UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

_____________________________________________

FORM 10-Q

_____________________________________________

(Mark One)



x☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the ~~Quarterly Period Ended~~ ~~September~~quarterly period ended June 30, ~~2017~~

2019



¨☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number 001-35714

_____________________________________________

MPLX LP

(Exact name of registrant as specified in its charter)

_____________________________________________



200 E. Hardin Street,	Findlay,	Ohio	45840
(Address of principal executive offices)			(Zip code)

~~(419)~~ (419) 421-2414

(Registrant’s telephone number, including area code)

_____________________________________________



Securities Registered pursuant to Section 12(b) of the Act
Title of each class	Trading symbol(s)	Name of each exchange on which registered
Common Units Representing Limited Partnership Interests	MPLX	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yesx No ¨

Indicate by check mark whether the registrant has submitted electronically ~~and posted on its corporate Web site, if any,~~ every Interactive Data File required to be submitted ~~and posted~~ pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit ~~and post~~ such files.) Yesx No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.



Large ~~accelerated filer~~Accelerated Filer	x	Accelerated filer	¨

Non-accelerated filer	¨ ~~(Do not check if a smaller reporting company)~~	Smaller reporting company	¨
			☐
		Emerging growth company	¨☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act) Yes ¨☐ No x

MPLX LP had ~~407,066,320~~1,057,188,255 common ~~units and 8,307,473 general partner~~ units outstanding at ~~October 27, 2017.~~

August 1, 2019.

~~MPLX LP~~

~~Form 10-Q~~

~~Quarter Ended September 30, 2017~~

~~INDEX~~

Table of Contents



	Page
PART I – FINANCIAL INFORMATION
Item 1. Financial Statements:
Consolidated Statements of Income (Unaudited)	3
Consolidated ~~Balance Sheets~~Statements of Comprehensive Income (Unaudited)	4
Consolidated ~~Statements of Cash Flows~~Balance Sheets (Unaudited)	5
Consolidated Statements of ~~Equity~~Cash Flows (Unaudited)	6
~~Notes to~~ Consolidated ~~Financial~~ Statements of Equity (Unaudited)	7
Notes to Consolidated Financial Statements (Unaudited)	9
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	4341
Item 3. Quantitative and Qualitative Disclosures about Market Risk	6560
Item 4. Controls and Procedures	6661

PART II – OTHER INFORMATION
Item 1. Legal Proceedings	61
Item 1A. Risk Factors	62
Item 6. Exhibits	65
Signatures	67
~~Item 1A. Risk Factors~~	67
~~Item 2. Unregistered Sales of Equity Securities~~	68
~~Item 5. Other Information~~	68
~~Item 6. Exhibits~~	70
~~Signatures~~	72

Unless the context otherwise requires, references in this report to “MPLX LP,” “MPLX,” “the Partnership,” “we,” “our,” “us,” or like terms refer to MPLX LP and its ~~subsidiaries, including MPLX Operations LLC (“MPLX Operations”), MPLX Terminal~~subsidiaries. Additionally, throughout this Quarterly Report on Form 10-Q, we have used terms in our discussion of the business and Storage LLC (“MPLX Terminal and Storage”), MarkWest Energy Partners, L.P. (“MarkWest”), MarkWest Hydrocarbon, L.L.C. (“MarkWest Hydrocarbon”), MarkWest Pioneer, L.L.C. (“MarkWest Pioneer”), MPLX Pipe Line Holdings LLC (“Pipe Line Holdings”), Marathon Pipe Line LLC (“MPL”), Ohio River Pipe Line LLC (“ORPL”), Hardin Street Marine LLC (“HSM”), Hardin Street Transportation LLC (“HST”), Woodhaven Cavern LLC (“WHC”) and MPLX Terminals LLC (“MPLXT”). Weoperating results that have ~~partial ownership interests~~been defined in ~~a number~~our Glossary of joint venture legal entities, including MarkWest Utica EMG, L.L.C. (“MarkWest Utica EMG”) and its subsidiary Ohio Gathering Company, L.L.C. (“Ohio Gathering”), Ohio Condensate Company, L.L.C. (“Ohio Condensate”), Wirth Gathering Partnership (“Wirth”), MarkWest EMG Jefferson Dry Gas Gathering Company, L.L.C. (“Jefferson Dry Gas”), Sherwood Midstream LLC (“Sherwood Midstream”), Sherwood Midstream Holdings LLC (“Sherwood Midstream Holdings”), MarEn Bakken Company, LLC (“MarEn Bakken”), Johnston County Terminal, LLC (“Johnston Terminal”), Guilford County Terminal Company, LLC (“Guilford Terminal”), LOOP LLC (“LOOP”), LOCAP LLC (“LOCAP”), Illinois Extension Pipeline Company, L.L.C. (“Illinois Extension”) and Explorer Pipeline Company (“Explorer”). References to “MPC” refer collectively to Marathon Petroleum Corporation and its subsidiaries, other than the Partnership. Unless otherwise specified, references to “Predecessor” refer collectively to HSM’s, HST’s, WHC’s and MPLXT’s related assets, liabilities and results of operations prior to the dates of their respective acquisitions effective January 1, 2014 for HSM, January 1, 2015 for HST and WHC and April 1, 2016 for MPLXT.Terms.

Table of Contents

Glossary of Terms

The abbreviations, acronyms and industry technology used in this report are defined as follows.



ASC	Accounting Standards Codification
ASU	Accounting Standards Update
ATM Program	~~A continuous offering, or~~An at-the-market program ~~by which~~for the ~~Partnership may offer~~issuance of common units ~~in amounts, at prices and on terms to be determined by market conditions and other factors at the time of any offerings~~
~~Bbl~~Barrel	~~Barrels~~One stock tank barrel, or 42 United States gallons of liquid volume, used in reference to crude oil or other liquid hydrocarbons
Bcf/d	One billion cubic feet ~~of natural gas~~ per day
Btu	One British thermal unit, an energy measurement
Condensate	A natural gas liquid with a low vapor pressure mainly composed of propane, butane, pentane and heavier hydrocarbon fractions
DCF (a non-GAAP financial measure)	Distributable Cash Flow
~~Dth/d~~	~~Dekatherms per day~~
EBITDA (a non-GAAP financial measure)	Earnings Before Interest, Taxes, Depreciation and Amortization
~~EPA~~	~~United States Environmental Protection Agency~~
FASB	Financial Accounting Standards Board
GAAP	Accounting principles generally accepted in the United States of America
Gal	Gallon
Gal/d	Gallons per day
IDR	Incentive ~~distribution right~~Distribution Right
Initial Offering	Initial public offering on October 31, 2012
LIBOR	London Interbank Offered Rate
~~MarkWest Merger~~	~~On December 4, 2015, a wholly-owned subsidiary of the Partnership merged with MarkWest Energy Partners, L.P.~~
mbpd	Thousand barrels per day
MMBtu	One million British thermal units, an energy measurement
MMcf/d	One million cubic feet of natural gas per day
~~Net operating margin (a non-GAAP financial measure)~~	~~Segment revenues, less segment purchased product costs, less realized derivative gains (losses) related to purchased product costs~~
NGL	Natural gas liquids, such as ethane, propane, butanes and natural gasoline
NYSE	New York Stock Exchange
~~OTC~~	~~Over-the-Counter~~
~~Partnership Agreement~~	~~Third Amended and Restated Agreement of Limited Partnership of MPLX LP, dated as of October 31, 2016, as amended~~
Predecessor	Collectively: - ~~HSM’s~~The related assets, liabilities and results of operations of Hardin Street Marine LLC (“HSM”) prior to the date of ~~its~~the acquisition, March 31, 2016, effective January 1, ~~2015.~~2015 - ~~HST’s, WHC’s and MPLXT’s~~The related assets, liabilities and results of operations of Hardin Street Transportation LLC (“HST”), Woodhaven Cavern LLC (“WHC”) and MPLX Terminals LLC (“MPLXT”) prior to the date of the acquisition, March 1, 2017, effective January 1, 2015 for HST and WHC and April 1, 2016 for ~~MPLXT.~~MPLXT
Realized derivative gain/loss	The gain or loss recognized when a derivative matures or is settled
SEC	United States Securities and Exchange Commission
SMR	Steam methane reformer, operated by a third party and located at the Javelina gas processing and fractionation complex in Corpus Christi, Texas
Unrealized derivative gain/loss	The gain or loss recognized on a derivative due to changes in fair value prior to the instrument maturing or settling
VIE	Variable interest entity
~~WTI~~	~~West Texas Intermediate~~

Table of Contents

Part I—Financial Information

Item 1. Financial Statements

MPLX LP

Consolidated Statements of Income (Unaudited)



	Three Months Ended June 30,				Six Months Ended June 30,
(In millions, except per unit data)	2019		2018		2019			2018
Revenues and other income:
Service revenue	$	448	$	410	$	886		$	792
Service revenue - related parties	620		549		1,198			1,020
Service revenue - product related	26		51		60			95
Rental income	90		84		184			163
Rental income - related parties	158		190		351			335
Product sales	168		206		370			413
Product sales - related parties	14		13		25			17
Income from equity method investments	73		50		143			111
Other income	5		1		5			5
Other income - related parties	27		24		53			47
Total revenues and other income	1,629		1,578		3,275			2,998
Costs and expenses:
Cost of revenues (excludes items below)	233		233		443			439
Purchased product costs	166		204		360			391
Rental cost of sales	28		33		65			62
Rental cost of sales - related parties	2		—		5			1
Purchases - related parties	239		223		451			400
Depreciation and amortization	214		188		425			364
General and administrative expenses	69		72		151			141
Other taxes	19		17		38			35
Total costs and expenses	970		970		1,938			1,833
Income from operations	659		608		1,337			1,165
Related party interest and other financial costs	1		1		2			2
Interest expense (net of amounts capitalized of $9 million, $9 million, $16 million and $18 million, respectively)	156		135		312			247
Other financial costs	13		15		27			32
Income before income taxes	489		457		996			884
(Benefit)/provision for income taxes	1		1		(1		)	5
Net income	488		456		997			879
Less: Net income attributable to noncontrolling interests	6		3		12			5
Net income attributable to MPLX LP	482		453		985			874
Less: Series A preferred unit distributions	21		20		41			36
Limited partners’ interest in net income attributable to MPLX LP	$	461	$	433	$	944		$	838
Per Unit Data (See Note 6)
Net income attributable to MPLX LP per limited partner unit:
Common - basic	$	0.56	$	0.55	$	1.16		$	1.15
Common - diluted	$	0.55	$	0.55	$	1.16		$	1.15
Weighted average limited partner units outstanding:
Common - basic	794		794		794			728
Common - diluted	795		794		795			728

Three Months Ended
September 30, Nine Months Ended
September 30,
(In millions, except per unit data) 2017
2016⁽¹⁾
2017
2016⁽¹⁾
Revenues and other income:
Service revenue $ 299
$ 250
$ 845
$ 712
Service revenue - related parties 276
253
801
676
Rental income 69
77
208
218
Rental income - related parties 70
68
207
172
Product sales 217
157
611
394
Product sales - related parties 2
2
6
8
Gain on sale of assets —
1
1
1
Income (loss) from equity method investments 23
6
29
(72 )
Other income 2
2
5
5
Other income - related parties 22
22
69
67
Total revenues and other income 980
838
2,782
2,181
Costs and expenses:
Cost of revenues (excludes items below) 129
122
381
329
Purchased product costs 170
117
441
310
Rental cost of sales 19
13
44
42
Rental cost of sales - related parties —
—
1
1
Purchases - related parties 114
109
330
286
Depreciation and amortization 164
151
515
438
Impairment expense —
—
—
130
General and administrative expenses 59
56
174
172
Other taxes 14
12
40
37
Total costs and expenses 669
580
1,926
1,745
Income from operations 311
258
856
436
Related party interest and other financial costs 1
—
1
1
Interest expense (net of amounts capitalized of $6 million, $7 million, $24 million and $21 million, respectively) 77
51
217
158
Other financial costs 15
13
40
37
Income before income taxes 218
194
598
240
Provision (benefit) for income taxes 1
—
3
(12 )
Net income 217
194
595
252
Less: Net income attributable to noncontrolling interests 1
2
3
3
Less: Net income attributable to Predecessor —
51
36
149
Net income attributable to MPLX LP 216
141
556
100
Less: Preferred unit distributions 16
16
49
25
Less: General partner’s interest in net income attributable to MPLX LP 86
51
222
136
Limited partners’ interest in net income (loss) attributable to MPLX LP $ 114
$ 74
$ 285
$ (61 )
Per Unit Data (See Note 6)
Net income (loss) attributable to MPLX LP per limited partner unit:
Common - basic $ 0.29
$ 0.22
$ 0.75
$ (0.19 )
Common - diluted 0.29
0.21
0.75
(0.19 )
Weighted average limited partner units outstanding:
Common - basic 394
341
378
324
Common - diluted 395
346
381
324
Cash distributions declared per limited partner common unit $ 0.5875
$ 0.5150
$ 1.6900
$ 1.5300


~~(1)~~	~~Financial information has been retrospectively adjusted for the acquisition of HST, WHC and MPLXT from MPC. See Notes 1 and 3.~~

~~The accompanying notes are an integral part of these consolidated financial statements.~~

~~MPLX LP~~

~~Consolidated Balance Sheets (Unaudited)~~

(In millions) September 30, 2017 December 31, 2016
Assets
Current assets:
Cash and cash equivalents $ 3
$ 234
Receivables, net 320
299
Receivables - related parties 152
247
Inventories 64
55
Other current assets 32
33
Total current assets 571
868
Equity method investments 3,997
2,471
Property, plant and equipment, net 11,922
11,408
Intangibles, net 463
492
Goodwill 2,245
2,245
Long-term receivables - related parties 18
11
Other noncurrent assets 22
14
Total assets $ 19,238
$ 17,509
Liabilities
Current liabilities:
Accounts payable $ 152
$ 140
Accrued liabilities 202
232
Payables - related parties 317
87
Deferred revenue 3
2
Deferred revenue - related parties 42
38
Accrued property, plant and equipment 183
146
Accrued taxes 44
38
Accrued interest payable 64
53
Other current liabilities 41
27
Total current liabilities 1,048
763
Long-term deferred revenue 34
12
Long-term deferred revenue - related parties 40
19
Long-term debt 6,848
4,422
Deferred income taxes 7
6
Deferred credits and other liabilities 175
177
Total liabilities 8,152
5,399
Commitments and contingencies (see Note 17)

Redeemable preferred units 1,000
1,000
Equity
Common unitholders - public (289 million and 271 million units issued and outstanding) 8,457
8,086
Class B unitholders (0 million and 4 million units issued and outstanding) —
133
Common unitholder - MPC (95 million and 86 million units issued and outstanding) 1,302
1,069
Common unitholder - GP (23 million and 0 units issued and outstanding) 822
—
General partner - MPC (8 million and 7 million units issued and outstanding) (626 ) 1,013
Equity of Predecessor —
791
Accumulated other comprehensive loss (14 ) —
Total MPLX LP partners’ capital 9,941
11,092
Noncontrolling interests 145
18
Total equity 10,086
11,110
Total liabilities, preferred units and equity $ 19,238
$ 17,509

The accompanying notes are an integral part of these consolidated financial statements.

MPLX LP

Consolidated Statements of ~~Cash Flows~~Comprehensive Income (Unaudited)

Nine Months Ended
September 30,
(In millions) 2017
2016⁽¹⁾
(Decrease) increase in cash and cash equivalents
Operating activities:
Net income $ 595
$ 252
Adjustments to reconcile net income to net cash provided by operating activities:
Amortization of deferred financing costs 38
34
Depreciation and amortization 515
438
Impairment expense —
130
Deferred income taxes 2
(16 )
Asset retirement expenditures (2 ) (4 )
Gain on disposal of assets (1 ) (1 )
(Income) loss from equity method investments (29 ) 72
Distributions from unconsolidated affiliates 136
111
Changes in:
Current receivables (20 ) (43 )
Inventories (3 ) (4 )
Fair value of derivatives (3 ) 28
Current accounts payable and accrued liabilities 6
64
Receivables from / liabilities to related parties 61
(104 )
All other, net 43
18
Net cash provided by operating activities 1,338
975
Investing activities:
Additions to property, plant and equipment (1,004 ) (943 )
Acquisitions, net of cash acquired (249 ) —
Disposal of assets 4
—
Investments - net related party loans 80
103
Investments in unconsolidated affiliates (690 ) (56 )
Distributions from unconsolidated affiliates - return of capital 24
—
All other, net (2 ) 4
Net cash used in investing activities (1,837 ) (892 )
Financing activities:
Long-term debt - borrowings 2,661
434
- repayments (251 ) (1,312 )
Related party debt - borrowings 829
2,215
- repayments (627 ) (2,223 )
Debt issuance costs (25 ) —
Net proceeds from equity offerings 483
510
Issuance of redeemable preferred units —
984
Distribution to MPC for acquisition (1,931 ) —
Distributions to preferred unitholders (49 ) (9 )
Distributions to unitholders and general partner (800 ) (612 )
Distributions to noncontrolling interests (4 ) (3 )
Contributions from noncontrolling interests 128
4
Consideration payment to Class B unitholders (25 ) (25 )
All other, net (8 ) (2 )
Contribution from MPC —
225
Distributions to MPC from Predecessor (113 ) (104 )
Net cash provided by financing activities 268
82
Net (decrease) increase in cash and cash equivalents (231 ) 165
Cash and cash equivalents at beginning of period 234
43
Cash and cash equivalents at end of period $ 3
$ 208



	Three Months Ended June 30,				Six Months Ended June 30,
(In millions)	2019		2018		2019		2018
Net income	$	488	$	456	$	997	$	879
Other comprehensive income/(loss), net of tax:
Remeasurements of pension and other postretirement benefits related to equity method investments, net of tax	—		—		1		(2		)
Comprehensive income	488		456		998		877
Less comprehensive income attributable to:
Noncontrolling interests	6		3		12		5
Comprehensive income attributable to MPLX LP	$	482	$	453	$	986	$	872


~~(1)~~	~~Financial information has been retrospectively adjusted for the acquisition of HST, WHC and MPLXT from MPC. See Notes 1 and 3.~~

The accompanying notes are an integral part of these consolidated financial statements.

Table of Contents

MPLX LP

Consolidated ~~Statements of Equity~~Balance Sheets (Unaudited)



(In millions)	June 30, 2019			December 31, 2018
Assets
Current assets:
Cash and cash equivalents	$	7		$	68
Receivables, net	335			417
Current assets - related parties	333			290
Inventories	77			77
Other current assets	34			45
Total current assets	786			897
Equity method investments	4,409			4,174
Property, plant and equipment, net	15,021			14,639
Intangibles, net	405			424
Goodwill	2,581			2,586
Right of use assets	255			—
Noncurrent assets - related parties	253			24
Other noncurrent assets	36			35
Total assets	23,746			22,779
Liabilities
Current liabilities:
Accounts payable	134			162
Accrued liabilities	148			250
Current liabilities - related parties	224			254
Accrued property, plant and equipment	227			294
Accrued interest payable	173			143
Operating lease liabilities	47			—
Other current liabilities	95			83
Total current liabilities	1,048			1,186
Long-term deferred revenue	108			80
Long-term liabilities - related parties	271			43
Long-term debt	14,030			13,392
Deferred income taxes	11			13
Long-term operating lease liabilities	209			—
Deferred credits and other liabilities	195			197
Total liabilities	15,872			14,911
Commitments and contingencies (see Note 20)
Series A preferred units	1,005			1,004
Equity
Common unitholders - public (290 million and 289 million units issued and outstanding)	8,305			8,336
Common unitholder - MPC (505 million and 505 million units issued and outstanding)	(1,671		)	(1,612		)
Accumulated other comprehensive loss	(15		)	(16		)
Total MPLX LP partners’ capital	6,619			6,708
Noncontrolling interests	250			156
Total equity	6,869			6,864
Total liabilities, preferred units and equity	$	23,746		$	22,779

Partnership
(In millions)
Common
Unit-holders
Public
Class B Unit-holders Public
Common
Unit-holder
MPC

Common Unit-holder
GP

General
Partner
MPC
Accumulated Other Comprehensive Loss
Non-controlling
Interests

Equity of Predecessor⁽¹⁾
Total
Balance at December 31, 2015 $ 7,691
$ 266
$ 465
$ —
$ 819
$ —
$ 13
$ 692
$ 9,946
Distributions to MPC from Predecessor —
—
—
—
—
—
—
(104 ) (104 )
Contribution from MPC —
—
84
—
141
—
—
—
225
Contribution of MarkWest Hydrocarbon from MPC —
—
—
—
(188 ) —
—
—
(188 )
Distribution of MarkWest Hydrocarbon to MPC —
—
—
—
565
—
—
—
565
Issuance of units under ATM Program 499
—
—
—
11
—
—
—
510
Net (loss) income (51 ) —
(10 ) —
136
—
3
149
227
Allocation of MPC's net investment at acquisition —
—
669
—
(337 ) —
—
(332 ) —
Distributions to unitholders and general partner (378 ) —
(98 ) —
(136 ) —
—
—
(612 )
Distributions to noncontrolling interests —
—
—
—
—
—
(3 ) —
(3 )
Contributions from noncontrolling interests —
—
—
—
—
—
4
—
4
Class B unit conversion 133
(133 ) —
—
—
—
—
—
—
Non-cash contribution from MPC —
—
—
—
—
—
—
334
334
Equity-based compensation 6
—
—
—
—
—
—
—
6
Deferred income tax impact from changes in equity (2 ) —
(13 ) —
(2 ) —
—
—
(17 )
Balance at September 30, 2016 $ 7,898
$ 133
$ 1,097

$ —
$ 1,009

$ —
$ 17
$ 739
$ 10,893

Balance at December 31, 2016 $ 8,086
$ 133
$ 1,069
$ —
$ 1,013
$ —
$ 18
$ 791
$ 11,110
Distributions to MPC from Predecessor —
—
—
—
—
—
—
(113 ) (113 )
Distributions of cash received from Joint-Interest Acquisition entities to MPC —
—
—
—
(13 ) —
—
—
(13 )
Issuance of units under ATM Program 473
—
—
—
10
—
—
—
483
Net income 212
—
68
5
222
—
3
36
546
Contribution from MPC —
—
—
—
—
(14 ) —
689
675
Allocation of MPC's net investment at acquisition —
—
845
824
(266 ) —
—
(1,403 ) —
Distribution to MPC for acquisitions —
—
(537 ) —
(1,394 ) —
—
—
(1,931 )
Distributions to unitholders and general partner (452 ) —
(143 ) (7 ) (198 ) —
—
—
(800 )
Distributions to noncontrolling interests —
—
—
—
—
—
(4 ) —
(4 )
Contributions from noncontrolling interests —
—
—
—
—
—
128
—
128
Class B unit conversion 133
(133 ) —
—
—
—
—
—
—
Equity-based compensation 5
—
—
—
—
—
—
—
5
Balance at September 30, 2017 $ 8,457
$ —
$ 1,302

$ 822
$ (626 ) $ (14 ) $ 145
$ —
$ 10,086


~~(1)~~	~~Financial information has been retrospectively adjusted for the acquisition of HST, WHC and MPLXT from MPC. See Notes 1 and 3.~~

The accompanying notes are an integral part of these consolidated financial statements.

Table of Contents

MPLX LP

Consolidated Statements of Cash Flows (Unaudited)



	Six Months Ended June 30,
(In millions)	2019			2018
Increase/(decrease) in cash, cash equivalents and restricted cash
Operating activities:
Net income	$	997		$	879
Adjustments to reconcile net income to net cash provided by operating activities:
Amortization of deferred financing costs	26			30
Depreciation and amortization	425			364
Deferred income taxes	(2		)	5
Asset retirement expenditures	(1		)	(5		)
Gain on disposal of assets	(4		)	—
Income from equity method investments	(143		)	(111		)
Distributions from unconsolidated affiliates	220			175
Changes in:
Current receivables	82			(71		)
Inventories	1			(5		)
Fair value of derivatives	7			—
Current accounts payable and accrued liabilities	(76		)	119
Current assets/current liabilities - related parties	(108		)	(92		)
Right of use assets/operating lease liabilities	3			—
Deferred revenue	29			16
All other, net	(4		)	(14		)
Net cash provided by operating activities	1,452			1,290
Investing activities:
Additions to property, plant and equipment	(884		)	(862		)
Acquisitions, net of cash acquired	6			—
Disposal of assets	8			4
Investments in unconsolidated affiliates	(310		)	(112		)
Distributions from unconsolidated affiliates - return of capital	2			15
All other, net	3			1
Net cash used in investing activities	(1,175		)	(954		)
Financing activities:
Long-term debt - borrowings	2,275			9,610
- repayments	(1,661		)	(4,655		)
Related party debt - borrowings	3,066			1,160
- repayments	(3,022		)	(1,433		)
Debt issuance costs	—			(53		)
Distributions to MPC for acquisitions	—			(4,111		)
Distributions to noncontrolling interests	(12		)	(6		)
Distributions to Series A preferred unitholders	(40		)	(33		)
Distributions to unitholders and general partner	(1,038		)	(814		)
Contributions from noncontrolling interests	94			5
All other, net	(8		)	(6		)
Net cash used in financing activities	(346		)	(336		)
Net (decrease)/increase in cash, cash equivalents and restricted cash	(69		)	—
Cash, cash equivalents and restricted cash at beginning of period	76			9
Cash, cash equivalents and restricted cash at end of period	$	7		$	9

The accompanying notes are an integral part of these consolidated financial statements.

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MPLX LP

Consolidated Statements of Equity (Unaudited)



	Partnership
(In millions)	Common Unit-holders Public			Common Unit-holder MPC			General Partner MPC			Accumulated Other Comprehensive Loss			Non-controlling Interests			Equity of Predecessor			Total
Balance at December 31, 2017	$	8,379		$	2,099		$	(637	)	$	(14	)	$	146		$	—		$	9,973
Net income (excludes amounts attributable to preferred units)	180			225			—			—			2			—			407
Allocation of MPC's net investment at acquisition	—			5,172			(4,126		)	—			—			(1,046		)	—
Distributions to:
MPC for acquisition	—			(936		)	(3,164		)	—			—			—			(4,100		)
Unitholders and general partner	(176		)	(171		)	—			—			—			—			(347		)
Noncontrolling interests	—			—			—			—			(3		)	—			(3		)
Contributions from:
MPC	—			—			—			—			—			1,046			1,046
Noncontrolling interests	—			—			—			—			1			—			1
Conversion of GP economic interests	—			(7,926		)	7,926			—			—			—			—
Other	2			—			1			(2		)	—			—			1
Balance at March 31, 2018	8,385			(1,537		)	—			(16		)	146			—			6,978
Net income (excludes amounts attributable to preferred units)	157			276			—			—			3			—			436
Distributions to:
Unitholders and general partner	(179		)	(288		)	—			—			—			—			(467		)
Noncontrolling interests	—			—			—			—			(3		)	—			(3		)
Contributions from:
Noncontrolling interests	—			—			—			—			4			—			4
Other	3			1			—			—			—			—			4
Balance at June 30, 2018	$	8,366		$	(1,548	)	$	—		$	(16	)	$	150		$	—		$	6,952

The accompanying notes are an integral part of these consolidated financial statements.

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MPLX LP

Consolidated Statements of Equity (Unaudited)



	Partnership
(In millions)	Common Unit-holders Public			Common Unit-holder MPC			Accumulated Other Comprehensive Loss			Non-controlling Interests			Total
Balance at December 31, 2018	$	8,336		$	(1,612	)	$	(16	)	$	156		$	6,864
Net income (excludes amounts attributable to preferred units)	176			307			—			6			489
Distributions to:
Unitholders	(188		)	(327		)	—			—			(515		)
Noncontrolling interests	—			—			—			(6		)	(6		)
Contributions from:
Noncontrolling interests	—			—			—			94			94
Other	2			—			1			—			3
Balance at March 31, 2019	8,326			(1,632		)	(15		)	250			6,929
Net income (excludes amounts attributable to preferred units)	168			293			—			6			467
Distributions to:
Unitholders	(191		)	(332		)	—			—			(523		)
Noncontrolling interests	—			—			—			(6		)	(6		)
Other	2			—			—			—			2
Balance at June 30, 2019	$	8,305		$	(1,671	)	$	(15	)	$	250		$	6,869

The accompanying notes are an integral part of these consolidated financial statements.

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Notes to Consolidated Financial Statements (Unaudited)

1. Description of the Business and Basis of Presentation

Description of the Business – MPLX LP is a diversified, ~~growth-oriented~~large-cap master limited partnership formed by Marathon Petroleum ~~Corporation.~~Corporation that owns and operates midstream energy infrastructure and logistics assets, and provides fuels distribution services. References in this report to “MPLX LP,” “MPLX,” “the Partnership,” “we,” “ours,” “us,” or like terms refer to MPLX LP and its subsidiaries. References to “MPC” refer collectively to Marathon Petroleum Corporation as our sponsor and its subsidiaries, ~~(collectively,~~other than the ~~“Partnership”)~~Partnership. We are engaged in ~~the gathering, processing and transportation of natural gas; the gathering, transportation, fractionation, storage and marketing of NGLs; and~~ the transportation, storage and distribution of crude oil and refined petroleum ~~products, principally for our sponsor. References to “MPC” refer collectively to Marathon Petroleum Corporation~~products; the gathering, processing and ~~its subsidiaries, other than~~transportation of natural gas; and the ~~Partnership.~~gathering, transportation, fractionation, storage and marketing of NGLs. MPLX’s principal executive office is located in Findlay, Ohio.

~~The Partnership’s~~MPLX’s business consists of two segments based on the nature of services it offers: Logistics and Storage (“L&S”), which ~~is focused on~~relates primarily to crude oil and refined petroleum ~~products~~products; and Gathering and Processing (“G&P”), which ~~is focused on~~relates primarily to natural gas and NGLs. See Note 9 for additional information regarding ~~operations.~~

~~Basis of Presentation~~ ~~– The Partnership’s consolidated financial statements include all majority-owned~~the operations and ~~controlled subsidiaries. For non-wholly-owned consolidated subsidiaries, the interests owned by third parties have been recorded as~~ ~~Noncontrolling interests~~ in the accompanying Consolidated Balance Sheets. Intercompany investments, accounts and transactions have been eliminated. The Partnership’s investments in which the Partnership exercises significant influence but does not control and does not have a controlling financial interest are accounted for using the equity method. The Partnership’s investments in a VIE in which the Partnership exercises significant influence but does not control and is not the primary beneficiary are also accounted for using the equity method.

Effective March 1, 2017, the Partnership acquired pipeline, storage and terminal businesses that are operated through Hardin Street Transportation LLC (“HST”), Woodhaven Cavern LLC (“WHC”) and MPLX Terminals LLC (“MPLXT”) (collectively with Hardin Street Marine LLC (“HSM”), “Predecessor”) from MPC. The acquisition from MPC was considered a transfer between entities under common control. Accordingly, the Partnership recorded the acquisition from MPC on its Consolidated Balance Sheets at MPC’s historical basis instead of fair value. Transfers of businesses between entities under common control require prior periods to be retrospectively adjusted to furnish comparative information since inception of common control. Therefore, the accompanying consolidated financial statements and related notes of MPLX LP have been retrospectively adjusted to include the historical results of ~~the businesses acquired from MPC prior to~~these segments.

On July 30, 2019, MPLX completed its acquisition by merger (the “Merger”) of Andeavor Logistics LP (“ANDX”). At the effective ~~dates~~time of the ~~acquisition.~~Merger, each common unit held by ANDX’s public unitholders was converted into the right to receive 1.135 MPLX common units. ANDX common units held by certain affiliates of MPC were converted into the right to receive 1.0328 MPLX common units. See Note 3 for additional information regarding the ~~HST, WHC and MPLXT acquisition. The accompanying financial statements and related notes present the combined financial position, results~~Merger.

Basis of operations, cash flows and equity of Predecessor on a historical basis. The financial statements of Predecessor have been prepared from the separate records maintained by MPC and may not necessarily be indicative of the conditions or the results of operations that would have existed if Predecessor had been operated as an unaffiliated entity.

In preparing the Consolidated Statements of Equity, net income attributable to MPLX LP is allocated to preferred unitholders based on a fixed distribution schedule, as discussed in Note 8, and subsequently allocated to the general partner and limited partner unitholders. Distributions, although earned, are not accrued until declared. However, when distributions related to the IDRs are made, earnings equal to the amount of those distributions are first allocated to the general partner before the remaining earnings are allocated to the limited partner unitholders based on their respective ownership percentages. The allocation of net income attributable to MPLX LP for purposes of calculating net income per limited partner unit is described in Note 6.

Presentation – The accompanying interim consolidated financial statements are unaudited; however, in the opinion of ~~the Partnership’s~~MPLX’s management, these statements reflect all adjustments necessary for a fair statement of the results for the periods reported. All such adjustments are of a normal, recurring nature unless otherwise disclosed. These interim consolidated financial statements, including the notes, have been prepared in accordance with the rules and regulations of the SEC applicable to interim period financial statements and do not include all of the information and disclosures required by GAAP for complete financial statements. Certain amounts in prior years have been reclassified to conform to current year presentation.

These interim consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Annual Report on Form 10-K for the year ended December 31, ~~2016, as updated by our Current Report on Form 8-K filed on May 1, 2017.~~2018. The results of operations for the three and ~~nine~~six months ended ~~September~~June 30, ~~2017~~2019 are not necessarily indicative of the results to be expected for the full year.

MPLX’s consolidated financial statements include all majority-owned and controlled subsidiaries. For non-wholly-owned consolidated subsidiaries, the interests owned by third parties have been recorded as “Noncontrolling interests” on the accompanying Consolidated Balance Sheets. Intercompany investments, accounts and transactions have been eliminated. MPLX’s investments in which MPLX exercises significant influence but does not control and does not have a controlling financial interest are accounted for using the equity method. MPLX’s investments in a VIE in which MPLX exercises significant influence but does not control and is not the primary beneficiary are also accounted for using the equity method.

In preparing the Consolidated Statements of Equity, net income attributable to MPLX LP is allocated to Series A preferred unitholders based on a fixed distribution schedule. Distributions, although earned, are not accrued until declared. The allocation of net income attributable to MPLX LP for purposes of calculating net income per limited partner unit is described in Note 6.

2. Accounting Standards

Recently Adopted

ASU 2016-02, Leases

We adopted ASU No. 2016-02, Leases (Topic 842), as of January 1, 2019, electing the transition method which permits entities to adopt the provisions of the standard using the modified retrospective approach without adjusting comparative periods. We also elected the package of practical expedients permitted under the transition guidance within the new standard, which among other things, allowed us to grandfather the historical accounting conclusions until a reassessment event is present. We have also elected the practical expedient to not recognize short-term leases on the balance sheet, the practical expedient related to right of way permits and land easements which allows us to carry forward our accounting treatment for those existing agreements, and the practical expedient to combine lease and non-lease components for the majority of our underlying classes of assets except for our third-party contractor service and equipment agreements and boat and barge equipment agreements in which we are the lessee. We did not elect the practical expedient to combine lease and non-lease components for arrangements in which we are

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the lessor. In ~~October 2016,~~instances where the ~~FASB issued~~practical expedient was not elected, lease and non-lease consideration is allocated based on relative standalone selling price.

Right of use (“ROU”) assets represent our right to use an ~~accounting standards update~~underlying asset in which we obtain substantially all of the economic benefits and the right to ~~amend~~direct the ~~consolidation guidance issued in February 2015~~use of the asset during the lease term. Lease liabilities represent our obligation to ~~require~~make lease payments arising from the lease. Operating lease ROU assets and lease liabilities are recognized at commencement date based on the present value of lease payments over the lease term. We recognize ROU assets and lease liabilities on the balance sheet for leases with a lease term of greater than one year. Payments that ~~a decision maker consider,~~are not fixed at the commencement of the lease are considered variable and are excluded from the ROU asset and lease liability calculations. In the measurement of our ROU assets and lease liabilities, the fixed lease payments in the ~~determination~~agreement are discounted using a secured incremental borrowing rate for a term similar to the duration of the ~~primary beneficiary, its indirect interest in a VIE held by a related party that~~lease, as our leases do not provide implicit rates. Operating lease expense is ~~under common control~~recognized on a ~~proportionate~~straight-line basis ~~only.~~over the lease term.

Adoption of the new standard resulted in the recording of ROU assets and lease liabilities of approximately $505 million and $502 million, respectively, as of January 1, 2019. The ~~change was effective for the financial~~standard did not materially impact our consolidated statements ~~for fiscal years beginning after December 15, 2016, and interim periods within those fiscal years. The Partnership was~~of income, cash flows or equity as a result of adoption.

As a lessor under ASC 842, MPLX may be required to ~~apply~~re-classify existing operating leases to sales-type leases upon modification and related reassessment of the ~~standard retrospectively~~leases. If such a modification were to ~~January 1, 2016,~~occur, it may result in the ~~date on which~~de-recognition of existing assets and recognition of a receivable in the ~~Partnership~~amount of the present value of fixed payments expected to be received by MPLX under the lease. MPLX will evaluate the impacts of lease reassessments as modifications occur.

We also adopted the ~~consolidation guidance issued in February 2015. The Partnership adopted this accounting standards update in~~following standard during the first ~~quarter~~six months of ~~2017 and it did not have an impact on the consolidated financial statements.~~

In March 2016, the FASB issued an accounting standards update on the accounting for employee share-based payments. This update requires the recognition of income tax effects of awards through the income statement when awards vest or are settled. It also increases the amount an employer can withhold for tax purposes without triggering liability accounting. Lastly, it allows employers to make a policy election to account for forfeitures as they occur. The changes were effective for fiscal years beginning after December 15, 2016, and interim periods within those fiscal years. Under the new guidance, the Partnership will continue estimating forfeiture rates to calculate compensation cost. The Partnership adopted this accounting standards update in the first quarter of 2017 and it2019, which did not have a material impact ~~on the consolidated~~to our financial ~~statements.~~statements or financial statement disclosures:



ASU		Effective Date
2017-12	Derivatives and Hedging - Targeted Improvements to Accounting for Hedging Activities	January 1, 2019

Not Yet Adopted

~~In August 2017,~~ASU 2017-04, Intangibles - Goodwill and Other - Simplifying the FASB issued an accounting standards update to amend the hedge accounting rules to simplify the application of hedge accounting guidance and better portray the economic results of risk management activities in the financial statements. The guidance expands the ability to hedge nonfinancial and financial risk components, reduces complexity in fair value hedges of interest rate risk, eliminates the requirement to separately measure and report hedge ineffectiveness, as well as eases certain hedge effectiveness assessment requirements. The guidance is effective beginning in 2019 with early adoption permitted. The Partnership is in the process of determining the impact of this guidance, including transition elections and required disclosures, on the consolidated financial statements and the timing of adoption.

In May 2017, the FASB issued an accounting standards update to provide guidance about when changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting. An entity should accountTest for the effects of a modification unless the fair value, vesting conditions and balance sheet classification of the modified award is the same as the original award immediately before the original award is modified. The Partnership will adopt the new standard on a prospective basis beginning on January 1, 2018. The application of this new accounting standard is not expected to have a material impact on the consolidated financial statements.

In February 2017, the FASB issued an accounting standards update addressing the derecognition of nonfinancial assets. The guidance defines in-substance nonfinancial assets, and states that the derecognition of business activities should be evaluated under the consolidation guidance, with limited exceptions related to conveyances of oil and gas mineral rights or contracts with customers. The standard eliminates the previous exclusion for businesses that are in-substance real estate, and eliminates some differences based on whether a transferred set is that of assets or a business and whether the transfer is to a joint venture. The standard must be implemented in conjunction with the implementation of the revenue recognition accounting standards update, which the Partnership will implement January 1, 2018. The Partnership plans to adopt the new standard using the modified retrospective method and does not expect the application of this accounting standards update to have a material impact on the consolidated financial statements.

Goodwill Impairment

In January 2017, the FASB issued an ~~accounting standards update~~ASU which simplifies the subsequent measurement of goodwill by eliminating Step 2 from the goodwill impairment test. Under the new guidance, the recognition of an impairment charge is calculated based on the amount by which the carrying amount exceeds the reporting unit’s fair value, which could be different from the amount calculated under the current method using the implied fair value of the goodwill; however, the loss recognized should not exceed the total amount of goodwill allocated to that reporting unit. The guidance should be applied on a prospective basis, and is effective for annual or any interim goodwill impairment tests in fiscal years beginning after December 15, 2019. Early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017. ~~The Partnership is in the process~~

ASU 2016-13, Credit Losses - Measurement of ~~determining the impact of the accounting standards update~~Credit Losses on ~~the consolidated financial statements.~~

In January 2017, the FASB issued an accounting standards update to clarify the definition of a business with the objective of adding guidance to assist entities with evaluating whether transactions should be accounted for as acquisitions (or disposals) of

assets or businesses. The standard is intended to narrow the definition of a business by specifying the minimum inputs and processes and by narrowing the definition of outputs. The change is effective for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. The guidance will be applied prospectively and early adoption is permitted for certain transactions. The Partnership is in the process of evaluating this accounting standards update and determining whether it will early adopt.

In November 2016, the FASB issued an accounting standards update requiring that the statement of cash flows explain the change during the period in the total of cash, cash equivalents and amounts generally described as restricted cash or restricted cash equivalents. The change is effective for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years, with early adoption permitted. Retrospective application is required. The application of this accounting standards update will not have a material impact on the Consolidated Statements of Cash Flows.

In August 2016, the FASB issued an accounting standards update related to the classification of certain cash flows. The accounting standards update provides specific guidance on eight cash flow classification issues, including debt prepayment or debt extinguishment costs and distributions received from equity method investees, to reduce diversity in practice. The change is effective for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years, with early adoption permitted. Retrospective application is required. The Partnership does not expect application of this accounting standards update to have a material impact on the Consolidated Statements of Cash Flows.

Financial Instruments

In June 2016, the FASB issued an ~~accounting standards update~~ASU related to the accounting for credit losses on certain financial instruments. The guidance requires that for most financial assets, losses ~~are~~be based on an expected loss approach which includes estimates of losses over the life of exposure that considers historical, current and forecasted information. Expanded disclosures related to the methods used to estimate the losses as well as a specific disaggregation of balances for financial assets are also required. The change is effective for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years, with early adoption permitted for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years. ~~The Partnership does~~We do not expect application of this ~~accounting standards update~~ASU to have a material impact on ~~the~~our consolidated financial statements.

~~In February 2016,~~

3. Acquisitions

Acquisition of Andeavor Logistics LP

As previously disclosed, on May 7, 2019, ANDX, Tesoro Logistics GP, LLC, then the ~~FASB issued~~general partner of ANDX (“TLGP”), MPLX, MPLX GP LLC, the general partner of MPLX (“MPLX GP”), and MPLX MAX LLC, a wholly-owned subsidiary of MPLX (“Merger Sub”), entered into an Agreement and Plan of Merger (the “Merger Agreement”) that provided for, among other things, the merger of Merger Sub with and into ANDX. On July 30, 2019, the Merger was completed, and ANDX survived the Merger as a wholly-owned subsidiary of MPLX. At the effective time of the Merger, each common unit held by

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ANDX’s public unitholders was converted into the right to receive 1.135 MPLX common units. ANDX common units held by certain affiliates of MPC were converted into the right to receive 1.0328 MPLX common units.

The assets of ANDX consist of a network of owned and operated crude oil, refined product and natural gas pipelines; terminals with crude oil and refined products storage capacity; rail loading and offloading facilities; marine terminals including storage; bulk petroleum distribution facilities; a trucking fleet; and natural gas processing and fractionation complexes. The assets are located in the western and inland regions of the United States.

MPC accounted for its October 1, 2018 acquisition of Andeavor (including acquiring control of ANDX), using the acquisition method of accounting ~~standards update requiring lessees~~which required Andeavor assets and liabilities to ~~record virtually all leases on their balance sheets. The accounting standards update also requires expanded disclosures to help financial statement users better understand~~be recorded by MPC at the ~~amount, timing~~acquisition date fair value. As a result of MPC’s relationship with both MPLX and ~~uncertainty of cash flows arising from leases. For lessors, this amended guidance modifies~~ANDX, the ~~classification criteria and the accounting for sales-type and direct financing leases. The change~~Merger will be ~~effective~~treated as a common control transaction, which requires the recognition of assets and liabilities acquired using MPC’s historical basis as of October 1, 2018. The fair value of assets acquired and liabilities assumed shown below have been pushed down from MPC and are considered preliminary as MPC has not yet completed a final determination of the respective fair values related to its acquisition of Andeavor. The preliminary purchase consideration allocation may change based on ~~a modified retrospective basis for fiscal years beginning after December 15, 2018,~~additional information received. Adjustments to this allocation can be made through the end of MPC’s measurement period, which is not to exceed one year from the Andeavor acquisition date. Values shown below have not been incorporated into the results of MPLX as of June 30, 2019 as the Merger was not closed until July 30, 2019.



