MPLX Lp Q4 FY2025 earnings call

• 2025 was a year of disciplined investment and strong returns, with adjusted EBITDA reaching just over $7 billion and a fourth consecutive year of mid-single-digit three-year adjusted EBITDA growth CAGR.
• Increased distribution by 12.5%, bringing total returns in 2025 to $4.4 billion.
• Deployed $5.5 billion to natural gas and NGL value chains, primarily focused on the fastest-growing region in the country.
• Optimized portfolio through divestitures of non-core assets.
• 2026 capital plan: Planning to invest $2.4 billion in a robust pipeline of capital projects supporting long-term structural growth, with 90% of growth capital directed towards natural gas and NGL services segment, concentrated in Permian and Marcellus basins.
• Execution of Permian NGL wellhead to water strategy advancing, with Titan treating complex construction on time and budget, expecting to treat more than 400 million cubic feet per day of sour gas by 2026, and Secretariat II, a new 300 million cubic feet per day processing plant, expected online in 2028.
• Bengal pipeline expansion on schedule, with 300,000 barrel per day of Gulf Coast fractionation capacity construction and LPG export terminal JV engineering and construction progressing, with key permits secured.
• In Marcellus, construction advancing on Harmon Creek III gas processing and fractionation complex, expected to be completed in 2026, and $450 million project to expand Marcellus gathering system, expected to deliver mid-teens returns and enter service in 2028.

Crude Oil and Products and Logistics segment: Segment adjusted EBITDA increased $52 million compared to 2024. Natural Gas and NGL Services segment: Segment adjusted EBITDA decreased $10 million compared to 2024, but with the divestiture of non-core gathering and processing assets having a $23 million year-over-year impact, it grew 2.1% year over year. Gathered volumes increased 2% year over year primarily due to production growth in the Utica. Processing volumes decreased 1% year over year as increased production in the Marcellus was offset by the sale of non-core assets. Processing volumes in the Utica increased 4% year over year. Marcellus processing utilization was 97% for the quarter. Total fractionation volumes decreased 2% year over year as higher ethane recoveries in the Marcellus and Utica were offset by the sale of the Rockies assets.

• Planning to invest $2.4 billion in 2026 for capital projects supporting long-term structural growth.
• 90% of growth capital directed towards natural gas and NGL services segment.
• Expect growth in 2026 to exceed 2025, driven by increased throughput on existing assets and new assets coming online.
• Anticipate mid-single-digit EBITDA growth in 2027 as assets ramp to full capacity.
• Distribution growth expected for two more years at 12.5%.

Q: Can you talk a little bit more about your confidence in that mid-teens return target for the project backlog? Particularly in the context of maybe lower growth in 2025 versus the mid-single-digit overall target going forward. And maybe particularly anything you can share around contract protections?

A: Yes. When thinking about 2026 and capital investments, we use strict capital discipline to ensure mid-teens returns and support mid-single-digit growth. Examples include BANGL incremental ownership coming online in 2026, Secretariat I ramping up through 2026, Bay Runner and Blackcomb coming into service in the fourth quarter, and Harmon Creek III coming online in the back half of the year. We remain confident in delivering that EBITDA into 2027 and the Gulf Coast project on track for 2028 and beyond.

Q: It sounds like you have had some early success on commercializing some of the Northwind kind of synergy projects with Secretariat II. You just frame up for us kind of where that process stands? Is there more you can do on capturing some of those volumes coming off that system?

A: Yes. When talking about the acquisition of Northwinders, it's a critical platform for future growth. Secretariat II will help support legacy volumes as well. The Titan II expansion is on track on time and budget to have complete late in the year, allowing us to meet expectations for run rate in 2027. We are building connecting lines to start offloading when those lines are complete and as Titan capacity ramps up, and we see robust growth continuing in the legacy portion of our system.

Q: There is a little bit of bearish sentiment on LPG exports generally and fears of overcapacity. But, you know, in the last few days, you have had this India US deal and India is looking to buy a lot more energy from the US. And I think LPG exports could be a new growth opportunity in that direction. So if you could if you had time and if you could talk a little bit about the new opportunities that open for LPG exports, with this India US trade deal.

A: Yeah. We see strong demand for NGL and nat gas and there is a pool there, obviously, from the growth anticipated from LNG. The announcement or conversations yesterday are further supportive. Market dynamics for global LPG demand remain very strong. Our assets, when they come online in 2028-2029, we believe will be full as we have shared with you before. We think we have got a good position when we look at export given our dock, given the partnership that we have and given the potential there for the long term.

Q: My quick follow-up here is, look, when we look at organic growth capital, obviously, think you were at $2.4 billion for '26. You were close to $2 billion last year, but then you did deploy almost $3.03 and a half billion of growth capital through M&A. And I am trying to understand, would if there are right opportunities present themselves, would you be open to still bolt on M&A 2026? And the question I am trying to ask is, at the start of the call, you said dividend distribution growth can be 12% for the next couple of years. I am trying to understand with some good M&A, can that two years become three years or more, if you could help us understand that.

