Prepared remarks
Welcome to the MPLX Second Quarter 2026 Earnings Call. My name is Julie, and I will be your operator for today's call. Please follow the operator's instructions. Please note that this conference is being recorded. I will now turn the call over to Brian Worthington. Brian, you may begin.
Welcome to MPLX's Second Quarter 2026 Earnings Conference Call. The slides that accompany this call can be found on our website at mplx.com under the Investors 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. With that, I will turn the call over to Maryann.
Thanks, Brian. Good morning, and thank you for joining our call. Our second quarter results reflect the consistent execution of our strategic priorities. MPLX delivered $1.8 billion of adjusted EBITDA in the second quarter, a 5% increase versus the same period last year, more than overcoming the divestiture of the Rockies assets in late 2025. This enabled a return of over $1.1 billion to our unitholders. 2026 is also a year of execution. We continue to advance high-return projects across our integrated natural gas and NGL value chains. The sequencing of projects entering service gives us confidence in a meaningful increase in EBITDA in the second half of 2026 and next year. In the Delaware Basin, we placed the Secretariat I processing plant into service in April, and exited the quarter at 86% utilization of our Delaware Basin processing system, demonstrating strong producer demand and operational excellence from our teams. And in August, the Harmon Creek III processing plant is beginning operations in line with our strategy to add processing capacity on a just-in-time basis. This increases our total processing capacity to 8.1 billion cubic feet per day and deethanization capacity to over 800,000 barrels per day. This plant, along with our associated gathering and compression expansions, extends our ability to meet producer needs in liquids-rich areas and supports long-term throughput growth. As we expand MPLX's core value chains, we are also focused on maximizing utilization of existing assets and optimizing operations. In the Northeast, Marcellus processing utilization of 96% in the quarter led to record volumes across our system, while strong production activity in the Utica supported processing utilization of 73%. In the Permian, sour gas treating volumes exceeded 150 million cubic feet per day for the second consecutive quarter as we continue to optimize operations at our Titan treating facility. As throughputs increase across our gathering and processing assets and additional projects enter service in the second half of the year, MPLX remains positioned to deliver mid-single-digit adjusted EBITDA growth. Natural gas and NGL fundamentals remain robust, creating compelling opportunities to support growing global demand for U.S. energy. When we allocate capital, we remain disciplined. There must be strong strategic fit, durable demand and compelling returns. MPLX is investing over 90% of its organic growth capital toward opportunities to meet growing natural gas and NGL infrastructure needs, leveraging our advantaged value chains. MPLX is increasing its 2026 capital spending outlook by $500 million to $2.9 billion. The increase primarily reflects the accelerated execution of our ongoing Gulf Coast fractionation project, pulling forward capital we previously expected to deploy in early 2027. In July, the Blackcomb natural gas pipeline began commissioning activities. The JV partners continue to progress the pipeline as planned with Blackcomb expected to achieve full commercial service in the fourth quarter. Within our NGL value chain, the expansion of our BANGL Pipeline to 300,000 barrels per day is also expected online in the fourth quarter, providing critical takeaway capacity as in-basin NGL volumes grow. In the Permian's Delaware Basin, which continues to attract strong producer interest, our teams are working to complete the expansion of our sour gas treating system to over 400 million cubic feet per day. The expansion of this strategic growth platform remains on track to enter service at the end of the fourth quarter, and we anticipate volumes to ramp quickly, supporting our run rate expectations for 2027. With multiple investments transitioning from construction to operation this year, we are on track to deliver mid-single-digit adjusted EBITDA growth in 2026. While the year-over-year growth from 2025 to 2026 is more back half weighted, it also positions MPLX for strong adjusted EBITDA growth in 2027. Against the backdrop of geopolitical uncertainty, the strategic importance of U.S. energy infrastructure remains clear. Domestic and global demand for secure, reliable energy continues to grow. Additionally, international customers are increasingly turning to the United States as a preferred supplier. MPLX is well positioned to respond to our customers' requirements in this growing market. The construction of our Gulf Coast fractionation and export facilities continues to advance on schedule. We expect the first 150,000 barrel per day fractionator, the 400,000 barrel per day JV LPG export terminal and the associated purity pipeline to be in service in 2028, followed by the second 150,000 barrel per day fractionation in 2029. Our confidence in the volumes and utilization of our assets reinforces our expectation for durable cash flows that will support MPLX's continued growth. This positions MPLX to continue reinvesting in the business while supporting the annual distribution increases to unitholders. Now let me turn the call over to Kris to discuss our operational and financial results for the quarter.
