Mplx Lp (NYSE: MPLX)

MPLX LP (MPLX) is a diversified, large-cap master limited partnership that operates in the midstream energy infrastructure and logistics sector. Its main business activities include gathering, transportation, storage, and distribution of crude oil, refined products, other hydrocarbon-based products, and renewables. The company operates in two segments: 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. This segment includes a network of pipelines, storage facilities, refining logistics assets, terminals, and a fuels distribution business. The company generates revenue in this segment primarily by charging tariffs for gathering and transporting crude oil, refined products, other hydrocarbon-based products, and renewables through its pipelines and at its barge docks, and fees for storing crude oil, refined products, and renewables at its storage facilities.

The G&P segment gathers, processes, and transports natural gas, and transports, fractionates, stores, and markets NGLs. This segment includes gathering and processing assets, natural gas pipelines, and NGL pipelines. The company generates revenue in this segment primarily by selling products purchased after services are provided, and by charging fees for gathering, processing, and transporting natural gas and NGLs.

MPLX has a strategic relationship with Marathon Petroleum Corporation (MPC), which owns and operates one of the largest refining systems in the United States. MPC retains a significant interest in MPLX through its non-economic ownership of the company's general partner and held approximately 65 percent of the outstanding common units of MPLX as of December 31, 2023. The company's contracts with MPC provide for annual escalations that are either fixed or based on a variety of factors, including the FERC index and various other inflation-based indexes.

In terms of competition, MPLX faces competition in its L&S segment from independent terminal and pipeline companies, integrated petroleum companies, refining and marketing companies, distribution companies with marketing and trading arms, and other wholesale petroleum products distributors. In its G&P segment, the company faces competition for natural gas gathering and in obtaining natural gas supplies for its processing and related services, in obtaining unprocessed NGLs for transportation and fractionation, and in marketing its products and services.

MPLX has a strong competitive position in the midstream sector, with a diversified portfolio of assets and a strategic relationship with MPC. The company's ability to generate stable cash flows and its commitment to strict capital discipline and fostering a low-cost culture have enabled it to maintain a strong balance sheet and generate strong financial performance.

The company's customers include major oil companies, refiners, and marketers, as well as independent producers and distributors. The company's customer base is diverse and includes a mix of long-term contracts and spot market transactions.

In terms of brand names and trade names, MPLX operates under the MPLX brand, and its subsidiaries include MarkWest Energy Partners, L.P., MPLX Logistics, LLC, and MPLX Gathering and Processing, LLC. Its products and services include natural gas gathering, processing, and transportation, crude oil and refined products transportation and storage, and NGL transportation, fractionation, and storage.

MPLX is subject to various federal, state, and local regulations, including those related to environmental protection, pipeline safety, and hazardous materials transportation. The company is also subject to various environmental and other regulations, including the Clean Water Act, the Clean Air Act, and the Resource Conservation and Recovery Act. In recent years, MPLX has incurred significant costs to comply with environmental regulations, including the installation of new equipment and the implementation of new operating procedures. The company expects to continue to incur significant costs in the future to comply with environmental regulations and to mitigate the environmental impact of its operations.

In addition, MPLX is subject to various air emissions regulations, including the Clean Air Act and comparable state laws. Changes in product quality specifications or blending requirements could reduce the company's throughput volumes, require it to incur additional handling costs or require capital expenditures.

The company is also subject to various regulations related to marine transportation, including the USCG, federal laws, including the Jones Act, state laws, and certain international conventions. The company's marine transportation business competes principally in markets subject to the Jones Act, a federal cabotage law that restricts domestic marine transportation in the United States to vessels built and registered in the United States, and manned and owned by United States citizens.