A: Yes, certainly. As you know, in similar as we set out this time last year, we put forth our capital plan and that capital plan is very specific to the organic projects that we have ongoing. We continue to look for M&A opportunities through the lens of strict capital discipline. We ensure that they meet mid-teens returns and are strategically aligned. When we find those M&A opportunities, we have a strong balance sheet and would absolutely consider incremental opportunities. The 12.5% distribution growth for the next two years meets our financial criteria, but we do not rule out increasing distribution beyond that depending on growth.

Q: Looking at your portfolio optimization which has been fairly consistent through the years, would you say you are at in terms of pruning assets that are less strategic across your portfolio to free up capital to pursue additional organic and tuck-in M&A growth?

A: Yes. We continue to evaluate all of our assets. We want to ensure we have the portfolio for today and the future. All of those basins today are cash flow positive. But we will always look through short term and long term and see whether or not there are owners of those assets similar as we think about what we just recently did with the Rockies. So we will continue to do that.

Q: Sorry to beat a dead horse on the growth rate, but wanted to clarify on 2026. You said it is faster growth than 2025. But would you say it is an above-average growth year in 2026 or just faster than '25? And relatedly, is that 2026 growth expectation inclusive of the headwind from the Rockies asset sale.

A: So yes, it is inclusive of the headwind coming from the Rocky sale. And my comment 24% to 25% growth is stronger than 24% to 25%. But I am not suggesting that it is completely outsized there. It is larger growth. Remember, we are starting from a $7 billion position. So growing that mid-single-digit, you know, is the range of $450 to $500 million depending on where you are in your mid-single-digit range. So it is 25 to 26 stronger than 24 to 25.

Q: I wanted to ask on the FERC index change for the next five-year period. So it is now a PPI minus 0.6%, I think. Should we think of that as a headwind for your outlook for the liquids business? Or would you say that new inflation adjustment level was expected and already baked into your plans and outlook.

A: Although the FERC adder is negative, we did anticipate this and this is in our plan. So we do not expect it to impact our plan to grow our EBITDA mid-single digits. If you just look at the COPAL segment that we are about 33% of the COPAL segment is tied to the FERC. And across all of MPLX, it is about 20%.

Q: I was wondering if you can provide some additional commentary around the new growth projects in the Marcellus you are hearing from producer customers? And then how do you expect Harmon Creek III to ramp.

A: Yes. When we talk about Marcellus, first of all, I mentioned we have got capital this year and that project will come in service in a few years, right? It is not an immediate contribution in 2026. Mid-teens returns clearly producer customers if you think about the way that we stay connected to our producer customers and just in time, a pretty important project for the long term. It is a compressor station, 30 miles of pipeline, well connections, debottlenecking, and so important as we think about providing that egress for our producer customers. We are really excited about the Harmon Creek III Project and also we are building a second full-size deethanizer as part of that project and some compression and pipe to help feed that. It is in our gathering system in Washington County, PA. We were at 97% utilization this last quarter. So we are and that is a high utilization number, but you put it in context, sets close to 7 billion cubic feet a day that is going through that system. So it is our largest system. Nearly full. So it is a great story. When we need to expand and a producer wants to expand, right now, it typically means a new plant. Or at least major piping and compression to help try to fill whatever existing capacity is there. So we expect Harmon Creek III, which is tied into that system and has great residue takeaway and GL takeaway capability and the demand that is there. For that to take up that additional capacity will be will be ramped up and filled on our normal timeframe.

Q: Can you maybe talk a little bit about any comments around leverage and distribution coverage, kind of expectations in '26 and '27? And then just as you have become a much bigger company with a much bigger EBITDA base, and you have a lot of kind of organic growth opportunity. How should we think about sort of CapEx moving forward.

A: Thank you. Appreciate that question. Let me start with the capital allocation. Our philosophy remains unchanged. First and foremost maintenance capital, then our distribution growth, then our growth capital, then our unit buybacks. As we look forward to 2026 and 2027, even as we talked about, Maryann mentioned, 12.5% distributions over the couple of years, we model that out. We think about coverage. We do not see ourselves going on an annual basis below that comfort level of 1.3 times. We are obviously also very much watching our leverage and managing to a leverage number that I think we have historically said we are comfortable at that four point zero times. And as we look forward with our capital plans, as we sit today, we would not go above that four point times. It is a great question. And as we think about CapEx, we think about our growth, what we really have to as you said, the EBITDA number keeps getting larger. So as that number grows, the number of organic projects and or bolt-on M&A has to grow with that EBITDA number. If you continue to target a mid-teens return, right, we can do that math. We know that over time that number has to grow. So we are actively looking at that on a five-year really basis and beyond. And we are modeling that EBITDA in as we would see these projects come online.