MPLX LP Q3 FY2026 earnings call

• Capital Returns: MPLX increased its quarterly distribution by 12.5% for the third consecutive year, equating to an annualized rate of $4.84 per unit, supported by mid-single-digit adjusted EBITDA growth.
• Strategic Divestitures: Announced the sale of midstream assets supporting Marathon Petroleum’s (MPC) St. Paul Park and Mandan refineries for $750 million (approx. 9x EBITDA multiple). Proceeds will be redeployed to advance growth plans in the Permian and Marcellus basins.
• New Capacity Online: Harmon Creek III complex began operations with 300 million cubic feet per day (mcf/d) of gas processing and 40,000 barrels per day (bpd) of deethanization capacity, raising Northeast processing capacity to 8.1 bcf/d.
• Utilization Growth: Utica gathering and processing volumes rose 19% and 20% year-over-year respectively. Northeast processing system utilization reached 93% in Q3.
• Pipeline Progress: Solitude Pipeline System reached Final Investment Decision (FID), adding 4.5 bcf/d of egress from the Permian Basin by late 2029. Bay Runner, Bangle Pipeline expansion, and Blackcomb Pipeline are expected to enter service or commissioning in Q4 2026.
• Future Projects: Gulf Coast fractionation and export facilities remain on schedule, with the first 150,000 bpd fractionator and 400,000 bpd LPG export facility targeted for H1 2028.
• Operational Efficiency: Secretariat I and Harmon Creek III are ramping up throughputs. Titan One sour gas plant is running at over 150 mcf/d, with expansion to over 400 mcf/d expected by year-end.

The Crude Oil and Products Logistics segment generated adjusted EBITDA that increased by $67 million year-over-year, driven by higher rates and increased butane blending, though partially offset by higher operating expenses. The Natural Gas and NGL Services segment saw its adjusted EBITDA rise by $26 million year-over-year, fueled by higher volumes from acquisitions and strong producer activity in the Utica, Marcellus, and Permian basins; excluding the impact of the Rockies divestiture, this segment's adjusted EBITDA grew 10% year-over-year. MPLX reported total consolidated adjusted EBITDA of $1.9 billion for the third quarter, representing a 5% growth compared to the same period in 2025.

• Adjusted EBITDA Growth: Management reaffirms the expectation to deliver durable mid-single-digit adjusted EBITDA growth in 2026, underpinned by investments ramping through the second half of the year.
• Distribution Outlook: While maintaining confidence in the ability to deliver mid-single-digit EBITDA growth and comfortable coverage ratios (1.3x), management acknowledged that another 12.5% distribution increase in 2027 may be impacted by the EBITDA loss from the recent asset divestitures.
• 2027 Expectations: Despite the headwind from the MPC-related asset sales, MPLX expects EBITDA growth in 2027 to be stronger than in 2026 as new projects come online.
• Capital Allocation: Over 90% of the $2.9 billion organic growth capital program for 2026 is directed toward natural gas and NGL infrastructure opportunities.

• Incentive Compensation Volatility: A significant increase in incentive compensation expense ($77 million in Q3, $48 million higher year-to-date vs prior year) impacted adjusted EBITDA growth by approximately 1%. This expense is linked to MPC share price performance, creating uncertainty for future quarters.
• Asset Divestiture Impact: The sale of midstream assets associated with MPC refineries presents a near-term headwind to 2027 EBITDA that was not initially contemplated in other operational metrics.
• Execution Risk: Delays or cost overruns in major capital projects such as Titan II, Solitude Pipeline, and Gulf Coast fractionation/export facilities could impact projected cash flow growth timelines.

Q: Analyst asked about the ramp-up from H1 to H2 2026, specifically if Titan 2 contributes in Q4, and details on 2027 growth versus 2026. / A: Management confirmed H2 will be stronger due to Secretariat I, Harmon Creek III, and Utica utilization ramps. Titan 2 will not contribute in Q4 but begins ramping in 2027. Despite the asset sale headwind, 2027 EBITDA growth is expected to exceed 2026 levels as more projects enter service. Compensation expenses linked to MPC stock could act as a headwind or tailwind.

Q: Analyst asked how the joint sale of MPC refineries affects the strategic relationship with MPC and whether contracts will be renewed upon recontracting in early 2028. / A: Management stated the MPC-MPLX relationship remains strategically critical and strong. They see no reason why contracts would not be renewed, noting that MPLX remains committed to its core basins (Permian, Marcellus, Utica) regardless of the refinery sales. The strategic focus on integrated value chains remains unchanged.

Q: Analyst questioned why Minnesota and North Dakota refineries were deemed non-core by MPC and why M&A was not pursued instead of divesting. / A: Management explained the decision was based on optimizing portfolios for future demands and valuation. Regarding M&A, they emphasized disciplined capital allocation requiring mid-teens returns for MPLX and mid-single-digit for others. Opportunities must fit the 'wellhead-to-water' strategy and return profiles, which explains the lack of recent transactions despite a hot market.

Q: Analyst asked about the impact of the EQT/Range merger on MPLX’s key customers and potential mismatches in Permian supply vs. egress capacity by 2030. / A: Management expressed confidence in long-term contracts with both EQT and Range, citing acreage dedications extending over a decade. Regarding Permian egress, they highlighted that Solitude reached FID rapidly due to strong shipper demand. They believe LNG and power generation demand will absorb capacity, viewing the basin as having sufficient support for their multi-partner pipeline strategies rather than being oversupplied.

Q: Analyst asked about the long-term CapEx run rate and how growth opportunities are evaluated between the Northeast and Permian basins. / A: Management clarified that 2026 CapEx is elevated due to pulling forward spend on large projects like Secretariat II, not overspending. 2027 CapEx is expected to be lower. Long-term, CapEx must grow to maintain mid-single-digit EBITDA growth. In the Northeast, growth focuses on incremental capacity extraction and just-in-time expansions as utilization hits mid-90s. In the Permian, growth is driven by exponential production increases requiring parallel egress and processing infrastructure.