MPLX LP (NYSE:MPLX) Q4 2022 Earnings Call Transcript

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Greg Floerke: Thanks, Keith. Really the 2022 prices, whether it be crude NGL or gas, were very supportive of increased drilling activity by producers and this is not just in the Permian Delaware, or even the Marcellus. It was across all basins. We’ve seen increased activity, so increased drilling in 2022 and some completions, and then completions into ’23 mean higher volume outlook for ’23. Certainly, there has been price volatility. We’ve seen prices over $10 per MMBtu in the summer, which, at a high and now we’re kind of back to more of a normal level. But in the Permian, in places like the Bakken, even the condensate when on the Utica is really crude price driven. And the drilling is related to crude price, and we see the benefits of associated gas and NGLs that come off of that. So short-term price swings really, we don’t expect right now will impact the volume as much because a lot of that activity was set up by drilling activity in 2022.

Keith Stanley: Got it. Thanks. Second question, I just wanted to follow up on the distribution. So you had the 10% hike last quarter. Growth in the distribution I think was pretty small in the couple of years before that. How should investors think about distribution growth over the next several years for the company? Does it tie in your head to overall growth and cash flows of the business? Do you see some excess cushion and excess cash flow, so the distribution could grow potentially faster? Just how are you thinking about that over the next few years?

John Quaid: Hi, Keith. It’s John. I’ll start and then I’m sure Michael will have some comments as well. Again, as you said, last quarter really driven off our confidence in the strength of our cash flows, we moved to the 10% distribution increase. But as I noted, still a really strong coverage ratio of 1.6x. And I think you’ve highlighted part of it, right? We’ve continued to grow the partnership. We’ve been focused on cost. And while we may have slowed on the distribution for a few years, we essentially built up our coverage. So that was partly — you heard Mike talk about our target of kind of mid single digit growth. Ultimately, you would see the distribution getting towards that sort of run rate. But we probably have built up some capacity here to think about how we might look at the distribution later this year.

Mike Hennigan: I’m just going to add a little bit of — repeat a little bit of what I said earlier, got to keep in mind the law of large numbers. We’re roughly 6 billion of EBITDA. So if we grow that at mid single digit, that’s $300 million more EBITDA, which would translate to more financial flexibility for us, whether we increase the base distribution, do buybacks or whatever. But the nice thing about our system is we’re large enough that even mid single digit growth will add a significant amount of additional cash flow to a distribution that today is about $3 billion roughly. So if you think about the math of where does that even translate? It provides flexibility for us to make more moves. And to your point, everybody in this space kind of paused a little bit during COVID.

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