MPLX Lp (MPLX) Q3 2019 Earnings Report, Transcript and Summary

Welcome to the MPLX Third Quarter 2019 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. And later, we will conduct a question-and-answer session. [Operator Instructions] Please note that this conference is now being recorded. And I would now like to turn the call over to Kristina Kazarian. Kristina, you may begin.

Good morning and welcome to the MPLX third quarter 2019 earnings webcast and conference call. The synchronized slides that accompany this call can be found on ww.mplx.com under the Investor tab. On the call today are Gary Heminger, Chairman and CEO; Mike Hennigan, President; Pam Beall, CFO; and other members of the management team. We invite you to read the Safe Harbor statements and non-GAAP disclaimer on Slide 2. It’s 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. Please note that all financial and operational metrics that will be discussed on this call include full quarter results of Andeavor Logistics. Now, I will turn the call over to Gary Heminger for opening remarks.

Thank you, Kristina, and good morning to everyone. Thank you for joining our call. As you may have seen earlier today, MPC announced the formation of a special committee of its Board of Directors, led by Mike Stice, to continue to evaluate alternatives to enhance value across its midstream business. The special committee will focus on analyzing valuation structures, leverage as well as other aspects. And we will continue to keep our unitholders updated as we go forward. And before I turn the call over to Mike to go into details and then Pam further to go into the financial details, let me take a moment to congratulate Mike. As we announced this morning, Mike will be taking over tomorrow as CEO of MPLX. And this company is in very good hands with Mike’s tremendous track record in the midstream space, but also his track record within the entire downstream industry. So congratulations to you, Mike, and I’ll turn it over to you.

