Company Reports

We like MPLX's portfolio of refining and Appalachia-based gathering and processing assets, given the propensity for fee-for-capacity and minimum volume commitment contracts, which present a highly secure stream of income over the long run. Further, MPLX still has plenty of opportunities to unlock in its newly enlarged portfolio of assets following drop-downs from its parent and the Andeavor Logistics deal, which has taken the partnership to $6.5 billion in expected 2024 EBITDA compared with just over $550 million in 2015. Already, it has sliced billions in spending from the portfolio as 2024 growth capital spending is just $950 million from the $2.6 billion initially announced at the time of the merger, demonstrating commendable focus on unitholder returns.The management team has prioritized unit buybacks, as buybacks between 2020 and 2022 total over $1 billion, but has shifted to boosting the distribution in 2023.

MPLX’s fourth-quarter results were quite good, and we expect to increase our $38 fair value estimate to about $40 per share. Our narrow moat rating remains unchanged. Fourth-quarter EBITDA was $1.62 billion, compared with $1.45 billion last year, as higher tariffs on the pipeline business and higher volumes in the gathering and processing segment made material contributions. The growth pushed full-year EBITDA to $6.3 billion, above our $6.1 billion forecast.

We like MPLX's portfolio of refining and Appalachia-based gathering and processing assets, given the propensity for fee-for-capacity and minimum volume commitment contracts, which present a highly secure stream of income over the long run. Further, MPLX still has plenty of opportunities to unlock in its newly enlarged portfolio of assets following drop-downs from its parent and the Andeavor Logistics deal, which has taken the partnership to $6.1 billion in expected 2023 EBITDA compared with just over $550 million in 2015. Already, it has sliced billions in spending from the portfolio as 2023 growth capital spending is just $800 million from the $2.6 billion initially announced at the time of the merger, demonstrating commendable focus on unitholder returns.The management team has prioritized unit buybacks, as buybacks between 2020 and 2022 total over $1 billion, but has shifted to boosting the distribution in 2023.

MPLX’s third-quarter results were solid. We don’t expect to change our $38 fair value estimate or narrow moat rating, as earning are tracking toward our 2023 EBITDA forecast of $6.1 billion. Overall EBITDA increased 9% to $1.6 billion from last year’s levels with the largest contributor being income from its ownership stakes in midstream assets, including Whistler where MPLX owns 38%. The Whistler pipeline expansion to 2.5 billion cubic feet per day (bcf/d) from 2 bcf/d was completed at the end of the third quarter. This pipeline is transporting gas to South Texas from the Permian basin, and a pipeline extension of Whistler, the Agua Dulce Corpus Christi pipeline, is in the works to deliver 1.7 bcf/d gas to Cheniere in 2024. The partnership, like its peers, is leaning heavily into providing the needed takeaway capacity from the Permian to serve robust U.S. LNG export demand and new U.S. terminals coming online.

We like MPLX's portfolio of refining and Appalachia-based gathering and processing assets, given the propensity for fee-for-capacity and minimum volume commitment contracts, which present a highly secure stream of income over the long run. Further, MPLX still has plenty of opportunities to unlock in its newly enlarged portfolio of assets following drop-downs from its parent and the Andeavor Logistics deal, which has taken the partnership to $5.8 billion in expected 2023 EBITDA compared with just over $550 million in 2015. Already, it has sliced billions in spending from the portfolio as 2023 growth capital spending is just $800 million from the $2.6 billion initially announced at the time of the merger, demonstrating commendable focus on unitholder returns. We expect MPLX to generate over $500 million in excess cash flow after capital spending and distributions in 2023. The management team has prioritized unit buybacks, as buybacks between 2020 and 2022 total over $1 billion, but has shifted to boosting the distribution in 2023.

MPLX’s second-quarter earnings were a bit better than we expected, primarily due to strength in pipeline volumes and pricing. We attribute the strength of the volumes to ongoing demand recovery, particularly at Marathon Petroleum refineries, while the pricing is likely inflation-linked strength. Pipeline volumes increased 1% from last year’s levels and pricing increased 9%. Gathering and processing volumes remain largely consistent with our expectations, with relatively muted volumes and weak pricing due to lower realized natural gas liquids prices. After updating our model, our fair value increases to $38 per unit from $35, while our narrow moat rating remains unchanged.

