Welcome to the MPLX Earnings Call. My name is Jason, and I will be your Operator. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session, and please note this conference is being recorded. I will now turn the call over to Lisa Wilson. Lisa, you may begin.

Thanks Jason. Good morning. And welcome to the MPLX Fourth Quarter and Full Year 2016 Earnings Webcast and Conference Call. The synchronized slides that accompany this call can be found on mplx.com, under the Investors tab. On the call today are Gary Heminger, Chairman and CEO; Don Templin, President; Pam Beall, Chief Financial Officer; and other members of the management team. We invite you to read the Safe Harbor statements and non-GAAP disclaimer on slide two. It is a reminder that we will be making forward-looking statements during the call and 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 three.

Thanks, Lisa, and good morning to everyone. Despite a challenging environment, particularly in the first half of the year, MPLX has strong operational and financial performance. While I'm pleased with what we achieved in 2016, I am even more excited about what lies ahead. On January the 3rd, we provided an update on the strategic actions we intend to implement at MPLX to provide increase visibility to our distribution growth and to lower our cost of capital. The partnership expects to acquire assets from MPC with approximately $1.4 billion of EBITDA as soon as practicable and expected in 2017. The proposed transaction representing approximately $250 million of EBITDA has already been offered to MPLX and referred to the conflicts committee of the MPLX board. This transaction is expected to close in the first quarter of 2017 pending requisite approvals. We expect the partnership to finance the dropdown transactions to approximately equal portions of debt and equity, with the equity financing to be funded through LP units issued to MPC. In conjunction with completion of the dropdowns, we also expect to exchange MPC's economic interest in the general partner, including incentive distribution rights for newly issued MPLX common units. These actions are expected to provide greater visibility to near-term distribution growth and reduce the partnerships cost of capital enhancing its ability to deliver an attractive distribution growth rate over the long-term. Importantly, all these transactions are subject to requisite approvals, market and other conditions, including tax and regulatory clearances. Following the dropdowns, the partnership's size and scale would be among the largest in the industry, with nearly equal contributions from logistics and storage, and gathering and processing segments. With a simplified structure, all alignment with MPC and additional visibility to an attractive distribution growth rate, we are confident about MPLX's compelling value proposed or proposition to investors. Now I will turn the call over to Don to cover the financial and operational highlights. Don?

Thanks, Gary. Over the course of 2016, we executed our plan and delivered strong results in all four quarters. We also achieved our financial and distribution growth guidance for the year. This was accomplished by managing our costs, optimizing capital investments and continuing our sharp focus on customer service. We also substantially reduced our leverage, placing the partnership in a strong financial position as we look forward to significant growth in 2017 and beyond. We reported fourth quarter adjusted EBITDA of $391 million and distributable cash flow of $318 million, marking the fourth straight quarter of growth in both these metrics. Full year adjusted EBITDA was $1.4 billion and distributable cash flow was over $1.1 billion. Last week, we announced an increase in our quarterly distribution to $0.52 per common unit, a 4% increase over fourth quarter last year. With this increase we delivered 13% distribution growth in 2016 and achieved our targeted distribution growth rate for the year. We also reaffirm our distribution growth guidance of 12% to 15% for 2017 and forecast double-digit distribution growth for 2018. We remain committed to maintaining a strong balance sheet and an investment grade credit profile. The partnership ended the year with $2.7 billion of liquidity and leverage of 3.4 times, well below our target of around 4 times. We also delivered a strong full year coverage ratio of 1.23 times. On the commercial front, we have reached an agreement with one of our key producer customers to continue to support their growth in the Marcellus. I'm pleased to announce that we recently executed amended gathering, processing and fractionation agreements with Range Resources, one of our largest producer customers. To support the continued long-term development of Range's substantial rich gas acreage, we expect to construct an additional 200 million cubic feet per…

