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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 _____________________________________________
FORM 10-Q
 ____________________________________________
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2021
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from                      to                     
Commission file number 001-35714
_____________________________________________ 
MPLX LP
(Exact name of registrant as specified in its charter)
 _____________________________________________
Delaware 27-0005456
(State or other jurisdiction of
incorporation or organization)
  (I.R.S. Employer
Identification No.)
200 E. Hardin Street, Findlay, Ohio   45840
(Address of principal executive offices) (Zip code)

(419) 421-2414
(Registrant’s telephone number, including area code)
 _____________________________________________
Securities Registered pursuant to Section 12(b) of the Act
Title of each class  Trading symbol(s) Name of each exchange on which registered
Common Units Representing Limited Partnership Interests MPLX New York Stock Exchange
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes  x     No  ¨

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files.) Yes  x    No  ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer x Accelerated filer
Non-accelerated filer Smaller reporting company
Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act) Yes      No  x

MPLX LP had 1,029,527,052 common units outstanding at April 30, 2021.


Table of Contents

Unless the context otherwise requires, references in this report to “MPLX LP,” “MPLX,” “the Partnership,” “we,” “our,” “us,” or like terms refer to MPLX LP and its subsidiaries. Additionally, throughout this Quarterly Report on Form 10-Q, we have used terms in our discussion of the business and operating results that have been defined in our Glossary of Terms.

1


Glossary of Terms

The abbreviations, acronyms and industry technology used in this report are defined as follows.
ASC Accounting Standards Codification
ASU Accounting Standards Update
Barrel One stock tank barrel, or 42 United States gallons of liquid volume, used in reference to crude oil or other liquid hydrocarbons
Bcf/d One billion cubic feet per day
Btu One British thermal unit, an energy measurement
Condensate A natural gas liquid with a low vapor pressure mainly composed of propane, butane, pentane and heavier hydrocarbon fractions
DCF (a non-GAAP financial measure) Distributable Cash Flow
EBITDA (a non-GAAP financial measure) Earnings Before Interest, Taxes, Depreciation and Amortization
FASB Financial Accounting Standards Board
GAAP Accounting principles generally accepted in the United States of America
LIBOR London Interbank Offered Rate
mbpd Thousand barrels per day
Merger MPLX acquisition by merger of Andeavor Logistics LP (“ANDX”) on July 30, 2019
MMBtu One million British thermal units, an energy measurement
MMcf/d One million cubic feet of natural gas per day
NGL Natural gas liquids, such as ethane, propane, butanes and natural gasoline
NYSE New York Stock Exchange
Realized derivative gain/loss The gain or loss recognized when a derivative matures or is settled
SEC United States Securities and Exchange Commission
Unrealized derivative gain/loss The gain or loss recognized on a derivative due to changes in fair value prior to the instrument maturing or settling
VIE Variable interest entity
Wholesale Exchange The transfer to MPC of the Western wholesale distribution business, which MPLX acquired as a result of its acquisition of ANDX, on July 31, 2020.

2


Part I—Financial Information

Item 1. Financial Statements
MPLX LP
Consolidated Statements of Income (Unaudited)
Three Months Ended 
March 31,
(In millions, except per unit data) 2021 2020
Revenues and other income:
Service revenue $ 589  $ 612 
Service revenue - related parties 872  928 
Service revenue - product related 77  39 
Rental income 99  96 
Rental income - related parties 242  234 
Product sales 282  169 
Product sales - related parties 42  33 
Income/(loss) from equity method investments(1)
70  (1,184)
Other income
Other income - related parties 65  64 
Total revenues and other income 2,339  992 
Costs and expenses:
Cost of revenues (excludes items below) 273  368 
Purchased product costs 276  135 
Rental cost of sales 32  35 
Rental cost of sales - related parties 39  46 
Purchases - related parties 298  276 
Depreciation and amortization 329  325 
Impairment expense —  2,165 
General and administrative expenses 86  97 
Other taxes 32  31 
Total costs and expenses 1,365  3,478 
Income/(loss) from operations 974  (2,486)
Related party interest and other financial costs — 
Interest expense (net of amounts capitalized of $5 million, $13 million, respectively)
198  211 
Other financial costs 27  16 
Income/(loss) before income taxes 749  (2,716)
Provision for income taxes — 
Net income/(loss) 748  (2,716)
Less: Net income attributable to noncontrolling interests
Net income/(loss) attributable to MPLX LP 739  (2,724)
Less: Series A preferred unit distributions 20  20 
Less: Series B preferred unit distributions 11  11 
Limited partners’ interest in net income/(loss) attributable to MPLX LP $ 708  $ (2,755)
Per Unit Data (See Note 6)
Net income/(loss) attributable to MPLX LP per limited partner unit:
Common - basic $ 0.68  $ (2.60)
Common - diluted $ 0.68  $ (2.60)
Weighted average limited partner units outstanding:
Common - basic 1,037  1,058 
Common - diluted 1,037  1,058 

(1)     The 2020 period includes $1,264 million of impairment expense. See Note 4.

The accompanying notes are an integral part of these consolidated financial statements.
3


MPLX LP
Consolidated Statements of Comprehensive Income (Unaudited)
Three Months Ended 
March 31,
(In millions) 2021 2020
Net income/(loss) $ 748  $ (2,716)
Other comprehensive income/(loss), net of tax:
Remeasurements of pension and other postretirement benefits related to equity method investments, net of tax (2) (1)
Comprehensive income/(loss) 746  (2,717)
Less comprehensive income attributable to:
Noncontrolling interests
Comprehensive income/(loss) attributable to MPLX LP $ 737  $ (2,725)


The accompanying notes are an integral part of these consolidated financial statements.

4


MPLX LP
Consolidated Balance Sheets (Unaudited)
 
(In millions) March 31, 2021 December 31, 2020
Assets
Current assets:
Cash and cash equivalents $ 24  $ 15 
Receivables, net 523  452 
Current assets - related parties 650  677 
Inventories 128  118 
Assets held for sale —  188 
Other current assets 49  65 
Total current assets 1,374  1,515 
Equity method investments 4,040  4,036 
Property, plant and equipment, net 20,996  21,218 
Intangibles, net 927  959 
Goodwill 7,657  7,657 
Right of use assets, net 296  309 
Noncurrent assets - related parties 676  672 
Other noncurrent assets 64  48 
Total assets 36,030  36,414 
Liabilities
Current liabilities:
Accounts payable 162  152 
Accrued liabilities 233  194 
Current liabilities - related parties 338  356 
Accrued property, plant and equipment 58  84 
Long-term debt due within one year 764 
Accrued interest payable 189  222 
Operating lease liabilities 63  63 
Liabilities held for sale —  101 
Other current liabilities 151  150 
Total current liabilities 1,196  2,086 
Long-term deferred revenue 332  314 
Long-term liabilities - related parties 279  283 
Long-term debt 20,052  19,375 
Deferred income taxes 11  12 
Long-term operating lease liabilities 230  244 
Deferred credits and other liabilities 112  115 
Total liabilities 22,212  22,429 
Commitments and contingencies (see Note 21)
Series A preferred units 968  968 
Equity
Common unitholders - public (385 million and 391 million units issued and outstanding)
9,226  9,384 
Common unitholders - MPC (647 million and 647 million units issued and outstanding)
2,796  2,792 
Series B preferred units (.6 million and .6 million units issued and outstanding)
601  611 
Accumulated other comprehensive loss (17) (15)
Total MPLX LP partners’ capital 12,606  12,772 
Noncontrolling interests 244  245 
Total equity 12,850  13,017 
Total liabilities, preferred units and equity $ 36,030  $ 36,414 

The accompanying notes are an integral part of these consolidated financial statements.
5


