Marathon Petroleum drops down ownership in certain assets to MPLX for $1.05B

Marathon Petroleum Corp. (NYSE: MPC) and MPLX LP (NYSE: MPLX) today closed a transaction in which MPC contributed its joint-interest ownership in certain pipelines and storage facilities to MPLX for total consideration of $1.05 billion.

The assets 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

These joint-interest acquisitions are projected to generate approximately $138 million of 2018 adjusted earnings before interest, taxes, depreciation and amortization (EBITDA). Adjusted EBITDA with respect to the joint-interest acquisitions is calculated as cash distributions adjusted for maintenance capital, growth capital and financing activities.

MPC is contributing these 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 terms of the acquisition were approved by the MPLX Board of Directors following the approval of the transaction by its independent conflicts committee. The conflicts committee was advised by Jefferies LLC as to financial matters and Andrews Kurth Kenyon LLP as to legal matters. MPC was advised by Tudor, Pickering, Holt & Co. as to financial matters.

Did You Like this Article? Get All the Energy Industry News Delivered to Your Inbox

Subscribe to an email newsletter today at no cost and receive the latest news and information.

 Subscribe Now


Logistics Risk Management in the Transformer Industry

Transformers often are shipped thousands of miles, involving multiple handoffs,and more than a do...

Secrets of Barco UniSee Mount Revealed

Last year Barco introduced UniSee, a revolutionary large-scale visualization platform designed to...

The Time is Right for Optimum Reliability: Capital-Intensive Industries and Asset Performance Management

Imagine a plant that is no longer at risk of a random shutdown. Imagine not worrying about losing...

Going Digital: The New Normal in Oil & Gas

In this whitepaper you will learn how Keystone Engineering, ONGC, and Saipem are using software t...