Thank you, Gary. I’m pleased to report that MPLX delivered strong results with the third quarter adjusted EBITDA of $1.3 billion, including full quarter results from ANDX. Our distributable cash flow of $1 billion for the quarter provided strong distribution coverage of 1.4 times and we reported leverage of 4 times. As noted in our last earnings call, we successfully closed our acquisition of Andeavor Logistics on July 30. This acquisition simplified MPC’s midstream structure into one public company, allowing us to high-grade our commercial opportunities and create a large-scale, diversified midstream company, anchored by fee-based cash flows. We progressed our slate of high-return projects. We’ve advanced our strategy of creating integrated crude oil and natural gas logistics systems from the Permian to the U.S. Gulf Coast. We also high-graded our growth CapEx portfolio and announced our projected 2020 growth capital target. Our expected portfolio of projects demonstrates our continued focus on growing the L&S side of the business in key shale areas in the U.S. and leveraging downstream projects to support MPC’s refineries as well as the growing export market. Turning your attention to Slide 4, I’d like to provide an update on our initiatives to optimize MPLX’s growth CapEx that we introduced last quarter. As I mentioned previously, our first priority, following the combination with ANDX, was to high-grade the combined capital portfolio. We have completed plans to streamline our growth capital expenditures focusing on the most attractive returns. For 2020, we are targeting growth CapEx of approximately $2 billion. This is approximately $600 million less than what the two prior midstream companies had projected in total. Virtually, all of the reduced spending is in the G&P segment of our business. In doing so, we believe we have selected the highest return projects available to us, which will best position us to deliver long-term value to our unitholders. Our target to spend approximately 75% of growth CapEx in the L&S segment continues to shift in our strategic direction over the last couple of years. At the same time, our G&P business remains an important part of our portfolio. Slowing Northeast growth allows our portfolio of premier G&P assets in the region to deliver positive cash flow, which can be deployed to our strategic investments, especially in the Permian. Additionally, as Gary mentioned, MPC announced that it is forming a special committee of its Board of Directors to continue to evaluate alternatives to enhance value across its midstream segment. Moving to Slide 5, we highlight our strategy to create an integrated crude oil and natural gas logistics systems from the Permian to the Gulf Coast. During the third quarter, design and construction of the Whistler natural gas pipeline has progressed. Deal purchase orders, construction agreements and compression purchase orders have all been signed. Let us remind you that this joint venture project is been designed to transport approximately 2 billion cubic feet per day of natural gas to approximately 475 miles of 42-inch pipe from Waha, Texas to the Agua Dulce market in South Texas. We expect to ultimately deliver natural gas to MPC’s Galveston Bay refinery. Supply to the Whistler pipeline will be sourced from multiple upstream connections in the Permian Basin, including direct connections to plants in the Midland Basin through an approximately 50-mile 30-inch pipeline lateral as well as a direct connection to the 1.4 billion cubic feet per day Agua Blanca pipeline. We expect Whistler to be in service in the third quarter of 2021. Last quarter, we announced our participation in the Wink-to-Webster Permian crude oil project, 36-inch diameter pipeline with planned origination points in Wink and Midland, Texas. The pipeline will have destination points in the Houston market, including MPC’s Galveston Bay refinery. We have a 15% equity ownership in the Wink-to-Webster joint venture. And the project continues to be targeted to be in service in early 2021. As part of the ANDX acquisition, our Permian business now includes the Conan crude gathering system, a 250,000 barrel a day capacity system in Lea County, New Mexico and Loving County, Texas. Volumes on the system continue to grow to new records, averaging 250,000 barrels per day in the third quarter, up approximately 8% over the second quarter of 2019. And lastly, we continue to progress our Permian to Gulf Coast NGL pipeline called BANGL, targeting FID by year-end to ensure a 2021 startup. Slide 6 provides second quarter Logistics and Storage highlights for our new combined L&S business. Total pipeline throughputs averaged 5.2 million barrels per day, 54% increase over the same quarter last year and the year-on-year increase in throughput is primarily driven by the acquisition of ANDX. We are also providing quarter-over-quarter volume information to help provide an apples-to-apples view of our business, as if we had owned ANDX last quarter. On a sequential basis, pipeline throughputs increased 2% versus the second quarter of 2019. Terminal throughput averaged 3.3 million barrels per day for the quarter, an increase of 123% versus the third quarter of 2018. The year-on-year increase in throughput for our terminals was primarily driven by the addition of ANDX terminalling assets. On a sequential basis, terminal throughputs were flat versus the second quarter of 2019. MPC’s Capline reversal project progressed with the purge of the mainline initiated in October. Once reversed, Capline will be capable of supplying discounted Mid-Continent and Canadian crudes at St. James, Louisiana, which has a direct connection to MPC’s Garyville refinery. Capline is now expected to begin light crude service in the first half of 2021, with heavy crude service expected in 2022. Slide 7 provides second quarter Gathering and Processing highlights for the new combined G&P business segment. Gathered volumes in our legacy MPLX Gathering and Processing business increased 12% year-over-year and 7% sequentially over the second quarter of 2019, primarily in the Marcellus, Utica basins. Total gathered volumes averaged 6.3 billion cubic feet per day, representing a 33% increase over the third quarter of 2018 and a 6% increase versus the second quarter of 2019, primarily driven by the ANDX acquisition. Processed volumes in our legacy MPLX Gathering and Processing business increased 13% year-over-year and 3% sequentially over the second quarter of 2019, primarily due to significant volume growth at our Sherwood and Harmon Creek complexes. Total processed volumes increased 23% versus the same quarter last year to 8.8 billion cubic feet per day primarily driven by the ANDX acquisition, and sequentially processed volumes increased 3% over the second quarter of 2019. This month, we placed the Sherwood 12 processing plant in the Marcellus and the Tornado processing plant in the Permian in service, adding 400 million cubic feet per day of incremental capacity. We plan to commission Sherwood 13 later in the fourth quarter of 2019, bringing the total capacity of this complex to 2.6 billion cubic feet per day. We also have 2 additional plants under various stages of development in the Permian, which would add 400 million more cubic feet per day of incremental capacity. Once completed, they’ll bring our total Permian processing capacity to 1 billion cubic feet per day, with approximately 125,000 barrels per day of liquids. Volumes from our Permian Gathering and Processing operations, which feed our planned Whistler natural gas and our proposed BANGL NGL pipelines. Fractionated volumes in our legacy MPLX Gathering and Processing business increased 5% year-over-year and 4% sequentially due to C2 and C3 fractionation capacity added in 2018 in the Marcellus and Utica basins. Total fractionated volumes averaged 547,000 barrels per day in the second quarter, representing a 12% increase over the third quarter last year and a 5% increase versus the second quarter of 2019, primarily driven by the ANDX acquisition. As part of the acquisition, our G&P segment now includes the North Dakota NGL logistics hub in the Bakken. This project was built to transport mixed NGLs from a third-party processing plant in McKenzie County, North Dakota to our Belfield gas processing plant for fractionation and then to ship these purity NGL products on manifest and unit trains from our Fryburg rail terminal. The NGL Logistics Hub project was completed in the second quarter of 2019 and all services, including pipeline, fractionation and rail loading are fully operational. Let me conclude my comments by summarizing our strategic direction related to capital spending. First, we continue to shift the portfolio more towards the L&S side of the business and less towards G&P. Our 2018 plan had roughly 85% of our growth capital targeted to the G&P processing area. Our 2019 plan was approximately 50-50, and we anticipate our 2020 growth capital will target approximately 75% of the spend in the L&S segment. Second, related to our Northeast G&P business, we continue to diversify the portfolio by investing less in the Northeast G&P business and more in the other areas of growth, particularly in the Permian. Our Northeast G&P business represents approximately 20% of our 2019 expected EBITDA and is projected to be cash flow positive for the first year since the MarkWest acquisition. Third, with the high-graded 2020 capital target we discussed earlier, we anticipate that outside of the Permian all of our G&P basins, in which we operate, will be cash flow positive next year to support our investments in the Permian. I will now turn the call over to Pam to cover our financial highlights.