(In millions)
Cash and cash equivalents	$	83
Receivables, net	241
Inventories	21
Other current assets⁽¹⁾	59
Equity method investments	731
Property, plant and equipment, net	6,709
Intangibles, net	960
Other noncurrent assets⁽²⁾	31
Total assets acquired	8,835
Accounts payable	198
Other current liabilities⁽³⁾	188
Long-term debt	4,916
Deferred credits and other long-term liabilities⁽⁴⁾	75
Total liabilities assumed	5,377
Net assets acquired excluding goodwill	3,458
Goodwill	7,428
Total purchase price	$	10,886

(1)Includes both related party and ~~interim periods within those fiscal years, with early adoption permitted. The Partnership is currently evaluating the impact of this standard on the Partnership’s financial statements~~third party other current assets.

(2) Includes both related party and disclosures, internal controls and accounting policies. This evaluation process includes reviewing all forms of leases, performing a completeness assessment over the lease population and analyzing the practical expedients in order to determine the best path to implementation. The Partnership does not plan to early adopt the standard. The Partnership believes the impact will be material on the consolidated financial statementsthird party other noncurrent assets as ~~all operating leases will be recognized~~well as a right of use assets associated with leases.

(3) Includes accrued liabilities, operating lease liabilities, long term debt due within one year, as well as related party and third party other current liabilities.

(4) Includes deferred revenue and deferred income taxes, as well as related party and third party other noncurrent liabilities.

Details of our valuation methodology and significant inputs for fair value measurements are included by asset class below. The fair value measurements for equity method investments, property, plant and ~~lease obligation. Based~~equipment, intangible assets and long-term debt are based on ~~results~~significant inputs that are not observable in the market and, therefore, represent Level 3 measurements.

Goodwill

The preliminary purchase consideration allocation resulted in the recognition of $7 billion in goodwill which will be split between the ~~evaluation process~~L&S and G&P segments once assigned to ~~date,~~ the ~~Partnership also believes the impact on existing processes, controls~~relevant reporting units.

Inventory

The fair value of inventory was recorded at cost as of October 1, 2018 as these items are related to spare parts, materials and ~~information systems may be material.~~supplies and approximate fair value.

~~In January 2016, the FASB issued an accounting standards update requiring unconsolidated equity investments, not accounted for under~~

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Equity Method Investments

The fair value of the equity method ~~to be measured at fair value~~investments was determined based on applying income and market approaches. The income approach relied on the discounted cash flow method and the market approach relied on a market multiple approach considering historical and projected financial results. Discount rates for the discounted cash flow models were based on capital structures for similar market participants and included various risk premiums that account for risks associated with ~~changes in fair value recognized in net income.~~ the specific investments.

Property, Plant and Equipment

The ~~update also requires the use of the exit price notion when measuring the~~preliminary fair value of ~~financial instruments for disclosure purposes~~property, plant and ~~the separate presentation of financial assets and liabilities by measurement category and form~~equipment is $7 billion, which is based primarily on the ~~balance sheet~~cost approach. Key assumptions in the cost approach include determining the replacement cost by evaluating recent purchases of similar assets or published data, and ~~accompanying notes.~~ adjusting replacement cost for economic and functional obsolescence, location, normal useful lives, and capacity (if applicable).

Acquired Intangible Assets

The ~~update eliminates the requirement to disclose the methods and assumptions used in estimating the~~preliminary fair value of ~~financial instruments measured at amortized cost. Lastly,~~ the ~~accounting standards update requires separate presentation in~~acquired identifiable intangible assets is $960 million, which represents the value of various customer contracts and relationships and other ~~comprehensive income of the portion of the total change in the~~intangible assets. The preliminary fair value of ~~a liability resulting from a change~~customer contracts and relationships is $890 million, which was valued by applying the multi-period excess earnings method, which is an income approach. Key assumptions in the ~~instrument-specific credit risk when electing~~income approach include the underlying contract cash flow estimates, remaining contract term, probability of renewal, growth rates and discount rates. The intangible assets are all finite lived and will be amortized over 2 to ~~measure the liability at~~10 years.

Debt

The fair value of the ANDX unsecured notes was measured using a market approach, based upon the average of quotes for the acquired debt from major financial institutions and a third-party valuation service. Additionally, approximately $1.1 billion of borrowings under revolving credit agreements approximate fair value.

Acquisition Costs

We recognized $4 million in ~~accordance with~~acquisition costs during the period which are reflected in general and administrative expenses.

Pro Forma Financial Information

The following unaudited pro forma information combines the historical operations of MPLX and ANDX, giving effect to the merger as if it had been consummated on January 1, 2018, the beginning of the earliest period presented.



	Three Months Ended June 30,				Six Months Ended June 30,
(In millions)	2019		2018		2019		2018
Total revenues and other income	$	2,224	$	2,122	$	4,461	$	4,059
Net income attributable to MPLX LP	$	652	$	600	$	1,324	$	1,161

The pro forma information includes adjustments to align accounting policies which include adjustments for capitalization of assets and treatment of turnaround and major maintenance costs. The pro forma information also includes adjustments related to: reversing transactions between MPLX and ANDX which previously would have been recorded as transactions between related parties; basis differences on equity method investments as a result of recognition of MPC’s investments in ANDX’s equity method investments; depreciation and amortization expense to reflect the increased fair value ~~option~~of property, plant and equipment and increased amortization expense related to identifiable intangible assets; as well as adjustments to interest expense for ~~financial instruments. The changes are effective~~the amortization of fair value adjustments over the remaining term of ANDX’s outstanding debt, reversal of ANDX’s historical amortization of debt issuance costs and debt discounts and to adjust for ~~fiscal years,~~the difference in the weighted average interest rate between MPLX’s revolving credit facility and ~~interim periods within those fiscal years, beginning after December 15, 2017. Early adoption is permitted only~~the ANDX revolving credit facilities.

Mt. Airy Terminal

On September 26, 2018, MPLX acquired an eastern U.S. Gulf Coast export terminal (the “Mt. Airy Terminal”) from Pin Oak Holdings, LLC for ~~guidance regarding presentation~~total consideration of $451 million. At the time of the ~~liability’s credit risk.~~acquisition, the terminal included tanks with 4 million barrels of third-party leased storage capacity and a dock with 120 mbpd of capacity. The ~~Partnership does not expect application of this accounting standards update to have a material impact~~Mt. Airy Terminal is located on the ~~consolidated financial statements.~~

~~In May 2014,~~Mississippi River between New Orleans and Baton Rouge, is in close proximity to several Gulf Coast refineries including MPC’s Garyville Refinery and is near numerous rail lines and pipelines. The Mt. Airy Terminal is accounted for within the FASB issued Accounting Standards Update 2014-09 which created Accounting Standards Codification Topic 606, “Revenue from Contracts with Customers” (“ASC 606”). The guidance in ASC 606 states that revenue is recognized when a customer obtains control of a good or service. Recognition of the revenue will involve a multiple step approach including identifying the contract, identifying the separate performance obligations, determining the transaction price, allocating the price to the performance obligations and recognizing the revenue as the obligations are satisfied. Additional disclosures will be required to provide adequate information to understand the nature, amount, timing and uncertainty of reported revenues and revenues expected to be recognized. The change will be effective on a retrospective or modified retrospective basis for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years, with early adoption permitted no earlier than January 1, 2017.

~~The Partnership will adopt the revenue recognition standard during~~L&S segment. In the first quarter of ~~2018. The Partnership plans~~2019, an adjustment to ~~adopt~~ the ~~new standard using the modified retrospective method, which will result in a cumulative effect adjustment as~~initial purchase price was made for approximately $5 million

Table of the date of adoption. By selecting this adoption method, the Partnership will disclose the amount by which each financial statement line item is affected by the standard in the current reporting period after adoption as compared with the guidance that was in effect before adoption.Contents

The Partnership is currently evaluating the impact of the revenue recognition standard on its consolidated financial statements and disclosures, internal controls and accounting policies. This evaluation process includes a phased approach, the first phase of which includes reviewing a sample of contracts and transaction types across segments. This phase was completed as of September 30, 2017.

Based on the results of the first phase assessment, the Partnership has reached conclusions for all material contract types. Revenue recognition patterns will not change for fee-based or percent-of-proceeds contracts. The Partnership does expect certain amounts to be grossed up in revenue and cost of revenues as a result of implementation, specifically related to third-party reimbursements from customers and commodities received as consideration in service agreements, such as keep-whole arrangements. In the third quarter of 2017, the Partnership finalized a conclusion on the valuation of non-cash consideration received in the form of a commodity product, with the valuation being performed on the date the service performance obligation is completed.

The Partnership is in the process of finalizing the second phase of implementation, which includes the calculation of the impact of the new standard on results and the development of new policies, procedures and disclosures related to the ~~application upon adoption. The Partnership believes third-party reimbursements included~~final settlement of the acquisition, which was paid in the ~~transaction~~first six months of 2019 as shown on the statement of cash flow. This reduced the total purchase price ~~would have~~to $446 million and resulted in ~~a gross up in 2016~~$336 million of property, plant and ~~2017 service revenue~~equipment, $121 million of goodwill and ~~cost of revenues between $300 million and $350 million annually, with no impact~~the remainder being attributable to net ~~income. The Partnership will provide a summary~~liabilities assumed.

Goodwill represents the significant growth potential of the ~~total ASC 606 impact~~terminal due to the multiple pipelines and rail lines which cross the property, the terminal’s position as an aggregation point for liquids growth in the ~~Annual Report~~region for both ocean-going vessels and inland barges, the proximity of the terminal to MPC’s Garyville refinery and other refineries in the region as well as the opportunity to construct an additional dock at the site.

Refining Logistics and Fuels Distribution Acquisition

On February 1, 2018, MPC and MPLX closed on ~~Form 10-K~~an agreement for the ~~year ended December 31, 2017.~~

~~3. Acquisitions~~

~~Joint-Interest Acquisition~~

~~On September 1, 2017, the Partnership entered into a Membership Interests~~dropdown of refining logistics assets and Shares Contributions Agreement (the “September 2017 Contributions Agreement”) with MPLX GP LLC (“MPLX GP”), MPLX Logistics Holdings LLC (“MPLX Logistics”), MPLX Holdings Inc. (“MPLX Holdings”)fuels distribution services to MPLX. MPC contributed these assets and ~~MPC Investment LLC (“MPC Investment”), each a wholly-owned subsidiary of MPC, whereby the Partnership agreed to acquire certain ownership interests~~services in joint venture entities indirectly held by MPC. Pursuant to the September 2017 Contributions Agreement, MPC Investment agreed to contribute: all of the membership interests of Lincoln Pipeline LLC, which holds a 35 percent interest in Illinois Extension Pipeline Company, L.L.C. (“Illinois Extension”); all of the membership interests of MPL Louisiana Holdings LLC, which holds a 40.7 percent interest in LOOP LLC (“LOOP”); a 58.52 percent interest in LOCAP LLC (“LOCAP”); and a 24.51 percent interest in Explorer Pipeline Company (“Explorer”), through a series of intercompany contributions to the Partnershipexchange for ~~an agreed upon purchase price of approximately $420 million~~$4.1 billion in cash and ~~equity consideration valued at approximately $630 million for total consideration of $1.05 billion (collectively, the “Joint-Interest Acquisition”). The~~a fixed number of MPLX common units ~~representing the equity consideration was then determined by dividing the contribution amount by the simple average~~and general partner units of ~~the ten day trading volume weighted average NYSE price of a common unit for the ten trading days ending at market close on August 31, 2017.~~111,611,111 and 2,277,778, respectively. The fair value of the common and general partner units issued as of the acquisition date was ~~approximately $653 million~~$4.3 billion based on the closing common unit price as of ~~September~~February 1, ~~2017,~~2018, as recorded on the Consolidated Statements of Equity, for a total purchase price of ~~$1.07~~$8.4 billion. The equity issued consisted of: (i) ~~13,719,017~~85,610,278 common units to MPLX GP, (ii) ~~3,350,893~~18,176,666 common units to MPLX Logistics Holdings LLC and (iii) ~~1,441,224~~7,824,167 common units to MPLX ~~Holdings. The Partnership~~Holdings Inc. MPLX also issued ~~377,778~~2,277,778 general partner units to MPLX GP in order to maintain its two percent general partner interest (“GP Interest”) in ~~the Partnership.~~

Illinois Extension operates the 168-mile, 24-inch diameter Southern Access Extension (“SAX”) crude oil pipeline from Flanagan, Illinois to Patoka, Illinois, as well as additional tankage and two pump stations. LOOP owns and operates midstream crude oil infrastructure, including a deep water oil port offshore of Louisiana, pipelines and onshore storage facilities. LOOP also manages the operations of LOCAP, an affiliate pipeline system. LOCAP owns and operates a crude oil pipeline and tank facility in St. James, Louisiana, that distributes oil received from LOOP’s storage facilities and other connecting pipelines to nearby refineries and into the mid-continent region of the United States. Explorer owns and operates an approximate 1,830-mile common carrier pipeline that primarily transports gasoline, diesel, diluent and jet fuel from the Gulf Coast refining complex to the Midwest United States. The Partnership accounts for the Joint-Interest Acquisition entities as equity method investments within its L&S segment.

As a transfer between entities under common control, the Partnership recorded the Joint-Interest Acquisition on its Consolidated Balance Sheets at MPC’s historical basis, which included accumulated other comprehensive loss. The Partnership recognizes an accumulated other comprehensive loss on its Consolidated Balance Sheets relating to pension and other post-retirement benefits provided by the LOOP and Explorer joint-interests to their employees. MPLX LP is not a sponsor of these benefit plans. There were no changes to ~~Accumulated other comprehensive loss~~ ~~during the period September 1, 2017 through September 30, 2017.~~

Distributions of cash received from the entities and interests acquired in the Joint-Interest Acquisition related to periods prior to the acquisition will be prorated on a daily basis with MPLX LP retaining the portion of distributions beginning on the closing date. All amounts distributed to MPLX LP related to periods before the acquisition will be paid to MPC. Additionally, MPLX LP has agreed to pay MPC for any distributions of cash from LOOP related to the sale of LOOP’s excess crude oil inventory. Because the future distributions or payments cannot be reasonably quantified, a liability was not recorded in connection with the acquisition. MPLX LP subsequently received distributions related to the third quarter 2017 and recorded a liability to MPC and a corresponding decrease to the general partner’s equity for $13 million, as shown on the Consolidated Statements of Equity.

There is no income associated with the Joint-Interest Acquisition included in the Consolidated Statements of Income since the September 1, 2017 acquisition date, as the Partnership accounts for these investments in arrears using the most recently available information. The Partnership’s investment balance at September 30, 2017 related to the acquired interests is approximately $645 million and reported under the caption ~~Equity method investments~~ ~~on the Consolidated Balance Sheets.~~MPLX. MPC agreed to waive approximately two-thirds of the third quarter 2017 distributions on the common units issued in connection with the Joint-Interest Acquisition. As a result of this waiver, MPC did not receive approximately two-thirds of the distributions or IDRs that would have otherwise accrued on such common units with respect to the third quarter 2017 distributions. The value of these waived distributions was $10 million.

~~Acquisition of Hardin Street Transportation LLC, Woodhaven Cavern LLC and MPLX Terminals LLC~~

MPC contributed the assets of HST, WHC and MPLXT to newly created and wholly-owned subsidiaries and entered into commercial agreements related to services provided by these new entities to MPC on January 1, 2015 for HST and WHC and April 1, 2016 for MPLXT. Pursuant to a Membership Interests Contributions Agreement entered into on March 1, 2017 by the Partnership with MPLX GP, MPLX Logistics, MPLX Holdings and MPC Investment, each a wholly-owned subsidiary of MPC, MPC Investment agreed to contribute the outstanding membership interests in HST, WHC and MPLXT through a series of intercompany contributions to the Partnership for approximately $1.5 billion in cash and equity consideration valued at approximately $504 million (the “Transaction”). The number of common units representing the equity consideration was determined by dividing the contribution amount by the simple average of the ten day trailing volume weighted average NYSE price of a common unit for the ten trading days ending at market close on February 28, 2017. The fair value of the common and general partner units issued was approximately $503 million, as recorded on the Consolidated Statements of Equity, and consisted of (i) 9,197,900 common units to MPLX GP, (ii) 2,630,427 common units to MPLX Logistics and (iii) 1,132,049 common units to MPLX Holdings. The Partnership also issued 264,497 general partner units to MPLX GP in order to maintain its two percent GP Interest in the Partnership. MPC agreed to waive two-thirdsone-third of the first quarter ~~2017~~2018 distributions on the common units issued in connection with the Transaction. As a result of this waiver, MPC did not receive two-thirds of the general partner distributions or IDRs that would have otherwise accrued on such common units with respect to the first quarter 2017 distributions. The value of these waived distributions was $6 million.

HST owns and operates various private crude oil and refined product pipeline systems and associated storage tanks. As of the acquisition date, these pipeline systems consisted of 174 miles of crude oil pipelines and 430 miles of refined products pipelines. WHC owns and operates nine butane and propane storage caverns located in Michigan with approximately 1.8 million barrels of NGL storage capacity. As of the acquisition date, MPLXT owned and operated 59 terminals for the receipt, storage, blending, additization, handling and redelivery of refined petroleum products. Additionally, MPLXT operated one leased terminal and had partial ownership interest in two terminals. Collectively, these 62 terminals have a combined shell capacity of approximately 23.6 million barrels. The terminal facilities are located primarily in the Midwest, Gulf Coast and Southeast regions of the United States. The Partnership accounts for these businesses within its L&S segment.

The Partnership retrospectively adjusted the historical financial results for all periods to give effect to the acquisition of HST and WHC effective January 1, 2015, and the acquisition of MPLXT effective April 1, 2016, as required for transactions between entities under common control. Prior to these dates, these entities were not considered businesses and, therefore, there are no financial results from which to recast.

The following tables present the Partnership’s previously reported unaudited Consolidated Statements of Income for the three and nine months ended September 30, 2016, retrospectively adjusted for the acquisition of HST, WHC and MPLXT:

Three Months Ended September 30, 2016
(In millions, except per unit data) MPLX LP (Previously Reported) HST/WHC MPLXT
Eliminations⁽¹⁾
MPLX LP (Currently Reported)
Revenues and other income:
Service revenue $ 250
$ —
$ —
$ —
$ 250
Service revenue - related parties 153
28
72
—
253
Rental income 77
—
—
—
77
Rental income - related parties 29
13
26
—
68
Product sales 157
—
—
—
157
Product sales - related parties 2
—
—
—
2
Income from equity method investments 6
—
—
—
6
Gain on sale of assets 1
—
—
—
1
Other income 2
—
—
—
2
Other income - related parties 26
—
—
(4 ) 22
Total revenues and other income 703
41
98
(4 ) 838
Costs and expenses:
Cost of revenues (excludes items below) 90
10
22
—
122
Purchased product costs 117
—
—
—
117
Rental cost of sales 11
2
—
—
13
Rental cost of sales - related parties —
1
—
(1 ) —
Purchases - related parties 84
4
24
(3 ) 109
Depreciation and amortization 138
4
9
—
151
General and administrative expenses 46
2
8
—
56
Other taxes 10
—
2
—
12
Total costs and expenses 496
23
65
(4 ) 580
Income from operations 207
18
33
—
258
Interest expense (net of amounts capitalized) 51
—
—
—
51
Other financial costs 13
—
—
—
13
Income before income taxes 143
18
33
—
194
Net income 143
18
33
—
194
Less: Net income attributable to noncontrolling interests 2
—
—
—
2
Less: Net income attributable to Predecessor —
18
33
—
51
Net income attributable to MPLX LP 141
—
—
—
141
Less: Preferred unit distributions 16
—
—
—
16
Less: General partner’s interest in net income attributable to MPLX LP 51
—
—
—
51
Limited partners’ interest in net income attributable to MPLX LP $ 74
$ —
$ —
$ —
$ 74


~~(1)~~	~~Represents intercompany transactions eliminated during the consolidation process, in accordance with GAAP.~~

Nine Months Ended September 30, 2016
(In millions, except per unit data) MPLX LP (Previously Reported) HST/WHC MPLXT
Eliminations⁽¹⁾
MPLX LP (Currently Reported)
Revenues and other income:
Service revenue $ 712
$ —
$ —
$ —
$ 712
Service revenue - related parties 448
82
146
—
676
Rental income 218
—
—
—
218
Rental income - related parties 84
36
52
—
172
Product sales 394
—
—
—
394
Product sales - related parties 8
—
—
—
8
Loss from equity method investments (72 ) —
—
—
(72 )
Gain on sale of assets 1
—
—
—
1
Other income 5
—
—
—
5
Other income - related parties 78
—
—
(11 ) 67
Total revenues and other income 1,876
118
198
(11 ) 2,181
Costs and expenses:
Cost of revenues (excludes items below) 263
24
42
—
329
Purchased product costs 310
—
—
—
310
Rental cost of sales 39
3
—
—
42
Rental cost of sales - related parties —
2
—
(1 ) 1
Purchases - related parties 238
13
45
(10 ) 286
Depreciation and amortization 407
12
19
—
438
Impairment expense 130
—
—
—
130
General and administrative expenses 147
5
20
—
172
Other taxes 32
2
3
—
37
Total costs and expenses 1,566
61
129
(11 ) 1,745
Income from operations 310
57
69
—
436
Related party interest and other financial income 1
—
—
—
1
Interest expense (net of amounts capitalized) 158
—
—
—
158
Other financial costs 37
—
—
—
37
Income before income taxes 114
57
69
—
240
Benefit for income taxes (12 ) —
—
—
(12 )
Net income 126
57
69
—
252
Less: Net income attributable to noncontrolling interests 3
—
—
—
3
Less: Net income attributable to Predecessor 23
57
69
—
149
Net income attributable to MPLX LP 100
—
—
—
100
Less: Preferred unit distributions 25
—
—
—
25
Less: General partner’s interest in net income attributable to MPLX LP 136
—
—
—
136
Limited partners’ interest in net loss attributable to MPLX LP $ (61 )
$ —

$ —

$ —

$ (61 )


~~(1)~~	~~Represents intercompany transactions eliminated during the consolidation process, in accordance with GAAP.~~

~~The following table presents the Partnership’s previously reported unaudited Consolidated Statements of Cash Flows, retrospectively adjusted for the acquisition of HST, WHC and MPLXT:~~

Nine Months Ended September 30, 2016
(In millions) MPLX LP (Previously Reported) HST/WHC MPLXT MPLX LP (Currently Reported)
Increase (decrease) in cash and cash equivalents
Operating activities:
Net income $ 126
$ 57
$ 69
$ 252
Adjustments to reconcile net income to net cash provided by (used in) operating activities:

Amortization of deferred financing costs 34
—
—
34
Depreciation and amortization 407
12
19
438
Impairment expense 130
—
—
130
Deferred income taxes (16 ) —
—
(16 )
Asset retirement expenditures (3 ) (1 ) —
(4 )
Gain on disposal of assets (1 ) —
—
(1 )
Loss from equity method investments 72
—
—
72
Distributions from unconsolidated affiliates 111
—
—
111
Changes in:
Current receivables (44 ) 1
—
(43 )
Inventories (4 ) —
—
(4 )
Fair value of derivatives 28
—
—
28
Current accounts payable and accrued liabilities 59
(1 ) 6
64
Receivables from / liabilities to related parties 15
3
(122 ) (104 )
All other, net 18
2
(2 ) 18
Net cash provided by (used in) operating activities 932
73
(30 ) 975
Investing activities:
Additions to property, plant and equipment (874 ) (36 ) (33 ) (943 )
Investments - net related party loans 77
(37 ) 63
103
Investments in unconsolidated affiliates (56 ) —
—
(56 )
All other, net 4
—
—
4
Net cash (used in) provided by investing activities (849 ) (73 ) 30
(892 )
Financing activities:
Long-term debt - borrowings 434
—
—
434
- repayments (1,312 ) —
—
(1,312 )
Related party debt - borrowings 2,215
—
—
2,215
- repayments (2,223 ) —
—
(2,223 )
Net proceeds from equity offerings 510
—
—
510
Issuance of redeemable preferred units 984
—
—
984
Distributions to preferred unitholders (9 ) —
—
(9 )
Distributions to unitholders and general partner (612 ) —
—
(612 )
Distributions to noncontrolling interests (3 ) —
—
(3 )
Contributions from noncontrolling interests 4
—
—
4
Consideration payment to Class B unitholders (25 ) —
—
(25 )
All other, net (2 ) —
—
(2 )
Contribution from MPC 225
—
—
225
Distributions to MPC from Predecessor (104 ) —
—
(104 )
Net cash provided by financing activities 82
—
—
82
Net increase in cash and cash equivalents 165
—
—
165
Cash and cash equivalents at beginning of period 43
—
—
43
Cash and cash equivalents at end of period $ 208
$ —
$ —
$ 208

~~Acquisition of Ozark Pipeline~~

On March 1, 2017, the Partnership acquired the Ozark pipeline from Enbridge Pipelines (Ozark) LLC for approximately $219 million, including purchase price adjustments made in the second quarter of 2017. Based on the final fair value estimates of assets acquired and liabilities assumed at the acquisition date, the purchase price was primarily allocated to property, plant and equipment. The Ozark pipeline is a 433-mile, 22-inch crude oil pipeline originating in Cushing, Oklahoma, and terminating in Wood River, Illinois, capable of transporting approximately 230 mbpd. The Partnership accounts for the Ozark pipeline within its L&S segment.

~~The amounts of revenue and income from operations associated with the acquisition included in the Consolidated Statements of Income, since the March 1, 2017 acquisition date, are as follows:~~

(In millions) Three Months Ended September 30, 2017 Seven Months Ended September 30, 2017
Revenues and other income $ 19
$ 45
Income from operations 6
17

~~Assuming the acquisition of the Ozark pipeline had occurred on January 1, 2016, the consolidated pro forma results would not have been materially different from reported results.~~

~~MarEn Bakken~~

On February 15, 2017, the Partnership closed on a joint venture, MarEn Bakken Company, LLC (“MarEn Bakken”), with Enbridge Energy Partners L.P. in which MPLX LP acquired a partial, indirect interest in the Dakota Access Pipeline and Energy Transfer Crude Oil Company Pipeline projects, collectively referred to as the Bakken Pipeline system, from Energy Transfer Partners, L.P. and Sunoco Logistics Partners, L.P. The Partnership contributed $500 million of the $2.0 billion purchase price paid by MarEn Bakken to acquire a 36.75 percent indirect interest in the Bakken Pipeline system. The Partnership holds, through a subsidiary, a 25 percent interest in MarEn Bakken, which equates to a 9.1875 percent indirect interest in the Bakken Pipeline system.

The Partnership accounts for its investment in MarEn Bakken as an equity method investment and bases the equity method accounting for this joint venture in arrears using the most recently available information. The Partnership’s investment balance at September 30, 2017 is approximately $520 million and reported under the caption ~~Equity method investments~~ on the Consolidated Balance Sheets. In connection with the Partnership’s acquisition of a partial, indirect equity interest in the Bakken Pipeline system, MPC agreed to waive its right to receive incentive distributions of $1.6 million per quarter for twelve consecutive quarters, beginning with distributions declared in the first quarter of 2017 and paid to MPC in the second quarter of 2017, which was prorated to $0.8 million from the acquisition date.

~~Acquisition of Hardin Street Marine LLC~~

On March 14, 2016, the Partnership entered into a Membership Interests Contribution Agreement (the “Contribution Agreement”) with MPLX GP, MPLX Logistics and MPC Investment, each a wholly-owned subsidiary of MPC, related to the acquisition of HSM, MPC’s inland marine business, from MPC. Pursuant to the Contribution Agreement, the transaction was valued at $600 million consisting of a fixed number of common units and general partner units of 22,534,002 and 459,878, respectively. The general partner units maintain MPC’s two percent GP Interest in the Partnership. The acquisition closed on March 31, 2016 and the fair value of the common units and general partner units issued was $669 million and $14 million, respectively, as recorded on the Consolidated Statements of Equity. MPC agreed to waive distributions in the first quarter of 2016 on common units issued in connection with this transaction. As a result of this waiver, MPC did not receive ~~general partner~~$23.7 million of the distributions ~~or IDRs~~ that would have otherwise accrued on such common units with respect to the first quarter ~~2016 distributions. The value~~ of 2018. Immediately following this transaction, the GP Interest was converted into a non-economic general partner interest.

MPLX recorded this transaction on a historical basis as required for transactions between entities under common control. No effect was given to the prior periods as these ~~waived distributions~~entities were not considered businesses prior to the February 1, 2018 dropdown. In connection with the dropdown, approximately $830 million of net property, plant and equipment was ~~$15 million.~~

~~The inland marine business, comprised~~recorded in addition to $85 million and $130 million of ~~18 tow boats~~goodwill allocated to MPLX Refining Logistics LLC (“Refining Logistics”) and ~~219 owned~~MPLX Fuels Distribution LLC (“Fuels Distribution”), respectively. Both the refining logistics assets and ~~leased barges as of~~ the ~~acquisition date, which transport light products, heavy oils, crude oil, renewable~~ fuels ~~chemicals and feedstocks in the Midwest and Gulf Coast regions of the United States,~~distribution services are accounted for ~~nearly 60 percent of~~within the ~~total volumes MPC shipped by inland marine vessels as of March 31, 2016. The Partnership accounts for HSM within its~~ L&S segment.

As of the transaction date, the Refining Logistics assets included 619 tanks with approximately 56 million barrels of storage capacity (crude, finished products and intermediates), 32 rail and truck racks, 18 docks, and gasoline blenders. These assets generate revenue through storage services agreements with MPC. Refining Logistics provides certain services to MPC related to the receipt, storage, throughput, custody and delivery of petroleum products in and through certain storage and logistical facilities and assets associated with MPC’s refineries.

Fuels Distribution, which is a wholly-owned subsidiary of MPLXT, generates revenue through a fuels distribution services agreement with MPC. Fuels Distribution is structured to provide a broad range of scheduling and marketing services as MPC’s agent.

1613

Table of Contents

4. Investments and Noncontrolling Interests

The following table presents MPLX’s equity method investments at the dates indicated:



	Ownership as of	Carrying value at
	June 30,	June 30,		December 31,
(In millions, except ownership percentages)	2019	2019		2018
Explorer Pipeline Company	25%	$	83	$	90
Illinois Extension Pipeline Company, L.L.C.	35%	278		275
LOCAP LLC	59%	27		27
LOOP LLC	41%	234		226
MarEn Bakken Company LLC	25%	487		498
Centrahoma Processing LLC	40%	155		160
MarkWest EMG Jefferson Dry Gas Gathering Company, L.L.C.	67%	269		236
MarkWest Utica EMG, L.L.C.	56%	2,026		2,039
Sherwood Midstream LLC	50%	491		366
Sherwood Midstream Holdings LLC	56%	162		157
Other		197		100
Total		$	4,409	$	4,174

Summarized financial information for ~~the Partnership’s~~MPLX’s equity method investments for the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2019 and ~~2016~~2018 is as follows:


	Nine Months Ended September 30, 2017								Six Months Ended June 30, 2019
(In millions)	MarkWest Utica EMG		Other VIEs		Non-VIEs		Total		VIEs		Non-VIEs⁽²⁾		Total
Revenues and other income	$	137	$	49	$	178	$	364	$	282	$	608	$	890
Costs and expenses	72		29		115		216		146		236		382
Income from operations	65		20		63		148		136		372		508
Net income	65		19		28		112		117		339		456
Income from equity method investments⁽¹⁾	6		7		16		29		$	48	$	95	$	143


	Nine Months Ended September 30, 2016										Six Months Ended June 30, 2018
(In millions)	MarkWest Utica EMG		Other VIEs⁽²⁾			Non-VIEs		Total			VIEs		Non-VIEs		Total
Revenues and other income	$	165	$	13		$	108	$	286		$	209	$	589	$	798
Costs and expenses	70		107			80		257			127		305		432
Income (loss) from operations	95		(94		)	28		29
Net income (loss)	94		(94		)	28		28
Income (loss) from equity method investments⁽¹⁾	10		(88		)	6		(72		)
Income from operations											82		284		366
Net income											81		256		337
Income from equity method investments⁽¹⁾											$	26	$	85	$	111


(1)	“Income ~~(loss)~~ from equity method investments” includes the impact of any basis differential amortization or accretion.


(2)	Includes ~~an impairment charge~~three months of ~~$89 million for the nine months ended September 30, 2016~~activity related to ~~the Partnership’s~~Johnson County Terminal, we sold our investment in ~~Ohio Condensate Company, L.L.C., which does not appear separately in~~ this ~~table.~~joint venture on April 1, 2019.

Summarized balance sheet information for ~~the Partnership’s~~MPLX’s equity method investments as of ~~September~~June 30, ~~2017~~2019 and December 31, ~~2016~~2018 is as follows:


	September 30, 2017								June 30, 2019
(In millions)	MarkWest Utica EMG⁽¹⁾		Other VIEs		Non-VIEs		Total		VIEs		Non-VIEs		Total
Current assets	$	72	$	47	$	379	$	498	$	200	$	357	$	557
Noncurrent assets	2,092		878		4,614		7,584		4,597		4,656		9,253
Current liabilities	37		55		492		584		163		225		388
Noncurrent liabilities	2		12		562		576		$	233	$	845	$	1,078

Table of Contents

December 31, 2016
(In millions)
MarkWest Utica EMG⁽¹⁾
Other VIEs Non-VIEs Total
Current assets $ 45
$ 2
$ 40
$ 87
Noncurrent assets 2,173
132
390
2,695
Current liabilities 30
4
26
60
Noncurrent liabilities 2
13
—
15


~~(1)~~	MarkWest Utica EMG, L.L.C.’s (“MarkWest Utica EMG”) noncurrent assets include its investment in its subsidiary Ohio Gathering Company, L.L.C. (“Ohio Gathering”), which does not appear elsewhere in this table. The investment was $794 million as of September 30, 2017 and December 31, 2016.



	December 31, 2018
(In millions)	VIEs		Non-VIEs		Total
Current assets	$	235	$	379	$	614
Noncurrent assets	3,535		4,715		8,250
Current liabilities	155		246		401
Noncurrent liabilities	$	189	$	841	$	1,030

As of ~~September~~June 30, ~~2017~~2019 and December 31, ~~2016,~~2018, the carrying value of ~~the Partnership’s~~MPLX’s equity method investments exceeded the underlying net assets of its investees by ~~$1.1 billion.~~approximately $1 billion for the G&P segment. As of June 30, 2019 and December 31, 2018, the carrying value of MPLX’s equity method investments in the L&S segment exceeded the underlying net assets of its investees by $113 million and $114 million, respectively. This basis difference is being amortized ~~or accreted~~ into net income over the remaining estimated useful lives of the underlying ~~net~~ assets, except for $459 million and $39 million of excess related to ~~goodwill.~~goodwill for the G&P and L&S segments, respectively.

MarkWest Utica EMG

Effective January 1, 2012, MarkWest Utica Operating Company, LLC (“Utica Operating”), a wholly-owned and consolidated subsidiary of MarkWest Energy Partners, L.P. (“MarkWest”), and EMG Utica, LLC (“EMG Utica” and together with Utica Operating, the “Members”) executed agreements to form a joint venture, MarkWest Utica EMG, to develop significant natural gas gathering, processing and NGL fractionation, transportation and marketing infrastructure in eastern Ohio. The related limited liability company agreement has been amended from time to time (the limited liability company agreement currently in effect is referred to as the “Amended LLC Agreement”). The aggregate funding commitment of EMG Utica was $950 million. Thereafter, Utica Operating was required to fund, as needed, 100 percent of future capital for L.L.C. (“MarkWest Utica EMG until the aggregate capital that had been contributed by the Members reached $2.0 billion, which occurred prior to the MarkWest Merger. Until such time as the investment balances of Utica Operating and EMG Utica are in the ratio of 70 percent and 30 percent, respectively (such time being referred to as the “Second Equalization Date”EMG”), EMG Utica will have the right, but not the obligation, to fund up to 10 percent of each capital call for MarkWest Utica EMG, and Utica Operating will be required to fund all remaining capital not elected to be funded by EMG Utica. After the Second Equalization Date, Utica Operating and EMG Utica will have the right, but not the obligation, to fund their pro rata portion (based on their respective investment balances) of any additional required capital and may also fund additional capital that the other party elects not to fund. As of September 30, 2017, EMG Utica has contributed approximately $1.2 billion and Utica Operating has contributed approximately $1.5 billion to MarkWest Utica EMG.

Under the Amended LLC Agreement, prior to December 31, 2016, EMG Utica’s investment balance was increased by a quarterly special non-cash allocation of income (“Preference Amount”), calculated based upon the amount of capital contributed by EMG Utica in excess of $500 million. After December 31, 2016, no Preference Amount will accrue to EMG Utica’s investment balance. EMG Utica received a Preference Amount totaling approximately $4 million and $12 million for the three and nine months ended September 30, 2016, respectively.

Under the Amended LLC Agreement, after December 31, 2016, cash generated by MarkWest Utica EMG that is available for distribution will be allocated to the Members in proportion to their respective investment balances. As of September 30, 2017, Utica Operating’s investment balance in MarkWest Utica EMG was approximately 56 percent.

~~MarkWest Utica EMG~~ is deemed to be a VIE. ~~Utica Operating~~Neither MPLX nor any of its subsidiaries is ~~not~~ deemed to be the primary beneficiary due to EMG ~~Utica’s~~Utica, L.L.C.’s voting rights on significant matters. ~~The Partnership’s investment in MarkWest Utica EMG’s, which was $2.2 billion at September 30, 2017 and December 31, 2016, is reported under the caption~~ ~~Equity method investments~~ ~~on the Consolidated Balance Sheets. The Partnership’s~~MPLX’s maximum exposure to loss as a result of its involvement with MarkWest Utica EMG includes its equity investment, any additional capital contribution commitments and any operating expenses incurred by the subsidiary operator in excess of its compensation received for the performance of the operating services. MarkWest Utica EMG holds an investment in its subsidiary, Ohio Gathering Company, L.L.C. (“Ohio Gathering”), which does not appear elsewhere in the tables above. The ~~Partnership~~investment was $788 million and $750 million as of June 30, 2019 and December 31, 2018, respectively. MPLX did not provide any financial support to MarkWest Utica EMG that it was not contractually obligated to provide during the ~~three and nine~~six months ended ~~September~~June 30, 2017 and 2016, respectively. The Partnership receives management fee revenue for engineering and construction and administrative services for operating MarkWest Utica EMG, and is also reimbursed for personnel services (“Operational Service revenue”). Operational Service revenue is reported as ~~Other income-related parties~~ in the Consolidated Statements of Income. The amount of Operational Service revenue related to MarkWest Utica EMG for the three and nine months ended September 30, 2017, totaled $5 million and $13 million, respectively. The amount of Operational Service revenue related to MarkWest Utica EMG for the three and nine months ended September 30, 2016, totaled approximately $5 million and $12 million, respectively.2019.

Ohio Gathering

Ohio Gathering is a subsidiary of MarkWest Utica EMG and is engaged in providing natural gas gathering services in the Utica Shale in eastern Ohio. Ohio Gathering is a joint venture between MarkWest Utica EMG and Summit Midstream Partners, LLC. As of ~~September~~June 30, ~~2017, the Partnership~~2019, MPLX has an approximate 34 percent indirect ownership interest in Ohio Gathering. As Ohio Gathering is a subsidiary of MarkWest Utica EMG, which is accounted for as an equity method investment, ~~the Partnership~~MPLX reports its portion of Ohio Gathering’s net assets as a component of its investment in MarkWest Utica EMG. ~~The Partnership receives Operational Service revenue for operating Ohio Gathering which is reported as~~ ~~Other income-related parties~~ in the Consolidated Statements of Income. The amount of Operational Service revenue related to Ohio Gathering for the three and nine months ended September 30, 2017, totaled $4 million and $12 million, respectively. The amount of Operational Service revenue related to Ohio Gathering for the three and nine months ended September 30, 2016, totaled approximately $5 million and $12 million, respectively.

Sherwood Midstream

Effective January 1, 2017, MarkWest Liberty Midstream & Resources, L.L.C. (“MarkWest Liberty Midstream”), a wholly-owned and consolidated subsidiary of MarkWest, and Antero Midstream Partners, LP (“Antero Midstream”) formed a joint venture, Sherwood Midstream LLC (“Sherwood Midstream”), is deemed to ~~support~~be a VIE. Neither MPLX nor any of its subsidiaries is deemed to be the primary beneficiary of Sherwood Midstream due to Antero ~~Resources Corporation’s development~~Midstream Partners, LP’s voting rights on significant matters. MPLX’s maximum exposure to loss as a result of its involvement with Sherwood Midstream includes its equity investment, any additional capital contribution commitments and any operating expenses incurred by the subsidiary operator in excess of its compensation received for the ~~Marcellus Shale. MarkWest Liberty Midstream has a 50 percent ownership interest in Sherwood Midstream. Pursuant to the terms~~performance of the ~~related limited liability company agreement (the “LLC Agreement”), MarkWest Liberty~~operating services. MPLX did not provide any financial support to Sherwood Midstream ~~contributed assets then under construction with a fair value of approximately $134 million and cash of approximately $20 million. Antero~~that it was not contractually obligated to provide during the six months ended June 30, 2019.

Sherwood Midstream ~~made~~also has an ~~initial capital contribution of approximately $154 million.~~

~~Also effective January 1, 2017, MarkWest Liberty Midstream converted all of its ownership interests~~investment in MarkWest Ohio Fractionation Company, L.L.C. (“Ohio Fractionation”), which is a ~~previously wholly-owned subsidiary, to Class A Interests and amended its LLC Agreement to create Class B-3 Interests, which were sold to~~VIE, that it accounts for as an equity method investment as Sherwood Midstream ~~for $126 million in cash. The Class B-3 Interests provide~~does not control Ohio Fractionation. During the three months ended March 31, 2019, Sherwood Midstream ~~with~~acquired the right to fractionation revenue and the obligation to pay expenses related to 20 mbpd of capacity in the Hopedale ~~3 fractionator. Sherwood Midstream accounts for its investment in Ohio Fractionation, which~~4 fractionator; this transaction is ~~a VIE,~~shown as ~~an equity method investment as Sherwood Midstream does not control Ohio Fractionation.~~“Contributions from noncontrolling interests” on the Consolidated Statements of Cash Flows. MarkWest Liberty Midstream & Resources, L.L.C (“MarkWest Liberty Midstream”), a wholly-owned and consolidated subsidiary, has been deemed to be the primary beneficiary of Ohio Fractionation because it has control over the decisions that could significantly impact its financial performance, and as a result, consolidates Ohio Fractionation. The carrying amounts of assets and liabilities included in the Partnership’s Consolidated Balance Sheets pertaining to Ohio Fractionation at September 30, 2017, were current assets of $51 million, non-current assets of $406 million and current liabilities of $26 million. The creditors of Ohio Fractionation do not have recourse to MPLX LP’s general credit through guarantees or other financial arrangements. The assets of Ohio Fractionation are the property of Ohio Fractionation and cannot be used to satisfy the obligations of MPLX LP. Sherwood Midstream’s interests are reflected in ~~Net~~“Net income attributable to noncontrolling ~~interests~~ ininterests” on the Consolidated Statements of Income and ~~Noncontrolling interests~~ ~~in the Consolidated Balance Sheets.~~

~~Under the LLC Agreement, cash generated by Sherwood Midstream that is available for distribution will be allocated to the members in proportion to their respective investment balances.~~

Sherwood Midstream is deemed to be a VIE. MarkWest Liberty Midstream is not deemed to be the primary beneficiary, due to Antero Midstream’s voting rights on significant matters. The Partnership’s investment in Sherwood Midstream, which was approximately $220 million at September 30, 2017, is reported under the caption ~~Equity method investments~~“Noncontrolling interests” on the Consolidated Balance Sheets. ~~The Partnership’s maximum exposure to loss as a result~~

Table of its involvement with Sherwood Midstream includes its equity investment, any additional capital contribution commitments and any operating expenses incurred by the subsidiary operator in excess of its compensation received for the performance of the operating services. The Partnership did not provide any financial support to Sherwood Midstream that it was not contractually obligated to provide during the nine months ended September 30, 2017. The Partnership receives Operational Service revenue for operating Sherwood Midstream. The amount of Operational Service revenue related to Sherwood Midstream for the three and nine months ended September 30, 2017, totaled approximately $2 million and $6 million, respectively, and is reported as ~~Other income-related parties~~ ~~in the Consolidated Statements of Income.~~Contents

Sherwood Midstream Holdings

~~Effective January 1, 2017, MarkWest Liberty Midstream and Sherwood Midstream formed a joint venture,~~MPLX accounts for Sherwood Midstream Holdings LLC (“Sherwood Midstream Holdings”), for the purpose of owning, operating and maintaining all of the shared assets that support the operations of the gas plants and other assets owned by Sherwood Midstream and the gas plants and deethanization facilities owned by MarkWest Liberty Midstream. MarkWest Liberty Midstream initially contributed certain real property, equipment and facilities with a fair value of approximately $209 million to Sherwood Midstream Holdings in exchange for a 79 percent initial ownership interest. Sherwood Midstream contributed cash of approximately $44 million to Sherwood Midstream Holdings in exchange for a 21 percent ownership interest. During the second quarter ended June 30, 2017, true-ups to the initial contributions were finalized. MarkWest Liberty Midstream contributed certain additional real property, equipment and facilities with a fair value of approximately $10 million to Sherwood Midstream Holdings and Sherwood Midstream contributed cash of approximately $4 million to Sherwood Midstream Holdings. Collectively, the real property, equipment, facilities and cash initially contributed, or that may be subsequently constructed by or contributed, to Sherwood Midstream Holdings are referred to as the “Shared Assets.” The net book value of the contributed assets was approximately $203 million. The contribution was determined to be an in-substance sale of real estate. As such, the Partnership only recognized a gain for the portion attributable to Antero Midstream’s indirect interest of approximately $2 million, included in ~~Gain on sale of assets~~ in the Consolidated Statements of Income. MarkWest Liberty Midstream’s portion of the gain attributable to its direct and indirect interests of approximately $14 million is included in its investment in Sherwood

~~Midstream Holdings and is reported under the caption~~ ~~Equity method investments~~ ~~on the Consolidated Balance Sheets. In connection with the initial contributions, MarkWest Liberty Midstream received a special distribution of approximately $45 million.~~

MarkWest Liberty Midstream’s and Sherwood Midstream’s ownership interests in Sherwood Midstream Holdings will fluctuate over time. As new Shared Assets are constructed, the members will make additional capital contributions to Sherwood Midstream Holdings. The amount that each member must contribute will be based on the expected utilization of the Shared Assets, as defined in the LLC Agreement. Pursuant to the terms of the LLC Agreement, MarkWest Liberty Midstream will serve as the operator for Sherwood Midstream Holdings.

