# MPLX LP: Form 10-Q for the period ended Jun 30, 2023

- Company: [MPLX LP](/companies/mplx.md) (CIK 1552000)
- Form: 10-Q
- Filed: 2023-08-01
- Accepted by EDGAR: Aug 1, 2023, 13:03 ET
- Period: 2023-06-30
- Accession: 0001552000-23-000030
- Inline XBRL: yes
- Main document: https://www.sec.gov/Archives/edgar/data/1552000/000155200023000030/mplx-20230630.htm
- All documents and exhibits: https://www.sec.gov/Archives/edgar/data/1552000/000155200023000030/

## Figures reported in this filing

Standardized XBRL line items for the period ended 2023-06-30.

| Line item | Period | Value | XBRL concept |
| --- | --- | ---: | --- |
| Revenue | 3 months, 2023-04-01 to 2023-06-30 | $2.08bn | us-gaap:RevenueFromContractWithCustomerExcludingAssessedTax |
| Revenue | 6 months, 2023-01-01 to 2023-06-30 | $4.20bn | us-gaap:RevenueFromContractWithCustomerExcludingAssessedTax |
| Operating income | 3 months, 2023-04-01 to 2023-06-30 | $1.18bn | us-gaap:OperatingIncomeLoss |
| Operating income | 6 months, 2023-01-01 to 2023-06-30 | $2.37bn | us-gaap:OperatingIncomeLoss |
| Income tax | 3 months, 2023-04-01 to 2023-06-30 | $0 | us-gaap:IncomeTaxExpenseBenefit |
| Income tax | 6 months, 2023-01-01 to 2023-06-30 | $1.0m | us-gaap:IncomeTaxExpenseBenefit |
| Net income | 3 months, 2023-04-01 to 2023-06-30 | $933.0m | us-gaap:NetIncomeLoss |
| Net income | 6 months, 2023-01-01 to 2023-06-30 | $1.88bn | us-gaap:NetIncomeLoss |
| Operating cash flow | 6 months, 2023-01-01 to 2023-06-30 | $2.66bn | us-gaap:NetCashProvidedByUsedInOperatingActivities |
| Capital expenditure | 6 months, 2023-01-01 to 2023-06-30 | $432.0m | us-gaap:PaymentsToAcquirePropertyPlantAndEquipment |
| Share repurchases | 6 months, 2023-01-01 to 2023-06-30 | $0 | us-gaap:PaymentsForRepurchaseOfCommonStock |
| Cash and equivalents | at 2023-06-30 | $755.0m | us-gaap:CashAndCashEquivalentsAtCarryingValue |
| Current assets | at 2023-06-30 | $2.32bn | us-gaap:AssetsCurrent |
| Total assets | at 2023-06-30 | $35.87bn | us-gaap:Assets |
| Current liabilities | at 2023-06-30 | $1.32bn | us-gaap:LiabilitiesCurrent |
| Total liabilities | at 2023-06-30 | $22.68bn | us-gaap:Liabilities |

## Management's discussion and analysis

As filed, 63,622 characters.

Management’s Discussion and Analysis of Financial Condition and Results of Operations should also be read in conjunction with the unaudited consolidated financial statements and accompanying footnotes included under Item 1. Financial Statements and in conjunction with our Annual Report on Form 10-K for the year ended December 31, 2022.

### Disclosures Regarding Forward-Looking Statements

This Quarterly Report on Form 10-Q, particularly Management’s Discussion and Analysis of Financial Condition and Results of Operations and Quantitative and Qualitative Disclosures about Market Risk, includes forward-looking statements that are subject to risks, contingencies or uncertainties. You can identify forward-looking statements by words such as “anticipate,” “believe,” “commitment,” “could,” “design,” “estimate,” “expect,” “forecast,” “goal,” “guidance,” “intend,” “may,” “objective,” “opportunity,” “outlook,” “plan,” “policy,” “position,” “potential,” “predict,” “priority,” “project,” “prospective,” “pursue,” “seek,” “should,” “strategy,” “target,” “will,” “would” or other similar expressions that convey the uncertainty of future events or outcomes.

Forward-looking statements include, among other things, statements regarding:

- future financial and operating results;
- environmental, social and governance (“ESG”) plans and goals, including those related to greenhouse gas emissions, diversity and inclusion and ESG reporting;
- future levels of capital, environmental or maintenance expenditures, general and administrative and other expenses;
- the success or timing of completion of ongoing or anticipated capital or maintenance projects;
- business strategies, growth opportunities and expected investments;
- the timing and amount of future distributions or unit repurchases; and
- the anticipated effects of actions of third parties such as competitors, activist investors, federal, foreign, state or local regulatory authorities, or plaintiffs in litigation.

Our forward-looking statements are not guarantees of future performance and you should not rely unduly on them, as they involve risks, uncertainties and assumptions that we cannot predict. Forward-looking and other statements regarding our ESG plans and goals are not an indication that these statements are material to investors or required to be disclosed in our filings with the SEC. In addition, historical, current, and forward-looking ESG-related statements may be based on standards for measuring progress that are still developing, internal controls and processes that continue to evolve, and assumptions that are subject to change in the future. Material differences between actual results and any future performance suggested in our forward-looking statements could result from a variety of factors, including the following:

- general economic, political or regulatory developments, including inflation, interest rates, changes in governmental policies relating to refined petroleum products, crude oil, natural gas, NGLs, renewables, or taxation;
- the ability of MPC to achieve its strategic objectives and the effects of those strategic decisions on us;
- further impairments;
- negative capital market conditions, including an increase of the current yield on common units;
- the ability to achieve strategic and financial objectives, including with respect to distribution coverage, future distribution levels, proposed projects and completed transactions;
- the success of MPC’s portfolio optimization, including the ability to complete any divestitures on commercially reasonable terms and/or within the expected timeframe, and the effects of any such divestitures on our business, financial condition, results of operations and cash flows;
- the adequacy of capital resources and liquidity, including the availability of sufficient cash flow to pay distributions and access to debt on commercially reasonable terms, and the ability to successfully execute business plans, growth strategies and self-funding models;
- the timing and extent of changes in commodity prices and demand for crude oil, refined products, feedstocks or other hydrocarbon-based products, or renewables;
- volatility in or degradation of general economic, market, industry or business conditions as a result of the COVID-19 pandemic, other infectious disease outbreaks, natural hazards, extreme weather events, the military conflict between Russia and Ukraine, other conflicts, inflation, rising interest rates or otherwise;
- changes to the expected construction costs and timing of projects and planned investments, and the ability to obtain regulatory and other approvals with respect thereto;
- completion of midstream infrastructure by competitors;
- disruptions due to equipment interruption or failure, including electrical shortages and power grid failures;
- the suspension, reduction or termination of MPC’s obligations under MPLX’s commercial agreements;
- modifications to financial policies, capital budgets, and earnings and distributions;
- the ability to manage disruptions in credit markets or changes to credit ratings;
- compliance with federal and state environmental, economic, health and safety, energy and other policies and regulations or enforcement actions initiated thereunder;
- adverse results in litigation;
- the effect of restructuring or reorganization of business components;
- the potential effects of changes in tariff rates on our business, financial condition, results of operations and cash flows;
- foreign imports and exports of crude oil, refined products, natural gas and NGLs;
- changes in producer customers’ drilling plans or in volumes of throughput of crude oil, natural gas, NGLs, refined products, other hydrocarbon-based products, or renewables;
- changes in the cost or availability of third-party vessels, pipelines, railcars and other means of transportation for crude oil, natural gas, NGLs, feedstocks, refined products, or renewables;
- the price, availability and acceptance of alternative fuels and alternative-fuel vehicles and laws mandating such fuels or vehicles;
- actions taken by our competitors, including pricing adjustments and the expansion and retirement of pipeline capacity, processing, fractionation and treating facilities in response to market conditions;
- expectations regarding joint venture arrangements and other acquisitions or divestitures of assets;
- midstream and refining industry overcapacity or undercapacity;
- accidents or other unscheduled shutdowns affecting our machinery, pipelines, processing, fractionation and treating facilities or equipment, means of transportation, or those of our suppliers or customers;
- acts of war, terrorism or civil unrest that could impair our ability to gather, process, fractionate or transport crude oil, natural gas, NGLs, refined products, or renewables;
- political pressure and influence of environmental groups upon policies and decisions related to the production, gathering, refining, processing, fractionation, transportation and marketing of crude oil or other feedstocks, refined products, natural gas, NGLs, other hydrocarbon-based products, or renewables;
- the imposition of windfall profit taxes or maximum refining margin penalties on companies operating in the energy industry in California or other jurisdictions; and
- our ability to successfully achieve our ESG goals and targets within the expected timeframe, if at all.

