Welcome to the MPLX Fourth Quarter Earnings Call. My name is Elan and I will be your operator for today's call. At this time all participants are in a listen-only mode. Later we will conduct a question-and-answer session. [Operator Instructions] Please note that this conference is being recorded. I will now turn the call over to Lisa Wilson. Lisa you may begin.

Thank you. Good morning and welcome to the MPLX fourth quarter 2017 earnings webcast and conference call. The synchronized slides that accompany this call can be found on mplx.com under the Investor Center tab. On the call today are Gary Heminger, our Chairman and CEO; Mike Hennigan, President; Pam Beall, Chief Financial Officer and other members of our management team. We invite you to read the Safe Harbor statements and no-GAAP disclaimer on Slide 2. It is a reminder that we will be making forward-looking statements during the call and during the question-and-answer session that follows. Actual results may differ materially from what we expect today. Factors that could cause actual results to differ are included there as well as in our filings with the SEC. Now, I will turn the call over to Gary Heminger for opening remarks on Slide 3.

Thanks Lisa and good morning to everyone. We issued two press releases today, our usual fourth quarter earnings announcement and one announcing the completion of our previously announced strategic actions. I'm pleased to report MPLX delivered another exceptional quarter continuing our track record of sequential earnings growth in all four quarters of 2017. The outstanding performance for the quarter and year was driven by record gathered processed and fractionated volumes resulting in high plant utilization as well as contributions from our logistics and storage assets. We also announced a robust organic growth plan for 2018 including the addition of eight processing plants representing nearly 1.5 billion cubic feet per day of incremental processing capacity as well as 100,000 barrels per day of additional fractionation capacity and the prolific Marcellus, Utica and Permian basins. These additions will increase the partnership's processing capacity by nearly 19% to over 9.4 billion cubic feet per day. Before I turn the call over to Mike to cover additional highlights for the fourth quarter and full year, I want to take a moment to recognize MPLX's five year anniversary. Since its initial public offering in 2012, MPL X has delivered 20 consecutive quarters of increased cash distributions for unit holders representing a compound annual growth rate of 18.3% over the minimum quarterly distribution established at the partnership's formation. The partnerships asset base and earnings profile has also been transformed over this time period. In late 2015, the partnership expanded into the midstream natural gas business, with the addition of MarkWest. Early last year, we announced a strategic action plan to enhance shareholder value which we completed today. As part of the strategic actions, we executed drop downs to MPLX's assets and services that are projected to generate approximately $1.4 billion of annual EBITDA as well as exchanged MPCs GP economic interest including IDRs for newly issued MPLX common units. These transactions have transformed MPLX nearly doubling the partnership's earnings base and improving the partnership's cost of capital by permanently eliminating the IDR burden. The addition of the high quality fee-based revenue streams further diversifies our earnings and contributes substantially to distributable cash flow base of the partnership. Earlier this week, we were pleased to see Standard and Poor's recognize MPLX's transformation and strong credit profile by upgrading the partnership's corporate credit rating to BBB flat. MPLX is now among the largest diversified master limited partnerships in the energy sector with a very competitive cost of capital. We're enthusiastic about the future of MPLX. Given our robust portfolio or getting projects in the Marcellus, Utica, Permian and STACK which are among the most prolific and economic shale plays in the country and a diversified suite of logistics assets. We are extraordinarily well positioned to deliver a long-term sustainable growth for our investors. With that, let me turn the call over to Mike to review our quarterly financial and operational highlights on Slide 4. Mike?

