Geri Ewing - Director, Investor Relations Pam Beall - President Tim Griffith - Chief Financial Officer.

Brian Zarahn - Barclays Gabe Moreen - Bank of America Merrill Lynch Jeremy Tonet - JPMorgan Tim Schneider - Evercore ISI Ryan Levine - Citigroup Kristina Kazarian - Deutsche Bank.

Welcome to the MPLX LP First Quarter 2015 Earnings Conference Call. My name is Hilda and I will be your operator for today. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session. Please note that this conference is being recorded. I will now turn the call over to Ms. Geri Ewing. Ms.

Ewing, you may begin..

Thanks, Hilda. Good afternoon and welcome to the MPLX first quarter 2015 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 Pam Beall, President of MPLX and Tim Griffith, Chief Financial Officer.

We invite you to read the Safe Harbor statement on slide 2. It’s a reminder that we will be making forward-looking statements during the presentation and during the question-and-answer session. Some forward-looking statements may relate to MPLX’s sponsor, Marathon Petroleum Corporation. Actual results may differ materially from what we expect today.

Factors that could cause actual results to differ are included here, as well as in our filings with both MPLX and Marathon Petroleum with the SEC. Now, I will turn the call over to Pam Beall for opening remarks..

Okay. Thank you, Geri and good afternoon. MPLX reported solid financial results for the first quarter, with the performance that continues to support the growth and distributable cash flow to the partnership. Adjusted EBITDA was 64.2 million for the quarter, generating distributable cash flow of 57.4 million.

Our Board of Directors declared a distribution of $0.41 per unit for the first quarter, which represents a 25.2% increase over the first quarter of 2014 and a 7.2% increase from the fourth quarter of 2014.

MPLX has provided distribution increases in each of the nine quarters since IPO, representing a compound annual growth rate of 21.9% over the minimum quarterly distribution established at the partnership’s formation. We continue to execute our strategy to accelerate the partnerships growth to evolve into a large cap diversified MLP.

This is exemplified by the announcement that Marathon Petroleum Corporation’s Board authorize the sale of it’s marine logistics business to MPLX sending the approval of the MPLX Board, this transaction is expected to close in the next several months.

If you’ll turn to slide four, we highlight MPC’s marine business transportation business, which is fully integrated waterborne transportation service provider consisting primarily of three groups of assets.

The base business includes 18 towboats and approximately 200 tank barges, which are capable of moving like products, heavy oils, crude oil, renewable fuels, chemicals and feedstocks throughout the Midwest and Gulf Coast regions of the U.S. The assets also include a state-of-the-art marine repair facility near catalyst for Kentucky.

As expected to enable us to minimize downtime and maximize asset utilization. The third group includes fleeting properties, which strategically located staging areas and key markets along the Ohio River and provide easy access to loading and unloading dock.

The marine business to be acquired represents about 60% of the volume of MPC’s England marine movement.

In addition to providing transportation services with acquired assets MPLX would provide additional marine logistic services including managing the 40% of the volumes MPC’s England marine movements provided by third-party and John’s act blue water movement that are provided 100% today by third-party.

MPC’s marine requirements of increase significantly in the past several years with this acquisition of -- [indiscernible] refinery and [hest] retail business along the Atlantic coast.

The contract structure with MPC is expected to be on our fee for capacity basis which would provide further stable earnings to MPLX predominantly fee based earnings profile and provided platform for future potential growth in the marine services area.

The proposed acquisition of the marine business is expected to generate approximately $115 million of annual EBITDA. If MPLX Board of Directors approve the transaction we expect all be financed with the a combination of debt and equity which could include transactions with MPC. Now we can turn back to slide 3, and I’ll continue these opening remarks.

We anticipated growth in MPLX earnings associated with these assets would help support a targeted average annual distribution growth rate in the 27% range over the next five years including an expected 29% growth in distributions in 2015.

We expect our increased size and scale will provide us greater flexibility to find organic projects and pursue acquisition opportunities independently from our sponsor’s Marathon Petroleum Corporation and provide the partnership with improved access to the capital market.

This is highlighted by the partnerships in our growth $500 million investment great bond offering that we completed in the first quarter. MPLX growth strategy also includes organic projects such as the Cornerstone pipeline, Robinson butane cavern and Patoka to Lima expansion.

