MPLX - NYSE

Welcome to the MPLX Fourth Quarter 2024 Earnings Call. My name is Amenda, 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 Kristina Kazarian. Kristina, you may begin.

Welcome to MPLX’s fourth quarter 2024 earnings conference call. The slides that accompany this call can be found on our [email protected] under the Investor tab. Joining me on the call today are Maryann Mannen, President and CEO; Kris Hagedorn, CFO and other members of the executive team. We invite you to read the Safe Harbor statements on Slide 2. We will be making forward-looking statements today. Actual results may differ. Factors that could cause actual results to differ are included there as well as in our filings with the SEC. As you saw in our earnings release, MPLX revised its reporting to better reflect the value chains and growth strategy of MPLX's operations. The logistics and storage segment, formally referred to as L&S, has been renamed Crude Oil and Products Logistics. The gathering and processing segment, formally referred to as G&P, has been renamed Natural Gas and NGL Services. With the chain, certain equity and method investments serving Natural Gas and NGL customers now reside in the Natural gas and NGL Services segment. Prior periods have been recast for comparability. Additional details on these reporting changes can be found on slides 16 and 17. With that, I will turn the call over to Maryann.

Thanks, Kristina. Good morning and thank you for joining our call. In 2024, we executed our strategic commitments. Full year adjusted EBITDA was $6.8 billion, an 8% increase year-over-year. In the Crude Oil and Products Logistics, results were driven by strong operational performance and demand. In the Natural Gas and NGL Services, we placed two processing plants into service in 2024 and achieved record throughput driven by our growing asset portfolios in the Utica, Marcellus and Permian basins. And today, MPLX handles over 10% of all the natural gas produced in the United States. This was the fourth consecutive year of MPLX generating mid-single digit adjusted EBITDA growth. Since 2021, we have grown adjusted EBITDA at a compound annual rate of 7%. In 2024, we invested $1.7 billion in organic growth projects and strategic acquisitions of increased ownership interest in existing joint ventures. These capital investments were targeted in key basins and value chains where we operate. We believe these investments will generate mid-teens returns, extending the durability of our mid-single digit EBITDA growth profile and our ability to return capital to our unit holders. In November, we increased our quarterly distribution by 12.5%, marking the third consecutive year MPLX has increased its quarterly distribution by 10% or more. Over the course of 2024, MPLX returned nearly $4 billion of capital to unitholders while maintaining distribution coverage of 1.5x strong given the stability of our business. Looking forward, our growth opportunities are robust. And today we announced a capital expenditure outlook of $2 billion for 2025. 85% of our growth capital will be allocated to opportunities within our Natural Gas and NGL Services. We anticipate mid-team returns on these projects and aggregates, and believe our execution on these investments will extend the durability of our mid-single digit growth profile, allowing us to invest in the business and support annual distribution increases in the future. And we believe we have the financial flexibility to execute strategic acquisition opportunities that would be complementary to these organic capital deployment plans. MPLX reached a significant milestone in its NGL wellhead to water chain strategy with the announcement of a project to construct a Gulf Coast Fractionation Complex and export terminal. MPLX's fully integrated NGL value chain connects the Permian to the Gulf Coast and will supply growing global demand for LPGs. Our $2.5 billion investment in the Fractionation Complex in export terminal complements MPLX's existing asset base and leverages existing infrastructure. MPLX will build and operate the Gulf Coast Fractionation Complex consisting of two 150,000 barrel per day Fractionation facilities and a 400,000 barrel per day LPG export terminal, all of which will be located adjacent to MPC's Galveston Bay refinery. MPLX has entered into a joint venture agreement with ONEOK for the export terminal and a bidirectional purity pipeline between Mont-Bellevue and Texas City. ONEOK will market its 200,000 barrels per day and provide connectivity to Mont-Bellevue storage, enhancing