Featured Company News – Marathon Petroleum Divests Ownership in Certain Assets to MPLX L.P.
LONDON, UK / ACCESSWIRE / September 5, 2017 / Pro-Trader Daily takes a look at the latest corporate events and news making the headlines for Marathon Petroleum Corp. (NYSE: MPC), following which we have published a free report that can be viewed by signing up at http://protraderdaily.com/optin/?symbol=MPC. The Company, the third-largest refiner in America, announced on September 01, 2017, closed a transaction with MPLX L.P. (NYSE: MPLX) in which Marathon Petroleum sold its joint-interest ownership in certain pipelines and storage facilities to MPLX for total consideration of $1.05 billion. For immediate access to our complimentary reports, including today's coverage, register for free now at:
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Joint-interest Ownership Assets
The dropped down assets include Marathon Petroleum's ownership interests in the following:
- Explorer Pipeline Co., which signifies a 24.51% interest in the Company;
- Lincoln Pipeline LLC, which represents a 35% interest in the Southern Access Extension Pipeline (SAX);
- MPL Louisiana Holdings LLC, which denotes a 40.7% interest in the Louisiana Offshore Oil Port (LOOP); and
- LOCAP LLC, which indicates a 58.52% interest in the Company.
Long Term Value for Investors
Gary R. Heminger, Chairman and CEO at Marathon Petroleum, highlighted that the drop down of joint-interest ownership assets would further add scale and diversity to MPLX. It, in fact, represents the latest step in Marathon Petroleum's strategic plan, which is deliberated to create long-term value for investors.
A Total Consideration of $1.05 billion
- MPC has agreed to contribute these assets for a total consideration of $1.05 billion.
- This comprises $630 million in MPLX's equity and $420 million in cash. The equity component of MPLX comprises common units of MPLX as well as general partner units to retain Marathon Petroleum's 2% general partner interest in MPLX. For this, the units have been valued on the basis of a 10-day volume-weighted average price of MPLX's common units prior to the closing.
- On the other hand, the cash aspect of the transaction would be funded by a draw on MPLX's $2.25 billion revolving credit facility.
Financial Implications
- It is anticipated that these joint-interest acquisitions would create adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) of nearly $138 million in 2018. In this regard, the adjusted EBITDA in case of joint-interest acquisitions is calculated as cash distributions adjusted for maintenance capital, growth capital, and financing activities.
- The total consideration of $1.05 billion is equivalent to 7.6-times multiple of the EBITDA of $138 million, which these interests are expected to generate in 2018.
- In fact, it is expected that the transaction would be immediately accretive to MPLX's distributable cash flow per unit.
Terms and Conditions
- As of now, MPLX's Board of Directors has approved the terms and conditions of the transactions. This has followed the approval of the transaction by its independent conflicts committee.
- For this transaction, Jefferies LLC advised MPLX's Conflicts Committee for financial matters while Andrews Kurth Kenyon LLP provided guidance on legal matters. On the other hand, Tudor, Pickering, Holt & Co. acted as financial advisors to Marathon Petroleum.
About Marathon Petroleum Corporation
Marathon Petroleum has a crude oil refining capacity of nearly 1.8 million barrels per calendar day in its seven-refinery system. The Marathon-brand gasoline is sold through 5,600 independently owned retail outlets across 19 states. Moreover, Speedway LLC, which is a Marathon Petroleum's subsidiary, owns and operates the nation's second-largest convenience store chain, with around 2,730 convenience stores in 21 states. Also, Marathon Petroleum owns, leases, or has ownership interests in nearly 10,800 miles of crude and light product pipelines
Marathon Petroleum owns the general partner of MPLX L.P. through subsidiaries. MPLX is a diversified, growth-oriented master limited partnership formed in 2012 by Marathon Petroleum Corporation to own, operate, develop, and acquire midstream energy infrastructure assets. Through MPLX, Marathon Petroleum has ownership interests in gathering and processing facilities with about 5.6 billion cubic feet per day of gathering capacity, 7.8 billion cubic feet per day of natural gas processing capacity, and 570,000 barrels per day of fractionation capacity.
Last Close Stock Review
At the closing bell, on Friday, September 01, 2017, Marathon Petroleum's stock climbed 3.49%, ending the trading session at $54.28. A total volume of 3.98 million shares have exchanged hands, which was higher than the 3-month average volume of 3.97 million shares. The Company's stock price surged 2.80% in the last three months, 6.12% in the past six months, and 29.52% in the previous twelve months. Moreover, the stock gained 7.81% since the start of the year. The stock is trading at a PE ratio of 32.04 and has a dividend yield of 2.65%. The stock currently has a market cap of $27.42 billion.
On Friday, September 01, 2017, the stock closed the trading session at $34.57, slightly rising 0.73% from its previous closing price of $34.32. A total volume of 841.06 thousand shares have exchanged hands. MPLX L.P.'s stock price advanced 4.44% in the last three months and 3.50% in the previous twelve months. The stock is trading at a PE ratio of 41.55 and has a dividend yield of 6.51%. At Friday's closing price, the stock's net capitalization stands at $13.42 billion.
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