Thanks, Mike. Turning to our financial highlights on Slide 8. Adjusted EBITDA was $1.3 billion for the third quarter, including results of ANDX for the full quarter. Total Logistics and Storage segment adjusted EBITDA was $849 million, while the Gathering and Processing segment contributed $424 million in adjusted EBITDA. For the quarter, we generated $1 billion of distributable cash flow and will return for the quarter approximately $704 million to our unitholders. This provided distribution coverage of 1.4 times and resulted in $293 million of retained distributable cash flow. For the first 9 months of 2019, distributable cash flow was $3.1 billion, which resulted in $1 billion of retained distributable cash flow to fund a portion of our capital investments. The bridge on Slide 9 shows the change in adjusted EBITDA from the third quarter of 2018 to the third quarter of 2019. The acquisition of ANDX contributed $329 million of adjusted EBITDA. The Logistics and Storage segment increased $36 million year-over-year, primarily driven by growth in crude oil and product volumes through our pipelines and terminals. The Gathering and Processing segment decreased $29 million, primarily driven by the impact of weighted average NGL prices that were approximately 51% lower year-over-year. This was partially offset by strong growth in gathered, processed and fractionated volumes from new assets placed into service over the last year. The bridge on Slide 10 shows the sequential change in adjusted EBITDA from the second quarter of 2019 to the third quarter of 2019. The acquisition of ANDX contributed $329 million of adjusted EBITDA on a sequential basis. Logistics and Storage segment increased $14 million, and this was primarily attributable to, again, growth in crude oil and product volumes. The Gathering and Processing segment increased $10 million, primarily driven by growth in gathered, processed and fractionated volumes, partially offset by weighted average NGL prices that were 16% lower from the second quarter to the third quarter. Slide 11 provides a summary of key financial highlights and select balance sheet information. During and shortly after the quarter, we undertook several financing activities to continued strength in our balance sheet and provide enhanced liquidity. These steps were outlined in a fair amount of detail in the earnings release. We ended the quarter with a leverage ratio of 4 times and approximately $5.4 billion of liquidity, including $3.5 billion available on our bank revolver, $1.4 billion available on our intercompany facility with MPC and $500 million available through our new bank term loan facility. As you look forward and update your models for 2020, I wanted to highlight a few important considerations that should inform your estimates. The 2020 Gathering and Processing volume guidance provided last year at our December 2018 Analyst Day was based on the best information available to us in the months leading up to that meeting. As you know, shortly after our Investor Day, our Gathering and Processing customers began talking about slower production growth for 2019 and 2020. While the year-over-year volume growth in 2019 year-to-date has remained relatively strong, we do expect slower growth in 2020 than we assumed for the December 2018 Analyst Day. And we do not expect our customers to finalize their drilling programs for 2020 until early next year. In addition, the December 2018 Analyst Day guidance for 2020 assumed NGL prices of $0.84 a gallon. I’ll remind you, our NGL gasket price for the third quarter of this year was $0.44 per gallon. And while there are some – we believe this might be a low point and expect some improvement in NGL prices, we do want to remind you that we estimate that every $0.05 change in the NGL basket results in $23 million of annual earnings impact. And the guidance from last year to the recent prices would imply about a $200 million impact. As Mike mentioned, we’re focusing on high grading our project backlog, and our growth capital target for 2020 is now $600 million lower than the combined 2020 guidance that was provided at the December 2018 Investor Day for MPLX and ANDX. And finally, it’s important to note that the new combined company adopted the accounting policies of MPC and MPLX related to planned major maintenance and capitalization of projects. We continue to expect this to result in approximately $25 million of additional expense per quarter or approximately $100 million per year impact to EBITDA with an offsetting reduction to maintenance capital. As we look forward, we expect to continue to grow free cash flow through our disciplined approach to allocating capital investments to the highest-return projects, with long-term strategic focus. This disciplined capital investment approach should allow us to increase our financial flexibility, maintain strong distribution coverage and an investment-grade credit profile. Now, let me turn the call back over to Kristina.