the competitiveness of the terminal. We also believe this strategic partnership with ONEOK will create additional optionality and value to our customers. We also see it as a platform for future collaboration and growth across our Gulf Coast assets. MPLX plans to market ethane production from the Frac to both existing and new customers. MPC plans to contract with MPLX to purchase the remaining LPG production from the Frac, which MPC will market globally through its existing marketing business via the new export terminal. This contract structure once again demonstrates the strengths of our strategic relationship with MPC. The Fractionation facilities are expected to be in service in 2028 and 2029 and the export terminal is expected to be in service in early 2028. We anticipate mid-teens return on the project, which is expected to begin generating EBITDA when placed in service in 2028, and will ramp through the end of 2030. Additionally, we believe the expansion of our Gulf Coast NGL value chain will create a platform for optimization and incremental growth opportunities. As we look at additional opportunities for MPLX, we are investing for durable growth in response to strong producer demand. MPLX is expanding its natural gas and NGL integrated value chains, progressing long-haul pipeline growth projects, and investing in processing capacity. In the Permian Basin, MPLX is constructing its seventh processing plant Secretariat, a 200 million cubic feet per day processing plant expected online in the fourth quarter of 2025, bringing our gas processing capacity in the Permian Basin to 1.4 billion cubic feet per day. Integral to our Wellhead to Water NGL strategy, the BANGL joint venture is progressing segment expansions, enabling additional NGLs to reach our Gulf Coast Fractionation Complex. The Bangle pipeline's expansion to 250,000 barrels per day is expected to be in service by the end of the first quarter, and the JV partners have sanctioned the expansion of the main line to 300,000 barrels per day, which is expected online in the second half of 2026. Within our natural gas value chain, the Matterhorn Express Pipeline began full commercial service in November, and we continue to see strong demand from shippers. Additionally, MPLX and its partners are progressing the Blackcomb and Rio Bravo pipelines, designed to transport natural gas from the Permian to domestic and export markets along the Gulf Coast. Both pipelines are expected in service in the second half of 2026. In the Marcellus Basin, MPLX is constructing the Harmon Creek III processing plant and adding fractionation capacity as we work with our customers to align capacity expansion with their drilling plans. This complex will comprise of a 300 million cubic feet per day processing plant and 40,000 barrel per day de-ethanizer. Following completion in the second half of 2026, MPLX expects gas processing capacity in the northeast to total 8.1 billion cubic feet per day and fractionation capacity to total 800,000 barrels per day. Within the Crude Oil and Products Logistics, we anticipate spending $250 million on growth projects. This includes expanding crude gathering pipelines supporting the Permian and Bakken basins, various butane blending projects at our products terminals and investing in other high return investments targeted at the expansion or debottlenecking of assets. We have a very high degree of confidence in these investments as the macroenvironment for energy remains favorable. The United States is a low-cost producer of energy fuels needed across the globe and the outlook for hydrocarbons remains robust. Grid electrification, onshoring, nearshoring and data center development are driving natural gas demand and growth forecast through the end of the decade. As demand increases for natural gas powered electricity, we are well positioned to support the development plans of our producer customers. Globally, demand for transportation fuels is expected to grow. The U.S. refining industry is expected to remain structurally advantaged over the rest of the world. Furthermore, we believe the MPC refining assets are the most competitive in each region MPC operates and our strategic relationship with MPC will provide additional opportunities to enhance value chains supporting their operations. We are confident in our growth opportunities to generate durable cash flow for MPLX, supporting our commitment to return capital to unit holders. Now, let me turn the call over to Chris to discuss our operational and financial results for the quarter.

