FINDLAY, Ohio,
Dec. 15, 2017 - Marathon Petroleum Corp. (NYSE: MPC) and MPLX LP
(NYSE: MPLX) today announced a definitive agreement for MPC to
exchange its general partner (GP) economic interests in MPLX, which
include incentive distribution rights (IDRs), for 275 million newly
issued MPLX common (LP) units valued at approximately $10.1 billion
based on the volume-weighted average price of MPLX over the past 10
days.
The transaction is expected to close on Feb. 1,
2018, subject to and immediately following the closing of the
previously announced dropdown of refining logistics assets and
fuels distribution services. Upon closing, MPC will continue to
control MPLX through its ownership of the non-economic GP interest
in MPLX and will own approximately 64 percent of the outstanding
MPLX common units.
The exchange simplifies the corporate structure
and provides a clear valuation for MPC's GP economic interests in
MPLX. The exchange eliminates the GP cash distribution requirements
of the partnership and is expected to be accretive to distributable
cash flow attributable to common unitholders in the third quarter
and for the full year 2018.
"We are pleased to complete the strategic actions
announced in January with the agreement to exchange MPC's GP
economic interests for LP units, which will result in substantial
long-term benefits across the enterprise," said Gary R. Heminger,
chairman and CEO of both MPC and MPLX. "MPLX is well-positioned to
deliver long-term growth while maintaining strong distribution
coverage. This exchange fully aligns the interests of MPC and MPLX
and facilitates predictable and growing distributions to all
unitholders of MPLX, including MPC."
"We are enthusiastic about the future for MPLX and
the value proposition for our unitholders," said Michael J.
Hennigan, president of MPLX. "The elimination of the rapidly
growing IDR obligation improves the partnership's cost of capital
permanently. We believe this buy-in creates one of the fastest
paths to accretion compared with similar GP transactions, and
positions the partnership extraordinarily well for the future. This
transaction and the dropdown will help facilitate our plan to
target strong distribution coverage and maintain an
investment-grade credit profile, both of which enable attractive
and sustainable distribution growth for the long-term."
In addition, MPC has agreed to waive the portion
of the fourth-quarter 2017 LP distributions on the new units in
excess of what would have been distributable to MPC for its GP
economic interests absent this transaction.
This transaction was unanimously approved by the
board of directors of MPC. The MPLX board also unanimously approved
the transaction following special approval 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 Citi as to financial
matters and Vinson & Elkins LLP as to legal 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 20 states and the District of Columbia. 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. Through subsidiaries, MPC owns the
general partner of MPLX LP, a midstream master limited partnership.
Primarily through MPLX, MPC owns, leases or has ownership interests
in approximately 10,800 miles of crude oil and light product
pipelines. Also through MPLX, MPC has ownership interests in
gathering and processing facilities with approximately 5.9 billion
cubic feet per day of gathering capacity, 8 billion cubic feet per
day of natural gas processing capacity and 610,000 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.
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 through a marine fleet
and approximately 10,000 miles of crude oil and light-product
pipelines. 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 5.9 billion cubic feet per day of
gathering capacity, 8 billion cubic feet per day of natural gas
processing capacity and 610,000 barrels per day of fractionation
capacity.
Investor Relations
Contacts:
Lisa Wilson (419) 421-2071
Denice Myers (419) 421-2965
Doug Wendt (419) 421-2423
Media Contacts:
Chuck Rice (419) 421-2521
Katie Merx (419) 672-5159
Forward-looking
Statements
This press release contains forward-looking
statements within the meaning of federal securities laws regarding
Marathon Petroleum Corporation ("MPC") and MPLX LP ("MPLX"). These
forward-looking statements relate to, among other things,
expectations, estimates and projections concerning the business and
operations of MPC and MPLX, including strategic initiatives and our
value creation plans. 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 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; our ability to generate
sufficient income and cash flow to effect the intended share
repurchases, including within the expected timeframe; our ability
to manage disruptions in credit markets or changes to our credit
rating; the potential impact on our share price if we are unable to
effect the intended share repurchases; adverse changes in laws
including with respect to tax and regulatory matters;
continued/further volatility in and/or degradation of market and
industry conditions; the impact of adverse market conditions
affecting MPC's and MPLX's midstream businesses; modifications to
MPLX earnings and distribution growth objectives, and other risks
described below with respect to MPLX; 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
Securities and Exchange Commission (SEC). 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; 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; the adequacy of MPLX's capital resources and
liquidity, including, but not limited to, availability of
sufficient cash flow to pay distributions and access to debt to
fund anticipated dropdowns on commercially reasonable terms, 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; 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; 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 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 MPC's Form 10-K or in MPLX's Form 10-K could
also have material adverse effects on forward-looking statements.
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. 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.
IDR release 121517
This
announcement is distributed by Nasdaq Corporate Solutions on behalf
of Nasdaq Corporate Solutions clients.
The issuer of this announcement warrants that they are solely
responsible for the content, accuracy and originality of the
information contained therein.
Source: Marathon Petroleum Corporation via
Globenewswire
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