We recently completed the binding open season for the Cornerstone pipeline project which will transport liquid production from the Utica shale region in Eastern Ohio to Ohio river pipeline tank farm in East Florida and to Marathon Petroleum Company’s refinery in Ohio.

The pipeline will be routed to provide the opportunity for connections to various state stabilization, [indiscernible] and private genetic facilities along with potential gather at storage facilities. The pipeline will be batched at batched with the ability to transport condensate, natural gasoline, diluents and butane.

Marathon Petroleum has committed to be an anchor shipper on the Cornerstone, the diameter of the pipeline is been increased to 16 inches to provide an industry solution.

Including opportunities to connect many Midwest refineries to production from Utica shale but the potential to ultimately reach the Chicago area refineries and pipeline that supply diluent to western Canada.

The larger diameter pipeline and related tank farm project which is necessary to accommodate the larger pipeline is estimated to cost approximately $250 million and is expected to be completed by the end of 2016.

We continue to be very enthusiastic about the logistics and infrastructure build out in this region and view Cornerstone a critical piece of that development.

Given the macro oil price environment that we’ve seen over the last six months we want to remind investors that MPLX is a sponsored master limited partnership with a strong fee based earnings profile and almost no direct exposure to commodity risk.

Most of the crude oil and refine product movements to under pin these earnings are related to Marathon Petroleum corporations crude oil and refine product movements under a long term contracts that are not directly impacted by the lower crude oil prices.

Additionally nearly all of these contracts contain minimum volume commitments which further product the cash flows of the partnership. The addition of the MPC marine assets would expand this fee based earnings profile.

MPLX is focused on participating in the energy industries mid stream infrastructure build out and we believe it is very well positioned to participate in this growth and continue to generate attractive returns for the partnership unit holders over an extended period of time.

And I’ll turn the call over to Tim Griffith to review the financial results for the quarter. .

Thanks Pam. The bridge on slide 5 shows the change in net income during the first quarter 2015 on a 100% basis compared to the first quarter of 2014 as well as the adjustment for the small retained interest and pipeline holdings retained by MPC.

The primary drivers for the decrease in net income from last year with the recognition of lower revenue related to volume deficiency credits and higher general administrative and interest expenses. The higher interest cost were attributable to new debt issued to fund the pipeline holdings acquisitions in December.

Partially offset in these negative impacts in income was an increase in transportation revenue primarily due to higher average tariff rates. Although not shown on the slide, net income attributable to MPLX increased 11.4 million from the first quarter of 2014 which is primarily due to increase in the MPLX's ownership interest in pipeline holdings.

Partially offset by the decreases just mentioned. As you can see on slide 6, distributable capital for the quarter was 57.4 million compared to 37.3 million of distributable cash flow for the first quarter of 2014.

During the first quarter of ’15, MPC did not ship its minimum committed volume on certain MPLX pipeline systems resulting in 12.6 million of deficiency payments in the quarter.

Although, these deficiency payments in the quarter do not immediately enter into the termination of income, they are included in the 57.4 million of distributable cash flow in the quarter.

Inversely, adjusted EBITDA attributable to MPLX included 9.9 million of revenue resulting from recognizing volume deficiency credits that were generated in prior quarters, which were not part of the distributable cash flow in the first quarter. Distributions for the first quarter were 36.9 million.

This represents the coverage ratio of 1.56 x compared to our target coverage of 1.1x. Our coverage ratio will fluctuate from period-to-period primarily due to the seasonality in maintenance spending and the timing of drop downs in acquisitions. As you can see here, coverage in the first quarter tends to be higher within the calendar year.

In addition, the accelerated growth profile of the partnerships earnings may result in distribution coverage above our 1.1 x target for more extended period of time.

Slide 7 provides adjusted EBITDA and distributable cash flow by quarter for MPLX since the formation of the partnership and continues to demonstrate the focus growth and earnings and distributable cash flow of the partnership over time.

As we highlighted last quarter we expect the partnerships to run rate EBITDA to be at least 450 million by the end of this year. The acquisitions of marine assets Pam just discussed could be an important part of that growth. Slide 8 provides some selected balance sheet information.

As Pam eluded to, MPLX completed its inaugural $500 million 10 year debt offering during the first quarter, which was rated investment grade by all three of the major agencies. We used the proceeds of this bond offering to repay our revolving credit facility resulting in the full $1 billion of availability on our bank credit facility.