Thanks, Maryann. Slide 8 outlines the fourth quarter operational and financial performance highlights for our Crude Oil and Products Logistics. The segment adjusted EBITDA was a new record, increasing $60 million when compared to the fourth quarter of 2023. The increase was driven by higher rates and throughputs across our systems. Pipeline volumes were up year-over-year, primarily because of the timing of refinery maintenance and increased volumes in the Permian in 2024. Terminal volumes were also up year-over-year, primarily due to higher throughputs on the West Coast. Moving to our Natural Gas and NGL Services segment on slide 9, the segment established a new record as the segment adjusted EBITDA increased $79 million compared to the fourth quarter of 2023. This is driven by increased volumes including contributions from increased ownership interests and existing joint ventures in the Utica and Permian basins and growth from our equity affiliates. Gathered volumes increased 8% year-over-year primarily due to the addition of dry gas volumes from Utica assets acquired earlier this year and increased production in the Marcellus. Processing volumes increased 6% year-over-year primarily from higher volumes in the Utica and Permian basins. In the Utica, processing volumes have increased nearly 50% year-over-year highlighting the value producers are seeing in the liquids rich acreage. Utica processing utilization exited 2024 at 70% and as new wells are placed online, we are positioned for additional volumes with minimal capital spending in 2025. Marcellus processing utilization was 92% in the quarter reflecting the ramp of our Harmon Creek II processing plant. Total Fractionation volumes grew 14% year-over-year primarily due to higher processed volumes and ethane recoveries in the Marcellus and Utica basins. Moving to our fourth quarter financial highlights on slide 10, total adjusted EBITDA of $1.8 billion and distributable cash flow of $1.5 billion increased 9% and 7% respectively from the prior year. MPLX returned nearly $1 billion to unitholders and distributions and $100 million in unit repurchases. During the quarter MPLX retired $1.15 billion of senior notes which matured in December. We ended the quarter with a cash balance of $1.5 billion and expect to retire another $500 million of senior notes maturing later this month. MPLX maintained strong financial flexibility and we expect to continue the growing the partnership's cash flow enabling the return of capital to unit holders. Now let me hand it back to Maryann for some final thoughts.

Thanks, Kris. MPLX has a strong history of growing the partnership's cash flows and its distributions to unitholders by executing its strategic priorities, all while maintaining capital discipline. While year-to-year growth may not be linear, we are targeting a mid-single-digit growth rate over multi-year periods, and as you can see from our results, we have achieved this growth. By deploying capital wisely, controlling our costs, and optimizing operations to get the most out of our assets, we have delivered 7% growth on both an adjusted EBITDA and DCF on a three-year compound annual basis. Similarly, the growth and durability of our cash flows, combined with the strong coverage of 1.5x, and low leverage just above 3x, has allowed MPLX to consistently increase its quarterly distribution, most recently by 12.5%, and we expect for years to come. Our capital allocation priorities are unchanged. First, maintenance capital. We are steadfast in our commitment to safely operate our assets, protect the health and safety of our employees, and support the communities we operate in. Second, we are focused on delivering a secure and growing distribution and expect this will remain our primary return of capital tool. Third, we will invest in growing the business seeking to achieve superior returns. After these priorities, we will assess the opportunistic return of capital to unitholders through unit repurchases. In summary, the opportunities ahead of MPLX in 2025 are compelling as we execute our mid-single digit adjusted EBITDA growth strategy. In addition to optimizing our highly contracted asset base, we see growth across our natural gas and NGL value chains. In the Marcellus and Utica, producer activity remains robust, supporting growth of our gathering processing and fractionation footprint. Development of our Gulf Coast Fractionation Complex and Export Terminal will enhance our NGL value chain, and with our joint venture partners, we are progressing long-haul natural gas and NGL pipelines to meet growing demand from Gulf Coast and international markets. Advancing these high return growth projects position us to grow our cash flow, allowing us to reinvest in the business and return capital to unitholders through a growing distribution. The growth and durability of our cash flows combined with strong coverage and low leverage provides MPLX considerable financial flexibility. We believe MPLX is positioned for additional distribution increases like the 12.5% seen in 2024. At the current distribution, MPC expects to receive $2.5 billion annually from MPLX, illustrating the strategic value of MPLX within MPC's portfolio. And as both pursue value enhancing opportunities, the value of this strategic relationship is further strengthened. Our commitment to operational excellence, our growth opportunities, and our financial flexibility position us to generate durable cash flow for MPLX, supporting our commitment to peer-leading capital returns to unitholders. Now let me turn the call over to Kristina.

Thanks Maryann. As we open the call for your questions, as a courtesy to all participants, we ask that you limit yourself to one question and a follow-up. If time permits, we will re-prompt for additional questions. We're ready for questions.

[Operator Instructions] Our first question comes from John Mackay with Goldman Sachs.

