon, Gathered Marcellus. flat quarter, in up the were gallon to were the of quarter volumes which XXXX. in NGL to second from Utica XX% slightly $X.XX prices

to Slide X. Moving

the our – results of flow excuse financial and second me, quarter and Our stability cash resiliency business. earnings demonstrate

flow nearly billion and increased from an $XX sale include total to benefits capital $X.X due million $XX million $XXX XQ reverse last to flow XQ a billion year. second Free EBITDA in increased and anticipate primarily one-time anticipate compared working This distributed which $XX expenses million quarter. asset related flat from the million primarily third increase in Project after quarter. related expenses. distributions of the $X.X quarter, million For several in to we project of product in XXXX, the to may quarter, the experienced does incremental X% prior cash light sales $XXX the proceeds, benefit, up in was was terminals from cash while largely number the adjusted we year, of approximately

Looking quarter, times. distribution highlights ended coverage a and at ratio X.X $X.XXX unit financial X.XX debt of in of for second ratio per of $XX the a quarter distribution with quarter billion MPLX the resulting We about other declared of total leverage times.

to to $X we a facility entered new subject The to forward debt. facility. Looking roughly the market existing previously which refinance we next $X have XX maturities, expect over facility long-term billion new five-year of note the senior have we into end, months, conditions, would to we credit into – quarter After billion replace the credit cost grow while commitment XXXX. capital continue adoption current discipline we to extends the and business cash a low In unitholders. July strong given generating of flow. continued supporting invest to our expect business capital of culture, closing, MPX Enhancing to and also return financial conditions, to our our of flexibility strict

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

Kristina Kazarian

Thanks John.

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

Operator

Thank you.

from come the begin question [Operator We Instructions] Mackay will question-and-answer will John Goldman with session. first Our now Sachs.

open. is line Your

John Mackay

number on I the new a hear the nice the lower increasing of some I during bit potentially time. little allocation, start talk Can think of Thanks that authorization, you And also Mike, forward that comments in Hey, about, us than thinking most good you're year? buyback little the but quarter expected. about for you, your about just against from going the buyback got a think was to to wanted on morning. second bit balance capital how later just this distribution and Thanks.

Mike Hennigan

take thanks I'm comment. your to Yes, one. let John, for John going that

John Quaid

for morning, Hey the Thanks question. John.

into our quarter read and wouldn't much in about – I deviation nothing activity should allocation second a be too capital from viewed our First, it as the philosophy.

less right, we we total now for free our we $X.X quarter, $XXX opportunities. with this some $X of But higher flow million, first ended a cash of $XXX to into than continuing have and was incremental the growth and the authorization on the quarter billion in at remember looking with our capital authorization, forecasting after coming year, spending balance were forward, units. look sheet distributions You'll repurchase million billion

second cash look market but in there I to dynamic in reassess to kind repurchases. we'd approach, So with can subject of in and approval. conditions unit would distribution addition opportunities the last right, any SEC line board we'll year and look subject regs, continue unit we to time and flow forward time think all certainly overall, to did in if we perhaps certainly expect as our at more opportunistic growth anticipate of base repurchases, we be from as our all change which be above half, to the flexibility, to think And limit done you of course, can I so

as maybe holding supplemental a perhaps opportunities us a for capital some cash look look of tax tool as we to opportunistically see and level return, return have growth to you evaluate really capital. efficient might We but

to So I wants to it if the back picture Mike I'll and anything. turn that's he think add big

Mike Hennigan

well. think I you it covered

John Mackay

great. for kind appreciate of of a underlying Maybe those going there. have we thorough, kind about that we've of nicely. Wondering a bounced was, kind seen follow quarters, little couple processing just back I Marcellus us. on unpack the lowest Really can what's No, talk Northeast? bit felt of you in Can you'd two stuff. but was think in if detail fundamental just up the kind on

Greg Floerke

last John, and load of would of over in new that to the even a this is hold bit and a We've online demand a Greg, even destruction represent, off drilling particularly the flat coming flat quite period era seen pads that growth of maintenance year-over-year would speak post-COVID number drilling to decline. to be, question. sort Northeast I'll

drove see come crude the pricing the to level has because focused ramp continued the activity. areas early probably have of on, is We production more in more what been the rig that of crude

see activity up. year. in So now more see versus seeing ramp are up early a volume of XXXX but to And half we Permian, expect back load of starting the to we that Bakken

continued not decline necessarily bit growth a So continued some to maintained. producers have little maintain some of have to and and

So that explanation. primary really the is

John Mackay

the Appreciate Thanks Okay. time for everyone. that.