Thank you, Maryann. Slide 8 outlines the second quarter operational and financial performance highlights for our Crude Oil and Products Logistics segment. Segment adjusted EBITDA increased $23 million when compared to the second quarter of 2025. The increase was primarily driven by higher rates across the business units and increased butane blending, partially offset by lower crude pipeline throughputs from planned MPC turnaround activity and the seasonality of planned maintenance and project spending, resulting in higher operating expenses. MPLX has been strategically investing in butane blending systems throughout our terminal and pipeline network over the past few years. These investments allowed MPLX to blend additional butane volumes and take advantage of strong commodity prices in the quarter, generating over $20 million of additional benefit versus the prior year. Pipeline volumes increased 4% year-over-year, primarily due to Marathon's planned refining turnaround activities in the Mid-Con region. Moving on to Slide 9. Segment adjusted EBITDA increased $62 million compared to the second quarter of 2025. The increase was primarily driven by increased volumes, including growth from equity affiliates and acquisitions, partially offset by the divestiture of our Rockies assets in 2025. Excluding the impact of the Rockies divestiture, segment adjusted EBITDA increased $99 million year-over-year. Gathering volumes were up 15% year-over-year, primarily from production growth in the Utica, Permian and Marcellus basins. Processing volumes increased 5% year-over-year, primarily due to increased production in the Marcellus and Permian basins. Marcellus processing utilization was 96% for the quarter, demonstrating the need for incremental capacity as Harmon Creek III is beginning operations in August. Total fractionation volumes increased 8% year-over-year, primarily due to increased production in the Marcellus. With the start-up of Secretariat I in April, volumes on the BANGL NGL pipeline increased to over 200,000 barrels per day in the second quarter, illustrating the strategic value of our integrated wellhead-to-water strategy. Sour gas treating volumes in the second quarter exceeded 150 million cubic feet per day as we continue to optimize operations at our Titan treating facility and expand its capacity to handle over 400 million cubic feet per day by the end of the fourth quarter. We are progressing construction of a natural gas pipeline connection to allow sweet gas from our Titan facility to feed into the Secretariat I processing plant. This highlights the value of our recently acquired Delaware Basin system. Beyond an increasing rig count in the U.S., MPLX is strategically positioned to support additional drilling activity by producer customers. In the Permian Basin, undeveloped acreage in Lea and Eddy Counties in New Mexico was recently leased by current producer customers. Roughly 40% of this acreage has volumes dedicated to our sour gas treating system, highlighting the geographic advantage of the Titan complex within the Delaware Basin. Additionally, the state of Ohio recently awarded leases for undeveloped acreage in Belmont County. Nearly half of this land is also dedicated to MPLX, and we anticipate additional production in the wet gas window of the Utica will add to higher utilization of our gathering and processing assets in the region with limited capital outlay. Furthermore, growing production from the Utica has supported recent investments and expansions of MPLX pipeline and Ohio River terminals to serve increasing regional demand. This positions MPLX to continue reinvesting in the business while supporting annual distribution increases to unitholders. Now let me hand it back to Maryann for some concluding thoughts.
Thanks, Kris. Our base business is generating steady and durable growth. And the strategy we have executed over the last several years has positioned MPLX to continue delivering strong results. Through disciplined capital deployment and optimization of our integrated value chains, we have grown adjusted EBITDA, distributable cash flow and maintained a robust return profile. We are executing our long-term strategy with consistency and discipline, and we have a strong financial foundation. This track record of execution has enabled us to increase our quarterly distribution by 12.5% in each of the last two years. We anticipate growing our distribution at this rate again in 2026 and in 2027. We expect to continue growing the distribution supported by durable cash flows, a strong balance sheet and visible growth. While we are delivering our strategic organic growth priorities, we will continue to evaluate inorganic opportunities as they arise to further expand our strategic value chains and grow cash flows. Underpinned by the optimization of our value chains and throughput ramp across new assets placed into service such as Secretariat I, Harmon Creek III and our sour gas treating operations, MPLX remains on track to deliver sequential growth throughout the year, culminating in mid-single-digit adjusted EBITDA growth in 2026. Now let me turn the call over to Brian.
Thanks, Maryann. As we open the call for your questions, as a courtesy to our participants we ask that you limit yourself to one question and a follow-up. If time permits, we will be prompt for additional questions. We will now open the call to questions.
Questions and answers
The operator will now provide instructions for the question-and-answer session. Our first question comes from John Mackay with Goldman Sachs.
I wanted to talk about the growth cadence for the year. I appreciate the color on the project ramp for second half and the comments around mid-single-digit EBITDA growth for the year. I think your original comments for the year had been a little higher relative to the 2025 growth rate. So I was just wondering if you can kind of talk through some of the puts and takes for the year overall and how to maybe bridge us to our exit rate into the fourth quarter of this year.
