MPLX LP Reports First-Quarter 2017 Financial Results

(a)   The three months ended March 31, 2016, includes a pretax, non-cash impairment charge of $129 million related to the goodwill established in connection with the MarkWest acquisition.
(b)   Amounts have been recast to reflect the March 1, 2017, acquisition of Hardin Street Transportation (HST), Woodhaven Cavern (WHC) and MPLX Terminals (MPLXT) from MPC. The results of HST and WHC were recast effective Jan. 1, 2015, and the results for MPLXT were recast effective April 1, 2016. Prior to these dates these companies were not considered businesses and therefore there are no financial results from which to recast.
(c)   Non-GAAP measure calculated before the distribution to preferred units and excluding impairment charges. See reconciliation below.
(d)   Distributions declared by the board of directors of MPLX's general partner.
(e)   Non-GAAP measure. See calculation below.
(f)    Includes capital expenditures for inland marine business acquired on March 31, 2016, and the pipeline, storage and terminals businesses acquired on March 1, 2017 (collectively with inland marine business, "Predecessor"). Excludes non-affiliated joint-venture (JV) members' share of capital expenditures. See description below.

Operational Highlights

·         Processed volumes in the Marcellus and Utica of 4.6 billion cubic feet per day, a 4 percent increase for the first quarter of 2017 versus the fourth quarter of 2016.
·         Fractionated volumes in the Marcellus and Utica of 334,000 barrels per day, a 6 percent increase for the first quarter of 2017 versus the fourth quarter of 2016.
·         Commenced operations of the Sherwood VII 200-million-cubic-feet-per-day gas processing plant; three additional Sherwood plants are under construction.
·         Commenced operation of a third fractionation train at Hopedale complex in Ohio, to support growing natural gas liquids (NGL) production from producers in the Marcellus and Utica shales.
·         Averaged 96 percent utilization at Hidalgo complex.
·      Began construction of Argo I gas processing plant in Delaware Basin.
·         Continued construction of the Harpster-Lima pipeline and expansions to the East Sparta-Heath and Heath-Findlay pipelines. These pipeline projects are expected to be complete by mid-2017.

Financial Position and Liquidity

As of March 31, MPLX had $265 million in cash, $2 billion available through its bank revolving credit facility and $500 million available through its credit facility with MPC. During the first quarter, MPLX opportunistically issued 4.2 million new common units through its at-the-market program and received net proceeds of approximately $148 million.

In February, the partnership issued $2.25 billion in unsecured senior notes. MPLX used a significant portion of the net proceeds from this offering to fund the March 1 dropdown from MPC and expects to use the remaining proceeds for general partnership purposes, which may include future dropdowns from MPC and capital expenditures.

The partnership's $2.8 billion of available liquidity and its access to the capital markets should provide it with sufficient flexibility to meet its day-to-day operational needs and continue investing in organic growth opportunities. The partnership's debt-to-pro forma adjusted EBITDA ratio was 4.0 times at March 31, 2017. MPLX remains committed to maintaining an investment-grade credit profile.

Forecast

MPLX's 2017 financial forecast has been revised to reflect the first-quarter dropdown from MPC; the acquisitions of the Ozark pipeline and Bakken Pipeline system; and MPLX's current estimates for operational volumes and commodity prices. The 2017 forecast excluding future dropdowns is:

(a)   Non-GAAP measure calculated before the distribution to preferred units. See reconciliation below.
(b)   Guidance excludes acquisition costs for dropdown of terminal, pipeline and storage assets; Ozark Pipeline; and Bakken Pipeline system. Also excludes non-affiliated JV members' share of capital expenditures.

The forecast for organic growth capital expenditures is $1.8 billion to $2.0 billion, an increase from the previous range of $1.4 billion to $1.7 billion. Updates include additional capital to support the development of the Argo I plant in the Delaware Basin, the Sherwood Complex in the Northeast and an expansion of the Ozark Pipeline. Maintenance capital is forecast at approximately $150 million, an increase of $50 million versus previous guidance, primarily due to expenditures related to assets acquired during the quarter.

Segment Results

(a)   See reconciliation below for details.

Logistics and Storage (L&S) segment operating income increased for the first quarter of 2017 compared with the same period in 2016. The increase was primarily due to the acquisition of the MPLX Terminals, Hardin Street Transportation and Woodhaven Cavern businesses on March 1, 2017, and the acquisition of the Hardin Street Marine business on March 31, 2016.