MPLX LP
Consolidated Statements of Cash Flows (Unaudited)
Three Months Ended 
March 31,
(In millions) 2021 2020
Increase/(decrease) in cash, cash equivalents and restricted cash
Operating activities:
Net income/(loss) $ 748  $ (2,716)
Adjustments to reconcile net income/(loss) to net cash provided by operating activities:
Amortization of deferred financing costs 17  14 
Depreciation and amortization 329  325 
Impairment expense —  2,165 
(Income)/loss from equity method investments(1)
(70) 1,184 
Distributions from unconsolidated affiliates 119  119 
Changes in:
Current receivables (67) 71 
Inventories (11)
Fair value of derivatives (15)
Current accounts payable and accrued liabilities 26  (142)
Current assets/current liabilities - related parties (8) (52)
Right of use assets/operating lease liabilities (1) (4)
Deferred revenue 24  27 
All other, net 15  30 
Net cash provided by operating activities 1,124  1,009 
Investing activities:
Additions to property, plant and equipment (126) (379)
Disposal of assets 70  39 
Investments in unconsolidated affiliates (35) (91)
Distributions from unconsolidated affiliates - return of capital —  69 
All other, net — 
Net cash used in investing activities (90) (362)
Financing activities:
Long-term debt - borrowings 1,910  1,325 
       - repayments (2,020) (581)
Related party debt - borrowings 2,241  1,667 
        - repayments (2,241) (2,261)
Unit repurchases (155) — 
Distributions to noncontrolling interests (10) (9)
Distributions to Series A preferred unitholders (20) (20)
Distributions to Series B preferred unitholders (21) (21)
Distributions to unitholders and general partner (713) (717)
Contributions from MPC 14 
All other, net (3) (2)
Net cash used in financing activities (1,025) (605)
Net increase in cash, cash equivalents and restricted cash 42 
Cash, cash equivalents and restricted cash at beginning of period 15  15 
Cash, cash equivalents and restricted cash at end of period $ 24  $ 57 

(1)     The 2020 period includes $1,264 million of impairment expense. See Note 4.

The accompanying notes are an integral part of these consolidated financial statements.
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MPLX LP
Consolidated Statements of Equity (Unaudited)

  Partnership    
(In millions) Common
Unit-holders
Public
Common
Unit-holder
MPC
Series B Preferred Unit-holders Accumulated Other Comprehensive Loss Non-controlling
Interests
Total
Balance at December 31, 2019 $ 10,800  $ 4,968  $ 611  $ (15) $ 249  $ 16,613 
Net (loss)/income (excludes amounts attributable to preferred units) (1,022) (1,733) 11  —  (2,736)
Distributions to:
Unitholders (271) (446) (21) —  —  (738)
Noncontrolling interests —  —  —  —  (9) (9)
Contributions from:
MPC —  225  —  —  —  225 
Other —  —  (1) — 
Balance at March 31, 2020 9,509  3,014  601  (16) 248  13,356 
Balance at December 31, 2020 9,384  2,792  611  (15) 245  13,017 
Net income (excludes amounts attributable to preferred units) 266  443  11  —  729 
Unit Repurchases (155) —  —  —  —  (155)
Distributions to:
Unitholders (269) (445) (21) —  —  (735)
Noncontrolling interests —  —  —  —  (10) (10)
Contributions from:
MPC —  —  —  — 
Other —  (1) —  (2) —  (3)
Balance at March 31, 2021 $ 9,226  $ 2,796  $ 601  $ (17) $ 244  $ 12,850 

The accompanying notes are an integral part of these consolidated financial statements.
7


Notes to Consolidated Financial Statements (Unaudited)

1. Description of the Business and Basis of Presentation

Description of the Business – MPLX LP is a diversified, large-cap master limited partnership formed by Marathon Petroleum Corporation that owns and operates midstream energy infrastructure and logistics assets, and provides fuels distribution services. References in this report to “MPLX LP,” “MPLX,” “the Partnership,” “we,” “ours,” “us,” or like terms refer to MPLX LP and its subsidiaries. References to “MPC” refer collectively to Marathon Petroleum Corporation as our sponsor and its subsidiaries, other than the Partnership. We are engaged in the transportation, storage and distribution of crude oil, asphalt and refined petroleum products; the gathering, processing and transportation of natural gas; and the gathering, transportation, fractionation, storage and marketing of NGLs. MPLX’s principal executive office is located in Findlay, Ohio.

MPLX’s business consists of two segments based on the nature of services it offers: Logistics and Storage (“L&S”), which relates primarily to crude oil, asphalt and refined petroleum products; and Gathering and Processing (“G&P”), which relates primarily to natural gas and NGLs. See Note 9 for additional information regarding the operations and results of these segments.

On July 31, 2020, MPLX completed the exchange of Western Refining Wholesale, LLC (“WRW”) to Western Refining Southwest, Inc. (now known as Western Refining Southwest LLC) (“WRSW”), a wholly owned subsidiary of MPC, in exchange for the redemption of 18,582,088 MPLX common units held by WRSW (the “Wholesale Exchange”). See Note 3 for additional information regarding the Wholesale Exchange. These financial statements include the results of WRSW through July 31, 2020.

Impairments – During the first quarter of 2021, we have seen improvement in the environment in which our business operates as COVID-19 impacts are beginning to subside. The increased availability of vaccinations, coupled with an easing of COVID-19 restrictions in certain areas, has been followed by an increase in economic activity, the opening of many businesses and schools and an increase in in-person interaction and associated travel. No additional events or circumstances arose during the first quarter of 2021 that would indicate potential impairment beyond those recognized in 2020 as noted below.

During the first quarter of 2020, the overall deterioration in the economy and the environment in which MPLX and its customers operate, as well as a sustained decrease in unit price, were considered triggering events at that time resulting in impairments of the carrying value of certain assets. We recognized impairments related to goodwill, certain equity method investments and certain long-lived assets (including intangibles), within our G&P segment. Many of our producer customers refined and updated production forecasts in response to the environment at that time, which impacted their expected future demand for our services, including the future utilization of our assets. Additionally, certain of our contracts have commodity price exposure, including NGL prices, which experienced increased volatility as noted above. The table below provides information related to the impairments recognized during the first quarter of 2020 as well as the corresponding footnote where additional information can be found.
(In millions) Impairment Footnote Reference
Goodwill $ 1,814  12
Equity method investments 1,264  4
Intangibles, net 177  12
Property, plant and equipment, net 174  11
Total impairments $ 3,429 

Basis of Presentation – The accompanying interim consolidated financial statements are unaudited; however, in the opinion of MPLX’s management, these statements reflect all adjustments necessary for a fair statement of the results for the periods reported. All such adjustments are of a normal, recurring nature unless otherwise disclosed. These interim consolidated financial statements, including the notes, have been prepared in accordance with the rules and regulations of the SEC applicable to interim period financial statements and do not include all of the information and disclosures required by GAAP for complete financial statements.

These interim consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Annual Report on Form 10-K for the year ended December 31, 2020. The results of operations for the three months ended March 31, 2021 are not necessarily indicative of the results to be expected for the full year.

8


MPLX’s consolidated financial statements include all majority-owned and controlled subsidiaries. For non-wholly owned consolidated subsidiaries, the interests owned by third parties have been recorded as “Noncontrolling interests” on the accompanying Consolidated Balance Sheets. Intercompany investments, accounts and transactions have been eliminated. MPLX’s investments in which MPLX exercises significant influence but does not control and does not have a controlling financial interest are accounted for using the equity method. MPLX’s investments in VIEs in which MPLX exercises significant influence but does not control and is not the primary beneficiary are also accounted for using the equity method.

In preparing the Consolidated Statements of Equity, net income attributable to MPLX LP is allocated to Series A and Series B preferred unitholders based on a fixed distribution schedule. Distributions, although earned, are not accrued until declared. The allocation of net income attributable to MPLX LP for purposes of calculating net income per limited partner unit is described in Note 6.

2. Accounting Standards

Recently Adopted

We did not adopt any ASUs during the first three months of 2021 that are expected to have a material impact to our financial statements or financial statement disclosures.
3. Acquisitions and Dispositions

Sale of Javelina Assets and Liabilities

On February 12, 2021, MarkWest Energy Operating Company, L.L.C., (“MarkWest Energy”) a wholly owned subsidiary of MPLX, completed the sale of all of MarkWest Energy’s equity interests in MarkWest Javelina Company L.L.C., MarkWest Javelina Pipeline Company L.L.C., and MarkWest Gas Services L.L.C. (collectively, “Javelina”) pursuant to the terms of an Equity Purchase Agreement entered into with a third party on December 23, 2020. The agreement included adjustments for working capital as well as an earnout provision based on the performance of the assets. No gain or loss was recorded on the sale. The estimated value of the earnout provision was recorded as a contingent asset shown within “Other noncurrent assets” on the Consolidated Balance Sheet as of March 31, 2021. Javelina’s assets and liabilities sold are shown on the Consolidated Balance Sheet as “Assets held for sale” and “Liabilities held for sale” for the year ended December 31, 2020. Prior to the sale, Javelina was reported within the G&P segment.