~~The Partnership accounts for Sherwood Midstream Holdings,~~ which is a VIE, as an equity method investment as Sherwood Midstream is considered to be the general partner and controls all decisions. ~~The Partnership’s investment~~During the three months ended March 31, 2018, MarkWest Liberty Midstream sold to Sherwood Midstream six percent of its equity ownership in Sherwood Midstream Holdings ~~which was approximately $163 million at September 30, 2017, is reported under the caption~~ ~~Equity method investments~~ ~~on the Consolidated Balance Sheets. The Partnership’s~~for $15 million. MPLX’s maximum exposure to loss as a result of its involvement with Sherwood Midstream Holdings includes its equity investment, any additional capital contribution commitments and any operating expenses incurred by the subsidiary operator in excess of its compensation received for the performance of the operating services. ~~The Partnership~~MPLX did not provide any financial support to Sherwood Midstream Holdings that it was not contractually obligated to provide during the ~~nine~~six months ended ~~September~~June 30, ~~2017.~~2019.

Sherwood Midstream has been deemed the primary beneficiary of Sherwood Midstream Holdings due to its controlling financial interest through its authority to manage the joint venture. As a result, Sherwood Midstream consolidates Sherwood Midstream Holdings. Therefore, ~~the Partnership~~MPLX also reports its portion of Sherwood Midstream Holdings’ net assets as a component of its investment in Sherwood Midstream. As of ~~September~~June 30, ~~2017, the Partnership~~2019, MPLX has a ~~14.7~~22.2 percent indirect ownership interest in Sherwood Midstream Holdings through Sherwood Midstream.

5. Related Party Agreements and Transactions

~~The Partnership’s~~As of June 30, 2019, MPLX’s material related parties ~~include:~~are:

MPC, which refines, markets and transports crude oil and petroleum ~~products, primarily in the Midwest, Gulf Coast, East Coast and Southeast regions of the United States.~~

~~Centennial Pipeline LLC (“Centennial”), in which MPC has a 50 percent interest as of September 30, 2017. Centennial owns a products pipeline and storage facility.~~

~~Muskegon Pipeline LLC (“Muskegon”), in which MPC has a 60 percent interest as of September 30, 2017. Muskegon owns a common carrier products pipeline.~~products.

MarkWest Utica EMG, in which MPLX LP has a 56 percent interest as of ~~September~~June 30, ~~2017.~~2019. MarkWest Utica EMG is engaged in natural gas processing and NGL fractionation, transportation and marketing in Ohio.

Ohio Gathering, in which MPLX LP has a 34 percent indirect interest as of ~~September~~June 30, ~~2017.~~2019. Ohio Gathering is a subsidiary of MarkWest Utica EMG providing natural gas gathering service in the Utica Shale region of eastern Ohio.

Sherwood Midstream, in which MPLX LP has a 50 percent interest as of ~~September~~June 30, ~~2017.~~2019. Sherwood Midstream supports the development of Antero Resources Corporation’s Marcellus Shale acreage in the rich-gas corridor of West Virginia.

Sherwood Midstream Holdings, in which MPLX LP has ~~an 86~~a 78 percent total direct and indirect interest as of ~~September~~June 30, ~~2017.~~2019. Sherwood Midstream Holdings owns certain infrastructure at the Sherwood Complex that is shared by and supports the operation of both the Sherwood Midstream and MarkWest gas processing plants and ~~deethanization~~de-ethanization facilities.

~~Illinois Extension,~~MarkWest EMG Jefferson Dry Gas Gathering Company, L.L.C. (“Jefferson Dry Gas”), in which MPLX LP has a 3567 percent interest as of ~~September~~June 30, ~~2017. Illinois Extension operates~~2019. Jefferson Dry Gas provides natural dry gas gathering and related services in the ~~SAX crude oil pipeline from Flanagan, Illinois to Patoka, Illinois, as well as additional tankage and two pump stations.~~

LOOP, in which MPLX LP has a 40.7 percent interest as of September 30, 2017. LOOP owns and operates midstream crude oil infrastructure, including a deep water oil port offshore of Louisiana, pipelines, and onshore storage facilities, and manages operations of LOCAP, an affiliate pipeline system.

LOCAP, in which MPLX LP has a 58.52 percent interest as of September 30, 2017. LOCAP owns and operates a crude oil pipeline and tank facility in St. James, Louisiana, that distributes oil received from LOOP’s storage facilities and other connecting pipelines to nearby refineries and into the midcontinentUtica Shale region of ~~the United States.~~Ohio.

Explorer, in which MPLX LP has a 24.51 percent interest as of September 30, 2017. Explorer owns and operates a common carrier pipeline that primarily transports gasoline, diesel, diluent and jet fuel from the Gulf Coast refining complex to the Midwestern United States.

Related Party Agreements

~~The Partnership~~MPLX has various long-term, fee-based commercial agreements with MPC. Under these agreements, ~~the Partnership~~MPLX provides transportation, terminal, fuels distribution, marketing, storage, management, operational and ~~storage~~other services to ~~MPC, and~~MPC. MPC has committed to provide ~~the Partnership~~MPLX with minimum ~~quarterly~~ throughput volumes on crude oil and refined products ~~systems~~systems; fees for storage capacity; a fixed fee for substantially all available capacity for boats and ~~minimum storage volumes of crude oil, refined products~~barges under the marine transportation services agreement; operating and ~~butane.~~

management fees; as well as reimbursements for certain direct and indirect costs. In addition, ~~the Partnership~~MPLX has obligations to MPC for services provided to MPLX by MPC under omnibus and employee services agreements as well as other various agreements.

MPLX is also party to a loan agreement with MPC Investment ~~a wholly-owned subsidiary of MPC.~~LLC (“MPC Investment”) (the “MPC Loan Agreement”). Under the terms of the ~~agreement,~~MPC Loan Agreement, MPC Investment ~~will make~~makes a loan or loans to ~~the Partnership~~MPLX on a revolving basis as requested by ~~the Partnership~~MPLX and as agreed to by MPC Investment. On April 27, 2018, MPLX and MPC Investment inentered into an ~~amount or amounts that do not result~~amendment to the MPC Loan Agreement to increase the borrowing capacity under the MPC Loan Agreement from $500 million to $1 billion in ~~the~~ aggregate principal amount of all loans outstanding ~~exceeding $500 million~~ at any one time. The entire unpaid principal amount of the loan, together with all accrued and unpaid interest and other amounts (if any), shall become due and payable on December 4, ~~2020.~~2020. MPC Investment may demand payment of all or any portion of the outstanding principal amount of the loan, together with all accrued and unpaid interest and other amounts (if any), at any time prior to December 4, ~~2020.~~2020. Borrowings under the loan will bear interest at LIBOR plus 1.50 percent. ~~During~~Activity on the ~~nine months ended September 30, 2017, the Partnership borrowed $829 million and repaid $627 million, resulting~~MPC Loan Agreement was as follows:

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(In millions)	Six Months Ended June 30, 2019			Year Ended December 31, 2018
Borrowings	$	3,066		$	3,962
Average interest rate of borrowings	3.845		%	3.473		%
Repayments	$	3,022		$	4,347
Outstanding balance at end of period⁽¹⁾	$	44		$	—

(1) Included in ~~$202 million outstanding balance at September 30, 2017, which is included in~~ ~~Payables-related parties~~“Current liabilities - related parties” on the Consolidated Balance Sheets. Borrowings were at an average interest rate of 2.721 percent, per annum, for the nine months ended September 30, 2017. During the year ended December 31, 2016, the Partnership borrowed $2.5 billion and repaid $2.5 billion, resulting in no outstanding balance at December 31, 2016. Borrowings were at an average interest rate of 1.939 percent, per annum, for the year ended December 31, 2016. For additional information regarding the Partnership’s commercial and other agreements with MPC, see Item 1. Business in the Annual Report on Form 10-K for the year ended December 31, 2016.

~~The Partnership believes the terms and conditions under its agreements with MPC are generally comparable to those with unrelated parties.~~

~~HST, WHC and MPLXT Agreements~~

As discussed in Note 3, the Partnership acquired HST, WHC and MPLXT on March 1, 2017. HST, WHC and MPLXT have various operating, transportation services, terminal services, storage services and employee services agreements with MPC, which were assumed by the Partnership with the closing of the Transaction.

HST is a party to a transportation services agreement with MPC dated January 1, 2015. Under this agreement, HST provides pipeline transportation of crude oil and refined products, as well as related services, for MPC. MPC pays HST for such services based on contractual rates related to MPC crude oil and refined product deliveries as well as any viscosity surcharges, loading, handling, transfers or other related charges. This agreement is set to expire on December 31, 2026 and automatically renews for two additional renewal terms of four years each unless terminated by either party.

On January 1, 2015, HST entered into various three-year term storage services agreements with MPC. Under the storage services agreements, HST receives a monthly fee from MPC based on a contractual rate per barrel multiplied by the total commitment volume respective to each storage tank. The contractual rate per barrel is subject to an annual review and adjustment for inflation. HST is not obligated to measure volume gains and losses per the terms of these agreements.

On January 1, 2015, WHC entered into a long-term, fee-based storage and services agreement with MPC related to storage at its butane and propane caverns with an initial term of 10 years. Under this storage and services agreement, WHC receives a monthly fee from MPC based on a contractual rate per barrel multiplied by the total commitment volume respective to each storage cavern. The contractual rate per barrel includes utilization of the caverns and related services. The agreement is subject to an annual review and adjustment for inflation.

Under the storage services agreements with both HST and WHC, the Partnership is obligated to make available to MPC, on a firm basis, the available storage capacity at the tank farms and butane and propane caverns and MPC pays the Partnership a per-barrel fee for such storage capacity regardless of whether MPC fully utilizes the available capacity.

MPLXT is a party to a terminal services agreement with MPC, dated March 1, 2017. Under this agreement, MPLXT provides terminal storage for refined petroleum products, as well as related services, for MPC. MPC pays MPLXT monthly for such services based on contractual fees relating to MPC product deliveries as well as any viscosity surcharges, loading, handling, transfers or other related charges. This agreement is set to expire on March 31, 2026 and automatically renews for two additional renewal terms of five years each unless terminated by either party.

The Partnership is party to various employee services agreements with MPC under which the Partnership reimburses MPC for employee benefit expenses, along with the provision of operational and management services, including those in support of HST, WHC and MPLXT.

Related Party ~~Transactions~~Revenue

~~Sales to related parties were as follows:~~

Three Months Ended September 30, Nine Months Ended September 30,
(In millions) 2017 2016 2017 2016
Service revenues
MPC $ 276
$ 253
$ 801
$ 676
Rental income
MPC $ 70
$ 68
$ 207
$ 172
Product sales⁽¹⁾

MPC $ 2
$ 2
$ 6
$ 8

~~(1)~~

There were additional product sales to MPC that net to zero within the consolidated financial statements as the transactions are recorded net due to the terms of the agreements under which such product was sold. For the three and nine months ended September 30, 2017, these sales totaled $63 million and $173 million, respectively. For the three and nine months ended September 30, 2016, these sales totaled $13 million and $25 million, respectively.

Related party sales to MPC consist of crude oil and refined products pipeline transportation services based on ~~regulated~~ tariff ~~rates,~~rates; storage, terminal and fuels distribution services based on contracted ~~rates~~rates; and marine transportation services. Related party sales to MPC also consist of revenue related to volume deficiency credits.

MPLX also has operating agreements with MPC under which it receives a fee for operating MPC’s retained pipeline assets and a fixed annual fee for providing oversight and management services ~~provided by HSM.~~required to run the marine business. MPLX also receives management fee revenue for engineering, construction and administrative services for operating certain of its equity method investments.

Revenue received from related parties included on the Consolidated Statements of Income was as follows:



	Three Months Ended June 30,				Six Months Ended June 30,
(In millions)	2019		2018		2019		2018
Service revenues - related parties
MPC	$	620	$	549	$	1,198	$	1,020
Rental income - related parties
MPC	158		190		351		335
Product sales - related parties⁽¹⁾
MPC	14		13		25		17
Other income - related parties
MPC	10		10		20		20
MarkWest Utica EMG	4		4		8		8
Ohio Gathering	5		4		9		8
Sherwood Midstream	3		2		7		5
Jefferson Dry Gas	1		2		3		3
Other	4		2		6		3
Total Other income - related parties	$	27	$	24	$	53	$	47

(1) There were additional product sales to MPC that net to zero within the consolidated financial statements as the transactions are recorded net due to the terms of the agreements under which such product was sold. For the three and six months ended June 30, 2019, these sales totaled $118 million and $204 million, respectively. For the three and six months ended June 30, 2018, these sales totaled $112 million and $191 million, respectively.

Related Party Expenses

MPC provides executive management services and certain general and administrative services to MPLX under the terms of an omnibus agreement (“Omnibus charges”). Omnibus charges included in “Rental cost of sales - related parties” primarily relate to services that support MPLX’s rental operations and maintenance of assets available for rent. Omnibus charges included in “Purchases - related parties” primarily relate to services that support MPLX’s operations and maintenance activities, as well as compensation expenses. Omnibus charges included in “General and administrative expenses” primarily relate to services that support MPLX’s executive management, accounting and human resources activities. MPLX LP also obtains employee services from MPC under employee services agreements (“ESA charges”). ESA charges for personnel directly involved in or supporting operations and maintenance activities related to rental services are classified as “Rental cost of sales - related parties.” ESA charges for personnel directly involved in or supporting operations and maintenance activities related to other services are classified as “Purchases - related parties.” ESA charges for personnel involved in executive management, accounting and

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human resources activities are classified as “General and administrative expenses.” In addition to these agreements, MPLX purchases products from MPC, makes payments to MPC in its capacity as general contractor to MPLX, and has certain rent and lease agreements with MPC.

Expenses incurred from MPC under the omnibus and employee services agreements as well as other purchases from MPC included on the Consolidated Statements of Income are as follows:



	Three Months Ended June 30,				Six Months Ended June 30,
(In millions)	2019		2018		2019		2018
Rental cost of sales - related parties	$	2	$	—	$	5	$	1
Purchases - related parties	239		223		451		400
General and administrative expenses	43		44		93		83
Total	$	284	$	267	$	549	$	484

Some charges incurred under the omnibus and ESA agreements are related to engineering services and are associated with assets under construction. These charges are added to “Property, plant and equipment, net” on the Consolidated Balance Sheets. For the three and six months ended June 30, 2019, these charges totaled $38 million and $79 million, respectively. For the three and six months ended June 30, 2018, these charges totaled $41 million and $63 million, respectively.

Related Party Assets and Liabilities

Assets and liabilities with related parties appearing on the Consolidated Balance Sheets are detailed in the table below. This table identifies the various components of related party assets and liabilities, including those associated with leases (see Note 19 for additional information) and deferred revenue on minimum volume commitments. During the six months ended June 30, 2019 and the year ended December 31, 2018, MPC did not ship its minimum committed volumes on certain pipelines. Under ~~the Partnership’s~~MPLX’s pipeline transportation services agreements, if MPC fails to transport its minimum throughput volumes during any quarter, then MPC will pay ~~the Partnership~~MPLX a deficiency payment equal to the volume of the deficiency multiplied by the tariff rate then in effect. The deficiency amounts are recorded as ~~Deferred revenue-related parties~~.“Current liabilities - related parties.” MPC may then apply the amount of any such deficiency payments as a credit for volumes transported on the applicable pipeline ~~system~~ in excess of its minimum volume commitment ~~during the following four or eight quarters~~in future periods under the terms of the applicable transportation services agreement. ~~The Partnership~~MPLX recognizes related party revenues for the deficiency payments when credits are used for volumes transported in excess of minimum quarterly volume commitments, ~~when~~where it ~~becomes impossible to physically transport volumes necessary to utilize~~is probable the ~~credits~~customer will not use the credit in future periods or upon the expiration of the credits. The use or expiration of the credits is a decrease in ~~Deferred revenue-related parties~~.

~~The revenue received from~~“Current liabilities - related ~~parties, included in~~ ~~Other income-related parties~~ ~~on the Consolidated Statements of Income, was as follows:~~

Three Months Ended September 30, Nine Months Ended September 30,
(In millions) 2017 2016 2017 2016
MPC $ 9
$ 10
$ 30
$ 36
MarkWest Utica EMG 5
5
13
12
Ohio Gathering 4
5
12
12
Other 4
2
14
7
Total $ 22
$ 22
$ 69
$ 67

MPC provides executive management services and certain general and administrative services to the Partnership under the terms of an omnibus agreement. Expenses incurred under this agreement are shown in the table below by the income statement line where they were recorded. Charges for services included in ~~Purchases-related parties~~ ~~primarily relate to services that support the Partnership’s operations and maintenance activities, as well as compensation expenses. Charges for services included in~~ ~~General and administrative expenses~~ ~~primarily relate to services that support the Partnership’s executive management, accounting and human resources activities. These charges were as follows:~~

Three Months Ended September 30, Nine Months Ended September 30,
(In millions) 2017 2016 2017 2016
Purchases - related parties $ 17
$ 11
$ 50
$ 29
General and administrative expenses 9
11
28
33
Total $ 26
$ 22
$ 78
$ 62

~~Also under terms of the omnibus agreement, some service costs related to engineering services are associated with assets under construction. These costs added to~~ ~~Property, plant and equipment~~ ~~were as follows:~~

Three Months Ended September 30, Nine Months Ended September 30,
(In millions) 2017 2016 2017 2016
MPC $ 11
$ 14
$ 33
$ 36

MPLX LP obtains employee services from MPC under employee services agreements. Expenses incurred under these agreements are shown in the table below by the income statement line where they were recorded. The costs of personnel directly involved in or supporting operations and maintenance activities are classified as ~~Purchases-related parties. The costs of personnel involved in executive management, accounting and human resources activities are classified as~~ ~~General and administrative~~ ~~expenses in the Consolidated Statements of Income.~~

~~Employee services expenses from related parties were as follows:~~

Three Months Ended September 30, Nine Months Ended September 30,
(In millions) 2017 2016 2017 2016
Purchases - related parties $ 97
$ 98
$ 280
$ 257
General and administrative expenses 25
27
74
75
Total $ 122
$ 125
$ 354
$ 332

~~Receivables from related parties, which for December 31, 2016 included reimbursements from the MarkWest Merger to be provided by MPC for the conversion of Class B units, were as follows:~~

(In millions) September 30, 2017 December 31, 2016
MPC $ 144
$ 242
MarkWest Utica EMG 2
2
Ohio Gathering 2
2
Other 4
1
Total $ 152
$ 247

~~Long-term receivables with related parties, which includes straight-line rental income, were as follows:~~

(In millions) September 30, 2017 December 31, 2016
MPC $ 18
$ 11

~~Payables to related parties were as follows:~~

(In millions) September 30, 2017 December 31, 2016
MPC⁽¹⁾
$ 277
$ 63
MarkWest Utica EMG 30
24
Other 10
—
Total $ 317
$ 87


~~(1)~~	~~Balance includes approximately $202 million related to the loan with MPC Investment as discussed above.~~

~~During the nine months ended September 30, 2017 and the year ended December 31, 2016, MPC did not ship its minimum committed volumes on certain pipeline systems.~~parties.” In addition, capital projects ~~the Partnership~~MPLX is undertaking at the request of MPC are reimbursed in cash and recognized in income over the remaining term of the applicable agreements. ~~The~~ ~~Deferred revenue-related parties~~ ~~balance associated with the minimum volume deficiencies and project reimbursements were as follows:~~

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(In millions) September 30, 2017 December 31, 2016
Minimum volume deficiencies - MPC $ 55
$ 48
Project reimbursements - MPC 27
9
Total $ 82
$ 57



(In millions)	June 30, 2019		December 31, 2018
Current assets - related parties
Receivables - MPC	$	318	$	281
Receivables - Other	10		8
Prepaid - MPC	5		1
Total	333		290
Noncurrent assets - related parties
Long-term receivables - MPC	21		24
Right of use assets - MPC	232		—
Total	253		24
Current liabilities - related parties
Payables - MPC	157		131
Payables - MarkWest Utica EMG	10		51
Payables - Sherwood Midstream	17		16
Payables - Other	—		5
Operating lease liabilities - MPC	1		—
Deferred revenue - Minimum volume deficiencies - MPC	31		44
Deferred revenue - Project reimbursements - MPC	8		7
Total	224		254
Long-term liabilities - related parties
Long-term operating lease liabilities - MPC	231		—
Long-term deferred revenue - Project reimbursements - MPC	40		43
Total	$	271	$	43

Other Related Party Transactions

From time to time, MPLX may also sell to or purchase from related parties, assets and inventory at the lesser of average unit cost or net realizable value. Sales to related parties for the six months ended June 30, 2019 and 2018 were less than $1 million and $3 million, respectively. Purchases from related parties for the six months ended June 30, 2019 and 2018 were less than $1 million and $1 million, respectively.

6. Net ~~Income~~ Income/(Loss) Per Limited Partner Unit

Net ~~income~~ income/(loss) per unit applicable to common ~~limited partner~~ units is computed by dividing ~~the respective limited partners’ interest in~~ net ~~income~~ income/(loss) attributable to MPLX LP less income/(loss) allocated to participating securities by the weighted average number of common units outstanding. ~~Because~~Additional MPLX common units and MPLX Series B preferred units were issued on July 30, 2019 as a result of the ~~Partnership has more than one class~~merger with ANDX as discussed in Note 3. Distributions declared on these newly-issued common and Series B preferred units are a reduction to income available to MPLX common unit holders due to their participation in distributions of ~~participating securities, it uses the two-class method when calculating the net income (loss) per unit applicable to limited partners.~~second quarter income. The classes of participating securities include common units, ~~general partner~~certain equity-based compensation awards, Series A preferred units ~~Preferred~~and Series B preferred units for the three and six months ended June 30, 2019 and common units, certain equity-based compensation awards and ~~IDRs.~~

As discussed in Note 1, the HST, WHC and MPLXT acquisition was a transfer between entities under common control. As entities under common control with MPC, prior periods were retrospectively adjusted to furnish comparative information. Accordingly, the prior period earnings have been allocated to the general partner and do not affect the net income (loss) per unit calculation. The earningsSeries A preferred units for the ~~entities acquired under common control will be included in the net income (loss) per unit calculation prospectively as described above.~~three and six months ended June 30, 2018.

For the three and six months ended ~~September~~June 30, ~~2017, the Partnership~~2019 and 2018, MPLX had dilutive potential common units consisting of certain equity-based compensation awards. For the three months ended September 30, 2016 and the nine months ended September 30, 2017 and 2016, the Partnership had dilutive potential common units consisting of certain equity-based compensation awards and Class B units. Potential common units omitted from the diluted earnings per unit calculation for the three and ~~nine~~six months ended ~~September~~June 30, ~~2017~~2019 and 2018 were less than ~~one~~1 million.

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	Three Months Ended June 30,						Six Months Ended June 30,
(In millions)	2019			2018			2019			2018
Net income attributable to MPLX LP	$	482		$	453		$	985		$	874
Less: Distributions declared on Series A preferred units⁽¹⁾	21			20			41			36
Distributions declared on Series B preferred units⁽¹⁾	21			—			21			—
Limited partners’ distributions declared on MPLX common units (including common units of general partner)⁽¹⁾⁽²⁾	692			497			1,215			964
Undistributed net loss attributable to MPLX LP	$	(252	)	$	(64	)	$	(292	)	$	(126	)

(1) See Note 7 for distribution information.

(2) The three and six months ended June 30, 2019 amounts are net of $12.5 million of waived distributions with respect to units held by MPC and its affiliates.



	Three Months Ended June 30, 2019
(In millions, except per unit data)	Limited Partners’ Common Units			Series A Preferred Units		Series B Preferred Units		Total
Basic and diluted net income attributable to MPLX LP per unit
Net income attributable to MPLX LP:
Distributions declared	$	692		$	21	$	21	$	734
Undistributed net loss attributable to MPLX LP	(252		)	—		—		(252		)
Net income attributable to MPLX LP⁽¹⁾	$	440		$	21	$	21	$	482
Weighted average units outstanding:
Basic⁽²⁾	794			31				825
Diluted⁽²⁾	795			31				826
Net income attributable to MPLX LP per limited partner unit:
Basic	$	0.56
Diluted	$	0.55

(1) Allocation of net income attributable to MPLX LP assumes all earnings for the ~~three~~period had been distributed based on the current period distribution priorities.

(2) The Series B preferred units and ~~nine~~the MPLX common units issued in connection with the merger were not outstanding during the three months ended ~~September~~June 30, ~~2016 were less than one million~~2019. See Notes 3 and ~~approximately eight million, respectively.~~7 for additional information about the treatment of these units.

Three Months Ended September 30, Nine Months Ended September 30,
(In millions) 2017 2016 2017 2016
Net income attributable to MPLX LP $ 216
$ 141
$ 556
$ 100
Less: Limited partners’ distributions declared
on Preferred units⁽¹⁾
16
16
49
25
General partner’s distributions declared (including IDRs)⁽¹⁾
88
54
229
148
Limited partners’ distributions declared on common units⁽¹⁾
232
179
648
507
Undistributed net loss attributable to MPLX LP $ (120 )
$ (108 ) $ (370 ) $ (580 )



	Three Months Ended June 30, 2018
(In millions, except per unit data)	Limited Partners’ Common Units			Series A Preferred Units		Total
Basic and diluted net income attributable to MPLX LP per unit
Net income attributable to MPLX LP:
Distributions declared	$	497		$	20	$	517
Undistributed net loss attributable to MPLX LP	(64		)	—		(64		)
Net income attributable to MPLX LP⁽¹⁾	$	433		$	20	$	453
Weighted average units outstanding:
Basic	794			31		825
Diluted	794			31		825
Net income attributable to MPLX LP per limited partner unit:
Basic	$	0.55
Diluted	$	0.55


~~(1)~~	~~See Note 7 for distribution information.~~

(1) Allocation of net income attributable to MPLX LP assumes all earnings for the period had been distributed based on the current period distribution priorities.

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	Three Months Ended September 30, 2017											Six Months Ended June 30, 2019
(In millions, except per unit data)	General Partner			Limited Partners’ Common Units			Redeemable Preferred Units		Total			Limited Partners’ Common Units			Series A Preferred Units		Series B Preferred Units		Total
Basic and diluted net income attributable to MPLX LP per unit:
Net income attributable to MPLX LP:
Distributions declared (including IDRs)	$	88		$	232		$	16	$	336
Distributions declared												$	1,215		$	41	$	21	$	1,277
Undistributed net loss attributable to MPLX LP	(2		)	(118		)	—		(120		)	(292		)	—		—		(292		)
Net income attributable to MPLX LP⁽¹⁾	$	86		$	114		$	16	$	216		$	923		$	41	$	21	$	985
Weighted average units outstanding:
Basic(2)	8			394			31		433			794			31				825
Diluted(2)	8			395			31		434			795			31				826
Net income attributable to MPLX LP per limited partner unit:
Basic				$	0.29							$	1.16
Diluted				$	0.29							$	1.16

(1) Allocation of net income attributable to MPLX LP assumes all earnings for the period had been distributed based on the current period distribution priorities.

(2) The Series B preferred units and the MPLX common units issued in connection with the merger were not outstanding during the six months ended June 30, 2019. See Notes 3 and 7 for additional information about the treatment of these units.


	Three Months Ended September 30, 2016											Six Months Ended June 30, 2018
(In millions, except per unit data)	General Partner			Limited Partners’ Common Units			Redeemable Preferred Units		Total			Limited Partners’ Common Units			Series A Preferred Units		Total
Basic and diluted net income attributable to MPLX LP per unit:
Net income attributable to MPLX LP:
Distributions declared (including IDRs)	$	54		$	179		$	16	$	249
Distributions declared												$	964		$	36	$	1,000
Undistributed net loss attributable to MPLX LP	(3		)	(105		)	—		(108		)	(126		)	—		(126		)
Net income attributable to MPLX LP⁽¹⁾	$	51		$	74		$	16	$	141		$	838		$	36	$	874
Weighted average units outstanding:
Basic	7			341			31		379			728			31		759
Diluted	7			346			31		384			728			31		759
Net income attributable to MPLX LP per limited partner unit:
Basic				$	0.22							$	1.15
Diluted				$	0.21							$	1.15

(1) Allocation of net income attributable to MPLX LP assumes all earnings for the period had been distributed based on the current period distribution priorities.

Nine Months Ended September 30, 2017
(In millions, except per unit data)
General
Partner

Limited
Partners’
Common
Units
Redeemable Preferred Units Total
Basic and diluted net income attributable to MPLX LP per unit:
Net income attributable to MPLX LP:
Distributions declared (including IDRs) $ 229
$ 648
$ 49
$ 926
Undistributed net loss attributable to MPLX LP (7 ) (363 ) —
(370 )
Net income attributable to MPLX LP⁽¹⁾
$ 222
$ 285
$ 49
$ 556
Weighted average units outstanding:
Basic 8
378
31
417
Diluted 8
381
31
420
Net income attributable to MPLX LP per limited partner unit:
Basic $ 0.75

Diluted $ 0.75

Nine Months Ended September 30, 2016
(In millions, except per unit data)
General
Partner

Limited
Partners’
Common
Units
Redeemable Preferred Units Total
Basic and diluted net loss attributable to MPLX LP per unit:
Net income (loss) attributable to MPLX LP:
Distributions declared (including IDRs) $ 148
$ 507
$ 25
$ 680
Undistributed net loss attributable to MPLX LP (12 ) (568 ) —
(580 )
Net income (loss) attributable to MPLX LP⁽¹⁾
$ 136
$ (61 ) $ 25
$ 100
Weighted average units outstanding:
Basic 7
324
16
347
Diluted 7
324
16
347
Net loss attributable to MPLX LP per limited partner unit:
Basic $ (0.19 )

Diluted $ (0.19 )


~~(1)~~	~~Allocation of net income (loss) attributable to MPLX LP assumes all earnings for the period had been distributed based on the current period distribution priorities.~~

7. Equity

The changes in the number of common units outstanding during the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2019 are summarized below:

(In units) Common Class B General Partner Total
Balance at December 31, 2016 357,193,288
3,990,878
7,371,105
368,555,271
Unit-based compensation awards⁽¹⁾
183,509
—
3,745
187,254
Issuance of units under the ATM Program⁽²⁾
13,846,998
—
282,591
14,129,589
Contribution of HST/WHC/MPLXT⁽³⁾
12,960,376
—
264,497
13,224,873
Contribution of the Joint-Interest Acquisition⁽³⁾
18,511,134
—
377,778
18,888,912
Class B conversion⁽⁴⁾
4,350,057
(3,990,878 ) 7,330
366,509
Balance at September 30, 2017 407,045,362

—

8,307,046

415,352,408



~~(1)~~(In units)	~~As a result of the unit-based~~Common
Balance at December 31, 2018	794,089,518
Unit-based compensation awards ~~issued during the period, MPLX GP contributed less than $1 million in exchange for 3,745 general partner units to maintain its two percent GP Interest.~~

	260,101
~~(2)~~Balance at June 30, 2019	~~As a result of common units issued under the ATM Program during the period, MPLX GP contributed $10 million in exchange for 282,591 general partner units to maintain its two percent GP Interest.~~794,349,619


~~(3)~~	~~See Note 3 for information regarding this acquisition.~~


~~(4)~~	On July 1, 2017, 3,990,878 Class B units converted to 4,350,057 common units and were eligible to receive the second quarter 2017 distribution. As a result of the Class B conversion, MPLX GP contributed less than $1 million in exchange for 7,330 general partner units to maintain its two percent GP Interest.

~~Reorganization Transactions~~ – On September 1, 2016, the Partnership and various affiliates initiated a series of reorganization transactions in order to simplify the Partnership’s ownership structure and its financial and tax reporting requirements. In connection with these transactions, the issued and outstanding MPLX LP Class A units, all of which were held by MarkWest Hydrocarbon, were either distributed to or purchased by MPC in exchange for $84 million in cash, 21,401,137 MPLX LP common units and 436,758 MPLX LP general partner units. Following these initial transactions, all of the MPLX LP Class A units were exchanged on a one-for-one basis for newly issued common units representing limited partner interests in MPLX LP. MPC also contributed $141 million to facilitate the repayment of intercompany debt between MarkWest Hydrocarbon and MarkWest. As a result of these transactions, the MPLX LP Class A units were eliminated, are no longer outstanding and no longer participate in distributions of cash from the Partnership. Cash that is derived from or attributable to MarkWest Hydrocarbon’s operations is now treated in the same manner as cash derived from or attributable to other operations of the Partnership and its subsidiaries.

~~Net Income Allocation~~–In preparing the Consolidated Statements of Equity, net income (loss) attributable to MPLX LP is allocated to Preferred unitholders based on a fixed distribution schedule, as discussed in Note 8, and subsequently allocated to the general partner and limited partner unitholders. However, when distributions related to the IDRs are made, earnings equal to the amount of those distributions are first allocated to the general partner before the remaining earnings are allocated to the unitholders, based on their respective ownership percentages. The following table presents the allocation of the general partner’s GP Interest in net income attributable to MPLX LP:

Three Months Ended September 30, Nine Months Ended September 30,
(In millions) 2017 2016 2017 2016
Net income attributable to MPLX LP $ 216
$ 141
$ 556
$ 100
Less: Preferred unit distributions 16
16
49
25
General partner's IDRs and other 83
49
216
137
Net income (loss) attributable to MPLX LP available to general and limited partners $ 117
$ 76
$ 291
$ (62 )

General partner's two percent GP Interest in net income (loss) attributable to MPLX LP $ 3
$ 2
$ 6
$ (1 )
General partner's IDRs and other 83
49
216
137
General partner's GP Interest in net income attributable to MPLX LP $ 86
$ 51
$ 222
$ 136

Cash distributions–The Partnership Agreement sets forth the calculation to be used to determine the amount and priority of cash distributions that the common unitholders, Preferred unitholders and general partner will receive. In accordance with the ~~Partnership Agreement,~~MPLX partnership agreement, on ~~October 25, 2017, the Partnership~~July 22, 2019, MPLX declared a quarterly cash distribution, based on the results of the ~~third~~second quarter of ~~2017,~~2019, totaling ~~$320~~$692 million, or ~~$0.5875~~$0.6675 per common ~~unit.~~unit, which

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includes common units issued on July 30, 2019 as a result of the Merger. This rate will also be received by Series A preferred unitholders. These distributions will be paid on ~~November~~August 14, ~~2017~~2019 to common unitholders of record on ~~November 6, 2017.~~August 5, 2019.

Additionally, as a result of the Merger, 600,000 ANDX preferred units were converted into 600,000 preferred units of MPLX (the “Series B preferred units”). Series B preferred unitholders are entitled to receive, when and if declared by the board, a fixed distribution of $68.75 per unit, per annum, payable semi-annually in arrears on February 15 and August 15. Accordingly a cash distribution payment totaling $21 million will be paid to Series B unitholders on August 15, 2019.

Quarterly distributions for 2019 and 2018 are summarized below:



(Per common unit)	2019		2018
March 31,	$	0.6575	$	0.6175
June 30,	$	0.6675	$	0.6275

The allocation of total quarterly cash distributions to ~~general,~~ limited and ~~Preferred~~preferred unitholders is as follows for the three and ~~nine~~six months ended ~~September~~June 30, ~~2017~~2019 and ~~2016. The Partnership’s~~2018. MPLX’s distributions are declared subsequent to quarter end; therefore, the following table represents total cash distributions applicable to the period in which the distributions were ~~earned.~~earned, except for the Series B preferred unit distributions which were earned throughout 2019, prior to the merger being completed.

Three Months Ended September 30, Nine Months Ended September 30,
(In millions) 2017 2016 2017 2016
General partner's distributions:
General partner's distributions on general partner units $ 7
$ 5
$ 18
$ 13
General partner's distributions on IDRs 81
49
211
135
Total distribution on general partner units and IDRs $ 88
$ 54
$ 229
$ 148
Common and preferred unit distributions:
Common unitholders, includes common units of general partner $ 232
$ 179
$ 648
$ 507
Preferred unit distributions 16
16
49
25
Total cash distributions declared $ 336
$ 249
$ 926
$ 680



	Three Months Ended June 30,				Six Months Ended June 30,
(In millions)	2019		2018		2019		2018
Common and preferred unit distributions:
Common unitholders, includes common units of general partner	$	692	$	497	$	1,215	$	964
Series A preferred unit distributions	21		20		41		36
Series B preferred unit distributions	21		—		21		—
Total cash distributions declared	$	734	$	517	$	1,277	$	1,000

The distribution on common units for the three and six months ended June 30, 2019 includes the impact of the issuance of approximately 102 million units issued to public unitholders and approximately 161 million units issued to MPC in connection with MPLX's acquisition of ANDX on July 30, 2019. Had the transaction been completed subsequent to our distribution record date, distributions would have been $163 million lower for the three and six months ended June 30, 2019. This is net of $12.5 million of waived distributions with respect to units held by MPC and its affiliates. The $12.5 million quarterly distribution waiver will continue through 2019. Total distributions excluding the newly issued common units associated with the merger and the Series B preferred units were $550 million and $1,093 for the three and six months ended June 30, 2019.

8. Redeemable Series A Preferred Units

Private Placement of Series A Preferred Units –On May 13, 2016, MPLX LP completed the private placement of approximately 30.8 million 6.5 percent Series A Convertible ~~Preferred~~preferred units ~~(the "Preferred units")~~ for a cash purchase price of $32.50 per unit. The aggregate net proceeds of approximately $984 million from the sale of the ~~Preferred~~preferred units were used for capital expenditures, repayment of debt and general ~~partnership~~business purposes.

The ~~Preferred~~Series A preferred units rank senior to all common units and pari passu with all Series B preferred units with respect to distributions and rights upon liquidation. The holders of the ~~Preferred~~Series A preferred units ~~are entitled to receive~~received cumulative quarterly distributions equal to $0.528125 per ~~unit. Following~~unit for each quarter prior to the second ~~anniversary~~quarter of 2018. Beginning with the ~~issuance~~second quarter of ~~the Preferred units,~~2018, the holders of the ~~Preferred~~Series A preferred units ~~will~~are entitled to receive, aswhen and if declared by the board, a quarterly distribution equal to the greater of $0.528125 per unit or the amount of distributions they would have received on an as converted basis. On July 22, 2019, MPLX declared a quarterly cash distribution of $0.6675 per common unit ~~distributions paid to holders~~representing the distribution of ~~MPLX LP~~income earned during the second quarter of 2019. The Series A preferred units will receive the common ~~units.~~unit rate in lieu of the lower $0.528125 base amount.

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The changes in the redeemable preferred balance from December 31, ~~2016~~2018 through ~~September~~June 30, ~~2017~~2019 are summarized below:



(In millions)	Redeemable Preferred Units
Balance at December 31, 2018	$	1,004
Net income allocated	41
Distributions received by Series A preferred unitholders	(40		)
Balance at June 30, 2019	$	1,005

(In millions) Redeemable Preferred Units
Balance at December 31, 2016 $ 1,000
Net income 49
Distributions received by Preferred unitholders (49 )
Balance at September 30, 2017 $ 1,000

The holders may convert their ~~Preferred~~Series A preferred units into common units at any time after the third anniversary of the issuance date or prior to liquidation, dissolution or winding up of the Partnership, in full or in part, subject to minimum conversion amounts and conditions. After the fourth anniversary of the issuance date, ~~the Partnership~~MPLX may convert the ~~Preferred~~Series A preferred units into common units at any time, in whole or in part, subject to certain minimum conversion amounts and conditions, if the closing price of MPLX LP common units is greater than $48.75 for the ~~20 day~~20-day trading period immediately preceding the conversion notice date. The conversion rate for the ~~Preferred~~Series A preferred units shall be the quotient of (a) the sum of (i) $32.50, plus (ii) any unpaid cash distributions on the applicable ~~Preferred~~preferred unit, divided by (b) ~~$32.50.~~$32.50, subject to adjustment for unit distributions, unit splits and similar transactions. The holders of the ~~Preferred~~Series A preferred units are entitled to vote on an as-converted basis with the common unitholders and ~~will~~ have certain other class voting rights with respect to any amendment to the ~~Partnership Agreement~~MPLX partnership agreement that would adversely affect any rights, preferences or privileges of the ~~Preferred~~preferred units. In addition, upon certain events involving a change of control, the holders of ~~Preferred~~preferred units may elect, among other potential elections, to convert their ~~Preferred~~Series A preferred units to common units at the ~~then-change~~then change of control conversion rate.

The ~~Preferred~~Series A preferred units are considered redeemable securities under GAAP due to the existence of redemption provisions upon a deemed liquidation event which is outside ~~the Partnership’s~~MPLX’s control. Therefore, they are presented as temporary equity in the mezzanine section of the Consolidated Balance Sheets. The ~~Preferred~~Series A preferred units have been recorded at their issuance date fair value, net of issuance costs. Income allocations increase the carrying value and declared distributions ~~decreased~~decrease the carrying value of the ~~Preferred~~Series A preferred units. As the ~~Preferred~~Series A preferred units are not currently redeemable and not probable of becoming redeemable, adjustment to the initial carrying amount is not necessary and would only be required if it becomes probable that the ~~Preferred~~Series A preferred units would become redeemable.

9. Segment Information

~~The Partnership’s~~MPLX’s chief operating decision maker is the chief executive officer (“CEO”) of its general partner. The CEO reviews ~~the Partnership’s~~MPLX’s discrete financial information, makes operating decisions, assesses financial performance and allocates resources on a type of service basis. ~~The Partnership~~MPLX has two reportable segments: L&S and G&P. Each of these segments ~~are~~is organized and managed based upon the nature of the products and services it offers.

L&S – transports, stores, distributes and ~~distributes~~markets crude oil and refined petroleum products. Segment information for prior periods includes retrospective adjustments in connection with the acquisition of HST, WHC and MPLXT. Segment information is not included for periods prior to the Joint-Interest Acquisition and the Ozark pipeline acquisition. See Note 3 for more detail of these acquisitions.

G&P – gathers, processes and transports natural gas; and gathers, transports, fractionates, stores and markets NGLs.

~~The Partnership has investments~~Our CEO evaluates the performance of our segments using Segment Adjusted EBITDA. Amounts included in ~~entities that are accounted~~net income and excluded from Segment Adjusted EBITDA include: (i) depreciation and amortization; (ii) provision/(benefit) for ~~using the~~income taxes; (iii) amortization of deferred financing costs; (iv) extinguishment of debt; (v) non-cash equity-based compensation; (vi) impairment expense; (vii) net interest and other financial costs; (viii) income/(loss) from equity method ~~of accounting (see Note 4). However, the CEO views the Partnership-operated~~investments; (ix) distributions and adjustments related to equity method ~~investments’ financial information~~investments; (x) unrealized derivative gains/(losses); (xi) acquisition costs; (xii) noncontrolling interest; and (xiii) other adjustments as ~~if those investments were consolidated.~~

~~Segment operating income represents income from operations attributable~~deemed necessary. These items are either: (i) believed to be non-recurring in nature; (ii) not believed to be allocable or controlled by the segment; or (iii) are not tied to the reportable segments. Corporate general and administrative expenses, unrealized derivative gains (losses), goodwill impairment, certain management fees and depreciation and amortization are not allocated to the reportable segments. Management does not consider these items allocable to or controllable by any individual segment and, therefore, excludes these items when evaluating segment performance. Segment results are also adjusted to exclude the portion of income from operations attributable to the noncontrolling interests related to partially-owned entities that are either consolidated or accounted for as equity method investments. Segment operating income attributable to MPLX LP excludes the operating income related to Predecessorsoperational performance of the ~~HSM, HST, WHC and MPLXT businesses prior to the dates they were acquired by MPLX LP.~~segment.