Gathering and Processing (G&P) segment operating income increased for the first quarter of 2017 compared with the same period in 2016. This increase is due to higher product margins; higher processing and fractionation volumes; and lower transportation costs and other operating expenses.

See reconciliation below for detail on items not allocable to or controllable by any individual segment, which are therefore excluded when evaluating segment performance.

Conference Call

At 11 a.m. EDT today, MPLX will hold a conference call and webcast to discuss the reported results and provide an update on operations. Interested parties may listen to the conference call by dialing 1-800-446-1671 (confirmation number 44548079) or by visiting MPLX's website at http://www.mplx.com and clicking on the "2017 First-Quarter Financial Results" link in the "News & Headlines" section. Replays of the conference call will be available on MPLX's website through Thursday, May 11. Investor-related material will also be available online prior to the conference call and webcast at http://ir.mplx.com.

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About MPLX LP

MPLX is a diversified, growth-oriented master limited partnership formed in 2012 by Marathon Petroleum Corporation to own, operate, develop and acquire midstream energy infrastructure assets. We are engaged in the gathering, processing and transportation of natural gas; the gathering, transportation, fractionation, storage and marketing of NGLs; and the transportation, storage and distribution of crude oil and refined petroleum products. Headquartered in Findlay, Ohio, MPLX's assets consist of a network of common carrier crude oil and products pipeline assets located in the Midwest and Gulf Coast regions of the United States; 62 light-product terminals with approximately 24 million barrels of storage capacity; an inland marine business; crude oil and product storage facilities (tank farms and caverns) with approximately 7.8 million barrels of available storage capacity; a barge dock facility with approximately 78,000 barrels per day of crude oil and product throughput capacity; and gathering and processing assets that include more than 5,600 miles of gas gathering and NGL pipelines, 55 gas processing plants, 14 NGL fractionation facilities and two condensate stabilization facilities.

Investor Relations Contacts:
Lisa D. Wilson (419) 421-2071
Doug Wendt (419) 421-2423
Denice Myers (419) 421-2965

Media Contacts:
Chuck Rice (419) 421-2521
Katie Merx (419) 672-5159

Non-GAAP references
In addition to our financial information presented in accordance with U.S. generally accepted accounting principles (GAAP), management utilizes additional non-GAAP measures to facilitate comparisons of past performance and future periods. This press release and supporting schedules include the non-GAAP measures adjusted EBITDA, distributable cash flow (DCF) and distribution coverage ratio. The amount of adjusted EBITDA and DCF generated is considered by the board of directors of our general partner in approving the Partnership's cash distribution. Adjusted EBITDA and DCF should not be considered separately from or as a substitute for net income, income from operations, or cash flow as reflected in our financial statements. The GAAP measures most directly comparable to adjusted EBITDA and DCF are net income and net cash provided by operating activities. We define Adjusted EBITDA as net income adjusted for (i) depreciation and amortization; (ii) provision (benefit) for income taxes; (iii) amortization of deferred financing costs; (iv) non-cash equity-based compensation; (v) impairment expense; (vi) net interest and other financial costs; (vii) loss (income) from equity investments; (viii) distributions from unconsolidated subsidiaries; (ix) unrealized derivative losses (gains); and (x) acquisition costs. In general, we define DCF as adjusted EBITDA adjusted for (i) deferred revenue impacts; (ii) net interest and other financial costs; (iii) maintenance capital expenditures; and (iv) other non-cash items.

The Partnership makes a distinction between realized or unrealized gains and losses on derivatives. During the period when a derivative contract is outstanding, we record changes in the fair value of the derivative as an unrealized gain or loss. When a derivative contract matures or is settled, we reverse the previously recorded unrealized gain or loss and record the realized gain or loss of the contract.

Adjusted EBITDA is a financial performance measure used by management, industry analysts, investors, lenders, and rating agencies to assess the financial performance and operating results of our ongoing business operations. Additionally, we believe adjusted EBITDA provides useful information to investors for trending, analyzing and benchmarking our operating results from period to period as compared to other companies that may have different financing and capital structures.

DCF is a financial performance measure used by management as a key component in the determination of cash distributions paid to unitholders. We believe DCF is an important financial measure for unitholders as an indicator of cash return on investment and to evaluate whether the partnership is generating sufficient cash flow to support quarterly distributions. In addition, DCF is commonly used by the investment community because the market value of publicly traded partnerships is based, in part, on DCF and cash distributions paid to unitholders.