Wholesale Exchange

On July 31, 2020, MPLX entered into a Redemption Agreement (the “Redemption Agreement”) with WRSW, a wholly owned subsidiary of MPC, pursuant to which MPLX agreed to transfer to WRSW all of the outstanding membership interests in WRW in exchange for the redemption of MPLX common units held by WRSW. The transaction effected the transfer to MPC of the Western wholesale distribution business that MPLX acquired as a result of its acquisition of ANDX. Per the terms of the Redemption Agreement, MPLX redeemed 18,582,088 common units (the “Redeemed Units”) held by WRSW on July 31, 2020. The number of Redeemed Units was calculated by dividing WRW’s aggregate valuation of $340 million by the simple average of the volume weighted average NYSE prices of an MPLX common unit for the ten trading days ending at market close on July 27, 2020. MPLX canceled the Redeemed Units immediately following the Wholesale Exchange. The carrying value of the net assets of WRW transferred to MPC was approximately $90 million as of July 31, 2020, resulting in $250 million being recorded to “Common Unit-holder MPC” within the Consolidated Statements of Equity, netted against the fair value of the redeemed units. Included within the $90 million carrying value of the WRW net assets was approximately $65 million of goodwill.


9


4. Investments and Noncontrolling Interests

The following table presents MPLX’s equity method investments at the dates indicated:
Ownership as of Carrying value at
March 31, March 31, December 31,
(In millions, except ownership percentages) 2021 2021 2020
L&S
MarEn Bakken Company LLC(1)
25% $ 462  $ 465 
Illinois Extension Pipeline Company, L.L.C. 35% 259  254 
LOOP LLC 41% 257  252 
Andeavor Logistics Rio Pipeline LLC(2)
67% 193  194 
Minnesota Pipe Line Company, LLC 17% 187  188 
Whistler Pipeline LLC(2)
38% 187  185 
Explorer Pipeline Company 25% 69  72 
W2W Holdings LLC(2)(3)
50% 73  72 
Other(2)
105  103 
Total L&S 1,792  1,785 
G&P
MarkWest Utica EMG, L.L.C.(2)
57% 696  698 
Sherwood Midstream LLC(2)
50% 552  557 
MarkWest EMG Jefferson Dry Gas Gathering Company, L.L.C.(2)
67% 313  307 
Rendezvous Gas Services, L.L.C.(2)
78% 157  159 
Sherwood Midstream Holdings LLC(2)
51% 145  148 
Centrahoma Processing LLC 40% 137  145 
Other(2)
248  237 
Total G&P 2,248  2,251 
Total $ 4,040  $ 4,036 
(1)    The investment in MarEn Bakken Company LLC includes our 9.19 percent indirect interest in a joint venture (“Dakota Access”) that owns and operates the Dakota Access Pipeline and Energy Transfer Crude Oil Pipeline projects, collectively referred to as the Bakken Pipeline system or DAPL.    
(2)    Investments deemed to be VIEs. Some investments included within “Other” have also been deemed to be VIEs.
(3)    Through our ownership interest in W2W Holdings LLC, we have a 15 percent equity interest Wink to Webster Pipeline LLC.

For those entities that have been deemed to be VIEs, neither MPLX nor any of its subsidiaries have been deemed to be the primary beneficiary due to voting rights on significant matters. While we have the ability to exercise influence through participation in the management committees which make all significant decisions, we have equal influence over each committee as a joint interest partner and all significant decisions require the consent of the other investors without regard to economic interest and as such we have determined that these entities should not be consolidated and apply the equity method of accounting with respect to our investments in each entity.

Sherwood Midstream LLC (“Sherwood Midstream”) has been deemed the primary beneficiary of Sherwood Midstream Holdings LLC (Sherwood Midstream Holdings”) due to its controlling financial interest through its authority to manage the joint venture. As a result, Sherwood Midstream consolidates Sherwood Midstream Holdings. Therefore, MPLX also reports its portion of Sherwood Midstream Holdings’ net assets as a component of its investment in Sherwood Midstream. As of March 31, 2021, MPLX has a 24.55 percent indirect ownership interest in Sherwood Midstream Holdings through Sherwood Midstream.

MPLX’s maximum exposure to loss as a result of its involvement with equity method investments includes its equity investment, any additional capital contribution commitments and any operating expenses incurred by the subsidiary operator in excess of its compensation received for the performance of the operating services. MPLX did not provide any financial support to equity method investments that it was not contractually obligated to provide during the three months ended March 31, 2021.


10


During the first quarter of 2020, we recorded an other than temporary impairment for three joint ventures in which we have an interest as discussed in Note 1. Impairment of these investments was $1,264 million, of which $1,251 million was related to MarkWest Utica EMG, L.L.C. and its investment in Ohio Gathering Company, L.L.C. The impairment was recorded through “Income from equity method investments.” The impairments were largely due to a reduction in forecasted volumes gathered and processed by the systems operated by the joint ventures. No additional impairments have been recorded since that time.

Summarized financial information for MPLX’s equity method investments for the three months ended March 31, 2021 and 2020 is as follows:
Three Months Ended March 31, 2021
(In millions) VIEs Non-VIEs Total
Revenues and other income $ 163  $ 284  $ 447 
Costs and expenses 107  131  238 
Income from operations 56  153  209 
Net income 64  140  204 
Income from equity method investments(1)
$ 39  $ 31  $ 70 
(1)    Includes the impact of any basis differential amortization or accretion.
Three Months Ended March 31, 2020
(In millions) VIEs Non-VIEs Total
Revenues and other income $ (217) $ 337  $ 120 
Costs and expenses 104  132  236 
(Loss)/income from operations (321) 205  (116)
Net (loss)/income (337) 186  (151)
(Loss)/income from equity method investments(1)
$ (1,222) $ 38  $ (1,184)
(1)    Includes the impact of any basis differential amortization or accretion in addition to the impairment of $1,264 million.

Summarized balance sheet information for MPLX’s equity method investments as of March 31, 2021 and December 31, 2020 is as follows:
March 31, 2021
(In millions) VIEs Non-VIEs Total
Current assets $ 312  $ 321  $ 633 
Noncurrent assets 7,266  4,967  12,233 
Current liabilities 338  194  532 
Noncurrent liabilities $ 2,053  $ 853  $ 2,906 

December 31, 2020
(In millions) VIEs Non-VIEs Total
Current assets $ 530  $ 318  $ 848 
Noncurrent assets 6,889  4,997  11,886 
Current liabilities 323  187  510 
Noncurrent liabilities $ 1,904  $ 830  $ 2,734 

As of March 31, 2021 and December 31, 2020, the underlying net assets of MPLX’s investees in the G&P segment exceeded the carrying value of its equity method investments by approximately $56 million and $57 million, respectively. As of March 31, 2021 and December 31, 2020, the carrying value of MPLX’s equity method investments in the L&S segment exceeded the underlying net assets of its investees by $331 million.

At March 31, 2021 and December 31, 2020, the G&P basis difference was being amortized into net income over the remaining estimated useful lives of the underlying assets, except for $31 million of excess related to goodwill. At March 31, 2021 and December 31, 2020, the L&S basis difference was being amortized into net income over the remaining estimated useful lives of the underlying assets, except for $167 million of excess related to goodwill.

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5. Related Party Agreements and Transactions

MPLX engages in transactions with both MPC and certain of its equity method investments as part of its normal business; however, transactions with MPC make up the majority of MPLX’s related party transactions. Transactions with related parties are further described below.