Thanks, Pam. As we open the call for questions, we ask that you limit yourself to one question plus one follow-up. We may re-prompt for additional questions as time permits. And with that, let us now open the call for questions.

Thank you. And we will now begin the question-and-answer session. [Operator Instructions] Our first question today is from Jeremy Tonet from JP Morgan.

Hi, good morning.

Good morning, Jeremy.

Hey, thanks. Just want to start off with any thoughts you’re able to share on portfolio optimization. I know that the strategic review is still ongoing and the ink hasn’t dried yet on the merger there. But it seems like there’s quite a lot of stuff in the portfolio now and maybe not all of it touches and is integrated. So I don’t know if there are any thoughts you can share on G&P sales there. Or maybe said another way, could you give us any thoughts on what’s the right mix between logistics versus G&P you think in the portfolio longer-term?

Yeah, sure, Jeremy. We don’t have anything to report on asset optimization this quarter. As I mentioned earlier, we would look to continue to move our strategy from a capital standpoint towards the L&S business. We are interested if the time is right and the valuations are correct to optimize the portfolio. But with the current macro environment around the natural gas business, we don’t plan on giving any assets away. They’re all generating free cash at this point. So absent any activity there, I think you’ve heard us say on the call that we’ll continue to deploy more capital towards the L&S side of the business. And I mentioned in the prepared remarks about 75% of our 2020 capital will go towards the L&S side of the business. And at the same time, the G&P side of the business is kicking off a lot of cash. Our Northeast exposure is a very good solid part of our portfolio, and it’s going to continue to kick off a lot of cash as we have – which is going to be a little slower growth than we’ve had in the past. But generating that cash outlay enables us to continue to invest a little bit down in the Permian as we diversify the portfolio.

Thanks for that. Maybe just turning to a high-level question with regards to return on capital. It seems like there’s a lot of distress in the market today and the midstream market continues to evolve. So just wondering if you could share your latest thoughts with regards to how you think about returning capital between distributions, any growth there, if that make sense in any context or buybacks, or how that all kind of plays together?

