On September 1, 2017, Marathon Petroleum Corp. (ticker: MPC) contributed its joint-interest ownership of pipelines and storage facilities to MPLX, LP (ticker: MPLX), Marathon’s infrastructure arm. The assets are valued at $1.05 billion, Marathon said in a press release.
The assets that were dropped down to MPLX include MPC’s ownership interests in:
- Explorer Pipeline Co., representing a 24.51 % interest in the company
- Lincoln Pipeline LLC, representing a 35 % interest in the Southern Access Extension Pipeline (SAX)
- MPL Louisiana Holdings LLC, representing a 40.7 % interest in the Louisiana Offshore Oil Port (LOOP)
- LOCAP LLC, representing a 58.52 % interest in the company
The joint-interest acquisitions are predicted to generate approximately $138 million of 2018 adjusted EBITDA, Marathon said.
Terms
MPC is dropping down the assets in exchange for $630 million in MPLX equity and $420 million in cash.
The equity component of the transaction consists of MPLX common units and general partner units to maintain MPC’s 2% general partner interest in MPLX. The cash portion of the transaction will be funded by a draw on MPLX’s $2.25 billion revolving credit facility. The units are valued based on the 10-day volume-weighted average price of MPLX common units prior to the closing.
The total consideration equates to a 7.6-times multiple of the $138 million of EBITDA these interests are expected to generate in 2018. The transaction is expected to be immediately accretive to MPLX’s distributable cash flow per unit, the company said.
MPLX forecasted organic growth in capital expenditures in 2017 from $1.4 billion to $1.7 billion, according to MPLX. In 2017, the partnership is expected to complete 400 million cubic feet per day of additional natural gas processing capacity and 120,000 barrels per day of additional fractionation capacity, according to MPLX.