For additional risk factors affecting our business, see the risk factors described in our Annual Report on Form 10-K for the year ended December 31, 2022. We undertake no obligation to update any forward-looking statements except to the extent required by applicable law.

### MPLX Overview

We are a diversified, large-cap master limited partnership formed by MPC in 2012 that owns and operates midstream energy infrastructure and logistics assets, and provides fuels distribution services. The business consists of two segments based on the nature of services it offers: Logistics and Storage (“L&S”) and Gathering and Processing (“G&P”). The L&S segment primarily engages in the gathering, transportation, storage and distribution of crude oil, refined products, other hydrocarbon-based products, and renewables. The L&S segment also includes the operation of our refining logistics, fuels distribution and inland marine businesses, terminals, rail facilities and storage caverns. The G&P segment provides gathering, processing and transportation of natural gas as well as the transportation, fractionation, storage and marketing of NGLs.

### Significant Financial and Other Highlights

Significant financial highlights for the three months ended June 30, 2023 and June 30, 2022 are shown in the chart below. Refer to the Results of Operations, the Liquidity and Capital Resources, and Non-GAAP Financial Information sections for further information.

(1) Non-GAAP measure. See reconciliations that follow for the most directly comparable GAAP measures.

### Other Highlights

- Returned $799 million and $1,620 million of capital to unitholders in the three and six months ended June 30, 2023, in the form of distributions.
- Announced a second quarter 2023 distribution of $0.7750 per common unit.

### Current Economic Environment

In an effort to ease inflation in support of its monetary policy goals, the Federal Reserve has raised interest rates multiple times throughout 2022 and 2023. We cannot predict the effect of higher interest rates, the concern of a recession, or the impact of inflation and fuel prices on demand for our services. In response to this business environment, MPLX remains focused on executing its strategic priorities of strict capital discipline, fostering a low-cost culture, and portfolio optimization. Also, to the extent permitted by regulations and our existing agreements, many of which provide for inflation-based adjustments, we have increased the fees we charge our customers to reflect higher levels of inflation.

### Non-GAAP Financial Information

Our management uses a variety of financial and operating metrics to analyze our performance. These metrics are significant factors in assessing our operating results and profitability and include the non-GAAP financial measures of Adjusted EBITDA, DCF, adjusted free cash flow (“Adjusted FCF”), and Adjusted FCF after distributions. The amount of Adjusted EBITDA and DCF generated is considered by the board of directors of our general partner in approving MPLX’s cash distributions.

We define Adjusted EBITDA as net income adjusted for: (i) provision for income taxes; (ii) interest and other financial costs; (iii) depreciation and amortization; (iv) income/(loss) from equity method investments; (v) distributions and adjustments related to equity method investments; (vi) gain on sales-type leases; (vii) impairment expense; (viii) noncontrolling interests; and (ix) other adjustments, as applicable. We also use DCF, which we define as Adjusted EBITDA adjusted for: (i) deferred revenue impacts; (ii) sales-type lease payments, net of income; (iii) net interest and other financial costs; (iv) net maintenance capital expenditures; (v) equity method investment capital expenditures paid out; and (vi) other adjustments as deemed necessary.

We define Adjusted FCF as net cash provided by operating activities adjusted for: (i) net cash used in investing activities; (ii) cash contributions from MPC; and (iii) cash distributions to noncontrolling interests. We define Adjusted FCF after distributions as Adjusted FCF less base distributions to common and preferred unitholders.

We believe that the presentation of Adjusted EBITDA, DCF, Adjusted FCF and Adjusted FCF after distributions provides useful information to investors in assessing our financial condition and results of operations. The GAAP measures most directly comparable to Adjusted EBITDA and DCF are net income and net cash provided by operating activities while the GAAP measure most directly comparable to Adjusted FCF and Adjusted FCF after distributions is net cash provided by operating activities. These non-GAAP financial measures should not be considered alternatives to GAAP net income or net cash provided by operating activities as they have important limitations as analytical tools because they exclude some but not all items that affect net income and net cash provided by operating activities or any other measure of financial performance or liquidity presented in accordance with GAAP. These non-GAAP financial measures should not be considered in isolation or as substitutes for analysis of our results as reported under GAAP. Additionally, because non-GAAP financial measures may be defined differently by other companies in our industry, our definitions may not be comparable to similarly titled measures of other companies, thereby diminishing their utility. For a reconciliation of Adjusted EBITDA and DCF to their most directly comparable measures calculated and presented in accordance with GAAP, see Results of Operations. For a reconciliation of Adjusted FCF and Adjusted FCF after distributions to their most directly comparable measure calculated and presented in accordance with GAAP, see Liquidity and Capital Resources.

### Comparability of our Financial Results

During the normal course of business, we amend or modify our contractual agreements with customers. These amendments or modifications require the agreements to be reassessed under ASU No. 2016-02, Leases (“ASC 842”), which can impact the classification of revenues or costs associated with the agreement. These reassessments may impact the comparability of our financial results.

### Results of Operations

The following tables and discussion summarize our results of operations, including a reconciliation of Adjusted EBITDA and DCF from Net income and Net cash provided by operating activities, to the most directly comparable GAAP financial measures. This discussion should be read in conjunction with Item 1. Financial Statements and is intended to provide investors with a reasonable basis for assessing our historical operations, but should not serve as the only criteria for predicting our future performance.

*(In millions)*

| Revenues and other income: | Three Months Ended June 30, 2023 | 2022 | Variance | Six Months Ended June 30, 2023 | 2022 | Variance |
| --- | ---: | ---: | ---: | ---: | ---: | ---: |
| Total revenues and other income | $2,690 | $2,940 | $(250) | $5,403 | $5,550 | $(147) |
| Costs and expenses: |  |  |  |  |  |  |
| Cost of revenues (excludes items below) | 348 | 323 | 25 | 656 | 610 | 46 |
| Purchased product costs | 354 | 663 | (309) | 760 | 1,130 | (370) |
| Rental cost of sales | 20 | 42 | (22) | 40 | 79 | (39) |
| Rental cost of sales - related parties | 9 | 19 | (10) | 16 | 34 | (18) |
| Purchases - related parties | 357 | 351 | 6 | 718 | 670 | 48 |
| Depreciation and amortization | 310 | 310 | — | 606 | 623 | (17) |
| General and administrative expenses | 89 | 82 | 7 | 178 | 160 | 18 |
| Other taxes | 28 | 33 | (5) | 58 | 67 | (9) |
| Total costs and expenses | 1,515 | 1,823 | (308) | 3,032 | 3,373 | (341) |
| Income from operations | 1,175 | 1,117 | 58 | 2,371 | 2,177 | 194 |
| Related-party interest and other financial costs | — | 1 | (1) | — | 5 | (5) |
| Interest expense, net of amounts capitalized | 226 | 212 | 14 | 450 | 410 | 40 |
| Other financial costs | 7 | 20 | (13) | 26 | 40 | (14) |
| Income before income taxes | 942 | 884 | 58 | 1,895 | 1,722 | 173 |
| Provision for income taxes | — | — | — | 1 | 5 | (4) |
| Net income | 942 | 884 | 58 | 1,894 | 1,717 | 177 |
| Less: Net income attributable to noncontrolling interests | 9 | 9 | — | 18 | 17 | 1 |
| Net income attributable to MPLX LP | 933 | 875 | 58 | 1,876 | 1,700 | 176 |
| Adjusted EBITDA attributable to MPLX LP(1) | 1,531 | 1,457 | 74 | 3,050 | 2,850 | 200 |
| DCF attributable to MPLX(1) | $1,315 | $1,237 | $78 | $2,583 | $2,447 | $136 |

(1) Non-GAAP measure. See reconciliation below to the most directly comparable GAAP measures.

