MPLX LP (NYSE:MPLX) Q4 2016 Earnings Conference Call - Preliminary Transcript

Feb 01, 2017 • 11:00 am ET


MPLX LP (NYSE:MPLX) Q4 2016 Earnings Conference Call - Preliminary Transcript


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Welcome to the MPLX Earnings Call. My name is Jason, and I will be your Operator. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session, and please note this conference is being recorded.

I will now turn the call over to Lisa Wilson. Lisa, you may begin.

Lisa Wilson

Thanks Jason. Good morning. And welcome to the MPLX Fourth Quarter and Full Year 2016 Earnings Webcast and Conference Call. The synchronized slides that accompany this call can be found on, under the Investors tab. On the call today are Gary Heminger, Chairman and CEO; Don Templin, President; Pam Beall, Chief Financial Officer; and other members of the management team. We invite you to read the Safe Harbor statements and non-GAAP disclaimer on slide two. It is a reminder that we will be making forward-looking statements during the call and the question-and-answer session that follows. Actual results may differ materially from what we expect today. Factors that could cause actual results to differ are included there, as well as in our filings with the SEC.

Now, I will turn the call over to Gary Heminger for opening remarks on slide 3.

Gary Heminger

Thanks, Lisa, and good morning to everyone. Despite a challenging environment, particularly in the first half of the year, MPLX has strong operational and financial performance. While I'm pleased with what we achieved in 2016, I am even more excited about what lies ahead. On January the third, we provided an update on the strategic actions we intend to implement at MPLX to provide increase visibility to our distribution growth and to lower our cost of capital.

The partnership expects to acquire assets from MPC with approximately $1.4 billion of EBITDA as soon as practicable and expected in 2017. The proposed transaction representing approximately $250 million of EBITDA has already been offered to MPLX and referred to the conflicts committee of the MPLX board. This transaction is expected to close in the first quarter of 2017 pending requisite approvals.

We expect the partnership to finance the dropdown transactions to approximately equal portions of debt and equity, with the equity financing to be funded through LP units issued to MPC. In conjunction with completion of the dropdowns, we also expect to exchange MPC's economic interest in the general partner, including incentive distribution rights for newly issued MPLX common units. These actions are expected to provide greater visibility to near-term distribution growth and reduce the partnerships cost of capital enhancing its ability to deliver an attractive distribution growth rate over the long-term. Importantly, all these transactions are subject to requisite approvals, market and other conditions, including tax and regulatory clearances.

Following the dropdowns, the partnership's size and scale would be among the largest in the industry, with nearly equal contributions from logistics and storage, and gathering and processing segments. With a simplified structure, all alignment with MPC and additional visibility to an attractive distribution growth rate, we are confident about MPLX's compelling value proposed or proposition