Thank you, Don. Turning to our financial highlights on slide nine, we reported adjusted EBITDA of $391 million and distributable cash flow of $318 million for the fourth quarter of 2016. Full year adjusted EBITDA was $1.4 billion and distributable cash flow was over $1.1 billion. Total segment operating income was $429 million, with approximately 70% generated by the gathering and processing segment. The bridge on slide 10 shows the change in adjusted EBITDA from the fourth quarter of 2015 compared to the fourth quarter of 2016. Since the prior year quarter, we increased adjusted EBITDA by $93 million. The increase in the gathering and processing segment adjusted EBITDA was primarily driven by higher volumes and increased NGL [ph] pipelines (13:09). While the addition of the marine business accounted for the majority of the change in the logistics and storage segment. Slide 11 provides a summary of key financial highlights and select balance sheet information. At the end of the fourth quarter, we had approximately $2 billion available on our bank revolver and the full $500 million available on our intercompany facility with our sponsor Marathon Petroleum. During the quarter we opportunistically issued 8.6 million new common units through an ATM program and received net proceeds of approximately $277 million. As Gary mentioned earlier, we expect to finance the dropdown transactions through approximately equal portions of debt and equity. With the equity financing funded through LP units issued to MPC, we do not expect to raise public equity for the dropdowns. We remain committed to maintaining an investment grade credit profile as demonstrated by our actions last year, a significant focus of 2016 was strengthening the balance sheet of the partnership, we reduced the leverage from 4.7 times at the end of 2015 to 3.4 times at the end of…

Thanks, Pam. As we open the call for your questions, we ask that you limit yourself to one question plus a follow-up. You may re-prompt for additional questions as time permits. With that, we will now open the call to questions. Thank you, Jason.

Thank you. [Operator Instructions] And our first question comes from Kristina Kazarian from Deutsche Bank.

Afternoon, guys.

Hi, Kristina.

Hi, Kristina. How are you?

Good. Speaking more on the fundamental side, could you guys talk a little bit about volume guidance in the Marcellus/Utica. So you guys have gathered up 3% to 6%, processed 10% to 15% and frac up 15% to 20%. Just could you touch on the trends between each and what kind of driving the differences as we step along the value chain?

Sure, Kristina. This is Don. As we’re looking into 2017, I think, you’ll recall that at the end of the third quarter on the gathered volumes we were generally guiding flat and we’re seeing some incremental positive information and feedback from our producer customers that we would expect that to increase slightly from what we have communicated to you all at the end of the third quarter. In terms of the process volumes of 10% to 15% over last year over 2016, some of that’s going to be driven by the addition to our processing that we’re building at Sherwood. So, Sherwood VII and VIII, we’ll be adding those in 2017. That’s 400 million cubic feet per day of incremental processing capacity. Our Sherwood plant is right now operating essentially at full capacity. It’s at 1.2 Bcf a day and so we’re expecting that will clearly be an addition to our process volumes. On the -- so, a lot of -- I would say a lot of our growth would be driven by adding that capacity, but that capacity will come online sort of over the periods. So that’s 400 million cubic feet per day on sort of 4.4% of processing that we have. So, that’s sort of 10% but it gets feathered in during the year. We are going to also probably spend less money and capital in the Utica, but we’re going to be driving increased capacity utilization. So, we have assets there that aren’t fully utilized and our goal in ‘17 is to make sure that we’re driving a fuller utilization of those assets and we will deploy incremental capital when it appears that those are getting more full or more fully utilized and we have an opportunity to deploy capital there. A lot of our capital would be deployed on the Marcellus side and we’re actually expecting to deploy more capital in the Southwest than we are on -- in Utica just given the opportunity set that present itself.

Okay. And then my follow-up is, in context for that comment in the $1.4 billion to $1.7 billion CapEx number and you guys said that it was about 75% Marcellus/NGL related. How much incremental infrastructure is really needed and what I’m really trying to get out is, how do I think about the longer annual growth rate for a company like of your size and any specifics would be great?

Yeah. I think, at the time that combination was announced, we’d indicated that we thought over the longer term that we have probably a $1.5 billion of growth capital that was available to us sort of on an annual basis, and I would say, Kristina, that we feel given the opportunity set that we see, the optimism that our produce customers are communicating and drilling plants that we see for ‘17 and beyond that I would think that that’s probably on the conservative side, not on the aggressive side. So we do see a good strong opportunity set for that type of investment.

All right. I’ll leave it there. Thanks, guys.

Sure, Kristina.

Thank you. Our next question comes from Jeremy Tonet from JP Morgan.

Good morning.

Hi, Jeremy.