*(In millions)*

| Reconciliation of Adjusted EBITDA attributable to MPLX LP and DCF attributable to GP and LP unitholders from Net income: | Three Months Ended June 30, 2023 | 2022 | Variance | Six Months Ended June 30, 2023 | 2022 | Variance |
| --- | ---: | ---: | ---: | ---: | ---: | ---: |
| Net income | $942 | $884 | $58 | $1,894 | $1,717 | $177 |
| Provision for income taxes | — | — | — | 1 | 5 | (4) |
| Interest and other financial costs | 233 | 233 | — | 476 | 455 | 21 |
| Income from operations | 1,175 | 1,117 | 58 | 2,371 | 2,177 | 194 |
| Depreciation and amortization | 310 | 310 | — | 606 | 623 | (17) |
| Income from equity method investments | (145) | (111) | (34) | (279) | (210) | (69) |
| Distributions/adjustments related to equity method investments | 190 | 152 | 38 | 343 | 284 | 59 |
| Other(1) | 11 | (1) | 12 | 29 | (5) | 34 |
| Adjusted EBITDA | 1,541 | 1,467 | 74 | 3,070 | 2,869 | 201 |
| Adjusted EBITDA attributable to noncontrolling interests | (10) | (10) | — | (20) | (19) | (1) |
| Adjusted EBITDA attributable to MPLX LP | 1,531 | 1,457 | 74 | 3,050 | 2,850 | 200 |
| Deferred revenue impacts | 28 | 24 | 4 | 40 | 48 | (8) |
| Sales-type lease payments, net of income | 2 | 5 | (3) | 6 | 10 | (4) |
| Net interest and other financial costs(2) | (221) | (215) | (6) | (438) | (419) | (19) |
| Maintenance capital expenditures, net of reimbursements | (21) | (39) | 18 | (65) | (53) | (12) |
| Equity method investment maintenance capital expenditures paid out | (2) | (3) | 1 | (7) | (6) | (1) |
| Other | (2) | 8 | (10) | (3) | 17 | (20) |
| DCF attributable to MPLX LP | 1,315 | 1,237 | 78 | 2,583 | 2,447 | 136 |
| Preferred unit distributions | (23) | (31) | 8 | (51) | (63) | 12 |
| DCF attributable to GP and LP unitholders | $1,292 | $1,206 | $86 | $2,532 | $2,384 | $148 |

(1) Includes unrealized derivative gain/(loss), non-cash equity-based compensation and other miscellaneous items.

(2) Excludes gain/loss on extinguishment of debt and amortization of deferred financing costs.

*(In millions)*

| Reconciliation of Adjusted EBITDA attributable to MPLX LP and DCF attributable to GP and LP unitholders from Net cash provided by operating activities: | Three Months Ended June 30, 2023 | 2022 | Variance | Six Months Ended June 30, 2023 | 2022 | Variance |
| --- | ---: | ---: | ---: | ---: | ---: | ---: |
| Net cash provided by operating activities | $1,437 | $1,487 | $(50) | $2,664 | $2,612 | $52 |
| Changes in working capital items | (160) | (266) | 106 | (112) | (148) | 36 |
| All other, net | 6 | 9 | (3) | (3) | (36) | 33 |
| Loss on extinguishment of debt | — | — | — | 9 | — | 9 |
| Net interest and other financial costs(1) | 221 | 215 | 6 | 438 | 419 | 19 |
| Other adjustments to equity method investment distributions | (1) | 14 | (15) | 12 | 26 | (14) |
| Other | 38 | 8 | 30 | 62 | (4) | 66 |
| Adjusted EBITDA | 1,541 | 1,467 | 74 | 3,070 | 2,869 | 201 |
| Adjusted EBITDA attributable to noncontrolling interests | (10) | (10) | — | (20) | (19) | (1) |
| Adjusted EBITDA attributable to MPLX LP | 1,531 | 1,457 | 74 | 3,050 | 2,850 | 200 |
| Deferred revenue impacts | 28 | 24 | 4 | 40 | 48 | (8) |
| Sales-type lease payments, net of income | 2 | 5 | (3) | 6 | 10 | (4) |
| Net interest and other financial costs(1) | (221) | (215) | (6) | (438) | (419) | (19) |
| Maintenance capital expenditures, net of reimbursements | (21) | (39) | 18 | (65) | (53) | (12) |
| Equity method investment maintenance capital expenditures paid out | (2) | (3) | 1 | (7) | (6) | (1) |
| Other | (2) | 8 | (10) | (3) | 17 | (20) |
| DCF attributable to MPLX LP | 1,315 | 1,237 | 78 | 2,583 | 2,447 | 136 |
| Preferred unit distributions | (23) | (31) | 8 | (51) | (63) | 12 |
| DCF attributable to GP and LP unitholders | $1,292 | $1,206 | $86 | $2,532 | $2,384 | $148 |

(1) Excludes gain/loss on extinguishment of debt and amortization of deferred financing costs.

### Three months ended June 30, 2023 compared to three months ended June 30, 2022

Total revenues and other income decreased $250 million in the second quarter of 2023 compared to the same period of 2022. The decrease was driven by lower product sales revenue as a result of lower NGL prices during the second quarter of 2023 as compared to the same period of 2022. The decrease was partially offset by higher throughput and rate escalations across the business and a $34 million increase in income from equity method investments primarily due to higher throughput.

Cost of revenues increased $25 million and rental cost of sales (including related party) decreased $32 million in the second quarter of 2023 compared to the same period of 2022. These offsetting variances reflect the modification of a gathering and compression agreement in the third quarter of 2022 (“Third-Party Lease Modification”) which resulted in a change in the presentation of expenses from rental cost of sales to cost of revenues.

Purchased product costs decreased $309 million in the second quarter of 2023 compared to the same period of 2022. This was primarily due to lower NGL prices of $393 million, partially offset by higher volumes of $90 million.

Interest expense, net of amounts capitalized increased $14 million in the second quarter of 2023 compared to the same period of 2022. This was primarily due to refinancing maturing debt with fixed rate debt at higher interest rates in 2022 and 2023 in addition to taking on incremental debt in order to finance the redemption of the Series B preferred units in the first quarter of 2023. Other financial costs also benefited from higher interest earned during the second quarter of 2023. Refer to the Liquidity and Capital Resources section for further information.

### Six months ended June 30, 2023 compared to six months ended June 30, 2022

Total revenues and other income decreased $147 million in the first six months of 2023 compared to the same period of 2022. The decrease was driven by lower product sales revenue as a result of lower NGL prices during the first six months of 2023 as compared to the same period of 2022. The decrease was partially offset by higher throughput and rate escalations across the business and a $69 million increase in income from equity method investments primarily due to higher throughput.

Cost of revenues increased $46 million and rental cost of sales (including related party) decreased $57 million in the first six months of 2023 compared to the same period of 2022. These offsetting variances reflect the modification of a gathering and compression agreement in the third quarter of 2022 (“Third-Party Lease Modification”) which resulted in a change in the presentation of expenses from rental cost of sales to cost of revenues.

Purchased product costs decreased $370 million in the first six months of 2023 compared to the same period of 2022. This was primarily due to lower NGL prices of $550 million, partially offset by higher volumes of $172 million.

Purchases - related parties increased $48 million in the first six months of 2023 compared to the same period of 2022. This was primarily due to higher related-party purchased product costs and higher transportation costs.

Depreciation and amortization decreased $17 million in the first six months of 2023 compared to the same period of 2022. This was primarily due to lower depreciation as a result of the derecognition of fixed assets in connection with the Third-Party Lease Modification in the third quarter of 2022. This decrease was partially offset by depreciation on new assets placed in service after the second quarter of 2022 and accelerated depreciation related to idled assets.

General and administrative expenses increased $18 million in the first six months of 2023 compared to the same period of 2022 due to increased costs from MPC, primarily higher employee costs.