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The tables below present information about revenues and other income, ~~from operations and~~ capital expenditures and total assets for our reportable segments:



	Three Months Ended June 30,				Six Months Ended June 30,
(In millions)	2019		2018		2019		2018
L&S
Service revenue	$	653	$	581	$	1,265	$	1,080
Rental income	164		190		363		335
Product related revenue	4		3		7		5
Income from equity method investments	47		36		88		80
Other income	17		12		28		24
Total segment revenues and other income⁽¹⁾	885		822		1,751		1,524
Segment Adjusted EBITDA⁽²⁾	569		526		1,128		963
Maintenance capital expenditures	19		25		32		47
Growth capital expenditures	115		93		218		247
G&P
Service revenue	415		378		819		732
Rental income	84		84		172		163
Product related revenue	204		267		448		520
Income from equity method investments	26		14		55		31
Other income	15		13		30		28
Total segment revenues and other income⁽¹⁾	744		756		1,524		1,474
Segment Adjusted EBITDA⁽²⁾	351		341		722		664
Maintenance capital expenditures	15		8		21		11
Growth capital expenditures	$	268	$	406	$	529	$	677

(1) Within the total segment revenues and other income amounts presented above, third party revenues for the ~~reported segments:~~

Three Months Ended September 30, 2017
(In millions) L&S G&P Total
Revenues and other income:
Segment revenues $ 378
$ 669
$ 1,047
Segment other income 11
1
12
Total segment revenues and other income 389
670
1,059
Costs and expenses:
Segment cost of revenues 176
276
452
Segment operating income before portion attributable to noncontrolling interests and Predecessor 213
394
607
Segment portion attributable to noncontrolling interests and Predecessor —
45
45
Segment operating income attributable to MPLX LP $ 213
$ 349
$ 562

Three Months Ended September 30, 2016
(In millions) L&S G&P Total
Revenues and other income:
Segment revenues $ 339
$ 567
$ 906
Segment other income 12
1
13
Total segment revenues and other income 351
568
919
Costs and expenses:
Segment cost of revenues 153
239
392
Segment operating income before portion attributable to noncontrolling interests and Predecessor 198
329
527
Segment portion attributable to noncontrolling interests and Predecessor 74
36
110
Segment operating income attributable to MPLX LP $ 124
$ 293
$ 417

Nine Months Ended September 30, 2017
(In millions) L&S G&P Total
Revenues and other income:
Segment revenues $ 1,095
$ 1,869
$ 2,964
Segment other income 35
2
37
Total segment revenues and other income 1,130
1,871
3,001
Costs and expenses:
Segment cost of revenues 500
781
1,281
Segment operating income before portion attributable to noncontrolling interests and Predecessor 630
1,090
1,720
Segment portion attributable to noncontrolling interests and Predecessor 53
119
172
Segment operating income attributable to MPLX LP $ 577
$ 971
$ 1,548

Nine Months Ended September 30, 2016
(In millions) L&S G&P Total
Revenues and other income:
Segment revenues $ 901
$ 1,595
$ 2,496
Segment other income 42
1
43
Total segment revenues and other income 943
1,596
2,539
Costs and expenses:
Segment cost of revenues 392
662
1,054
Segment operating income before portion attributable to noncontrolling interests and Predecessor 551
934
1,485
Segment portion attributable to noncontrolling interests and Predecessor 216
113
329
Segment operating income attributable to MPLX LP $ 335
$ 821
$ 1,156

Three Months Ended September 30, Nine Months Ended September 30,
(In millions) 2017 2016 2017 2016
Reconciliation to Income from operations:
L&S segment operating income attributable to MPLX LP $ 213
$ 124
$ 577
$ 335
G&P segment operating income attributable to MPLX LP 349
293
971
821
Segment operating income attributable to MPLX LP 562
417
1,548
1,156
Segment portion attributable to unconsolidated affiliates (47 ) (41 ) (125 ) (130 )
Segment portion attributable to Predecessor —
74
53
216
Income (loss) from equity method investments 23
6
29
(72 )
Other income - related parties 13
11
38
29
Unrealized derivative (losses) gains⁽¹⁾
(17 ) (2 ) 2
(23 )
Depreciation and amortization (164 ) (151 ) (515 ) (438 )
Impairment expense —
—
—
(130 )
General and administrative expenses (59 ) (56 ) (174 ) (172 )
Income from operations $ 311
$ 258
$ 856
$ 436

Three Months Ended September 30, Nine Months Ended September 30,
(In millions) 2017 2016 2017 2016
Reconciliation to Total revenues and other income:
Total segment revenues and other income $ 1,059
$ 919
$ 3,001
$ 2,539
Revenue adjustment from unconsolidated affiliates (107 ) (100 ) (287 ) (303 )
Income (loss) from equity method investments 23
6
29
(72 )
Other income - related parties 13
11
38
29
Unrealized derivative (losses) gains related to product sales⁽¹⁾
(8 ) 2
1
(12 )
Total revenues and other income $ 980
$ 838
$ 2,782
$ 2,181

~~(1)~~

The Partnership makes a distinction between realized or unrealized gains and losses on derivatives. During the period when a derivative contract is outstanding, changes in the fair value of the derivative are recorded as an unrealized gain or loss. When a derivative contract matures or is settled, the previously recorded unrealized gain or loss is reversed and the realized gain or loss of the contract is recorded.

Three Months Ended September 30, Nine Months Ended September 30,
(In millions) 2017 2016 2017 2016
Reconciliation to Net income attributable to noncontrolling interests and Predecessor:
Segment portion attributable to noncontrolling interests and Predecessor $ 45
$ 110
$ 172
$ 329
Portion of noncontrolling interests and Predecessor related to items below segment income from operations (21 ) (39 ) (84 ) (157 )
Portion of operating income attributable to noncontrolling interests of unconsolidated affiliates (23 ) (18 ) (49 ) (20 )
Net income attributable to noncontrolling interests and Predecessor $ 1
$ 53
$ 39
$ 152

~~The following table reconciles~~L&S segment ~~capital expenditures to total capital expenditures:~~

Three Months Ended September 30, Nine Months Ended September 30,
(In millions) 2017 2016 2017 2016
L&S segment capital expenditures $ 120
$ 188
$ 353
$ 369
G&P segment capital expenditures 333
183
957
668
Total segment capital expenditures 453
371
1,310
1,037
Less: Capital expenditures for Partnership-operated, non-wholly-owned subsidiaries in G&P segment 101
34
306
94
Total capital expenditures $ 352
$ 337
$ 1,004
$ 943

~~Total assets by reportable segment were:~~

(In millions) September 30, 2017 December 31, 2016
Cash and cash equivalents $ 3
$ 234
L&S 4,520
2,978
G&P 14,715
14,297
Total assets $ 19,238
$ 17,509

~~10. Inventories~~

~~Inventories consist of the following:~~

(In millions) September 30, 2017 December 31, 2016
NGLs $ 3
$ 2
Line fill 9
9
Spare parts, materials and supplies 52
44
Total inventories $ 64
$ 55

~~11. Property, Plant~~were $94 million and ~~Equipment~~

~~Property, plant and equipment with associated accumulated depreciation is shown below:~~

(In millions) September 30, 2017 December 31, 2016
Natural gas gathering and NGL transportation pipelines and facilities $ 5,101
$ 4,748
Processing, fractionation and storage facilities⁽¹⁾
3,753
3,547
Pipelines and related assets 2,181
1,799
Barges and towing vessels 484
479
Terminals and related assets⁽¹⁾
794
759
Land, building, office equipment and other 755
757
Construction-in-progress 986
1,013
Total 14,054
13,102
Less accumulated depreciation 2,132
1,694
Property, plant and equipment, net $ 11,922
$ 11,408


~~(1)~~	~~Certain prior period amounts have been updated to conform to current period presentation.~~

~~12. Fair Value Measurements~~

~~Fair Values – Recurring~~

~~Fair value measurements and disclosures relate primarily to the Partnership’s derivative positions as discussed in Note 13. Money market funds, which are included in~~ ~~Cash and cash equivalents~~ on the Consolidated Balance Sheets, are measured at fair value and are included in Level 1 measurements of the valuation hierarchy. Level 2 instruments include crude oil and natural gas swap contracts. Level 3 instruments include all NGL transactions and embedded derivatives in commodity contracts. The following table presents the financial instruments carried at fair value classified by the valuation hierarchy:

September 30, 2017 December 31, 2016
(In millions) Assets Liabilities Assets Liabilities
Significant other observable inputs (Level 2)
Commodity contracts $ —
$ —
$ —
$ —
Significant unobservable inputs (Level 3)
Commodity contracts —
(5 ) —
(6 )
Embedded derivatives in commodity contracts —
(52 ) —
(54 )
Total carrying value in Consolidated Balance Sheets $ —
$ (57 ) $ —
$ (60 )

The following table provides additional information about the significant unobservable inputs used in the valuation of Level 3 instruments as of September 30, 2017. The market approach is used for valuation of all instruments.



~~Level 3 Instrument~~	~~Balance Sheet Classification~~	~~Unobservable Inputs~~	~~Value Range~~	~~Time Period~~
~~Commodity contracts~~	~~Liabilities~~	~~Forward ethane prices (per Gal)~~⁽¹⁾	~~$0.27 - $0.28~~	~~Oct. 17 - Dec. 17~~
		~~Forward propane prices (per Gal)~~⁽¹⁾	~~$0.68 - $0.91~~	~~Oct. 17 - Dec. 18~~
		~~Forward isobutane prices (per Gal)~~⁽¹⁾	~~$0.82 - $1.06~~	~~Oct. 17 - Dec. 18~~
		~~Forward normal butane prices (per Gal)~~⁽¹⁾	~~$0.76 - $1.03~~	~~Oct. 17 - Dec. 18~~
		~~Forward natural gasoline prices (per Gal)~~⁽¹⁾	~~$1.18 - $1.22~~	~~Oct. 17 - Dec. 18~~

~~Embedded derivatives in commodity contracts~~	~~Assets~~	~~ERCOT Pricing (per MegaWatt Hour)~~	~~$24.19 - $26.05~~	~~Oct. 17 - Dec. 17~~
	~~Liabilities~~	~~Forward propane prices (per Gal)~~⁽¹⁾	~~$0.61 - $0.91~~	~~Oct. 17 - Dec. 22~~
		~~Forward isobutane prices (per Gal)~~⁽¹⁾	~~$0.75 - $1.06~~	~~Oct. 17 - Dec. 22~~
		~~Forward normal butane prices (per Gal)~~⁽¹⁾	~~$0.69 - $1.03~~	~~Oct. 17 - Dec. 22~~
		~~Forward natural gasoline prices (per Gal)~~⁽¹⁾	~~$1.15 - $1.22~~	~~Oct. 17 - Dec. 22~~
		~~Forward natural gas prices (per MMBtu)~~⁽²⁾	~~$2.30 - $3.11~~	~~Oct. 17 - Dec. 22~~
		~~Probability of renewal~~⁽³⁾	~~50.0%~~
		~~Probability of renewal for second 5-yr term~~⁽³⁾	~~75.0%~~


~~(1)~~	~~NGL prices used in the valuations decrease over time.~~


~~(2)~~	~~Natural gas prices used in the valuations decrease over time.~~

~~(3)~~

The producer counterparty to the embedded derivative has the option to renew the gas purchase agreement and the related keep-whole processing agreement for two successive five-year terms after 2022. The embedded gas purchase agreement cannot be renewed without the renewal of the related keep-whole processing agreement. Due to the significant number of years until the renewal options are exercisable and the high level of uncertainty regarding the counterparty’s future

business strategy, the future commodity price environment, and the future competitive environment for midstream services in the Southern Appalachian region, management determined that a 50 percent probability of renewal for the first five-year term and 75 percent for the second five-year term are appropriate assumptions. Included in this assumption is a further extension of management’s estimates of future frac spreads through 2032.

~~Fair Value Sensitivity Related to Unobservable Inputs~~

~~Commodity contracts (assets and liabilities) –~~ For the Partnership’s commodity contracts, increases in forward NGL prices result in a decrease in the fair value of the derivative assets and an increase in the fair value of the derivative liabilities. The forward prices for the individual NGL products generally increase or decrease in a positive correlation with one another.

~~Embedded derivatives in commodity contracts –~~ ~~The Partnership has two embedded derivatives in commodity contracts, as follows:~~

A single embedded derivative liability comprised of both the purchase of natural gas at prices impacted by the frac spread and the probability of contract renewal (the “Natural Gas Embedded Derivative”), as discussed further in Note 13. Increases (decreases) in the frac spread result in an increase (decrease) in the fair value of the embedded derivative liability. An increase in the probability of renewal would result in an increase in the fair value of the related embedded derivative liability.

An embedded derivative related to utilities costs discussed further in Note 13. Increases in the forward Electric Reliability Council of Texas (“ERCOT”) prices result in a decrease in the fair value of the embedded derivative liability.

~~Level 3 Valuation Process~~

The Partnership’s Risk Management Department (the “Risk Department”) is responsible for the valuation of the Partnership’s commodity derivative contracts and embedded derivatives in commodity contracts, except for the Natural Gas Embedded Derivative. The Risk Department reports to the Chief Financial Officer and is responsible for the oversight of the Partnership’s commodity risk management program. The members of the Risk Department have the requisite experience, knowledge and day-to-day involvement in the energy commodity markets to ensure appropriate valuations and understand the changes in the valuations from period to period. The valuations of the Level 3 commodity derivative contracts are performed by a third-party pricing service and are reviewed and validated on a quarterly basis by the Risk Department by comparing the pricing and option volatilities to actual market data and/or data provided by at least one other independent third-party pricing service.

Management is responsible for the valuation of the Natural Gas Embedded Derivative discussed in Note 13. Included in the valuation of the Natural Gas Embedded Derivative are assumptions about the forward price curves for NGLs and natural gas for periods in which price curves are not available from third-party pricing services due to insufficient market data. The Risk Department must develop forward price curves for NGLs and natural gas through the initial contract term (October 2017 through December 2022) for management’s use in determining the fair value of the Natural Gas Embedded Derivative. In developing the pricing curves for these periods, the Risk Department maximizes its use of the latest known market data and trends as well as its understanding of the historical relationships between forward NGL and natural gas prices and the forward market data that is available for the required period, such as crude oil pricing and natural gas pricing from other markets. However, there is very limited actual market data available to validate the Risk Department’s estimated price curves. Management also assesses the probability of the producer customer’s renewal of the contracts, which includes consideration of:

The estimated favorability of the contracts to the producer customer as compared to other options that would be available to them at the time and in the relative geographic area of their producing assets;

~~Extrapolated pricing curves, using a weighted average probability method that is based on historical frac spreads, which impact the calculation of favorability; and~~

~~The producer customer’s potential business strategy decision points that may exist at the time the counterparty would elect whether to renew the contracts.~~

~~Changes in Level 3 Fair Value Measurements~~

~~The tables below include a rollforward of the balance sheet amounts~~$176 million for the three and ~~nine~~six months ended ~~September~~June 30, ~~2017~~2019, respectively, and ~~2016,~~$71 million and $145 million for the three and six months ended June 30, 2018, respectively. Third party revenues for the G&P segment were $716 million and $1,472 million for the three and six months ended June 30, 2019, respectively, ~~(including~~and $731 million and $1,434 million for the ~~change in fair value),~~three and six months ended June 30, 2018, respectively.

(2) See below for ~~assets and liabilities classified by~~ the ~~Partnership within Level 3 of the valuation hierarchy.~~reconciliation from Segment Adjusted EBITDA to “Net income.”

Three Months Ended September 30, 2017 Nine Months Ended September 30, 2017
(In millions) Commodity Derivative Contracts (net) Embedded Derivatives in Commodity Contracts (net) Commodity Derivative Contracts (net) Embedded Derivatives in Commodity Contracts (net)
Fair value at beginning of period $ 2
$ (43 ) $ (6 ) $ (54 )
Total losses (realized and unrealized) included in earnings⁽¹⁾
(10 ) (12 ) (3 ) (4 )
Settlements 3
3
4
6
Fair value at end of period $ (5 ) $ (52 ) $ (5 ) $ (52 )
The amount of total losses for the period included in earnings attributable to the change in unrealized losses relating to liabilities still held at end of period $ (7 ) $ (10 ) $ (4 ) $ (4 )



(In millions)	June 30, 2019		December 31, 2018
Segment assets
Cash and cash equivalents	$	7	$	68
L&S⁽¹⁾	7,083		6,566
G&P⁽¹⁾	16,656		16,145
Total assets	$	23,746	$	22,779

(1) Equity method investments included in L&S assets were $1.17 billion at June 30, 2019 and $1.12 billion at December 31, 2018. Equity method investments included in G&P assets were $3.24 billion at June 30, 2019 and $3.05 billion at December 31, 2018.

Three Months Ended September 30, 2016 Nine Months Ended September 30, 2016
(In millions) Commodity Derivative Contracts (net) Embedded Derivatives in Commodity Contracts (net) Commodity Derivative Contracts (net) Embedded Derivatives in Commodity Contracts (net)
Fair value at beginning of period $ (4 ) $ (40 ) $ 7
$ (32 )
Total gains (losses) (realized and unrealized) included in earnings⁽¹⁾
2
(6 ) (5 ) (17 )
Settlements (1 ) 2
(6 ) 5
Netting adjustment⁽²⁾
—
—
1
—
Fair value at end of period $ (3 ) $ (44 ) $ (3 ) $ (44 )
The amount of total losses for the period included in earnings attributable to the change in unrealized losses relating to liabilities still held at end of period $ —
$ (4 ) $ (4 ) $ (15 )


~~(1)~~	~~Gains and losses on Commodity Derivative Contracts classified as Level 3 are recorded in~~ ~~Product sales~~ ~~in the accompanying Consolidated Statements of Income. Gains and losses on Embedded Derivatives in Commodity Contracts are recorded in~~ ~~Purchased product costs~~ ~~and~~ ~~Cost of revenues~~.

~~(2)~~

Certain derivative positions are subject to master netting agreements; therefore, the Partnership has elected to offset derivative assets and liabilities where legally permissible. The Partnership may hold positions with certain counterparties, which for GAAP purposes are classified within different levels of the fair value hierarchy and may be legally permissible to offset. This adjustment represents the total impact of offsetting Level 2 positions with Level 3 positions as of September 30, 2016.

~~Fair Values – Reported~~

The Partnership’s primary financial instruments are cash and cash equivalents, receivables, receivables from related parties, accounts payable, payables to related parties and long-term debt. The Partnership’s fair value assessment incorporates a variety of considerations, including (1) the short-term duration of the instruments, (2) MPC’s investment-grade credit rating and (3) the historical incurrence of and expected future insignificance of bad debt expense, which includes an evaluation of counterparty credit risk. The Partnership believes the carrying values of its current assets and liabilities approximate fair value. The recorded value of the amounts outstanding under the bank revolving credit facility, if any, approximates fair value due to the variable interest rate that approximates current market rates. Derivative instruments are recorded at fair value, based on available market information (see Note 13).

Table of Contents

The ~~fair value of~~table below provides a reconciliation between “Net income” and Segment Adjusted EBITDA.



	Three Months Ended June 30,						Six Months Ended June 30,
(In millions)	2019			2018			2019			2018
Reconciliation to Net income:
L&S Segment Adjusted EBITDA	$	569		$	526		$	1,128		$	963
G&P Segment Adjusted EBITDA	351			341			722			664
Total reportable segments	920			867			1,850			1,627
Depreciation and amortization⁽¹⁾	(214		)	(188		)	(425		)	(364		)
(Provision)/benefit for income taxes	(1		)	(1		)	1			(5		)
Amortization of deferred financing costs	(13		)	(15		)	(26		)	(31		)
Non-cash equity-based compensation	(3		)	(5		)	(9		)	(9		)
Net interest and other financial costs	(157		)	(136		)	(315		)	(250		)
Income from equity method investments	73			50			143			111
Distributions/adjustments related to equity method investments	(120		)	(112		)	(228		)	(202		)
Unrealized derivative losses⁽²⁾	—			(8		)	(4		)	(1		)
Acquisition costs	(4		)	—			(4		)	(3		)
Adjusted EBITDA attributable to noncontrolling interests	7			4			14			6
Net income	$	488		$	456		$	997		$	879

(1) Depreciation and amortization attributable to L&S was $70 million and $140 million for the ~~Partnership’s long-term debt is estimated based on recent market non-binding indicative quotes. The fair value of~~three and six months ended June 30, 2019, respectively, and $61 million and $109 million for the ~~SMR liability is estimated using a discounted cash flow approach based on~~three and six months ended June 30, 2018, respectively. Depreciation and amortization attributable to G&P was $144 million and $285 million for the ~~contractual cash flows~~three and six months ended June 30, 2019, respectively, and $127 million and $255 million for the ~~Partnership’s unsecured borrowing rate. The long-term debt~~three and ~~SMR liability fair values are considered Level 3 measurements. The following table summarizes the fair value and carrying value of the long-term debt, excluding capital leases, and SMR liability:~~six months ended June 30, 2018, respectively.

September 30, 2017 December 31, 2016
(In millions) Fair Value Carrying Value Fair Value Carrying Value
Long-term debt $ 7,619
$ 6,869
$ 4,953
$ 4,422
SMR liability 106
92
108
96

~~13. Derivative Financial Instruments~~

~~Commodity Derivatives~~

NGL and natural gas prices are volatile and are impacted by changes in fundamental supply and demand, as well as market uncertainty, availability of NGL transportation and fractionation capacity and a variety of additional factors that are beyond the Partnership’s control. A portion of the Partnership’s profitability is directly affected by prevailing commodity prices primarily as a result of processing or conditioning at its own or third-party processing plants, purchasing and selling or gathering and transporting volumes of natural gas at index-related prices and the cost of third-party transportation and fractionation services. To the extent that commodity prices influence the level of natural gas drilling by the Partnership’s producer customers, such prices also affect profitability. To protect itself financially against adverse price movements and to maintain more stable and predictable cash flows so that the Partnership can meet its cash distribution objectives, debt service and capital plans, the Partnership executes a strategy governed by its risk management policy. The Partnership has a committee comprised of senior management that oversees risk management activities, continually monitors the risk management program and adjusts its strategy as conditions warrant. The Partnership enters into certain derivative contracts to reduce the risks associated with unfavorable changes in the prices of natural gas and NGLs. Derivative contracts utilized are swaps traded on the OTC market and fixed price forward contracts. The risk management policy does not allow the Partnership to take speculative positions with its derivative contracts.

To mitigate its cash flow exposure to fluctuations in the price of NGLs, the Partnership has entered into derivative financial instruments relating to the future price of NGLs and crude oil. The Partnership currently manages the majority of its NGL price risk using direct product NGL derivative contracts. The Partnership enters into NGL derivative contracts when adequate market liquidity exists and future prices are satisfactory. A portion of the Partnership’s NGL price exposure is managed by using crude oil contracts. In periods where NGL prices and crude oil prices are not consistent with the historical relationship, the crude oil contracts create increased risk and additional gains or losses. The Partnership may settle its crude oil contracts prior to the contractual settlement date in order to take advantage of favorable terms and reduce the future exposure resulting from the less effective crude oil contracts. Based on its current volume forecasts, the majority of its derivative positions used to manage the future commodity price exposure are expected to be direct product NGL derivative contracts.

To mitigate its cash flow exposure to fluctuations in the price of natural gas, the Partnership primarily utilizes derivative financial instruments relating to the future price of natural gas and takes into account the partial offset of its long and short gas positions resulting from normal operating activities.

As a result of its current derivative positions, the Partnership has mitigated a portion of its expected commodity price risk through the fourth quarter of 2018. The Partnership would be exposed to additional commodity risk in certain situations such as if producers under-deliver or over-deliver product or when processing facilities are operated in different recovery modes. In the event the Partnership has derivative positions in excess of the product delivered or expected to be delivered, the excess derivative positions may be terminated.

Management conducts a standard credit review on counterparties to derivative contracts and has provided the counterparties with a guaranty as credit support for its obligations. A separate agreement with certain counterparties allows MarkWest Liberty Midstream to enter into derivative positions without posting cash collateral. The Partnership uses standardized agreements that allow for offset of certain positive and negative exposures (“master netting arrangements”) in the event of default or other terminating events, including bankruptcy.

The Partnership records derivative contracts at fair value in the Consolidated Balance Sheets and has not elected hedge accounting or the normal purchases and normal sales designation (except for electricity and certain other qualifying contracts,

for which the normal purchases and normal sales designation has been elected). The Partnership’s accounting may cause volatility in the Consolidated Statements of Income as the Partnership recognizes all unrealized gains and losses from the changes in fair value of derivatives in current earnings. The Partnership(2) MPLX makes a distinction between realized orand unrealized gains and losses on derivatives. During the period when a derivative contract is outstanding, changes in the fair value of the derivative are recorded as an unrealized gain or loss. When a derivative contract matures or is settled, the previously recorded unrealized gain or loss is reversed and the realized gain or loss of the contract is recorded.

~~Volume~~

10. Inventories

Inventories consist of ~~Commodity~~the following:



(In millions)	June 30, 2019		December 31, 2018
NGLs	$	5	$	9
Line fill	7		9
Spare parts, materials and supplies	65		59
Total inventories	$	77	$	77

11. Property, Plant and Equipment

Property, plant and equipment with associated accumulated depreciation is shown below:



(In millions)	June 30, 2019		December 31, 2018
Natural gas gathering and NGL transportation pipelines and facilities	$	6,211	$	5,926
Processing, fractionation and storage facilities	5,365		5,336
Pipelines and related assets	2,630		2,560
Barges and towing vessels	657		620
Terminals and related assets	1,185		1,178
Refinery related assets	949		938
Land, building, office equipment and other	1,005		957
Construction-in-progress	1,084		801
Total	19,086		18,316
Less accumulated depreciation	4,065		3,677
Property, plant and equipment, net	$	15,021	$	14,639

12. Fair Value Measurements

Fair Values – Recurring

Fair value measurements and disclosures relate primarily to MPLX’s derivative positions as discussed in Note 13. The following table presents the financial instruments carried at fair value on a recurring basis as of June 30, 2019 and December 31, 2018 by fair value hierarchy level. MPLX has elected to offset the fair value amounts recognized for multiple derivative contracts executed with the same counterparty.



	June 30, 2019					December 31, 2018
(In millions)	Assets		Liabilities			Assets		Liabilities
Significant unobservable inputs (Level 3)
Embedded derivatives in commodity contracts	$	—	$	(65	)	$	—	$	(61	)
Total carrying value on Consolidated Balance Sheets	$	—	$	(65	)	$	—	$	(61	)

Level 3 instruments include all NGL transactions and embedded derivatives in commodity contracts. The embedded derivative liability relates to a natural gas purchase commitment embedded in a keep-whole processing agreement. The fair value calculation for these Level 3 instruments used significant unobservable inputs including: (1) NGL prices interpolated and extrapolated due to inactive markets ranging from $0.46 to $1.14 and (2) the probability of renewal of 92 percent for the first five-year term and 82 percent for the second five-year term of the gas purchase commitment and related keep-whole processing agreement. Increases or decreases in the fractionation spread result in an increase or decrease in the fair value of the embedded derivative liability, respectively. An increase in the probability of renewal would result in an increase in the fair value of the related embedded derivative liability. Beyond the embedded derivative discussed above, we had no outstanding commodity contracts as of June 30, 2019 or December 31, 2018.

Changes in Level 3 Fair Value Measurements

The following table is a reconciliation of the net beginning and ending balances recorded for net assets and liabilities classified as Level 3 in the fair value hierarchy.

Table of Contents



	Three Months Ended June 30, 2019					Three Months Ended June 30, 2018
(In millions)	Commodity Derivative Contracts (net)		Embedded Derivatives in Commodity Contracts (net)			Commodity Derivative Contracts (net)			Embedded Derivatives in Commodity Contracts (net)
Fair value at beginning of period	$	—	$	(65	)	$	(2	)	$	(58	)
Total losses (realized and unrealized) included in earnings⁽¹⁾	—		(1		)	(1		)	(11		)
Settlements	—		1			1			3
Fair value at end of period	—		(65		)	(2		)	(66		)
The amount of total losses for the period included in earnings attributable to the change in unrealized losses relating to liabilities still held at end of period	$	—	$	(2	)	$	(1	)	$	(10	)

(1) Gains and losses on commodity derivative contracts classified as Level 3 are recorded in “Product sales”on the Consolidated Statements of Income. Gains and losses on derivatives embedded in commodity contracts are recorded in “Purchased product costs” and “Cost of revenues” on the Consolidated Statements of Income.



	Six Months Ended June 30, 2019					Six Months Ended June 30, 2018
(In millions)	Commodity Derivative Contracts (net)		Embedded Derivatives in Commodity Contracts (net)			Commodity Derivative Contracts (net)			Embedded Derivatives in Commodity Contracts (net)
Fair value at beginning of period	$	—	$	(61	)	$	(2	)	$	(64	)
Total losses (realized and unrealized) included in earnings⁽¹⁾	—		(7		)	(1		)	(8		)
Settlements	—		3			1			6
Fair value at end of period	—		(65		)	(2		)	(66		)
The amount of total losses for the period included in earnings attributable to the change in unrealized losses relating to liabilities still held at end of period	$	—	$	(5	)	$	—		$	(5	)

Fair Values – Reported

MPLX’s primary financial instruments are cash and cash equivalents, receivables, receivables from related parties, accounts payable, payables to related parties and long-term debt. MPLX’s fair value assessment incorporates a variety of considerations, including (1) the duration of the instruments, (2) MPC’s investment-grade credit rating and (3) the historical incurrence of and expected future insignificance of bad debt expense, which includes an evaluation of counterparty credit risk. MPLX believes the carrying values of its current assets and liabilities approximate fair value. The recorded value of the amounts outstanding under the bank revolving credit facility, if any, approximates fair value due to the variable interest rate that approximates current market rates. Derivative ~~Activity~~instruments are recorded at fair value, based on available market information (see Note 13).

The fair value of MPLX’s long-term debt is estimated based on recent market non-binding indicative quotes. The fair value of the SMR liability is estimated using a discounted cash flow approach based on the contractual cash flows and MPLX’s unsecured borrowing rate. The long-term debt and SMR liability fair values are considered Level 3 measurements. The following table summarizes the fair value and carrying value of the long-term debt, excluding finance leases, and SMR liability:



	June 30, 2019				December 31, 2018
(In millions)	Fair Value		Carrying Value		Fair Value		Carrying Value
Long-term debt	$	15,282	$	14,123	$	13,169	$	13,484
SMR liability	$	94	$	83	$	92	$	86

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13. Derivative Financial Instruments

As of ~~September~~June 30, ~~2017, the Partnership~~2019, MPLX had ~~the following~~no outstanding commodity contracts ~~that were executed to manage~~beyond the ~~cash flow risk associated with future sales of NGLs and purchases of natural gas:~~embedded derivative discussed below.



~~Derivative contracts not designated as hedging instruments~~	~~Financial Position~~	~~Notional Quantity (net)~~
~~Crude Oil (bbl)~~	~~Short~~	~~18,400~~
~~Natural Gas (MMBtu)~~	~~Long~~	~~1,096,539~~
~~NGLs (gal)~~	~~Short~~	~~33,387,904~~

Embedded ~~Derivatives in Commodity Contracts~~

~~The Partnership~~Derivative - MPLX has a ~~commodity contract~~natural gas purchase commitment embedded in a keep-whole processing agreement with a producer customer in the Southern Appalachian region ~~that creates a floor on~~expiring in December 2022. The customer has the frac spread for gas purchases of 9,000 Dth/d. The commodity contract is a component of a broader regional arrangement that also includes a keep-whole processing agreement. For accounting purposes, these contracts have been aggregated into a single contract and are evaluated together. In February 2011, the Partnership executed agreements with the producer customer to extend the commodity contract and the related processing agreement from March 31, 2015 to December 31, 2022, with the producer customer’sunilateral option to extend the agreement for two ~~successive~~consecutive five-year terms through December ~~31,~~ 2032. ~~The~~For accounting purposes, the natural gas purchase ~~of gas at prices based on the frac spread~~commitment and the ~~option to extend the agreements~~term extending options have been ~~identified as~~aggregated into a single compound embedded ~~derivative, which is recorded at fair value.~~derivative. The probability of ~~renewal~~the customer exercising its options is determined based on ~~extrapolated pricing curves, a review of the overall expected favorability of the contracts based on such pricing curves and~~ assumptions about the ~~counterparty’s~~customer’s potential business strategy decision points that may exist at the time ~~the counterparty~~they would elect whether to renew the contract. The changes in fair value of this compound embedded derivative are based on the difference between the contractual and index pricing, the probability of the producer customer exercising its option to extend and the estimated favorability of these contracts compared to current market conditions. The changes in fair value are recorded in earnings through ~~Purchased~~“Purchased product ~~costs~~ incosts” on the Consolidated Statements of Income. As of ~~September~~June 30, ~~2017~~2019 and December 31, ~~2016,~~2018, the estimated fair value of this contract was a liability of ~~$52~~$65 million and ~~$54~~$61 million, respectively.

The Partnership has a commodity contract that gives it an option to fix a component of the utilities cost to an index price on electricity at a plant location in the Southwest through the fourth quarter of 2018. The contract’s pricing is currently fixed through the fourth quarter of 2017 with the ability to fix the pricing for its remaining year. Changes in the fair value as of the derivative component of this contract were recognized as ~~Cost of Revenues~~ ~~in the Consolidated Statements of Income. As of September 30, 2017, the estimated fair value of this contract was a liability of less than $1 million.~~

~~Financial Statement Impact of Derivative Contracts~~

There were no material changes to the Partnership’s policy regarding the accounting for these instruments as previously disclosed in the Partnership’s Annual Report on Form 10-K for the year ended December 31, 2016, as updated by our Current Report on Form 8-K filed on May 1, 2017. The impact of the Partnership’s derivative instruments on its Consolidated Balance Sheets is summarized below:

(In millions) September 30, 2017 December 31, 2016
Derivative contracts not designated as hedging instruments and their balance sheet location Asset Liability Asset Liability
Commodity contracts⁽¹⁾

Other current assets / other current liabilities $ —
$ (15 ) $ —
$ (13 )
Other noncurrent assets / deferred credits and other liabilities —
(42 ) —
(47 )
Total $ —
$ (57 ) $ —
$ (60 )


~~(1)~~	~~Includes embedded derivatives in commodity contracts as discussed above.~~

Certain derivative positions are subject to master netting agreements, therefore, ~~the Partnership~~MPLX has elected to offset derivative assets and liabilities that are legally permissible to be offset. ~~The net amounts in the table below equal the balances presented in~~As of June 30, 2019 and December 31, 2018, there were no derivative assets or liabilities that were offset on the Consolidated Balance ~~Sheets:~~

Sheets. The impact of MPLX’s derivative instruments on its Consolidated Balance Sheets is summarized below:

September 30, 2017
Assets Liabilities
(In millions) Gross Amount Gross Amounts Offset in the Consolidated Balance Sheets Net Amount of Assets in the Consolidated Balance Sheets Gross Amount Gross Amounts Offset in the Consolidated Balance Sheets Net Amount of Liabilities in the Consolidated Balance Sheets
Current
Commodity contracts $ —
$ —
$ —
$ (5 ) $ —
$ (5 )
Embedded derivatives in commodity contracts —
—
—
(10 ) —
(10 )
Total current derivative instruments —
—
—
(15 ) —
(15 )
Non-current
Commodity contracts —
—
—
—
—
—
Embedded derivatives in commodity contracts —
—
—
(42 ) —
(42 )
Total non-current derivative instruments —
—
—
(42 ) —
(42 )
Total derivative instruments $ —
$ —
$ —
$ (57 ) $ —
$ (57 )



(In millions)	June 30, 2019					December 31, 2018
Derivative contracts not designated as hedging instruments and their balance sheet location	Asset		Liability			Asset		Liability
Commodity contracts⁽¹⁾
Other current assets / Other current liabilities	$	—	$	(7	)	$	—	$	(7	)
Other noncurrent assets / Deferred credits and other liabilities	—		(58		)	—		(54		)
Total	$	—	$	(65	)	$	—	$	(61	)

(1) Includes embedded derivatives in commodity contracts as discussed above.

For further information regarding the ~~table above,~~fair value measurement of derivative instruments, including the ~~Partnership does not offset a counterparty’s current derivative contracts with the counterparty’s non-current derivative contracts, although the Partnership’s~~effect of master netting arrangements ~~would allow current~~or collateral, see Note 12. There were no material changes to MPLX’s policy regarding the accounting for Level 2 and ~~non-current positions to be offset~~Level 3 instruments as previously disclosed in ~~the event of default. Additionally, in the event of default, the Partnership’s master netting arrangements would allow~~MPLX’s Annual Report on Form 10-K for the ~~offsetting~~year ended December 31, 2018. MPLX does not designate any of ~~all transactions executed under the master netting arrangement. These types~~its commodity derivative positions as hedges for accounting purposes.

Table of transactions may include non-derivative instruments, derivatives qualifying for scope exceptions, receivables and payables arising from settled positions and other forms of non-cash collateral (such as letters of credit).Contents

The impact of ~~the Partnership’s~~MPLX’s derivative contracts not designated as hedging instruments and the location of ~~gain or (loss)~~gains and losses recognized inon the Consolidated Statements of Income is summarized below:



	Three Months Ended June 30,						Six Months Ended June 30,
(In millions)	2019			2018			2019			2018
Product sales
Realized (loss)/gain	$	—		$	(1	)	$	—		$	(1	)
Unrealized (loss)/gain	—			—			—			1
Product sales derivative (loss)/gain	—			(1		)	—			—
Purchased product costs
Realized (loss)/gain	(1		)	(3		)	(3		)	(6		)
Unrealized (loss)/gain	—			(8		)	(4		)	(2		)
Purchased product costs derivative (loss)/gain	(1		)	(11		)	(7		)	(8		)
Cost of revenues
Realized (loss)/gain	—			—			—			—
Unrealized (loss)/gain	—			—			—			—
Cost of revenues derivative (loss)/gain	—			—			—			—
Total derivative (loss)/gain	$	(1	)	$	(12	)	$	(7	)	$	(8	)

Three Months Ended September 30, Nine Months Ended September 30,
(In millions) 2017 2016 2017 2016
Product sales
Realized (loss) gain $ (2 ) $ —
$ (3 ) $ 6
Unrealized (loss) gain (8 ) 2
1
(12 )
Total derivative (loss) gain related to product sales (10 ) 2
(2 ) (6 )
Purchased product costs
Realized loss⁽¹⁾
(2 ) (1 ) (6 ) (4 )
Unrealized (loss) gain (9 ) (3 ) 1
(12 )
Total derivative loss related to purchased product costs (11 ) (4 ) (5 ) (16 )
Cost of revenues
Realized loss⁽¹⁾
—
—
—
(2 )
Unrealized (loss) gain —
(1 ) —
1
Total derivative loss related to cost of revenues —
(1 ) —
(1 )
Total derivative losses $ (21 ) $ (3 ) $ (7 ) $ (23 )


~~(1)~~	~~Certain prior period amounts have been updated to conform to current period presentation.~~

14. Debt

~~The Partnership’s~~MPLX’s outstanding borrowings ~~consisted~~consist of the following:



(In millions)	June 30, 2019			December 31, 2018
MPLX LP:
Bank revolving credit facility due 2022	$	615		$	—
3.375% senior notes due March 2023	500			500
4.500% senior notes due July 2023	989			989
4.875% senior notes due December 2024	1,149			1,149
4.000% senior notes due February 2025	500			500
4.875% senior notes due June 2025	1,189			1,189
4.125% senior notes due March 2027	1,250			1,250
4.000% senior notes due March 2028	1,250			1,250
4.800% senior notes due February 2029	750			750
4.500% senior notes due April 2038	1,750			1,750
5.200% senior notes due March 2047	1,000			1,000
4.700% senior notes due April 2048	1,500			1,500
5.500% senior notes due February 2049	1,500			1,500
4.900% senior notes due April 2058	500			500
Consolidated subsidiaries:
MarkWest - 4.500% - 4.875% senior notes, due 2023-2025	23			23
Financing lease obligations⁽¹⁾	8			6
Total	14,473			13,856
Unamortized debt issuance costs	(95		)	(97		)
Unamortized discount	(342		)	(366		)
Amounts due within one year	(6		)	(1		)
Total long-term debt due after one year	$	14,030		$	13,392

(1) See Note 19 for lease information.

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(In millions) September 30, 2017 December 31, 2016
MPLX LP:
Bank revolving credit facility due 2022 $ 420
$ —
Term loan facility due 2019 —
250
5.500% senior notes due February 2023 710
710
4.500% senior notes due July 2023 989
989
4.875% senior notes due December 2024 1,149
1,149
4.000% senior notes due February 2025 500
500
4.875% senior notes due June 2025 1,189
1,189
4.125% senior notes due March 2027 1,250
—
5.200% senior notes due March 2047 1,000
—
Consolidated subsidiaries:
MarkWest - 4.500% - 5.500% senior notes, due 2023-2025 63
63
MPL - capital lease obligations due 2020 7
8
Total 7,277
4,858
Unamortized debt issuance costs (27 ) (7 )
Unamortized discount (401 ) (428 )
Amounts due within one year (1 ) (1 )
Total long-term debt due after one year $ 6,848
$ 4,422

Credit ~~Agreements~~Agreement

~~On July 21, 2017, the Partnership entered into a syndicated credit agreement to replace its previously outstanding $2.0 billion five-year bank revolving credit facility with~~MPLX has a $2.25 billion five-year bank revolving credit facility that expires in July 2022 (the “MPLX Credit ~~Agreement 2022”~~Agreement”). ~~The financial covenants and the interest rate terms contained in the new credit agreement are substantially the same as those contained in the previous bank revolving credit facility.~~ During the ~~nine~~six months ended ~~September~~June 30, ~~2017, the Partnership had no borrowings under the previous bank revolving credit facility. During the nine months ended September 30, 2017, the Partnership~~2019, MPLX borrowed~~$420~~ $2,275 million under the MPLX Credit Agreement, ~~2022,~~ at an average interest rate of ~~2.702~~3.802 percent,and repaid $1,660 million. At ~~September~~June 30, ~~2017, the Partnership~~2019, MPLX had ~~$420~~$615 million outstanding borrowings and $3 million letters of credit outstanding under the ~~new~~ facility, resulting in total availability of ~~$1.827~~$1.632 billion, or ~~81.2~~72.5 percent of the borrowing capacity.

The $250 million term loan facility was drawn in full on November 20, 2014. On July 19, 2017, MPLX LP prepaid the entire outstanding principal of this loan facility with cash on hand. The borrowings under this facility between January 1, 2017 and July 19, 2017 were at an average interest rate of 2.407 percent.

Senior Notes

On December 10, 2018, MPLX redeemed all $750 million of its 5.5 percent senior notes due February ~~10, 2017,~~15, 2023, $40 million of which was issued by the ~~Partnership completed~~MarkWest subsidiary. These notes were redeemed at 101.833 percent of the principal amount, which resulted in a ~~public offering~~payment of $14 million related to the note premium and the immediate recognition of $46 million of unamortized debt issuance costs.

On November 15, 2018, MPLX issued $2.25 billion aggregate principal amount of senior notes in a public offering, consisting of $750 million aggregate principal amount of 4.8 percent unsecured senior notes due February 2029 and $1.5 billion aggregate principal amount of 5.5 percent unsecured senior notes due February 2049 (collectively, the “November 2018 New Senior Notes”). The November 2018 New Senior Notes were offered at a price to the public of 99.432 percent and 98.031 percent of par, respectively. The proceeds were used to repay outstanding borrowings under the MPLX Credit Agreement and the MPC Loan Agreement and to redeem all $750 million of its 5.5 percent senior notes due February 2023, as well as for general business purposes. Interest on each series of the November 2018 New Senior Notes is payable semi-annually in arrears, commencing on February 15, 2019.