Hi. I was just hoping that you could build on a little bit more from what you said at the AP -- MPC call with regards to the wholesale fuels business and the PLR status there? And just wondering if you don’t have full clarity, is there any chunk of it that you feel comfortable has clarity, half of it at this point or any other color that you could provide around that would be helpful?

Jeremy, it’s Pam Beall and I’ll take that question. So, we’re very encouraged that final regulations were published and our team is evaluating all the information contained in those regulations, and we hope that that very soon we’ll be in a position to understand better the path forward. As we’ve indicated and as MPC has indicated, we expect that we’re still likely to seek the PLR. We don’t view it as being kind of part of the loaf. We think we need to do it on the entire loaf. The -- it’s a very sizeable amount of EBITDA that will be coming into the partnership and we think that the parameters of the fuels distribution service agreement that we’ve structured here is unique enough that we just don’t want to -- we think it’s just most prudent to get the absolute clarity that it will be qualifying income. It’s just not a risk that would make sense given the size that would be dropped into the partnership and dropping in part of it and then having a different view about qualifying income. Just would not be prudent, we wouldn’t be acting in the best interest of the unitholders to take on that.

Yeah. That makes sense. And just want to turn about -- turn to growth outside of the Northeast and just wondering with the Delaware Basin, with the stack, we continue to see volumes ramping there. Just wondering what you think about the prospects for incremental processing plants that could be developed there to service producer need?

Sure, Jeremy. I mean, we are very optimistic about what’s happening in the Southwest and I -- our Hidalgo plant, the first plant that we put into service in that region is nearly at 90% utilization or maybe on a daily basis, slightly higher than that. So typically we would have a ramp up that would be 12 months to 18 months. That was put into service in the May time period. We’re already at 90% utilization. And so, I would expect that we are -- that we will continue to invest in that region. We are actively in dialogue with producer customers around being able to grow our assets, particularly processing assets around there. In the stack, we support Newfield and we’ve -- we are very constructive on sort of what they are doing there as well and we continue to grow with them and we look to continue to grow with them.

Great. That’s helpful. Thank you.

Thank you. Our next question comes from TJ Schultz from RBC Capital Markets.

Great. Thanks. I think, just firstly, amendments and extensions to the Range agreements, I guess, just what was the impetus to work through amendments? If you can give any more detail and changes to contract structure, pricing and tender on that arrangement?

Yeah. So, we’re not going to provide details around sort of those amendments and extensions. But I guess what I can say is that one of the reasons that Marcellus exists in the Marcellus is that Range Resources was our key customer there and we grew with them over the last number of years, and we are really excited about growing with Range in the years ahead. So, we believe that this positions us to be able to grow with Range as they continue to grow. As we -- as indicated we’ve committed to building incremental complexes so an incremental processing at our Houston facility and incremental processing at Harmon Creek. And so we feel like we are well-positioned with Range for the long-term to continue to grow as they grow.

Okay. Thanks. I guess, just second on guidance, assumptions included for your investment in the Bakken pipeline system in guidance for 2017?

So, in terms of the Bakken pipeline system, we have indicated that if and when the conditions and we do expect the conditions to close will be met, when the conditions to close are met, we expect to make a $500 million investment and to take an ownership interest that is slightly more than 9% of that pipeline. So that would be -- we would expect it that especially given some of the positive communications that’s coming out of Washington DC and with the administration. We are optimistic that something on that will happen near-term rather than longer term, and maybe I’ll have Pam comment as well.

Yeah. We’re just going to add that the guidance that we’ve provided does not include the impact of acquisitions or dropdowns.

Okay. Perfect. Thank you.

Thank you. Our next question comes from Eric Genco from Citi.

Good morning. I was just curious based on your guidance right now, what do you have sort of in terms of expectations for Rover. If they were to not get their certificate and miss the three clearing deadline, is there a downside to this guidance or and then on the converse if they actually are able to meet the deadline then is there upside and how would that work in your perspective?