Interest expense, net of amounts capitalized increased $40 million in the first six months of 2023 compared to the same period of 2022. This was primarily due to refinancing debt with fixed rate debt at higher interest rates in 2022 and 2023 in addition to taking on incremental debt in order to finance the redemption of the Series B preferred units in the first quarter of 2023. Other financial costs also benefited from higher interest earned during 2023. Refer to the Liquidity and Capital Resources section for further information.

### Segment Results

We classify our business in the following reportable segments: L&S and G&P. We evaluate the performance of our segments using Segment Adjusted EBITDA. Segment Adjusted EBITDA represents Adjusted EBITDA attributable to the reportable segments. Amounts included in net income and excluded from Segment Adjusted EBITDA include: (i) depreciation and amortization; (ii) interest and other financial costs; (iii) income/(loss) from equity method investments; (iv) distributions and adjustments related to equity method investments; (v) gain on sales-type leases; (vi) impairment expense; (vii) noncontrolling interests; and (viii) other adjustments, as applicable. These items are either: (i) believed to be non-recurring in nature; (ii) not believed to be allocable or controlled by the segment; or (iii) are not tied to the operational performance of the segment.

The tables below present information about Segment Adjusted EBITDA for the reported segments for the three and six months ended June 30, 2023 and June 30, 2022.

### L&S Segment

### Second Quarter L&S Segment Financial Highlights (in millions)

*(In millions)*

|  | Three Months Ended June 30, 2023 | 2022 | Variance | Six Months Ended June 30, 2023 | 2022 | Variance |
| --- | ---: | ---: | ---: | ---: | ---: | ---: |
| Service revenue | $1,060 | $1,010 | $50 | $2,093 | $1,993 | $100 |
| Rental income | 210 | 208 | 2 | 422 | 383 | 39 |
| Product related revenue | 3 | 7 | (4) | 8 | 11 | (3) |
| Sales-type lease revenue | 125 | 114 | 11 | 250 | 225 | 25 |
| Income from equity method investments | 82 | 59 | 23 | 153 | 111 | 42 |
| Other income | 18 | 22 | (4) | 32 | 34 | (2) |
| Total segment revenues and other income | 1,498 | 1,420 | 78 | 2,958 | 2,757 | 201 |
| Cost of revenues | 158 | 159 | (1) | 293 | 300 | (7) |
| Purchases - related parties | 263 | 258 | 5 | 507 | 497 | 10 |
| Depreciation and amortization | 140 | 129 | 11 | 269 | 259 | 10 |
| General and administrative expenses | 51 | 43 | 8 | 100 | 86 | 14 |
| Other taxes | 20 | 20 | — | 39 | 41 | (2) |
| Total costs and expenses | 632 | 609 | 23 | 1,208 | 1,183 | 25 |
| Segment Adjusted EBITDA | 1,022 | 966 | 56 | 2,048 | 1,870 | 178 |
| Capital expenditures | 110 | 81 | 29 | 178 | 158 | 20 |
| Investments in unconsolidated affiliates(1) | $1 | $10 | $(9) | $16 | $78 | $(62) |

(1) The six months ended June 30, 2022 includes a contribution of $60 million to our Bakken Pipeline joint venture to fund our share of a debt repayment by the joint venture.

### Three months ended June 30, 2023 compared to three months ended June 30, 2022

Service revenue increased $50 million in the second quarter of 2023 compared to the same period of 2022. This was primarily driven by higher pipeline tariff rates, increased pipeline throughput, and $12 million from refining logistics fee escalations. The increase was partially offset by a decrease of $8 million from changes in the presentation of revenue between service revenue, rental income and sales-type lease revenue as a result of modifications to agreements with MPC.

Sales-type lease revenue increased $11 million in the second quarter of 2023 compared to the same period of 2022. This was primarily due to an increase of $7 million from changes in the presentation of revenue between service revenue, rental income and sales-type lease revenue as a result of modifications to agreements with MPC, as well as from $3 million from refining logistics due to fee escalations.

Income from equity method investments increased $23 million in the second quarter of 2023 compared to the same period of 2022. This was primarily driven by increased throughput on equity method investment pipeline systems.

### Six months ended June 30, 2023 compared to six months ended June 30, 2022

Service revenue increased $100 million in the first six months of 2023 compared to the same period of 2022. This was primarily driven by higher pipeline tariff rates, increased pipeline throughput, and $17 million from refining logistics fee escalations. These increases were partially offset by a decrease of $39 million from changes in the presentation of revenue between service revenue, rental income and sales-type lease revenue driven by modifications to agreements with MPC.

Rental income increased $39 million in the first six months of 2023 compared to the same period of 2022. This was primarily due to an increase of $21 million from changes in the presentation of revenue between service revenue, rental income and sales-type lease revenue driven by modifications to agreements with MPC. There was also increased revenue of $13 million from refining logistics primarily due to fee escalations.

Sales-type lease revenue increased $25 million in the first six months of 2023 compared to the same period of 2022. This was primarily due to an increase of $18 million from changes in the presentation of revenue between service revenue, rental income and sales-type lease revenue as a result of modifications to agreements with MPC, as well as an increase of $7 million from refining logistics due to fee escalations.

Income from equity method investments increased $42 million in the first six months of 2023 compared to the same period of 2022. This was primarily driven by increased throughput on equity method investment pipeline systems.

General and administrative expenses increased $14 million in the first six months of 2023 compared to the same period of 2022, due to increased costs from MPC, primarily higher employee costs.

### L&S Operating Data

| L&S Pipeline throughput (mbpd) | Three Months Ended June 30, 2023 | 2022 | Six Months Ended June 30, 2023 | 2022 |
| --- | ---: | ---: | ---: | ---: |
| Crude oil pipelines | 3,834 | 3,674 | 3,739 | 3,527 |
| Product pipelines | 2,118 | 2,247 | 2,053 | 2,103 |
| Total pipelines | 5,952 | 5,921 | 5,792 | 5,630 |
| Average tariff rates ($ per barrel)(1) |  |  |  |  |
| Crude oil pipelines | $0.93 | $0.86 | $0.93 | $0.89 |
| Product pipelines | 0.81 | 0.77 | 0.83 | 0.80 |
| Total pipelines | $0.89 | $0.82 | $0.89 | $0.85 |
| Terminal throughput (mbpd) | 3,180 | 3,101 | 3,136 | 3,021 |
| Marine Assets (number in operation)(2) |  |  |  |  |
| Barges | 307 | 296 | 307 | 296 |
| Towboats | 27 | 23 | 27 | 23 |

(1) Average tariff rates calculated using pipeline transportation revenues divided by pipeline throughput barrels. Transportation revenues include tariff and other fees, which may vary by region and nature of services provided.

(2) Represents total at end of period.

### G&P Segment

### Second Quarter G&P Segment Financial Highlights (in millions)

*(In millions)*

|  | Three Months Ended June 30, 2023 | 2022 | Variance | Six Months Ended June 30, 2023 | 2022 | Variance |
| --- | ---: | ---: | ---: | ---: | ---: | ---: |
| Service revenue | $546 | $505 | $41 | $1,071 | $991 | $80 |
| Rental income | 52 | 92 | (40) | 103 | 173 | (70) |
| Product related revenue | 467 | 860 | (393) | 1,031 | 1,521 | (490) |
| Sales-type lease revenue | 33 | — | 33 | 67 | — | 67 |
| Income from equity method investments | 63 | 52 | 11 | 126 | 99 | 27 |
| Other income | 31 | 11 | 20 | 47 | 9 | 38 |
| Total segment revenues and other income | 1,192 | 1,520 | (328) | 2,445 | 2,793 | (348) |
| Cost of revenues | 219 | 225 | (6) | 419 | 423 | (4) |
| Purchased product costs | 354 | 663 | (309) | 760 | 1,130 | (370) |
| Purchases - related parties | 94 | 93 | 1 | 211 | 173 | 38 |
| Depreciation and amortization | 170 | 181 | (11) | 337 | 364 | (27) |
| General and administrative expenses | 38 | 39 | (1) | 78 | 74 | 4 |
| Other taxes | 8 | 13 | (5) | 19 | 26 | (7) |
| Total costs and expenses | 883 | 1,214 | (331) | 1,824 | 2,190 | (366) |
| Segment Adjusted EBITDA | 509 | 491 | 18 | 1,002 | 980 | 22 |
| Capital expenditures | 143 | 95 | 48 | 266 | 190 | 76 |
| Investments in unconsolidated affiliates | $25 | $36 | $(11) | $61 | $78 | $(17) |

### Three months ended June 30, 2023 compared to three months ended June 30, 2022

Service revenue increased $41 million in the second quarter of 2023 compared to the same period of 2022. This was primarily due to higher volumes and higher throughput fee rates in the Marcellus and Rockies.