MPLX has various long-term, fee-based commercial agreements with MPC. Under these agreements, MPLX provides transportation, terminal, fuels distribution, marketing, storage, management, operational and other services to MPC. MPC has committed to provide MPLX with minimum quarterly throughput volumes on crude oil and refined products and other fees for storage capacity; operating and management fees; as well as reimbursements for certain direct and indirect costs. MPC has also committed to provide a fixed fee for 100 percent of available capacity for boats, barges and third-party chartered equipment under the marine transportation service agreement. MPLX also has a keep-whole commodity agreement with MPC under which MPC pays us a processing fee for NGLs related to keep-whole agreements and delivers shrink gas to the producers on our behalf. We pay MPC a marketing fee in exchange for assuming the commodity risk. Additionally, MPLX has obligations to MPC for services provided to MPLX by MPC under omnibus and employee services-type agreements as well as other various agreements.

Related Party Loan

MPLX is party to a loan agreement with MPC Investment LLC (“MPC Investment”) (the “MPC Loan Agreement”). Under the terms of the agreement, MPC Investment extends loans to MPLX on a revolving basis as requested by MPLX and as agreed to by MPC Investment. The borrowing capacity of the MPC Loan Agreement is $1.5 billion aggregate principal amount of all loans outstanding at any one time. The loan agreement is scheduled to expire, and borrowings under the loan agreement are scheduled to mature and become due and payable on July 31, 2024, provided that MPC Investment may demand payment of all or any portion of the outstanding principal amount of the loan, together with all accrued and unpaid interest and other amounts (if any), at any time prior to maturity. Borrowings under the MPC Loan Agreement bear interest at LIBOR plus 1.25 percent or such lower rate as would be applicable to such loans under the MPLX Credit Agreement as discussed in Note 15. Activity on the MPC Loan Agreement was as follows:
(In millions) Three Months Ended March 31, 2021 Year Ended December 31, 2020
Borrowings $ 2,241  $ 6,264 
Average interest rate of borrowings 1.371  % 2.278  %
Repayments $ 2,241  $ 6,858 
Outstanding balance at end of period(1)
$ —  $ — 
(1)     Included in “Current liabilities - related parties” on the Consolidated Balance Sheets.

Related Party Revenue

Related party sales to MPC consist of crude oil and refined products pipeline and trucking transportation services based on tariff/contracted rates; storage, terminal and fuels distribution services based on contracted rates; and marine transportation services. Related party sales to MPC also consist of revenue related to volume deficiency credits.

MPLX also has operating agreements with MPC under which it receives a fee for operating MPC’s retained pipeline assets and a fixed annual fee for providing oversight and management services required to run the marine business. MPLX also receives management fee revenue for engineering, construction and administrative services for operating certain of its equity method investments.

Revenue received from related parties included on the Consolidated Statements of Income was as follows:
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  Three Months Ended March 31,
(In millions) 2021 2020
Service revenues - related parties
MPC $ 871  $ 927 
Other
Total Service revenue - related parties 872  928 
Rental income - related parties
MPC 242  234 
Product sales - related parties(1)
MPC 42  33 
Other income - related parties
MPC 49  48 
Other 16  16 
Total Other income - related parties $ 65  $ 64 
(1)     There were additional product sales to MPC that net to zero within the consolidated financial statements as the transactions are recorded net due to the terms of the agreements under which such product was sold. For the three months ended March 31, 2021 and March 31, 2020, these sales totaled $168 million and $173 million, respectively.

Related Party Expenses

MPC provides executive management services and certain general and administrative services to MPLX under the terms of our omnibus agreements (“Omnibus charges”). Omnibus charges included in “Rental cost of sales - related parties” primarily relate to services that support MPLX’s rental operations and maintenance of assets available for rent. Omnibus charges included in “Purchases - related parties” primarily relate to services that support MPLX’s operations and maintenance activities, as well as compensation expenses. Omnibus charges included in “General and administrative expenses” primarily relate to services that support MPLX’s executive management, accounting and human resources activities. MPLX also obtains employee services from MPC under employee services agreements (“ESA charges”). ESA charges for personnel directly involved in or supporting operations and maintenance activities related to rental services are classified as “Rental cost of sales - related parties.” ESA charges for personnel directly involved in or supporting operations and maintenance activities related to other services are classified as “Purchases - related parties.” ESA charges for personnel involved in executive management, accounting and human resources activities are classified as “General and administrative expenses.” In addition to these agreements, MPLX purchases products from MPC, makes payments to MPC in its capacity as general contractor to MPLX, and has certain lease agreements with MPC.

Expenses incurred from MPC under the omnibus and employee services agreements as well as other purchases from MPC included on the Consolidated Statements of Income are as follows:
  Three Months Ended March 31,
(In millions) 2021 2020
Rental cost of sales - related parties
MPC $ 39  $ 46 
Purchases - related parties
MPC 294  271 
Other
Total Purchases - related parties 298  276 
General and administrative expenses
MPC $ 57  $ 64 

Some charges incurred under the omnibus and ESA agreements are related to engineering services and are associated with assets under construction. These charges are added to “Property, plant and equipment, net” on the Consolidated Balance Sheets. For the three months ended March 31, 2021 and March 31, 2020, these charges totaled $12 million and $36 million, respectively.

13


MPC has also been advancing certain strategic priorities to lay a foundation for long-term success, including plans to optimize its assets and structurally lower costs in 2021 and beyond. In 2020, MPC approved and executed an involuntary workforce reduction plan, which together with employee reductions resulting from MPC's indefinite idling of its Martinez, California and Gallup, New Mexico refineries, affected approximately 2,050 employees. All of the employees that conduct MPLX’s business are directly employed by affiliates of MPC, and certain of those employees were affected by MPC’s workforce reductions. During the third and fourth quarters of 2020, MPLX reimbursed MPC for $37 million related to severance and employee benefits related expenses that MPC recorded in connection with its workforce reductions. There were no such costs in the first quarter of 2021.

Related Party Assets and Liabilities

Assets and liabilities with related parties appearing on the Consolidated Balance Sheets are detailed in the table below. This table identifies the various components of related party assets and liabilities, including those associated with leases (see Note 20 for additional information) and deferred revenue on minimum volume commitments. If MPC fails to meet its minimum committed volumes, MPC will pay MPLX a deficiency payment based on the terms of the agreement. The deficiency amounts are recorded as “Current liabilities - related parties.” In many cases, MPC may then apply the amount of any such deficiency payments as a credit for volumes in excess of its minimum volume commitment in future periods under the terms of the applicable agreements. MPLX recognizes related party revenues for the deficiency payments when credits are used for volumes in excess of minimum quarterly volume commitments, where it is probable the customer will not use the credit in future periods or upon the expiration of the credits. The use or expiration of the credits is a decrease in “Current liabilities - related parties.” In addition, capital projects MPLX is undertaking at the request of MPC are reimbursed in cash and recognized in income over the remaining term of the applicable agreements or in some cases as an equity contribution from its sponsor.

(In millions) March 31, 2021 December 31, 2020
Current assets - related parties
Receivables - MPC $ 586  $ 615 
Receivables - Other 14  27 
Prepaid - MPC 17 
Other - MPC
Lease Receivables - MPC 32  30 
Total 650  677 
Noncurrent assets - related parties
Long-term receivables - MPC 32  32 
Right of use assets - MPC 230  231 
Long-term lease receivables - MPC 388  386 
Unguaranteed residual asset - MPC 26  23 
Total 676  672 
Current liabilities - related parties
Payables - MPC 213  215 
Payables - Other 26  43 
Operating lease liabilities - MPC
Deferred revenue - Minimum volume deficiencies - MPC 65  66 
Deferred revenue - Project reimbursements - MPC 32  30 
Deferred revenue - Project reimbursements - Other
Total 338  356 
Long-term liabilities - related parties
Long-term operating lease liabilities - MPC 229  229 
Long-term deferred revenue - Project reimbursements - MPC 43  47 
Long-term deferred revenue - Project reimbursements - Other
Total $ 279  $ 283 
14



Other Related Party Transactions

From time to time, MPLX may also sell to or purchase from related parties, assets and inventory at the lesser of average unit cost or net realizable value. Sales to related parties for the three months ended March 31, 2021 and 2020 were $9 million and $2 million, respectively. Purchases from related parties were immaterial for the three months ended March 31, 2021 and 2020.