We like MPLX's portfolio of refining and Appalachia-based gathering and processing assets, given the propensity for fee-for-capacity and minimum volume commitment contracts, which present a highly secure stream of income over the long run. Further, MPLX still has plenty of opportunities to unlock in its newly enlarged portfolio of assets following drop-downs from its parent and the Andeavor Logistics deal, which has taken the partnership to $5.8 billion in expected 2023 EBITDA compared with just over $550 million in 2015. Already, it has sliced billions in spending from the portfolio as 2023 growth capital spending is just $800 million from the $2.6 billion initially announced at the time of the merger, demonstrating commendable focus on unitholder returns. We expect MPLX to generate over $500 million in excess cash flow after capital spending and distributions in 2023. The management team has prioritized unit buybacks, as buybacks between 2020 and 2022 total over $1 billion, but has shifted to boosting the distribution in 2023.

MPLX’s first-quarter results were solid, in our view, with steady growth. We do not expect to change our $35 fair value estimate or narrow moat rating. EBITDA increased modestly to $1.5 billion from $1.4 billion last year, primarily helped by higher volumes and rates from the logistics segment. We expect future growth to be led by the Whistler projects due online in 2023 and 2024 that will let MPLX benefit from Permian gas growth and high export demand.

After refreshing our model for fourth-quarter results, rolling it over to 2023, and boosting our gas growth estimates largely driven by MPLX's Permian and Appalachian debottlenecking efforts, we are increasing our fair value estimate to $35 per unit from $31. Our narrow moat rating is unchanged.

We like MPLX's portfolio of refining and Appalachia-based gathering and processing assets, given the propensity for fee-for-capacity and minimum volume commitment contracts, which present a highly secure stream of income over the long run. Further, MPLX still has plenty of opportunities to unlock in its newly enlarged portfolio of assets following drop-downs from its parent and the Andeavor Logistics deal, which has taken the partnership to $5.8 billion in expected 2023 EBITDA compared with just over $550 million in 2015. Already, it has sliced billions in spending from the portfolio as 2023 growth capital spending is just $800 million from the $2.6 billion initially announced at the time of the merger, demonstrating commendable focus on unitholder returns. We expect MPLX to generate over $500 million in excess cash flow after capital spending and distributions in 2023. The management team has prioritized unit buybacks, as buybacks between 2020 and 2022 total over $1 billion, and likely more to come in 2023.

MPLX’s reliability was once again on display in fourth-quarter results with solid volumes. EBITDA of $5.8 billion for all of 2022 was slightly ahead of our $5.7 billion expectation but is tracking toward our 2023 forecast of $6 billion. With largely stable volumes (terminals pipeline throughout was flat year over year), the focus continues to be on capital returns. The partnership boosted its distribution 10% in 2022 and bought back $491 million in units, one of the larger buybacks in our U.S. midstream coverage. We expect to maintain our fair value estimate and narrow moat rating.

MPLX's third-quarter results continue to be steady, despite the volatility in the oil and gas markets. After updating our model, we maintain our $31 fair value estimate and narrow moat rating. Overall EBITDA improved to $1.5 billion from $1.4 billion last year, helped by a 5% increase in pipeline throughput and a 12% increase in gathered volumes. We expect similar results going forward, given MPLX's tight linkages to refineries and steady demand. The Whistler expansion to 2.5 billion cubic feet per day (bcf/d) from 2 bcf/d remains a highly attractive use of capital, given growing Permian gas production. MPLX is also adding laterals into the Midland basin and Corpus Christi domestic and export markets.

We like MPLX's portfolio of refining and Appalachia-based gathering and processing assets, given the propensity for fee-for-capacity and minimum volume commitment contracts, which present a highly secure stream of income over the long run. Further, MPLX still has plenty of opportunities to unlock in its newly enlarged portfolio of assets following drop-downs from its parent and the Andeavor Logistics deal, which has taken the partnership to $5.7 billion in expected 2022 EBITDA compared with just over $550 million in 2015. Already, it has sliced billions in spending from the portfolio as 2022 growth capital spending is just $760 million from the $2.6 billion initially announced at the time of the merger, demonstrating commendable focus on unitholder returns. We expect MPLX to generate over $500 million in excess cash flow after capital spending and distributions in 2022. The management team has prioritized unit buybacks; 2021 buybacks totaled $630 million with another $315 million in 2022 and $1 billion in capacity available.

MPLX’s second-quarter results were solid, in our view. After updating our model to account for the most recent quarter of unit buybacks and healthy cash flows, we’re increasing our fair value estimate to $31 per unit from $30. Our narrow moat rating is unchanged. MPLX noted that nearly all of its contracts have a level of inflation protection based on Consumer Price Index, Producer Price Index, or Federal Energy Regulatory Commission indexed rates.