Rental income decreased $40 million and sales-type lease revenue increased $33 million in the second quarter of 2023 compared to the same period of 2022. This was primarily due to changes in the presentation of revenue between rental income and sales-type lease revenue as a result of the Third-Party Lease Modification in the third quarter of 2022 of $33 million. In addition, a contract modification decreased the amount of revenue allocated to Rental income in Southern Appalachia beginning in the first quarter of 2023.

Product related revenue decreased $393 million in the second quarter of 2023 compared to the same period of 2022. This was primarily due to lower NGL prices across all regions of $450 million, partially offset by higher volumes in the Southwest of $49 million.

Income from equity method investments increased $11 million in the second quarter of 2023 compared to the same period of 2022. This was primarily due to higher volumes associated with several of our joint ventures in the Marcellus and Utica. Additionally, our joint venture in the Southwest region added processing capacity in the fourth quarter of 2022 driving higher volumes over the prior period.

Other income increased $20 million in the second quarter of 2023 compared to the same period of 2022 due primarily to a gain on disposal of assets recognized in the second quarter of 2023 of $13 million in addition to a loss on disposal of assets of $4 million recognized in the second quarter of 2022.

Cost of revenues decreased $6 million in the second quarter of 2023 compared to the same period of 2022. This decrease is attributable to lower operating costs and repairs and maintenance costs in the Rockies of $14 million, partially offset by higher operating costs in the Southwest of $8 million.

Purchased product costs decreased $309 million in the second quarter of 2023 compared to the same period of 2022. This was primarily due to lower NGL prices of $393 million in the Southwest and Southern Appalachia, partially offset by higher volumes in the Southwest of $90 million.

### Six months ended June 30, 2023 compared to six months ended June 30, 2022

Service revenue increased $80 million in the first six months of 2023 compared to the same period of 2022. This was primarily due to higher volumes, higher throughput fee rates and higher minimum volume commitments in the Marcellus and Rockies.

Rental income decreased $70 million and sales-type lease revenue increased $67 million in the first six months of 2023 compared to the same period of 2022. This was primarily due to changes in the presentation of revenue between rental income and sales-type lease revenue as a result of the Third-Party Lease Modification in the third quarter of 2022.

Product related revenue decreased $490 million in the first six months of 2023 compared to the same period of 2022. This was primarily due to lower prices across all regions of $648 million, partially offset by higher volumes in the Southwest of $147 million and changes in the fair value of our propane contracts of $10 million.

Income from equity method investments increased $27 million in the first six months of 2023 compared to the same period of 2022. This was primarily due to higher volumes associated with several of our joint ventures in the Marcellus and Utica. Additionally, our joint venture in the Southwest region added processing capacity in the fourth quarter of 2022 driving higher volumes over the prior period.

Other income increased $38 million in the first six months of 2023 compared to the same period of 2022 due primarily to a gain on disposal of assets recognized in the second quarter of 2023 of $13 million in addition to a loss on disposal of assets of $22 million recognized in the first half of 2022.

Purchased product costs decreased $370 million in the first six months of 2023 compared to the same period of 2022. This was primarily due to lower NGL prices of $550 million in the Southwest and Southern Appalachia, partially offset by higher volumes in the Southwest of $172 million.

Purchases - related parties increased $38 million in the first six months of 2023 compared to the same period of 2022. The increase is attributable to higher volumes and pricing on associated related-party purchased product costs in the Rockies and higher transportation costs from increased throughput in the Southwest.

Depreciation and amortization decreased $27 million in the first six months of 2023 compared to the same period of 2022. This was primarily due to lower depreciation as a result of the derecognition of fixed assets in connection with the Third-Party Lease Modification in the third quarter of 2022. This decrease was partially offset by depreciation on new assets placed in service after the second quarter of 2022.

### G&P Operating Data

(1) Other includes Southern Appalachia, Bakken and Rockies Operations.

| G&P Gathering Throughput (MMcf/d) | MPLX LP(1) Three Months Ended June 30, 2023 | 2022 | MPLX LP Operated(2) Three Months Ended June 30, 2023 | 2022 |
| --- | ---: | ---: | ---: | ---: |
| Marcellus Operations | 1,321 | 1,287 | 1,321 | 1,287 |
| Utica Operations | — | — | 2,326 | 1,943 |
| Southwest Operations | 1,354 | 1,429 | 1,768 | 1,694 |
| Bakken Operations | 160 | 148 | 160 | 148 |
| Rockies Operations | 457 | 425 | 584 | 554 |
| Total gathering throughput | 3,292 | 3,289 | 6,159 | 5,626 |
| Natural Gas Processed (MMcf/d) |  |  |  |  |
| Marcellus Operations | 4,091 | 3,987 | 5,691 | 5,445 |
| Utica Operations | — | — | 547 | 522 |
| Southwest Operations | 1,517 | 1,449 | 1,848 | 1,638 |
| Southern Appalachian Operations | 219 | 231 | 219 | 231 |
| Bakken Operations | 159 | 142 | 159 | 142 |
| Rockies Operations | 470 | 440 | 470 | 440 |
| Total natural gas processed | 6,456 | 6,249 | 8,934 | 8,418 |
| C2 + NGLs Fractionated (mbpd) |  |  |  |  |
| Marcellus Operations(3) | 520 | 471 | 520 | 471 |
| Utica Operations(3) | — | — | 30 | 30 |
| Southern Appalachian Operations | 11 | 12 | 11 | 12 |
| Bakken Operations | 18 | 20 | 18 | 20 |
| Rockies Operations | 4 | 3 | 4 | 3 |
| Total C2 + NGLs fractionated(4) | 553 | 506 | 583 | 536 |

36

| G&P Gathering Throughput (MMcf/d) | MPLX LP(1) Six Months Ended June 30, 2023 | 2022 | MPLX LP Operated(2) Six Months Ended June 30, 2023 | 2022 |
| --- | ---: | ---: | ---: | ---: |
| Marcellus Operations | 1,342 | 1,300 | 1,342 | 1,300 |
| Utica Operations | — | — | 2,393 | 1,879 |
| Southwest Operations | 1,367 | 1,369 | 1,792 | 1,586 |
| Bakken Operations | 158 | 147 | 158 | 147 |
| Rockies Operations | 450 | 410 | 574 | 540 |
| Total gathering throughput | 3,317 | 3,226 | 6,259 | 5,452 |
| Natural Gas Processed (MMcf/d) |  |  |  |  |
| Marcellus Operations | 4,068 | 4,001 | 5,623 | 5,487 |
| Utica Operations | — | — | 521 | 473 |
| Southwest Operations | 1,460 | 1,416 | 1,784 | 1,589 |
| Southern Appalachian Operations | 225 | 228 | 225 | 228 |
| Bakken Operations | 156 | 143 | 156 | 143 |
| Rockies Operations | 462 | 423 | 462 | 423 |
| Total natural gas processed | 6,371 | 6,211 | 8,771 | 8,343 |
| C2 + NGLs Fractionated (mbpd) |  |  |  |  |
| Marcellus Operations(3) | 526 | 469 | 526 | 469 |
| Utica Operations(3) | — | — | 30 | 27 |
| Southern Appalachian Operations | 11 | 11 | 11 | 11 |
| Bakken Operations | 18 | 20 | 18 | 20 |
| Rockies Operations | 3 | 4 | 3 | 4 |
| Total C2 + NGLs fractionated(4) | 558 | 504 | 588 | 531 |

| Pricing Information | Three Months Ended June 30, 2023 | 2022 | Six Months Ended June 30, 2023 | 2022 |
| --- | ---: | ---: | ---: | ---: |
| Natural Gas NYMEX HH ($ per MMBtu) | $2.32 | $7.50 | $2.54 | $6.04 |
| C2 + NGL Pricing ($ per gallon)(5) | $0.63 | $1.18 | $0.70 | $1.16 |

(1) This column represents operating data for entities that have been consolidated into the MPLX financial statements.