Thanks Gary. First let me start out by saying how excited we are to complete the strategic actions with MPC. The IDR buying is expected to be accretive common unit holders in the third quarter and for the full year 2018. We believe this buying creates one of the fastest path to accretion compared to similar GP transactions and positions the partnership extraordinarily well for the future. Turning to fourth quarter and full year highlights. We were pleased to report record quarterly financial results with adjusted EBITDA of $569 million and distributable cash flow of $445 million. The partnership ended the quarter with strong distribution coverage of 1.24x and 1.28x for the full year. Full year adjusted EBITDA was $2 billion and distributable cash flow was over $1.6 billion. As Gary mentioned we announced our 20th consecutive increase in our quarterly distribution to $0.6075 per common unit a 17% increase over fourth quarter last year. With this increase, we delivered 12.1% distribution growth in 2017 meeting our targeted distribution growth rate for the year. We also reaffirm our distribution growth guidance of 10% for 2018. The partnership ended the year with leverage of 3.6x comfortably within levels appropriate for an investment grade credit profile. Turning to Slide 5. We provide an update on our logistics and storage segment. We continue to make progress on several capital projects, expansions of our Ozark and Wood River-to-Patoka pipeline systems which deliver cushing source crude to Patoka are on schedule and expected to be complete in mid-2018. Work on the Robinson butane cavern is nearing completion and is expected to be in service in the second quarter. This is a win for both MPLX and MPC. We are replacing storage services previously provided to MPC by third party midstream companies. MPLX has garnered a…

Thank you, Mike. Turning to our financial highlights on Slide 10. We reported record adjusted of $569 million and distributable cash flow of $445 million for the fourth quarter. Full year adjusted EBITDA was $2 billion and distributable cash flow was over $1.6 billion. Focusing on the bottom half of the slide, total segment operating income for the full year was 2.117 billion with approximately 63% generated by the gathering and processing segment. After the drop downs in 2018 and with the full year impact of the 2017 drops we expect the largest share of the segment income to be generated by logistics and storage segment. On slide 11. The bridge slide shows the change in adjusted EBITDA from the fourth quarter of 2016 to the fourth quarter of 2017. Since the prior year quarter, we increased adjusted EBITDA by $178 million. The terminal pipeline and storage assets acquired from MPC in the first quarter of 2017 generated $64 million dollars of adjusted EBITDA this quarter, while the joint interest pipelines and storage assets dropped in the third quarter contributed an additional $35 million of adjusted EBITDA. The increase in the logistics and storage segment was primarily driven by our investment in the Dakota Access Pipeline as well as earnings from the Ozark pipeline. Higher gathered, processed and fractionated volumes accounted for the majority of the change in the gathering and processing segment which also benefited from higher commodity prices versus the fourth quarter last year. Slide 12 shows the change in adjusted EBITDA for the full year of 2017. Total adjusted EBITDA increased $585 million over 2016. The Marine assets acquired from MPC in the first quarter of 2016 contributed an additional $35 million of adjusted EBITDA in 2017. $226 million of the increase over 2016 were generated by…

Thanks Pam. As we open the call for questions, we ask that you limit yourself to one question plus a follow up. You may reprompt for additional questions if time permits. With that we will now open the call to questions.

Thank you. We will now begin the question-and-answer session. [Operator Instructions] Our first question today is from Justin Jenkins from Raymond James.

Hi. Good morning, everybody. I guess just starting out, it seems like the growth opportunities in the Marcellus are very clear. But thinking more on the southwest side with the STACK J.V. and Permian opportunities, how should we think about reaching a bigger mass there on both the processing side and maybe venturing out into other activities whether it's crude gathering or long haul transportation on the crude or NGL side to maybe integrate with the refining system that MPC has on the Gulf Coast.

Hey, Justin. This is Mike. It's a great question. And it's exactly what we're concentrating on. We're very proud of the position we have in the Northeast and as we've already discussed we had a lot of activity there. But you hit on the head, one of the big opportunities that I think we still have in front of us is to get more active in the Permian. So we are going to be starting up our second plant as well as the STACK so those two other areas ,we need to get better penetration. It's very highly competitive but we're going to be trying to put a lot a lot of effort in that area to cry and grow our presence. And you also hit one of other our other strategic initiatives is we do want to try and get into long haul transport pipelines whether it be crude or natural gas or NGLs. It's an area of focus obviously highly competitive, but it's an area that we're going to try and concentrate on. So expanding our Permian presence is a priority for us as well as continuing the buildout of growth that we have going on up in the Northeast.

