MPLX LP (MPLX) obtains 90% of its revenue from FERC-based tariffs, and the MLP has no commodity exposure in its business of transporting crude oil, fuel, distillate and jet across its pipelines. Its main client is Marathon Petroleum Corp. (MPC), with about 90% of revenues, and the MLP further sees opportunities to expand with agreements with third parties, says Garry L. Peiffer, President at MPLX LP.
“We are working on ways to both enhance throughputs in business with our major sponsor being Marathon Petroleum, and also looking at ways to get more third-party business. Our light-products pipelines — that being gasoline, distillate and some jet — are roughly 65% to 70% full on annual average basis. Our crude oil systems are 75% to 80% full. So even without any capital investments, we can improve our revenues by just higher utilization of those existing assets,” Peiffer said.
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Peiffer says growth opportunities will come from both through organic means and through acquisitions. He adds that MPLX, unlike other MLPs, was not created to repair the balance sheet of a parent company through accounting spin-offs. He also says MPC has an investment-grade rating, and MPLX had no debt after cash on the balance sheet as of the end of 2012.
“We are looking at MPLX primarily as a growth vehicle, not as a vehicle to spin off cash or to generate cash for the parent, but as a vehicle — or a currency in the case of the units from the partnership — that we can now go out and acquire logistical assets that for most companies that are not in the MLP space are rather pricey, but because, as you probably know, MLPs do not pay any federal corporate income taxes at the MLP level, all of the unit holders pay the taxes,” Peiffer said.
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