(2) This column represents operating data for entities that have been consolidated into the MPLX financial statements as well as operating data for MPLX-operated equity method investments.

(3) Entities within the Marcellus and Utica Operations jointly own the Hopedale fractionation complex. Hopedale throughput is included in the Marcellus and Utica Operations and represent each region’s utilization of the complex.

(4) Purity ethane makes up approximately 226 mbpd and 189 mbpd of MPLX LP consolidated total fractionated products for the three months ended June 30, 2023 and June 30, 2022, respectively, and approximately 236 mbpd and 187 mbpd of total fractionated products for the six months ended June 30, 2023 and June 30, 2022, respectively. Purity ethane makes up approximately 232 mbpd and 194 mbpd of MPLX LP Operated total fractionated products for the three months ended June 30, 2023 and June 30, 2022, respectively, and approximately 242 mbpd and 191 mbpd of total fractionated products for the six months ended June 30, 2023 and June 30, 2022, respectively.

(5) C2 + NGL pricing based on Mont Belvieu prices assuming an NGL barrel of approximately 35 percent ethane, 35 percent propane, six percent Iso-Butane, 12 percent normal butane and 12 percent natural gasoline.

### Seasonality

The volume of crude oil and refined products transported and stored utilizing our assets is affected by the level of supply and demand for crude oil and refined products in the markets served directly or indirectly by our assets. The majority of effects of seasonality on the L&S segment’s revenues are mitigated through the use of fee-based transportation and storage services agreements with MPC that include minimum volume commitments.

In our G&P segment, we experience minimal impacts from seasonal fluctuations which impact the demand for natural gas and NGLs and the related commodity prices caused by various factors including variations in weather patterns from year to year. We are able to manage the seasonality impacts through the execution of our marketing strategy. Overall, our exposure to the seasonality fluctuations is limited due to the nature of our fee-based business.

### Liquidity and Capital Resources

### Cash Flows

Our cash and cash equivalents were $755 million at June 30, 2023 and $238 million at December 31, 2022. The change in cash and cash equivalents was due to the factors discussed below. Net cash provided by (used in) operating activities, investing activities and financing activities were as follows:

*(In millions)*

| Net cash provided by (used in): | Six Months Ended June 30, 2023 | 2022 |
| --- | ---: | ---: |
| Operating activities | $2,664 | $2,612 |
| Investing activities | (491) | (411) |
| Financing activities | (1,656) | (1,916) |
| Total | $517 | $285 |

Net cash provided by operating activities increased $52 million in the first six months of 2023 compared to the same period of 2022, primarily due to improved results from operations partially offset by higher favorable working capital changes during the first six months of 2022 compared to the same period of 2023.

Net cash used in investing activities increased $80 million in the first six months of 2023 compared to the same period of 2022, due to higher capital spending. The increase in the first six months of 2023 was partially offset by higher contributions to equity method investments for the first half of 2022, which included a $60 million contribution to our Bakken Pipeline joint venture to fund our share of a scheduled debt repayment by the joint venture.

Net cash used in financing activities decreased $260 million in the first six months of 2023 compared to the same period of 2022. The decrease was driven by net borrowings in the first half of 2023 as compared to net repayments in the first half of 2022, resulting in a decreased use of cash of $854 million. There was also lower spending on the unit repurchase program of $135 million in the first half of 2023 compared to the same period of 2022. The decrease in the use of cash was partially offset by the use of $600 million to redeem the Series B units and by $127 million of higher distributions paid to unitholders during the first six months of 2023 compared to the same period of 2022, as a result of the 10 percent increase in our base distribution effective for the third quarter of 2022.

### Adjusted Free Cash Flow

The following table provides a reconciliation of Adjusted FCF and Adjusted FCF after distributions from net cash provided by operating activities for the three and six months ended June 30, 2023 and June 30, 2022.

*(In millions)*

|  | Three Months Ended June 30, 2023 | 2022 | Six Months Ended June 30, 2023 | 2022 |
| --- | ---: | ---: | ---: | ---: |
| Net cash provided by operating activities(1) | $1,437 | $1,487 | $2,664 | $2,612 |
| Adjustments to reconcile net cash provided by operating activities to adjusted free cash flow |  |  |  |  |
| Net cash used in investing activities | (271) | (135) | (491) | (411) |
| Contributions from MPC | 5 | 7 | 13 | 17 |
| Distributions to noncontrolling interests | (9) | (10) | (19) | (19) |
| Adjusted free cash flow | 1,162 | 1,349 | 2,167 | 2,199 |
| Distributions paid to common and preferred unitholders | (799) | (735) | (1,620) | (1,493) |
| Adjusted free cash flow after distributions | $363 | $614 | $547 | $706 |

(1) The three months ended June 30, 2023 and June 30, 2022 include working capital draws of $160 million and $266 million, respectively. The six months ended June 30, 2023 and June 30, 2022 include working capital draws of $112 million and $148 million, respectively.

### Debt and Liquidity Overview

On February 9, 2023, MPLX issued $1.6 billion aggregate principal amount of notes, consisting of $1.1 billion principal amount of 5.00 percent senior notes due 2033 (the “2033 Senior Notes”) and $500 million principal amount of 5.65 percent senior notes due 2053 (the “2053 Senior Notes”). The 2033 Senior Notes were offered at a price to the public of 99.170 percent of par with interest payable semi-annually in arrears, commencing on September 1, 2023. The 2053 Senior Notes were offered at a price to the public of 99.536 percent of par with interest payable semi-annually in arrears, commencing on September 1, 2023.

On February 15, 2023, MPLX used $600 million of the net proceeds from the offering of the 2033 Senior Notes and 2053 Senior Notes described above to redeem all of the outstanding Series B preferred units. On March 13, 2023, MPLX used the remaining proceeds from the offering, and cash on hand, to redeem all of MPLX’s and MarkWest’s $1.0 billion aggregate principal amount of 4.50 percent senior notes due July 2023, at par, plus accrued and unpaid interest.

Our intention is to maintain an investment-grade credit profile. As of June 30, 2023, the credit ratings on our senior unsecured debt were as follows:

|  |  |
| --- | --- |
| Rating Agency | Rating |
| Moody’s | Baa2 (stable outlook) |
| Standard & Poor’s | BBB (stable outlook) |
| Fitch | BBB (stable outlook) |

The ratings reflect the respective views of the rating agencies and should not be interpreted as a recommendation to buy, sell or hold our securities. Although it is our intention to maintain a credit profile that supports an investment grade rating, there is no assurance that these ratings will continue for any given period of time. The ratings may be revised or withdrawn entirely by the rating agencies if, in their respective judgments, circumstances so warrant. A rating from one rating agency should be evaluated independently of ratings from other rating agencies.

The agreements governing our debt obligations do not contain credit rating triggers that would result in the acceleration of interest, principal or other payments solely in the event that our credit ratings are downgraded. However, any downgrades in the credit ratings of our senior unsecured debt ratings to below investment grade ratings could, among other things, increase the applicable interest rates and other fees payable under the MPLX Credit Agreement and may limit our ability to obtain future financing, including refinancing existing indebtedness.

Our liquidity totaled $4.3 billion at June 30, 2023 consisting of:

*(In millions)*

|  | June 30, 2023 Total Capacity | Outstanding Borrowings | Available Capacity |
| --- | ---: | ---: | ---: |
| MPLX Credit Agreement(1) | $2,000 | $— | $2,000 |
| MPC Loan Agreement | 1,500 | — | 1,500 |
| Total | $3,500 | $— | 3,500 |
| Cash and cash equivalents |  |  | 755 |
| Total liquidity |  |  | $4,255 |

(1) Outstanding borrowings include less than $1 million in letters of credit outstanding under this facility.