Mike Hennigan

John. Thanks

Operator

Next, we hear Fargo. Michael will from with Wells Blum

You may proceed.

Michael Blum

morning, Thanks. everyone. Good

to little plant you've the So announced unless quite processing while. wrong. is first wanted yes, a stand I new the This bit I'm Northeast a in from

the specifically influence in rate like, change on the done, of of and pipeline that just if would anything get So growth Northeast you then in to view MPLX? wanted any kind does if volumes for basic then think your and Mountain for that overall view related growth to seeing do your you're Valley really kind get of

Greg Floerke

I what the over seen ramp last expect growth XX the in Greg, we've Yes. we do beyond before, to in had again, months. up see some as mentioned Northeast

and area terms producers, In the an plant, gathering of Marcellus. the of are plants really to processing specific the the like new even sort within the area

that very have at run we over or months. XX some So have the plants close last are near capacity

And need we're capacity that plant. area we we're but months utilization, some see building high the for the next where at still XX Creek that over overall, aren't level do more to at the XX specific Harmon quite in

Mike Hennigan

this add is Mike. Michael, just And I'll that.

a come up. And So has said, a The what get anticipation will MVP is Greg done. been constrained our while. area to shell plan as for it's going

out, going build processing pointed you another As we're plan. to

So start more a bit, going constrained area mentioned. little to just bit I think the we're in somewhat finally growth to as for Greg that's a little been see

Michael Blum

their My that. in a MLPs. few strategic to probably in Great. really which have chosen is been nature. recently I appreciate sponsors There's buy more second question

latest sense So from they're still maintain MPLX just the thoughts traded separate get a and your relationship publicly perspective, whether on Thanks. just your makes it's and curious, structure, MLP. MPC,

Mike Hennigan

we call. MPC get question at Michael, often the that Yes,

the roll that our is of situation others a different lot seen, it answer is quick you've than Our up. many

have prepared good our we're about still another structure works that talked remarks, of just, So it's for we comfortable the in pretty the between two both, think re-upped family. we the marathon for we XX as years It today. just entities. We use asset in

structure us. pretty we're comfortable we for think it's good a we with So where stand and

Michael Blum

very Thank Great. you much.

Mike Hennigan

welcome. You're

Operator

come Brian will UBS. with from Our question Reynolds next

Your line open. is

Brian Reynolds

agreement in details or morning, down just curious there could Thanks. now with move assets incremental up in were any Hi, you the are or agreement? included not if extension good the L&S previously that rates provide MPC, contract the are do other any pipeline in everyone. that Was any

Tim Aydt

Yes, Brian. Tim. This I'll is take that one,

fact stable pipelines well familiar and MPLX So operations. I are critical that you're the to as really these MPC’s both earnings to as with think

certainly renew provide to the to than XX more So both for the refining does keep changed an specific extending which MPC number as they're it's MPC with extend for mind years. result, a these that I MPLX for contract other contract to And agreed contract contract duration, logistics assets the and indeed a to your significant system. are the certainty terms pretty and fit contract. actually question, not were another marketing guess, extended be in and of key very under these systems. it'd and on years integral purpose But important

sense, not it renewal sense financial for operational make but does So with only certainly both MPC parties. made

think the have this would that contract thing lot so while a do and on last of specific touch we're I we MPC, I about talking other is with forth. systems

And so serve we third utilization to the including systems those of focus maximizing all continue of that well. parties on as those

John Quaid

helpful. that's just I on might John, hey, it's to hopefully Tim's And Brian, So add comments.

of we a this evidence questions might commitment. but thinking as from as things part have as these on all too, largely of the around think that MPC maybe MPLX think some of and that mentioned investors I really was are reminder, commitment certainly just our renewal index was of One well, is FERC based the this And well, systems. to Tim,

their year in with moving have been So rates line the every indices.