So, Eric, we have obviously expectations around all of the infrastructure that’s being contemplated to be constructed in the basin. I mean, Rovers, obviously, an important piece of it. We expect that it will get -- it will be constructed and be completed. But we’ve not provided sort of any guidance around the impact sort of month-to-month or quarter-to-quarter on our results. I guess, I would just say this. I feel very comfortable with the guidance that were given -- that we are currently giving knowing what we know about completion dates of infrastructure and we believe we’ve been very -- we have the ability to be very flexible in meeting and accommodating our producer customers’ needs. So last summer around NGLs, the summer of 2016, we were loading unit trains of propane and sending them to Kansas in order to allow our producer customer to continue to grow the way that they wanted to grow. And I would expect that going into ‘17 and ‘18, we will be flexible and so will our producer customers in being able to grow their business.

That’s very helpful. And then, I guess, this is a -- as a follow-up or separate question. As I think about the guidance you’ve given and kind of where you’re right now and kind of post all of the dropdowns. I think you mentioned in the last call that you expect to be above your 1.1 time sort of coverage long-term target once the dropdowns are complete? And you cited here a 4.0 times sort of longer term target on sort of debt-to-EBITDA but sort of back of the envelope math suggests that you’re in 3.4 now and you do 50/50 net-to-equity like you’re going to be, I mean, likely at 3.5 times or less maybe once all this is done and with much, much higher cover. So, I’m just curious how are you thinking about that and in terms of yield compression, is that part of it or maintaining the distribution growth guidance? I’m just curious of your thoughts on that overall?

I think the answer is probably, yes, to both of the comments you made at the end. I mean, we are committed to our distribution growth guidance both the 12% to 15% for 2017 and a double-digit for ‘18. We believe that the actions that we’re taking will actually provide increase visibility to investors around our ability to meet that distribution growth guidance. In terms of, one of the things I do think that’s important over time as we make the acquisitions from MPC and we have -- and we essentially acquired the dropdown portfolio from MPC, we do think it’s important and our investors want incremental visibility into our growth profile. So, I would say if our coverage rises a little bit above the sort of 1.1 times that we historically had when we were predominantly a dropdown story. I don’t think that’s a bad resolve. I think that will actually give our investors a lot of confidence in our growth profile and allow us to continue to drive a lower cost to capital.

Okay. Thank you.

Our next question comes from Robert Balsamo from FBR [sic] FB&R (31:18).

How are you doing guys? Congrats on a nice quarter.

Thanks.

I was wondering just some clarity on the arrangement with, Range, any potential there for expansion into North Louisiana or other basins I assume that’s on the table?

Yeah.

Yeah. Our primary focus on and the announcement that we made was really a Marcellus-based focus, but maybe I’ll have Randy Nickerson comment around sort of a continuing relationship with Range.

As Don said, Range is a big part of why we’re there. Excuse me, when we wrote that the -- first entered to the arrangement with Range, we have to realize that was the very first time we moved into Marcellus and honestly at that time if I think back to that we thought sort of our base case was $50 million a day growing to $90 million a day, not really know what -- not really knowing the extent of the rock or the production. So, honestly, part of it is a natural evolution and maturing other relationship between us and Range. We just needed to rework to the arrangement. At the same time, we needed to expand both at the new complex at Harmon Creek replacing Houston. So, both of those were the key drivers and why we did -- we wanted to rework the arrangement. It’s good for both Range and MarkWest, solidifies the arrangement for us. We’re delighted by it. We get to expand. I think everything is all positives on both sides.

Okay. Thank you very much.

Our next question comes from Brian Zarahn from Mizuho.

Good morning.

Good morning, Brian.

Good morning.

With dropdowns in organic projects and the DAPL investments it is going to be active 2017, given the parent we’ll be taking equity for the dropdowns. Can you provide some color on financing expectations for, the roughly $2 billion combined of organic investments in DAPL?

Yeah. Brian, it’s Pam, and I’ll take that question. I think it’s important for us to always look, where we ended the year and how well position the partnership is. So, we ended 2016 with $2.7 billion of liquidity and $234 million of cash on the balance sheet. So, as we’re entering this phase of significant growth, the partnership is in really good position to take on these commitments. We know that the market or the debt markets are very strong. They’re certainly strong for energy names and we think that there -- it’s going to be very strong for the sector in which we operate today. And we think that based on the fact that the sponsor is going to take back the equity portion of the consideration. It really limits the amount of equity that we need to raise in the capital markets. So, we’re very confident in our ability to raise the capital that we will need to fund both the organic portion of our growth strategy, the dropdowns and the acquisition of DAPL.