Perfect appreciate that color Mike. And just one quick clarification question if I could. Is there any volume or seasonal component to the fuel distribution contract or is that just a fixed quarterly payment?

It's pretty steady overall. It's based on volume in general, but I think you're going to see pretty steady numbers around that $600 million that we have guided previously.

Perfect. Appreciate the color guys.

Thank you. Our next question is from Jeremy Tonet from JPMorgan.

Good morning. Mike, I want to pick up on the volumes that you talked about for the GMP business and talked about the potential for double-digit growth you're hearing from your producers. I was wondering if you could provide a little bit more color there as far as where that is across your footprint and is it kind of greater in some areas versus others just trying to fill out for our models how that could shake out for 2018?

Yes. So good question, Jeremy. Overall, that there's been two of our largest customers that have been public. Antero came out with guidance for what they're going to be doing as far as growth over the next couple of years. And they're looking at 20% growth for a couple of years. Range has also been public with some pretty strong double digit type numbers up in the Marcellus area. We've also talked about previously and you'll see in our results that the Utica dry gas is an area of concentration for a couple of the large producers in that area as well. So overall we're pretty bullish that the activity that's occurring on the natural gas side is pretty encouraging for us. Obviously, that's why we're looking at six plants up in the northeast as well as one in the Permian and one in the STACK.

Okay. Thanks for that. And then, just want to expand on Ozark a little bit there, if you could just provide a little bit more color on the timing, the size, the commitment kind of where the flows are going with that project. That would be helpful.

Yes. Ozark, we're looking at the expansion about 115,000 barrels of expansion for about mid year roughly in that timing. This is on top of the base business that we had when we originally acquired it. So it's an area of concentration on our L&S side in addition to Ozark we're continuing the expansion from Wood River into Patoka as well. We're also building tanks in Patoka as well. So that entire system we're expanding and upgrading and we expect it to be online about mid year.

Great. Thanks. And sorry if I could just clarify as far as when you're talking about long haul pipes, is that more on the building side or the buying side, when you were referencing that earlier?

Well, we're obviously going to look at both. We think there's going to be some assets that come for sale that will always evaluate. Absent that we have a plan that doesn't count on any M&A. So our internal plan is always based on own growth organically. So we are going to look at both, but we would like to just get in that business a little bit more. The legacy MarkWest system has been terrific from well-head to plan, but we also think we should get involved in some of the takeaway projects that are applicable to this growth as well. And then, on the crude side we're looking to expand our system where we have opportunities to feed MPC assets as well as third party assets.

That's it for me. Thank you very much.

You're welcome.

Thank you. Our next question is from Kristina Kazarian from Credit Suisse.

Good afternoon, guys. Mike, so first a quick question on volume in the Northeast, can you talk a little bit more about both operating leverage and how you're kind of thinking about that on the existing asset base and production ramp as well as how we should be thinking about the cadence of cash flow uplift from the 1.5 Bcf of processing capacity or the 100,000 barrels of fracs that are coming online this year?

Good morning, Kristina. Yes. Well, we've tried our best to do when we put this in our materials give you our best estimate of the timing that we see. So as everybody knows, we started up Sherwood 8 back in 2017 and it's filled rather quickly. We have Sherwood 9 just started up in this last month or so and then we have 10 and 11 scheduled mid-year and then towards the end of the year. So we'll see how the production ramps behind that. Same thing on the other assets that we have up in the Northeast, Majorsville and Harman Creek. So what we've tried to do is give you our best estimate of timing that's in our public materials and you can see the plan throughout the year. Once all those plants are up we'll have about 1.5 of additional -- 1.5 billion capacity. And we'll try and give more color as the year progresses as to the exact month or better timing. But for right now what we have in our public materials is our best timing as we see it for those plants coming online.