Distribution coverage ratio is a financial performance measure used by management to reflect the relationship between the partnership's financial operating performance and cash distribution capability. We define the distribution coverage ratio as the ratio of DCF attributable to GP and LP unitholders to total GP and LP distribution declared.

Forward-looking statements
This press release contains forward-looking statements within the meaning of federal securities laws regarding MPLX LP ("MPLX") and Marathon Petroleum Corporation ("MPC"). These forward-looking statements relate to, among other things, expectations, estimates and projections concerning the business and operations of MPLX and MPC, including proposed strategic initiatives. You can identify forward-looking statements by words such as "anticipate," "believe," "design," "estimate," "expect," "forecast," "goal," "guidance," "imply," "intend," "objective," "opportunity," "outlook," "plan," "position," "pursue," "prospective," "predict," "project," "potential," "seek," "strategy," "target," "could," "may," "should," "would," "will" or other similar expressions that convey the uncertainty of future events or outcomes. Such forward-looking statements are not guarantees of future performance and are subject to risks, uncertainties and other factors, some of which are beyond the companies' control and are difficult to predict. Factors that could cause MPLX's actual results to differ materially from those implied in the forward-looking statements include: negative capital market conditions, including an increase of the current yield on common units, adversely affecting MPLX's ability to meet its distribution growth guidance; the time, costs and ability to obtain regulatory or other approvals and consents and otherwise consummate the strategic initiatives discussed herein and other proposed transactions; the satisfaction or waiver of conditions in the agreements governing the strategic initiatives discussed herein and other proposed transactions; our ability to achieve the strategic and other objectives related to the strategic initiatives discussed herein and other proposed transactions; adverse changes in laws including with respect to tax and regulatory matters; inability to agree with respect to the timing of and value attributed to assets identified for dropdown; the adequacy of MPLX's capital resources and liquidity, including, but not limited to, availability of sufficient cash flow to pay distributions, and the ability to successfully execute its business plans and growth strategy; the timing and extent of changes in commodity prices and demand for crude oil, refined products, feedstocks or other hydrocarbon-based products; continued/further volatility in and/or degradation of market and industry conditions; changes to the expected construction costs and timing of projects; completion of midstream infrastructure by competitors; disruptions due to equipment interruption or failure, including electrical shortages and power grid failures; the suspension, reduction or termination of MPC's obligations under MPLX's commercial agreements; modifications to earnings and distribution growth objectives; the level of support from MPC, including dropdowns, alternative financing arrangements, taking equity units, and other methods of sponsor support, as a result of the capital allocation needs of the enterprise as a whole and its ability to provide support on commercially reasonable terms; compliance with federal and state environmental, economic, health and safety, energy and other policies and regulations and/or enforcement actions initiated thereunder; changes to MPLX's capital budget; other risk factors inherent to MPLX's industry; and the factors set forth under the heading "Risk Factors" in MPLX's Annual Report on Form 10-K for the year ended Dec. 31, 2016, filed with the Securities and Exchange Commission (SEC). Factors that could cause MPC's actual results to differ materially from those implied in the forward-looking statements include: the time, costs and ability to obtain regulatory or other approvals and consents and otherwise consummate the strategic initiatives discussed herein; the satisfaction or waiver of conditions in the agreements governing the strategic initiatives discussed herein; our ability to achieve the strategic and other objectives related to the strategic initiatives discussed herein; adverse changes in laws including with respect to tax and regulatory matters; inability to agree with the MPLX conflicts committee with respect to the timing of and value attributed to assets identified for dropdown; changes to the expected construction costs and timing of projects; continued/further volatility in and/or degradation of market and industry conditions; the availability and pricing of crude oil and other feedstocks; slower growth in domestic and Canadian crude supply; the effects of the lifting of the U.S. crude oil export ban; completion of pipeline capacity to areas outside the U.S. Midwest; consumer demand for refined products; transportation logistics; the reliability of processing units and other equipment; MPC's ability to successfully implement growth opportunities; modifications to MPLX earnings and distribution growth objectives, and other risks described above with respect to MPLX; compliance with federal and state environmental, economic, health and safety, energy and other policies and regulations, including the cost of compliance with the Renewable Fuel Standard, and/or enforcement actions initiated thereunder; changes to MPC's capital budget; other risk factors inherent to MPC's industry; and the factors set forth under the heading "Risk Factors" in MPC's Annual Report on Form 10-K for the year ended Dec. 31, 2016, filed with the SEC. In addition, the forward-looking statements included herein could be affected by general domestic and international economic and political conditions. Unpredictable or unknown factors not discussed here, in MPLX's Form 10-K or in MPC's Form 10-K could also have material adverse effects on forward-looking statements. Copies of MPLX's Form 10-K are available on the SEC website, MPLX's website at http://ir.mplx.com or by contacting MPLX's Investor Relations office. Copies of MPC's Form 10-K are available on the SEC website, MPC's website at http://ir.marathonpetroleum.com or by contacting MPC's Investor Relations office.

