Marathon Petroleum Drops Down Terminal, Pipeline and Storage Assets to MPLX

Marathon Petroleum (MCP) and MPLX LP (MPLX) said Wednesday that they have closed a transaction in which Marathon Petroleum contributed certain terminal, pipeline and storage assets to MPLX for total consideration of $2.02 billion.

The assets include 62 light-product terminals with 24 million barrels of storage capacity; 11 pipeline systems consisting of 604 miles of pipeline; 73 tanks with 7.8 million barrels of storage capacity; a crude oil truck unloading facility at Marathon Petroleum’s refinery in Canton, Ohio; and eight natural gas liquids storage caverns in Woodhaven, Michigan, with about 1.8 million barrels of capacity.

Marathon Petroleum is contributing these assets in exchange for the issuance of $504 million in MPLX equity and $1.51 billion in cash. The equity to be issued in the transaction consists of MPLX common units and general partner units to maintain Marathon Petroleum’s 2% general partner interest in MPLX. The units will be valued based on the 10-day volume weighted average price of MPLX common units prior to the closing.

The total consideration equates to an 8 times multiple of the $250 million of earnings before interest, taxes, depreciation and amortization these businesses are expected to generate in the next 12 months. The transaction is expected to be immediately accretive to MPLX’s 2017 distributable cash flow.