Perfect. And then just turning back to the southwest little expansion on the question I got asked earlier, can you maybe have a little bit more around the expanded target JV that was announced earlier this year as well as additional opportunities for things like maybe another Omega plant?

Yes. So down in that area, we have 2 initiatives going on. So we have the Omega plant which will be coming on mid-year. And then we looked at an opportunity with Target where we're a partner with Target in a JV, where Target is a 60% owner and we're 40% owner. There's two separate plants, the Tupelo plant was 100% owned by Targa and we've negotiated a deal with them where we will contribute that into the JV with Target, so we will pick up 40% ownership there. And then, our Hickory Hills plant is a new plant. It's actually being relocated plant that Target had up into the Hickory Hills area in Hughes county. So both of those are additions that we put together in this large JV that we have with Targa, but it's all meant to expand our presence in the Oklahoma area to compliment what we have going on with our Omega plant as well.

Perfect. Thanks guys. A nice job on the quarter today.

You're welcome Kristina. Thank you.

Thank you. Our next question is from Brian Zarahn from Mizuho.

Good morning.

Good morning, Brian.

Just following up on the Permian obviously the basin is poised for a continued robust production growth. And how do you view the attractiveness of potential investments in the Permian against the increasingly rising competition from midstream players and pressures on returns.

Yes. It's a good question, Brian. We would really like strategically to enhance our presence in the Permian. It's one of our strategic initiatives. But, as you mentioned is very highly competitive out in that area. So we'll be disciplined in our approach. We'll look at lot of different opportunities whether it's on our own or in the JV capacity or with some key business partners. But ultimately I hope you're going to see us grow our presence there both on the GMP side as well as on the pipeline side of the business.

And then, as a follow up to fuel distribution, since it is a new business for MPLX, can you give a little more color on the volume and fee structure behind the $600 million of expected EBITDA and all the volumes going to MPC or any third parties?

Yes. So fuel distribution, it is a volume related metric. Overall, we think it's pretty stable. So the minimum volume we expect MPC to hit pretty easily, the higher end of the volume would be pretty tough. So we think it's going to be in that sweet spot that will be pretty easy to hit. I was asked earlier whether there's some seasonality? There's a little bit of seasonality just that in the normal course of the year. But overall, I think it's very stable and the most important thing about fuels distribution, I think not everybody in the market has picked up, yes. it is a service contract, so it comes with no maintenance capital. So we've often talked about this drop that just occurred of a $1 billion, $600 million of it is fuel distribution which has no maintenance capital to it. So obviously it's much closer to DCF than it is to EBITDA. So we're pretty excited about that source of cash flow. We think it's very stable. Obviously, it's aligned with MPCs interest. So we're pretty excited about that $600 million.

Thanks Mike.

You're welcome Brian.

Thank you. Our next question is from Eric Genco from Citi Investment Research.

Hey, good morning. I just want to follow-up. We talked in the past about trying to expand out the legacy system for third party revenue opportunities now that everything's kind of into the portfolio or is there anything that you have to sort of that you can maybe update us on there something that you're seeing opportunities?

Nothing specific yet at this point Eric. As you know we just did the drop today, but we were going to be looking at that. Our whole L&S team is poised to look for two things; we're looking at how can we better serve MPC with a focused concentrated effort on the logistics side. And we hope to do some real good things there as well as look for opportunities for some third party participation. But too early to give you any specifics but obviously we're pretty excited about picking up 10,000 miles of pipe, 60 some terminals. So we're excited that we've got to be able to find some opportunities.

Okay. And then, I guess separately bit of a follow up, appreciate some of the plants in the Northeast are kind of scheduled to come on Midway through the year. If there was hypothetically another six month delay in any two given the latest actions by the Pennsylvania DEP with that. How sensitive do you see 2018 to that sort of event. Is that something where you might push out some of those plants or what would be the option of sort of for NGL takeaway if that were to occur.