Hey, good morning. Thanks for the time. Just wanted to start on the NGL value chain announcement. Maybe you could just share a little more background on the strategic rationale here among bringing the partners like ONEOK, having MPC take the offtake, and what that means for your confidence in the return profile overall. Thanks.

Hey, good morning, John. Sure. First and foremost, this Gulf Coast NGL value chain expansion that we talked about this morning. As over the last several quarters, we've been talking about our ability to build out our wellhead to water strategy. We've shared our thoughts around how we were building optionality and ensuring that this opportunity could yield mid-single digit growth. We think that this project demonstrates our ability over the long term to continue to do that. Beginning at the wellhead, we have incrementally grown processing capacity over the last few years, serving some of the best producer customers in the Permian Basin. I mentioned earlier this morning, we're bringing on Secretariat's seventh processing plant in the Permian, as an example. Last quarter, we talked about our increase in ownership in the BANGL Pipeline to 45%. And as this increased ownership gives us the long-haul pipeline to bring the volumes. BANGL, as I mentioned this morning, also expanding the mainline to 300,000 barrels a day. So we think this investment in the Fractionation complex and the export terminal really complements MPLX's existing asset base. I think the second part of your question was sort of why the JVs, if you will, with ONEOK, the JV for the export terminal and the purity pipeline include ONEOK. ONEOK will bring marketing and provide connectivity to Mont-Bellevue storage. And we think this improves the competitiveness of the terminal. Also, we think this strategic partnership with ONEOK will create additional optionality and value for our customers and clearly give us some optionality for the future. So, putting all of that together, given our current infrastructure and the opportunity that we see, we have a high degree of confidence that this project will continue to extend our EBITDA growth into the future. Let me pause there.

No, thanks for that, Maryann. That made a lot of sense. And maybe it's just my follow-up. You touched a couple times on additional opportunities in the future. Maybe you could just flesh that out for us. If we look at the capacity of this footprint, there's probably some more room for you to add some processing upstream. What else could we be talking about here for those incremental opportunities? Thanks.

Yes, certainly. So as , the NGL and Nat Gas opportunity set for us, as we've been talking about, we think is an extremely important platform, particularly as we look at the connectivity to our export markets and what we might be able to do in the future. I'm going to ask Dave to give you a little more color on what some of those opportunities, longer term, might be.

Yes, thanks, Maryann. So maybe I'll set the stage with, when we use the word strategy, think about long-term roadmap of where we want to go within the crude, the Nat gas, and NGL value chains, and those will continue to evolve and develop. So when you think about the announcement today of our Gulf Coast Fractionation Complex, we talk a lot about the justification, the rationale around that, but also think about the Gulf Coast, and within the Gulf Coast, some of our refinery assets at MPC and the interconnectivity opportunities that we'll provide in the future. In addition to that, the Gulf Coast, as everybody knows, has got a very large petrochemical footprint, and think about the interconnectivity with some of our existing or new customers down the road in the petrochemical side of the business. And finally, and Maryann touched on it very well with our new JV partner ONEOK, as we continue to build out this project and look at incremental opportunities between that partnership, we believe that there is a roadmap for some pretty substantial growth opportunities there also. So I think the combination of those three within the U.S. Gulf Coast footprint has a lot of growth potential in the NGL platform.

Our next question comes from Manav Gupta with UBS.

Good morning, Maryann. I think one of the unique features of your stock MPLX is your double digit distribution growth, and I'm trying to understand with these new projects that you have added, have you been able to extend that for a period of time where we can say maybe for even the next four or five years, MPLX could continue to grow their distribution in double digits?

Good morning, Manav, and thanks for the question. So, certainly, as we look at this opportunity, as well as putting other capital to work this year, next year, we remain optimistic about mid-single-digit growth, EBITDA I shared, it might not be perfectly linear just based on how that capital goes to work and when these projects actually come to fruition. But our reason for the 12.5% distribution increase last year was certainly predicated on the fact that we believed it was durable, the cash flows being generated from these projects as you've seen over the last few years, the growth in EBITDA, the growth in the DCF. So, we are certainly optimistic that this level of distribution increase, like the 12.5% that our unitholders experienced in 2024, we'll be able to do that for years to come.