Brian Reynolds

Great, JMP that My and appreciate impacts is on Northeast you know then touched any the its MPLX just Thanks. I one on all business. previously bit regulatory consider reform if it around any hasn't, it thoughts met earlier, given follow initial briefly risk potential just the the profile, now there's up a build pipeline hasn't potential adjusted color. little opportunities in question it but curious that unique uncertainty. given would that

Mike Hennigan

heard inflation legislation, you thought to want the a to make legislation. different act I to or different a I speaking just you refer sure… I Brian, And reduction

Brian Reynolds

deal that Inflation reduction side mentioned. the effectively

Mike Hennigan

obviously, pretty the released just we So and were bill, long it. to evaluate details continue

around don't right it remarks. now some hard call. prepared some our I on very would commented working to emissions. to-date see There of legislation. focus those emissions. of and We've we see the We say, his think those the points done of current be I key with Really about we opportunities kind renewables, system. impact benefit a emission draft, on all encouraged, we're a talked MPLX. around couple need you but flows how like for think final overall we've reduce but kind we've methane and to I One, to see a through reduce in the work that may Mike been significant of feel to some the

Tim Aydt

we things add And I increase provisions is version just, some this there's of logistics a the could standpoint. from could some which part be There an interest projects, maybe does maybe tax logistics needs I And the And as hydrogen production, Tim. that and which current in are would of just question. would provisions well. drive that your in. If credit. couple supportive of some CCS also was it SAF the of have then XXQ future for that

so it. So, but early, we're monitor continue John as said, to it's to going

Brian Reynolds

it. covered rest that Great, all great Nope. day. your and color Appreciate have of the a

Tim Aydt

you, Brian. Thank

Operator

you. Thank

with JPMC. Jeremy from come will Tonet question next Our

is Your open. line

Steve McGee

This for to any wanted one see Matterhorn. is to was Steve further McGee for updates me, Jeremy. if there Really just

thinking us any details you're how give there. further participating and can Just you about

Tim Aydt

Sure. will I one. This Tim. take that is

Permian we've of As strong we that to Whistler, the before, why project in partners is finalized needed ownership expansions such existing even totally May the not does stand X%. going believe that which for over do the the that's are it in our as mentioned equity the those of at growth yet, FID a pipes and the couple Matterhorn of in next is but currently years. more believe five be been announced first plus pipes, beyond of the the Matterhorn as

would would some monetary reflect project of then and $XX a that represent of financing. about course million standpoint, from level of investment that so And

small we our But the that's on expansion. stake here relatively house So of that's put side toward a – lot of Whistler Matterhorn. commitments the its and

Steve McGee

now cost helpful super just do could And cost of do optimize with it again? kind how if much think just you to business. you that any with the can you're if pressures it's Got I you, see that, of wanted one how versus right much seeing Actually, just there. then permanent increases more, throughout

Tim Aydt

basically we Tim would this and referring protection. the so. have of some So again, I is that assume to inflation you're

in we increases say pressures others, that And attack the quite question I'll across like some labor of are categories, indicators most material, equipment, So are that largely all inflationary freight. these that for certainly spend our I cost would frankly. seeing in with line regard. public and

up We cost are significantly. a seeing little energy that line pipe may be and more

about working up fuel help year-on-year of operating the realizing in-house, offset our some work more completing of example, efficiencies is of and certainly through these house. ideas workforce. for are power our and to the teams maybe the increases pipeline The work deferring hard For XX% by non-critical side our

see if capital so see that contracted in spend, impact previously, to more intend increased maintain million providers. are year. the think year didn't increased We and our say I XXXX, other spend from of of but cost we going XXXX our on capital stay capital costs for that guidance side, do significantly and we see as within much in the $XXX talking would I increases contractors in you're up show more the sheet still capital later you're going with expect early was service projects lot to to that spend budget. a of are capital rate starting our that much as we the to and probably on

you that flare So to hopefully seeing. a we're little gives what

Steve McGee

Thanks guys. you I'll perfect. leave That's Yep. there.