On February 8, 2018, MPLX issued $5.5 billion aggregate principal amount of senior notes in a public offering, consisting of ~~(i)~~$500 million aggregate principal amount of 3.375 percent unsecured senior notes due March 2023, $1.25 billion aggregate principal amount of ~~4.125~~4.0 percent unsecured senior notes due in March ~~2027 and (ii) $1.0~~2028, $1.75 billion aggregate principal amount of ~~5.200~~4.5 percent unsecured senior notes due ~~in March 2047~~April 2038, $1.5 billion aggregate principal amount of 4.7 percent unsecured senior notes due April 2048, and $500 million aggregate principal amount of 4.9 percent unsecured senior notes due April 2058 (collectively, the ~~“New~~“February 2018 New Senior Notes”). The ~~net proceeds from the~~February 2018 New Senior Notes ~~totaled approximately $2.22~~were offered at a price to the public of 99.931 percent, 99.551 percent, 98.811 percent, 99.348 percent, and 99.289 percent of par, respectively. Also on February 8, 2018, $4.1 billion ~~after deducting underwriting discounts, and~~of the net proceeds were used to repay a 364-day term loan facility, which was drawn on February 1, 2018 to fund the cash portion of the dropdown consideration for Refining Logistics and Fuels Distribution. The remaining proceeds were used to repay outstanding borrowings under the MPLX Credit Agreement and the MPC Loan Agreement, as well as for general ~~partnership purposes and capital expenditures.~~business purposes. Interest on each series of ~~the~~ notes due in 2023 and 2028 is payable semi-annually in arrears, ~~on March 1 and September 1,~~ commencing on September ~~1, 2017.~~15, 2018. Interest on each series of notes due in 2038, 2048 and 2058 is payable semi-annually in arrears, commencing on October 15, 2018.

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15. Revenue

Disaggregation of Revenue

The following tables represent a disaggregation of revenue for each reportable segment for the three and six months ended June 30, 2019 and 2018:



	Three Months Ended June 30, 2019
(In millions)	L&S		G&P		Total
Revenues and other income:
Service revenue	$	33	$	415	$	448
Service revenue - related parties	620		—		620
Service revenue - product related	—		26		26
Product sales⁽¹⁾	2		166		168
Product sales - related parties	2		12		14
Total revenues from contracts with customers	$	657	$	619	1,276
Non-ASC 606 revenue⁽²⁾					353
Total revenues and other income					$	1,629



	Three Months Ended June 30, 2018
(In millions)	L&S		G&P		Total
Revenues and other income:
Service revenue	$	32	$	378	$	410
Service revenue - related parties	549		—		549
Service revenue - product related	—		51		51
Product sales⁽¹⁾	1		207		208
Product sales - related parties	2		11		13
Total revenues from contracts with customers	$	584	$	647	1,231
Non-ASC 606 revenue⁽²⁾					347
Total revenues and other income					$	1,578



	Six Months Ended June 30, 2019
(In millions)	L&S		G&P		Total
Revenues and other income:
Service revenue	$	67	$	819	$	886
Service revenue - related parties	1,198		—		1,198
Service revenue - product related	—		60		60
Product sales⁽¹⁾	3		367		370
Product sales - related parties	4		21		25
Total revenues from contracts with customers	$	1,272	$	1,267	2,539
Non-ASC 606 revenue⁽²⁾					736
Total revenues and other income					$	3,275

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	Six Months Ended June 30, 2018
(In millions)	L&S		G&P		Total
Revenues and other income:
Service revenue	$	60	$	732	$	792
Service revenue - related parties	1,020		—		1,020
Service revenue - product related	—		95		95
Product sales⁽¹⁾	2		412		414
Product sales - related parties	3		14		17
Total revenues from contracts with customers	$	1,085	$	1,253	2,338
Non-ASC 606 revenue⁽²⁾					660
Total revenues and other income					$	2,998

(1) G&P “Product sales” for the three and six months ended June 30, 2018 includes approximately $2 million and $1 million of revenue related to derivative gains and losses and mark-to-market adjustments, respectively. There were no adjustments for the three and six months ended June 30, 2019.

(2) Non-ASC 606 Revenue includes rental income, income from equity method investments, derivative gains and losses, mark-to-market adjustments, and other income.

Contract Balances

Contract assets typically relate to aid in construction agreements where the revenue recognized and MPLX’s rights to consideration for work completed exceeds the amount billed to the customer. Contract assets are generally classified as current and included in “Other current assets” on the Consolidated Balance Sheets.

Contract liabilities, which we refer to as “Deferred revenue” and “Long-term deferred revenue,” typically relate to advance payments for aid in construction agreements and deferred customer credits associated with makeup rights and minimum volume commitments. Related to minimum volume commitments, breakage is estimated and recognized into service revenue in instances where it is probable the customer will not use the credit in future periods. We classify contract liabilities as current or long-term based on the timing of when we expect to recognize revenue.

“Receivables, net” primarily relate to our commodity sales. Portions of the “Receivables, net” balance are attributed to the sale of commodity product controlled by MPLX prior to sale while a significant portion of the balance relates to the sale of commodity product on behalf of our producer customers. Both types of transactions are commingled and excluded from the table below. MPLX remits the net sales price back to our producer customers upon completion of the sale. Each period end, certain amounts within accounts payable relate to our payments to producer customers. Such amounts are not deemed material at period end as a result of when we settle with each producer.

The table below reflects the changes in our contract balances for the period ended June 30, 2019:



(In millions)	Balance at December 31, 2018⁽¹⁾		Additions/ (Deletions)			Revenue Recognized⁽²⁾			Balance at June 30, 2019
Contract assets	$	4	$	2		$	(1	)	$	5
Deferred revenue	4		2			(1		)	5
Deferred revenue - related parties	50		4			(17		)	37
Long-term deferred revenue	10		3			—			13
Long-term deferred revenue - related parties	$	42	$	(2	)	$	—		$	40

(1) Balance represents ASC 606 portion of each respective line item.

(2) No significant revenue was recognized related to past performance obligations in the current period.

Remaining Performance Obligations

The table below includes estimated revenue expected to be recognized in the future related to performance obligations that are unsatisfied (or partially unsatisfied) at the end of the reporting period.

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As of June 30, 2019, the amounts allocated to contract assets and contract liabilities on the Consolidated Balance Sheets are $93 million and are reflected in the amounts below. This will be recognized as revenue as the obligations are satisfied, which is expected to occur over the next 25 years. Further, MPLX does not disclose variable consideration due to volume variability in the table below.



(In millions)
2019	$	587
2020	1,181
2021	1,196
2022	1,181
2023 and thereafter	5,655
Total revenue on remaining performance obligations^(1),(2),(3)	$	9,800

(1) All fixed consideration from contracts with customers is included in the amounts presented above. Variable consideration that is constrained or not required to be estimated as it reflects our efforts to perform is excluded.

(2) Arrangements deemed implicit leases are included in “Rental income” and are excluded from this table.

(3) Only minimum volume commitments that are deemed fixed are included in the table above. MPLX has various minimum volume commitments in processing arrangements that vary based on the actual Btu content of the gas received. These amounts are deemed variable consideration and are excluded from the table above.

We do not disclose information on the future performance obligations for any contract with an original expected duration of

one year or less.

16. Supplemental Cash Flow Information

Nine Months Ended September 30,
(In millions) 2017 2016
Net cash provided by operating activities included:
Interest paid (net of amounts capitalized) $ 207
$ 158
Non-cash investing and financing activities:
Net transfers of property, plant and equipment from materials and supplies inventories $ 6
$ (4 )
Contribution of fixed assets to joint venture⁽¹⁾
337
—



(In millions)	June 30, 2019		December 31, 2018
Cash and cash equivalents	$	7	$	68
Restricted cash⁽¹⁾	—		8
Cash, cash equivalents and restricted cash	$	7	$	76

(1) The restricted cash balance is included within “Other current assets” on the Consolidated Balance Sheets.


~~(1)~~	~~Contribution of assets to Sherwood Midstream and Sherwood Midstream Holdings. See Note 4.~~



	Six Months Ended June 30,
(In millions)	2019		2018
Net cash provided by operating activities included:
Interest paid (net of amounts capitalized)	$	284	$	154
Income taxes paid	—		1
Cash paid for amounts included in the measurement of lease liabilities
Payments on operating leases	35		—
Non-cash investing and financing activities:
Net transfers of property, plant and equipment from materials and supplies inventories	1		2
ROU assets obtained in exchange for new operating lease obligations	6		—
ROU assets obtained in exchange for new finance lease obligations	$	3	$	—

The Consolidated Statements of Cash Flows exclude changes to the Consolidated Balance Sheets that did not affect cash. The following is the change of additions to property, plant and equipment related to capital accruals:



	Six Months Ended June 30,
(In millions)	2019			2018
(Decrease)/increase in capital accruals	$	(85	)	$	115

Nine Months Ended September 30,
(In millions) 2017 2016
Increase in capital accruals $ 55
$ —

17. Accumulated Other Comprehensive Loss

MPLX LP records an accumulated other comprehensive loss on the Consolidated Balance Sheets relating to pension and other post-retirement benefits provided by LOOP LLC (“LOOP”) and Explorer Pipeline Company (“Explorer”) to their employees. MPLX LP is not a sponsor of these benefit plans.

The following table shows the changes in “Accumulated other comprehensive loss” by component during the period December 31, 2018 through June 30, 2019.



(In millions)	Pension Benefits			Other Post-Retirement Benefits			Total
Balance at December 31, 2018⁽¹⁾	$	(14	)	$	(2	)	$	(16	)
Other comprehensive income - remeasurements⁽²⁾	—			1			1
Balance at June 30, 2019⁽¹⁾	$	(14	)	$	(1	)	$	(15	)

The following table shows the changes in “Accumulated other comprehensive loss” by component during the period December 31, 2017 through June 30, 2018.



(In millions)	Pension Benefits			Other Post-Retirement Benefits			Total
Balance at December 31, 2017⁽¹⁾	$	(13	)	$	(1	)	$	(14	)
Other comprehensive loss - remeasurements⁽²⁾	(1		)	(1		)	(2		)
Balance at June 30, 2018⁽¹⁾	$	(14	)	$	(2	)	$	(16	)

(1) These components of “Accumulated other comprehensive loss” are included in the computation of net periodic benefit cost by LOOP and Explorer and are therefore included on the Consolidated Statements of Income under the caption “Income/(loss) from equity method investments.”

(2) Components of other comprehensive income/loss - remeasurements relate to actuarial gains and losses as well as amortization of prior service costs. MPLX records an adjustment to “Comprehensive income” in accordance with its ownership interest in LOOP and Explorer.

~~16.~~18. Equity-Based Compensation

Phantom Units – The following is a summary of phantom unit award activity of MPLX LP common units for the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2019:



	Number of Units		Weighted Average Fair Value
Outstanding at December 31, 2018	1,154,335		$	34.34
Granted	197,345		33.08
Settled	(377,559	)	33.42
Forfeited	(16,255	)	34.82
Outstanding at June 30, 2019	957,866		$	34.44

Number
of Units Weighted
Average
Fair Value
Outstanding at December 31, 2016 1,173,411
$ 33.09
Granted 653,721
36.36
Settled (288,584 ) 33.50
Forfeited (113,107 ) 34.59
Outstanding at September 30, 2017 1,425,441
34.39

Performance Units – ~~The Partnership~~MPLX grants performance units ~~under the MPLX LP 2012 Incentive Compensation Plan~~ to certain officers of the general partner and certain eligibleMPC officers who make significant contributions to its business. These performance units pay out 75 percent in cash and 25 percent in MPLX LP common ~~units. The~~units and often contain both market and performance ~~units paying out in units~~conditions based on various metrics. Market conditions are ~~accounted for as equity awards.~~ valued using a Monte Carlo valuation while performance conditions are reevaluated periodically and valued at the compensation cost associated with the performance outcome deemed most probable.

The performance units granted in ~~2017~~2019 are hybrid awards having a three-year performance period of January 1, ~~2017~~2019 through December 31, ~~2019.~~2021. The payout of the award is dependent on two independent conditions, each constituting 50 percent of the overall target units granted. The awards have a performance condition based on MPLX LP’s ~~DCF during the last twelve months of the performance period,~~distributable cash flow, and a market condition based on MPLX LP’s total unitholder ~~return over the entire three-year performance period.~~return. The market condition was valued using a Monte Carlo valuation, ~~with the result being combined with the expected payout of the performance condition as of the grant date,~~ resulting in a grant date fair value of ~~$0.90~~$.68 per unit for the ~~2017~~2019 equity-classified performance units. Grant date fair value of the performance condition is based on potential payouts per unit of up to $2.00 per unit. Compensation cost associated with the

performance condition is based on the grant date fair value of the payout deemed most probable to occur and is adjusted as the expectation for payout changes.

During the first quarter of 2018, a performance award was granted; however, a grant date could not be established based on the nature of the award terms. Given that a grant date cannot be established, no expense or units have been recorded. When a grant date is established, the fair value of the award will be recognized over the remaining performance period.

The following is a summary of the ~~equity-classified~~activity for performance unit ~~award activity~~awards to be settled in MPLX LP common units for the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2019:



	Number of Units
Outstanding at December 31, ~~2016~~2018	~~1,799,249~~1,941,750
Granted	~~1,407,062~~987,994
Settled	(~~464,500~~772,397	)
Forfeited	~~(35,217~~—	)
Outstanding at ~~September~~June 30, ~~2017~~2019	~~2,706,594~~2,157,347

19. Leases

For further information regarding the adoption of ASC 842, including the method of adoption and practical expedients elected, see Note 2.

Lessee

We lease a wide variety of facilities and equipment under leases from third parties, including land and building space, office and field equipment, storage facilities and transportation equipment, while our related party leases primarily relate to ground leases associated with our refining logistics assets. Our remaining lease terms range from less than one year to 60 years. Some long-term leases include renewal options ranging from one to 50 years and, in certain leases, also include purchase options. Renewal options and termination options were not included in the measurement of ROU assets and lease liabilities since it was determined they were not reasonably certain to be exercised.

Under ASC 842, the components of lease costs were as follows:



	Three Months Ended June 30, 2019				Six Months Ended June 30, 2019
(In millions)	Related Party		Third Party		Related Party		Third Party
Components of lease costs:
Operating lease costs	$	4	$	14	$	8	$	28
Variable lease cost	—		1		—		3
Short-term lease cost	—		11		—		21
Total lease cost	$	4	$	26	$	8	$	52

~~17.~~

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Supplemental balance sheet data related to leases were as follows:



	June 30, 2019
(In millions)	Related Party			Third Party
Operating leases
Assets
Right of use assets	$	232		$	255
Liabilities
Operating lease liabilities	1			47
Long-term operating lease liabilities	231			209
Total operating lease liabilities	$	232		$	256
Weighted average remaining lease term	47.67 years			6.74 years
Weighted average discount rate	5.80		%	4.31		%

Finance leases
Assets
Property, plant and equipment, gross				$	27
Accumulated depreciation				9
Property, plant and equipment, net				18
Liabilities
Other current liabilities				6
Long-term debt				2
Total finance lease liabilities				$	8
Weighted average remaining lease term				16.82 years
Weighted average discount rate				5.76		%

As of June 30, 2019, maturities of lease liabilities for operating lease obligations and finance lease obligations having initial or remaining non-cancellable lease terms in excess of one year are as follows:



(In millions)	Related Party Operating Leases		Third Party Operating Leases		Finance Leases
2019	$	8	$	30	$	1
2020	14		55		6
2021	14		52		—
2022	14		47		—
2023	14		43		—
2024 and thereafter	619		68		7
Gross lease payments	683		295		14
Less: imputed interest	451		39		6
Total lease liabilities	$	232	$	256	$	8

Future minimum commitments as of December 31, 2018, for capital lease obligations and for operating lease obligations having initial or remaining non-cancellable lease terms in excess of one year are as follows:

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(In millions)	Operating Lease Obligations		Capital Lease Obligations
2019	$	73	$	2
2020	70		5
2021	67		—
2022	64		—
2023	58		—
2024 and thereafter	719		—
Total minimum lease payments	$	1,051	7
Less: imputed interest costs			1
Present value of net minimum lease payments			$	6

Lessor

Based on the terms of fee-based transportation and storage services agreements with MPC as well as certain natural gas gathering, transportation and processing agreements, MPLX is considered to be the lessor under several operating lease arrangements in accordance with GAAP. The agreements with MPC have remaining terms ranging from less than one year to 12 years with renewal options ranging from zero to 10 years. MPLX’s primary natural gas lease operations relate to a natural gas gathering agreement in the Marcellus Shale for which it earns a fixed-fee for providing gathering services to a single producer using a dedicated gathering system. As the gathering system is expanded, the fixed-fee charged to the producer is adjusted to include the additional gathering assets in the lease. The primary term of the natural gas gathering arrangement expires in 2038 and will continue thereafter on a year-to-year basis until terminated by either party. Other significant natural gas implicit leases relate to a natural gas processing agreement in the Marcellus Shale and a natural gas processing agreement in the Southern Appalachia region for which MPLX earns minimum monthly fees for providing processing services to a single producer using a dedicated processing plant. The primary term of these natural gas processing agreements expires during 2023 and 2033, these contracts will continue thereafter on a year-to-year basis until terminated by either party. MPLX’s revenue from its lease arrangements, excluding executory costs, totaled approximately $216 million and $464 million for the three and six months ended June 30, 2019, respectively.

MPLX did not elect to use the practical expedient to combine lease and non-lease components for lessor arrangements. The tables below represent the portion of the contract allocated to the lease component based on relative standalone selling price. Lessor agreements are currently deemed operating, as we elected the practical expedient to carry forward historical classification conclusions. We will determine the impact of the new standard on these arrangements if and when a modification occurs and they are required to be assessed under ASC 842. MPLX may be required to re-classify existing operating leases to sales-type leases upon modification and related reassessment of the leases.

MPLX’s lease arrangements related to the processing facilities contain contingent rental provisions whereby MPLX receives additional fees if the producer customer exceeds the monthly minimum processed volumes. During the three and six months ended June 30, 2019, MPLX received less than $1 million of contingent lease payments.

The following is a schedule of minimum future rental revenue on the non-cancellable operating leases as of June 30, 2019:



(In millions)	Related Party		Third Party		Total
2019	$	316	$	90	$	406
2020	633		178		811
2021	636		169		805
2022	635		166		801
2023	623		161		784
2024 and thereafter	2,409		1,264		3,673
Total minimum future rentals	$	5,252	$	2,028	$	7,280

The following is a schedule of minimum future rental revenue on the non-cancellable operating leases as of December 31, 2018:

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(In millions)	Related Party		Third Party		Total
2019	$	748	$	160	$	908
2020	750		159		909
2021	627		150		777
2022	627		148		775
2023	616		142		758
2024 and thereafter	2,321		1,111		3,432
Total minimum future rentals	$	5,689	$	1,870	$	7,559

The following schedule summarizes MPLX’s investment in assets held for operating lease by major classes as of June 30, 2019 and December 31, 2018:



(In millions)	June 30, 2019		December 31, 2018
Natural gas gathering and NGL transportation pipelines and facilities	$	1,038	$	964
Processing, fractionation and storage facilities	1,550		1,398
Pipelines and related assets	275		266
Barges and towing vessels	656		619
Terminals and related assets	1,185		1,178
Refinery related assets	949		938
Land, building, office equipment and other	207		162
Total	5,860		5,525
Less accumulated depreciation	2,230		2,038
Property, plant and equipment, net	$	3,630	$	3,487

20. Commitments and Contingencies

~~The Partnership~~MPLX is the subject of, or a party to, a number of pending or threatened legal actions, contingencies and commitments involving a variety of matters, including laws and regulations relating to the environment. Some of these matters are discussed below. For matters for which ~~the Partnership~~MPLX has not recorded an accrued liability, ~~the Partnership~~MPLX is unable to estimate a range of possible losses for the reasons discussed in more detail below. For matters for which MPLX has recorded an accrued liability, MPLX does not consider it reasonably possible that a loss resulting from such matter in excess of any amounts accrued has been incurred that is expected to have a material adverse effect on MPLX’s consolidated financial position, results of operations or cash flows. However, the ultimate resolution of some of these contingencies could, individually or in the aggregate, be material.

Environmental Matters – ~~The Partnership~~MPLX is subject to federal, state and local laws and regulations relating to the environment. These laws generally provide for control of pollutants released into the environment and require responsible parties to undertake remediation of hazardous waste disposal sites. Penalties may be imposed for non-compliance.

At ~~September~~June 30, ~~2017~~2019 and December 31, ~~2016,~~2018, accrued liabilities for remediation totaled ~~$14~~$16 million and $3$14 million, respectively. However, it is not presently possible to estimate the ultimate amount of all remediation costs that might be incurred or the penalties, if any, which may be imposed. At June 30, 2019 and December 31, ~~2016,~~2018, there ~~was less than $1 million in receivables from~~were no balances with MPC for indemnification of environmental ~~costs related to incidents occurring prior to the Initial Offering. There were no such receivables at September 30, 2017.~~costs.

In July 2015, representatives from the EPA and the United States Department of Justice conducted a raid on a MarkWest Liberty Midstream pipeline launcher/receiver site utilized for pipeline maintenance operations in Washington County, Pennsylvania pursuant to a search warrant issued by a magistrate of the United States District Court for the Western District of Pennsylvania. As part of this initiative, the U.S. Attorney’s Office for the Western District of Pennsylvania proceeded with an investigation of MarkWest Liberty Midstream’s launcher/receiver, pipeline and compressor station operations. In response to the investigation, MarkWest initiated independent studies which demonstrated that there was no risk to worker safety and no threat of public harm associated with MarkWest Liberty Midstream’s launcher/receiver operations. These findings were supported by a subsequent inspection and review by the Occupational Safety and Health Administration. After providing these studies, and other substantial documentation related to MarkWest Liberty Midstream's pipeline and compressor stations, and arranging site visits and conducting several meetings with the government’s representatives, on September 13, 2016, the U.S. Attorney’s Office for the Western District of Pennsylvania rendered a declination decision, dropping its criminal investigation and declining to pursue charges in this matter.

~~The Partnership~~MPLX is involved in ~~a number of other~~ environmental enforcement matters arising in the ordinary course of business. While the outcome and impact on MPLX LP cannot be predicted with certainty, management believes the resolution of these environmental matters will not, individually or collectively, have a material adverse effect on its consolidated results of operations, financial position or cash flows.

Other Lawsuits – MPLX, MarkWest, MarkWest Liberty Midstream, MarkWest Liberty Bluestone, L.L.C., Ohio Fractionation and MarkWest Utica EMG (collectively, the “MPLX Parties”) are parties to various lawsuits with Bilfinger Westcon, Inc. (“Westcon”) that were instituted in 2016 and 2017 in Pennsylvania, West Virginia and Ohio. The lawsuits relate to disputes regarding construction work performed by Westcon at the Bluestone, Mobley and Cadiz processing complexes in Pennsylvania,

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West Virginia and Ohio, respectively, and the Hopedale fractionation complex in Ohio. With respect to work performed by Westcon at the Mobley and Bluestone processing complexes, one or more of the MPLX Parties have asserted breach of contract, fraud, and with respect to work performed at the Mobley processing complex, MarkWest Liberty Midstream has also asserted negligent misrepresentation claims against Westcon. Westcon has also asserted claims against one or more of the MPLX Parties regarding these construction projects for breach of contract, unjust enrichment, promissory estoppel, fraud and constructive fraud, tortious interference with contractual relations, and civil conspiracy. Collectively, in the several cases, the MPLX Parties sought in excess of $10 million, plus an unspecified amount of punitive damages. Collectively, in the several cases, Westcon sought in excess of $40 million, plus an unspecified amount of punitive damages. On July 31, 2019, Westcon and the MPLX Parties reached an agreement to resolve the disputes among those parties relating to the Bluestone processing complex in Pennsylvania. The settlement will not have a material adverse effect on MPLX’s consolidated financial position, results of operations or cash flows. While the ultimate outcome and impact to MPLX cannot be predicted with certainty, MPLX does not consider it reasonably possible that a loss resulting from the remaining lawsuits or other proceedings in excess of any amounts accrued has been incurred that is expected to have a material adverse effect on its consolidated financial position, results of operations, or cash flows.

In 2003, the State of Illinois brought an action against the Premcor Refining Group, Inc. (“Premcor”) and Apex Refining Company (“Apex”) asserting claims for environmental cleanup related to the refinery owned by these entities in the Hartford/Wood River, Illinois area. In 2006, Premcor and Apex filed third-party complaints against numerous owners and operators of petroleum products facilities in the Hartford/Wood River, Illinois area, including Marathon Pipe Line LLC (“MPL”). These complaints, which have been amended since filing, assert claims of common law nuisance and contribution under the Illinois Contribution Act and other laws for environmental cleanup costs that may be imposed on Premcor and Apex by the State of Illinois. On September 6, 2016, the trial court approved a settlement between Apex and the State of Illinois whereby Apex agreed to settle all claims against it for a $10 million payment. Premcor filed a motion for permissive appeal and requested a stay to the proceeding until the motion is ruled upon. Premcor reached a settlement with the State of Illinois in the second quarter of 2018, which has been objected to ~~this ruling~~by certain third-party defendants, including MPL, and is ~~seeking an appeal. There are several~~subject to court approval. Several third-party defendants in the litigation ~~and~~including MPL ~~has~~have asserted cross-claims in contribution against the various third-party defendants. This litigation is currently pending in the Third Judicial Circuit Court, Madison County,

Illinois. The trial concerning Premcor’s claims against third-party defendants, including MPL, previously scheduled to commence September 10, 2018, has been postponed and a new trial date has not been set. While the ultimate outcome ~~of these litigated matters remains uncertain, neither the likelihood of an unfavorable outcome nor the ultimate liability, if any,~~and impact to MPLX cannot be predicted with ~~respect to this matter can be determined at this time and the Partnership is unable to estimate a~~certainty, MPLX does not consider it reasonably possible that a loss ~~(or range~~resulting from such lawsuits or other proceedings in excess of ~~losses) for this litigation.~~any amounts accrued has been incurred that is expected to have a material adverse effect on its consolidated financial position, results of operations, or cash flows. Under the omnibus agreement, MPC will indemnify ~~the Partnership~~MPLX for the full cost of any losses should MPL be deemed responsible for any damages in this lawsuit.

~~The Partnership~~MPLX is also a party to a number of other lawsuits and other proceedings arising in the ordinary course of business. While the ultimate outcome and impact to ~~the Partnership~~MPLX cannot be predicted with certainty, ~~the Partnership~~MPLX believes the resolution of these other lawsuits and proceedings will not have a material adverse effect on its consolidated financial position, results of operations or cash flows.

Guarantees– Over the years, ~~the Partnership~~MPLX has sold various assets in the normal course of its business. Certain of the related agreements contain performance and general guarantees, including guarantees regarding inaccuracies in representations, warranties, covenants and agreements, and environmental and general indemnifications that require ~~the Partnership~~MPLX to perform upon the occurrence of a triggering event or condition. These guarantees and indemnifications are part of the normal course of selling assets. ~~The Partnership~~MPLX is typically not able to calculate the maximum potential amount of future payments that could be made under such contractual provisions because of the variability inherent in the guarantees and indemnities. Most often, the nature of the guarantees and indemnities is such that there is no appropriate method for quantifying the exposure because the underlying triggering event has little or no past experience upon which a reasonable prediction of the outcome can be based.

In connection with our approximate 9 percent indirect interest in a joint venture that owns and operates the Dakota Access Pipeline and Energy Transfer Crude Oil Pipeline projects, collectively referred to as the Bakken Pipeline system, we have entered into a Contingent Equity Contribution Agreement whereby MPLX LP, along with the other joint venture owners in the Bakken Pipeline system, have agreed to make equity contributions to the joint venture upon certain events occurring to allow the entities that own and operate the Bakken Pipeline system to satisfy their senior note payment obligations. The senior notes were issued to repay amounts owed by the pipeline companies to fund the cost of construction of Bakken Pipeline system. As of June 30, 2019, our maximum potential undiscounted payments under the Contingent Equity Contribution Agreement were approximately $230 million.

Contractual Commitments and Contingencies – At ~~September~~June 30, ~~2017, the Partnership’s~~2019, MPLX’s contractual commitments to acquire property, plant and equipment totaled ~~$520~~$528 million. These commitments ~~at September 30, 2017~~ were primarily related to plant expansion projects for the

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Marcellus and Southwest Operations. In addition, from time to time and in the ordinary course of business, ~~the Partnership~~MPLX and its affiliates provide guarantees of ~~the Partnership’s~~MPLX’s subsidiaries payment and performance obligations in the G&P segment. Certain natural gas processing and gathering arrangements require ~~the Partnership~~MPLX to construct new natural gas processing plants, natural gas gathering pipelines and NGL pipelines and contain certain fees and charges if specified construction milestones are not achieved for reasons other than force majeure. In certain cases, certain producers may have the right to cancel the processing arrangements if there are significant delays that are not due to force majeure. As of ~~September~~June 30, ~~2017,~~2019, management does not believe there are any indications that ~~the Partnership~~MPLX will not be able to meet the construction milestones, that force majeure does not apply or that such fees and charges will otherwise be triggered.

21. Subsequent Events

As previously disclosed, on May 7, 2019, ANDX, TLGP, MPLX, MPLX GP and Merger Sub, entered into a Merger Agreement that provided for, among other things, the merger of Merger Sub with and into ANDX. On July 30, 2019, the Merger was completed, and ANDX survived the Merger as a wholly-owned subsidiary of MPLX. At the effective time of the Merger, each common unit held by ANDX’s public unitholders was converted into the right to receive 1.135 MPLX common units. ANDX common units held by certain affiliates of MPC were converted into the right to receive 1.0328 MPLX common units. Also effective July 30, 2019 in connection with the closing of the Merger, MPLX amended and restated its existing $2.25 billion revolving credit facility to increase borrowing capacity to up to $3.5 billion and extend its term to July 30, 2024. ANDX’s revolving credit facilities totaling $2.1 billion in borrowing capacity were terminated upon the closing and repaid with borrowings under the MPLX revolving credit facility. Additionally, on July 31, 2019, MPLX upsized its existing $1.0 billion intercompany loan agreement with MPC to $1.5 billion. See Note 3 for additional information related to this transaction.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Management’s Discussion and Analysis of Financial Condition and Results of Operations should be read in conjunction with the unaudited financial statements and accompanying footnotes included under Item 1. Financial Statements and in conjunction with our Annual Report on Form 10-K for the year ended December 31, ~~2016, as updated by our Current Report on Form 8-K filed on May 1, 2017.~~2018.

Disclosures Regarding Forward-Looking Statements

Management’s Discussion and Analysis of Financial Condition and Results of Operations includes various forward-looking statements concerning trends or events potentially affecting our business. You can identify our forward-looking statements by words such as “anticipate,” “believe,” ~~“estimate,~~“could,” ~~“objective,~~“design,” “estimate,” “expect,” “forecast,” “goal,” “guidance,” “imply,” “intend,” “may,” “objective,” “opportunity,” “outlook,” “plan,” “position,” “potential,” “predict,” “project,” ~~“potential,~~“prospective,” “pursue,” “seek,” “should,” “strategy,” “target,” ~~“could,~~“will,” ~~“may,” “should,” “would,” “will”~~“would” or other similar expressions that convey the uncertainty of future events or outcomes. ~~In accordance with “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995, these~~These statements are accompanied by cautionary language identifying important factors, though not necessarily all such factors, ~~which~~that could cause future outcomes to differ materially from those set forth in the forward-looking statements. We undertake no obligation to update any forward-looking statements except to the extent required by applicable law.

Forward-looking statements include, but are not limited to, statements that relate to, or statements that are subject to risks, contingencies or uncertainties that relate to:

MPLX’s acquisition of ANDX;

future levels of revenues and other income, income from operations, net income attributable to MPLX LP, earnings per unit, Adjusted EBITDA or DCF (see the Non-GAAP Financial Information section below for the definitions of Adjusted EBITDA and DCF);

the regional, national and worldwide availability and pricing of refined products, crude oil, natural gas, NGLs and other feedstocks;

the timing and extent of changes in commodity prices and demand for crude oil, refined products, feedstocks or other hydrocarbon-based products;

our ability to manage disruptions in credit markets or changes to our credit rating;

anticipated levels of drilling activity, production rates and volumes of throughput of crude oil, natural gas, NGLs, refined products or other hydrocarbon-based products;

future levels of capital, environmental or maintenance expenditures, general and administrative and other expenses;

the success or timing of completion of ongoing or anticipated capital or maintenance projects;

the reliability of processing units and other equipment;

expectations regarding joint venture arrangements and other acquisitions, including the dropdowns completed by MPC, or divestitures of assets;

business strategies, growth opportunities and expected investment;

the adequacy of our capital resources and liquidity, including but not limited to, availability of sufficient cash flow to pay distributions and access debt on commercially reasonable terms;

the effect of restructuring or reorganization of business components;

the potential effects of judicial or other proceedings on our business, financial condition, results of operations and cash flows;

the potential effects of changes in tariff rates on our business, financial condition, results of operations and cash flows;

continued or further volatility in and/or degradation of general economic, market, industry or business conditions;

compliance with federal and state environmental, economic, health and safety, energy and other policies and regulations and/or enforcement actions initiated thereunder;

our ability to successfully execute our business plans, growth strategy and self-funding model;

capital market conditions, including the cost of capital, and our ability to raise adequate capital to execute our business plan and implement our growth strategy; and

the anticipated effects of actions of third parties such as competitors; or federal, foreign, state or local regulatory authorities; or plaintiffs in litigation.

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Our forward-looking statements are not guarantees of future performance and you should not rely unduly on them, as they involve risks, uncertainties and assumptions that we cannot predict. Material differences between actual results and any future performance suggested in our forward-looking statements could result from a variety of factors, including the following:

volatility or degradation in general economic, market, industry or business conditions;

risks and uncertainties associated with intangible assets, including any future goodwill or intangible assets impairment charges;

availability and pricing of domestic and foreign supplies of natural gas, NGLs and crude oil and other feedstocks;

availability and pricing of domestic and foreign supplies of refined products such as gasoline, diesel fuel, jet fuel, home heating oil and petrochemicals;

foreign imports and exports of crude oil, refined products, natural gas and NGLs;

completion of midstream infrastructure by competitors;

midstream and refining industry overcapacity or under capacity;

changes in the cost or availability of third-party vessels, pipelines, railcars and other means of transportation for crude oil, natural gas, NGLs, feedstocks and refined products;

the price, availability and acceptance of alternative fuels and alternative-fuel vehicles and laws mandating such fuels or vehicles;

fluctuations in consumer demand for refined products, natural gas and NGLs, including seasonal fluctuations;

changes to the expected construction costs and timing of projects and planned investments, and our ability to obtain regulatory and other approvals with respect thereto;

political and economic conditions in nations that consume refined products, natural gas and NGLs, including the United States, and in crude oil producing regions, including the Middle East, Africa, Canada and South America;

actions taken by our competitors, including pricing adjustments and the expansion and retirement of pipeline capacity, processing, fractionation and treating facilities in response to market conditions;

changes in fuel and utility costs for our facilities;

failure to realize the benefits projected for capital projects, or cost overruns associated with such projects;

the ability to achieve strategic and financial objectives, including with respect to proposed projects and transactions;

accidents or other unscheduled shutdowns affecting our machinery, pipelines, processing, fractionation and treating facilities or equipment, or those of our suppliers or customers;

unusual weather conditions and natural disasters;

disruptions due to equipment interruption or failure, including electrical shortages and power grid failures;

acts of war, terrorism or civil unrest that could impair our ability to gather, process, fractionate or transport crude oil, natural gas, NGLs or refined products;

state and federal environmental, economic, health and safety, energy and other policies and regulations, including the cost of compliance;

the ability to complete any divestitures on commercially reasonable terms and/or within the expected timeframe, and the effects of any such divestitures on the business, financial condition, results of operations and cash flows;

adverse changes in laws including with respect to tax and regulatory matters;

modifications to financial policies, capital budgets, and earnings and distributions;

rulings, judgments or settlements and related expenses in litigation or other legal, tax or regulatory matters, including unexpected environmental remediation costs, in excess of any reserves or insurance coverage;

the suspension, reduction or termination of MPC’s obligations under MPLX’s commercial agreements;

political pressure and influence of environmental groups upon policies and decisions related to the production, gathering, refining, processing, fractionation, transportation and marketing of crude oil or other feedstocks, refined products, natural gas, NGLs or other hydrocarbon-based products;

labor and material shortages;

changes to our capital budget;

the ability and willingness of parties with whom we have material relationships to perform their obligations to us;

negative capital market conditions, including an increase of the current yield on MPLX LP common units, adversely affecting MPLX LP’s ability to meet its distribution growth guidance;

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changes in the credit ratings assigned to our debt securities and trade credit, changes in the availability of unsecured credit, changes affecting the credit markets generally and our ability to manage such changes; and

For additional risk factors affecting our business, see ~~Item~~“Item 1A. Risk ~~Factors~~Factors” below, together with the risk factors described in our Annual Report on Form 10-K for the year ended December 31, ~~2016.~~2018.

~~PARTNERSHIP~~MPLX OVERVIEW

We are a diversified, ~~growth-oriented master limited partnership~~large-cap MLP formed by MPC, ~~to own, operate, develop~~that owns and ~~acquire~~operates midstream energy infrastructure ~~assets.~~and logistics assets, and provides fuels distribution services. We are engaged in ~~the gathering, processing and transportation of natural gas; the gathering, transportation, fractionation, storage and marketing of NGLs; and~~ the transportation, storage and distribution of crude oil and refined petroleum ~~products.~~products; gathering, processing and transportation of natural gas; and the gathering, transportation, fractionation, storage and marketing of NGLs. Our operations are conducted in our Logistics and Storage and Gathering and Processing segments.

SIGNIFICANT FINANCIAL AND OTHER HIGHLIGHTS

Significant financial and other highlights for the three months ended ~~September~~June 30, ~~2017~~2019 are listed below. Refer to Results of Operations and Liquidity and Capital Resources for further details.

L&S ~~segment operating income attributable to MPLX LP~~Segment Adjusted EBITDA increased approximately ~~$89~~$43 million, or 728 percent, for the three months ended ~~September~~June 30, ~~2017~~2019 compared to the same period of ~~2016 due~~2018. This increase is primarily attributable to ~~$74 million~~higher transportation volumes and rates. L&S Segment Adjusted EBITDA was also impacted by increased fees from ~~the inclusion of HST, WHC~~Refining Logistics and ~~MPLXT results after our acquisition~~Fuels Distribution, increased terminal throughputs and marine vessels as ~~of March 1, 2017and$7 million from~~well as the acquisition of the ~~Ozark pipeline.~~

Mt. Airy terminal in the third quarter of 2018.

G&P ~~segment operating income attributable to MPLX LP~~Segment Adjusted EBITDA increased approximately ~~$56~~$10 million, or 193 percent, for the three months ended ~~September~~June 30, ~~2017~~2019 compared to the same period of ~~2016.~~2018. The increase can be attributed to additional fees from increased volumes which were partially offset by price impacts and major maintenance downtime at our Javelina facility. The G&P segment realized ~~product price increases and~~ volume increases during the ~~third~~second quarter of ~~2017~~2019 primarily due to ~~expansions~~continued growth in the Marcellus and Southwest as ~~well as growth~~volumes continue to increase at recently completed plants/expansions when comparing second quarter 2019 to the ~~Sherwood, Majorsville and Bluestone (previously referred to as Keystone) plants.~~same period in 2018. Compared to the ~~third~~second quarter of ~~2016,~~2018, processing volumes were up approximately 1115 percent, fractionated volumes were up approximately 1413 percent and gathering volumes were up approximately 1315 percent.

~~Additional highlights for~~Other Highlights

Announced a final investment decision to move forward with the ~~three~~design and ~~nine months ended September 30, 2017, including a look ahead to anticipated growth, are listed below.~~

~~Acquisition and Growth Activities~~

On September 27, 2017, MPC authorized an offer of MPLX Fuels Distributions LLC and MPLX Refining Logistics LLC to MPLX LP in exchange for cash and limited and general partnership units. MPLX Fuels Distribution LLC is structured to provide a broad range of scheduling and marketing services as MPC’s sole and exclusive agent. MPLX Refining Logistics LLC contains the integrated tank farm assets that support MPC’s refining operations. These essential logistics assets include: approximately 56 million barrels storage capacity (crude, finished products and intermediates), 619 tanks, 32 rail and truck racks, and 18 docks and gasoline blenders. This offer, which is projected to contribute approximately $1.0 billion of annual EBITDA, is currently under review by the conflicts committeeconstruction of the ~~board~~Whistler Pipeline after having secured sufficient firm transportation agreements with shippers. The majority of ~~directors~~available capacity on the planned pipeline has been subscribed and committed by long-term transportation agreements. The Whistler Pipeline is being designed to transport approximately 2 Bcf/d of our general partner. The transaction is expected to close no later than the end of the first quarter of 2018. If approved, this acquisition will complete a series of planned acquisitions of assets from MPC that began in early 2017. The combined sum of the three transactions totals an estimated $1.4 billion of annual EBITDA. The stable, fee-based earnings from these acquired assets add both scale and diversification to our portfolio of high-quality midstream assets.

On September 1, 2017, we acquired joint-interest ownerships in certain pipelines and storage facilities from MPC for $420 million in cash and the issuance of $653 million in MPLX LP equity. The acquired ownership interests include a 35 percent ownership interest in Illinois Extension, a 40.7 percent ownership interest in LOOP, a 58.52 percent ownership interest in LOCAP, and a 24.51 percent ownership interest in Explorer. The assets held by these entities include a 1,830-mile refined products pipeline, storage facilities, pump stations, and an offshore deep water oil port located along the Gulf Coast. The infrastructure serves primarily the Midwest and Gulf Coast regions of the United States. There is no income associated with the Joint-Interest Acquisition included in the Consolidated Statements of Income since the September 1, 2017 acquisition date, as we account for these equity method investments in arrears using the most recently available information.

On March 1, 2017, we acquired certain pipeline, storage and terminal assets from MPC for $1.5 billion in cash and the issuance of $503 million in MPLX LP equity. As of the acquisition date, the assets consisted of 174natural gas through approximately 475 miles of crude oil pipelines and 430 miles of refined products pipelines, nine butane and propane storage caverns located in Michigan with approximately 1.8 million barrels of NGL storage capacity, 59 terminals for42-inch pipeline from Waha, Texas, to the receipt, storage, blending, additization, handling and redelivery of refined petroleum products, along with one leased terminal and partial ownership interest in two terminals. Collectively, the 62 terminals had a combined total shell capacity of approximately 23.6 million barrels. The terminal facilities are located primarily in the Midwest, Gulf Coast and Southeast regions of the United States.

On March 1, 2017, we purchased the 433-mile, 22-inch Ozark crude oil pipeline for $219 million. The pipeline is capable of transporting approximately 230 mbpd and expands the footprint of our logistics and storage segment by connecting Cushing, Oklahoma-sourced volumes to our extensive Midwest pipeline network. An expansion project to increase the line's capacity to approximately 345 mbpd is expected to be completed in the second quarter of 2018.

On February 15, 2017, we acquired a 9.1875 percent indirect equity interest in the Dakota Access Pipeline and Energy Transfer Crude Oil Company Pipeline projects, collectively referred to as the Bakken Pipeline system, for $500 million. The Bakken Pipeline system is currently expected to deliver in excess of 520 mbpd of crude oil from the Bakken/Three Forks productionAgua Dulce area in North Dakota to the Midwest through Patoka, Illinois and ultimately to the Gulf Coast. During the third quarter 2017, MPLX LP benefited from the first full quarter of earnings from its indirect interest in the Bakken Pipeline system. Initial cash distributions related to this investment were also received during the third quarter 2017.

On February 6, 2017, we formed a strategic joint venture with Antero Midstream to process natural gas at the Sherwood Complex and fractionate natural gas liquids at the Hopedale Complex. This unique transaction strengthens our long-term relationship with the largest producer in the Appalachian Basin and provides the Partnership with substantial future growth opportunities. As part of this agreement, Antero Midstream released to the joint venture the dedication of approximately 195,000 gross operated acres located in Tyler, Wetzel and Ritchie counties of West Virginia. We contributed cash of $20 million, along with $353 million of assets, comprised of real property, equipment and facilities, including three 200 MMcf/d gas processing plants then under construction at the Sherwood Complex. Antero Midstream contributed cash of $154 million. The joint venture commenced operations of the first new facility during the first quarter of 2017, the second new facility during the third quarter of 2017 and expects to commence operations of the third new facility during the first quarter of 2018. Construction of a fourth new facility was announced during the first quarter of 2017 and is expected to commence operations in late 2018. In addition to the four new processing facilities, the joint venture contemplates the development of up to another seven processing facilities to support Antero Resources Corporation, which would be located at both the Sherwood Complex and a new location in West Virginia. At the Hopedale Complex, the largest fractionation facility in the Marcellus and Utica shales, the joint venture will also support the growth of Antero Resources Corporation’s NGL production by investing in 20 mbpd of existing fractionation capacity, with options to invest in future fractionation expansions.