BANGL at 250, and that will go to 300 by the end of the year. Third quarter, Harmon Creek III, as I mentioned, came online in early August. So we'll be ramping that through the third quarter and into the fourth quarter. And then Bay Runner as well, which provides natural gas supply to LNG facilities in Brownsville. And then in the fourth quarter, we've got Blackcomb, which I mentioned in my remarks. And then the ramping of the Titan facility, that's Delaware Basin sour gas back into the third quarter and then again in the fourth quarter as we reach the over 400 million cubic feet per day processing capacity. So year-on-year, again, John, that does give us confidence that 2026 growth will exceed that of 2025. As we think about the sequence, the third quarter should be stronger than the second quarter and the fourth should be stronger than the third as well. So certainly not trying to convey anything different than we have before. We continue to see that growth as we have outlined. Let me pause and see if I've answered your question, John.
I appreciate all the walking through there. My second question is just on the new details on the frac timing and the CapEx pull forward. You guys talked about this a little bit, but maybe you can just walk through kind of some of the new timing expectations for the fracs and how to think about them coming online relative to the export dock and kind of how that's changed from prior.
Yes, certainly. So first and foremost, the project remains on budget. All we're doing here is pulling early spend that we had expected to deploy in 2027 into the back half of 2026. This gives us an even higher degree of confidence in the completion on time and obviously gives us the potential for an early completion, but certainly gives us confidence in on-time completion of the frac and the dock. We would expect both the frac and the dock to come online at the same time, and we would not have the frac come online ahead of the dock. So we have good confidence in the timing of this project, and we are confident in the fact that all of our assets, as we've been communicating, are full, and we're pleased about that. Shawn was just there a few weeks ago visiting the site. I will let Shawn give you a little bit of color on how that project is progressing from a construction perspective.
John, this is Shawn. As Maryann said, I happened to have a chance to be there just a few weeks ago. As I stood there and saw the 60,000-barrel spheres being constructed and the 600,000 refrigerated tanks for the terminal being installed, it really just reinforced exactly what Maryann said: the confidence that we'll be online in early 2028. In addition, I want to note the level of safety that the entire team and the contractors are showing on the site is very visible. I'm really proud of the team for ensuring safety is first and foremost.
That answers your question. Thank you.
The next question comes from Manav Gupta with UBS.
I'm trying to get a little more detail about the ramp and the completion at Titan and how the overall Permian gas situation is moving ahead with these new pipes opening up. If the Waha remains in positive territory, you could see more NGLs come out of the Permian, more gas come out of the Permian. Could you highlight your leverage to the entire Permian gas situation, especially the Titan project?
Certainly, and thanks for the question. Let me start, and then I'll pass to Greg to give you a little more color on the actual progress and details around Titan, and then Dave can give you some further insights into how we're seeing egress out of the Permian. We continue to operate the Delaware Basin sour gas treating system well, delivering a second consecutive quarter where we exceeded 150 million cubic feet per day, and we're continuing to optimize around that, including looking for cost reductions. This was always intended to be an important platform for us for growth, and we continue to see that. We've had multiple producer customers expressing interest in the platform, which opens up opportunities for us to increase utilization. We're pleased with current performance. In the back half of the year, as I mentioned earlier, we'll see escalation of those volumes. Let me pass it to Greg, who can give you some additional color on how that's operating.
Thanks, Maryann. Manav, I'll give a little bit of color around the Titan 2 expansion and associated projects and how this ties in. As Maryann mentioned, we are continuing to operate near the capacity we have, so we're focused on improving reliability, safety and operating cost efficiency. In terms of Titan 2, associated with the amine treating capacity expansion, we're also building about 100 miles of pipeline, multiple compression station expansions to provide the hydraulic capacity to fill the plant. We're also building a pipeline from Titan down to our Secretariat plant to be able to deliver sweet gas, as Maryann mentioned earlier. We have a couple of different connections, including the line to Secretariat into our existing legacy systems. We truly are integrating the systems together. One of the big benefits will be taking sweet gas to help fill our processing plants, which then in turn help to fill our BANGL NGL system. We're on schedule and on budget for those projects for fourth quarter delivery, including the new Titan expansion.
Manav, maybe I'll touch on whether we believe there's incremental takeaway capacity needed for the Permian from a natural gas perspective. The short answer is yes. U.S. natural gas demand continues to be very strong, underpinned by not only LNG, but also data center needs. In the Permian, in June and July we've seen over 1 Bcf per day of growth to nearly 25 Bcf per day of gas in the Permian, and that is forecasted to grow to 35 Bcf per day by 2030. From that forecast, we see incremental takeaway capacity constraints anticipated in the future. We've been very active in numerous long-haul pipelines from Whistler to Matterhorn to Blackcomb and Eiger, providing over 11 Bcf per day of takeaway capacity. Even with Blackcomb and Eiger coming online — Eiger later this year and Blackcomb in the second half of 2028 — we still believe incremental takeaway capacity is needed. As we look forward, you'll continue to see us evaluate and participate and deploy capital in incremental industry solutions to provide that long-haul takeaway capacity out of the Permian to the U.S. Gulf Coast.