We like MPLX's portfolio of refining and Appalachia-based gathering and processing assets, given the propensity for fee-for-capacity and minimum volume commitment contracts, which present a highly secure stream of income over the long run. Further, MPLX still has plenty of opportunities to unlock in its newly enlarged portfolio of assets following drop-downs from its parent and the Andeavor Logistics deal, which has taken the partnership to $5.7 billion in expected 2022 EBITDA compared with just over $550 million in 2015. Already, it has sliced billions in spending from the portfolio as 2022 growth capital spending is just $700 million from the $2.6 billion initially announced at the time of the merger, demonstrating commendable focus on unitholder returns. We expect MPLX to generate over $750 million in excess cash flow after capital spending and distributions in 2022. The management team has prioritized unit buybacks; 2021 buybacks totaled $630 million with another $135 million in 2022 and $1.2 billion in capacity available.

MPLX’s first-quarter results were more of the same steady growth given its linkage to refineries. We see no reason to change our fair value estimate or narrow moat rating. Overall adjusted EBITDA increased about 3% to $1.4 billion from last year’s levels helped by higher terminal and gathering volumes. The capital return story for MPLX continues to be stronger than most U.S. peers, with over $850 million returned during the quarter, including $100 million of unit repurchases during the quarter. The partnership has $237 million left on its $1 billion buyback program, and at this rate, it could be expanded later this year.

We like MPLX's portfolio of refining and Appalachian-based gathering and processing assets, given the propensity for fee-for-capacity and minimum volume commitment contracts, which present a highly secure stream of income over the long run. Further, MPLX still has plenty of opportunities to unlock within its newly enlarged portfolio of assets following dropdowns from its parent and the Andeavor Logistics deal, which has taken the partnership to $5.7 billion in expected 2022 EBITDA compared with just over $550 million in 2015. Already, it has sliced billions in spending from the portfolio as 2022 growth capital spending is just $700 million from the $2.6 billion initially announced at the time of the merger, demonstrating commendable focus on unitholder returns. We expect MPLX to generate over $650 million in excess cash flow after capital spending and distributions in 2022, and the management team has prioritized unit buybacks. 2021 buybacks totaled $630 million and we expect similar capacity in 2022.

We like MPLX's portfolio of refining and Appalachian-based gathering and processing assets, given the propensity for fee-for-capacity and minimum volume commitment contracts, which present a highly secure stream of income over the long run. Further, MPLX still has plenty of opportunities to unlock within its newly enlarged portfolio of assets following dropdowns from its parent and the Andeavor Logistics deal, which has taken the partnership to $5.8 billion in expected 2022 EBITDA compared with just over $550 million in 2015. Already, it has sliced billions in spending from the portfolio as 2022 growth capital spending is just $700 million from the $2.6 billion initially announced at the time of the merger, demonstrating commendable focus on unitholder returns. We expect MPLX to generate over $800 million in excess cash flow after capital spending and distributions in 2021, and the management team has prioritized unit buybacks. 2021 buybacks totaled $630 million and we expect similar capacity in 2022.

MPLX’s fourth-quarter results were slightly ahead of our expectations, as 2021 EBITDA of $5.6 billion exceeded our forecast of $5.535 billion, due mainly to slightly better volumes. However, as we only expect modest improvements in 2022 EBITDA to about $5.7 billion, the changes are not material enough to impact our fair value estimate or narrow moat rating. MPLX, like peer Magellan ($800 million since inception and $523 million in 2021), continues to be one of the more aggressive re-purchasers of units with $630 million in 2021 purchases and $663 million since inception in the fourth quarter of 2020. With an average 2021 purchase price of about $28.64 a unit by our estimates, the buybacks are adding some value versus our $30 fair value estimate. Even with higher 2022 growth capital spending at $900 million, including $700 million in growth capital, we still expect MPLX can repurchase a similar amount of units in 2022. This shift would require a newly expanded authorization from the board to do so as there is only $337 million remaining. However, Marathon Petroleum (owner of 64% of MPLX’s units) just announced an incremental $5 billion buyback for its own shares, so we think MPLX would have no issues here.

MPLX’s third-quarter earnings were solid, as results continued to track toward our full-year expectations. We expect to maintain our $30 fair value estimate and narrow moat rating. Overall, EBITDA increased modestly to $1.4 billion from $1.3 billion last year, mainly due to higher natural gas liquids pricing within its gathering and processing segment. Logistics and storage volumes continue to recover as well and will be helped in future by the recent start-up of several major projects, including the Wink-to-Webster oil pipeline and Whistler gas pipeline.