Perfect. My quick follow-up is obviously these are very good organic projects with excellent returns, but I mean you have a good balance sheet. If the right small bolt-on opportunities do come along the way, could you still look at them for growth? And then the parent obviously has some assets which can also be moved into MPLX. So how are you thinking about those things?

Yes. Thanks, Manav. Sure. So maybe a minute on just to be sure we're clear on how would you think about capital? If I step back first to 2024, we've talked about capital in and about $1 billion per year, but if you've seen, we actually put about $1.9 billion to work in 2024. Some of that what we would classify as traditional capital, but another $800 million or so in small bolt-on M&A. You may remember early in the year we did the Summit transaction. We took incremental ownership in BANGL, Wink to Webster. So a couple of examples. This year we're talking a capital project or, sorry, a capital expenditure estimates in and about $2 billion. Keep in mind, as , we've got the balance sheet capability to be able to do that, but 85% of that capital we are saying would be targeted toward the Nagas and NGL services. So obviously the project that we just got done announcing this morning is a part of that Secretariat that we will be completing in the back half of this year, Harmon Creek III that we talked about, back half of next year. And then certainly if there were to be incremental bolt-on M&A opportunities that met all of our criteria, so first and foremost, strategic fit, our mid-teens return, extension of our value chains, all of those criteria, we would certainly have the capacity at the MPLX level to be able to do that. I think your last question to me was whether or not we would consider drops. And as the past couple of years drops were probably lower on our items of priority. I think a few things about drops today. One, it certainly makes sense, I'll bet there's just a small few, to get those assets to the midstream side, putting those assets where they belong. Having said that, in no way would we do that to support mid-single digit growth. We believe the organic opportunities that we have support our mid-single digit growth. If we were to do drops, then that cash that would be a part of MPC, of course, we could use to increase the buyback given the valuation that we see at MPC. But it should be clear that if we do a drop, it would not be because we're trying to support mid-single digit growth with those drops, because that EBITDA is in the enterprise today.

Our next question comes from Jeremy Tonet with J.P. Morgan.

Hi, good morning. Just wanted to come back to the NGL strategy a bit more, quite kicking up to high gear here. Wanted to touch base on a couple points. As far as it relates to the Fractionation component, is this a take or pay contract for MPLX where it's all kind of firmed up and MPC is responsible for all the marketing, so there's not that type of exposure at MPLX? And then if I think back on the Mark West assets, there's MPLX has GMP in a lot of different areas. Could those areas be piped into this track and export facility, or what's the art of what's possible here?

Thanks, Jeremy. So first and foremost, want to be sure that we understand, particularly on the contract with MPC and MPLX, as , as we have in all other contracts, any commodity risk would be borne by MPC, not by MPLX. I'm going to pass it to Dave first and he can give you a little bit of color on the contract and then I'll move on to Greg who can talk about the MarkWest assets.

Hey Jeremy, so let me touch on, and I think Maryann did a nice job of articulating it, but I want to be clear with the contracts between MPLX and specifically MPC from the Frac and then over the export terminal, those will be termed up agreements without the commodity exposure on the MPLX side of the equation. So I just want to be clear there that the commodity exposure and the marketing of those C3s specifically coming out of the Frac, because as Maryann touched on earlier, the ethane will be going to existing customers or new customers in the market, but the contracts between MPLX and MPC for the C3 Plus out of the fraction across the dock will be commercial agreements without commodity exposure on the MPLX side of the equation. So hopefully that answers your question.

Jeremy, this is Greg. With regard to your question on the data centers, data center power demand has continued. Thank you. Go ahead, Maryann.

I'm sorry, Greg. He was asking about MarkWest assets. Can they be integrated? That was Jeremy's question.

Okay, sorry.

No worries.

I'm sorry, I apologize. I misheard the question. In terms of, yes, the facilities that we have, I'm sorry, I misunderstood the question. Our facilities in the Permian Delaware Basin are already piped in to deliver NGLs to BANGL. And the BANGL pipe will be extended to our Gulf Coast facilities, which then will allow access both for fractionation and for terminal access to water.