Yeah, Jeremy, it’s Pam. So return on capital has been a very big part for midstream companies. And I think it will continue to be a very big part of the thesis. We have been returning $0.01 a quarter distribution growth this year. We haven’t provided a guidance for next year. But we continue to believe that’s going to be a very important part of the value proposition for investors going forward. And as Mike highlighted, with our focus on high-grading the portfolio, shrinking the amount of capital we’re investing in the business, our focus is on generating free cash, so that we can fund the greater portion of our investments in the business with cash we generate from operations. And obviously, we have to balance that with keeping the appropriate leverage. Maintaining an investment-grade credit profile is paramount importance to us. So it’s really balancing those things. But our focus is going to be on strengthening our financial flexibility. Returning capital to shareholders is an important part of that prospect.

Thank you. And our next question is from Shneur Gershuni from UBS.

Hi, good morning, everyone. I wanted to start off with the committee that’s been put together, I think led by Mr. Stice. It seemed interesting that, the word midstream was used and not MPLX. And I’m trying to understand what is the mission of this committee in terms of extracting or creating value. Is it just going to be from an MPC perspective? Is it going to be options to create value from an MPLX perspective? What are the different options that they’re going to be looking at? Just wondering, if you can give us some color on that and a timeline on when we can expect a [indiscernible].

Yes, Shneur. This maybe we chose a wrong word there. But we look at midstream as being synonymous with MPLX. We have a few other assets within midstream that we will, and I think that’s really why use the term midstream. We have some assets still to be considered whether they are going to be dropped down into MPLX into the future. But I wouldn’t read anything into whether it’s midstream or it’s MPLX. It’s all of our logistics type assets.

Are you able to talk to the mission of it and what different options you’re going to be looking at?

Yeah, look, I’ll have Mike go into the details.

Shneur, one of the things, I’d just remind everybody is we stated publicly back in the summer that we had been engaged for quite some time with multiple external advisers as well as our internal team on ways to unlock value in the midstream for both MPLX and MPC. And I had told people earlier that we’ve analyzed over 25 cases. We’ve analyzed different structures. We’ve looked at cash flow impacts, balance sheet impacts, tax considerations, transaction costs, liquidity outcomes and credit ratings, synergies, dis-synergies, C-Corp, not a C-Corp, asset optimization, portfolio realignment. I mean we’ve looked at everything, and we’ve said consistently, it’s 25-plus different cases. The bottom line to date, though, is we have not found the silver bullet to act on that would create long-term value, and that’s why we haven’t announced any activity in this regard. So that’s where we are to this point. We obviously support the Board’s special committee to continue to evaluate options and we’re going to continue to do that ourselves. We’re going to continue to challenge ourselves to see if there’s ways that we can create value. But up until this point, after looking at all the different permutations that we can come up with and engaging multiple advisers, we have not found that silver bullet to act on.

Thank you. Our next question is from Spiro Dounis from Credit Suisse.

Hey, good morning, everyone, and congrats, Mike. Just starting off with the midstream review and thinking about the timing. I think you guys had mentioned that should conclude around April next year. And I think we were all, to some degree, expecting 2020 EBITDA guidance maybe well before that. So just curious the 2020 guidance get tethered to that review now? Or can those 2 be separated?

So Spiro, one of the things that we learned the last time in guidance is we had given it in December of 2018, and then the producing community came out with a lower growth profile in early 2019. So one of the dynamics that we have is the producers look over their portfolio and get their plans together, but they don’t really come public with them until the early part of next year. So at this point, the one thing we did wanted to share with you was our best look at our capital. And I thought it was a good realization for the market to understand that we are optimizing both MPLX and ANDX together trying to find synergies commercially as well as on the capital side. So we’re very happy that we’ve gotten that capital program from $2.6 billion down to $2.0 billion, and that’s what we have guided for at this time. But any additional information from the producers, we don’t expect to have until the early part of next year. So that’s one of the dynamics that we learned from this last time. And then with regards to the committee, like you said, they’re going to engage and Mike Stice is leading it as Gary mentioned. And internally, we’ll continue to support it as well, as like I said, continue to challenge ourselves and continue to look for ways because we’re all very frustrated, both unitholders and ourselves as to where the equities have traded. So it is a high priority for us, and we continue to look for opportunities. But like I said, we haven’t found something that we think is worthy of action.