The partnership also maintains ability to borrow from its sponsor if desired or necessary.

This availability in addition to the 132.5 million of cash and ready access to the capital markets should provide us with sufficient liquidity to pursue the growth opportunities that expand the growing base, our distributable cash flow included in the accelerated pace of earnings growth we are now pursuing.

Our consolidated total debt represents about 3.3 x consolidated EBITDA well below the maximum in our credit facility 5 x and continues to provide great financial flexibility for the partnership. Slide 9 demonstrates our commitment to grow the distributable cash flow to grow and distribute cash flow to or unit holders.

The bars illustrated this recent history since the IPO and how it was strong and consistent growth in the LP distributions. MPLXs first quarter 2015 distributions represent a 25.2% increase over the first quarter of 2014 and a 21.9% compound annual growth rate over the minimum quarterly distribution established at the partnerships formation.

As Pam mentioned earlier, we expect to increase LP distributions by 29% in calendar year 2015 and average in annual growth rate in the mid 20's percent over the next five years.

This substantial growth is part of our intent to evolve MPLX into a large cap diversified MLP which will provide an attractive return to our unit holders over an extended period of time. With that, let me turn the call back over to Geri Ewing.

Geri?.

Thanks, Tim. With that, we will open the call for questions..

Thank you. We will now begin the question and answer session. [Operator Instructions] We have a question from Brian Zarahn from Barclays. .

I appreciate the color on the marine transportation business.

In terms of contracts, would you expect the duration would be similar to your prior drop downs for this business?.

We’ll have contractor links and it will be attractive for these kind of assets.

I’d say that generally in the inland marine business in the spot markets, the contract length is pretty short in duration anywhere from one year to three years and we would expect we provide contracts between the MPLX and MPC for a greater period of time than that, but I don’t know that we’re prepared to disclose all that until we finalize the transaction Brian..

Brian I might just add to that that as Pam described I mean the marine business for MPC is so fundamental to how the business operates that.

If there is any contracting risk at all frankly just relates to potentially what those rates could look like overtime, but highly unlikely that we would ever step away from MPC’s marine business given its importance to the refining business..

And then it sounds like the business first and third-parties do provide some marine transportation services to MPC.

And do you view this as a potential growth vehicle for MPLX and marine transportation or is it more providing services to MPC for now and then you’ll see how the business evolves?.

Well Brian just based on the fact that only 60% of MPC’s needs are being met today with its own marine assets that are proposed to become part of MPLX. We think that there is significant growth potential just to move those services that today are provided by third-parties to MPLX, so that’s an inherent built in growth opportunity for MPLX.

And 100% of the blue water movements are chartered today to third-party, so both of those represent attractive growth opportunities for MPLX and really that growth in the requirement that MPC has is really based on its growth and its recent acquisitions Galveston Bay and the Hess retail business, so there’s some really we see a nice path toward growth just with the sponsors and then yes we will look to expand the services to third-parties overtime..

And then on timing I know you mentioned several months, would you view that as greater than three months for this transaction to close or how do you view the timing of several months?.

I think there’s a process that we need to go through and I really couldn’t give anything more definitive than we’ve already provided..

And last one for me on 2015 expansion CapEx, is 220 million still a reasonable number?.

Well we have been talking about for Cornerstone when we were contemplating just the 12-inch pipe it was about 200 million that was a component of that 260. And the addition of the tank farm build out at this point along with the increase in the size of the pipe from 12 to 16 that project alone the increase the project total goes up to 250.

Now of course not all that’s in 2015, but so, but a portion of that would be. So we haven’t really updated the guidance on exactly what we see in 2015, our CapEx will be a bit could be more because of the expanded scope for Cornerstone..

The next question comes from Gabe Moreen from Bank of America Merrill Lynch..

Quick question for you in terms of just expectations around maintenance CapEx for the marine transportation assets and just how you’d be viewing that? Would that be higher?.

Yes, no go ahead Gabe..

I’m sorry just whether it’s going to be higher or lower in I guess the base MPLX businesses?.

So the maintenance capital for the current MPLX business is predominantly the pipeline business and so a lot of that is maintenance capital. For the marine business, most of the maintenance actually is expensed, so the maintenance capital tends to be quite low..

And is it fair to say that I know there’s dry-docking and things like that in the marine transportation business, so is it fair to say that some of those expenses maybe I guess somewhat lumpy in terms of the profile going forward?.