Got it, but I think that you might have GMPS and other basins and just wanted to see if those could be integrated into the system.

Okay. Yes, we definitely have NGL access, fractionation, and other basins. And those NGLs would have the ability, in some cases, to be directed down towards our fractionators and our export facilities on the Gulf Coast.

Got it. That's helpful.

Hey, Jeremy, just making sure we got your question now. Are you good?

Yes, I just wanted to see what was possible there. And then maybe, I guess, going towards the data center side and touching there just, there just there's a lot of talk about what's possible what mid-streamers could provide for solutions there. Would MPLX look at laterals to beat gas into data centers or even possibly behind the meter or anything else just wondering what's on your radar at this point.

Yes, Jeremy, great question and I'm going to give Greg the opportunity to share because he's got a lot to offer on this topic but as I mentioned you look at the amount 10% of US gas production is going through MPLX. We think there are opportunities particularly when you look at the location of our producer customers, the amount of residue gas that we have and the opportunities over the long-haul. We think we're well situated to support our producer customers but let me pass it back to Greg because I know he's got some things that he wants to share there.

Jeremy is with regard to the power supply for data centers, data center power needs and demand has been growing and we think it will continue to grow whether or not it's AI driven or whether it's basically cooling for these large data centers. Natural gas is positioned to be the primary fuel source we believe for that growth and in order to generate that power you need processed and treated gas so that could either be co-location, you'll off of one of our large processing plants or any of our processing plants or off of downstream residue pipelines. We think that we do have the ability either through short pipe connections or co-location to be locations where co-generation would be favorable as well as potentially even data center development. It's easier at this point to put in more fiber optic cable for long-haul to transmit data than to build new electric transmission lines or pipe. So we think there may be definitely co-location for data for power generation, but potentially data centers as well.

Our next question comes from Theresa Chen with Barclays.

Good morning. Thank you for taking my question. With the organic CapEx step up in 2025, just wanted to get more color and clarify your views on the cadence of capital deployment, both organic and inorganic, over the next couple of years with the backlog that you have of organic projects. So is the $2.0 billion a good run rate for organic taking into account additional potential processing the backlog, and then M&A would come on top of that, or how should we think about that?

Thanks, Theresa. What I would tell you, yes, indeed, the $2 billion is different than the $1 billion we've communicated historically, and as Maryann had articulated, we've always talked about the $1 billion, but we've been deploying more, such as the $1.9 billion that she went through last year in 2024, and if you look back even to 2023, it was closer to about $1.4 billion with the Tornado acquisition we did at the end of the year. Looking forward, the $2 billion is a rough number. That is growth capital with maintenance this year. I would expect that number to look similar in future years, but I also would tell you I don't think it's going to be linear in nature. I also would tell you, Theresa, that the $2 billion is not inclusive of M&A. We're not projecting M&A, but as Maryann had stated, we will absolutely look at M&A that fits into our strategic footprint and hits our return profiles. So with our significant balance sheet flexibility we currently have, we think we're in a great position to be able to do that.

Understood. In terms of the LPG export project, can you share how that partnership with ONEOK is going to work? Will we be operating the facility? Is it a JV, UJI? Will all the storage be in Mont-Bellevue? Does all of it exist at this point? Is it underground? Any color around that would be great. Thank you.

Hey, Theresa. This is Dave. Let me touch on that a little bit and we'll use the word JV to be probably consistent. We'll use the plural JVs and I'll touch on that in a minute. So let me start on the pipelines. There will be the JV pipeline from Mont-Bellevue to Texas City bi-directional. We'll be a 20% equity owner and there will be an 80% equity owner in that. That will be constructed and operated by ONEOK on that piece of the equation. The second JV, which is the export terminal, will be a 50-50 terminal which will be constructed and operated by MPLX. So that's a nuance on the JV as far as the equation. So there is no UGI within this Gulf Coast Fractionation relationship. It's purely JVs. Very similar, different equity ownership on the two, and different operational, both construction and operational differences between the two, between ONEOK and MPLX. So I hope that gives a little more color on that.