6. Net Income/(Loss) Per Limited Partner Unit

Net income/(loss) per unit applicable to common units is computed by dividing net income/(loss) attributable to MPLX LP less income/(loss) allocated to participating securities by the weighted average number of common units outstanding.

During the three months ended March 31, 2021 and 2020, MPLX had participating securities consisting of common units, certain equity-based compensation awards, Series A preferred units and Series B preferred units and had dilutive potential common units consisting of certain equity-based compensation awards. Potential common units omitted from the diluted earnings per unit calculation for the three months ended March 31, 2021 and 2020 were less than 1 million.
Three Months Ended March 31,
(In millions) 2021 2020
Net income/(loss) attributable to MPLX LP $ 739  $ (2,724)
Less: Distributions declared on Series A preferred units(1)
20  20 
Distributions declared on Series B preferred units(1)
11  11 
Limited partners’ distributions declared on MPLX common units (including common units of general partner)(1)
707  728 
Undistributed net gain/(loss) attributable to MPLX LP $ $ (3,483)
(1)     See Note 7 for distribution information.
  Three Months Ended March 31, 2021
(In millions, except per unit data) Limited Partners’
Common Units
Series A Preferred Units Series B Preferred Units Total
Basic and diluted net income attributable to MPLX LP per unit
Net income attributable to MPLX LP:
Distributions declared $ 707  $ 20  $ 11  $ 738 
Undistributed net gain attributable to MPLX LP —  — 
Net income attributable to MPLX LP(1)
$ 708  $ 20  $ 11  $ 739 
Weighted average units outstanding:
Basic 1,037 
Diluted 1,037 
Net income attributable to MPLX LP per limited partner unit:
Basic $ 0.68 
Diluted $ 0.68 
(1)     Allocation of net income attributable to MPLX LP assumes all earnings for the period had been distributed based on the distribution priorities applicable to the period.

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  Three Months Ended March 31, 2020
(In millions, except per unit data) Limited Partners’
Common Units
Series A Preferred Units Series B Preferred Units Total
Basic and diluted net income attributable to MPLX LP per unit
Net income attributable to MPLX LP:
Distributions declared $ 728  $ 20  $ 11  $ 759 
Undistributed net loss attributable to MPLX LP (3,483) —  —  (3,483)
Net (loss)/income attributable to MPLX LP(1)
$ (2,755) $ 20  $ 11  $ (2,724)
Weighted average units outstanding:
Basic 1,058 
Diluted 1,058 
Net income attributable to MPLX LP per limited partner unit:
Basic $ (2.60)
Diluted $ (2.60)
(1)     Allocation of net income attributable to MPLX LP assumes all earnings for the period had been distributed based on the distribution priorities applicable to the period.


7. Equity

The changes in the number of common units outstanding during the three months ended March 31, 2021 are summarized below:
(In units) Common
Balance at December 31, 2020 1,038,777,978 
Unit-based compensation awards 143,247 
Units redeemed in unit repurchase program (6,272,981)
Balance at March 31, 2021 1,032,648,244 

Unit Repurchase Program

On November 2, 2020, MPLX announced the board authorization of a unit repurchase program for the repurchase of up to $1 billion of MPLX’s outstanding common units held by the public. MPLX may utilize various methods to effect the repurchases, which could include open market repurchases, negotiated block transactions, tender offers, accelerated unit repurchases or open market solicitations for units, some of which may be effected through Rule 10b5-1 plans. The timing and amount of repurchases will depend upon several factors, including market and business conditions, and repurchases may be initiated, suspended or discontinued at any time. The repurchase authorization has no expiration date. During the three months ended March 31, 2021, 6,272,981 public common units were repurchased at an average cost per unit of $24.78. Total cash paid for units repurchased during 2021 was $155 million with $812 million remaining available under the program for future repurchases as of March 31, 2021. As of March 31, 2021, we had agreements to acquire 291,400 additional common units for $7 million, which settled in April 2021.

Wholesale Exchange

In connection with the Wholesale Exchange as discussed in Note 3, 18,582,088 units were redeemed by MPC in exchange for all of the outstanding membership interests in WRW. These units were cancelled by MPLX immediately following the transaction.

Series B Preferred Units

MPLX has outstanding 600,000 units of 6.875 percent Fixed-to-Floating Rate Cumulative Redeemable Perpetual Preferred Units representing limited partner interests of MPLX with a price to the public of $1,000 per unit (the “Series B preferred
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units”). The Series B preferred units are pari passu with the Series A preferred units with respect to distribution rights and rights upon liquidation. Series B preferred unitholders are entitled to receive a fixed distribution of $68.75 per unit, per annum, payable semi-annually in arrears on the 15th day, or the first business day thereafter, of February and August of each year up to and including February 15, 2023. After February 15, 2023, the holders of Series B preferred units are entitled to receive cumulative, quarterly distributions payable in arrears on the 15th day of February, May, August and November of each year, or the first business day thereafter, based on a floating annual rate equal to the three-month LIBOR plus 4.652 percent, in each case assuming a distribution is declared by the Board of Directors..

The changes in the Series B preferred unit balance from December 31, 2020 through March 31, 2021 are summarized below. Series B preferred units are included in the Consolidated Balance Sheets and Consolidated Statements of Equity within “Series B preferred units”.
(In millions) Series B Preferred Units
Balance at December 31, 2020 $ 611 
Net income allocated 11 
Distributions received by Series B preferred unitholders (21)
Balance at March 31, 2021 $ 601 

Cash distributions In accordance with the MPLX partnership agreement, on April 27, 2021, MPLX declared a quarterly cash distribution for the first quarter of 2021, totaling $707 million, or $0.6875 per common unit. This rate will also be received by Series A preferred unitholders. These distributions will be paid on May 14, 2021 to common unitholders of record on May 7, 2021. MPLX also made a cash distribution payment totaling $21 million to Series B unitholders on February 16, 2021.

Quarterly distributions for the first quarters of 2021 and 2020 are summarized below:
(Per common unit) 2021 2020
March 31, $ 0.6875  $ 0.6875 

The allocation of total quarterly cash distributions to limited and preferred unitholders is as follows for the three months ended March 31, 2021 and 2020. MPLX’s distributions are declared subsequent to quarter end; therefore, the following table represents total cash distributions applicable to the period in which the distributions were earned.
Three Months Ended March 31,
(In millions) 2021 2020
Common and preferred unit distributions:
Common unitholders, includes common units of general partner $ 707  $ 728 
Series A preferred unit distributions 20  20 
Series B preferred unit distributions 11  11 
Total cash distributions declared $ 738  $ 759 

8. Series A Preferred Units

On May 13, 2016, MPLX LP issued approximately 30.8 million 6.5 percent Series A Convertible preferred units for a cash purchase price of $32.50 per unit. The Series A preferred units rank senior to all common units and pari passu with all Series B preferred units with respect to distributions and rights upon liquidation. The holders of the Series A preferred units are entitled to receive, when and if declared by the board, a quarterly distribution equal to the greater of $0.528125 per unit or the amount of distributions they would have received on an as converted basis. On April 27, 2021, MPLX declared a quarterly cash distribution of $0.6875 per common unit for the first quarter of 2021. Holders of the Series A preferred units will receive the common unit rate in lieu of the lower $0.528125 base amount.

The holders may convert their Series A preferred units into common units at any time, in full or in part, subject to minimum conversion amounts and conditions. After the fourth anniversary of the issuance date, MPLX may convert the Series A preferred units into common units at any time, in whole or in part, subject to certain minimum conversion amounts and conditions, if the closing price of MPLX common units is greater than $48.75 for the 20-day trading period immediately preceding the conversion notice date. The conversion rate for the Series A preferred units shall be the quotient of (a) the sum of (i) $32.50, plus (ii) any unpaid cash distributions on the applicable preferred unit, divided by (b) $32.50, subject to adjustment
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for unit distributions, unit splits and similar transactions. The holders of the Series A preferred units are entitled to vote on an as-converted basis with the common unitholders and have certain other class voting rights with respect to any amendment to the MPLX partnership agreement that would adversely affect any rights, preferences or privileges of the preferred units. In addition, upon certain events involving a change of control, the holders of preferred units may elect, among other potential elections, to convert their Series A preferred units to common units at the then change of control conversion rate.