Yeah. That’s fair. I appreciate the color. And then you mentioned 2020 CapEx, which segues into the next question here. I know you mentioned mostly G&P, but maybe could you just provide a little more detail may be regionally, kind of where most of that fat has kind of been trimmed out in the budget? And then just more color around, does that – does it contemplate any sort of asset sales or dropdowns from MPC? In other words, could asset sales take that figure lower? And would you try and balance that out with assets from MPC?

Yeah. So we have not included any asset sales in that analysis. And to your question as to where it was, it’s kind of been directed across the portfolio, and I mentioned mostly in the G&P segment. We’re happy with our G&P portfolio from a cash standpoint. We’re now kicking off cash as I mentioned, and we’re kicking off a lot of cash up in the Northeast. So we’re in a real good position there. And we’ve kind of directed a little bit more of the capital into the L&S segment, because we want to diversify the portfolio a little bit more and kind of broaden our L&S segment to a larger extent. And that’s what we’ve been doing over the last couple of years. Just repeating in 2018, 85% of the capital was targeted in G&P. And in 2020, 75% of it will be targeted into L&S. So we’ve kind of continued to strategically reposition the portfolio towards L&S and enjoy the cash generation that’s incurring in our G&P business.

Thank you. Our next question is from Ujjwal Pradhan from Bank of America Securities.

Good morning, everyone. First, congratulations to both Gary and Mike, and thanks for taking my question. Thanks for all the color on your thoughts around G&P, but I wanted to dig a little further into that. So as you high-grade your future CapEx and continue a current review of your asset base, thinking longer term, is regaining the entirety of your G&P business still a strategic priority for you and MPC? And also regarding portfolio optimization, Gary mentioned in the earlier MPC call that some of your G&P assets are not garnering market – a fair market value. So I was wondering if you can share some of your thoughts in terms of G&P priority and how you plan on managing going forward.

Yeah. I don’t want to repeat myself. But our G&P priority was to make sure that we have cash generation coming out of all the basins to help support the growth in that business down in the Permian. So that’s what we’ve trimmed out of the budget going from that $2.6 billion capital down to $2 billion. But we are very happy with the cash flow generation from these assets. We’ve deployed quite a bit of capital into the area, particularly in the Northeast. And I know we get a lot of questions around Northeast G&P. And I’ve said on many occasions that the fact that the Northeast is slowing down a little bit fits what we’re trying to do as far as diversification, we do believe the Northeast will continue to grow. I’m going to let Pam make a few comments on some of the recent data that we’ve gotten as far as public statements, but we believe the Northeast is going to continue to grow. We’ve deployed a lot of capital there that is kicking off cash. So for right now, we’re continuing on the path that we’ve been on, which is continue to move the portfolio more towards L&S, little less towards G&P, enjoy the cash generation that’s coming off that business to support our growth in the other area. And then I think you’re going to see us continue to high-grade that portfolio. We’ve spent between the 2 MLPs close to $3 billion last year, and now we’re bringing that down to $2 billion as we high-grade, and I think you’ll see more of that from us in the future as well.

Yeah. Just to elaborate on that Mike said about where we are spending the capital, it is very focused on the Permian so we will continue to invest in Gathering and Processing in the Permian. And we’ll be leveraging the Gathering and Processing business there into these large long-haul downstream pipelines. So the pipelines for the Wink-to-Webster crude pipeline, natural gas pipeline on Whistler. And then the project that we’re still advancing, the BANGL pipeline, which is an NGL pipeline. So we have in-flight about 5 plants in the Permian that will generate about 125,000 barrels a day of liquids. That would be available to move on an NGL pipeline and quite a bit of gas, but at least the bcf of gas will be from our own plants. So we continue to allocate capital in the Permian so that we can leverage that into some of those downstream projects. Also, the Conan crude gathering has been an important element, and that will continue to be. So Greg?