We expect our ongoing sources of liquidity to include cash generated from operations and borrowings under our revolving credit facilities and access to capital markets. We believe that cash generated from these sources will be sufficient to meet our short-term and long-term funding requirements, including working capital requirements, capital expenditure requirements, contractual obligations, and quarterly cash distributions. Our material future obligations include interest on debt, payments of debt principal, purchase obligations including contracts to acquire plant, property and equipment, and our operating leases and service agreements. We may also, from time to time, repurchase our senior notes or preferred units in the open market, in tender offers, in privately negotiated transactions or otherwise in such volumes, at market prices and upon such other terms as we deem appropriate and execute unit repurchases under our unit repurchase program. MPC manages our cash and cash equivalents on our behalf directly with third-party institutions as part of the treasury services that it provides to us under our omnibus agreement. From time to time, we may also consider utilizing other sources of liquidity, including the formation of joint ventures or sales of non-strategic assets.

The MPLX Credit Agreement contains certain representations and warranties, affirmative and restrictive covenants and events of default that we consider to be usual and customary for an agreement of this type. The financial covenant requires MPLX to maintain a ratio of Consolidated Total Debt as of the end of each fiscal quarter to Consolidated EBITDA (both as defined in the MPLX Credit Agreement) for the prior four fiscal quarters of no greater than 5.0 to 1.0 (or 5.5 to 1.0 during the six-month period following certain acquisitions). Consolidated EBITDA is subject to adjustments for certain acquisitions completed and capital projects undertaken during the relevant period. Other covenants restrict us and/or certain of our subsidiaries from incurring debt, creating liens on assets and entering into transactions with affiliates. As of June 30, 2023, we were in compliance with this financial covenant with a ratio of Consolidated Total Debt to Consolidated EBITDA of 3.5 to 1.0, as well as all other covenants contained in the MPLX Credit Agreement.

### Equity and Preferred Units Overview

#### Unit Repurchase Program

On August 2, 2022 we announced the board authorization for the repurchase of up to an additional $1.0 billion of MPLX common units held by the public. The authorization has no expiration date. We may utilize various methods to effect the repurchases, which could include open market repurchases, negotiated block transactions, accelerated unit repurchases, tender offers or open market solicitations for units, some of which may be effected through Rule 10b5-1 plans. The timing and amount of future repurchases, if any, will depend upon several factors, including market and business conditions, and such repurchases may be discontinued at any time.

No units were repurchased during the six months ended June 30, 2023. As of June 30, 2023, we had $846 million remaining under the repurchase authorization.

#### Redemption of the Series B Preferred Units

On February 15, 2023, MPLX exercised its right to redeem all 600,000 outstanding units of 6.875 percent Fixed-to-Floating Rate Cumulative Redeemable Perpetual Preferred Units (the “Series B preferred units”). MPLX paid unitholders the Series B preferred unit redemption price of $1,000 per unit. See Note 5 to the unaudited consolidated financial statements for more information.

Distributions on the Series B preferred units were payable semi-annually in arrears on the 15th day, or the first business day thereafter, of February and August of each year up to and including February 15, 2023. In accordance with these terms, MPLX made a final cash distribution of $21 million to Series B preferred unitholders on February 15, 2023, in conjunction with the redemption.

#### Distributions

We intend to pay a minimum quarterly distribution to the holders of our common units of $0.2625 per unit, or $1.05 per unit on an annualized basis, to the extent we have sufficient cash from our operations after the establishment of cash reserves and the payment of costs and expenses, including reimbursements of expenses to our general partner. The amount of distributions paid under our policy and the decision to make any distributions is determined by our general partner, taking into consideration the terms of our partnership agreement. Such minimum distribution would equate to $263 million per quarter, or $1,051 million per year, based on the number of common units outstanding at June 30, 2023.

On July 25, 2023, MPLX declared a cash distribution for the second quarter of 2023, totaling $776 million, or $0.775 per common unit. This distribution will be paid on August 14, 2023 to common unitholders of record on August 4, 2023. Although our partnership agreement requires that we distribute all of our available cash each quarter, we do not otherwise have a legal obligation to distribute any particular amount per common unit. This rate will also be received by Series A preferred unitholders.

The allocation of total cash distributions is as follows for the three and six months ended June 30, 2023 and June 30, 2022. MPLX’s distributions are declared subsequent to quarter end; therefore, the following table represents total cash distributions applicable to the period in which the distributions were earned.

*(In millions, except per unit data)*

| Distribution declared: | Three Months Ended June 30, 2023 | 2022 | Six Months Ended June 30, 2023 | 2022 |
| --- | ---: | ---: | ---: | ---: |
| Limited partner units - public | $274 | $257 | $548 | $514 |
| Limited partner units - MPC | 502 | 457 | 1,004 | 913 |
| Total LP distribution declared | 776 | 714 | 1,552 | 1,427 |
| Series A preferred units | 23 | 21 | 46 | 42 |
| Series B preferred units(1) | — | 10 | 5 | 21 |
| Total distribution declared | $799 | $745 | 1,603 | 1,490 |
| Quarterly cash distributions declared per limited partner common unit | $0.775 | $0.705 | $1.5500 | $1.4100 |

(1) The six months ended June 30, 2023, includes the portion of the $21 million distribution paid to the Series B preferred unitholders on February 15, 2023 that was earned during the period prior to redemption.

### Capital Expenditures

Our operations are capital intensive, requiring investments to expand, upgrade, enhance or maintain existing operations and to meet environmental and operational regulations. Our capital requirements consist of growth capital expenditures and maintenance capital expenditures. Growth capital expenditures are those incurred for acquisitions or capital improvements that we expect will increase our operating capacity for volumes gathered, processed, transported or fractionated, decrease operating expenses within our facilities or increase operating income over the long term. Examples of growth capital expenditures include costs to develop or acquire additional pipeline, terminal, processing or storage capacity. In general, growth capital includes costs that are expected to generate additional or new cash flow for MPLX. In contrast, maintenance capital expenditures are those made to replace partially or fully depreciated assets, to maintain the existing operating capacity of our assets and to extend their useful lives, or other capital expenditures that are incurred in maintaining existing system volumes and related cash flows.

MPLX’s initial capital investment plan for 2023 totals $950 million, net of reimbursements, which includes growth capital of $800 million and maintenance capital of $150 million. Growth capital expenditures and investments in affiliates during the six months ended June 30, 2023 were primarily for gas processing plants and gathering projects in the Marcellus and Permian basins, as well as additions to our brown water marine fleet. We continuously evaluate our capital plan and make changes as conditions warrant.

Our capital expenditures are shown in the table below:

*(In millions)*

| Capital expenditures: | Six Months Ended June 30, 2023 | 2022 |
| --- | ---: | ---: |
| Growth capital expenditures | $366 | $278 |
| Growth capital reimbursements(1) | (80) | (32) |
| Investments in unconsolidated affiliates | 77 | 156 |
| Capitalized interest | (6) | (5) |
| Total growth capital expenditures(2) | 357 | 397 |
| Maintenance capital expenditures | 78 | 70 |
| Maintenance capital reimbursements | (13) | (17) |
| Capitalized interest | (1) | — |
| Total maintenance capital expenditures | 64 | 53 |
| Total growth and maintenance capital expenditures | 421 | 450 |
| Investments in unconsolidated affiliates(3) | (77) | (156) |
| Growth and maintenance capital reimbursements(4) | 93 | 49 |
| Increase in capital accruals | (12) | (54) |
| Capitalized interest | 7 | 5 |
| Additions to property, plant and equipment(3) | $432 | $294 |

(1) Growth capital reimbursements include reimbursements from customers and our Sponsor. Prior periods have been updated to reflect these reimbursements to conform to the current period presentation.

(2) Total growth capital expenditures exclude $28 million of acquisitions for the six months ended June 30, 2022.