Thank you. And just the storage piece, as alluded to earlier, how is that going to work?

Yes, thank you. I missed that piece. So yes, that is one of the strategic rationales when we looked at potential partners for this Gulf Coast Fractionation project and the continuation of our wellhead to water strategy. Storage was a key element of that. And that is one of the pieces that ONEOK brings to the table, storage in Mont-Bellevue. It's existing storage. And I think your question is what type it is, cavern storage, just to be clear on that.

Our next question comes from Keith Stanley with Wolfe Research.

Hi. Good morning. First, any color you can give on how much of your NGLs from your Permian processing plants do you control today? And you'd be able to move through the pipeline, FRAC, and export dock. Are some of them committed long-term elsewhere? Or are they pretty much under your control?

This is Greg. The answer to that question is that some of the, we don't have our own fractionation right now. This is part of why we're building the fractionation. So all of the NGLs that are produced at our six plants, soon to be seven plants, are fractionated at third-party facilities. And so right now we don't have direct responsibility for those liquids that producers do, but the fact that we're building the plants and have the ability to redirect these barrels in the future give us, what's given us confidence to build the new fractionators. So as those contracts roll off, we do expect to have the ability to redirect liquids to our fractionators.

Hey Keith, it's Marianna, just want to reiterate what Greg just said. Today, we are using third party in the future. That won't be the case. And that's what gives us confidence in our ability to fill these fracs as well as its proximity to GBR and other basins that we believe will also be contributing. So we've got a high degree of confidence in our ability to feed these fracs.

Okay, great. Second question was a follow-up from an earlier one. Understand there's no commodity exposure on the contracting with MPC, but what percentage of the frac and export capacity is actually contracted with MPC versus still available to contract with the market? Is most of it kind of spoken for with MPC, just any sense you can give there?

Yes, Keith, this is Dave. I won't give specifics on percentage, but I'll say the vast majority of the volumes coming out of the fracs, and again, ex-ethane, I'm talking C3 Plus propane coming out of the fracs will be contracted with MPC.

Our next question comes from Michael Bloom with Wells Fargo.

Thanks. Good morning, everyone. Wanted to ask about the maintenance CapEx for 2025, it's a pretty noticeable jump from the run rate you've had the last few years, so I'm just wondering if there's anything, any kind of one-time items or anything to call out there, or is this just the result of a, I don't know, larger asset base? Thanks.

Yes, thanks, Michael. What I would tell you, first, maybe let me just step back and tell you how we develop our maintenance capital, both expense and capital every year. First, it's bottoms up. So when I say that, we look asset by asset and determine what we need to do to make sure that asset runs safely. Always our first priorities have safe, reliable operations, and that's what our capital and expense maintenance programs really reflect. What I will tell you, you do see a bit of a step-up in 2025, but even with that step-up, we remain extremely confident in our ability to grow EBITDA in the mid-single digits. One thing I would point to that is in the 2025 budget, and it's something I know that you're familiar with, would be the new Quad O regulations. So when you look at some of the emissions capital spend spend requirements that you see from a regulatory perspective, some of that's built into that 2025 budget. So, that's one reason you see a bit of a creep up.

Hey, Michael, this is Shawn. I'll just tag on to Kris' comments. So, there's not any one particular thing that outside of what he mentioned about Quad O, it's really just our ability to make sure our assets are safe, reliable, based on the age and as we risk manage those, what we need to do. So, there's no special story on that. It's just the cycles that you go through on maintenance.

Great. Thanks for that. And then, just wanted to ask about BANGL, with the change in ownership at EPIC NGL, I realize you're announcing a modest expansion of BANGL this morning, but I just wanted to see if that, does that limit your ability at all to expand BANGL further down the road and just how does that play into your wellhead to water strategy from the pipeline perspective? Thanks.

