OREANDA-NEWS. Marathon Petroleum Corp. (NYSE: MPC) and MPLX LP (NYSE: MPLX) today closed a transaction in which MPC contributed its joint-interest ownership in certain pipelines and storage facilities to MPLX for total consideration of $1.05 billion.

The assets include MPC's ownership interests in:

  • Explorer Pipeline Co., representing a 24.51 percent interest in the company
  • Lincoln Pipeline LLC, representing a 35 percent interest in the Southern Access Extension Pipeline (SAX)
  • MPL Louisiana Holdings LLC, representing a 40.7 percent interest in the Louisiana Offshore Oil Port (LOOP)
  • LOCAP LLC, representing a 58.52 percent interest in the company

These joint-interest acquisitions are projected to generate approximately $138 million of 2018 adjusted earnings before interest, taxes, depreciation and amortization (EBITDA). Adjusted EBITDA with respect to the joint-interest acquisitions is calculated as cash distributions adjusted for maintenance capital, growth capital and financing activities.

"This dropdown of joint-interest ownership will add further scale and diversity to MPLX and represents the latest step in our strategic plan, which is designed to create long-term value for our investors," MPC Chairman and CEO Gary R. Heminger said.

MPC is contributing these assets in exchange for $630 million in MPLX equity and $420 million in cash. The equity component of the transaction consists of MPLX common units and general partner units to maintain MPC's 2 percent general partner interest in MPLX. The cash portion of the transaction will be funded by a draw on MPLX's $2.25 billion revolving credit facility. The units are valued based on the 10-day volume-weighted average price of MPLX common units prior to the closing.

The total consideration equates to a 7.6-times multiple of the $138 million of EBITDA these interests are expected to generate in 2018. The transaction is expected to be immediately accretive to MPLX's distributable cash flow per unit.

The terms of the acquisition were approved by the MPLX Board of Directors following the approval of the transaction by its independent conflicts committee. The conflicts committee was advised by Jefferies LLC as to financial matters and Andrews Kurth Kenyon LLP as to legal matters. MPC was advised by Tudor, Pickering, Holt & Co. as to financial matters.

About Marathon Petroleum Corporation

MPC is the nation's third-largest refiner, with a crude oil refining capacity of approximately 1.8 million barrels per calendar day in its seven-refinery system. Marathon brand gasoline is sold through approximately 5,600 independently owned retail outlets across 19 states. In addition, Speedway LLC, an MPC subsidiary, owns and operates the nation's second-largest convenience store chain, with approximately 2,730 convenience stores in 21 states. MPC owns, leases or has ownership interests in approximately 10,800 miles of crude and light product pipelines. Through subsidiaries, MPC owns the general partner of MPLX LP, a midstream master limited partnership. Through MPLX, MPC has ownership interests in gathering and processing facilities with approximately 5.6 billion cubic feet per day of gathering capacity, 7.8 billion cubic feet per day of natural gas processing capacity and 570,000 barrels per day of fractionation capacity. MPC's fully integrated system provides operational flexibility to move crude oil, NGLs, feedstocks and petroleum-related products efficiently through the company's distribution network and midstream service businesses in the Midwest, Northeast, East Coast, Southeast and Gulf Coast regions.


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 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; storage caverns with approximately 2.8 million barrels of storage capacity; crude oil and product storage facilities (tank farms) with approximately 5 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 approximately 5.6 billion cubic feet per day of gathering capacity, 7.8 billion cubic feet per day of natural gas processing capacity and 570,000 barrels per day of fractionation capacity.