(a)   Financial results for HST and WHC were recast effective Jan. 1, 2015, and the results for MPLXT were recast effective April 1, 2016. Prior to these dates these companies were not considered businesses and therefore there are no financial results from which to recast. The net income of these businesses is excluded from net income attributable to MPLX LP prior to March 1, 2017, acquisition from MPC.

(a)   The preferred units are considered redeemable securities due to the existence of redemption provisions upon a deemed liquidation event which is outside our control.
(b)   DCF attributable to GP and LP unitholders divided by total GP and LP distribution declared.
(c)   Non-GAAP measure. See reconciliation below.

(a)   Calculated using face value total debt and LTM pro forma adjusted EBITDA, which is pro forma for acquisitions. Face value total debt includes approximately $453 million and $435 million of unamortized discount and debt issuance costs as of March 31, 2017, and Dec. 31, 2016, respectively.
(b)   Class B units were issued to and are held by M&R MWE Liberty LLC, an affiliate of The Energy & Minerals Group. The Class B units will convert into common units at a rate of 1.09 common units and will receive $6.20 in cash for each Class B unit in two equal installments, the first of which occurred on July 1, 2016, and the second of which will occur July 1, 2017. Class B units do not receive distributions.
(c)   Financial information has been retrospectively adjusted to include the results of HST, WHC and MPLXT prior to the March 1, 2017, acquisition from MPC, since MPLX and these businesses are under common control.

(a)   Pipeline throughput and tariff rates as of March 31, 2016, have been recast to reflect the acquisition of HST.
(b)   MPLXT was not established as a business until April 1, 2016, therefore there is no terminal throughput to disclose for the three months ended March 31, 2016.

(a)   All Partnership-operated, non-wholly owned subsidiaries are treated as if they are consolidated.
(b)   The operating income of the Predecessor is excluded from segment operating income attributable to MPLX LP prior to the acquisition dates.
(c)   The Partnership makes a distinction between realized or unrealized gains and losses on derivatives. During the period when a derivative contract is outstanding, we record changes in the fair value of the derivative as an unrealized gain or loss. When a derivative contract matures or is settled, we reverse the previously recorded unrealized gain or loss and record the realized gain or loss of the contract.

(a)   The Partnership makes a distinction between realized or unrealized gains and losses on derivatives. During the period when a derivative contract is outstanding, we record changes in the fair value of the derivative as an unrealized gain or loss. When a derivative contract matures or is settled, we reverse the previously recorded unrealized gain or loss and record the realized gain or loss of the contract.
(b)   The Adjusted EBITDA and DCF adjustments related to the Predecessor are excluded from adjusted EBITDA attributable to MPLX LP and DCF prior to the acquisition dates.

(a)   The Partnership makes a distinction between realized or unrealized gains and losses on derivatives. During the period when a derivative contract is outstanding, we record changes in the fair value of the derivative as an unrealized gain or loss. When a derivative contract matures or is settled, we reverse the previously recorded unrealized gain or loss and record the realized gain or loss of the contract.
(b)   The Adjusted EBITDA and DCF adjustments related to the Predecessor are excluded from adjusted EBITDA attributable to MPLX LP and DCF prior to the acquisition dates.

(a)   Includes capital expenditures of the Predecessor for all periods presented.
(b)   Capital expenditures includes amounts related to unconsolidated, partnership-operated subsidiaries.

(a)   The Partnership makes a distinction between realized or unrealized gains and losses on derivatives. During the period when a derivative contract is outstanding, we record changes in the fair value of the derivative as an unrealized gain or loss. When a derivative contract matures or is settled, we reverse the previously recorded unrealized gain or loss and record the realized gain or loss of the contract.

(a)   The Partnership makes a distinction between realized or unrealized gains and losses on derivatives. During the period when a derivative contract is outstanding, we record changes in the fair value of the derivative as an unrealized gain or loss. When a derivative contract matures or is settled, we reverse the previously recorded unrealized gain or loss and record the realized gain or loss of the contract.

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