I hope that addresses your question, Manav.
Absolutely. And a quick update on both Bay Runner Pipeline and the Bay Runner Twin pipeline, if there is any update on those two projects?
Manav, the first part of your message cut out. Could you ask the question again? We heard the back half, but would you be able to repeat it?
The Bay Runner pipeline and the Bay Runner Twin pipeline, is there an update on those two projects?
Sure.
Yes, Manav. As we recently announced, both these projects are supporting NextDecade's LNG facility as they continue to announce their first three trains and subsequent trains. We and our partners have been executing our projects to supply just-in-time capital to support when those are coming online to supply the gas. So Bay Runner and now the recently announced Bay Runner 2, which is the conversion from Rio Bravo, are being executed to be capital-efficient and schedule-efficient. That conversion allows us to run in the same area and just be more effective, and we'll bring that online just in time to support NextDecade's LNG expansion capacity.
The next question comes from JPMorgan. The question is on behalf of Jeremy Tonet; this question is from Francina.
I just wanted to dig a bit deeper on the inorganic opportunity set that you kind of finished off the prepared remarks with. Can you describe the opportunity set that you have at hand? And in terms of the strategy itself, would you characterize that more as bolt-ons or a kind of renewed strategy for MPLX via M&A?
Yes, certainly. When we think about inorganic opportunities, they need to fit our strategic intent. You've heard us talk about wellhead-to-water. Our wellhead-to-water strategy continues to be a very solid platform for growth and opportunities longer term, particularly when you look at demand pools for natural gas and NGL and the requirement for reliable, secure energy from the U.S. Those are the areas where we continue to lean in. These opportunities also need to meet our hurdles — they need to deliver mid-teens returns and ensure we can deliver mid-single-digit year-on-year growth. We're looking in those opportunities, and as you've seen, our JV partners have been important. Transaction BANGL would be a good example where we increased our ownership in assets we know and that fit deeply into our long-term strategy. So the focus is strategic fit, natural gas and NGL, and our wellhead-to-water growth strategy.
That's very helpful. And then just looking a bit deeper on the capital allocation priorities, given the pretty robust book of projects coming online in 2026 and 2027 and the 12.5% distribution increase remaining, how do you see those priorities maybe changing longer term as we exit 2026 and into 2027?
Thank you, Francina. Our capital allocation priorities are unchanged. First and foremost, we maintain the assets and our current EBITDA level. Secondly, we prioritize distribution growth — we've consistently communicated a 12.5% increase that we anticipate in both 2026 and 2027. Next is growth, which can come in the form of organic projects like the ones we've discussed, and we will continue to evaluate inorganic opportunities that fit our strategy. So really, the priorities remain: maintain the business, support distribution growth, and pursue disciplined growth opportunities.
The last question comes from Burke Sansiviero with Wolfe Research.
Are you still targeting at least 1.3x coverage with the 2026 and 2027 distribution growth plans? And can this be met solely with organic growth, or is M&A required to get there?
Yes. We continue to target our 1.3 coverage ratio for both 2026 and 2027 and beyond. From a capital perspective, we believe our current organic plan gives us confidence in maintaining that 1.3 coverage. The second-half growth provides the confidence for 2026, and entering 2027 we will have the platform to grow even more. So we are confident our organic plan supports the coverage target.
Burke, I think Kris covered it well. To reiterate, when we think about 2027, with the projects coming online that we've already put capital to work in the third and fourth quarters and the continued ramp into 2027, we believe 2027 growth is in hand. That does not mean we will stop looking at inorganic opportunities; we'll continue to evaluate them. But our goal of 1.3 coverage remains the objective, and we are not relying on inorganic M&A to meet 2027. On the question about the MPC and MPLX relationship, we remain very pleased both companies continue to execute their strategic priorities. We do not see a reason to change that relationship. There is a tremendous amount of value created by the current structure. The growth of MPLX and the ability for us to continue to grow the distribution provides sound cash flow back to MPC. That relationship creates value for both MPLX unitholders and MPC shareholders. It is an important strategic relationship, and we do not see a reason to change it at this time.
I'm showing no further questions.
Okay. Well, thank you for your interest in MPLX. Should you have more questions or want clarification on the topics discussed this morning, please contact us and our team will be available to take your calls. Thank you for joining us today.
Thank you for your participation. Participants, you may disconnect at this time.