~~Financing Activities~~

On July 21, 2017, the Partnership entered into a credit agreement to replace its previous $2.0 billion five-year bank revolving credit facility with a $2.25 billion five-year bank revolving credit facility that expires in July 2022. The financial covenants and the interest rate terms contained in the new credit agreement are substantially the same as those contained in the previous bank revolving credit facility. Additionally, on July 19, 2017, MPLX LP prepaid the entire outstanding principal amount of its $250 million term loan with cash on hand.

~~On February 10, 2017, we completed a public offering of $2.25 billion aggregate principal amount of senior notes (the “New Senior Notes”).~~

South Texas.

During the ~~nine~~six months ended ~~September~~June 30, ~~2017,~~2019, we ~~issued an aggregate of 13,846,998 commons~~did not issue any common units under our ATM ~~Program, generating net proceeds of approximately $473 million.~~Program. As of ~~September~~June 30, ~~2017,~~2019, $1.7 billion of common units remain available for issuance through the ATM Program.

Continued focus on portfolio optimization, which could include asset divestitures

RECENT DEVELOPMENTS

As previously disclosed, on May 7, 2019, ANDX, Tesoro Logistics GP, LLC, then the general partner of ANDX (“TLGP”), MPLX, MPLX GP LLC, the general partner of MPLX (“MPLX GP”), and MPLX MAX LLC, a wholly-owned subsidiary of MPLX (“Merger Sub”), entered into an Agreement and Plan of Merger (the “Merger Agreement”) that provided for, among other things, the merger of Merger Sub with and into ANDX. On July 30, 2019, the Merger was completed, and ANDX survived the Merger as a wholly-owned subsidiary of MPLX. At the effective time of the Merger, each common unit held by ANDX’s public unitholders was converted into the right to receive 1.135 MPLX common units. ANDX common units held by certain affiliates of MPC were converted into the right to receive 1.0328 MPLX common units.

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bulk petroleum distribution facilities; a trucking fleet; and natural gas processing and fractionation complexes. The assets are located in the western and inland regions of the United States.

NON-GAAP FINANCIAL INFORMATION

Our management uses a variety of financial and operating metrics to analyze our performance. These metrics are significant factors in assessing our operating results and profitability and include the non-GAAP financial measures of Adjusted EBITDA and DCF. The amount of Adjusted EBITDA and DCF generated is considered by the board of directors of our general partner in approving ~~the Partnership’s~~MPLX’s cash distributions.

We define Adjusted EBITDA as net income adjusted ~~for~~for: (i) depreciation and amortization; (ii) ~~provision~~ provision/(benefit) for income taxes; (iii) amortization of deferred financing costs; (iv) extinguishment of debt; (v) non-cash equity-based compensation; ~~(v)~~(vi) impairment expense; ~~(vi)~~(vii) net interest and other financial costs; ~~(vii) (income) loss~~(viii) income/(loss) from equity method investments; ~~(viii) distributions from unconsolidated subsidiaries considering principal payments of debt and certain capital expenditures;~~ (ix) distributions ~~of cash received from Joint-Interest Acquisition entities~~and adjustments related to ~~MPC;~~equity method investments; (x) unrealized derivative ~~losses (gains)~~gains/(losses); ~~and~~ (xi) acquisition ~~costs.~~costs; (xii) noncontrolling interest; and (xiii) other adjustments as deemed necessary. We also use DCF, which we define as Adjusted EBITDA adjusted ~~for~~for: (i) deferred revenue impacts; (ii) net interest and other financial costs; (iii) maintenance capital expenditures; (iv) equity method investment capital expenditures paid out; and ~~(iv)~~(v) other non-cash items. ~~The Partnership~~MPLX makes a distinction between realized orand unrealized gains and losses on derivatives. During the period when a derivative contract is outstanding, changes in the fair value of the derivative are recorded as an unrealized gain or loss. When a derivative contract matures or is settled, the previously recorded unrealized gain or loss is reversed and the realized gain or loss of the contract is recorded.

We believe that the presentation of Adjusted EBITDA and DCF provides useful information to investors in assessing our financial condition and results of operations. The GAAP measures most directly comparable to Adjusted EBITDA and DCF are net income and net cash provided by operating activities. Adjusted EBITDA and DCF should not be considered alternatives to GAAP net income or net cash provided by operating activities. Adjusted EBITDA and DCF have important limitations as analytical tools because they exclude some but not all items that affect net income and net cash provided by operating activities or any other measure of financial performance or liquidity presented in accordance with GAAP. Adjusted EBITDA and DCF should not be considered in isolation or as substitutes for analysis of our results as reported under GAAP. Additionally, because Adjusted EBITDA and DCF may be defined differently by other companies in our industry, our definitions of Adjusted EBITDA and DCF may not be comparable to similarly titled measures of other companies, thereby diminishing their utility. For a reconciliation of Adjusted EBITDA and DCF to their most directly comparable measures calculated and presented in accordance with GAAP, see Results of Operations.

Management ~~evaluates contract performance on~~also utilizes Segment Adjusted EBITDA in evaluating the ~~basis of net operating margin, a non-GAAP~~ financial measure, which is defined as segment revenue less segment purchased product costs less realized derivative gains (losses) related to purchased product costs. These charges have been excluded for the purpose of enhancing the understanding by both management and investors of the underlying baseline operating performance of our contractual arrangements, which management uses to evaluate our financial performance for purposes of planning and forecasting. Net operating margin does not have any standardized definition and, therefore, is unlikely to be comparable to similar measures presented by other reporting companies. Net operating margin results should not be evaluated in isolation of, or as a substitute for, our financial results prepared in accordance with GAAP. Our use of net operating margin and the underlying methodology in excluding certain charges is not necessarily an indication of the results of operations expected in the future, or that we will not, in fact, incur such charges in future periods.

~~In evaluating our financial performance, management utilizes the segment performance measures, segment revenues and segment operating income, including total segment operating income.~~segments. The use of ~~these~~this measures allows investors to understand how management evaluates financial performance to make operating decisions and allocate resources. See Note 9 of the Notes to Consolidated Financial Statements for the reconciliations of these segment measures, including total segment operating income, to their respective most directly comparable GAAP measures.

COMPARABILITY OF OUR FINANCIAL RESULTS

Our acquisitions have impacted comparability of our financial results (see Note 3 of the Notes to Consolidated Financial Statements).

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RESULTS OF OPERATIONS

The following ~~table~~tables and discussion is a summary of our results of operations for the three and ~~nine~~six months ended ~~September~~June 30, ~~2017~~2019 and ~~2016,~~2018, including a reconciliation of Adjusted EBITDA and DCF from ~~net income~~“Net income” and ~~net~~“Net cash provided by operating activities,” the most directly comparable GAAP financial measures. ~~Prior period financial information has been retrospectively adjusted for the acquisition of HST, WHC and MPLXT.~~


	Three Months Ended September 30,							Nine Months Ended September 30,								Three Months Ended June 30,							Six Months Ended June 30,
(In millions)	2017		2016		Variance			2017		2016			Variance			2019		2018		Variance			2019			2018		Variance
Total revenues and other income	$	980	$	838	$	142		$	2,782	$	2,181		$	601		$	1,629	$	1,578	$	51		$	3,275		$	2,998	$	277
Costs and expenses:
Cost of revenues (excludes items below)	129		122		7			381		329			52			233		233		—			443			439		4
Purchased product costs	170		117		53			441		310			131			166		204		(38		)	360			391		(31		)
Rental cost of sales	19		13		6			44		42			2			28		33		(5		)	65			62		3
Rental cost of sales - related parties	—		—		—			1		1			—			2		—		2			5			1		4
Purchases - related parties	114		109		5			330		286			44			239		223		16			451			400		51
Depreciation and amortization	164		151		13			515		438			77			214		188		26			425			364		61
Impairment expense	—		—		—			—		130			(130		)
General and administrative expenses	59		56		3			174		172			2			69		72		(3		)	151			141		10
Other taxes	14		12		2			40		37			3			19		17		2			38			35		3
Total costs and expenses	669		580		89			1,926		1,745			181			970		970		—			1,938			1,833		105
Income from operations	311		258		53			856		436			420			659		608		51			1,337			1,165		172
Related party interest and other financial costs	1		—		1			1		1			—			1		1		—			2			2		—
Interest expense, net of amounts capitalized	77		51		26			217		158			59			156		135		21			312			247		65
Other financial costs	15		13		2			40		37			3			13		15		(2		)	27			32		(5		)
Income before income taxes	218		194		24			598		240			358			489		457		32			996			884		112
Provision (benefit) for income taxes	1		—		1			3		(12		)	15
(Benefit)/provision for income taxes																1		1		—			(1		)	5		(6		)
Net income	217		194		23			595		252			343			488		456		32			997			879		118
Less: Net income attributable to noncontrolling interests	1		2		(1		)	3		3			—			6		3		3			12			5		7
Less: Net income attributable to Predecessor	—		51		(51		)	36		149			(113		)
Net income attributable to MPLX LP	$	216	$	141	$	75		$	556	$	100		$	456		482		453		29			985			874		111

Adjusted EBITDA attributable to MPLX LP⁽¹⁾	$	538	$	375	$	163		$	1,435	$	1,028		$	407		920		867		53			1,850			1,627		223
DCF⁽¹⁾	442		301		141			1,183		822			361			741		695		46			1,498			1,314		184
DCF attributable to GP and LP unitholders⁽¹⁾	426		285		141			1,134		797			337			$	699	$	675	$	24		$	1,436		$	1,278	$	158

(1) Non-GAAP financial measure. See the following tables for reconciliations to the most directly comparable GAAP measures.


~~(1)~~	~~Non-GAAP financial measure. See the following tables for reconciliations to the most directly comparable GAAP measures.~~

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	Three Months Ended June 30,									Six Months Ended June 30,
(In millions)	2019			2018			Variance			2019			2018			Variance
Reconciliation of Adjusted EBITDA attributable to MPLX LP and DCF attributable to GP and LP unitholders from Net income:
Net income	$	488		$	456		$	32		$	997		$	879		$	118
Provision for income taxes	1			1			—			(1		)	5			(6		)
Amortization of deferred financing costs	13			15			(2		)	26			31			(5		)
Net interest and other financial costs	157			136			21			315			250			65
Income from operations	659			608			51			1,337			1,165			172
Depreciation and amortization	214			188			26			425			364			61
Non-cash equity-based compensation	3			5			(2		)	9			9			—
Income from equity method investments	(73		)	(50		)	(23		)	(143		)	(111		)	(32		)
Distributions/adjustments related to equity method investments	120			112			8			228			202			26
Unrealized derivative losses/(gains)⁽¹⁾	—			8			(8		)	4			1			3
Acquisition costs	4			—			4			4			3			1
Adjusted EBITDA	927			871			56			1,864			1,633			231
Adjusted EBITDA attributable to noncontrolling interests	(7		)	(4		)	(3		)	(14		)	(6		)	(8		)
Adjusted EBITDA attributable to MPLX LP⁽²⁾	920			867			53			1,850			1,627			223
Deferred revenue impacts	9			2			7			17			11			6
Net interest and other financial costs	(157		)	(136		)	(21		)	(315		)	(250		)	(65		)
Maintenance capital expenditures	(34		)	(33		)	(1		)	(53		)	(58		)	5
Equity method investment capital expenditures paid out	(5		)	(5		)	—			(9		)	(16		)	7
Other	8			—			8			8			—			8
DCF	741			695			46			1,498			1,314			184
Preferred unit distributions	(42		)	(20		)	(22		)	(62		)	(36		)	(26		)
DCF attributable to GP and LP unitholders	699			675			24			1,436			1,278			158
Series B preferred unit distributions	21			—			21			21			—			21
Adjusted DCF attributable to GP and LP unitholders	$	720		$	675		$	45		$	1,457		$	1,278		$	179

(1) MPLX makes a distinction between realized and unrealized gains and losses on derivatives. During the period when a derivative contract is outstanding, changes in the fair value of the derivative are recorded as an unrealized gain or loss. When a derivative contract matures or is settled, the previously recorded unrealized gain or loss is reversed and the realized gain or loss of the contract is recorded.

(2) For the three months ended June 30, 2019, the L&S and G&P segments made up $569 million and $351 million of Adjusted EBITDA attributable to MPLX LP, respectively. For the three months ended June 30, 2018, the L&S and G&P segments made up $526 million and $341 million of Adjusted EBITDA attributable to MPLX LP, respectively. For the six months ended June 30, 2019, the L&S and G&P segments made up $1,128 million and $722 million of Adjusted EBITDA attributable to MPLX LP, respectively. For the six months ended June 30, 2018, the L&S and G&P segments made up $963 million and $664 million of Adjusted EBITDA attributable to MPLX LP, respectively.

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	Three Months Ended September 30,									Nine Months Ended September 30,									Six Months Ended June 30,
(In millions)	2017			2016			Variance			2017			2016			Variance			2019			2018			Variance
Reconciliation of Adjusted EBITDA attributable to MPLX LP and DCF attributable to GP and LP unitholders from Net income:
Net income	$	217		$	194		$	23		$	595		$	252		$	343
Depreciation and amortization	164			151			13			515			438			77
Provision (benefit) for income taxes	1			—			1			3			(12		)	15
Amortization of deferred financing costs	13			11			2			38			34			4
Reconciliation of Adjusted EBITDA attributable to MPLX LP and DCF attributable to GP and LP unitholders from Net cash provided by operating activities:
Net cash provided by operating activities																			$	1,452		$	1,290		$	162
Changes in working capital items																			62			33			29
All other, net																			4			14			(10		)
Non-cash equity-based compensation	4			3			1			10			9			1			9			9			—
Impairment expense	—			—			—			—			130			(130		)
Net (loss)/gain on disposal of assets																			4			—			4
Net interest and other financial costs	80			53			27			220			162			58			315			250			65
(Income) loss from equity method investments	(23		)	(6		)	(17		)	(29		)	72			(101		)
Distributions from unconsolidated subsidiaries	70			33			37			136			111			25
Distributions of cash received from Joint-Interest Acquisition entities to MPC	(13		)	—			(13		)	(13		)	—			(13		)
Current income taxes																			1			—			1
Asset retirement expenditures																			1			5			(4		)
Unrealized derivative losses/(gains)⁽¹⁾																			4			1			3
Acquisition costs																			4			3			1
Other adjustments to equity method investment distributions	8			—			8			8			—			8			8			27			(19		)
Unrealized derivative losses (gains)⁽¹⁾	17			2			15			(2		)	23			(25		)
Acquisition costs	2			—			2			6			(1		)	7
Other																			—			1			(1		)
Adjusted EBITDA	540			441			99			1,487			1,218			269			1,864			1,633			231
Adjusted EBITDA attributable to noncontrolling interests	(2		)	(2		)	—			(5		)	(3		)	(2		)	(14		)	(6		)	(8		)
Adjusted EBITDA attributable to Predecessor⁽²⁾	—			(64		)	64			(47		)	(187		)	140
Adjusted EBITDA attributable to MPLX LP	538			375			163			1,435			1,028			407
Adjusted EBITDA attributable to MPLX LP⁽²⁾																			1,850			1,627			223
Deferred revenue impacts	8			1			7			25			8			17			17			11			6
Net interest and other financial costs	(80		)	(53		)	(27		)	(220		)	(162		)	(58		)	(315		)	(250		)	(65		)
Maintenance capital expenditures	(24		)	(25		)	1			(59		)	(58		)	(1		)	(53		)	(58		)	5
Equity method investment capital expenditures paid out																			(9		)	(16		)	7
Other	—			(2		)	2			—			(2		)	2			8			—			8
Portion of DCF adjustments attributable to Predecessor⁽²⁾	—			5			(5		)	2			8			(6		)
DCF	442			301			141			1,183			822			361			1,498			1,314			184
Preferred unit distributions	(16		)	(16		)	—			(49		)	(25		)	(24		)	(62		)	(36		)	(26		)
DCF attributable to GP and LP unitholders	$	426		$	285		$	141		$	1,134		$	797		$	337		1,436			1,278			158
Series B preferred unit distributions																			21			—			21
Adjusted DCF attributable to GP and LP unitholders																			$	1,457		$	1,278		$	179

(2) For the six months ended June 30, 2019, the L&S and G&P segments made up $1,128 million and $722 million of Adjusted EBITDA attributable to MPLX LP, respectively. For the six months ended June 30, 2018, the L&S and G&P segments made up $963 million and $664 million of Adjusted EBITDA attributable to MPLX LP, respectively.

Nine Months Ended September 30,
(In millions) 2017 2016 Variance
Reconciliation of Adjusted EBITDA attributable to MPLX LP and DCF attributable to GP and LP unitholders from Net cash provided by operating activities:
Net cash provided by operating activities $ 1,338
$ 975
$ 363
Changes in working capital items (41 ) 59
(100 )
All other, net (43 ) (18 ) (25 )
Non-cash equity-based compensation 10
9
1
Net gain on disposal of assets 1
1
—
Net interest and other financial costs 220
162
58
Current income taxes 1
4
(3 )
Asset retirement expenditures 2
4
(2 )
Unrealized derivative (gains) losses⁽¹⁾
(2 ) 23
(25 )
Acquisition costs 6
(1 ) 7
Distributions of cash received from Joint-Interest Acquisition entities to MPC (13 ) —
(13 )
Other adjustments to equity method investment distributions 8
—
8
Adjusted EBITDA 1,487
1,218
269
Adjusted EBITDA attributable to noncontrolling interests (5 ) (3 ) (2 )
Adjusted EBITDA attributable to Predecessor⁽²⁾
(47 ) (187 ) 140
Adjusted EBITDA attributable to MPLX LP 1,435
1,028
407
Deferred revenue impacts 25
8
17
Net interest and other financial costs (220 ) (162 ) (58 )
Maintenance capital expenditures (59 ) (58 ) (1 )
Other —
(2 ) 2
Portion of DCF adjustments attributable to Predecessor⁽²⁾
2
8
(6 )
DCF 1,183
822
361
Preferred unit distributions (49 ) (25 ) (24 )
DCF attributable to GP and LP unitholders $ 1,134
$ 797
$ 337

~~(1)~~


~~(2)~~	~~The Adjusted EBITDA and DCF adjustments related to Predecessor are excluded from Adjusted EBITDA attributable to MPLX LP and DCF prior to the acquisition dates.~~

Three months ended ~~September~~June 30, ~~2017~~2019 compared to three months ended ~~September~~June 30, ~~2016~~2018

Total revenues and other income increased ~~$142~~$51 million in the ~~third~~second quarter of ~~2017~~2019 compared to the same period of ~~2016.~~2018. This variance was due mainly to increased volumes and prices for pipeline transportation, terminals and marine of approximately $41 million. Equity method investments provided a $23 million increase which was mainly attributable to increased volumes in the Sherwood Midstream, MarEn Bakken Company LLC, Utica EMG, Jefferson Dry Gas and the Explorer Pipeline Company joint ventures. G&P volumes in the Marcellus and Southwest also contributed to the increase in revenues of approximately $74 million. These increases were offset by lower revenues in the G&P segment due to lower prices in the Marcellus, Southern Appalachia and Southwest of approximately $100 million as well as by a decrease in the Delaware Basin Residue, LLC and LOOP LLC joint ventures. The remainder of the increase relates to the Mt. Airy acquisition, the Robinson Butane Cavern and the recognition of revenue related to volume deficiencies.

Purchased product costs decreased $38 million in the second quarter of 2019 compared to the same period of 2018. This variance was primarily due to lower prices of $70 million, partially offset by higher volumes of $40 million in the Southwest. In addition, there was a decrease in unrealized losses associated with derivatives which was driven by higher unrealized losses in 2018 as a result of an increasing fractionation spread during the period.

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Purchases - related parties increased $16 million in the second quarter of 2019 compared to the same period of 2018. This variance is primarily due to increases in employee-related costs.

Depreciation and amortization expense increased $26 million in the second quarter of 2019 compared to the same period of 2018. This variance was primarily due to the acquisitions of the Mt. Airy Terminal, additions to in-service property, plant and equipment throughout 2018 and the first six months of 2019 as well as write-downs of equipment no longer in use.

Net interest expense and other financial costs increased $19 million in the second quarter of 2019 compared to the same period of 2018. The increase is mainly due to increased interest and financing costs related to the new senior notes.

Six months ended June 30, 2019 compared to six months ended June 30, 2018

Total revenues and other income increased $277 million in the first six months of 2019 compared to the same period of 2018. This variance was due mainly to a $110 million increase from the acquisition of Refining Logistics and Fuels Distribution and increased volumes and prices for pipeline transportation, terminals and marine of $82 million. We also experienced higher revenues from G&P volume growth in the Marcellus and Southwest of approximately $180 million offset by decreased pricing on product sales of approximately ~~$54 million, offset by an increased unrealized derivative loss of $10 million, higher revenues from volume growth of $49~~$156 million in the Marcellus, Southern Appalachia and Southwest. Equity method investments provided a $32 million increase which was mainly attributable to increased volumes in the MarEn Bakken Company, LLC, Sherwood Midstream, Jefferson Dry Gas, Lincoln Pipeline LLC, and Utica EMG. These increases were partially offset by a decrease in the Explorer Pipeline Co., Delaware Basin Residue, LLC, LOCAP LLC and LOOP LLC joint ventures. The remainder of the increase relates to the Mt. Airy acquisition, the Robinson Butane Cavern and the ~~Southwest areas,higher crude and~~recognition of revenue related to volume deficiencies.

Purchased product transportation volumes of $14 million, a $19 million increase from the acquisition of the Ozark pipeline, a $17 million increase from our equity method investments, mainly due to the acquisition of an equity interest in the Bakken Pipeline system, the addition of the Sherwood Midstream joint venture during 2017 and increased dry gas gathering volumes for certain of our equity method investments.

~~Cost of revenues increased $7~~costs decreased $31 million in the ~~third quarter~~first six months of ~~2017~~2019 compared to the same period of ~~2016.~~2018. This was primarily due to lower prices of $112 million in the Southwest and Southern Appalachia, partially offset by higher volumes of $79 million in the Southwest in addition to a slight increase in unrealized derivative losses.

Purchases-related parties increased $51 million in the first six months of 2019 compared to the same period of 2018. The increase was primarily due to the acquisition of Refining Logistics and Fuels Distribution with a portion also being attributable to increases in employee-related costs.

Depreciation and amortization expense increased $61 million in the first six months of 2019 compared to the same period of 2018. This variance was primarily due to the acquisitions of Refining Logistics and the Mt. Airy Terminal, additions to in-service property, plant and equipment throughout 2018 and the first six months of 2019, as well as write-downs of equipment no longer in use.

General and administrative expenses increased $10 million in the first six months of 2019 compared to the same period of 2018. This variance was primarily due to the acquisition of ~~the Ozark pipeline.~~Refining Logistics and Fuels Distribution and other employee-related costs.

Purchased product costs increased $53 million in the third quarter of 2017 compared to the same period of 2016. This variance was primarily due to higher NGL and gas prices of $36 million and increased volumes of $10 million, primarily in the Southwest area, as well as an increase in the unrealized loss of $6 million, of which a majority is related to our Natural Gas Embedded Derivative.

Depreciation and amortization expense increased $13 million in the third quarter of 2017 compared to the same period of 2016. This variance was primarily due to additions to in-service property, plant and equipment as well as approximately $2 million of accelerated depreciation related to adjustments of certain assets’ useful life.

Net interest expense and other financial costs increased ~~$28~~$60 million in the ~~third quarter~~first six months of ~~2017~~2019 compared to the same period of ~~2016. The increase is mainly due to the New Senior Notes issued in February 2017.~~

~~Nine months ended September 30, 2017 compared to nine months ended September 30, 2016~~

Total revenues and other income increased $601 million in the first nine months of 2017 compared to the same period of 2016. This variance was due mainly to the inclusion of $103 million of revenue generated by MPLXT and its subsidiaries since it was not formed as a business until April 1, 2016, ~~increased pricing on product sales of approximately $177 million as well as higher revenues from volume growth of $146 million in the Marcellus and the Southwest areas~~, ~~higher crude and product transportation volumes of $28 million~~, ~~$45 million from the acquisition of the Ozark pipeline~~and a $12 million increase from our equity method investments. The nine months ended September 30, 2016 also included an impairment expense of $89 million related to our investment in Ohio Condensate as referenced in our Annual Report on Form 10-K for the year ended December 31, 2016, as updated by our Current Report on Form 8-K filed on May 1, 2017.

~~Cost of revenues increased $52 million in the first nine months of 2017 compared to the same period of 2016. This variance was primarily due to $20 million from the inclusion of MPLXT~~, ~~as well as $20 million from the acquisition of the Ozark pipeline and an increase in expenses related to the timing of projects.~~

Purchased product costs increased $131 million in the first nine months of 2017 compared to the same period of 2016. This variance was primarily due to higher NGL and gas prices and purchase volumes in the Southwest area, offset by a $13 million unrealized gain on our Natural Gas Embedded Derivative.

Purchases-related parties increased $44 million in the first nine months of 2017 compared to the same period of 2016. The increase was primarily due to the inclusion of approximately $23 million related party purchases of MPLXT as well as general increases in employee costs due to headcount.

Depreciation and amortization expense increased $77 million in the first nine months of 2017 compared to the same period of 2016. This variance was primarily due to accelerated depreciation expense of approximately $35 million incurred on the decommissioning of the Houston 1 facility in the Marcellus area and other various assets, approximately $10 million of additional depreciation due to the inclusion of MPLXT, as well additions to in-service property, plant and equipment during the fourth quarter of 2016 and the first nine months of 2017.

Impairment expense decreased $130 million in the first nine months of 2017 compared to the same period of 2016. This variance was due to a non-cash impairment to goodwill in two reporting units in the G&P segment during the first six months of 2016.

~~Net interest expense and other financial costs increased $62 million in the first nine months of 2017 compared to the same period of 2016.~~2018. The increase is primarily due to increased interest and financing costs related to the ~~New Senior Notes issued in February 2017.~~new senior notes.

SEGMENT RESULTS

We classify our business in the following reportable segments: L&S and G&P. Segment ~~operating income~~Adjusted EBITDA represents ~~income from operations~~Adjusted EBITDA attributable to the reportable segments. ~~We have investments~~Amounts included in ~~entities that we operate that are accounted~~net income and excluded from Segment Adjusted EBITDA include: (i) depreciation and amortization; (ii) provision/(benefit) for ~~using~~income taxes; (iii) amortization of deferred financing costs; (iv) extinguishment of debt; (v) non-cash equity-based compensation; (vi) impairment expense; (vii) net interest and other financial costs; (viii) income/(loss) from equity method ~~investment accounting standards. However, we view financial information as if those investments were consolidated. Corporate general~~investments; (ix) distributions and ~~administrative expenses,~~adjustments related to equity method investments; (x) unrealized derivative gains/(losses) ~~gains, property, plant~~; (xi) acquisition costs; (xii) noncontrolling interests; and ~~equipment impairment, goodwill impairment and depreciation and amortization~~(xiii) other adjustments as deemed necessary. These items are either: (i) believed to be non-recurring in nature; (ii) not believed to be allocable or controlled by the segment; or (iii) are not ~~allocated~~tied to the reportable segments. Management does not consider these items allocable to or controllable by any individual segment and, therefore, excludes these items when evaluating segment performance. Segment results are also adjusted to excludeoperational performance of the portion of income from operations attributable to the noncontrolling interests related to partially owned entities that are either consolidated or accounted for as equity method investments. Segment operating income attributable to MPLX LP excludes the operating income related to the HSM Predecessor prior to the March 31, 2016 acquisition and the HST, WHC and MPLXT Predecessor prior to the March 1, 2017 acquisition.segment.

The tables below present information about ~~segment operating income~~Segment Adjusted EBITDA for the reported ~~segments.~~segments for the three and six months ended June 30, 2019 and 2018.

Table of Contents

L&S Segment

Three Months Ended September 30, Nine Months Ended September 30,
(In millions) 2017 2016 Variance 2017 2016 Variance
Revenues and other income:
Segment revenues $ 378
$ 339
$ 39
$ 1,095
$ 901
$ 194
Segment other income 11
12
(1 ) 35
42
(7 )
Total segment revenues and other income 389
351
38
1,130
943
187
Costs and expenses:
Segment cost of revenues 176
153
23
500
392
108
Segment operating income before portion attributable to noncontrolling interests and Predecessor 213
198
15
630
551
79
Segment portion attributable to noncontrolling interests and Predecessor —
74
(74 ) 53
216
(163 )
Segment operating income attributable to MPLX LP $ 213
$ 124
$ 89
$ 577
$ 335
$ 242



	Three Months Ended June 30,									Six Months Ended June 30,
(In millions)	2019			2018			Variance			2019			2018			Variance
Service revenue	$	653		$	581		$	72		$	1,265		$	1,080		$	185
Rental income	164			190			(26		)	363			335			28
Product related revenue	4			3			1			7			5			2
Income from equity method investments	47			36			11			88			80			8
Other income	17			12			5			28			24			4
Total segment revenues and other income	885			822			63			1,751			1,524			227
Cost of revenues	102			103			(1		)	197			190			7
Purchases - related parties	190			181			9			360			319			41
Depreciation and amortization	70			61			9			140			109			31
General and administrative expenses	29			35			(6		)	72			70			2
Other taxes	8			8			—			16			17			(1		)
Segment income from operations	486			434			52			966			819			147
Depreciation and amortization	70			61			9			140			109			31
Income from equity method investments	(47		)	(36		)	(11		)	(88		)	(80		)	(8		)
Distributions/adjustments related to equity method investments	55			64			(9		)	101			107			(6		)
Acquisition costs	4			—			4			4			3			1
Non-cash equity-based compensation	1			3			(2		)	5			5			—
Segment adjusted EBITDA⁽¹⁾	569			526			43			1,128			963			165

Maintenance capital expenditures	$	19		$	25		$	(6	)	$	32		$	47		$	(15	)

(1) See the Reconciliation of Adjusted EBITDA attributable to MPLX LP and DCF attributable to GP and LP unitholders from Net income table for the reconciliation to the most directly comparable GAAP measure.

Three months ended ~~September~~June 30, ~~2017~~2019 compared to three months ended ~~September~~June 30, ~~2016~~2018

InService revenue increased $72 million in the ~~third~~second quarter of ~~2017~~2019 compared to the same period of ~~2016, segment revenue increased~~2018. This was primarily due to ~~a $14~~$13 million ~~increase~~of revenue from ~~higher crude and product~~increased transportation volumes,, ~~a $19 million increase from~~ partially attributable to the ~~acquisition~~completion of the Ozark ~~pipeline,~~aexpansion; $14 million of revenue from increased transportation prices; $4 million ~~increase~~ from ~~the annual increase in~~increased fees from Refining Logistics and Fuels Distribution; $7 million from increased terminal throughput; $3 million from additional storage capacity; a $4$7 million increase from additional ~~barges, partially~~marine vessels; and a $27 million increase in service revenue with a corresponding decrease to rental income due to a change in lease classification. These increases were offset by a $2 million decrease in the recognition of revenue related to volume ~~deficiency payments.~~deficiencies.

InRental income decreased $26 million in the ~~third~~second quarter of ~~2017~~2019 compared to the same period of ~~2016, segment cost of revenues increased~~2018. This was primarily due to a ~~$12~~$27 million decrease to rental income with a corresponding increase to service revenue due to a change in lease classification and a $7 million decrease due to the acceleration of straight-line rent, both due to a change in lease classification. These decreases were partially offset by an additional $7 million from the acquisition of the ~~Ozark pipeline, as well as~~Mt. Airy Terminal.

Income from ~~salaries and compensation due to headcount and other miscellaneous expenses.~~

InEquity method investments increased $11 million in the ~~third~~second quarter of ~~2017~~2019 compared to the same period of ~~2016, the segment portion attributable to noncontrolling interests and Predecessor decreased~~2018 due to increased income from MarEn Bakken, Explorer, and Lincoln, primarily due to increased throughput volumes, slightly offset by decreased income from LOCAP primarily due to lower throughput volumes.

Purchases - related parties increased $9 million in the ~~acquisition~~second quarter of ~~HST, WHC and MPLXT as of March 1, 2017.~~

~~Nine months ended September 30, 2017 compared to nine months ended September 30, 2016~~

~~In the first nine months of 2017~~2019 compared to the same period of ~~2016, segment revenue increased~~2018. This was primarily due to increased employee-related charges.

Depreciation and amortization increased $9 million in the ~~inclusion~~second quarter of ~~$103 million of revenue generated by MPLXT and its subsidiaries, a $28 million increase from higher crude and product transportation volumes,a $45 million increase from the acquisition of the Ozark pipeline~~, ~~a $3 million increase due to the recognition of revenues related to volume deficiency payments,and a $10 million increase from additional barges.~~

~~In the first nine months of 2017~~2019 compared to the same period of ~~2016, segment cost~~2018. This was primarily due to the acquisition of the Mt. Airy Terminal as well as additions to in-service property, plant and equipment throughout 2018 and the first six months of 2019.

Table of Contents

Six months ended June 30, 2019 compared to six months ended June 30, 2018

Service revenue increased $185 million in the first six months of 2019 compared to the same period of 2018. This was primarily due to an additional $69 million of revenue due to the acquisition of Refining Logistics and Fuels Distribution as well as from the annual fee escalation; $50 million of revenue from increased transportation volumes, partially attributable to the completion of the Ozark expansion; $8 million of revenue from increased transportation prices; $6 million of revenue from additional storage capacity; $12 million from increased terminal throughput; $12 million from additional marine vessels, and a $27 million increase due to the reclassification of certain lease revenue from rental income to service revenue.

Rental income increased $28 million in the first six months of 2019 compared to the same period of 2018. This was primarily due to an additional $41 million of revenue from the acquisition of Refining Logistics, $5 million from the completion of a new butane cavern, and $13 million from the acquisition of the Mt. Airy Terminal. These increases were offset by a $27 million decrease due to the reclassification of certain lease revenue from rental income to service revenue and by a $7 million decrease due to the acceleration of straight-line rent, both due to a change in lease classification.

Income from Equity method investments increased 8 million in the first six months of 2019 compared to the same period of 2018. This increase was due to increased income from MarEn Bakken and Lincoln, primarily due to increased throughput volumes, offset by decreased income from LOCAP primarily due to lower throughput volumes and decreased income from Explorer primarily due to an upward adjustment to income in 2018 for a change in corporate tax rate.

Cost of revenues increased $7 million in the first six months of 2019 compared to the same period of 2018. This was primarily due to increased costs to operate new and expanded assets such as the Mt. Airy Terminal, the expanded Ozark pipeline, additional marine vessels, and the completed Robinson Butane cavern, partially offset by lower project spend due to the timing of projects.

Purchases - related parties increased $41 million in the first six months of 2019 compared to the same period of 2018. This was primarily due to the acquisition of Refining Logistics and Fuels Distribution as well as increased employee-related costs.

Depreciation and amortization increased $31 million in the first six months of 2019 compared to the same period of 2018. This was primarily due to the acquisitions of ~~MPLXT~~Refining Logistics and the ~~Ozark pipeline, increased expenses related~~Mt. Airy Terminal as well as additions to ~~the timing of projects, salaries~~in-service property, plant and ~~compensation due to headcount,~~equipment throughout 2018 and ~~other miscellaneous expenses.~~

In the first ~~nine~~six months of 2017 compared to the same period of 2016, the segment portion attributable to noncontrolling interests and Predecessor decreased due to the inclusion of HSM for the first three months of 2016 and the acquisition of HST, WHC and MPLXT as of March 1, 2017.2019.

MPC Minimum Volume Commitments

During both the ~~third~~second quarter and first ~~nine~~six months of ~~2017,~~2019, MPC did not ship its minimum committed volumes on certain of our pipeline systems. As a result, for the first ~~nine~~six months, MPC was obligated to make a ~~$37~~$14 million deficiency payment, of which ~~$11~~$4 million was paid in the ~~third~~second quarter of ~~2017.~~2019. We record deficiency payments as ~~Deferred revenue-related parties~~“Current liabilities - related parties” on our Consolidated Balance Sheets. In the ~~third~~second quarter and first ~~nine~~six months of ~~2017,~~2019, we recognized revenue of $7$11 million and ~~$29~~$27 million ~~respectively,~~ related to MPC’s volume deficiency ~~credits.~~credits, respectively. At ~~September~~June 30, ~~2017,~~2019, the cumulative balance of ~~Deferred revenue-related parties~~“Current liabilities - related parties” on our Consolidated Balance Sheets related to volume deficiencies was ~~$55~~$31 million. The following table presents the future expiration dates of the associated deferred revenue credits as of ~~September~~June 30, ~~2017:~~2019:

(In millions)
December 31, 2017 $ 8
March 31, 2018 11
June 30, 2018 11
September 30, 2018 10
December 31, 2018 4
March 31, 2019 3
June 30, 2019 4
September 30, 2019 4
Total $ 55



(In millions)
September 30, 2019	$	11
December 31, 2019	10
March 31, 2020	6
June 30, 2020	4
Total	$	31

We will recognize revenue for the deficiency payments in future periods at the earlier of when volumes are transported in excess of the minimum quarterly volume commitments, ~~when~~where it ~~becomes impossible to physically transport volumes necessary to utilize~~is probable the ~~accumulated credits~~customer will not use the credit in future periods or upon expiration of the ~~make-up period.~~credits. Deficiency payments are included in the determination of DCF in the period in which a deficiency occurs.

Table of Contents

G&P Segment

~~Our assets include approximately 5.9 bcf/d of gathering capacity, 7.8 bcf/d of natural gas processing capacity and 570 mbpd of fractionation capacity.~~

Three Months Ended September 30, Nine Months Ended September 30,
(In millions) 2017 2016 Variance 2017 2016 Variance
Revenues and other income:
Segment revenues $ 669
$ 567
$ 102
$ 1,869
$ 1,595
$ 274
Segment other income 1
1
—
2
1
1
Total segment revenues and other income 670
568
102
1,871
1,596
275
Costs and expenses:
Segment cost of revenues 276
239
37
781
662
119
Segment operating income before portion attributable to noncontrolling interests 394
329
65
1,090
934
156
Segment portion attributable to noncontrolling interests 45
36
9
119
113
6
Segment operating income attributable to MPLX LP $ 349
$ 293
$ 56
$ 971
$ 821
$ 150



	Three Months Ended June 30,									Six Months Ended June 30,
(In millions)	2019			2018			Variance			2019			2018			Variance
Service revenue	$	415		$	378		$	37		$	819		$	732		$	87
Rental income	84			84			—			172			163			9
Product related revenue	204			267			(63		)	448			520			(72		)
Income from equity method investments	26			14			12			55			31			24
Other income	15			13			2			30			28			2
Total segment revenues and other income	744			756			(12		)	1,524			1,474			50
Cost of revenues	161			163			(2		)	316			312			4
Purchased product costs	166			204			(38		)	360			391			(31		)
Purchases - related parties	49			42			7			91			81			10
Depreciation and amortization	144			127			17			285			255			30
General and administrative expenses	40			37			3			79			71			8
Other taxes	11			9			2			22			18			4
Segment income from operations	173			174			(1		)	371			346			25
Depreciation and amortization	144			127			17			285			255			30
Income from equity method investments	(26		)	(14		)	(12		)	(55		)	(31		)	(24		)
Distributions/adjustments related to equity method investments	65			48			17			127			95			32
Unrealized derivative loss/(gain)⁽¹⁾	—			8			(8		)	4			1			3
Non-cash equity-based compensation	2			2			—			4			4			—
Adjusted EBITDA attributable to noncontrolling interests	(7		)	(4		)	(3		)	(14		)	(6		)	(8		)
Segment adjusted EBITDA⁽²⁾	351			341			10			722			664			58

Maintenance capital expenditures	$	15		$	8		$	7		$	21		$	11		$	10

(2) See the Reconciliation of Adjusted EBITDA attributable to MPLX LP and DCF attributable to GP and LP unitholders from Net income table for the reconciliation to the most directly comparable GAAP measure.

Three months ended ~~September~~June 30, ~~2017~~2019 compared to three months ended ~~September~~June 30, ~~2016~~2018

InService revenue increased $37 million in the ~~third~~second quarter of ~~2017~~2019 compared to the same period of ~~2016, segment revenue increased~~2018. This was primarily due to ~~increased pricing on product sales of approximately $46 million and increased volumes of $15 million, combined with increased~~higher fees ~~of approximately $41 million on~~from higher volumes ~~due to new gathering and processing facilities in the Marcellus, Southwest, and Utica areas, as well as additional fractionation capacity~~ in the Marcellus and ~~Utica areas.~~Southwest.

InProduct related revenue decreased $63 million in the ~~third~~second quarter of ~~2017~~2019 compared to the same period of ~~2016, segment cost of revenues increased~~2018. This was primarily due to ~~increased product costs resulting from higher NGL and gas~~lower prices ~~of $28 million and increased volumes of $10 million primarily~~ in the Southwest, ~~area partially~~Southern Appalachia and Marcellus of approximately $100 million offset by ~~lower maintenance costs and other operating efficiencies.~~volume increases in the Southwest. A portion of the volume increase in the Southwest was offset by a volume decrease due to downtime at the Javelina facility.

~~Nine months ended September 30, 2017 compared to nine months ended September 30, 2016~~

InIncome from equity method investments increased $12 million in the ~~first nine months~~second quarter of ~~2017~~2019 compared to the same period of ~~2016, segment revenue increased~~2018. This was primarily due to ~~increased pricing on~~growth in the Sherwood Midstream joint venture due to additional plants coming online at the end of 2018, an increase in the Utica EMG joint venture as a result of assets written off in the prior period, and an increase in the Jefferson Dry Gas joint venture as a result of higher dry gas gathering volumes, partially offset by a decrease in the Delaware Basin Residue, LLC joint venture driven by unrealized derivative losses.

Table of Contents

Purchased product ~~sales of approximately $144 million and increased volumes of~~costs decreased $38 million ~~combined with increased fees of approximately $92 million on higher volumes due to new processing plants~~ in the ~~Marcellus and Southwest areas and additional fractionation capacity in the Marcellus and Utica areas.~~

~~In the first nine months~~second quarter of ~~2017~~2019 compared to the same period of ~~2016, segment cost of revenues increased~~2018. This was primarily due ~~primarily~~ to ~~increased product costs resulting from higher~~lower prices of ~~approximately $102~~$70 million ~~and~~in the Southwest, partially offset by higher volumes of ~~$21~~$40 million in the Southwest. In addition, there was a decrease in unrealized losses associated with derivatives which was driven by higher unrealized losses in 2018 as a result of an increasing fractionation spread during the period.

Purchases - related parties increased $7 million in the second quarter of 2019 compared to the same period of 2018. This was primarily due to increases in employee-related costs.

Depreciation and amortization increased $17 million in the second quarter of 2019 compared to the same period of 2018. This was primarily due to additions to in-service property, plant and equipment throughout 2018 and the first six month of 2019, as well as the write-down of equipment no longer in use.

Six months ended June 30, 2019 compared to six months ended June 30, 2018

Service revenue increased $87 million in the first half of 2019 compared to the same period of 2018. This was primarily due to higher fees from higher volumes in the Marcellus and Southwest.

Rental income increased $9 million in the first half of 2019 compared to the same period of 2018. This was primarily due to fees from higher volumes in the Marcellus.

Product related revenue decreased $72 million in the first half of 2019 compared to the same period of 2018. This was primarily due to lower prices in the Southwest, ~~area~~Southern Appalachia and Marcellus of $156 million offset by volume increases in the Southwest. A portion of the volume increase in the Southwest was offset by a volume decrease due to downtime at the Javelina facility.

Income from equity method investments increased $24 million in the first half of 2019 compared to the same period of 2018. This was primarily due to growth in the Sherwood Midstream joint venture due to additional plants coming online at the end of 2018, an increase in the Jefferson Dry Gas joint venture as a result of higher dry gas gathering volumes, and an increase in the Utica EMG joint venture as a result of assets written off in the prior period, partially offset by ~~lower facility~~a decrease in the Delaware Basin Residue, LLC joint venture driven by unrealized derivative losses.

Purchased product costs decreased $31 million in the first half of 2019 compared to the same period of 2018. This was primarily due to lower ~~maintenance costs~~prices of $112 million in the Southwest and ~~other operating efficiencies.~~Southern Appalachia, partially offset by higher volumes of $79 million in the Southwest in addition to a slight increase in unrealized derivative losses.

~~Segment Reconciliations~~Purchases - related parties increased $10 million in the first half of 2019 compared to the same period of 2018. This was primarily due to increases in employee-related costs.