Approximately 29.6 million Series A preferred units remaining outstanding as of March 31, 2021. The changes in the redeemable preferred balance from December 31, 2020 through March 31, 2021 are summarized below:
(In millions) Redeemable Series A Preferred Units
Balance at December 31, 2020 $ 968 
Net income allocated 20 
Distributions received by Series A preferred unitholders (20)
Balance at March 31, 2021 $ 968 

The Series A preferred units are considered redeemable securities under GAAP due to the existence of redemption provisions upon a deemed liquidation event which is outside MPLX’s control. Therefore, they are presented as temporary equity in the mezzanine section of the Consolidated Balance Sheets. The Series A preferred units have been recorded at their issuance date fair value, net of issuance costs. Income allocations increase the carrying value and declared distributions decrease the carrying value of the Series A preferred units. As the Series A preferred units are not currently redeemable and not probable of becoming redeemable, adjustment to the initial carrying amount is not necessary and would only be required if it becomes probable that the Series A preferred units would become redeemable.

9. Segment Information

MPLX’s chief operating decision maker is the chief executive officer (“CEO”) of its general partner. The CEO reviews MPLX’s discrete financial information, makes operating decisions, assesses financial performance and allocates resources on a type of service basis. MPLX has two reportable segments: L&S and G&P. Each of these segments is organized and managed based upon the nature of the products and services it offers.

L&S – transports, stores, distributes and markets crude oil, asphalt, refined petroleum products and water. Also includes an inland marine business, terminals, rail facilities, storage caverns and refining logistics.
G&P – gathers, processes and transports natural gas; and gathers, transports, fractionates, stores and markets NGLs.

Our CEO evaluates the performance of our segments using Segment Adjusted EBITDA. Amounts included in net income and excluded from Segment Adjusted EBITDA include: (i) depreciation and amortization; (ii) provision/(benefit) for income taxes; (iii) amortization of deferred financing costs; (iv) extinguishment of debt; (v) non-cash equity-based compensation; (vi) impairment expense; (vii) net interest and other financial costs; (viii) income/(loss) from equity method investments; (ix) distributions and adjustments related to equity method investments; (x) unrealized derivative gains/(losses); (xi) acquisition costs; (xii) noncontrolling interest; and (xiii) other adjustments as deemed necessary. These items are either: (i) believed to be non-recurring in nature; (ii) not believed to be allocable or controlled by the segment; or (iii) are not tied to the operational performance of the segment.

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The tables below present information about revenues and other income, capital expenditures and investments in unconsolidated affiliates as well as total assets for our reportable segments:
Three Months Ended March 31,
(In millions) 2021 2020
L&S
Service revenue $ 953  $ 1,004 
Rental income 249  242 
Product related revenue 19 
Income from equity method investments 36  50 
Other income 52  51 
Total segment revenues and other income(1)
1,294  1,366 
Segment Adjusted EBITDA(2)
896  872 
Capital expenditures 59  184 
Investments in unconsolidated affiliates 54 
G&P
Service revenue 508  536 
Rental income 92  88 
Product related revenue 397  222 
Income/(loss) from equity method investments 34  (1,234)
Other income 14  14 
Total segment revenues and other income/(loss)(1)
1,045  (374)
Segment Adjusted EBITDA(2)
456  422 
Capital expenditures 30  134 
Investments in unconsolidated affiliates $ 26  $ 37 
(1)    Within the total segment revenues and other income amounts presented above, third party revenues for the L&S segment were $129 million and $158 million for the three months ended March 31, 2021 and 2020, respectively. Third party revenues for the G&P segment were $989 million for the three months ended March 31, 2021 and third party losses were $425 million for the three months ended March 31, 2020.
(2)    See below for the reconciliation from Segment Adjusted EBITDA to “Net income.”

(In millions) March 31, 2021 December 31, 2020
Segment assets
Cash and cash equivalents $ 24  $ 15 
L&S 20,787  20,938 
G&P 15,219  15,461 
Total assets $ 36,030  $ 36,414 

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The table below provides a reconciliation between “Net income/(loss)” and Segment Adjusted EBITDA.

Three Months Ended March 31,
(In millions) 2021 2020
Reconciliation to Net income/(loss):
L&S Segment Adjusted EBITDA $ 896  $ 872 
G&P Segment Adjusted EBITDA 456  422 
Total reportable segments 1,352  1,294 
Depreciation and amortization(1)
(329) (325)
Provision for income taxes (1) — 
Amortization of deferred financing costs (17) (14)
Non-cash equity-based compensation (3) (5)
Impairment expense —  (2,165)
Net interest and other financial costs (220) (216)
Gain on extinguishment of debt 12  — 
Income/(loss) from equity method investments 70  (1,184)
Distributions/adjustments related to equity method investments (121) (124)
Unrealized derivative (losses)/gains(2)
(3) 15 
Other (2) (1)
Adjusted EBITDA attributable to noncontrolling interests 10 
Net income/(loss) $ 748  $ (2,716)
(1)    Depreciation and amortization attributable to L&S was $147 million for the three months ended March 31, 2021 and $138 million for the three months ended March 31, 2020. Depreciation and amortization attributable to G&P was $182 million for the three months ended March 31, 2021 and $187 million for the three months ended March 31, 2020.
(2)    MPLX makes a distinction between realized and unrealized gains and losses on derivatives. During the period when a derivative contract is outstanding, changes in the fair value of the derivative are recorded as an unrealized gain or loss. When a derivative contract matures or is settled, the previously recorded unrealized gain or loss is reversed and the realized gain or loss of the contract is recorded.

10. Inventories

Inventories consist of the following:
(In millions) March 31, 2021 December 31, 2020
NGLs $ $
Line fill 20  13 
Spare parts, materials and supplies 103  100 
Total inventories $ 128  $ 118 

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11. Property, Plant and Equipment
 
Property, plant and equipment with associated accumulated depreciation is shown below:
(In millions) March 31, 2021 December 31, 2020
L&S
Pipelines $ 6,045  $ 6,026 
Refining logistics 2,335  2,333 
Terminals 1,649  1,643 
Marine 965  965 
Land, building and other 1,584  1,584 
Construction-in-progress 277  262 
Total L&S property, plant and equipment 12,855  12,813 
G&P
Gathering and transportation 7,559  7,547 
Processing and fractionation 5,725  5,721 
Land, building and other 510  507 
Construction-in-progress 288  287 
Total G&P property, plant and equipment 14,082  14,062 
Total property, plant and equipment 26,937  26,875 
Less accumulated depreciation 5,941  5,657 
Property, plant and equipment, net $ 20,996  $ 21,218 

Long-lived assets used in operations are assessed for impairment whenever changes in facts and circumstances indicate that the carrying value of the assets may not be recoverable based on the expected undiscounted future cash flow of an asset group. For purposes of impairment evaluation, long-lived assets must be grouped at the lowest level for which independent cash flows can be identified, which is at least at the segment level and in some cases for similar assets in the same geographic region where cash flows can be separately identified. If the sum of the undiscounted cash flows is less than the carrying value of an asset group, fair value is calculated, and the carrying value is written down if greater than the calculated fair value.

During the first quarter of 2020, we identified an impairment trigger relating to asset groups within our Western G&P reporting unit as a result of significant impacts to forecasted cash flows for these asset groups resulting from the first quarter events and circumstances as discussed in Note 1. The cash flows associated with these assets were significantly impacted by volume declines reflecting decreased forecasted producer customer production as a result of lower commodity prices. After assessing each asset group within the Western G&P reporting unit for impairment, only the East Texas G&P asset group resulted in the fair value of the underlying assets being less than the carrying value. As a result, an impairment of $174 million was recorded to “Impairment expense” on the Consolidated Statements of Income in the first quarter of 2020. No additional impairments have been recorded since that time.

12. Goodwill and Intangibles

Goodwill

MPLX annually evaluates goodwill for impairment as of November 30, as well as whenever events or changes in circumstances indicate it is more likely than not that the fair value of a reporting unit with goodwill is less than its carrying amount. There were no impairments recorded as a result of our November 30, 2020 annual goodwill impairment evaluation.