Yes, it would be. And when we close the transaction, I’m sure we’ll be able to provide some more guidance and some more definitive guidance around what you should expect but the marine or the maintenance capital would be maybe 1% or 2% of EBITDA quite a bit lower than in the pipeline business..

I think you’re right, separate the amount of maintenance capital from replacement capital which for marine business could get lumpy a different point in time depending on when specific vessel need to replaced and where they are and useful lot.

So, I think we would expect over time as this becomes part of MPLX with that replacement capital could be lumpy at different points in time..

Got it, I guess I’ll stay tune for guidance. When the transaction happens just to had ultimately would be treated.

So I guess my follow up question to that is more conceptual just in terms of why this next among all the drop down opportunities that you’ve got just because of business is growing so much over the last year too and you see the potential for further growth or there are reasons behind it. .

I think with in the process of reading a number of asset classes kind of simultaneously and this was an asset class was ready sooner than somebody others in terms of all the accounting and [indiscernible] and permits and transfers of assets that are required to get these assets ready for moving into MPLX and it does provide a nice platform for growth within MPLX.

So, I think combination of factors there..

Our next question comes from Jeremy Tonet from JPMorgan..

I just want to think about minimum volume commitments that can associated with this next drop down, I don’t think that was mentioned at this point it might be premature but I’m just wondering conceptually as far as price you’re willing pay for drop downs versus how long the MPC is to the contract, what percentage of cash flow is covered by MPC.

Could you walk us through how you think about that trade off?.

Well for this transaction think of it more like the contract that we have for butane cavern that’s already part of MPLX, we talk about fee for capacity, MPC will pay a fee to have the equipment available whether it’s used or not. Now, since it’s only 60% of its water movements today MPC’s marine assets have always been very highly utilized.

So, the compensation is not tied to that utilization you only have to have equipment available for MPC to use and we take into consideration the maintenance that use to occur. But its not like a minimum volume commitment, it’s MPC will pay to have that capacity at it’s dispose discussion.

And then in addition there is a flat monthly rate or fee associated with managing the rest of the marine water movements for MPC and managing the third party charted business. .

Got you, that make sense. And maybe just asking a bit differently but conceptually the other contracts are five to 10 years for what are the assets you guys own, it sounds like this might be something or a bit shorter duration.

How do you guys think about the trade off with valuation there? Does that enter the equation as far as the multiple that you could see on the dropdown this type of the business. .

So I don’t know that the length of the contract will be less than five to 10 years, I was just trying to illustrate that in this market I would say more normal would be one to three, that doesn’t mean that’s the agreement that we will have with MPC. We would expect to have a longer term agreement then what is typical in the industry today. .

And if I could as far as the replacement CapEx you talked about what is the average useful life of these vessels, how should we think about that. .

A lot of vessels can be used up to 40 years and I would say that when you look across the industry and the fleets across the industry average age of our fleet is relatively young by comparison. So again I think it’s the time that we complete the acquisition, we’ll be sharing more detailed information about the business. .

That’s helpful. Thanks. And just going back to Cornerstone for a minute and I think you’ve touched on this as far as what some of the can be a platform for additional growth opportunities.

I was wondering if you might be able to extend a little bit there as far as any other specific things that you see where Cornerstone can lead to other opportunities..

Yes, right.

So, we’ve talked a little bit about the build out opportunities for Cornerstone and that would include taking these nature gas liquids west and south out of the Ohio River pipeline east part of terminal down to East Ohio and then backup Findlay and jump on a system to go up to Toledo or down to Lima where they are refineries located in those markets.

So that would used existing pipeline that MPC, Marathon pipeline and Ohio River pipeline have in the ground today. And there is also opportunity to build out at the Oregon. And let me just ask Craig Pierson to add some color as well. So Craig is the President of Marathon pipeline.

Craig?.

Yes, thanks. At the Oregon of the pipeline, there is some other opportunities associated with some existing fractionation facilities to extent the Oregon to those facilities and also some potential other pipeline and connections..

So there is between the Oregon of Cornerstone and South Eastern Ohio whether is another I will take concentration of similar plans, there is a gap there and there is potential to connect some pipes that are in that area with the Cornerstone origination point.

And I think it would provide the producers a lot more flexibility in terms of accessing pipeline market. So again, we think that there is opportunity to move natural gasoline.