Thanks Michael, for that question. This is Shawn. As we look at, if you take a step back on BANGL, it's been a really capital efficient growth project for us and we'll continue that as we go. We've gone from 125, 250, first quarter, 300, second half of ‘26. And then, as needed the demand, we will look at those expansion opportunities at that time. And regarding the specific question about EPIC, we don't anticipate that relationship will change just like we had an existing relationship with EPIC just because P66 is purchasing. So, that will continue to be working closely on the operational side as we move forward on our NGL strategy.

Our next question comes from Neal Dingmann with Truist Securities.

Good morning. Thanks for the time. My first question is on Appalachia for you all specifically. Just wondering when you see it today as Marcellus activity trending today, largely as you all were expecting and wondering if you were expecting any sort of step up in activity in the latter part of this year based on sort of macro today.

Neal, this is Greg. Yes, we are seeing the activity that we expected in the Marcellus. We are seeing growth in some of the areas as indicated by our new Harmon Creek III plant that's in construction and will come into service later next year. We've been as high as 95% utilization in that area. As we brought on the Harmon Creek II plant, that dropped down. But as we fill that, we are moving back up. So we are in that mid-90% utilization range and expect, we'll continue to keep those plants filled the Marcellus certainly higher gas prices are good and the NGL market is very good for us right now too.

Great details and then maybe just a second question on I wonder how you all look at this on what I'm looking at sort of your growth versus shareholder return. I'm just wondering how do you weigh the prospects of buybacks against I know you all announced the 1.7 capital it's your mark for growth because I mean when I look at your shares still seem discounted after last year's solid return yet you definitely have a number of exciting growth prospects like you've laid up this morning so just wonder how you sort of balance those two.

Neal, it's Maryann. Thank you for the question. I think, look, first and foremost as we said our main return a capital tool will continue to be our distribution and we hope based on our opportunities for mid-single digit growth that you'll be able to see similar distribution increases for years to come. Our growth opportunities like we talked about here this morning have to meet our strategic roadmaps they have to have those mid-teens returns that we think are critical to be sure that we're deploying capital. We do that through the lens of strict capital discipline always have and we will continue to do that and we need to be sure that capital our extensions of the value chains that we've been talking about, absent that share repurchase will be a tool that we will use to return capital and as you can see in this last quarter, we returned about a $100 million really trying to support the fact that we continue to see our equity as undervalued. So certainly another opportunity for us posts all of the allocations that I just mentioned and no change in that. Thanks for the question.

Our last question comes from Neel Mitra with Bank of America.

Hi. Congrats on all the downstream NGL announcements today. I just had a couple of questions on the export facility. So first of all, how are you able to kind of commercialize this with the MPC and MPLX complex as a greenfield export facility when the brownfield players have been kind of very able to crowd people out? And the second part of it is, is this commercialized or are we waiting to see contracts to completely FID this? How are you looking at kind of term versus spot and how you're going to actually sell the NGLs over the dock?

Hey, Neel. This is Dave again. Let me touch on this. One of the key elements that I touched on with the dock and the export terminal is the joint venture with ONEOK. And the reason that's important is it gets us to a world-class scale dock. So you're very capital efficient, number one, when you're doing a 400,000 barrel a day dock. And then as I stated, it's a 50-50 JV. So each of us, both ONEOK and MPLX, will have control of 50% of that dock. And then MPLX will contract with the MPC for our 50% of what we control the dock. So that'll be that commercial relationship between MPLX and MPC, and then MPC would then market internationally and take on any commodity exposure and any upside or downside relative to that. So on the second piece of your question on, hey, do we have the volumes to FID and commit this project? The answer is yes, or we wouldn't have FID announced it. So we're very confident in this project. We've been working on it for a long time. We've been talking about it for a long time, as with any large complex projects, a lot of work done behind the scenes to get to this point, both from project schedule, project planning, and then also commercial relationships with our new JV partner.

Got it.

Neel, it’s Maryann, and just maybe one other additional point to all of Dave's comments on the commercial side, particularly as we're looking at MPC, keep in mind export markets are clearly something that MPC participates in today, and our ability to continue to extend the sustainability of that commercial excellence, both in the short term and over the long term, is the key strategic tenet that has been and will continue to be part of MPC's value proposition as well. So, confidence in our ability to execute that also.