During the first quarter of 2020, we determined that an interim impairment analysis of the goodwill recorded was necessary based on consideration of a number of first quarter events and circumstances as discussed in Note 1. Our producer customers in our Eastern G&P region reduced production forecasts and drilling activity in response to the global economic downturn. Additionally, a decline in NGL prices impacted our future revenue forecast. After performing our evaluations related to the interim impairment of goodwill during the first quarter of 2020, we recorded an impairment of $1,814 million within the Eastern G&P reporting unit, which was recorded to “Impairment expense” on the Consolidated Statements of Income. The
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impairment was primarily driven by additional guidance related to the slowing of drilling activity, which reduced production growth forecasts from our producer customers.

Changes in the carrying amount of goodwill were as follows:
(In millions) L&S G&P Total
Gross goodwill as of December 31, 2019 $ 7,722  $ 3,141  $ 10,863 
Accumulated impairment losses —  (1,327) (1,327)
Balance as of December 31, 2019 7,722  1,814  9,536 
Impairment losses —  (1,814) (1,814)
Wholesale Exchange (Note 3) (65) —  (65)
Balance as of December 31, 2020 7,657  —  7,657 
Balance as of March 31, 2021 7,657  —  7,657 
Gross goodwill as of March 31, 2021 7,657  3,141  10,798 
Accumulated impairment losses —  (3,141) (3,141)
Balance as of March 31, 2021 $ 7,657  $ —  $ 7,657 

Intangible Assets

During the first quarter of 2020, we also determined that an impairment analysis of intangibles within our Western G&P reporting unit was necessary. See Note 11 for additional information regarding our assessment around the Western G&P reporting unit, and more specifically our East Texas G&P asset group. The fair value of the intangibles in our East Texas G&P asset group was determined based on applying the multi-period excess earnings method, which is an income approach. Key assumptions included management’s best estimates of the expected future cash flows from existing customers, customer attrition rates and the discount rate. After performing our evaluations related to the impairment of intangible assets associated with our East Texas G&P asset group during the first quarter of 2020, we recorded an impairment of $177 million to “Impairment expense” on the Consolidated Statements of Income related to our customer relationships. No additional impairments have been recorded since that time.

MPLX’s remaining intangible assets are comprised of customer contracts and relationships. Gross intangible assets with accumulated amortization as of March 31, 2021 and December 31, 2020 is shown below:
March 31, 2021 December 31, 2020
(In millions) Useful Lives Gross
Accumulated Amortization(1)
Net Gross
Accumulated Amortization(2)
Net
L&S
6 - 8 years
$ 283  $ (90) $ 193  $ 283  $ (81) $ 202 
G&P
6 - 25 years
1,288  (554) 734  1,288  (531) 757 
$ 1,571  $ (644) $ 927  $ 1,571  $ (612) $ 959 
(1)    Amortization expense attributable to the L&S and G&P segments for the three months ended March 31, 2021 was $9 million and $23 million, respectively.
(2)    Impairment charge of $177 million is included within the G&P accumulated amortization.

Estimated future amortization expense related to the intangible assets at March 31, 2021 is as follows:
(In millions)
2021 $ 95 
2022 127 
2023 127 
2024 127 
2025 113 
Thereafter 338 
Total $ 927 


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13. Fair Value Measurements

Fair Values – Recurring

Fair value measurements and disclosures relate primarily to MPLX’s derivative positions as discussed in Note 14. The following table presents the financial instruments carried at fair value on a recurring basis as of March 31, 2021 and December 31, 2020 by fair value hierarchy level. MPLX has elected to offset the fair value amounts recognized for multiple derivative contracts executed with the same counterparty.
March 31, 2021 December 31, 2020
(In millions) Assets Liabilities Assets Liabilities
Significant unobservable inputs (Level 3)
Embedded derivatives in commodity contracts $ —  $ (66) $ —  $ (63)
Total carrying value on Consolidated Balance Sheets $ —  $ (66) $ —  $ (63)

Level 3 instruments include all NGL transactions and embedded derivatives in commodity contracts. The embedded derivative liability relates to a natural gas purchase commitment embedded in a keep-whole processing agreement. The fair value calculation for these Level 3 instruments used significant unobservable inputs including: (1) NGL prices interpolated and extrapolated due to inactive markets ranging from $0.48 to $1.36 per gallon with a weighted average of $0.62 per gallon and (2) the probability of renewal of 100 percent for the first five-year term and second five-year term of the gas purchase commitment and related keep-whole processing agreement. Increases or decreases in the fractionation spread result in an increase or decrease in the fair value of the embedded derivative liability, respectively. Beyond the embedded derivative discussed above, we had no outstanding commodity contracts as of March 31, 2021 or December 31, 2020.
Changes in Level 3 Fair Value Measurements

The following table is a reconciliation of the net beginning and ending balances recorded for net assets and liabilities classified as Level 3 in the fair value hierarchy.
Three Months Ended March 31, 2021 Three Months Ended March 31, 2020
(In millions) Commodity Derivative Contracts (net) Embedded Derivatives in Commodity Contracts (net) Commodity Derivative Contracts (net) Embedded Derivatives in Commodity Contracts (net)
Fair value at beginning of period $ —  $ (63) $ —  $ (60)
Total (losses)/gains (realized and unrealized) included in earnings(1)
—  (6) —  14 
Settlements —  — 
Fair value at end of period —  (66) —  (45)
The amount of total (losses)/gains for the period included in earnings attributable to the change in unrealized gains or losses relating to liabilities still held at end of period $ —  $ (5) $ —  $ 13 
(1)     Gains and losses on commodity derivative contracts classified as Level 3 are recorded in “Product sales” on the Consolidated Statements of Income. Gains and losses on derivatives embedded in commodity contracts are recorded in “Purchased product costs” and “Cost of revenues” on the Consolidated Statements of Income.

Fair Values – Reported

MPLX’s primary financial instruments are cash and cash equivalents, receivables, receivables from related parties, lease receivables from related parties, accounts payable, payables to related parties and long-term debt. MPLX’s fair value assessment incorporates a variety of considerations, including (1) the duration of the instruments, (2) MPC’s investment-grade credit rating and (3) the historical incurrence of and expected future insignificance of bad debt expense, which includes an evaluation of counterparty credit risk. MPLX believes the carrying values of its current assets and liabilities approximate fair value. The recorded value of the amounts outstanding under the bank revolving credit facility, if any, approximates fair value
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due to the variable interest rate that approximates current market rates. Derivative instruments are recorded at fair value, based on available market information (see Note 14).

The fair value of MPLX’s long-term debt is estimated based on recent market non-binding indicative quotes. The long-term debt fair values are considered Level 3 measurements. The following table summarizes the fair value and carrying value of our debt, excluding finance leases:
March 31, 2021 December 31, 2020
(In millions) Fair Value Carrying Value Fair Value Carrying Value
Long-term debt (including amounts due within one year) $ 21,988  $ 20,156  $ 22,951  $ 20,244 

14. Derivative Financial Instruments

As of March 31, 2021, MPLX had no outstanding commodity contracts beyond the embedded derivative discussed below.

Embedded Derivative - MPLX has a natural gas purchase commitment embedded in a keep-whole processing agreement with a producer customer in the Southern Appalachian region expiring in December 2022. The customer has the unilateral option to extend the agreement for two consecutive five-year terms through December 2032. For accounting purposes, the natural gas purchase commitment and the term extending options have been aggregated into a single compound embedded derivative. The probability of the customer exercising its options is determined based on assumptions about the customer’s potential business strategy decision points that may exist at the time they would elect whether to renew the contract. The changes in fair value of this compound embedded derivative are based on the difference between the contractual and index pricing, the probability of the producer customer exercising its option to extend and the estimated favorability of these contracts compared to current market conditions. The changes in fair value are recorded in earnings through “Purchased product costs” on the Consolidated Statements of Income. As of March 31, 2021 and December 31, 2020, the estimated fair value of this contract was a liability of $66 million and $63 million, respectively.