(3) Investments in unconsolidated affiliates and additions to property, plant and equipment are shown as separate lines within investing activities in the Consolidated Statements of Cash Flows.

(4) Growth capital reimbursements are included in changes in deferred revenue within operating activities in the Consolidated Statements of Cash Flows. Maintenance capital reimbursements are included in the Contributions from MPC line within financing activities in the Consolidated Statements of Cash Flows.

### Contractual Cash Obligations

As of June 30, 2023, our contractual cash obligations included debt, finance and operating lease obligations, purchase obligations for services and to acquire property, plant and equipment, and other liabilities. During the six months ended June 30, 2023, our debt obligations increased by $600 million due to the issuance of Senior Notes and use of proceeds described above in Liquidity and Capital Resources-Debt and Liquidity Overview. There were no other material changes to our contractual obligations outside the ordinary course of business since December 31, 2022.

### Off-Balance Sheet Arrangements

Off-balance sheet arrangements comprise those arrangements that may potentially impact our liquidity, capital resources and results of operations, even though such arrangements are not recorded as liabilities under GAAP. Our off-balance sheet arrangements are limited to guarantees that are described in Note 14 of the unaudited consolidated financial statements and indemnities as disclosed in our Annual Report on Form 10-K for the year ended December 31, 2022.

Although these arrangements serve a variety of our business purposes, we are not dependent on them to maintain our liquidity and capital resources, and we are not aware of any circumstances that are reasonably likely to cause the off-balance sheet arrangements to have a material adverse effect on our liquidity and capital resources.

### Transactions with Related Parties

At June 30, 2023, MPC owned our non-economic general partnership interest and held approximately 65 percent of our outstanding common units.

We provide MPC with crude oil, product pipeline, and trucking transportation services based on regulated tariff/contracted rates, as well as storage, terminal, fuels distribution, and inland marine transportation services based on contracted rates. We also have agreements with MPC under which we receive fees for operating MPC’s retained pipeline assets, providing management services for the marine business, and operating certain of MPC’s equity method investments. MPC provides us with certain services related to information technology, engineering, legal, accounting, treasury, human resources and other administrative services under employee services and omnibus services agreements.

The below table shows the percentage of Total revenues and other income as well as Total costs and expenses with MPC:

|  | Three Months Ended June 30, 2023 | 2022 | Six Months Ended June 30, 2023 | 2022 |
| --- | ---: | ---: | ---: | ---: |
| Total revenues and other income | 50% | 45% | 50% | 46% |
| Total costs and expenses | 27% | 23% | 27% | 24% |

For further discussion of agreements and activity with MPC and related parties see Item 1. Business in our Annual Report on Form 10-K for the year ended December 31, 2022 and Note 4 to the unaudited consolidated financial statements in this report.

### Environmental Matters and Compliance Costs

We have incurred and may continue to incur substantial capital, operating and maintenance, and remediation expenditures as a result of environmental laws and regulations. If these expenditures, as with all costs, are not ultimately reflected in the prices of our products and services, our operating results will be adversely affected. We believe that substantially all of our competitors must comply with similar environmental laws and regulations. However, the specific impact on each competitor may vary depending on a number of factors, including, but not limited to, the age and location of its operating facilities.

As previously disclosed in our Annual Report on Form 10-K for the year ended December 31, 2022, actual expenditures may vary as the number and scope of environmental projects are revised as a result of improved technology or changes in regulatory requirements. There have been no significant changes to our environmental matters and compliance costs during the six months ended June 30, 2023.

### Critical Accounting Estimates

As of June 30, 2023, there have been no significant changes to our critical accounting estimates since our Annual Report on Form 10-K for the year ended December 31, 2022.

### Accounting Standards Not Yet Adopted

We have not identified any recent accounting pronouncements that are expected to have a material impact on our financial condition, results of operations or cash flows upon adoption. Accounting standards are discussed in Note 2 of the unaudited consolidated financial statements.

## Market risk

As filed, 4,034 characters.

We are exposed to market risks related to the volatility of commodity prices. We employ various strategies, including the use of commodity derivative instruments, to economically hedge the risks related to these price fluctuations. We are also exposed to market risks related to changes in interest rates. As of June 30, 2023, we did not have any open financial derivative instruments to hedge the economic risks related to interest rate fluctuations; however, we continually monitor the market and our exposure and may enter into these arrangements in the future.

### Commodity Price Risk

The information about commodity price risk for the three and six months ended June 30, 2023 does not differ materially from that discussed in Item 7A. Quantitative and Qualitative Disclosures about Market Risk of our Annual Report on Form 10-K for the year ended December 31, 2022.

### Outstanding Derivative Contracts and Sensitivity Analysis

See Notes 9 and 10 to the unaudited consolidated financial statements for more information about the fair value measurement of our derivative instruments, including the natural gas embedded derivative, as well as the amounts recorded in our consolidated balance sheets and statements of income. We do not designate any of our commodity derivative instruments as hedges for accounting purposes.

Our open derivative positions at June 30, 2023 will expire at various times through 2023. We prepared a sensitivity analysis to estimate our exposure to market risk associated with our derivative instruments. Based on our open net positions at June 30, 2023, a 10 percent change in quoted market prices of our derivative instruments, assuming all other factors remain constant, could change the fair value of our derivative instruments and Income before income taxes by $2.0 million. This analysis may differ from actual results.

### Interest Rate Risk and Sensitivity Analysis

Sensitivity analysis of the effect of a hypothetical 100-basis-point change in interest rates on outstanding third-party debt, excluding finance leases, is provided in the following table. Fair value of cash and cash equivalents, receivables, accounts payable and accrued interest approximate carrying value and are relatively insensitive to changes in interest rates due to the short-term maturity of the instruments. Accordingly, these instruments are excluded from the table.

*(In millions)*

| Outstanding debt | Fair Value as of June 30, 2023(1) | Change in Fair Value(2) | Change in Income Before Income Taxes for the Three Months Ended June 30, 2023(3) |
| --- | ---: | ---: | ---: |
| Fixed-rate | $18,671 | $1,523 | N/A |
| Variable-rate(4) | $— | $— | $— |

(1) Fair value was based on market prices, where available, or current borrowing rates for financings with similar terms and maturities.

(2) Assumes a 100-basis-point decrease in the weighted average yield-to-maturity at June 30, 2023.

(3) Assumes a 100-basis-point change in interest rates. The change to income before income taxes was based on the weighted average balance of all outstanding variable-rate debt for the six months ended June 30, 2023.

(4) MPLX had no outstanding borrowings on the MPLX Credit Agreement as of June 30, 2023.

At June 30, 2023, our portfolio of third‑party debt consisted of fixed-rate instruments and outstanding borrowings, if any, under the MPLX Credit Agreement. The fair value of our fixed-rate debt is relatively sensitive to interest rate fluctuations. Our sensitivity to interest rate declines and corresponding increases in the fair value of our debt portfolio unfavorably affects our results of operations and cash flows only when we elect to repurchase or otherwise retire fixed-rate debt at prices above carrying value. Interest rate fluctuations generally do not impact the fair value of borrowings under our MPLX Credit Agreement, but may affect our results of operations and cash flows.

See Note 9 in the unaudited consolidated financial statements for additional information on the fair value of our debt.

## Controls and procedures

As filed, 978 characters.

### Disclosure Controls and Procedures

An evaluation of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended) was carried out under the supervision and with the participation of management, including the chief executive officer and chief financial officer of our general partner. Based upon that evaluation, the chief executive officer and chief financial officer of our general partner concluded that the design and operation of these disclosure controls and procedures were effective as of June 30, 2023, the end of the period covered by this report.

### Changes in Internal Control Over Financial Reporting

During the quarter ended June 30, 2023, there were no changes in our internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

## Risk factors

As filed, 150 characters.

There have been no material changes from the risk factors previously disclosed in our Annual Report on Form 10-K for the year ended December 31, 2022.

Filed Aug 1, 2023.
Source: SEC EDGAR, the filing index for accession 0001552000-23-000030. Last ingested by Listed: Nov 3, 2026, 19:31 ET. No prices; not investment advice.