As of now the organic investment in DAPL are expected to be funded with public equity?

Well, keep in mind we did raise equity opportunistically in the fourth quarter of 2016. So, we’ve already issued a fair bit of equity and we’ll -- the ATM market was a good way to raise equity capital through 2016 and we see no reason why it won’t be a good source of equity capital as we move through 2017 as well.

And then, as you’re moving ahead with the summer vacation process, what are your thoughts about potentially changing the timing of the GP volume, perhaps, a bit sooner than initially expected?

Yeah. Brian, this is Don. I guess, we as the acquirer of the assets that were being offered by MPC. We’ll acquire them when they’re offered to us. And I guess, I would say the same thing would be true around an IDR transaction. We can’t effect an IDR-type transaction until the GP makes that available to us. So, I expect that what MPC announced is their strategic plan and we are operating under the -- that -- the presumption that strategic plan will be carried out on that timetable and in that sequence.

Thank you, Don.

Thank you. Our next question comes from Theresa Chen from Barclays.

Good morning. I wanted to ask you about your positioning in the ethane market. I believe based on your current capacity, you have the ability to generate another 70,000 barrels per day production in ethane. And there’s -- in addition to that an opportunity to invest anywhere between $500 million to $1 billion in the Northeast. Can you just talk about the factors that caused that delta and how do you gets the low end versus the high end? Where do you stand now and is this at all contingent on export demand out of the Northeast?

Sure. This is Randy Nickerson, I’ll take that and maybe, Greg, can even follow up with that. One of the things that we did in the Marcellus and in the Utica that’s really different is, we have very distributed de-ethanization. So we have ethane recovery at each and every plant. That gives us incredible flexibility because each and every producer is positioned differently relative to their takeaway, relative to their prospective on ethane and so forth. And we can install additional de-ethanizers, really customized to match each and every one of our producers. You see us doing that, we’re installing bluestone. We have de-ethanization at some plants and not total de-ethanization at others. The other thing we can do because of the way we designed the system that’s really unique is that we can include smaller de-ethanization integrated with the plants at the complexes or we can install larger standalone de-ethanizer. So we have almost unlimited flexibility sort of meet the market, particularly as -- we talked about the crackers coming on at the end of ‘18 and end of the ’19, it still to be seen what the price of ethane is going to be -- going to happen. It’s really going to accrue like this, like people are projecting that we’re going to be perhaps even short of ethane in those crackers, we are going to have to reach up in the Northeast to pull up a lot more ethane than what we have. Today, we’re primarily just recovering the minimum amount what we all talked about as must recover, but realize that number can double and even in some cases triple if ethane becomes highly profitable to recover and that’s what drives it for. The neat thing about that is as well as we can install those additional facilities sort of just in time basis so they’re fully utilized. So, we’re really in a unique and a very good position to match the market as the ethane cracking capacity both in the Northeast particularly in the Gulf Coast expand is going to be great. The other thing we’re fortunate to be is we can send ethane is leaving our facilities and being exported out to East Coast. We have crackers in the Northeast when they come online, Shell and others, and then we ship -- our producers transport ethane down to the Gulf Coast. We really access almost all the major markets. So, we’re really in an ideal position or our producers are and we’re in an ideal position to support those producers when they decide to meet those markets. So, that’s why there’s such a big variability in the cost. It goes with the good part of having enormous flexibility.

Thanks, Randy. This is Greg Floerke. I just would add to what Randy said. We -- in addition to all of the distributed de-ethanization facilities which are cryogenic plants, we have a connecting purity ethane pipeline to all of those. And that purity pipeline allows us to deliver ethane into our Houston, Pennsylvania hub and our Cadiz, Ohio hub, which are interconnects with ATEX, Mariner West, Mariner East, and eventually Utopia, which will originate from our Cadiz facility. We also will be have two origin points, the two interconnecting origin points for pipeline will eventually connect the Shell cracker that’s been announced. So, that’s another takeaway point. So, we hope to grow on our current position where we recover about 80% of all the ethane in the region and as we continue to dial up our ability with existing utilization and expanding as we are at our Majorsville and Keystone plants will move with our customers demand to grow that capacity.