Now, we're very confident we can continue to clear the base and obviously we're doing it with a large rail facility in Ohio. We have keen interest in ME2 coming on line and we would love to see that plant be successful. I mean that pipeline be successful in the short-term. But absent it coming online to your point if it were delayed another six months or so we don't see any impact to our system. So we're trying to stay ahead of that and have our own contingency. Obviously, we do not want to be in a situation where we're not able to continue this path of processing plant growth. So we're feeling pretty good about it but we're also hopeful that ME2 will come online as soon as it can.

Awesome. Thanks for your time.

You're welcome.

Thank you. Our next question is from Jerren Holder from Goldman Sachs.

Hi, good morning. Just wanted to check just given strengthening NGL prices, are you seeing producer customers drilling programs more to wet gas acreage versus dry gas acreage or would you expect that to happen if we were to see higher commodity prices from here?

Obviously Jerren, the NGL prices are very supportive for wet gas development. I don't know that we're seeing a lot of switching. We're just seeing a lot of growth on both sides. So we're pleased that the Utica dry gas side particularly in Jefferson County has picked up throughout the year. If you look at our first quarter versus fourth quarter results on that side of the business, we've gotten a big increase in the amount of gathering and processing that's occurring there. And then, on the west side, we're pretty full through Sherwood 8, which was the most recent plant and now Sherwood 9 coming on. So I just say that I think there is a good opportunity for growth on both sides of the wet and the dry right now.

And just a follow up, now that new Topia is online, have you seen an increase already in utilization of some of your assets or should we expect like an earnings uplift from that project there on?

No. One of the things that we have going on is, I think ethane will be an opportunity for us in the future. We do have two de-ethanizers in the Northeast plant for 2018, but short-term that's a relatively small impact through our existing system in our Seneca and Cadiz system to supply that a little bit of incremental volume up into Canada about 100,00 barrels a day. So it's a relatively small number, but when we bring on two 20s of de-ethenization you'll see a 40,000 barrel day increase in our DS capacity.

Okay. Thank you.

You're welcome.

Thank you. Our next question is from Michael Blum from Wells Fargo.

Hey thanks. Just following up on the ethane question just curious as you're adding this de-ethenization capacity where is that incremental volume going?

I mean the incremental volume is going to --this is Greg Floerke -- going to several locations. We have access to the ATEX pipeline to the Gulf; we have access to Mariner East to the East Coast. At Mariner East one we have access to Mariner West to Ontario. And now as you -- was mentioned on the Topia line, which ties into our Cadiz, Ohio plant. So we are moving some incremental production to -- on the Topia, but we also still are moving incremental onto the other lines as well as those start to fill up. The Topia has capacity to take more ethane as well as the Mariner East 2 line when it comes on there'll be more capacity to the East Coast. So was the primary drivers and then of course longer term the Shell plant, cracker plant within the next couple of years and potential other growth within region.

Okay. Thank you. And then, my other question is just to clarify, so you're now not going to be providing like forward year guidance going forward? And then, I guess related to that, I think you at least started to talk a little bit about distribution growth beyond 2018. I was wondering if you could comment on either of those two? Thanks.

Yes. Michael, obviously, you know me from the past. I'm not a fan of giving a EBITDA guidance. But I do think we given quite a bit of guidance that everybody can kind of get their models in line. We are showing 10% distribution growth. So we've guided to that. We've also guided that we're targeting for greater than 1.2 coverage. We've given our capital estimates of approximately 2 billion on the organic side of growth and 191 on the maintenance side. And we've given our best estimate that we can on the timing of when those plants come on. So I think you have a package together that can help your model as best as we can do it. As far as long-term guidance we're more of a fan of doing one year at a time evaluating the market. I do think we're offering two things that I think is compelling for investors. We're offering an attractive distribution growth rate especially compared to other large cap MLPs. I mean with today's transaction we're going to be approximately $30 billion market cap company. And we're also providing good stability, investors obviously over the last six months or so have shown large interest in stability and we're showing that through two venues. One is good coverage. We finished the year at 1.28 and a strong balance sheet. We finished the year at 3.6 debt to EBITDA and we feel we have considerable room there as Pam mentioned. Our credit profile supports low fours on the debt to EBITDA and we are going to target for strong coverage. So I think we have a pretty attractive offering both on stability and growth. And we've given you in our view a good amount of guidance to show you what we're thinking and we'll try and update as best we can the timing of the capital as it comes online during the year.