Yeah. This is Greg Floerke. I just want to make one comment regarding the Northeast. We have deployed a large amount of capital in Northeast, and it’s been traditionally just in time as we’ve added cryogenic processing capacity and de-ethanization capacity on an individual facility and customer basis, and then we grow our Hopedale fractionation capacity as well. If you look at our numbers, we’re at 93% utilization in the Marcellus, right now. And so the capital that’s been deployed is being used. And now we’re able to sort of dial down from 8 or 10 plants a year to 1 or 2, and just drilling where we have MVCs, and gradually, incrementally, growing the fractionation with that. And we’re also preparing for the Shell Monaca 100,000-plus a day cracker that is coming up soon. And we’ve deployed the ethanization capacity to fill a significant majority of that demand off of our system

And I’ll just add to what Greg said there, that I mentioned earlier that the growth has been relatively strong in 2019. But just to give you an idea, for the Marcellus and Utica basins combined, our gathering volumes are up 20% this year, year-to-date, processed volumes were up 16% and fractionated volumes are up 14%, so a very strong volume growth here in 2019, despite some of the more bearish outlook that’s in the market today. And, again, we do expect that volume growth will come down some. But we do expect there to continue to be growth, especially in the areas that have the wet gas components and the value of NGLs we expect might have bottomed. And so we’re looking for some potential improvement there as well.

Got it. That’s helpful. Just a quick one, on BANGL, can you give us some color on what are some of gating items on FID there? And were the two fractionators that you have discussed feature in that plan?

Yeah, so we’re still excited about the BANGL project. One of the things that’s occurring as we speak is paper documentation occurring between parties, and I’ve mentioned that a couple of times. So right now, we have a strong discipline to make sure that we’re not going to go forward, unless we have a lot of support. We believe we do have that support. We’re engaged in a lot of documentation at this point. Some of the specific details of it are still being worked out, so I’m not going to go into further details there, because we’re coming to a critical point here. I said in our prepared remarks that we are looking to have FID in the next coming months. So we’re right at that critical point to determine the go-forward basis for the project.

Thank you. Our next question is from Shneur Gershuni from UBS.

Hi, so my follow-up question that I wanted to ask earlier was with respect to the Speedway spin, does Speedway become a material customer or counterparty to MPLX on a go-forward basis? And is there any risk to any contracts being renegotiated as part of that spin?

This is Gary, Shneur. No, we don’t expect – all of that, the supply agreement between MPC and Speedway. So it’d really be upstream of any logistics assets whatsoever. We don’t have any ties even today between Speedway from an MLP standpoint between Speedway and MPC.

All right, perfect. Thank you very much. I appreciate it.

Thank you. And we do have time for one final question. Our last question today is from Jeremy Tonet from JP Morgan.

Hi, good morning. Thanks for taking me – fit me in here. Just want to touch-base. There has been some talk about producers looking to renegotiate contracts on the midstream side. Antero has been talking about that a bit. So I was just wondering if you’re able to comment on that at all, what that could mean for MPLX?

Yeah, Jeremy. Obviously, we’re always having discussions with our customers related to fees. And we always want to offer our customers a competitive fee. Our philosophy is if there’s a win-win arrangement that’s different than a current situation, we’re happy to have the discussion. But obviously, it needs to work for both parties. So we’re open to those discussions as long as at the end of the day we feel it’s a win-win for both parties. But other than that, we haven’t had anything that I would comment on at this point.

That makes sense. That’s it for me. Thank you.

Yeah, you’re welcome.

And with that – is the last question. Thank you for joining us today and thank you for your interest in MPLX. Should you have additional questions or would you like clarification on any of the topics discussed this morning, we will be available to take your calls. Thank you, operator.

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