~~The following tables provide reconciliations~~Depreciation and amortization increased $30 million in the first half of ~~segment operating income~~2019 compared to ~~our consolidated income from operations, segment revenue~~the same period of 2018. This was primarily due to ~~our consolidated total revenues~~additions to in-service property, plant and ~~other income,~~equipment throughout 2018 and ~~segment portion attributable to noncontrolling interests to our consolidated net income attributable to noncontrolling interests for~~ the ~~three and nine~~first six months ended September 30, 2017 and 2016. Adjustments related to unconsolidated affiliates relate to our Partnership-operated non-wholly-owned entities that we consolidate for segment purposes. Income (loss) from equity method investments~~relates to our portion~~ of ~~income (loss) from our unconsolidated joint ventures~~2019, as well as the write-down of which Partnership-operated joint ventures are consolidated for segment purposes. Other income-related parties consists of operational service fee revenues from our operated unconsolidated affiliates. Unrealized derivative activity is not allocated to segments.equipment no longer in use.

Three Months Ended September 30, Nine Months Ended September 30,
(In millions) 2017 2016 Variance 2017 2016 Variance
Reconciliation to Income from operations:
L&S segment operating income attributable to MPLX LP $ 213
$ 124
$ 89
$ 577
$ 335
$ 242
G&P segment operating income attributable to MPLX LP 349
293
56
971
821
150
Segment operating income attributable to MPLX LP 562
417
145
1,548
1,156
392
Segment portion attributable to unconsolidated affiliates (47 ) (41 ) (6 ) (125 ) (130 ) 5
Segment portion attributable to Predecessor —
74
(74 ) 53
216
(163 )
Income (loss) from equity method investments 23
6
17
29
(72 ) 101
Other income - related parties 13
11
2
38
29
9
Unrealized derivative (losses) gains⁽¹⁾
(17 ) (2 ) (15 ) 2
(23 ) 25
Depreciation and amortization (164 ) (151 ) (13 ) (515 ) (438 ) (77 )
Impairment expense —
—
—
—
(130 ) 130
General and administrative expenses (59 ) (56 ) (3 ) (174 ) (172 ) (2 )
Income from operations $ 311
$ 258
$ 53
$ 856
$ 436
$ 420

Three Months Ended September 30, Nine Months Ended September 30,
(In millions) 2017 2016 Variance 2017 2016 Variance
Reconciliation to Total revenues and other income:
Total segment revenues and other income $ 1,059
$ 919
$ 140
$ 3,001
$ 2,539
$ 462
Revenue adjustment from unconsolidated affiliates (107 ) (100 ) (7 ) (287 ) (303 ) 16
Income (loss) from equity method investments 23
6
17
29
(72 ) 101
Other income - related parties 13
11
2
38
29
9
Unrealized derivative (losses) gains related to product sales⁽¹⁾
(8 ) 2
(10 ) 1
(12 ) 13
Total revenues and other income $ 980
$ 838
$ 142
$ 2,782
$ 2,181
$ 601

~~(1)~~

Three Months Ended September 30, Nine Months Ended September 30,
(In millions) 2017 2016 Variance 2017 2016 Variance
Reconciliation to Net income attributable to noncontrolling interests and Predecessor:
Segment portion attributable to noncontrolling interests and Predecessor $ 45
$ 110
$ (65 ) $ 172
$ 329
$ (157 )
Portion of noncontrolling interests and Predecessor related to items below segment income from operations (21 ) (39 ) 18
(84 ) (157 ) 73
Portion of operating income attributable to noncontrolling interests of unconsolidated affiliates (23 ) (18 ) (5 ) (49 ) (20 ) (29 )
Net income attributable to noncontrolling interests and Predecessor $ 1
$ 53
$ (52 ) $ 39
$ 152
$ (113 )

~~OUR G&P CONTRACTS WITH THIRD PARTIES~~

We generate the majority of our revenues in the G&P segment from natural gas gathering, transportation and processing; NGL gathering, transportation, fractionation, exchange, marketing and storage; and crude oil gathering and transportation. We enter into a variety of contracts to provide services under the following types of arrangements: fee-based, percent-of-proceeds, percent-of-index and keep-whole. In many cases, we provide services under contracts that contain a combination of more than one of the arrangements described below. See Item 1. Business – Our G&P Contracts With Third Parties in our Annual Report on Form 10-K for the year ended December 31, 2016 for further discussion of each of these types of arrangements.

The following table does not give effect to our active commodity risk management program. For further discussion of how we manage commodity price volatility for the portion of our net operating margin that is not fee-based, see Note 13 of the Notes to Consolidated Financial Statements. We manage our business by taking into account the partial offset of short natural gas positions primarily in the Southwest region of our G&P segment. The calculated percentages for net operating margin for percent-of-proceeds, percent-of-index and keep-whole contracts reflect the partial offset of our natural gas positions. The calculated percentages are less than one percent for percent-of-index due to the offset of our natural gas positions and, therefore, not meaningful to the table below.

~~For the three months ended September 30, 2017, we calculated the following approximate percentages of our net operating margin from the following types of contracts:~~

Fee-Based
Percent-of-Proceeds⁽¹⁾

Keep-Whole⁽²⁾
L&S 100 % — % — %
G&P⁽³⁾
86 % 12 % 2 %
Total 92 % 7 % 1 %

~~For the nine months ended September 30, 2017, we calculated the following approximate percentages of our net operating margin from the following types of contracts:~~

Fee-Based
Percent-of-Proceeds⁽¹⁾

Keep-Whole⁽²⁾
L&S 100 % — % — %
G&P⁽³⁾
87 % 11 % 2 %
Total 93 % 6 % 1 %


~~(1)~~	~~Includes condensate sales and other types of arrangements tied to NGL prices.~~


~~(2)~~	~~Includes condensate sales and other types of arrangements tied to both NGL and natural gas prices.~~


~~(3)~~	~~Includes unconsolidated affiliates (See Note 4 of the Notes to Consolidated Financial Statements).~~

~~The following table presents a reconciliation of net operating margin to income from operations, the most directly comparable GAAP financial measure.~~

Three Months Ended
September 30, Nine Months Ended
September 30,
(In millions) 2017 2016 2017 2016
Reconciliation of net operating margin to income from operations:
Segment revenues $ 1,047
$ 906
$ 2,964
$ 2,496
Purchased product costs (170 ) (117 ) (441 ) (310 )
Total derivative loss related to purchased product costs 11
4
5
16
Other (1 ) —
(5 ) (5 )
Net operating margin 887
793
2,523
2,197
Revenue adjustment from unconsolidated affiliates⁽²⁾
(107 ) (100 ) (287 ) (303 )
Realized derivative loss related to purchased product costs⁽¹⁾
(2 ) (1 ) (6 ) (4 )
Other 2
1
6
4
Unrealized derivative (losses) gains⁽¹⁾
(17 ) (2 ) 2
(23 )
Income (loss) from equity method investments 23
6
29
(72 )
Other income 2
2
5
5
Other income - related parties 22
22
69
67
Cost of revenues (excludes items below) (129 ) (122 ) (381 ) (329 )
Rental cost of sales (19 ) (13 ) (44 ) (42 )
Rental cost of sales - related parties —
—
(1 ) (1 )
Purchases - related parties (114 ) (109 ) (330 ) (286 )
Depreciation and amortization (164 ) (151 ) (515 ) (438 )
Impairment expense —
—
—
(130 )
General and administrative expenses (59 ) (56 ) (174 ) (172 )
Other taxes (14 ) (12 ) (40 ) (37 )
Income from operations $ 311
$ 258
$ 856
$ 436

~~(1)~~


~~(2)~~	These amounts relate to Partnership-operated unconsolidated affiliates. The chief operating decision maker and management include these to evaluate the segment performance as we continue to operate and manage the operations. Therefore, the impact of the revenue is included for segment reporting purposes, but removed for GAAP purposes.

SEASONALITY

The volume of crude oil and refined products transported ~~on our pipeline systems, at our barge dock~~ and stored atutilizing our ~~storage~~ assets is directly affected by the level of supply and demand for crude oil and refined products in the markets served directly or indirectly by our assets. Many effects of seasonality on the L&S segment’s revenues will be mitigated through the use of our fee-based transportation and storage services agreements with MPC that include minimum volume commitments.

Our G&P segment can be affected by seasonal fluctuations in the demand for natural gas and NGLs and the related fluctuations in commodity prices caused by various factors such as changes in transportation and travel patterns and variations in weather patterns from year to year. However, we manage the seasonality impact through the execution of our marketing strategy. We have access to up to ~~50 million gallons~~800 thousand barrels of propane storage capacity in the Southern Appalachia region provided by an arrangement with a third party which provides us with flexibility to manage the seasonality impact. Overall, our exposure to the seasonal fluctuations in the commodity markets is declining due to our growth in fee-based business.

5552

Table of Contents

OPERATING DATA

Three Months Ended
September 30, Nine Months Ended
September 30,
2017 2016 2017 2016
L&S
Pipeline throughput (mbpd)⁽¹⁾

Crude oil pipelines 2,046
1,775
1,901
1,665
Product pipelines 1,131
992
1,051
989
Total pipelines 3,177
2,767
2,952
2,654

Average tariff rates ($ per barrel)⁽¹⁾⁽²⁾

Crude oil pipelines $ 0.54
$ 0.55
$ 0.57
$ 0.57
Product pipelines 0.75
0.69
0.74
0.67
Total pipelines 0.62
0.60
0.63
0.61

Terminal throughput (mbpd) 1,496
1,517
1,470
1,510

Marine Assets (number in operation)⁽³⁾

Barges 232
217
232
217
Towboats 18
18
18
18

G&P
Gathering Throughput (MMcf/d)
Marcellus Operations 1,005
946
965
922
Utica Operations⁽⁴⁾
1,324
916
1,065
936
Southwest Operations⁽⁵⁾
1,400
1,444
1,385
1,455
Total gathering throughput 3,729
3,306
3,415
3,313

Natural Gas Processed (MMcf/d)
Marcellus Operations 3,986
3,273
3,778
3,166
Utica Operations⁽⁴⁾
1,000
1,050
982
1,068
Southwest Operations 1,331
1,339
1,310
1,209
Southern Appalachian Operations 264
244
266
248
Total natural gas processed 6,581
5,906
6,336
5,691

C2 + NGLs Fractionated (mbpd)
Marcellus Operations⁽⁶⁾
326
274
310
254
Utica Operations⁽⁴⁾⁽⁶⁾
39
41
40
43
Southwest Operations 18
19
19
17
Southern Appalachian Operations⁽⁷⁾
14
14
15
16
Total C2 + NGLs fractionated⁽⁸⁾
397
348
384
330

Pricing Information
Natural Gas NYMEX HH ($ per MMBtu) $ 2.96
$ 2.80
$ 3.05
$ 2.34
C2 + NGL Pricing ($ per gallon)⁽⁹⁾
$ 0.66
$ 0.46
$ 0.62
$ 0.44



	Three Months Ended June 30,				Six Months Ended June 30,
	2019		2018		2019		2018
L&S
Pipeline throughput (mbpd)
Crude oil pipelines	2,263		2,229		2,216		2,119
Product pipelines	1,226		1,164		1,234		1,110
Total pipelines	3,489		3,393		3,450		3,229

Average tariff rates ($ per barrel)⁽¹⁾
Crude oil pipelines	$	0.63	$	0.58	$	0.62	$	0.57
Product pipelines	0.84		0.76		0.82		0.76
Total pipelines	$	0.71	$	0.64	$	0.69	$	0.64

Terminal throughput (mbpd)	1,509		1,485		1,470		1,465

Marine Assets (number in operation)⁽²⁾
Barges	261		256		261		256
Towboats	23		20		23		20


~~(1)~~	~~Pipeline throughput and tariff rates as of September 30, 2016 have been retrospectively adjusted to reflect the acquisition of HST.~~



	Three Months Ended June 30, 2019		Three Months Ended June 30, 2018
	MPLX LP⁽³⁾	MPLX LP Operated⁽⁴⁾	MPLX LP⁽³⁾	MPLX LP Operated⁽⁴⁾
G&P
Gathering Throughput (MMcf/d)
Marcellus Operations	1,266	1,266	1,147	1,147
Utica Operations	—	2,066	—	1,654
Southwest Operations	1,617	1,617	1,492	1,494
Total gathering throughput	2,883	4,949	2,639	4,295

Natural Gas Processed (MMcf/d)
Marcellus Operations	4,216	5,202	3,716	4,286
Utica Operations	—	823	—	876
Southwest Operations	1,558	1,558	1,401	1,401
Southern Appalachian Operations	243	243	254	254
Total natural gas processed	6,017	7,826	5,371	6,817

C2 + NGLs Fractionated (mbpd)
Marcellus Operations⁽⁵⁾	440	440	362	362
Utica Operations⁽⁵⁾	—	40	—	45
Southwest Operations	3	3	19	19
Southern Appalachian Operations⁽⁶⁾	12	12	13	13
Total C2 + NGLs fractionated⁽⁷⁾	455	495	394	439

Table of Contents


~~(2)~~	~~Average tariff rates calculated using pipeline transportation revenues divided by pipeline throughput barrels.~~


~~(3)~~	~~Represents total at end of period.~~


~~(4)~~	~~Includes unconsolidated equity method investments that are shown consolidated for segment purposes only.~~

~~(5)~~

Includes approximately two MMcf/d related to the unconsolidated equity method investment, Wirth, for the three months ended September 30, 2017, and 230 MMcf/d related to unconsolidated equity method investments, Wirth and MarkWest Pioneer, for the nine months ended September 30, 2017. Includes approximately 307 MMcf/d and 299 MMcf/d related to unconsolidated equity method investments, Wirth and MarkWest Pioneer, for the three and nine months ended September 30, 2016, respectively.

~~(6)~~

Hopedale is jointly owned by Ohio Fractionation and MarkWest Utica EMG. Ohio Fractionation is a subsidiary of MarkWest Liberty Midstream. MarkWest Liberty Midstream and MarkWest Utica EMG are entities that operate in the Marcellus and Utica regions, respectively. The Marcellus Operations includes its portion utilized of the jointly owned Hopedale Fractionation Complex. The Utica Operations includes Utica’s portion utilized of the jointly owned Hopedale Fractionation Complex. Additionally, Sherwood Midstream has the right to fractionation revenue and the obligation to pay expenses related to 20 mbpd of capacity in the Hopedale 3 fractionator.


~~(7)~~	~~Includes NGLs fractionated for the Marcellus Operations and Utica Operations.~~


~~(8)~~	Purity ethane makes up approximately 164 mbpd and 160 mbpd of total fractionated products for the three and nine months ended September 30, 2017, respectively, and approximately 137 mbpd and 125 mbpd of total fractionated products for the three and nine months ended September 30, 2016, respectively.


~~(9)~~	C2 + NGL pricing based on Mont Belvieu prices assuming an NGL barrel of approximately 35 percent ethane, 35 percent propane, six percent Iso-Butane, 12 percent normal butane and 12 percent natural gasoline.



	Six Months Ended June 30, 2019		Six Months Ended June 30, 2018
	MPLX LP⁽³⁾	MPLX LP Operated⁽⁴⁾	MPLX LP⁽³⁾	MPLX LP Operated⁽⁴⁾
G&P
Gathering Throughput (MMcf/d)
Marcellus Operations	1,274	1,274	1,135	1,135
Utica Operations	—	2,087	—	1,612
Southwest Operations	1,600	1,600	1,484	1,486
Total gathering throughput	2,874	4,961	2,619	4,233

Natural Gas Processed (MMcf/d)
Marcellus Operations	4,185	5,175	3,656	4,201
Utica Operations	—	820	—	906
Southwest Operations	1,578	1,578	1,364	1,364
Southern Appalachian Operations	239	239	253	253
Total natural gas processed	6,002	7,812	5,273	6,724

C2 + NGLs Fractionated (mbpd)
Marcellus Operations⁽⁵⁾	430	430	357	357
Utica Operations⁽⁵⁾	—	43	—	45
Southwest Operations	10	10	17	17
Southern Appalachian Operations⁽⁶⁾	12	12	13	13
Total C2 + NGLs fractionated⁽⁷⁾	452	495	387	432



	Three Months Ended June 30,				Six Months Ended June 30,
	2019		2018		2019		2018
Pricing Information
Natural Gas NYMEX HH ($ per MMBtu)	$	2.51	$	2.83	$	2.69	$	2.84
C2 + NGL Pricing ($ per gallon)⁽⁸⁾	$	0.52	$	0.78	$	0.57	$	0.76

(1) Average tariff rates calculated using pipeline transportation revenues divided by pipeline throughput barrels.

(2) Represents total at end of period.

(3) This column represents operating data for entities that have been consolidated into the MPLX financial statements.

(4) This column represents operating data for entities that have been consolidated into the MPLX financial statements as well as operating data for MPLX-operated equity method investments.

(5) Hopedale is jointly owned by Ohio Fractionation and MarkWest Utica EMG. Ohio Fractionation is a subsidiary of MarkWest Liberty Midstream. MarkWest Liberty Midstream and MarkWest Utica EMG are entities that operate in the Marcellus and Utica regions, respectively. Marcellus Operations includes Ohio Fractionation’s portion utilized of the jointly owned Hopedale Fractionation Complex. Utica Operations includes MarkWest Utica EMG’s portion utilized of the jointly owned Hopedale Fractionation Complex. Additionally, Sherwood Midstream has the right to fractionation revenue and the obligation to pay expenses related to 40 mbpd of capacity in the Hopedale 3 and Hopedale 4 fractionators.

(6) Includes NGLs fractionated for the Marcellus Operations and Utica Operations.

(7) Purity ethane makes up approximately 195 mbpd and 176 mbpd of total MPLX Operated, fractionated products for the three months ended June 30, 2019 and 2018, respectively, and approximately 192 mbpd and 176 mbpd of total fractionated products for the six months ended June 30, 2019 and 2018, respectively. Purity ethane makes up approximately 189 mbpd and 161 mbpd of total MPLX LP consolidated, fractionated products for the three months ended June 30, 2019 and 2018, respectively, and approximately 183 mbpd and 162 mbpd of total fractionated products for the six months ended June 30, 2019 and 2018, respectively.

(8) C2 + NGL pricing based on Mont Belvieu prices assuming an NGL barrel of approximately 35 percent ethane, 35 percent propane, six percent Iso-Butane, 12 percent normal butane and 12 percent natural gasoline.

Table of Contents

LIQUIDITY AND CAPITAL RESOURCES

Cash Flows

Our cash, ~~and~~ cash equivalents ~~balance~~and restricted cash was $3$7 million at ~~September~~June 30, ~~2017 compared to $234~~2019 and $76 million at December 31, ~~2016.~~2018. The change in cash, ~~and~~ cash equivalents and restricted cash was due to the factors discussed below. Net cash provided by (used in) operating activities, investing activities and financing activities were as follows:


	Nine Months Ended September 30,						Six Months Ended June 30,
(In millions)	2017			2016			2019			2018
Net cash provided by (used in):
Operating activities	$	1,338		$	975		$	1,452		$	1,290
Investing activities	(1,837		)	(892		)	(1,175		)	(954		)
Financing activities	268			82			(346		)	(336		)
Total	$	(231	)	$	165		$	(69	)	$	—

Net cash provided by operating activities increased ~~$363~~$162 million in the first ~~nine~~six months of ~~2017~~2019 compared to the first ~~nine~~six months of ~~2016,~~2018, primarily due to the increase in net income period over period which was most impacted by the inclusion of Refining Logistics and Fuels Distribution for the full six months of 2019 compared to only five months being included in the first six months of 2018. Changes in working capital and increased distributions from equity method investments made up the majority of ~~which is related to an increase in adjusted EBITDA of $269 million. The favorable change in adjusted EBITDA was driven primarily by higher prices and volumes,~~ the ~~inclusion of MPLXT, since it was not formed as a business until April 1, 2016, and the acquisition~~remainder of the Ozark pipeline. In addition, there was an increase in distributions received from unconsolidated affiliates of $25 million due to the acquisition of an equity interest in the Bakken Pipeline system and the joint-interest acquisitions.change.

Net cash used in investing activities increased ~~$945~~$221 million in the first ~~nine~~six months of ~~2017~~2019 compared to the first ~~nine~~six months of ~~2016,~~2018, primarily due to ~~the acquisition of an equity interest in the Bakken Pipeline system for $513 million,~~increased investments in ~~other unconsolidated entities of approximately $177 million, $219 million for the acquisition of the Ozark pipeline, $30 million for the buy-out of an~~ equity method investment partner, an increase in cash used for additions to property, plant and equipment related to various capital projects, as well as a net decrease of $23 million in investment loans with MPC. Partially offsetting these items was a return of capital of $24 million from our acquisition of equity interests in Sherwood Midstream and Sherwood Midstream Holdings.investments.

Financing activities were a ~~$268~~$346 million ~~source~~use of cash in the first ~~nine~~six months of ~~2017~~2019 compared to a ~~$82~~$336 million ~~source~~use of cash in the first ~~nine~~six months of ~~2016.~~2018. The ~~source~~use of cash infor the first ~~nine~~six months of ~~2017~~2019 was primarily due to ~~$2.2 billion~~distributions of $1,038 million to common unitholders, distributions of $40 million to Series A preferred unitholders and distributions of $12 million to noncontrolling interests offset by net ~~proceeds from~~borrowings of $44 million on the ~~New Senior Notes, $420~~MPC Loan Agreement, net borrowings of $615 million ~~of proceeds under~~on the ~~bank~~ revolving credit facility, ~~$128~~and $94 million in contributions from noncontrolling ~~interests and $483 million of net proceeds from sales of units under the ATM Program~~. ~~These items were partially offset by distributions to MPC of $1.9 billion for the acquisition of HST, WHC, MPLXT and the Joint-~~interests.

5755

~~Interest Acquisition~~, $250 million repayment of the term loan facility, distributions of $49 million to Preferred unitholders, and increased distributions of $188 million to unitholders and our general partner due mainly to the increase in units outstanding as well as a 10 percent increase in the distribution per limited partner unit.

Debt and Liquidity Overview

Our outstanding borrowings at ~~September~~June 30, ~~2017~~2019 and December 31, ~~2016 consisted~~2018 consist of the following:


(In millions)	September 30, 2017			December 31, 2016			June 30, 2019			December 31, 2018
MPLX LP:
Bank revolving credit facility due 2022	$	420		$	—		$	615		$	—
Term loan facility due 2019	—			250
5.500% senior notes due February 2023	710			710
3.375% senior notes due March 2023							500			500
4.500% senior notes due July 2023	989			989			989			989
4.875% senior notes due December 2024	1,149			1,149			1,149			1,149
4.000% senior notes due February 2025	500			500			500			500
4.875% senior notes due June 2025	1,189			1,189			1,189			1,189
4.125% senior notes due March 2027	1,250			—			1,250			1,250
4.000% senior notes due March 2028							1,250			1,250
4.800% senior notes due February 2029							750			750
4.500% senior notes due April 2038							1,750			1,750
5.200% senior notes due March 2047	1,000			—			1,000			1,000
4.700% senior notes due April 2048							1,500			1,500
5.500% senior notes due February 2049							1,500			1,500
4.900% senior notes due April 2058							500			500
Consolidated subsidiaries:
MarkWest - 4.500% - 5.500%, due 2023-2025	63			63
MPL - capital lease obligations due 2020	7			8
MarkWest - 4.500% - 4.875% senior notes, due 2023-2025							23			23
Financing lease obligations							8			6
Total	7,277			4,858			14,473			13,856
Unamortized debt issuance costs	(27		)	(7		)	(95		)	(97		)
Unamortized discount	(401		)	(428		)	(342		)	(366		)
Amounts due within one year	(1		)	(1		)	(6		)	(1		)
Total long-term debt due after one year	$	6,848		$	4,422		$	14,030		$	13,392

The increase in debt as of September 30, 2017 compared to year-end 2016 was due to the public offering of the New Senior Notes in the first quarter of 2017 and from borrowings on the intercompany loan with MPC and the bank revolving credit facility for general partnership purposes including the acquisitions of HST, WHC, MPLXT and the Joint-Interest Acquisition from MPC, the acquisition of our equity interest in MarEn Bakken, the acquisition of the Ozark pipeline and capital expenditures. See Notes 3, 4 and 14 of the Notes to Consolidated Financial Statements for additional information.

On July 21, 2017, the Partnership entered into a credit agreement to replace its previous $2.0 billion five-year bank revolving credit facility with a $2.25 billion five-year bank revolving credit facility that expires in July 2022 (“MPLX Credit Agreement 2022”). The financial covenants and the interest rate terms contained in the new credit agreement are substantially the same as those contained in the previous bank revolving credit facility. Additionally, on July 19, 2017, MPLX LP prepaid the entire outstanding principal amount of its $250 million term loan with cash on hand.

The MPLX Credit Agreement ~~2022~~ includes certain representations and warranties, affirmative and negative covenants and events of default that we consider usual and customary for an agreement of ~~that~~its type and that could, among other things, limit our ability to pay distributions to our unitholders. The financial covenant requires us to maintain a ratio of Consolidated Total Debt as of the end of each fiscal quarter to Consolidated EBITDA (both as defined in the MPLX Credit ~~Agreement 2022)~~Agreement) for the prior four fiscal quarters of no greater than 5.0 to 1.0 (or 5.5 to 1.0 for up to two fiscal quarters following certain acquisitions). Consolidated EBITDA is subject to adjustments for certain acquisitions completed and capital projects undertaken during the relevant period. Other covenants restrict us and/or certain of our subsidiaries from incurring debt, creating liens on our assets and entering into transactions with affiliates. As of ~~September~~June 30, ~~2017,~~2019, we were in compliance with this financial covenant with a ratio of Consolidated Total Debt to Consolidated EBITDA of ~~3.4~~3.70 to 1.0, as well as other covenants contained in the MPLX Credit ~~Agreement 2022.~~Agreement. As disclosed in Note 2 of the Notes to Consolidated Financial Statements, ~~we expect~~ the adoption of the lease accounting standards update ~~to result~~resulted in the recognition of a significant lease obligation. The MPLX Credit Agreement ~~2022~~ contains provisions under which the effects of the new accounting standard are not recognized for purposes of financial covenant ~~calculation violations.~~calculations.

Effective July 30, 2019 in connection with the closing of the Merger, MPLX amended and restated the MPLX Credit Agreement to increase its borrowing capacity to up to $3.5 billion and extend its term to July 30, 2024.

Our intention is to maintain an investment grade credit profile. As of ~~September~~July 30, ~~2017,~~2019, the credit ratings on our senior unsecured debt were at or above investment grade level as follows:



Rating Agency		Rating
Moody’s		~~Baa3~~Baa2 (stable outlook)
Standard & Poor’s		~~BBB-~~BBB (stable outlook)
Fitch		~~BBB-~~BBB (stable outlook)

The ratings reflect the respective views of the rating agencies. Although it is our intention to maintain a credit profile that supports an investment grade rating, there is no assurance that these ratings will continue for any given period of time. The ratings may be revised or withdrawn entirely by the rating agencies if, in their respective judgments, circumstances so warrant.

The MPLX Credit Agreement ~~2022 does~~and senior notes do not contain credit rating triggers that would result in the acceleration of interest, principal or other payments solely in the event that our credit ratings are downgraded. However, any downgrades in the credit ratings of our senior unsecured debt ratings to below investment grade ratings would, among other things, increase the applicable interest rates and other fees payable under the MPLX Credit Agreement ~~2022~~ and may limit our flexibility to obtain future financing.

Our liquidity totaled ~~$2.1~~$2.6 billion at ~~September~~June 30, ~~2017~~2019 consisting of:


	September 30, 2017							June 30, 2019
(In millions)	Total Capacity		Outstanding Borrowings			Available Capacity		Total Capacity		Outstanding Borrowings			Available Capacity
MPLX LP - bank revolving credit facility expiring 2022⁽¹⁾	$	2,250	$	(423	)	$	1,827	$	2,250	$	(618	)	$	1,632
MPC Investment - loan agreement	500		(202		)	298
MPC Loan Agreement								1,000		(44		)	956
Total liquidity	$	2,750	$	(625	)	$	2,125	$	3,250	$	(662	)	2,588
Cash and cash equivalents						3							7
Total liquidity						$	2,128						$	2,595

(1) Outstanding borrowings include $3 million in letters of credit outstanding under this facility.


~~(1)~~	~~Outstanding borrowings include $3 million in letters of credit outstanding under this facility.~~

We expect our ongoing sources of liquidity to include cash generated from operations, borrowings under our loan agreement with MPC and borrowings under our revolving credit ~~agreements and issuances of additional debt and equity securities.~~facilities. We believe that cash generated from these sources will be sufficient to meet our short-term and long-term funding requirements, including working capital requirements, capital expenditure requirements, contractual obligations, ~~repayment of debt maturities~~ and quarterly cash distributions. MPC manages our cash and cash equivalents on our behalf directly with third-party institutions as part of the treasury services that it provides to us under our omnibus agreement. From time to time, we may also consider utilizing other sources of liquidity, including the formation of joint ventures or sales of non-strategic assets.

Equity and Preferred Units Overview

The table below summarizes the changes in the number of units outstanding through ~~September~~June 30, ~~2017:~~2019:

(In units) Common Class B General Partner Total
Balance at December 31, 2016 357,193,288
3,990,878
7,371,105
368,555,271
Unit-based compensation awards 183,509
—
3,745
187,254
Issuance of units under the ATM Program 13,846,998
—
282,591
14,129,589
Contribution of HST/WHC/MPLXT 12,960,376
—
264,497
13,224,873
Contribution of the Joint-Interest Acquisition 18,511,134
—
377,778
18,888,912
Class B conversion 4,350,057
(3,990,878 ) 7,330
366,509
Balance at September 30, 2017 407,045,362
—
8,307,046
415,352,408



(In units)
Balance at December 31, 2018	794,089,518
Unit-based compensation awards	260,101
Balance at June 30, 2019	794,349,619

~~For more details on equity activity, see Notes 7 and 8 of the Notes to Consolidated Financial Statements.~~

~~On July 1, 2017, all of the remaining 3,990,878 Class B units automatically converted into 1.09~~ MPLX ~~LP common units and the right to receive $6.20 per unit in cash. MPC funded this cash payment, which reduced our liability payable to Class B~~

unitholders by approximately $25 million on July 1, 2017. As a result of the Class B units conversion on July 1, 2017, MPLX GP contributed less than $1 million in exchange for 7,330 general partner units to maintain its two percent general partner interest. As common units outstanding as of the August 7, 2017 record date, the converted Class B units participated in the second quarter distribution.

~~The Partnership~~ expects the net proceeds, if any, from sales under ~~the~~our ATM Program will be used for general ~~partnership~~business purposes including repayment or refinancing of debt and funding for acquisitions, working capital requirements and capital expenditures. During the ~~nine~~six months ended ~~September~~June 30, ~~2017, the sale of~~2019, we issued no common units under ~~the~~our ATM ~~Program generated net proceeds of approximately $473 million.~~program. As of ~~September~~June 30, ~~2017,~~2019, $1.7 billion of common units remain available for issuance through the ATM ~~Program under the Distribution Agreement.~~Program.

MPC agreed to waive two-thirds of the first quarter 2017 distributions on the common units issued in connection with the acquisition of HST, WHC and MPLXT. As a result of this waiver, MPC did not receive general partner distributions or IDRs that would have otherwise accrued on such common units with respect to the first quarter 2017 distributions. The value of these waived distributions was $6 million. Additionally, in connection with our acquisition of a partial, indirect equity interest in the Bakken Pipeline system on February 15, 2017, MPC agreed to waive its right to receive incentive distributions of $1.6 million per quarter for twelve consecutive quarters beginning with the distributions declared in the first quarter of 2017 and paid to MPC in the second quarter of 2017, which was prorated from the acquisition date. Lastly, MPC agreed to waive two-thirds of the third quarter 2017 distributions on the common units issued in connection with the Joint-Interest Acquisition. As a result of this waiver, MPC did not receive the distributions or IDRs that would have otherwise accrued on such common units with respect to the third quarter 2017 distributions. The value of these waived distributions was $10 million.

We intend to pay at least the minimum quarterly distribution of $0.2625 per unit per quarter, which equates to ~~$109~~$209 million per quarter, or ~~$436~~$834 million per year, based on the number of common ~~and general partner~~ units outstanding at ~~September~~June 30, ~~2017.~~2019. On ~~October 25, 2017,~~July 22, 2019, we announced the board of directors of our general partner had declared a distribution of ~~$0.5875~~$0.6675 per unit that will be paid on ~~November~~August 14, ~~2017~~2019 to unitholders of record on ~~November 6, 2017.~~August 5, 2019. This represents an increase of ~~$0.0250~~$0.0100 per unit, or ~~four~~1.5 percent, above the ~~second~~first quarter ~~2017~~2019 distribution of ~~$0.5625~~$0.6575 per unit and an increase of 146.4 percent over the ~~third~~second quarter ~~2016~~2018 distribution. This increase in the distribution is consistent with our intent to maintain an attractive distribution growth profile over an extended period of time. Although our ~~Partnership Agreement~~partnership agreement requires that we distribute all of our available cash each quarter, we do not otherwise have a legal obligation to distribute any particular amount per common unit.

The allocation of total quarterly cash distributions to general and limited partners is as follows for the three and ~~nine~~six months ended ~~September~~June 30, ~~2017~~2019 and ~~2016.~~2018. Our distributions are declared subsequent to quarter end; therefore, the following table represents total cash distributions applicable to the period in which the distributions were earned. The distribution on common units for the three and six months ended June 30, 2019 includes the impact of the issuance of approximately 102 million units

issued to public unitholders and approximately 161 million units issued to MPC in connection with MPLX's acquisition of ANDX on July 30, 2019 while the Series B preferred units were issued as a result of the Merger, for which 600,000 ANDX preferred units were converted into 600,000 Series B preferred units of MPLX. Series B preferred unitholders are entitled to receive a fixed distribution of $68.75 per unit, per annum, payable semi-annually in arrears on February 15 and August 15. Accordingly a cash distribution payment totaling $21 million will be paid to Series B unitholders on August 15, 2019.


	Three Months Ended September 30,				Nine Months Ended September 30,				Three Months Ended June 30,				Six Months Ended June 30,
(In millions)	2017		2016		2017		2016		2019		2018		2019		2018
Distribution declared:
Limited partner units - public	$	170	$	135	$	481	$	393	$	261	$	181	$	452	$	360
Limited partner units - MPC(1)	54		44		152		114		431		316		763		604
Limited partner units - GP	8		—		15		—
General partner units - MPC	7		5		18		13
IDRs - MPC	81		49		211		135
Total GP & LP distribution declared	320		233		877		655		692		497		1,215		964
Redeemable preferred units	16		16		49		25
Series A preferred units									21		20		41		36
Series B preferred units									21		—		21		—
Total distribution declared	$	336	$	249	$	926	$	680	734		517		1,277		1,000

Cash distributions declared per limited partner common unit	$	0.5875	$	0.5150	$	1.6900	$	1.5300	$	0.6675	$	0.6275	$	1.3250	$	1.2450

~~Our intentions regarding the distribution growth profile expressed above include forward-looking statements. Such forward-looking statements~~(1) The three and six months ended June 30, 2019 amounts are ~~not guarantees~~net of future performance and are subject to risks, uncertainties and other factors, some of which are beyond our control and are difficult to predict. Factors that could cause actual results to differ materially from those implied in the forward-looking statements include: the adequacy of our capital resources and liquidity, including, but not limited to, the availability of sufficient cash flow to pay distributions and execute our business plan; negative capital market conditions, including an increase of the current yield on common units; the timing and extent of changes in commodity prices

and demand for natural gas, NGLs, crude oil, feedstocks or refined petroleum products; volatility in and/or degradation of market and industry conditions; completion of midstream capacity by our competitors; disruptions due to equipment interruption or failure, including electrical shortages and power grid failures; the suspension, reduction or termination of MPC’s obligations under our commercial agreements; our ability to successfully implement our growth plan, whether through organic growth or acquisitions; modifications to earnings and distribution objectives; state and federal environmental, economic, health and safety, energy and other policies and regulations; changes to our capital budget; financial stability of our producer customers and MPC; other risk factors inherent to our industry; and the factors set forth under the heading “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2016. In addition, the forward-looking statements included herein could be affected by general domestic and international economic and political conditions. Unpredictable or unknown factors not discussed here or in our SEC filings could also have material adverse effects on forward-looking statements.

~~MPC Strategic Actions~~

On January 3, 2017, MPC announced its plans to offer the Partnership the opportunity to acquire assets contributing an estimated $1.4 billion of annual EBITDA. The Partnership's plans for funding the dropdowns include debt and equity in approximately equal proportions, with the equity financing to be funded through transactions with MPC. In conjunction with the completion of the dropdowns, MPC announced its intentions to offer to exchange its IDRs and two percent GP Interest for common units. Following these transactions, we expect to internally fund a greater portion of our future growth from internal cash flows. The first drop of assets contributing approximately $250$12.5 million of ~~annual EBITDA took place in the first quarter of 2017~~waived distributions with respect to units held by MPC and was financed through cash and equity, as discussed in Note 3 of the Notes to Consolidated Financial Statements. The second drop of assets contributing approximately $138 million of annual EBITDA took place in the third quarter of 2017 and was financed through cash and equity, as discussed in Note 3 of the Notes to Consolidated Financial Statements. The remaining dropdown, which includes refinery logistics assets and fuels distribution services, with projected annual EBITDA of approximately $1.0 billion has been offered to the Partnership and referred to the conflicts committee of the board of directors of our general partner. The transaction is expected to close no later than the end of the first quarter of 2018.its affiliates.

Capital Expenditures

Our operations are capital intensive, requiring investments to expand, upgrade, enhance or maintain existing operations and to meet environmental and operational regulations. Our capital requirements consist of maintenance capital expenditures and growth capital expenditures. Examples of maintenance capital expenditures are those made to replace partially or fully depreciated assets, to maintain the existing operating capacity of our assets and to extend their useful lives, or other capital expenditures that are incurred in maintaining existing system volumes and related cash flows. In contrast, growth capital expenditures are those incurred for ~~acquisitions or~~ capital improvements that we expect will increase our operating capacity to increase volumes gathered, processed, transported or fractionated, decrease operating expenses within our facilities or increase operating income over the long term. Examples of growth capital expenditures include the acquisition of equipment or the construction costs associated with new well connections, and the development ~~or acquisition~~ of additional pipeline, processing or storage capacity. In general, growth capital includes costs that are expected to generate additional or new cash flow for ~~us.~~MPLX.

Our capital expenditures are shown in the table below:

Nine Months Ended September 30,
(In millions) 2017 2016
Capital expenditures:
Maintenance $ 59
$ 58
Expansion 1,002
889
Total capital expenditures 1,061
947
Less: Increase in capital accruals 55
—
Asset retirement expenditures 2
4
Additions to property, plant and equipment 1,004
943
Capital expenditures of unconsolidated subsidiaries⁽¹⁾
306
94
Total gross capital expenditures 1,310
1,037
Less: Joint venture partner contributions⁽²⁾
132
45
Total capital expenditures, net 1,178
992
Less: Maintenance capital 60
58
Total growth capital $ 1,118
$ 934



	Six Months Ended June 30,
(In millions)	2019			2018
Capital expenditures:
Maintenance	$	53		$	58
Growth	747			924
Total capital expenditures	800			982
Less: Increase (decrease) in capital accruals	(85		)	115
Asset retirement expenditures	1			5
Additions to property, plant and equipment	884			862
Investments in unconsolidated affiliates	310			112
Acquisitions	(6		)	—
Total capital expenditures and acquisitions	1,188			974
Less: Maintenance capital expenditures	53			58
Acquisitions	(6		)	—
Total growth capital expenditures⁽¹⁾	$	1,141		$	916

(1) Amount excludes contributions from noncontrolling interests of $94 million and $5 million for the six months ended June 30, 2019 and 2018, respectively, as reflected in the financing section of our statement of cash flows.


~~(1)~~	~~Includes amounts related to unconsolidated, Partnership-operated subsidiaries.~~


~~(2)~~	~~This represents estimated joint venture partners’ share of growth capital.~~

Our organic growth capital plan ~~range has not been revised~~ for 2019 is $2.2 billion. The L&S organic growth capital plan includes the ~~remainder~~continued expansion of ~~2017.~~MPLX’s marine fleet. We ~~anticipate finishing~~also have other projects including long-haul crude oil, natural gas and NGL pipelines as well as projects to increase our export capability which will further enhance our L&S segment full value chain capture. The G&P segment organic growth capital plan includes the ~~year near below~~addition of approximately 825 MMcf/d of processing capacity at five gas processing plants, two in the ~~previously reported range. This range excludes acquisition costs for~~Marcellus and three in the ~~dropdowns of HST, WHC, MPLXT~~Southwest, which expands MPLX’s processing capacity in the Permian Basin and the ~~Joint-Interest Acquisition, the acquisition~~STACK shale play of the Ozark pipeline and the MarEn Bakken investment, as discussed in Notes 3 and 4 of the Notes to Consolidated Financial Statements. The range also excludes non-affiliated joint venture members’ share of capital expenditures.Oklahoma. The G&P segment capital plan ~~includes investments that are expected to support producer customers and complete certain processing plants currently under construction at the Sherwood Complex. The L&S segment capital plan~~also includes the ~~development~~addition of ~~various crude oil~~approximately 100 mbpd of fractionation capacity in the Marcellus and refined petroleum products infrastructure projects, a butane cavern and a tank farm expansion, and an expansion project to increase line capacity on the Ozark pipeline. We also have large organic growth prospects associated with the anticipated growth of MPC’s operations and third-party activity in our areas of operation that we anticipate will provide attractive returns and cash flows.Utica basins. We continuously evaluate our capital plan and make changes as conditions warrant.

Contractual Cash Obligations

As of ~~September~~June 30, ~~2017,~~2019, our contractual cash obligations included long-term debt, ~~capital~~finance and operating lease obligations, purchase obligations for services and to acquire property, plant and equipment, and other liabilities. During the ~~nine~~six months ended ~~September~~June 30, ~~2017,~~2019, our long-term debt obligations increased by ~~$4.1 billion~~$615 million due to additional borrowings under the ~~new senior notes issued~~MPLX Credit Agreement and contracts to acquire property, plant and equipment ~~increased $317 million largely due to~~for new ~~and~~or growing ~~projects.~~projects decreased by $218 million. There were no other material changes to these obligations outside the ordinary course of business since December 31, ~~2016.~~2018.

Off-Balance Sheet Arrangements

~~As of September 30, 2017, we have not entered into any transactions, agreements or other~~Off-balance sheet arrangements comprise those arrangements that ~~would result in~~may potentially impact our liquidity, capital resources and results of operations, even though such arrangements are not recorded as liabilities under U.S. GAAP. Our off-balance sheet ~~liabilities.~~

~~Forward-looking Statements~~

~~Our opinions concerning~~arrangements are limited to indemnities and guarantees that are described in Note 20. Although these arrangements serve a variety of our business purposes, we are not dependent on them to maintain our liquidity and capital resources, and ~~our ability~~we are not aware of any circumstances that are reasonably likely to ~~avail ourselves in~~cause the ~~future of the financing options mentioned in the above forward-looking statements are based~~off-balance sheet arrangements to have a material adverse effect on currently available information. If this information proves to be inaccurate, future availability of financing may be adversely affected. Factors that affect the availability of financing include our performance (as measured by various factors, including cash provided by operating activities), the state of worldwide debt and equity markets, investor perceptions and expectations of past and future performance, the global financial climate, and, in particular, with respect to borrowings, the levels of our outstanding debt and future credit ratings by rating agencies. The discussion of liquidity and capital resources above also contains forward-looking statements regarding expected capital spending. The forward-looking statements about our capital budget are based on current expectations, estimates and projections and are not guarantees of future performance. Actual results may differ materially from these expectations, estimates and projections and are subject to certain risks, uncertainties and other factors, some of which are beyond our control and are difficult to predict. Some factors that could cause actual results to differ materially include negative capital market conditions, including an increase of the current yield on common units, adversely affecting the Partnership’s ability to meet its distribution growth guidance; the time, costs and ability to obtain regulatory or other approvals and consents and otherwise consummate the strategic initiatives discussed herein and other proposed transactions; the satisfaction or waiver of conditions in the agreements governing the strategic initiatives discussed herein and other proposed transactions; our ability to achieve the strategic and other objectives related to the strategic initiatives and transactions discussed herein, including the dropdown from MPC and the proposed exchange of common units for MPC’s economic interests in the general partner, the joint venture with Antero Midstream, the Ozark pipeline acquisition, and other proposed transactions; adverse changes in laws including with respect to tax and regulatory matters; the inability to agree with respect to the timing of and value attributed to assets identified for dropdown and/or the economic interests in the general partner; the adequacy of the Partnership’s capital resources and liquidity, including, but not limited to, availability of sufficient cash flow to pay distributions, and the ability to successfully execute its business plans and growth strategy; continued/further volatility in and/or degradation of market and industry conditions; changes to the expected construction costs and timing of projects; civil protests and resulting legal/regulatory uncertainty regarding environmental and social issues, including pipeline infrastructure, may prevent or delay the construction and operation of such infrastructure and realization of associated revenues; completion of midstream infrastructure by competitors; disruptions due to equipment interruption or failure, including electrical shortages and power grid failures; the suspension, reduction or termination of MPC's obligations under the Partnership’s commercial agreements; modifications to earnings and distribution growth objectives; the level of support from MPC, including dropdowns, alternative financing arrangements, taking equity units, and other methods of sponsor support, as a result of the capital allocation needs of the enterprise as a whole and its ability to provide support on commercially reasonable terms; compliance with federal and state environmental, economic, health and safety, energy and other policies and regulations and/or enforcement actions initiated thereunder; changes to the Partnership’s capital budget; prices of and demand for natural gas, NGLs, crude oil and refined products; delays in obtaining necessary third-party approvals and governmental permits; changes in labor, material and equipment costs and availability; planned and unplanned outages, the delay of, cancellation of or failure to implement planned capital projects; project overruns, disruptions or interruptions of our operations due to the shortage of skilled labor; unforeseen hazards such as weather conditions, acts of war or terrorist acts and the governmental or military response; and other operating and economic considerations. These factors, among others, could cause actual results to differ materially from those set forth in the forward-looking statements. For additional information on forward-looking statements and risks that can affect our business, see “Disclosures Regarding Forward-Looking Statements” and Item 1A. Risk Factors in our Annual Report on Form 10-K for the year ended December 31, 2016.resources.