Tim Aydt

Okay. Thanks, Steve.

Operator

you. Thank

come Chen will Barclays. Theresa with from next Our question

open. Your line is

Theresa Chen

Thanks hear for great you, And morning. Good from Mike. it's taking my to questions.

about worries hear are the MLP the your quarter the the given please? concern well, of but your would outlook of recent demand that and indicate following recession, across parent things going to love volumes demand regions the would across market incremental just the data the beginning L&S with maybe utilization and of things So economic side second

Mike Hennigan

we of wanted, you Yeah. at to system, commodities. the I the still for end interesting to Theresa was a question really first. was than guess probably is give again. our picked its obviously what pretty July thank monitor, Mike that The weekend we're Xth comment day, across that July the that the then It of seeing subsequent demand one and we're you but in up not your bullish you continue is more detail strong typically rest which weekend, of stronger of

constructive system. So I still across is pre-pandemic we're the mostly reason levels we're at think the still overall,

run the the I robust side. we choppy. demand that numbers, other there's if then been we see some Day still to went typically strong times but really some month, didn't we of room show and on during So with the Xth It's seen went Memorial bigger we've recovery. think weekend weekends July, the Like said, the season those, into

get refining reliably of And thought possible. at transportation we're you as low much in as constructive, that think end has the second the the I fuel as So back margin obviously a we go as run side quarter could environment. as once demand post-pandemic pretty still really in cost our still produce more the a we're market was the mentioned, process the running are to the house environment, Inventories we on to of system. we Overall show think day, continue to constructive. normal whole

pretty Demand hard strong reliability good. the Inventories as constructive. constructive for cost, not be us. low still right as a low take margins. and it's is now looking still it's market environment And are offers we'll So what to far

Theresa Chen

inflation L&S extent following you you Can inflation that And for the that of gathering color thus share that expected data far well, the assets L&S? your have the to your in in tracking be nature contractual response. of any to contractual detailed that assets your on can around escalator you then received or the of range. And the the site you and remind that'd teens assets we Thank within colors will captain mid as us tailwinds great? turning

Tim Aydt

that is some of the about off. questions – that may And have. think I can so your Tim. forth really can our I I kick inflation Yeah, and protection contracts this

our of up have to So and indexes the we qualifying PPI assets. inflation G&P small contracts. that all range escalators FERC either on L&S do CPI, are in escalators They of for from fixed the those protection some of or almost based some level the variable

those typically into effect For we those dated regulated line And pipelines sought guidance. for with, on rates most of go adjust pipelines rates July our in X.

less an the escalators changes, expect rate we really While expect again majority to means cost. an expect but about given EBITDA a is FERC really rate well, to one-third or to of see directly increase tied these And of EBITDA that see reminder to maybe or just revenue in meant that PPI. from which we the increases as your then in to fixed – cover don't material are than the the that a those the L&S do in see are escalator tied escalators to we those don't CPI change to

hopefully helpful. So that's

Theresa Chen

Thank you.

Tim Aydt

You're welcome.

Operator

next will for Thank from you. Danny question come [Operator Our Instructions] Truist. Neal with Dingmann

Your is open. line

Unidentified Analyst

when can guys, Hey unit a unit you of question, return capital speak holders? going could the to back repurchases for supplemental to value versus distribution to – you created consideration

John Quaid

thanks the Morning, Danny, for Yeah. question.

we're again, we evaluate to we're the all gets kind the maybe of road. base distribution look that more repurchases. fork want said, million of opportunistic an think maybe back but little our as to to above opportunistic can cash again, supplemental see our to efficient, we mean, envious I cash cover $X might approach. about given hold I well. overall, be as to growth continue as in of unit I the return Certainly plan, a some I with the a an opportunities to in we tax capital being in be kind bit generating that of to our billion continue position, this us you in Again, so push capital So $XXX a

question, picture but something know a if want add bigger to So the of framework hopefully Mike, than kind maybe I helpful, that's well. that's you little as don't bit your