That’s very helpful. And how much of that investment opportunity is baked into your near-term CapEx guidance for 2017?

That -- those big projects are not or that incremental project is not baked into our existing CapEx.

Okay. Great. Thank you very much.

We -- I mean we do have in the ‘17 budget, I mean, we have said and we announced this previously, I guess, Theresa was -- is that we have 60,000 barrels a day of de-ethanization that will come online in ‘17. So, that’s in our budget, but I guess, I thought you were asking about sort of the incremental stuff and the bigger takeaway above what we already have.

Just the [ph] $500 million to your $1 billion (41:25)?

Yeah. That’s not in this.

Got it. Thank you very much.

Thank you. And our next question comes from Corey Goldman from Jefferies.

Hey, guys. Just want to run through the 2017 EBITDA guidance quickly if I can. Just annualizing 4Q, that kind of gets us within the range already for ‘17 and you guys are forecasting some nice growth at least on the gathering, processing and frac side. Just -- can you give us some colors to what can get us to maybe just low end of the guidance that you’ve given us, just for the legacy side?

Well, let me start Corey, I guess, as we see that, we once, obviously, we’ve announced incremental processing capacity. So, we will have that that will help to drive on the G&P side. On the L&S side, we acquired the marine business at the end of the first quarter. So, there’s $30 million of incremental EBITDA in ‘17 that wouldn’t have been around in ‘16 if you kind of comparing those two quarters. L&S has historically grown at a pace and at percentages that would be typical of pipeline type growth. And then, the kind of the bigger pieces will really be around the G&P growth that we are experiencing.

Yeah. And then the Cornerstone Pipeline just came online in December. So, you’re going to have a full year of operation at Cornerstone.

Yeah. I guess that’s kind of my question is that, if we use just 4Q on the $391 million in annualized, I guess, that gets us at north of the low end of your 2017 guidance range. And so, you have full year Cornerstone, you have additional gathering, processing and fractionation volumes. Just -- is it being conservative on the NGL side, given that there is still some sensitivity on that front? I am just wondering why the low end would be lower than what the 4Q would be kind of indicating to us on 4Q ’16, sorry, no, yeah, for 4Q ‘16?

Yes. I would say we just reflect caution and conservatism around the commodity price environment. We’re optimistic, I think, there’s a lot of optimism by producer customers, but we just try to provide a range of guidance that could reflect the whole spectrum of what could occur in 2017.

Okay. Can you guys?

Go ahead.

Sorry. I was going to say if you guys can provide just the NGL forecast just so we can get some gauge on that maybe?

So you want the weighted average NGL price that’s in our forecast?

If you guys can provide it, yeah.

It’s $0.65.

Perfect. Okay. That’s helpful. And then just as a follow up and the new CapEx implied somewhere about $300 million to $500 million of additional projects, the additional Range processing plant that explains a good portion of it assuming Harmon was already included in the guidance. Can you guys just give some colors to what would drive us beyond, I mean, to get to that $500 million, is there additional projects in the Southwest that you guys are considering?

I’m sorry which $500 million, Corey?

Just a dealt between the $1 billion and 2 billion and the high end in the previous guidance and on the $1.7 billion, sorry.

I am sorry. I would say, as we think about that capital. I think we’re probably much closer to the high end of that range than we are to the bottom end of that range. And I think when we originally provided the range the sort of the gathering capital is typically the one where we have maybe the least visibility and probably the most flexibility in managing that to be timed up to when our producer customers are putting wells online. I would say the rest of the fractionation and the processing, the capital around that and the capital around the L&S part of the business I think is relatively fixed and probably has more upside probability than downside probability.

That’s really helpful. And if I can just squeeze one very quick one in there. The 35% hedges that you have on the prices, is that a target you’re comfortable with, are you going to look to add hedges on top of that already?

Well, we’re likely to continue to add as we go through the year.

Great. Thanks, guys.

Thank you. We have no further questions at this time. I will now turn the call back to Lisa Wilson.

Thank you, Jason. And thank you for your interest in MPLX. Should you have additional questions or would like clarification on any of the topics discussed this morning, Doug Wendt, Denise Myers and I will be available to take your calls. Thank you for joining us today.

Thank you. Ladies and gentlemen, this concludes today’s conference. Thank you for your participation. You may now disconnect.