TRANSACTIONS WITH RELATED PARTIES

At ~~September~~June 30, ~~2017,~~2019, MPC held ~~a two~~64 percent ~~GP Interest~~of the outstanding MPLX LP common units and ~~a 28.4 percent limited~~the non-economic general partner ~~interest in MPLX LP.~~interest.

Excluding revenues attributable to volumes shipped by MPC under joint tariffs with third parties that are treated as third-party revenues for accounting purposes, MPC accounted for 3649 percent and 4048 percent of our total revenues and other income for the ~~third~~second quarter of ~~2017~~2019 and ~~2016,~~2018, respectively. We provide ~~to MPC~~ crude oil and product pipeline transportation services based on regulated tariff rates and storage services and inland marine transportation based on contracted rates.

Of our total costs and expenses, MPC accounted for 2229 percent and 2528 percent for the ~~third~~second quarter of ~~2017~~2019 and ~~2016,~~2018, respectively. MPC performed certain services for us related to information technology, engineering, legal, accounting, treasury, human resources and other administrative services.

~~We believe that transactions with related parties were conducted under terms comparable to those with unrelated parties.~~ For further discussion of agreements and activity with MPC and related parties see Item 1. Business in our Annual Report on Form 10-K for the year ended December 31, ~~2016~~2018 and Note 5 of the Notes to Consolidated Financial Statements in this report.

ENVIRONMENTAL MATTERS AND COMPLIANCE COSTS

We have incurred and may continue to incur substantial capital, operating and maintenance, and remediation expenditures as a result of environmental laws and regulations. If these expenditures, as with all costs, are not ultimately reflected in the prices of our products and services, our operating results will be adversely affected. We believe that substantially all of our competitors must comply with similar environmental laws and regulations. However, the specific impact on each competitor may vary depending on a number of factors, including, but not limited to, the age and location of its operating facilities.

As of ~~September~~June 30, ~~2017,~~2019, there have been no significant changes to our environmental matters and compliance costs since our Annual Report on Form 10-K for the year ended December 31, ~~2016, as updated by our Current Report on Form 8-K filed on May 1, 2017.~~2018.

CRITICAL ACCOUNTING ESTIMATES

As of ~~September~~June 30, ~~2017,~~2019, there have been no significant changes to our critical accounting estimates since our Annual Report on Form 10-K for the year ended December 31, ~~2016, as updated by our Current Report on Form 8-K filed on May 1, 2017.~~2018.

ACCOUNTING STANDARDS NOT YET ADOPTED

As discussed in Note 2 of the Notes to Consolidated Financial Statements, certain new financial accounting pronouncements will be effective for our financial statements in the future.

Item 3. Quantitative and Qualitative Disclosures about Market Risk

~~Market risk includes~~We are exposed to market risks related to the ~~risk~~volatility of ~~loss arising from adverse~~commodity prices. We employ various strategies, including the potential use of commodity derivative instruments, to economically hedge the risks related to these price fluctuations. We are also exposed to market risks related to changes in ~~market rates and prices. We face market risk from commodity price changes and,~~interest rates. As of June 30, 2019, we did not have any open financial derivative instruments to ~~a lesser extent,~~economically hedge the risks related to interest rate fluctuations or commodity derivative instruments to economically hedge the risks related to the volatility of commodity prices; however, we continually monitor the market and our exposure and may enter into these arrangements in the future. While there is a risk related to changes ~~and non-performance~~in fair value of derivative instruments we may enter into; such risk is mitigated by ~~our customers and counterparties.~~price or rate changes related to the underlying commodity or financial transaction.

Commodity Price Risk

The information about commodity price risk for the three and ~~nine~~six months ended ~~September~~June 30, ~~2017~~2019 does not differ materially from that discussed in Item 7A. Quantitative and Qualitative Disclosures about Market Risk of our Annual Report on Form 10-K for the year ended December 31, ~~2016.~~2018.

Outstanding Derivative Contracts

The following tables provide information on the volume of our derivative activity for positions related to long liquids price risk at September 30, 2017, including the weighted-average prices (“WAVG”):

WTI Crude Swaps Volumes (Bbl/d) WAVG Price
(Per Bbl) Fair Value
(in thousands)
2017 (Oct - Dec) 200
$ 54.25
$ 42

Natural Gas Swaps Volumes (MMBtu/d) WAVG Price
(Per MMBtu) Fair Value
(in thousands)
2017 (Oct - Dec) 1,832
$ 3.03
$ (30 )
2018 2,542
$ 2.78
$ 4

Ethane Swaps Volumes (Gal/d) WAVG Price
(Per Gal) Fair Value
(in thousands)
2017 (Oct - Dec) 54,600
$ 0.27
$ (47 )

Propane Swaps Volumes (Gal/d) WAVG Price
(Per Gal) Fair Value
(in thousands)
2017 (Oct - Dec) 119,932
$ 0.61
$ (3,164 )
2018 16,925
$ 0.64
$ (506 )

IsoButane Swaps Volumes (Gal/d) WAVG Price
(Per Gal) Fair Value
(in thousands)
2017 (Oct - Dec) 10,730
$ 0.81
$ (236 )
2018 1,655
$ 0.80
$ (38 )

Normal Butane Swaps Volumes (Gal/d) WAVG Price
(Per Gal) Fair Value
(in thousands)
2017 (Oct - Dec) 31,622
$ 0.75
$ (823 )
2018 4,595
$ 0.75
$ (120 )

Natural Gasoline Swaps Volumes (Gal/d) WAVG Price
(Per Gal) Fair Value
(in thousands)
2017 (Oct - Dec) 41,827
$ 1.13
$ (346 )
2018 3,089
$ 1.18
$ (20 )

We have a ~~commodity contract~~natural gas purchase commitment embedded in a keep-whole processing agreement with a producer customer in the Southern Appalachian region ~~that creates a floor on~~expiring in December 2022. The customer has the frac spread for gas purchases of 9,000 Dth/d. The commodity contract is a component of a broader regional arrangement that also includes a keep-whole processing agreement. For accounting purposes, these contracts have been aggregated into a single contract and are evaluated together. In February 2011, we executed agreements with the producer customer to extend the commodity contract and the related processing agreement from March 31, 2015 to December 31, 2022, with the producer customer’sunilateral option to extend the agreement for two ~~successive~~consecutive five-year terms through December ~~31,~~ 2032. ~~The~~For accounting purposes, these natural gas purchase ~~of gas at prices based on the frac spread~~commitment and ~~the option to extend the agreements~~term extending options have been ~~identified as~~aggregated into a single compound embedded ~~derivative, which is recorded at fair value.~~derivative. The probability of ~~renewal~~the customer exercising its options is determined based on ~~extrapolated pricing curves, a review of the overall expected favorability of the contracts based on such pricing curves and~~ assumptions about the ~~counterparty’s~~customer’s potential

business strategy decision points that may exist at the time ~~the counterparty~~they would elect whether to renew the ~~contracts.~~contract. The changes in fair value of this compound embedded derivative are based on the difference between the contractual and index pricing, the probability of the producer customer exercising its option to extend and the estimated favorability of these contracts compared to current market conditions. The changes in fair value are recorded in earnings through ~~Purchased~~“Purchased product ~~costs~~ incosts” on the Consolidated Statements of Income. As of ~~September~~June 30, ~~2017,~~2019 and December 31, 2018, the estimated fair value of this contract was a liability of ~~$52 million.~~$65 million and $61 million, respectively.

We have a commodity contract that gives us an option to fix a component of the utilities cost to an index price on electricity at a plant location in the Southwest through the fourth quarter of 2018. The contract’s pricing is currently fixed through the fourth quarter of 2017 with the ability to fix the pricing for its remaining year. Changes in the fair value as of the derivative component of this contract were recognized as ~~Cost of Revenues~~ ~~in the Consolidated Statements of Income.~~ Open Derivative Positions and Sensitivity Analysis

As of ~~September~~June 30, ~~2017, the estimated fair value~~2019, we have no open commodity derivative contracts. We evaluate our portfolio of ~~this contract was a liability~~commodity derivative instruments on an ongoing basis and add or revise strategies in anticipation of ~~less than $1 million.~~changes in market conditions and in risk profiles.

Table of Contents

Interest Rate Risk

Sensitivity analysis of the effect of a hypothetical 100-basis-point change in interest rates on long-term debt, excluding ~~capital~~finance leases, is provided in the following table. Fair value of cash and cash equivalents, receivables, accounts payable and accrued interest approximate carrying value and are relatively insensitive to changes in interest rates due to the short-term maturity of the instruments. Accordingly, these instruments are excluded from the table.


(In millions)	Fair value as of September 30, 2017⁽¹⁾		Change in Fair Value⁽²⁾		Change in Income Before Income Taxes for the Nine Months Ended September 30, 2017⁽³⁾		Fair value as of June 30, 2019⁽¹⁾		Change in Fair Value⁽²⁾		Change in Income Before Income Taxes for the Six Months Ended June 30, 2019⁽³⁾
Long-term debt
Fixed-rate	$	7,199	$	575	N/A		$	14,667	$	1,577	N/A
Variable-rate	$	420	N/A		$	2	$	615	N/A		$	1

(1) Fair value was based on market prices, where available, or current borrowing rates for financings with similar terms and maturities.


~~(1)~~	~~Fair value was based on market prices, where available, or current borrowing rates for financings with similar terms and maturities.~~


~~(2)~~	~~Assumes a 100-basis-point decrease in the weighted average yield-to-maturity at September 30, 2017.~~


~~(3)~~	Assumes a 100-basis-point change in interest rates. The change to net income was based on the weighted average balance of all outstanding variable-rate debt for the nine months ended September 30, 2017.

(2) Assumes a 100-basis-point decrease in the weighted average yield-to-maturity at June 30, 2019.

(3) Assumes a 100-basis-point change in interest rates. The change to net income was based on the weighted average balance of all outstanding variable-rate debt for the six months ended June 30, 2019.

At ~~September~~June 30, ~~2017,~~2019, our portfolio of long-term debt consisted of fixed-rate instruments and variable-rate instruments under our ~~term loan~~revolving credit facility. The fair value of our fixed-rate debt is relatively sensitive to interest rate fluctuations. Our sensitivity to interest rate declines and corresponding increases in the fair value of our debt portfolio unfavorably affects our results of operations and cash flows only when we elect to repurchase or otherwise retire fixed-rate debt at prices above carrying value. Interest rate fluctuations generally do not impact the fair value of borrowings under our bank revolving credit or term loan facilities, but may affect our results of operations and cash flows. As of ~~September~~June 30, ~~2017,~~2019, we did not have any financial derivative instruments to hedge the risks related to interest rate fluctuations; however, we continually monitor the market and our exposure and may enter into these agreements in the future.

Item 4. Controls and Procedures

Disclosure Controls and Procedures

An evaluation of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules ~~13(a)-15(e)~~13a-15(e) and ~~15(d)-15(e)~~15d-15(e) under the Securities Exchange Act of 1934, as amended) was carried out under the supervision and with the participation of management, including the chief executive officer and chief financial officer of our general partner. Based upon that evaluation, the chief executive officer and chief financial officer of our general partner concluded that the design and operation of these disclosure controls and procedures were effective as of ~~September~~June 30, ~~2017~~2019, the end of the period covered by this report.

Changes in Internal Control Over Financial Reporting

During the quarter ended ~~September~~June 30, ~~2017,~~2019, there were no changes in our internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Part II – Other Information

Item 1. Legal Proceedings

We are the subject of, or a party to, a number of pending or threatened legal actions, contingencies and commitments involving a variety of matters, including laws and regulations relating to the environment.

As Except as described below, there have been no material changes to the legal proceedings previously ~~reported~~disclosed in our Annual Report on Form 10-K, as updated in the Quarterly Report on Form 10-Q for the ~~year~~quarter ended ~~December~~March 31, ~~2016, in July 2015, representatives from the EPA and the United States Department of Justice conducted a raid on a~~2019.

MPLX, MarkWest, MarkWest Liberty Midstream, ~~pipeline launcher/receiver site utilized for pipeline maintenance operations~~MarkWest Liberty Bluestone, L.L.C., Ohio Fractionation and MarkWest Utica EMG (collectively, the “MPLX Parties”) are parties to various lawsuits with Bilfinger Westcon, Inc. (“Westcon”) that were instituted in ~~Washington County,~~2016 and 2017 in Pennsylvania, ~~pursuant~~West Virginia and Ohio. The lawsuits relate to ~~a search warrant issued~~disputes regarding construction work performed by ~~a magistrate~~Westcon at the Bluestone, Mobley and Cadiz processing complexes in Pennsylvania, West Virginia and Ohio, respectively, and the Hopedale fractionation complex in Ohio. With respect to work performed by Westcon

at the Mobley and Bluestone processing complexes, one or more of the ~~United States District Court for~~MPLX Parties have asserted breach of contract, fraud, and with respect to work performed at the Western District of Pennsylvania. As part of this initiative, the U.S. Attorney’s Office for the Western District of Pennsylvania proceeded with an investigation of MarkWest Liberty Midstream’s launcher/receiver, pipeline and compressor station operations. In response to the investigation, MarkWest initiated independent studies which demonstrated that there was no risk to worker safety and no threat of public harm associated with MarkWest Liberty Midstream’s launcher/receiver operations. These findings were supported by a subsequent inspection and review by the Occupational Safety and Health Administration. After providing these studies, and other substantial documentation related to MarkWest Liberty Midstream's pipeline and compressor stations, and arranging site visits and conducting several meetings with the government’s representatives, on September 13, 2016, the U.S. Attorney’s Office for the Western District of Pennsylvania rendered a declination decision, dropping its criminal investigation and declining to pursue charges in this matter.

MarkWest Liberty Midstream continues to discuss with the EPA and the State of Pennsylvania civil enforcement allegations associated with permitting or other related regulatory obligations for its launcher/receiver and compressor station facilities in the region. In connection with these discussions, MarkWest Liberty Midstream received an initial proposal from the EPA to settle all civil claims associated with this matter for the combination of a proposed cash penalty of approximately $2.4 million and proposed supplemental environmental projects with an estimated cost of approximately $3.6 million.Mobley processing complex, MarkWest Liberty Midstream has ~~submitted a response asserting that this action involves novel issues surrounding primarily minor source emissions from facilities that~~also asserted negligent misrepresentation claims against Westcon. Westcon has also asserted claims against one or more of the ~~agencies themselves considered de minimis~~MPLX Parties regarding these construction projects for breach of contract, unjust enrichment, promissory estoppel, fraud and ~~were not~~constructive fraud, tortious interference with contractual relations, and civil conspiracy. Collectively, in the ~~subject~~several cases, the MPLX Parties sought in excess of ~~regulation and consequently that~~$10 million, plus an unspecified amount of punitive damages. Collectively, in the settlement proposal is excessive. In connection with these negotiations, MarkWest Liberty Midstream has received a revised settlement proposal from the EPA which proposes to lower the proposed cash penalty to approximately $1.24several cases, Westcon sought in excess of $40 million, plus an unspecified amount of punitive damages. On July 31, 2019, Westcon and the ~~estimated cost~~MPLX Parties reached an agreement to resolve the disputes among those parties relating to the Bluestone processing complex in Pennsylvania. The settlement will not have a material adverse effect on MPLX’s consolidated financial position, results of proposed supplemental environmental projects to an estimated cost of approximately $1.6 million. MarkWest Liberty Midstream will continue to negotiate with EPA regarding the amount and scope of the proposed settlement.operations or cash flows.

Item 1A. Risk Factors

~~We are subject to various risks and uncertainties in~~There have been no material changes from the ~~course of our business. The discussion of such risks and uncertainties may be found under Item 1A. Risk Factors~~risk factors previously disclosed in our Annual Report on Form 10-K for the year ended December 31, ~~2016.~~2018 other than the risks described below related to our acquisition of ANDX.

~~Item 2. Unregistered Sales~~The number of ~~Equity Securities~~

~~In connection with the issuance of 14,887~~our outstanding common units ~~upon the vesting~~has increased, and we have outstanding an additional class of ~~phantom units under the MPLX LP 2012 Incentive Compensation Plan, 359,179 common~~preferred units as a result of the ~~conversion~~Merger, which could make it more difficult for us to pay the current level of ~~Class B units to~~quarterly distributions.

As of July 29, 2019, there were 794,358,663 MPLX common units ~~and 1,184,335~~outstanding. We issued approximately 263 million common units under the ATM Program, our general partner purchased an aggregate of 31,803 general partner units for $1,059,390.81 in cash during the three months ended September 30, 2017, to maintain its two percent general partner interest in us. The general partner units were issued in reliance on an exemption from registration under Section 4(a)(2) of the Securities Act of 1933, as amended.

~~On September 1, 2017,~~ in connection with the ~~Joint-Interest Acquisition,~~Merger. Accordingly, the aggregate dollar amount required to pay the current per unit quarterly distribution on all our common units has increased, which could increase the likelihood that MPLX will not have sufficient funds to pay the current level of quarterly distributions to all unitholders.

Further, we issued ~~377,778 general partner~~600,000 new Series B preferred units in the Merger. We must pay distributions that have accrued on the Series A preferred units and the new Series B preferred units prior to paying any distributions on our common units. Distributions are payable on the Series A preferred units at a rate of the greater of $0.528125 per quarter per Series A preferred unit or the quarterly distribution that the holder would have received on an as-converted basis. We paid approximately $20 million in distributions on the Series A preferred units for the first quarter of 2019. Distributions will initially accrue on the Series B preferred units at a rate of $68.75 per unit per annum, payable on a semi-annual basis, which amounts to total annual distributions of approximately $41 million. The requirement to pay distributions on the new Series B preferred units increases the likelihood that we will not have sufficient funds to pay the current level of distributions to our common unitholders following the completion of the Merger.

A downgrade in our credit ratings could impact our access to capital and costs of doing business, and independent third parties control and maintain our credit ratings.

Following the Merger, we have more debt outstanding on a consolidated basis we had prior to the Merger, and the Merger may cause rating agencies to reevaluate our ratings. A downgrade of our credit ratings might increase our cost of borrowing and could require us to post collateral with third parties, negatively impacting our available liquidity. Our ability to access capital markets could also be limited by a downgrade of its credit ratings and other disruptions.

Credit rating agencies perform independent analysis when assigning credit ratings. The analysis includes a number of criteria including, but not limited to, business composition, market and operational risks, as well as various financial tests. Credit rating agencies continue to review the criteria for industry sectors and various debt ratings and may make changes to those criteria from time to time. Credit ratings are not recommendations to buy, sell or hold investments in the rated entity. Ratings are subject to revision or withdrawal at any time by the rating agencies, and we cannot assure that we will maintain our current credit ratings.

The Merger may not be accretive, and may be dilutive, to our earnings per unit, which may negatively affect the market price of our common units.

In connection with the completion of the Merger, we issued approximately 263 million common units. The issuance of these new common units could have the effect of depressing the market price of the common units, through dilution of earnings per unit or otherwise. Any dilution of, or delay of any accretion to, our earnings per unit could cause the price of our common units to ~~our general partner. The~~decline or increase at a reduced rate.

We have incurred and will continue to incur significant transaction and Merger-related costs in connection with the Merger, which may be in excess of those anticipated by us.

We expect to continue to incur a number of ~~general partner units issued were calculated by dividing $12,600,000 by 33.3529,~~non-recurring costs associated with the ~~simple average~~Merger, combining the operations of the ~~ten day trading volume weighted average NYSE price~~two partnerships and achieving desired synergies. These costs have been, and will continue to be, substantial.

We have incurred and will continue to incur transaction fees and costs related to formulating and implementing integration plans, including facilities and systems consolidation costs. We will continue to assess the magnitude of ~~an MPLX LP common unit for~~these costs, and additional unanticipated costs may be incurred in the ~~ten trading days ending at market close on August 31, 2017. The general partner units were issued in reliance on an exemption from registration under Section 4(a)(2)~~integration of the ~~Securities Act~~two partnerships’ businesses. Although we expect that the elimination of ~~1933,~~duplicative costs, as ~~amended.~~

~~Item 5. Other Information~~

~~Amended Restricted Stock Award Agreement~~

~~On October 26, 2017, C. Corwin Bromley entered into an Amended Restricted Stock Award Agreement with MPC (the “Amended Award Agreement”)~~well as the realization of other efficiencies related to ~~provide for~~ the ~~immediate vesting~~integration of ~~a restricted stock award upon Mr. Bromley’s retirement effective January 1, 2018, which was announced by MPLX LP (the “Partnership”) on August 4, 2017. Mr. Bromley was a named executive officer~~the businesses, should allow us to offset integration-related costs over time, this net benefit may not be achieved in the ~~Partnership’s Annual Report on Form 10-K for the year ended December 31, 2016.~~

near term, or at all.

The ~~foregoing description~~costs described above, as well as other unanticipated costs and expenses, could have a material adverse effect on our financial condition and operating results.

The integration of MPLX and ANDX may not be as successful as anticipated.

The Merger involves numerous operational, strategic, financial, accounting, legal, tax and other risks; potential liabilities associated with the ~~Amended Award Agreement is summary~~acquired businesses; and uncertainties related to design, operation and integration of ANDX’s internal control over financial reporting. Difficulties in ~~nature~~integrating MPLX and ~~subject~~ANDX may result in ANDX performing differently than expected, in operational challenges or in the failure to realize anticipated efficiencies. MPLX’s and ~~qualified in its entirety~~ANDX’s existing businesses could also be negatively impacted by the ~~full text of~~Merger. Potential difficulties that may be encountered in the ~~Amended Award Agreement, a copy of which is attached as Exhibit 10.2~~integration process include, among other factors:

the inability to ~~this Quarterly Report on Form 10-Q for~~successfully integrate the ~~quarterly period ended September 30, 2017 and is incorporated herein by reference.~~

~~MPLX LP Executive Change in Control Severance Benefits Plan~~

~~Effective October 26, 2017, the board of directors of Marathon Petroleum Corporation (the “Corporation”) and the board of directors~~businesses of MPLX ~~GP LLC,~~and ANDX in a manner that permits MPLX to achieve the ~~general partner (the “General Partner”) of MPLX LP (“~~full revenue and cost savings anticipated from the ~~Partnership”), adopted~~Merger;

complexities associated with managing the ~~MPLX LP Executive Change in Control Severance Benefits Plan (the “MPLX Plan”).~~larger, more complex, integrated business;

not realizing anticipated operating synergies;

~~The purpose of the MPLX Plan is to recognize the contributions of the senior executives~~integrating personnel who provide services to the ~~Corporation or~~two partnerships while maintaining focus on providing consistent, high-quality products and services;

potential unknown liabilities and unforeseen expenses associated with the ~~Partnership and to assure the continued provision~~Merger;

loss of services by these senior executives. The MPLX Plan is intended to operate as a companion plan to the Marathon Petroleum Corporation Amended and Restated Executive Change in Control Severance Benefits Plan (the “MPC Plan”). It is intended that the MPLX Plan shall not result in a duplication of benefits in the event a participant would be eligible to receive benefits under both the MPLX Plan and the MPC Plan. The following is a summary of the MPLX Plan:

~~The MPLX Plan applies to certain senior executives~~key personnel who provide services to the ~~Partnership,~~two partnerships;

performance shortfalls at one or both of the ~~Corporation~~partnerships as a result of the diversion of management’s attention caused by completing the Merger and integrating the operations of MPLX and ANDX; and

the disruption of, or ~~any~~the loss of momentum in, each company’s ongoing business or inconsistencies in standards, controls, procedures and policies.

We may fail to realize all of the anticipated benefits of the Merger.

The success of the Merger depends, in part, on our ability to realize the anticipated benefits and cost savings from combining MPLX’s and ANDX’s businesses. The anticipated benefits and cost savings of the Merger may not be realized fully or at all, or may take longer to realize than expected or could have other adverse effects that we do not currently foresee. Some of the assumptions that we have made, such as the achievement of operating synergies and the expansion in opportunities for logistics growth in crude oil production basins and regions, may not be realized. The integration process may result in the loss of key personnel who provide services to the two partnerships, the disruption of ongoing businesses or inconsistencies in standards, controls, procedures and policies. There could be potential unknown liabilities and unforeseen expenses associated with the Merger that were not discovered in the course of performing due diligence.

The market price of our common units may decline in the future as a result of the sale of common units held by former ANDX unitholders or current MPLX unitholders.

Following their ~~respective subsidiaries or affiliates.~~

~~A participant is generally entitled~~receipt of our common units as consideration in the Merger, former ANDX common unitholders may seek to ~~receive benefits under~~sell the MPLX ~~Plan if within two years~~common units delivered to them. Other MPLX common unitholders may also seek to sell common units held by them following ~~a Partnership Change in Control (as defined~~completion of the Merger. These sales (or the perception that these sales may occur), coupled with the increase in the outstanding number of MPLX ~~Plan),~~common units, may affect the ~~participant’s employment is terminated without cause or~~market for, ~~good reason, with good reason generally being defined~~and the market price of, MPLX common units in an adverse manner.

The combined partnership will record goodwill and other intangible assets that could become impaired and result in material non-cash charges to the results of operations of the combined partnership in the ~~MPLX Plan~~future.

The Merger will be accounted for as a ~~reduction~~reorganization of entities under common control in accordance with accounting principles generally accepted in the ~~participant’s roles, responsibilities, pay or benefits or~~United States. Under a reorganization of entities under common control, the ~~participant is required~~assets and liabilities of ANDX transferred between entities under common control will be recorded by MPLX based on MPC’s historical

cost basis resulting from its preliminary purchase price accounting. MPLX will record ANDX’s assets and liabilities at MPC’s basis as of October 1, 2018, the date that common control was first established.

Effective October 1, 2018, MPC acquired Andeavor, including a controlling interest in ANDX, thus establishing common control between MPLX, ANDX, MPLX GP and ANDX GP. Under MPC’s application of the acquisition method of accounting, a portion of the total purchase price was allocated to ~~relocate more than 50 miles from his or her current location. However, benefits are not payable if~~ANDX’s tangible assets and liabilities and identifiable intangible assets based on their fair values as of October 1, 2018. The excess of the ~~termination is for cause or due~~allocated purchase price over those fair values was recorded as goodwill. MPC’s basis in ANDX’s tangible assets, liabilities, identifiable intangible assets and goodwill will be transferred to ~~mandatory retirement, death, disability or resignation (other than for good reason) by~~MPLX upon completion of the ~~participant.~~

~~In addition to any earned but unpaid salary, a lump sum cash amount equal to~~Merger. To the extent the value of goodwill or intangible assets becomes impaired, the ~~participant’s unused vacation days~~combined partnership may be required to incur material non-cash charges relating to such impairment. The combined partnership’s operating results may be significantly impacted from both the impairment and ~~any normal post-termination compensation~~the underlying trends in the business that triggered the impairment.

Certain of the crude oil and ~~benefits under~~natural gas gathering facilities we acquired through our acquisition of ANDX are located on Native American tribal lands and are subject to various federal and tribal approvals and regulations, which may increase our costs and delay or prevent our efforts to conduct planned operations.

Various federal agencies within the ~~retirement, insurance~~U.S. Department of the Interior, particularly the Bureau of Indian Affairs, BLM, and the Office of Natural Resources Revenue, along with each Native American tribe, regulate natural gas and oil operations on Native American tribal lands, including drilling and production requirements and environmental standards. In addition, each Native American tribe is a sovereign nation having the right to enforce laws and regulations and to grant approvals independent from federal, state and local statutes and regulations. These tribal laws and regulations include various taxes, fees, requirements to employ Native American tribal members and other ~~compensation~~conditions that apply to operators and ~~benefit plans in which the participant participates, upon a Partnership Change in Control and Qualified Termination (as defined in the MPLX Plan), participants~~contractors conducting operations on Native American tribal lands. Persons conducting operations on tribal lands are eligible to receive: (i) a cash payment equal to three times the sum of the participant’s base salary and the highest bonus paid in the three years before the Qualified Termination or, if higher, in the three years before the Partnership Change in Control; (ii) life and health insurance benefits for up to 36 months after termination at the active employee cost; (iii) benefits that are equivalent to the retiree medical and life benefit provided under the MPC Plan; and (iv) a cash payment that is equivalent to the supplemental retirement benefit and supplemental savings benefit provided under the MPC Plan.

Participants who incur a Qualified Termination or who separate from service with all of the Partnership, the General Partner and any applicable buyer or successor entity within two years after the Partnership Change in Control under circumstances that would have resulted in a Qualified Termination had such separation occurred at the time of the Partnership Change in Control and participants who remain in service with the Corporation (and its affiliates) following the Partnership Change in Control may become eligible for the following benefits: (i) all Partnership equity awards that vest based solely upon the passage of time will be become vested and exercisable; and (ii) all Partnership equity awards that vest based on the attainment of performance goals will become vested as to the entire award with payment as follows (a) with respect to the period prior to the Partnership Change in Control (“Pre-CiC Period”), the award will be determined using actual performance during the Pre-CiC Period; and (b) with respect to the period after the Partnership Change in Control, the award will be determined assuming performance goals were satisfied at target levels. Participants who incur a Qualified Termination and participants who remain in or commence services with the Partnership, General Partner or any applicable buyer or successor entity (or any of their affiliates) following the Partnership Change in Control are eligible for the following benefits: (i) all Corporation equity awards will become vested and exercisable; (ii) the vesting of any Corporation equity awards that otherwise would vest based on the attainment of performance goals shall remaingenerally subject to the ~~attainment of applicable performance goals at the end~~Native American tribal court system. In addition, if our relationships with any of the ~~regularly scheduled performance period.~~relevant Native American tribes were to deteriorate, we could face significant risks to our ability to continue operations on Native American tribal lands. One or more of these factors may increase our cost of doing business on Native American tribal lands and impact the viability of, or prevent or delay our ability to conduct our natural gas and oil gathering and transmission operations on such lands.

The Corporation and the General Partner may at any time amend or terminate the MPLX Plan, provided that, for a period of two years following a Partnership Change in Control, the MPLX Plan may not be amended in a manner adverse to a participant with respect to that Partnership Change in Control. Any amendment or termination shall be set out in an instrument in writing and executed by an appropriate officer.

The foregoing description of the MPLX Plan is summary in nature and subject to, and qualified in its entirety by, the full text of the MPLX Plan, a copy of which is attached as Exhibit 10.3 to this Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2017 and is incorporated herein by reference.

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Item 6. Exhibits

Incorporated by Reference
Exhibit
Number
Exhibit Description Form Exhibit Filing Date SEC File No.
Filed
Herewith

Furnished
Herewith
2.1

Membership Interests and Shares Contributions Agreement, dated September 1, 2017, between MPLX LP, MPLX Logistics Holdings LLC, MPLX Holdings Inc., MPLX GP LLC and MPC Investment LLC
8-K 2.1
9/1/2017 001-35714
3.1

Certificate of Limited Partnership of MPLX LP
S-1 3.1
7/2/2012 333-182500
3.2

Amendment to the Certificate of Limited Partnership of MPLX LP
S-1/A 3.2
10/9/2012 333-182500
3.3

Third Amended and Restated Agreement of Limited Partnership of MPLX LP, dated as of October 31, 2016
10-Q 3.3
10/31/2016 001-35714
3.4

First Amendment to Third Amended and Restated Agreement of Limited Partnership of MPLX LP, dated as of February 23, 2017
10-K 3.4
2/24/2017 001-35714
10.1

Credit Agreement, dated as of July 21, 2017, among MPLX LP, as borrower, Wells Fargo Bank, National Association, as administrative agent, each of Wells Fargo Securities, LLC, JPMorgan Chase Bank, N.A., Barclays Bank PLC, Citigroup Global Markets Inc., Merrill Lynch, Pierce, Fenner & Smith Incorporated, Mizuho Bank, Ltd., The Bank of Tokyo-Mitsubishi UFJ, Ltd. and RBC Capital Markets, as joint lead arrangers and joint bookrunners, JPMorgan Chase Bank, N.A., as syndication agent, each of Bank of America, N.A., Barclays Bank PLC, Citigroup Global Markets Inc., Mizuho Bank, Ltd., The Bank of Tokyo-Mitsubishi UFJ, Ltd., and Royal Bank of Canada, as documentation agents, and the other lenders and issuing banks that are parties thereto.
8-K 10.1
7/27/2017 001-35714
10.2

Amended Restricted Stock Award Agreement
X
10.3

MPLX LP Executive Change in Control Severance Benefits Plan
X
31.1

Certification of Chief Executive Officer pursuant to Rule 13(a)-14 and 15(d)-14 under the Securities Exchange Act of 1934
X
31.2

Certification of Chief Financial Officer pursuant to Rule 13(a)-14 and 15(d)-14 under the Securities Exchange Act of 1934
X

Incorporated by Reference

Exhibit

Number

Exhibit Description

Form

Exhibit

Filing Date

SEC File No.

Filed

Herewith

Furnished

Herewith

2.1*

Agreement and Plan of Merger, dated as of May 7, 2019, by and among Andeavor Logistics LP, Tesoro Logistics GP, LLC, MPLX LP, MPLX GP LLC and MPLX MAX LLC.

8-K

2.1

5/8/2019

001-35714

3.1

Certificate of Limited Partnership of MPLX LP

S-1

3.1

7/2/2012

333-182500

3.2

Amendment to the Certificate of Limited Partnership of MPLX LP

S-1/A

3.2

10/9/2012

333-182500

3.3

Fifth Amended and Restated Agreement of Limited Partnership of MPLX LP, dated as of July 30, 2019

8-K

3.1

8/1/2019

001-35714

10.1

Support Agreement, dated as of May 7, 2019, by and among MPLX LP, Andeavor Logistics LP, Tesoro Logistics GP, LLC, Western Refining Southwest, Inc. and Marathon Petroleum Corporation

8-K

10.1

5/8/2019

001-35714

10.2

Amended and Restated Credit Agreement, dated as of July 26, 2019, by and among MPLX, as borrower, Wells Fargo Bank, National Association, as administrative agent, each of Wells Fargo Securities, LLC, JPMorgan Chase Bank, N.A., Barclays Bank PLC, BofA Securities, Inc., Citigroup Global Markets Inc., Mizuho Bank, Ltd., MUFG Bank, Ltd. and Royal Bank of Canada, as joint lead arrangers and joint bookrunners, JPMorgan Chase Bank, N.A., as syndication agent, each of Bank of America, N.A., Barclays Bank PLC, Citigroup Global Markets Inc., Mizuho Bank, Ltd., MUFG Bank, Ltd. and Royal Bank of Canada, as documentation agents, and the other lenders and issuing banks that are parties thereto

8-K

10.1

8/1/2019

001-35714

10.3

Amended and Restated Loan Agreement dated as of July 31, 2019 by and between MPLX LP and MPC Investment LLC.

8-K

10.2

8/1/2019

001-35714

31.1

Certification of Chief Executive Officer pursuant to Rule 13(a)-14 and 15(d)-14 under the Securities Exchange Act of 1934

31.2

Certification of Chief Financial Officer pursuant to Rule 13(a)-14 and 15(d)-14 under the Securities Exchange Act of 1934

32.1

Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350

7065

Table of Contents

Incorporated by Reference

Exhibit

Number

Exhibit Description

Form

Exhibit

Filing Date

SEC File No.

Filed

Herewith

Furnished

Herewith

~~32.1~~32.2

~~Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350~~

~~32.2~~

Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350

101.INS

XBRL Instance ~~Document~~Document: The instance document does not appear in the interactive data file because its XBRL tags are embedded within the Inline XBRL document.

101.SCH

Inline XBRL Taxonomy Extension Schema Document

101.CAL

Inline XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF

Inline XBRL Taxonomy Extension Definition Linkbase Document

101.LAB

Inline XBRL Taxonomy Extension Label Linkbase Document

101.PRE

Inline XBRL Taxonomy Extension Presentation Linkbase Document


*	Schedules have been omitted pursuant to Item 601(b)(2) of Regulation S-K. MPLX LP hereby undertakes to furnish supplementally a copy of any omitted schedule upon request by the SEC.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.



	MPLX LP

	By:	MPLX GP LLC
		Its general partner

Date: ~~October 30, 2017~~August 5, 2019	By:	/s/ ~~Paula L. Rosson~~ C. Kristopher Hagedorn
		~~Paula L. Rosson~~C. Kristopher Hagedorn
		~~Senior~~ Vice President and ~~Chief Accounting Officer~~Controller of MPLX GP LLC ~~(the~~ (the general partner of MPLX LP)

7267



	Three Months Ended September 30,				Nine Months Ended September 30,
(In millions, except per unit data)	2017		2016⁽¹⁾		2017		2016⁽¹⁾
Revenues and other income:
Service revenue	$	299	$	250	$	845	$	712
Service revenue - related parties	276		253		801		676
Rental income	69		77		208		218
Rental income - related parties	70		68		207		172
Product sales	217		157		611		394
Product sales - related parties	2		2		6		8
Gain on sale of assets	—		1		1		1
Income (loss) from equity method investments	23		6		29		(72		)
Other income	2		2		5		5
Other income - related parties	22		22		69		67
Total revenues and other income	980		838		2,782		2,181
Costs and expenses:
Cost of revenues (excludes items below)	129		122		381		329
Purchased product costs	170		117		441		310
Rental cost of sales	19		13		44		42
Rental cost of sales - related parties	—		—		1		1
Purchases - related parties	114		109		330		286
Depreciation and amortization	164		151		515		438
Impairment expense	—		—		—		130
General and administrative expenses	59		56		174		172
Other taxes	14		12		40		37
Total costs and expenses	669		580		1,926		1,745
Income from operations	311		258		856		436
Related party interest and other financial costs	1		—		1		1
Interest expense (net of amounts capitalized of $6 million, $7 million, $24 million and $21 million, respectively)	77		51		217		158
Other financial costs	15		13		40		37
Income before income taxes	218		194		598		240
Provision (benefit) for income taxes	1		—		3		(12		)
Net income	217		194		595		252
Less: Net income attributable to noncontrolling interests	1		2		3		3
Less: Net income attributable to Predecessor	—		51		36		149
Net income attributable to MPLX LP	216		141		556		100
Less: Preferred unit distributions	16		16		49		25
Less: General partner’s interest in net income attributable to MPLX LP	86		51		222		136
Limited partners’ interest in net income (loss) attributable to MPLX LP	$	114	$	74	$	285	$	(61	)
Per Unit Data (See Note 6)
Net income (loss) attributable to MPLX LP per limited partner unit:
Common - basic	$	0.29	$	0.22	$	0.75	$	(0.19	)
Common - diluted	0.29		0.21		0.75		(0.19		)
Weighted average limited partner units outstanding:
Common - basic	394		341		378		324
Common - diluted	395		346		381		324
Cash distributions declared per limited partner common unit	$	0.5875	$	0.5150	$	1.6900	$	1.5300



	Three Months Ended September 30, 2016
(In millions, except per unit data)	MPLX LP (Previously Reported)		HST/WHC		MPLXT		Eliminations⁽¹⁾			MPLX LP (Currently Reported)
Revenues and other income:
Service revenue	$	250	$	—	$	—	$	—		$	250
Service revenue - related parties	153		28		72		—			253
Rental income	77		—		—		—			77
Rental income - related parties	29		13		26		—			68
Product sales	157		—		—		—			157
Product sales - related parties	2		—		—		—			2
Income from equity method investments	6		—		—		—			6
Gain on sale of assets	1		—		—		—			1
Other income	2		—		—		—			2
Other income - related parties	26		—		—		(4		)	22
Total revenues and other income	703		41		98		(4		)	838
Costs and expenses:
Cost of revenues (excludes items below)	90		10		22		—			122
Purchased product costs	117		—		—		—			117
Rental cost of sales	11		2		—		—			13
Rental cost of sales - related parties	—		1		—		(1		)	—
Purchases - related parties	84		4		24		(3		)	109
Depreciation and amortization	138		4		9		—			151
General and administrative expenses	46		2		8		—			56
Other taxes	10		—		2		—			12
Total costs and expenses	496		23		65		(4		)	580
Income from operations	207		18		33		—			258
Interest expense (net of amounts capitalized)	51		—		—		—			51
Other financial costs	13		—		—		—			13
Income before income taxes	143		18		33		—			194
Net income	143		18		33		—			194
Less: Net income attributable to noncontrolling interests	2		—		—		—			2
Less: Net income attributable to Predecessor	—		18		33		—			51
Net income attributable to MPLX LP	141		—		—		—			141
Less: Preferred unit distributions	16		—		—		—			16
Less: General partner’s interest in net income attributable to MPLX LP	51		—		—		—			51
Limited partners’ interest in net income attributable to MPLX LP	$	74	$	—	$	—	$	—		$	74



(In millions)	Three Months Ended September 30, 2017		Seven Months Ended September 30, 2017
Revenues and other income	$	19	$	45
Income from operations	6		17



(In units)	Common	Class B		General Partner	Total
Balance at December 31, 2016	357,193,288	3,990,878		7,371,105	368,555,271
Unit-based compensation awards⁽¹⁾	183,509	—		3,745	187,254
Issuance of units under the ATM Program⁽²⁾	13,846,998	—		282,591	14,129,589
Contribution of HST/WHC/MPLXT⁽³⁾	12,960,376	—		264,497	13,224,873
Contribution of the Joint-Interest Acquisition⁽³⁾	18,511,134	—		377,778	18,888,912
Class B conversion⁽⁴⁾	4,350,057	(3,990,878	)	7,330	366,509
Balance at September 30, 2017	407,045,362	—		8,307,046	415,352,408



	Number of Units		Weighted Average Fair Value
Outstanding at December 31, 2016	1,173,411		$	33.09
Granted	653,721		36.36
Settled	(288,584	)	33.50
Forfeited	(113,107	)	34.59
Outstanding at September 30, 2017	1,425,441		34.39



(In millions)
December 31, 2017	$	8
March 31, 2018	11
June 30, 2018	11
September 30, 2018	10
December 31, 2018	4
March 31, 2019	3
June 30, 2019	4
September 30, 2019	4
Total	$	55



	Fee-Based		Percent-of-Proceeds⁽¹⁾		Keep-Whole⁽²⁾
L&S	100	%	—	%	—	%
G&P⁽³⁾	86	%	12	%	2	%
Total	92	%	7	%	1	%



WTI Crude Swaps	Volumes (Bbl/d)	WAVG Price (Per Bbl)		Fair Value (in thousands)
2017 (Oct - Dec)	200	$	54.25	$	42



Natural Gas Swaps	Volumes (MMBtu/d)	WAVG Price (Per MMBtu)		Fair Value (in thousands)
2017 (Oct - Dec)	1,832	$	3.03	$	(30	)
2018	2,542	$	2.78	$	4



Ethane Swaps	Volumes (Gal/d)	WAVG Price (Per Gal)		Fair Value (in thousands)
2017 (Oct - Dec)	54,600	$	0.27	$	(47	)



Propane Swaps	Volumes (Gal/d)	WAVG Price (Per Gal)		Fair Value (in thousands)
2017 (Oct - Dec)	119,932	$	0.61	$	(3,164	)
2018	16,925	$	0.64	$	(506	)



IsoButane Swaps	Volumes (Gal/d)	WAVG Price (Per Gal)		Fair Value (in thousands)
2017 (Oct - Dec)	10,730	$	0.81	$	(236	)
2018	1,655	$	0.80	$	(38	)



Normal Butane Swaps	Volumes (Gal/d)	WAVG Price (Per Gal)		Fair Value (in thousands)
2017 (Oct - Dec)	31,622	$	0.75	$	(823	)
2018	4,595	$	0.75	$	(120	)



Natural Gasoline Swaps	Volumes (Gal/d)	WAVG Price (Per Gal)		Fair Value (in thousands)
2017 (Oct - Dec)	41,827	$	1.13	$	(346	)
2018	3,089	$	1.18	$	(20	)

(State or other jurisdiction of
incorporation or organization)

(I.R.S. Employer
Identification No.)