Certain derivative positions are subject to master netting agreements, therefore, MPLX has elected to offset derivative assets and liabilities that are legally permissible to be offset. As of March 31, 2021 and December 31, 2020, there were no derivative assets or liabilities that were offset on the Consolidated Balance Sheets. The impact of MPLX’s derivative instruments on its Consolidated Balance Sheets is summarized below:
(In millions) March 31, 2021 December 31, 2020
Derivative contracts not designated as hedging instruments and their balance sheet location Asset Liability Asset Liability
Commodity contracts(1)
Other current assets / Other current liabilities $ —  $ (10) $ —  $ (7)
Other noncurrent assets / Deferred credits and other liabilities —  (56) —  (56)
Total $ —  $ (66) $ —  $ (63)
(1)     Includes embedded derivatives in commodity contracts as discussed above.

For further information regarding the fair value measurement of derivative instruments, see Note 13. There were no material changes to MPLX’s policy regarding the accounting for Level 2 and Level 3 instruments as previously disclosed in MPLX’s Annual Report on Form 10-K for the year ended December 31, 2020.

The impact of MPLX’s derivative contracts not designated as hedging instruments and the location of gains and losses recognized on the Consolidated Statements of Income is summarized below:
Three Months Ended March 31,
(In millions) 2021 2020
Purchased product costs
Realized (loss)/gain $ (3) $ (1)
Unrealized (loss)/gain (3) 15 
Purchased product costs derivative (loss)/gain (6) 14 
Total derivative (loss)/gain $ (6) $ 14 
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15. Debt

MPLX’s outstanding borrowings consist of the following:
(In millions) March 31, 2021 December 31, 2020
MPLX LP:
Bank revolving credit facility $ 835  $ 175 
Floating rate senior notes 1,000  1,000 
Fixed rate senior notes 18,532  19,240 
Consolidated subsidiaries:
MarkWest 23  23 
ANDX 45  87 
Financing lease obligations(1)
10  11 
Total 20,445  20,536 
Unamortized debt issuance costs (112) (116)
Unamortized discount/premium (279) (281)
Amounts due within one year (2) (764)
Total long-term debt due after one year $ 20,052  $ 19,375 
(1)    See Note 20 for lease information.

Credit Agreement

MPLX’s amended and restated revolving credit facility (as amended, the “MPLX Credit Agreement”), has a borrowing capacity of up to $3.5 billion and a term that extends to July 2024. During the three months ended March 31, 2021, MPLX borrowed $1.91 billion under the MPLX Credit Agreement, at an average interest rate of 1.347 percent, and repaid $1.25 billion. At March 31, 2021, MPLX had $835 million in outstanding borrowings and less than $1 million in letters of credit outstanding under the MPLX Credit Agreement, resulting in total availability of $2.67 billion, or 76.1 percent of the borrowing capacity.

Floating Rate Senior Notes

MPLX has $1.0 billion of aggregate principal amount of floating rate senior notes due September 2022. The notes were offered at a price to the public of 100 percent of par and are callable, in whole or in part, at par plus accrued and unpaid interest at any time on or after September 10, 2020. Interest is payable quarterly in March, June, September and December. The interest rate applicable to the notes is LIBOR plus 1.1 percent per annum.

Fixed Rate Senior Notes

MPLX’s senior notes, including those issued by consolidated subsidiaries, consist of various series of senior notes expiring between 2022 and 2058 with interest rates ranging from 1.750 percent to 5.500 percent. Interest on each series of notes is payable semi-annually in arrears on various dates depending on the series of the notes.

On December 29, 2020, MPLX announced the redemption of $750 million outstanding aggregate principal amount of 5.250 percent senior notes due January 15, 2025, including approximately $42 million aggregate principal amount of senior notes issued by Andeavor Logistics LP. These amounts are included on the Consolidated Balance Sheet at December 31, 2020 as “Long-term debt due within one year”. The notes were redeemed on January 15, 2021 at a price equal to 102.625 percent of the principal amount, which resulted in a payment of $20 million related to the note premium offset by the immediate recognition of $12 million of unamortized debt premium and issuance costs, which resulted in a loss on extinguishment of debt of $8 million that is included on the Consolidated Statements of Income as “Other financial costs”.

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16. Revenue

Disaggregation of Revenue

The following tables represent a disaggregation of revenue for each reportable segment for the three months ended March 31, 2021 and 2020:

Three Months Ended March 31, 2021
(In millions) L&S G&P Total
Revenues and other income:
Service revenue $ 84  $ 505  $ 589 
Service revenue - related parties 869  872 
Service revenue - product related —  77  77 
Product sales 281  282 
Product sales - related parties 39  42 
Total revenues from contracts with customers $ 957  $ 905  1,862 
Non-ASC 606 revenue(1)
477 
Total revenues and other income $ 2,339 

Three Months Ended March 31, 2020
(In millions) L&S G&P Total
Revenues and other income:
Service revenue $ 84  $ 528  $ 612 
Service revenue - related parties 920  928 
Service revenue - product related —  39  39 
Product sales 15  154  169 
Product sales - related parties 29  33 
Total revenues from contracts with customers $ 1,023  $ 758  1,781 
Non-ASC 606 (loss)/revenue(1)
(789)
Total revenues and other income $ 992 
(1)    Non-ASC 606 Revenue includes rental income, income/(loss) from equity method investments, derivative gains and losses, mark-to-market adjustments, and other income.

Contract Balances

Contract assets typically relate to aid in construction agreements where the revenue recognized and MPLX’s rights to consideration for work completed exceeds the amount billed to the customer. Contract assets are included in “Other current assets” and “Other noncurrent assets” on the Consolidated Balance Sheets.

Contract liabilities, which we refer to as “Deferred revenue” and “Long-term deferred revenue,” typically relate to advance payments for aid in construction agreements and deferred customer credits associated with makeup rights and minimum volume commitments. Related to minimum volume commitments, breakage is estimated and recognized into service revenue in instances where it is probable the customer will not use the credit in future periods. We classify contract liabilities as current or long-term based on the timing of when we expect to recognize revenue.

“Receivables, net” primarily relate to our commodity sales. Portions of the “Receivables, net” balance are attributed to the sale of commodity product controlled by MPLX prior to sale while a significant portion of the balance relates to the sale of commodity product on behalf of our producer customers. The sales and related “Receivable, net” are commingled and excluded from the table below. MPLX remits the net sales price back to our producer customers upon completion of the sale. Each period end, certain amounts within accounts payable relate to our payments to producer customers. Such amounts are not deemed material at period end as a result of when we settle with each producer.

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The tables below reflect the changes in our contract balances for the three-month periods ended March 31, 2021 and 2020:
(In millions)
Balance at December 31, 2020(1)
Additions/ (Deletions)
Revenue Recognized(2)
Balance at
March 31, 2021
Contract assets $ 40  $ (27) $ —  $ 13 
Long-term contract assets —  — 
Deferred revenue 37  (1) 43 
Deferred revenue - related parties 91  21  (20) 92 
Long-term deferred revenue 119  —  123 
Long-term deferred revenue - related parties 48  (4) —  44 
Long-term contract liability $ $ —  $ —  $

(In millions)
Balance at December 31, 2019(1)
Additions/ (Deletions)
Revenue Recognized(2)
Balance at
March 31, 2020
Contract assets $ 39  $ (27) $ —  $ 12 
Deferred revenue 23  (3) 25 
Deferred revenue - related parties 53  12  (16) 49 
Long-term deferred revenue 90  —  96 
Long-term deferred revenue - related parties $ 55  $ $ —  $ 56 
(1)    Balance represents ASC 606 portion of each respective line item.
(2)     No significant revenue was recognized related to past performance obligations in the current periods.

Remaining Performance Obligations

The table below includes estimated revenue expected to be recognized in the future related to performance obligations that are unsatisfied (or partially unsatisfied) at the end of the reporting period.

As of March 31, 2021, the amounts allocated to contract assets and contract liabilities on the Consolidated Balance Sheets are $301 million and are reflected in the amounts below. This will be recognized as revenue as the obligations are satisfied, which is expected to occur over the next 23 years. Further, MPLX does not disclose variable consideration due to volume variability in the table below.

(In millions)
2021 $