All right. Thank you.

You are welcome.

Thank you. And our next question is from Dennis Coleman from Bank of America.

Yes. Great thanks. Good morning. A lot of mine have been asked already, but I wonder some of the growth that you're talking about could be inorganic or M&A driven. And we've been very clear about no equity issuance for organic growth. How do you think about funding something say if it's a little bigger maybe on the corporate side and balance between debt and equity financing there?

Yes. That's a great question. Obviously, we have said for organic program, we don't plan to issue any new equity. But if we were able to find a large project or M&A or something along those lines that we thought was attractive and could create value for us in that case we would issue equity. So our base plan doesn't include any M&A activity and that's why we told everybody we're in a self funding model for organic. But we want to participate in the assets that are available. We have a few ideas ourselves and we'll continue to look. We'll be a disciplined investor. Obviously that's our mantra and if we find something that can work for us then we'll finance it accordingly.

Okay. And then, more of just a one-off lot of that larger growth oriented questions have been asked, but the marine assets you talked about adding some vessels there I think what kind of scale are we talking about?

Yes. That's a great opportunity for us. So John Swearingen's team provides Marine Services predominately to MPC at this point and we're using roughly 40% contract outside contract equipment, 60% roughly in-house and we're looking for opportunities to increase our equipment there. So it's one of our targeted goals to move that percentage up. We made the first move with the announcement that we've done recently and John and his team are going to continue to look for assets that are at a good price that we can take in-house and bring onto our fleet.

Thank you.

You're welcome.

Thank you. And we do have time for one final question. Our last question today is from Corey Goldman from Jefferies.

Hey guys. Just one quick one on ME2. Can we expect additional process rate in frac trains at MPLX post ME 2 to service or MPLX will be changing from kind of sourcing local demand in rail and truck to ME2?

I think our goal there is, we're supportive of that project as additional takeaway in the region. So anything that provides opportunities for our producers to enhance their net backs we're supportive of. At the same time, we're going to look to participate in any of the logistics assets that we can. One of the things that we'll be doing on a go forward basis is look at all the opportunities whether it's takeaway pipe such as ME2 or any other logistics assets to continue to enhance our earnings stream up in that area. It doesn't matter to me which consultant you've used. But, if you look at natural gas projections into the future, the Marcellus Utica will continue to be a very strong part of the equation. So we're going to stay active in that area and continue to try and be a very good service provider to the industry.

Sorry. Maybe I just -- I didn't ask it perfectly because you don't need ME2 right now for the projects you have announced for frac and processing, when ME2 when it does come into service. Do you expect additional frac and processing trains add MPLX do then fill that or will you be moving those volumes that you're already making and sourcing through truck and rail to ME2?

Now, we expect to continue to grow our frac and our processing. Sorry, if I misinterpreted your question there. But, yes, if there's additional outlets and there's additional growth we plan to continue to process that gas and frac that material and it continues to support the producer's goals.

Got you. Okay. No, that certainly answered it. And this one really, really quick one. I didn't see it in the presentation. I don't know if -- it's not being disclosed any more. But, just given the run in NGL prices and the expected netback enhancement post some of these projects coming into service. Can you guys provide the NGL and gas sensitivities in 2018?

Yes. We really haven't. That hasn't changed. So what we've said historically is a $0.05 move in the NGL basket, would be about $18 million a year.

Okay. That's all we have. Thank you very much.

Okay. Thank you.

Thank you for your questions today and your interest in MPLX. Should you have additional questions or would like clarification on any of the topics we discussed today, feel free to give Doug Wendt, Denise Myers and myself a call. Thank you.

Thank you. And this does conclude today's conference. You may disconnect at this time.