Mike Hennigan

unit that in the views return holders capital. on interesting remind Yeah, I'm on past, just this but us said it's different going have just we to everybody add, that to different I'll

others that and situation just back And strongly of we And is we to approach. wasn't as it, of optimize Some feel check. and said, having too send that preferred me It above all John buying way feel strongly kind the try as our go. the a as at very has units look going that buy it's compelling makes at yield look our long And at going there's to supplemental units was where ago do also back in just that. to We're and XX% permanent look trading environment. And at other that say the we're sense. it to to going times then we're the one.

to what So et versus bit due in a differentiate why to And is the result those we more we think permanent the current conditions. a we've market capital tried that's put our little as flows some we're in between earnings some we cash transitory growth are cetera, supplemental. in these think nature of of that investments, getting, of

John think it well. I said very So

Our the is of approach above. all

that very, me us buybacks and strong some that's way too. fits lot unit us tell capital. that, people see very different that please a send people return that to think others of I strongly the say convicted very and would views are full of go the way we to views different a base tell like I because check, investor from there's very, I'd very strongly, is have, the

and as on. return stand our has we approach because where our at market evaluate far been at ability capital, to So to look return invest as of we projections, keep our saying it's look a conditions,

trying at we're when can much efficient a day, we bit gives And more returning we both create in end at of you as as little be And as value those. we're of as look can it then hopeful. to the to the So that we're Hopefully color. trying in we the earnings.

Unidentified Analyst

helpful. very you. me. That's for that's Thank it No,

Operator

question Barclays. with last our And you. Harry from come Thank Mateer will

is open. line Your

Harry Mateer

Hi. morning. Thanks. Good

first of Your target well below the leverage question, is tracking your four times.

provided. historically You've

program So willingness is that repurchase And capacity four think to should be like we times good use your to how accelerated do? and about for like not would that this you'd to that number something or use? still incremental

Mike Hennigan

stability want and times cash everybody grown at are that flat thing that we're because to lot one remind is but basically we've comfortable let kept but the shown times flows, do is we've Yeah, John these we reason X.X of comment, yeah, I'll I four a earnings. we've very in

So said result. as leverage to as of that a our for result this while a that going a is we've decrease

under one So couple want be We're years leverage going over capital to in going think free that. business is to our levered, but where seen the more that in invest way, the things overall, earnings change the is not don't as grow, of what to debt. will cash flow, that you've last monitor we we I manage that continue is to adding such a disciplined we're we're generate such a to

So we've do been. been add? want a our for you kind of it's been while. has And why to that's leverage flat debt where John,

John Quaid

way and well. those. looking it back said some coming We've you my we're maturities think just of as remarks I to refinance Mike, kind our and No. refer to of some the got comments in

So Mike in with what just though I was thing kind evident of just think line about. another talking

Harry Mateer

has that next And year, the are how to question about about pretty Okay. senior early thinking Curious then did the comment with how so segue. I've John, that's good you my been. those reset rate preferreds, market seem given you're rates is been a where feeling One just rates would Thanks. fluid follow-up, to Yeah. heading. be floating expensive maturities. capital

you about in fit have capital the structure where thought guys longer-term? those So

John Quaid

callable appreciate I of those the look as to senior well, forward but XXXX. maturities, become in definitely of That's on not a these as opportunity you've certainly to when February No. it they doubt? well, Bs, something kind just our note question. high summarized Series And and planning to been Without we're cost those looking that's manage

Harry Mateer

Thanks Okay. much. very

Operator

you. Thank

Kristina Kazarian

joining for questions, All you right, other Sheila, your in for have MPLX. thanks any thank if we don't today us and interest

you any the If here to much. Relations so team get call our that have questions is answered today, any Thank help you time. Investor didn't on

Operator

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

at time. this disconnect may You

MPLX (MPLX) 2 Aug 222022 Q2 Earnings call transcript