Marathon Petroleum Corp. and MPLX LP announce agreement to exchange MPC's general partner economic interests, including IDRs, for MPLX common units

FINDLAY, Ohio, Dec. 15, 2017 - Marathon Petroleum Corp. (NYSE: MPC) and MPLX LP (NYSE: MPLX) today announced a definitive agreement for MPC to exchange its general partner (GP) economic interests in MPLX, which include incentive distribution rights (IDRs), for 275 million newly issued MPLX common (LP) units valued at approximately $10.1 billion based on the volume-weighted average price of MPLX over the past 10 days. 

The transaction is expected to close on Feb. 1, 2018, subject to and immediately following the closing of the previously announced dropdown of refining logistics assets and fuels distribution services. Upon closing, MPC will continue to control MPLX through its ownership of the non-economic GP interest in MPLX and will own approximately 64 percent of the outstanding MPLX common units.

The exchange simplifies the corporate structure and provides a clear valuation for MPC's GP economic interests in MPLX. The exchange eliminates the GP cash distribution requirements of the partnership and is expected to be accretive to distributable cash flow attributable to common unitholders in the third quarter and for the full year 2018.

"We are pleased to complete the strategic actions announced in January with the agreement to exchange MPC's GP economic interests for LP units, which will result in substantial long-term benefits across the enterprise," said Gary R. Heminger, chairman and CEO of both MPC and MPLX. "MPLX is well-positioned to deliver long-term growth while maintaining strong distribution coverage. This exchange fully aligns the interests of MPC and MPLX and facilitates predictable and growing distributions to all unitholders of MPLX, including MPC."

"We are enthusiastic about the future for MPLX and the value proposition for our unitholders," said Michael J. Hennigan, president of MPLX. "The elimination of the rapidly growing IDR obligation improves the partnership's cost of capital permanently. We believe this buy-in creates one of the fastest paths to accretion compared with similar GP transactions, and positions the partnership extraordinarily well for the future. This transaction and the dropdown will help facilitate our plan to target strong distribution coverage and maintain an investment-grade credit profile, both of which enable attractive and sustainable distribution growth for the long-term."