Certainly daily went we can make connections to some of the pipes that are proposing to go West into Canada to access the diluent market and we think through existing and upsized pipeline we could provide movement of these products over to MPC’s Robinson refinery and then backup to the Chicago area of refineries as well.

So we think that there is interest in accessing, the production is coming out of Utica Marcellus and we think that the Cornerstone pipeline is going to be a real key contributor to connecting the demand with the supply sources..

Our next question comes from Tim Schneider from Evercore ISI..

Just a quick question or quick follow-up for me on Cornerstone side, this is -- pipeline.

Can you just remind us what kind of products can run through that?.

Yeah, so condensate natural gasoline and their form of natural gasoline will the diluent with different quality and then butane are the products that we would expect to move in the pipe..

Is there any way at some point propane concert moving through pipeline?.

That’s not our focus, it’s just the liquids that I mentioned..

And then in terms of have can you quantify what the storages that you have the cavern?.

Well, we have a number of different caverns catalyst berg is a million -- Robinson right now is being configured for 1.4. Although, we are considering that’s the appropriate size or should be a little bit larger. And then MPC has retained assets that we expected to some point to be offered MPLX to acquire.

So MPC does have caverns in the concern area and also the district refinery..

And then actually I have a follow-up on the propane side. I mean if you look at what’s going on in the Northeast right now specifically kind of the seasonality around propane, I mean the market is going to massively over supplied and kind of that show their season right Q2, Q3 and there is a lack of inter region stores.

So I wouldn’t make sense to move corners or its half corners and also move propane West especially if you can get into a Chicago market eventually?.

Well, again it’s not our focus for Cornerstone to move propane. There are quite a few existing lines and propose lines that would have the ability to move propane affine North up to -- and there are some other lines that are natural gas lines today that might be other parties maybe considering.

But so Chicago is in kind of an interesting area, because you have a lot of supply now out of Utica and Marcellus. And historically there is also been a lot of supply coming from other Rockies and then even up from the Gulf Coast. But that’s not the focus of the pipe, of our use for Cornerstone and to build out project..

Our next question comes from Ryan Levine from Citigroup..

Hi guys.

Just wanted to get an update on the dropdown inventory at the parent still 1.6 billion and what portion of that subject to -- and what’s the latest in terms of your pursued event?.

So before the announcement that was made about offering the marine business to MPLX, we’ve been talking about a backlog or dropdown portfolio potential of about 1.6 billion..

And what portion of that is subject to PLR?.

Auto Private Letter Ruling, okay. We’ve been talking about the field distribution component of that portfolio that we are evaluating. And that we will probably seek up appeal our four.

What we’ve quantify that we’ve estimated that at a very high level to be about 600 million of potential EBITDA and that’s just been described at a high level as 20 billion gallons of product that we sell each year and catching $0.03 margin. And so we continue to evaluate how we want the structure of the field distribution business to look.

And so as soon as we conclude that process, we’ll be seeking the PLR, but we can’t really give you any specific timing around that at this point..

Our next question comes from Kristina Kazarian from Deutsche Bank..

Can you just talk a little bit about what this incremental 115 million of the EBITDA. Obviously the coverage growth deploy a bit closure to two times. Are you guys can run higher coverage on a go forward base is this mean there is a chance for accelerate the EPU growth slowdown in future pace of acquisitions.

How do balance those three all I had?.

Christine as I mentioned I think during the call. Its possible at the earnings of the partnership well outpaces the growth of distribution given the mid-20s, five year growth that we’ve provided. So it is possible that over the first year or two that will run coverage that will be higher than the 1.1 time.

I don’t think we’re going to revisit distribution growth strategy, we think that mid-20s five year growth is already robust and attractive for investors and we don’t think we need to go beyond that at this point..

Is there a point I guess too high?.

Base on how we look at the business and our own modeling in terms of what things look like. I think we’re comfortable that although could be higher than our target that it doesn’t put us in the situation we’re need to revisit in..

[Operator Instructions].

Although, there is no other question. We’ll close the Q&A..

Thank you. We don’t show further questions. I would like to turn the call back over to Ms. Ewing for any final remarks..

I just like to thank everyone for joining us today. And thank you for your interest in MPLX. Did you have any additional questions or like clarification and editing that was discuss today, please contact Teresa Homan and I myself we will be available for your call. Thank you..

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